The Pathway To Nowhere

It seems that the ICAEW's much vaunted Pathways scheme is going nowhere fast.

ICAS To Remain Independent

Anton Colella, the new chief executive of the Institute of Chartered Accountants of Scotland (ICAS), is going to build bridges with the ICAEW after last year's humiliating debacle over the proposed name of the planned merged institute (that was blocked by the membership of the ICAEW).

Colella, in an interview with the Herald, notes that rapprochement is now required with the ICAEW.

However, despite the ICAEW's continued obsession with merging with all and sundry, ICAS have every intention of remaining independent.

Colella is quoted as saying:

"Consolidation is not on the horizon for Icas.

We will, however, be looking to work very effectively with the other professional bodies in the UK. We will be working very hard to ensure we identify areas where we can collaborate."

The Numbers Game

It was reported last week that domestic ICAEW member numbers have all but stood still over the last year.

The Professional Oversight Board's recent survey, Key Facts and Trends in the Accountancy Profession, shows that domestic member numbers for the ICAEW grew by a mere 350 over the last 12 months or 0.3%.

However, ACCA membership rose from 56,837 to 59,059 over the same period, and CIMA grew from 51,386 to 53,697; growth rates of 3.9% and 4.4% respectively.

ACCA also trounces the ICAEW in terms of its age profile, with 70% of members under 45 years old, whilst the ICAEW and ICAS both have around 50% over 45 years old.

As we know, the ICAEW preferred method of addressing this stagnation in membership has been that of merging with other bodies. This method, because it dilutes the brand value of the qualification, was rejected by the membership last year.

However, I have been discussing with Dr Jeff Wooller (founder of the Ginger Group - not ICAEW approved) another solution.

We believe that we need to offer a solution which addresses both the needs of the market, and maintains the brand image of the ACA and FCA qualifications.

The ICAEW needs to offer the market what it wants, namely a tiered membership pitched at different levels. We should offer two additional qualifications, each with its own set of designatory letters:

• An accounting technician qualification, which would be very popular overseas and rival the CAT qualification of ACCA.



• A non practising qualification, at a higher level than technician, for those who do not wish to endure a training contract. This again would be very popular overseas, and would compete directly with the CAT of the ACCA. It would also be a cheaper and more practical alternative than MBA courses.

Thus the ICAEW could compete in the entire market place, without losing the brand value of its existing qualifications. Future growth rates in the ACCA and CIMA may plummet and the ICAEW would have a global qualification to rival the MBA.

However, we would first need to find out from leading ICAEW members, in business rather than in practice, what they would want from such qualifications. We believe that the ICAEW Faculties would be ideal vehicles for such research.

It will be interesting to see the reactions from the ICAEW competitors to our proposal, an attack would indicate that we have a winning proposal.

A Bold Prediction

Michael Cleary, the head of Grant Thornton, has made a bold call for unification of all six UK professional accounting bodies in a speech delivered to the Institute of Financial Accountants.

Cleary said that it is a "nonsense" for Britain to have more than six professional organisations.

He went on to predict that within a decade all the institutes will combine to form one nationwide institute.

Cairn Energy chairman Norman Murray, who is president of the Scottish institute (ICAS), disagrees:

"We have always said that consolidation is not inevitable.

To demonstrate to our members that merging would be in their interests and in the public interest, we need to show that we can work together closely with other institutes first and foremost.

At the moment we see no need to merge."

The ICAEW president, Ian Morris, also spoke up about co-operation when he visited Edinburgh to address the 1300 members of the English institute who work in Scotland.

Quote:

"Our relationship with ICAS is one of partnership.

I value the long-standing and constructive working relationship that exists between (us)."

I agree that a merger with ICAS would be beneficial for both bodies, if the membership can be persuaded. However, last year's appalling public relations disaster wrt the name change foisted on the ICAEW members by the ICAEW leadership has not done the ICAEW's reputation in Scotland any favours.

Ian Morris is right to say that we should value a long standing and constructive relationship with ICAS. Unfortunately, last year the leadership of the ICAEW did its very best to destroy the relationship.

As regards Michael Cleary's desire to merge all bodies, a merger should only be sought between similar bodies of equal standing in respect of qualifications and prestige. ICAS and ICAEW are two such bodies; CIPFA, CIMA et al are not.

That is why the merger with CIPFA failed last year, until the leadership of the ICAEW get that message we will not be able to move forward and engage in constructive dialogue with ICAS.

Breaching The Walls of The Bunker

Executives around the world believe that it takes companies slightly more than three years to recover from a crisis that damages their reputation.

That at least is the conclusion drawn from to market research carried out by Burson-Marsteller.

The research is based on the opinions of 685 business "influentials" - CEOs, senior executives, financial analysts, business media and government officials in 65 countries.

It shows that quickly disclosing the details of a scandal or corporate misstep should be management's top priority, as it begins the process of restoring corporate reputation.

The latest research conducted by the firm took a closer look at the crisis
management strategies that a company should use to protect, manage and build its reputation.

According to the market research, the top ten crisis management turnaround strategies are:

-Quickly disclose details of the scandal/misstep (69%)
-Make progress/recovery visible (59%)
-Analyse what went wrong (58%)
-Improve governance structure (38%)
-Make CEO and leadership accessible to the media (34%)
-Fire employees involved in the problem (32%)
-Commit to high corporate citizenship standards (23%)
-Carefully review ethics policies (19%)
-Hire an outside auditor for internal audits (18%)
-Issue an apology from the CEO (18%)

Deborah Bowker, chair of Burson-Marsteller's U.S. Corporate/Financial Practice said:

"A crisis can have a devastating impact on a company's reputation in terms of its profitability, credibility, competitive position, and ability to retain and attract top performers.

However, companies can lessen their recovery time and be welcomed back into the fold, with their reputation restored, if they follow a few well executed and integrated turnaround strategies."

Bearing in mind the long list of recent disasters that the ICAEW have inflicted on the membership, and the brand value, of the ICAEW; including, but not limited to, the following:

• The failed merger


• The unseemly public row with ICAS over the name


• Poaching members from other bodies


• Using the services of Media Strategy, a PR company that breached the Code of Practice of the Association of Professional Political Consultants


• Postponing the new exam syllabus until 2007


• Not introducing and ethics paper until 2007


• The Durgan Debacle


• The failure to publish the results of the investigation into the Durgan Debacle


• The failure to conduct an independent review/investigation into the causes of the Durgan Debacle

Do you not think that the ICAEW should take heed of the above advice from Burson-Marsteller?

I certainly do!

The question is, are the ICAEW open to advice from outside the Moorgate Place bunker?

Desperate or Incompetent?

I understand that one of this site's regular visitors contacted the ICAEW, a few months ago, to ask about how the "Pathways to Membership" (backdoor route to membership) of the ICAEW would work.

Today he finally received a response from them, in the form of a phone call, asking if he was interested in furthering an application.

I don't know whether this is a sign of desperation, or plain incompetence (given how long they took to come back to him).

Confusion at The ICAEW

Whilst the ICAEW reels from the Durgan contract fiasco, its standing with other professional bodies has taken another public battering; as Des Hudson, CEO of ICAS, questioned the ICAEW's recruitment strategy.

He is quoted by Accountancy Age as saying:

"We were surprised by the strategy, with respect to the various qualifications."

He noted that by getting other accountants to take up the ICAEW qualification, the ICAEW was contradicting its previous strategy of merging with other professional bodies whilst trying to keep the qualifications distinct.

Quote:

"To me there's confusion between their current and previous statements."

As John Prescott has found to his cost, slings and arrows can be survived - ridicule cannot. The leadership of the ICAEW are making themselves look ridiculous.

The Global Accounting Alliance-Updated

Proving that the ICAEW and ICAS can work together they have announced, together with ICAI and six other accountancy bodies, the formation of the Global Accounting Alliance (GAA).

Quote:

"Representing over 700,000 of the world's leading professional accountants, the Global Accounting Alliance will promote quality professional services, global membership support, share information and collaborate on important international issues.

The Alliance will work with national regulators, governments and stakeholders, through member-body collaboration, articulation of consensus views, and working in collaboration, where possible, with other international bodies."

If we can work together in this manner, why did we need to merge?

Unfortunately, Eric Anstee current head of the ICAEW, is still trying to flog the "dead horse" of merger. He is still interested in consolidation with CIPFA and CIMA.

However, he told Accountancy Age that he would have to speak to GAA members about merger plans.

Have I missed something here?

Surely the merger plans were rejected by the membership of the ICAEW last year?

Precisely why should he hold discussions with the GAA about merging?

What part of the word "No" does he not understand?

Update 17:15 27 April 2005

If you look up the registration of www.globalaccountingalliance.co.uk, you will see that it was registered on 15th September 2005 by the ICAEW.

This was before the merger motion was defeated in October 2005. This implies that the wheels were already in motion for the creation of the GAA.

Why then, if the ICAEW was working towards a global alliance at that stage, did they persist in telling the members that the most effective way of making our voice heard on the world/national stage was via merging with CIMA/CIPFA?

FYI, I have registered www.globalaccountingalliance.org.uk in my name, and will ensure that it redirects to this site in the next 48 hours.

The Dying Institute?

Accountancy Age report that ACCA has 73,839 students in the UK and Ireland, CIMA has 57,106, while the ICAEW has 8,560.

The article also notes that the growth of ACCA and CIMA is outstripping that of the ICAEW.

Whilst it is true to say that size of itself is not an indication of quality, the ICAEW should be concerned that the number of people wishing to join the ICAEW is, on the face of these statistics, declining.

Yet, last year, the ICAEW wasted time and money chasing the false solution of a merger with lesser bodies.

The ICAEW needs to identify and address the "internal" issues that are putting potential new members from joining, and not waste its time and members' money on further merger votes.

Issues that need to be addressed include:

-The exam syllabus

-Ethics in the profession

-The size and structure of Council

-Value for money in respect of subscriptions

-Working more closely with CCAB

-Improving relations with ICAS

Name Change Aborted

In a remarkable volte-face, it seems that the ICAEW has abandoned plans to change its name to the Institute of Chartered Accountants.

A spokesman for the English institute is quoted in The Herald as saying that the proposal had been scrapped "after consultation with members."

This is odd considering the fact that Eric Anstee had announced that, despite the merger vote fiasco, he was going to go ahead with the change of name anyway.

I wonder if this particular U turn has more to do with the opposition from ICAS, other professional bodies and politicians, rather than the views of the members of the ICAEW?

Whatever the reason, it is yet another humiliating defeat for the current leadership of the ICAEW.

What a Shambles!

It seems that the leadership of the ICAEW are intent on digging an even deeper grave for themselves this year.

Hot on the heels of the well deserved trouncing they received for trying to bully us into merging with CIPFA, they then managed to further destroy the ICAEW's reputation by delaying the introduction of the new syllabus, and most importantly the ethics module, for 2006.

Not content with wasting our money on a futile MORI poll asking us why we voted against the merger, don't they read or listen? The ICAEW now intends to add to its ever growing list of strategic and management failures.

Accountancy Age report that the Privy Council will block the proposed name change, which had so angered ICAS and other professional bodies around the world.

This in itself speaks volumes about the quality of leadership at the helm of the ICAEW. However, in case there is any room left for doubt, Accountancy Age also report that the proposed merger with IFA (the merger that ICAEW have yet to officially tell us, the membership, about) may be entering rather choppy waters.

Astute readers will note that IFA have a membership of 9000, it is a body that is even smaller than CIPFA. Yet, in order to prove its machismo, the ICAEW are now seemingly intent on merging with anything no matter how small.

It seems that there are allegations that senior members of IFA may be facing suspension for disciplinary offences.

How will that improve the reputatation of the ICAEW?

Here are few questions that we all need to mull over:

• When will we be rid of this shambolic leadership?



• When will the ICAEW learn that it is here to serve the interests of the membership, not the other way around?



• When will that Victorian anachronistic structure known as Council be removed from office?

Failure to address these issues will see the end of the ICAEW as a legitimate force and respected brand within the profession.

I don't want to see that happen, neither do the rest of the membership. The time for the membership to take control of the ICAEW is now.

Letter To Council

For your information I reproduce the full text of a letter sent by Bruce Lawson to all members of the ICAEW council.

"Dear Member of Council,

A miss is as good as a mile – No means No!

So the Institute gambled and lost – just 29% voted for a merger – 15% voted against and 56% don’t care – hardly a recipe for a re-run. Taking the ICAEW cost of £1.42 million, the 37,004 Yes votes cost £38 each.

The No camp, with two websites and less than a £5,000 spend, was successful because ICAEW strategy was inherently wrong. Try again, and with a £38 a head budget for the Nos (£734,000) you might not even get 50% of the vote and become even more embarrassed.

Your Chief Executive compares the vote with a parliamentary mandate – should a 29% vote be permitted to run the country – does the Council want to compare themselves with spinning politicians and the apathy that they expensively create. Hopefully not after the excellent leadership ICAEW has given until recently.

The debate has had the benefit of educating members. I did not know ICAEW had 500 staff whereas ICAS have 140. A lady at the EGM, who spoke eagerly in favour of the merger, was amazed to know there were 95 Council members.

So where next?

Surely the strategy must focus on falling income. Increased regulation, Practice Assurance, CPD requirements, etc. mean members will not fade away as in the past, but stop and resign to save paying expensive subscriptions. We might like to work longer, but will stress levels permit?

A recent Robert Half report shows (AA 27th October) 25% of a 2,232 sample don't want to work past 55. So face it, budget for a 20% fall in income in real terms over the next five years (think of the 1946 baby boomers) and cut your cloth accordingly.

A truly independent panel of ICAEW members with a budget of say £200K – 10% of what has recently been wasted – should review all ICAEW activities with a view to cutting costs and staff by say one-fifth, and Council members by at least half.

Dissident members will (and should) from now on, resist any subscription increase of more than general inflation – say 3% p.a. ICAEW must live within its means – members have to.

We note gratefully that ICAEW "work hard to provide value for money for our members and realize future cost savings" (page 8, Accountancy – November 2005).

ICAEW should concentrate on training, discipline and a dissemination of technical information and advice on ethics. Sponsoring major symposiums in Washington … what utter drivel.

Council should also abandon the collective responsibility secrecy, which MAC have written evidence of existing and find so disturbing. ICAEW must be utterly transparent in its dealings and an unwieldy Council should not be led by the Executive. What was wrong with the previous system anyway?

Your Chief Executive sees the vote as a mandate to continue to discuss consolidation. He and the Council would be wrong to pursue that strategy. Say you were wrong; budget for lower numbers and the inevitable recession. Cut costs and fanciful delusions of grandeur and then maybe you will get 71% of the members, who voted No or don’t care, and perhaps some of the Yes voters, who only reluctantly voted on your side again.

Ignore these warning signs and the Institute could become ungovernable.

On a lighter note, and in football parlance, you lost, the Nos won; accept defeat as graciously as your current President. Both sides knew the rules. Complaining to the referee after the match achieves very little … and what of the manager’s position?..

We shall see what happens next.

Peace In Our Time?

So much for the ICAEW taking on board my advice to make peace with ICAS.

The Scotsman reports that:

"Eric Anstee, chief executive of the Institute of Chartered Accountants of England and Wales (ICAEW), told The Scotsman that, despite his members narrowly voting not to merge with the Chartered Institute of Public Finance Accountants (CIPFA) this week, he plans to go ahead with an application to the Privy Council to drop "England and Wales" from its title.

The move has infuriated accountants in Scotland, whose governing body, the Institute of Chartered Accountants Scotland (ICAS), has already protested to the council about the move, with the support of the First Minister, Jack McConnell, angry it contravenes the convention that accounting bodies must carry a national name in their title."

In my view, not only is this pig headed and arrogant policy going to further worsen our relationship with ICAS, at a time when we should be making peace with them; the public argument between the two professional bodies, and negative publicity that this will attract, will irreparably damage the reputation and brand value of the ICAEW.

If anyone on the executive or council of the ICAEW has any sense, they will stop this now.

Merger Rejected

The merger between the ICAEW and CIPFA has been rejected, by the narrowest of margins.

65.7% of ICAEW members, who voted, voted for the merger; less than 600 votes below the 66.7% majority needed to carry the motion.

However, the 37,004 members who voted in favour of the merger represent a mere 29% of the total membership of the ICAEW.

Hardly a mandate for merger!

The close margin just goes to prove that the outcome was far from certain, and that every vote counted.

I am pleased to say that turnout was reasonably good, compared with other votes, 56,326 members (44%) voted.

I understand from feedback at the meeting, that the younger members, who have only recently qualified, were the most keen to maintain the brand value of the qualification that they have worked so hard for.

This puts into perspective the media spin that has been used by some, to portray the "anti merger camp" as being out of touch and "of a certain age".

I would like to thank everyone for their help and support in stopping this misguided merger proposal.

I am very pleased with the result.

The brand value of our qualification has been maintained.

However, there are issues that now need to be addressed:

1 The size of council needs to be cut from its current level of over 90, to 12.

2 Peace needs to be made with ICAS, with a view to merging in the long term.

3 £1.4M has been wasted, members of the ICAEW executive team should now consider their positions.

4 Our relationship with Media Strategy should be terminated.

I will continue to run www.stopthemerger.org, to ensure that these issues are addressed.

Once again thank you for your help and support.

Ken

£1.4M Wasted

According to today's Independent, the ICAEW has spent £1.4M on trying to win the merger campaign.

I would suspect that the figure excludes the fees paid to Media Strategy, the PR firm hired by the ICAEW to persuade us.

However, the article also notes that the ICAEW is preparing itself for an embarrassing climb down; as private polls show that it might lose the vote.

I would like to make this observation, the vote is not over until the polls close; as such it is vital to ensure that everyone votes on this issue.

Please make sure that everyone you know votes.

Thanks for your help and support.

Ken

Just in case you have forgotten, here are a few reasons as to why you should vote against the merger.

I have recorded a short video outlining my personal views about the ICAEW merger proposal.

Please click the following link to watch the video ICAEW Video 10MB.

I also have a "high quality" 22MB version, which you can view here ICAEW Video 22MB.

Reasons To Vote No

• The merger will dilute the brand



• Merging CIPFA and the ICAEW is not a merger of equals, we should be merging "like with like"



• The merger will increase the size of Council, from its current unwieldy and inefficient size of 90, to 115 members



• A two tier membership, as promised by Council, will be confusing to the membership, the outside world and impractical to administer



• Council will renege on its promise to run a dual qualification system



• To hand over control of the governing council of the ICAEW, to a new body, will denude the current membership of its right to veto who can become an accountant



• We should be talking to ICAS about merging, not CIPFA and CIMA



• The ICAEW have mismanaged the merger proposal from day one, by talking to the wrong bodies and by antagonising ICAS over the choice of name



• The Audit Commission has noted that 25% of submitted local council accounts have to be resubmitted, because of significant errors and "significant" departures from UK GAAP



• The mixture of qualifications that the merged body would embrace, would mean that it could not accurately claim to be called The Institute of Chartered Accountants



• The proposal to takeover CIPFA will add only another 13500 members to our numbers, that represents a mere 11% of our current membership. This will not alter the status quo, or increase our standing within the financial community



• If the merger were truly "revenue enhancing", as the ICAEW would have us believe, why did they raise subscriptions by 9% for 2006?



• The ICAEW is meant to represent the interests of its members, yet it is ignoring the membership and wasting our money on trying to convince us of the need to merge with CIPFA

ICAS Update

Mike Hathorn, President of ICAS, has issued another open letter to the members of ICAS; which updates them on the issues surrounding the ICAEW name change proposal.

He starts by saying:

"I have been overwhelmed with the volume of responses in the last few days.."

The full text can be read here ICAS open letter.

The name issue is causing a lot of bad feeling, on an international level, and is something that could have been avoided if the ICAEW had properly thought the merger proposal through.

More to the point, the ICAEW should have conducted discussions with ICAS with a view to merging.

Parliamentary Motion Tabled Against Name Change

Motions are to be tabled at Westminster and the Scottish Parliament, opposing plans by the ICAEW and CIPFA to change their name to 'The Institute of Chartered Accountants'.

The name is the preferred choice of the two Institutes if their consolidation vote is successful.

The moves come after the First Minister of Scotland, Jack McConnell, announced his intention to officially object to the Privy Council about the proposal.

The Deputy Leader of the Scottish Liberal Democrats and ICAS member, Michael Moore MP, is tabling an Early Day motion at Westminster, calling for the ICAEW and CIPFA to maintain the unbroken convention that Chartered Accountancy Institutes carry a geographical designation in their name.

Mr Moore added:

"The change of name should not be approved. There are many 'Institutes of Chartered Accountants' around the world. It would be quite wrong to allow one body to give the impression that there is only one, or that they were the first."

Brian Monteith MSP, the Conservative member for Mid – Scotland and Fife and also convener of Holyrood's audit committee, has tabled a motion which he is confident will attract cross-party support.

He said:

"This proposal is against the interests of ICAS and similar bodies across the globe. The Privy Council should not approve a Royal Charter change that would assert a false sense of superiority to the new body".

ICAS President, Mike Hathorn, welcomed the support:

"This backing at Holyrood and Westminster is an important endorsement for our arguments against this proposal. We continue our ongoing discussions with both the ICAEW and CIPFA to find alternatives to this increasingly unpopular choice of name."

Source ICAS

There is already an Early Day Motion against Media Strategy (the PR advisers to the ICAEW, paid for by the membership).

It is quite clear that this badly thought through, and badly managed, merger proposal is doing untold damage to the name, brand and reputation of the ICAEW.

Those responsible will have to resign once the vote goes against them.

ICAS Stops Fastracking CIPFA

ICAS have announced today that they have closed a scheme which offered CIPFA members fast-track membership of ICAS. Around one in six CIPFA candidates who began the scheme completed it and became members.

The focus in the ICAS syllabus on International Financial Reporting Standards has meant that CIPFA candidates, many of whom have not covered IFRS, can no longer be given the exemptions that made accelerated entry to the Institute possible.

Chief Executive Desmond Hudson said:

"When the course was first offered to CIPFA members, the accountancy landscape was very different. However, the educational content of today's CA qualification has changed dramatically. Unfortunately for CIPFA, it means it is no longer sustainable for their members to benefit from this fast-track entry to ICAS."

Executive Director of Education at ICAS, Mark Allison added,

"We will shortly be contacting our remaining CIPFA students to confirm the transitional arrangements which will allow them to complete their studies".

Source ICAS

ICAEW should take note of this.

Letter From The President

I draw your attention to the open letter written to the members of ICAS by Mike Hathorn, President of ICAS.

In it he explains the rationale for the opposition by ICAS to the proposed name change by the ICAEW, if the merger between ICAEW and CIPFA goes ahead.

One paragraph particularly caught my eye:

"After months of ICAS asking to meet to attempt to resolve the dispute sensibly, talks finally began on 17th August 2005. Although we believe these discussions should have started many months ago, we remain committed, as we have been from the outset, to pursue them honourably and seriously..."

This again confirms one of the main points that I have been putting forward on this site, namely that the ICAEW has mishandled the merger issue from the very beginning.

The issue regarding the name, and the delay in meeting with ICAS, has soured relations with the one body that we we should be discussing merging with.

The full text of the letter can be read here Open Letter.

First Minister of Scotland Backs ICAS in Name Dispute

The First minister of Scotland, Jack McConnell, has given his backing to ICAS's objections to the proposal by ICAEW and CIPFA to call the newly merged accounting body (if they win the merger vote) The Institute of Chartered Accountants.

McConnell is quoted in Accountancy Age as saying that the name would give a "false sense of representational status" to the merged body.

ICAS have confirmed that McConnell would complain to the Privy Council "if required".

ICAS state, in a press release, that:

"..ICAS has been deluged by a membership response from around the world entirely opposed to the name change and is heartened by the support of other Institutes..".

Des Hudson Chief Executive of ICAS said:

"The backing of the First Minister, Scotland's highest constitutional office holder, is terrific news for ICAS and an endorsement of the role of CAs in Scottish, UK and Global business. It is a very important step in ending this proposal.."

Needless to say ICAEW chief executive, Eric Anstee, is trying to push this under the carpet; by saying that "the name issue should not cloud voting".

The failure of the ICAEW to handle the name issue shows just how badly they have thought through the whole merger proposal.

The name issue is a clear example of the failure of leadership and planning shown by the Council, and the executive team, at the ICAEW.

I trust and assume that there will be resignations a plenty, once the members of the ICAEW have voted against the merger.

Vote for change, vote against the merger.