The French have a phrase for it: ‘The more things change, the more they stay
Talking last week to Michael Izza, the new chief executive of
the Institute of Chartered
Accountants in England and Wales about the challenges he faces and the
agenda going forward, one could not help the feeling of having been here before
– 30 years ago in 1976 when I was half-way through a five-year stint as editor
of Accountancy Age.
The labels are superficially different, but so many of the underlying issues
remain the same, which tells you one of two things.
Either the problems are insoluble or the institute is still struggling to
come to terms with problems, which should really have been sorted out a
Take amalgamation. In 1973 the institute committed itself to create one UK
accountancy body, but lost on the vote because the leadership just could not
carry the members with them.
Smaller bodies were fearful of being swallowed up, while the institute
members thought they were being diluted by inferior beings. Small practitioners
saw it as a big firm plot and the big firms thought what they wanted should
happen almost by divine right.
Between them they missed a golden opportunity and added fire to the smaller
bodies desire to challenge the institute.
Sounds familiar? It should, following the failure of the latest merger
Under pressure from government that wanted to deal with only one body, the
profession created the CCAB, the Consultative Committee of Accountancy Bodies.
That could have been a platform for amalgamation in the future, but what
could have been a force for progress was too often fractious, driven by personal
rivalries and intensely political.
And while they were squabbling at home they lost the opportunity to punch
their weight abroad and provide global leadership.If they had done, we would not
be having to play catch up now.
One could say the same of another current problem Izza faces the challenge of
IFRS, and whether they should apply universally to the smallest as well as the
biggest, and a parallel challenge of fair value accounting – beautiful in
theory, but liable to cause unwelcome fluctuations in practice.
Wind back 30 years and the issue was inflation accounting not IFRS but the
issues were just the same – what happens when elegant theory causes perverse
results, in those days they talked a lot about producing a conceptual framework
for accounting, a complete and comprehensive theoretical grounding for what they
sought to produce in practice, to eliminate such difficulties in the future.
That didn’t happen, though – another opportunity gone.
And there are other issues, from liability reform to protection of the term
accountant, which are also on Izza’s agenda.
But they too were around 30 years ago. It is time, indeed well past time, to
get them sorted.
Anthony Hilton is financial editor of the Evening Standard
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