Michael Izza Appointed CBE

 

Congratulations to Michael Izza for his honour.

ICAEW President Malcolm Bacchus has led messages of congratulations to Michael Izza after he was named in the King’s Birthday Honours list.

“I am delighted that our former Chief Executive, Professor Michael Izza, has been appointed CBE,” he said. “His wise stewardship and inspired leadership greatly strengthened ICAEW, growing its membership and making it a professional body of truly global standing.

“He has been an outstanding ambassador for the chartered accountancy profession, building its influence in public life and more widely in society and the economy. On behalf of ICAEW’s Council, its members and students and staff, I congratulate him on this thoroughly well-deserved recognition."

Responding to the news, Michael Izza said: “I feel very honoured to have been appointed CBE by HM The King, for services to accounting, audit and sustainability.

“It was a huge privilege to represent my profession as ICAEW Chief Executive for so many years, and I am proud of what we achieved together, especially with regard to the vital role that chartered accountants will play in the transition to sustainable economies around the world.

“I would like to thank my former colleagues, ICAEW members, students and volunteers for their support and commitment.”     

Izza led ICAEW for 18 years before his retirement at the end of March. Steering the Institute through the 2008 financial crisis, navigating the COVID pandemic, and grappling with the early stages of a global tech revolution.

During his tenure as chief executive, Izza was recognised as a leading advocate for the reform of audit and corporate governance, but also as a passionate believer in the role of chartered accountants in leading the transition to a more sustainable economy.

Alongside representing the accountancy profession to politicians, policymakers and regulators, he was on the HM Treasury steering group formed after Cop 26 that created a framework for net zero transitions – a gold standard planning tool to help businesses make the changes needed for a more sustainable future.

His appointment to CBE was made in recognition of his services to audit, accountancy and sustainability in his career so far, but in his last podcast for ICAEW, Izza confirmed that his desire to use his knowledge and experience in public service was undiminished.

“The things I’m gravitating towards are sustainability, and the net zero transition, and what I can do to help with that, but also technology. I’m really interested in where technology is going to take the profession, and indeed society going forward.” he said. “Giving something back either through the government or charities also appeals to me very strongly.”

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ICAEW in Hot Water Over Lavish CEO Severance Package

 

The Institute of Chartered Accountants in England and Wales (ICAEW) is facing intense scrutiny over a secret six-figure severance package being handed to its retiring chief executive, Michael Izza.

The payment, which could amount to as much as twice Izza's annual base salary of £492,000, has been met with anger and disbelief by many in the accounting profession.

It comes at a time when the ICAEW is already under fire for its retention of fines imposed on audit firms. In 2021, the ICAEW pocketed a £13.5 million penalty from Silentnight, the mattresses retailer, rather than using the money to reimburse pensioners who had been disadvantaged by corporate governance failings.

The ICAEW has defended the payment to Izza, saying that it is "in line with market rates" and that it is "appropriate" given his length of service and achievements.

However, critics argue that the payment is excessive and that it sends the wrong message at a time when the ICAEW is supposed to be promoting high standards of corporate governance.

"This is a staggering amount of money to pay to someone who is already very well-paid," said one industry insider. "It's a slap in the face to the thousands of accountants who work for the ICAEW and who are paid a fraction of what Izza is getting."

The ICAEW has said that it will publish the full details of the severance package in its next annual report. However, that is unlikely to do much to quell the anger that is already brewing.

This is just the latest in a series of controversies to hit the ICAEW in recent years. The organization has been criticized for its handling of the Carillion collapse, its close ties to the Big Four audit firms, and its failure to crack down on widespread corporate fraud.

The decision to hand Izza a six-figure severance package is likely to further damage the ICAEW's reputation and raise questions about its commitment to transparency and accountability.

The ICAEW is in hot water. They're handing a lavish sum to their retiring CEO, Michael Izza, amid a row over fines imposed on audit firms.

People are angry. They say the payment is excessive and sends the wrong message.

The ICAEW has defended the payment, saying it's in line with market rates. But critics say that's not good enough.

This is just the latest in a series of controversies to hit the ICAEW. They're in danger of losing the public's trust.

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Izza To Retire

 

After 17 years as CEO of the ICAEW, Michael Izza has announced that he will retire at the end of 2023.

As per his email:

"Dear Members,

I wanted to let you know that after 21 years at ICAEW, I have decided to retire as its Chief Executive by the end of 2023. 

 

I trained as a Chartered Accountant almost 40 years ago, and it has been an honour to be Chief Executive of ICAEW, representing our profession across the world.

 

I would like to thank you - as valued members - and all our many volunteers for your support to me and commitment to ICAEW. I am immensely proud of what we have achieved together, and I have no doubt that the Institute will continue to flourish after I leave. 

 

As Chief Executive I have taken every opportunity to champion sustainability and I believe that chartered accountants have a vital role in helping society and the economy achieve net zero. Our 2030 strategy positions ICAEW well for the future and I am confident that the best is yet to come.

 

Regards,   

Michael Izza FCA

ICAEW Chief Executive"

I would like to take this opportunity to wish him well for his retirement.

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Izza Looks To an FCA's Wider Social Purpose

Michael Izza, ICAEW Chief Executive

“The Sustainable Development Goals are an important framework to ensure governments and businesses are pursuing the long-term public interest, so we hope the Prime Minister will use them as a foundation for the UK’s post-Covid recovery plans.

As chartered accountants we think it’s vital businesses look beyond profit and have a wider social purpose, and we’re pleased to have so many organisations join our call to government to put these goals front and centre.”

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Coronavirus: the Chancellor's statement - Michael Izza's message to members

20 March 2020: the Chancellor's announcement this evening of a far-reaching package of measures allows businesses in this country to stand by their employees at a time of national emergency.
Such direct action by Government to keep people in employment is a really good start. It should make a difference to how people feel and keep them working and spending. The real battle now is for public confidence: if we can sustain that, the economics will follow.

Much of the detail is still being worked up and we expect more information to follow (for example on the self-employed). As soon as we can, ICAEW will provide you with more in-depth comments to help you navigate the support now on offer. In the meantime, please keep us updated on the issues you are facing through this form on our website.

Thank you to those who have already been in touch with us to share your issues and concerns. These are providing us with valuable insights to share in my conversations with government departments, the Bank of England and others, as well as helping our teams to prioritise their activities. So far, we have seen some key themes emerging around: -

• Tax
  Many of your comments relate to tax reliefs. On Thursday, our Head of Tax, Frank Haskew wrote to Rt Hon Jessie Norman MP urging HMRC to show flexibility and creativity over the coming weeks. We recommended leveraging employers’ NICs, perhaps through the use of employment grants, such as Coronavirus Retention Scheme, to keep people in work, a measure similar to what was announced by the Chancellor this evening. Administering the new loan scheme will be a huge ask for HMRC, so we are urging them to defer - with immediate effect - any other planned, but non-essential, changes to the tax system.  This will help ensure that chartered accountants can focus on supporting their clients through this period.

• Business funding
  Prompt and easy access to funding, such as loans and grants, from as wide a range of reputable and regulated finance providers as possible is also a clear concern. David Petrie in our Corporate Finance Faculty has been working closely with the British Business Bank to try to get funds to where they’re needed (notwithstanding the limitations of the CBILS). Access and then understanding the funding is a real issue for businesses as I discussed with the Governor of the Bank of England today.

• Paying wages
  The Government’s plans will help keep people in employment and on payroll. We recognise that there are gaps and more clarity is needed and will be making that point to Ministers.

Like many of you, I worked through 9/11 and the 2008 financial crisis, but this is unprecedented. I know members are doing everything they can to help their employees and clients, with many trying hard to stay afloat themselves. Once again, I want to reassure you of our commitment to helping our members during this crisis. Our Technical team is working tirelessly to unpick the detail, help policymakers with their decision making and supply the resources you urgently need at this time.

The situation and the information available continue to change rapidly, but we promise to keep you informed.  You can find our latest guidance on our website. Listening to feedback, we have now created a new page summarising the latest practical business advice to help you better support your clients.

Thank you for everything you are doing.

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The ICAEW Finally Wakes Up To Social Media

Good afternoon Twitter. With increasing numbers of members engaging with us on social media, it’s time for me to follow suit. Stay tuned for updates on my meetings with members and stakeholders, thoughts on our key projects and links to my regular blog.

— Michael Izza (@MichaelIzza) February 19, 2018

Better late than never.

#askICAEW Live

Hangout With Michael Izza

Got a question for our Chief Executive? Send your questions using #AskICAEW by 13 May. http://t.co/yv1UXRiwuU pic.twitter.com/1LitnQziX3

— ICAEW Talk (@ICAEW_talk) May 6, 2015

I assume they mean send your questions "before" 13 May.

Izza Changes His Mind

On 29 June I wrote:

"Michael Izza (CEO of the ICAEW) has published a blog post today entitled "Chartered accountants and tax evasion". Oddly though his first sentence deals with tax avoidance, not evasion, specifically the Times campaign against tax avoidance."

It seems that the ICAEW has taken on board what I wrote, because the title of Michael's article has now changed to "Aggressive tax avoidance - my view".

Thanks to Tax Journal for pointing that change out.

Kicking Off On Michael Izza's Blog

I see that it is rather kicking off on Michael Izza's blog about tax avoidance.

Good to see that fellow members are not docile/passive about this issue!

My views on the subject are here: An Opportunity Lost - Michael Izza Gets Stuck On K2

An Opportunity Lost - Michael Izza Gets Stuck On K2

Michael Izza (CEO of the ICAEW) has published a blog post today entitled "Chartered accountants and tax evasion". Oddly though his first sentence deals with tax avoidance, not evasion, specifically the Times campaign against tax avoidance.

He goes on to say:

"I believe that there is no place for our profession in the creation or maintenance of these sorts of tax schemes...

In these difficult times, any ICAEW Chartered Accountants who are engaged in the kinds of schemes highlighted in The Times need to look at themselves in the mirror and ask – am I upholding the honour and reputation of ICAEW Chartered Accountants and am I seen to be doing that? If the answer is no then they need to ask themselves whether they want to belong to our profession or not? "

Sadly Michael has missed an opportunity to stand up against the media and political witch hunt that is threatening both legitimate tax avoidance and the profession itself.

Instead of calling for the simplification of the tax system, which would kill many complex tax avoidance schemes stone dead, he kowtows to the pressure of the media and political witch hunt and implies that the ICAEW wants members who offer legal tax schemes which the ICAEW does not approve of to leave the ICAEW.

As Jason Selig commented the other day on the ICAEW Group discussion about tax avoidance on LinkedIn:

"How is this a moral question?- there is no "right" or "wrong" about paying tax. 

Is it moral to save for a pension or open an ISA or invest in an EIS scheme? 

All of them save tax and if it wasn't for the tax break you wouldn't do them. A tax adviser is under a "moral" obligation to offer these kind of schemes to clients and warn about the ramifications, tax investigation, exposure in the media of actually doing them. 

To fail to offer the schemes where relevant would be potentially negligent. 

You may find them repugnant - as do I in some of the more aggressive schemes such as K2, and my advice to clients is not to enter into them - but that's not my call it's the client's - the fact is it's legal and fully disclosed on the tax returns - if HMRC want to challenge there is a legal process that allows them to do so. "

As I noted the other day on my HMRC site:

"Avoidance is a perfectly normal human thing to try to do, the politicians are not in a position to lecture the rest of us on 'morality'." 

The media and politicians lecturing us on morality is as natural as a cat walking on its hind legs.

Gilding The Lilly

Five days ago I wrote about my surprise that Michael Izza had not commented on the potential £40M pension deficit in the ICAEW's 2011 accounts:

"for reasons that are unclear he does not say a word about the pension deficit of £40M that completely undermines that finances of the ICAEW, and is the tail that is wagging the dog of the ICAEW's drive for new members via its international "strategy".

How very odd that he doesn't mention it? "

It seems that I am not alone in believing that such a significant potential shortfall deserved more prominence. Kevin Reed is also of that view:

"MAKING FINANCIAL REPORTING more relevant and easier for to stakeholders to understand has been a long-running issue. 

Let's face it - when things go wrong there will always stakeholders up in arms as to why they'd not been able to predict such a terrible moment by reading the accounting runes. Conversely, there will be some clever sausage that looks in hindsight at the statements and figures to highlight that the problem's been clear all along.

As a non-accountant of the most severe kind - but as a journo with an interest in these issues - a couple of areas within the latest annual reviews from ICAEW and CIMA left me slightly perplexed.

Firstly, the ICAEW's pension scheme financial position has been valued by actuaries as in deficit of £40.1m at 31 December 2011, compared with the triennial valuation measured in 2010 at a deficit of £19.9m. This has the potential of forcing the ICAEW to stump up another £5m and review its pension funding plan. A fall in gilt yields is the main culprit behind the deficit's degradation.
Having traipsed up and down the pension schemes numbers - which spread across four pages - I admit to originally missing out the figure, which was included within the narrative section of the notes.

The deficit is mentioned twice within the institute's financial statements - in the review pages and again in its notes to financial statements. The ICAEW's summary of its position, the review, is online where the deficit is again flagged up.

The ICAEW told me that it is satisfied about the coverage afforded to the deficit, and its potential ramifications, within its year-end statements. Note the ‘potential', as the valuation itself was a ‘desktop' valuation, or estimate.

While I don't pretend to be able to pull out the institute's various pension scheme calculations through its statements of financial position (or balance sheet as I'd know it), particularly as ICAEW stakeholders are - let's face it - accountants, it still irks.

As a journo I'm not owed anything by the ICAEW. But maybe in the context of its members, and its role in making reporting as clear as possible, perhaps such an important ‘number' deserved more pronounced presentation.

And while on the topic, it also seems strange that CIMA feels it can't specifically reveal chief executive Charles Tilley's pay packet.

CIMA's annual review 2011 reveals its water consumption (3,400 cubic meters), but not the salaries of its senior management.

Some details are contained within the financial statements, but these are anonymous. We know that the highest paid executive's dosh has moved from the £210k-£220k bracket to £220k-£230k between 2010 and 2011. Is that Tilley? Dunno, assume so. Has ‘his' pay gone up from £220k to £220.1k, or £210k to £230k? A 100 quid or twenty grand? Dunno.

The average CIMA staff salary (wages + NI) fell to £33,349 from £36,224, with total staff numbers up to 426 from 369.

And of course, you're dying to know, the ICAEW does state their executives' pay. Chief Michael Izza earned a total of £477,000 - £372,000 in salary and £105,000 in ‘deferred variable pay', or performance-related pay."

My thanks to Kevin Reed for his Tweet following my publication of this article:

"Kevin Reed ‏@Goonerreed

Hat tip to Ken for flagging up the #icaew pensions data in 1st instance. Will add to my copy"

What About The Pension Deficit Michael?

Michael Izza (CEO of the ICAEW) has just published a brief review of the 2011 ICAEW results, entitled "2011: A Year of Growth for ICAEW".

He says:

"We have just published the ICAEW Annual Review for 2011, and as you will see the headlines are positive. Member and student numbers are up and income has grown, despite a tough economic backdrop in many parts of the world."

Yet for reasons that are unclear he does not say a word about the pension deficit of £40M that completely undermines that finances of the ICAEW, and is the tail that is wagging the dog of the ICAEW's drive for new members via its international "strategy".

How very odd that he doesn't mention it?

Cameron Lambastes Accountants Again! - ICAS Weighs In

I am pleased to see than Anton Colella (CEO of ICAS) is also less than impressed with Cameron's comments about accountants:

""People want to know that we’re not just a bunch of accountants trying to turn around the British economy as if it were a failing company, but that we’re resolutely on their side as we do,” said Prime Minister David Cameron earlier this week. It’s an unhappy irony that, in making an appealing point, Mr Cameron should malign an entire group of hard-working professionals.

ICAS represents over 19,000 world-class business-women and business-men. Now that’s just a – big – bunch of chartered accountants (CAs).

But it’s also a bunch of dedicated and passionate professionals, working to serve clients and investors in the public interest.

It’s a bunch of business leaders, who head up some of the biggest companies in the country, in public practice and in a myriad of business roles, providing employment, innovation and tax revenue.

It’s a bunch of volunteers, who provide their expertise to a range of charities across the UK and abroad with organisations like Accounting for Development, an organisation which matches CAs with organisations in developing nations.

I am sure Mr Cameron didn’t really intend to denigrate accountants. However, the notion of accountants as uncaring bean-counters is at odds with my experience of enthusiastic, hard-working CAs, whose energy and insights and will be key drivers of the UK economy’s recovery.

Prudence is a watch-word for accountants; in reporting, in auditing, in projecting. Prudent phrasing, in this case, might have helped avoid one group of people feeling as though Mr Cameron was not resolutely on their side."

The drip drip of negative comments about accountants, tax efficient schemes, tax avoidance etc, that are coming from Osborne and Cameron, are deliberately designed to play to people's prejudices about the profession and about those involved in the "dark arts" of financial advice.

It undermines the brand value of accountancy as a profession. We should not simply roll over passively, like some pitiful Victorian clerk, and let the politicians use our profession for their own political ends.

As I said a couple of days ago, an open joint letter from the UK's leading accounting bodies is required.

Plus members of the profession should tweet @Number10gov to tell Cameron to stop this nonsense, and make #accountinggate a trending topic.

Cameron Lambastes Accountants Again!

I see that Cameron is lambasting accountants again:

" David Cameron has warned that the Coalition risks being seen as a “bunch of accountants” unless it “focuses on what matters” in the wake of last week’s dismal local election results."

It looks like the letter from Michael Izza was not enough.

As I wrote a few days ago:

"Izza should not be too surprised at the barracking about tax avoidance and accountants from Cameron, Osborne and their ilk. Their background means that their financial affairs are handled by trusts and (ironically) accountants. They have no real world interaction with HMRC or the "mundane" daily matters of the finance that the rest of us have."

Maybe an open joint letter from the UK's leading accounting bodies is required, or maybe Cameron's accountant should simply go on strike?

I have Tweeted @Number10gov to tell him to stop this nonsense, I suggest fellow members do the same and make #accountinggate a trending topic.

Izza Vents His Spleen

Fed up with the low level ongoing anti accounting barracking from the Bullindgdon set at the heart of government, Michale Izza (CEO of The ICAEW) has vented his spleen.

In a letter to Cameron, Izza says that, while such remarks may be tongue-in-cheek, they undermine the significant contribution that the profession makes to the UK economy.

Izza should not be too surprised at the barracking about tax avoidance and accountants from Cameron, Osborne and their ilk. Their background means that their financial affairs are handled by trusts and (ironically) accountants. They have no real world interaction with HMRC or the "mundane" daily matters of the finance that the rest of us have.

Georgie Porgie and Cameron need to be reminded of the wise words of Lord Templeman in 1992:

"There is no morality in a tax and no illegality or immorality in a tax avoidance scheme."

Izza Rules Out CIPFA Merger

ICAEW CEO, Michael Izza, has ruled out a merger with CIPFA.

He is quoted by Accountancy Age:

"There are no formal merger plans in the short, medium or long term."
 
He also expressed hope that one day CIMA would return to the Consultative Committee of Accountancy Bodies (CCAB).

Given that CIMA left CCAB because they feel that the fees charged to belong to CCAB were disproportionately high, it is unlikely that they will return to CCAB anytime soon.

CCAB will need to demonstrate that it is doing something useful.

Ruffling Feathers

Anthony Thomas, President of CIOT, may well have ruffled some feathers over at the ICAEW when he recently debunked the nonsense that there is a "special relationship" between HMRC and the professional bodies. He called it a "myth", akin to that "relationship" between the UK and US governments.

Over at the ICAEW, Michael Izza (the CEO) recently stated that "we (the ICAEW) now have a partnership with HMRC".

So, who is right?

HMRC Service Delivery

Michael Izza (CEO of the ICAEW) has expressed hope that HMRC's commitment (yet another in a series of promises, previous ones having been broken) to improving its service levels will actually come to fruition this time.

He writes:

"HMRC has made similar promises in the past to tackle service issues yet have failed to deliver. 

I believe this time will be different. 

Thanks in no small part to the role played by our Tax Faculty and in particular, Paul Aplin, chair of its technical committee, we now have a partnership with HMRC and a very public commitment from the very top to a way forward which will help turn things around."

I don't discredit Michael for his optimism.

However, I do not share it.

Regular readers of my site www.hmrcisshite.com can attest to the fact that HMRC is in fact heading for meltdown, and will not be in a position to make good on its promises.

Unemployed Chartered Accountants

There is an interesting and useful discussion going on at the LinkedIn ICAEW Group at the moment, concerning the number of Chartered Accountants who are actually unemployed and the role that the ICAEW should take/does take in helping them.

As ever with the ICAEW, there appears to be a disconnect between the views of Moorgate Place and some of the membership. Several pertinent points about subscription levels, and the need for global offices have been raised by a number of ICAEW members.

Here is the opening comment by Martin Lloyd-Penny, the full discussion can be followed by group members here LinkedIn:

"Is Michael Izza correct?

On Monday I met the Michael Izza the CEO of the ICAEW and asked him how many Chartered Accountants are out of work - i.e. those that haven't retired and still want/need to work. Michael thought between 1,000 and 2,000 (out of a total of 135,000) and I think he may have underestimated the scale of the problem facing many of our members. Michael's estimate is based on the number of members that request a reduction in their annual subscription due to financial hardship - which maybe is not a true reflection of the scale of the problem. My view is that the number is significantly higher if you consider the numbers that:-

• Are not working at all and in many cases are claiming benefits
• Are having to find interim work as and when to support themselves – and the interim market is dead and there are literally thousands of highly experienced interim managers who can’t find any work.
• Are working part time and earning significantly less than they were 10 years ago
• Are having to resort to other means to keep a roof over their head – one of my candidates who was a CF partner in a London bank is driving a taxi!
• Are working as bookkeepers at £20 an hour in London – when I advertise that type of job I get up to 100 applicants of which 50% or more are qualified accountants.

Fortunately I continue to find lots of exciting opportunities for my candidates but I am not sure that the ICAEW is aware of the size of this problem. I know that they are trying to provide as much support as possible through CABA so I would like to make sure that the resource is being properly directed."