ICAS Leads The Way

As I have noted on my HMRC site, ICAS have put a very well aimed and targeted boot into the "delicates" of HMRC, in respect of HMRC's Impact Assessment of Business Record Checks.

ICAS are of the view that business records checks could cost SMEs at least 10 times more than HMRC's guesstimate, and will impose an absurd administrative burden on SMEs.

In HMRC's fantasy land each visit, averaging half a day, will cost a business £54. However, ICAS has re-costed an average visit using realistic estimates of business disruption and adviser's time and have come up with a total of at least £560 per visit.

ICAS is also somewhat wary of HMRC's fantasy plans to visit 50,000 SMEs each year for four years.

That would be most assuredly bureaucratic bullying overkill, if HMRC really had the resources to do that. Additionally, ICAS is not particularly impressed with the "quality" of some of the people HMRC will be sending into the field and is concerned about the "intransigent attitudes" of these inspectors.

ICAS say:

"..the bases on which these proposals have been presented seem deeply flawed.

Assumptions made by HMRC regarding the incidence of inadequate business records are unsubstantiated by any detail, and estimated costs of the scheme are massively understated. It was not long ago that HMRC were assuring the Administrative Burdens Advisory Board that interventions would be well targeted to reduce red tape for compliant taxpayers, and we fail to understand why this policy has been changed...

HMRC's basic assertion that poor business record keeping is responsible for a loss of tax in up to 2 million SME cases annually seems to be a sweeping generalisation with little credible evidence provided to back it up. We would like to see evidence as to how this statistic has been arrived at, as the validity of the entire consultation document is based on it. Without such evidence, the proposals might appear burdensome and unjustified.

Experience of our members in practice suggests that poor record keeping (where it arises) does not necessarily equate with loss of tax – it can sometimes result in their clients paying too much tax...

We would take issue with HMRC's basic assumption that SMEs with poor records have chosen to have poor records. This is a misconception. Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape. Typically they don't go into business because of their record keeping skills...

Anecdotal evidence has caused our members to question the skills and professional judgement of some HMRC representatives checking the business records of their clients. We understand that many of these members of staff have no significant accountancy or tax training. This can cause them to be on the defensive, and in these circumstances it is not unknown for them to adopt intransigent attitudes..."

As we can see, an unelected inefficient bureaucracy is allowing the excessive powers granted to it by a weak and incompetent political establishment to go to its head; and is attempting to use these powers to bully people and organisations that pay for its very existence.

Why have the ICAEW not issued not similar riposte to HMRC's plans?

Too Little, Too Late

The ICAEW, and the other professional accounting bodies, have failed in their bid to delay the implementation of iXBRL.

Treasury Minister, David Gauke, responded to the letter issued by the six bodies:

"Having read your letter and considered it along with other representations, I would like you and HMRC to proceed on the basis that mandation of online filing in iXBRL will go ahead as planned on 1 April."

As I noted a few days ago I am "disappoined to see that the professional institues (inclduing the ICAEW) have taken so long to stir themselves..

Delays have consequences!

The iXBRL Issue

I am disappoined to see that the professional institues (inclduing the ICAEW) have taken so long to stir themselves to put up a fight over HMRC's iXBRL implementaion planned for this April.

ICAS did at least red flag it in July 2009.

Kicking Members When They Are Down

From Kevin Reed's blog:

"WHY OH WHY must the ICAEW kick members when they are down?

In the last month the institute has agreed with three of its members that they PAY COSTS of more than £450 each regarding complaints that they entered into individual voluntary arrangements – in other words they were declared insolvent...."

I couldn't agree more, the ICAEW is meant to be for the benefit of the members.

Global Ambition

I see that the Institute of Chartered Accountants of Sri Lanka (ICASL) and the ICAEW have signed a Memorandum of Understanding (MoU), on 25th October 2010, designed to establish closer working relations between the two bodies.

Gerald Russell, ICAEW President, is quoted by dailymirror.lk:

"ICAEW and the ICASL have developed a close working relationship over the years and as a result of this agreement, we look forward to welcoming ICASL members to ICAEW.

Removing barriers for professional accountants across markets, through agreements such as this, is an important part of our international strategy.

ICAEW is keen to work in partnership with accountancy bodies across the world to enhance the profession globally."

Global ambitions are all well and good. However, care needs to be paid by the ICAEW to ensure:

1 That any inter institute membership, if it occurs, will be structured in such a way as to ensure that the brand value of the ICAEW qualification will not be diluted.

2 That, given the recession and high cost of subscriptions, UK members' subscriptions are not frittered away on global ambitions that have little relevance to the UK membership.

What's In a Name?

The official name of our professional body was changed at the beginning of this year to no longer spell out the "Institute of Chartered Accountants in England and Wales", but use simply "ICAEW".

An ongoing discussion on Linked in about the name change indicates that some members are not that impressed, eg Jonathan White says:

"Removing the term 'Chartered Accountant' formalises the opening up of control and use of the organisation to non-qualifieds, primarily the employees. Although in reality this is a situation which already exists as Graham says.

The removal of national terms, 'England and Wales' in this case, has been done to aid the 'globalisation' process they are so obsessed with and inevitably will lead to the ICAEW assisting people abroad to take the work of members here in the UK."

What do other members think?

Advice To The Members of The ICAEW and ACCA

I don't think the comments being levelled by some members of the ICAEW and ACCA at each other, as summarised in Accountancy Age, do anyone any favours.

Size does not matter.

This isn't a pissing contest!

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."

Size Doesn't Matter

Accountancy Age reports that the latest survey of accountancy by the Professional Oversight Board shows that ACCA had 137,233 members worldwide in 2009, up from 131,398 a year earlier. The ICAEW saw member numbers increase to 134,698 from 132,411.

ACCA is now larger than the ICAEW.

Sadly this may be used by the ICAEW as an excuse to dilute the brand by making it easier to join the ICAEW.

A quote by "Peter" on the AA website alludes to the fact that this is already happening:

"If the ICAEW is more elitist as the second comment claims why is it the case that they now allow members of other chartered institutes, ie CIMA, ACCA, to become ICAEW members (through the Pathways to Membership programme) without even taking the exams of the ICAEW after they have been fully paid up members of their own institutes for 5 years.

The ACCA and CIMA would only allow members of the ICAEW to become members of their institutes after passing the final exams of their respective institutes regardless of how many years they have been members of the ICAEW."

EU Branch

AccountingWeb reports that The Institute of Chartered Accountants in England and Wales (ICAEW) has opened its third international branch, based in Brussels, which will bring together all the body's work across the European region.

The new arm will be the ICAEW's third international region and follows the launches of the South East Asia (Singapore) and the Middle East (Dubai) regions in 2009. It will be run by the ICAEW's new European regional director Martin Manuzi.

Not everyone sees the benefits of this, Jonathan White asks "and how much and what exactly are the benefits to the rank and file membership here in the UK?"