RegulationAccounting StandardsMerger: so you think it’s all over…

Merger: so you think it's all over...

Tradition dictates that it takes a decade for merger talks to begin again. but last week's saga is far from finished

If opponents hope the narrow failure of the ICAEW/CIPFA merger puts an end to
concerns raised by the prospect of a super institute, they are very much
mistaken.
On a dramatic day at both Guildhall and Chartered Accountants’ Hall, where both
institutes’ votes were revealed simultaneously, the ICAEW fell agonisingly short
of the two-thirds majority required to push the merger through.

The announcement of the results by ICAEW president Ian Morris, to the 100 or
so members who turned up to have their say and witness the dramatic outcome in
the flesh, left many aghast.

It fell to ICAEW chief executive Eric Anstee to make an indignant, yet
determined, address. The institute, he claims, will continue to push for closer
ties with CIPFA and for consolidation within the industry.

Despite losing the vote, Anstee said he was well placed to make this point.
Indeed, it appears that his frustration at narrowly missing the required
majority will only strengthen his resolve, by bringing together the ICAEW and
the public-focused institute in all but name.

Anstee suggests that some of the most controversial strategies that formed
the merger proposal, such as the potential new name for the institute, and the
formation of an ICAEW public services faculty, could still continue despite
members’ rejection of the integration.

He justifies the importance of continuing to integrate with CIPFA by citing
ACCA’s attempt to seize the opportunity to court the public sector-oriented
institute straight after the merger results were announced.

ACCA chief executive Allen Blewitt said he was ‘sorry’ for CIPFA members
following the voting, but promised to make sure that accounting professionals
working
in this field ‘have the best training and service’, comments that alluded
to the ICAEW’s aversion to CPD collaboration.

Flirting outrageously with the prospect of a CIPFA tie-up, he went on to say:
‘We will happily talk to CIPFA about how we can help them to deliver a
top-quality service that public sector finance professionals need in the 21st
century.’

In a thinly-veiled dig at ICAEW members’ apparent selfishness in not
understanding the reasons behind the merger, CIPFA president Diane Colley
thanked the public sector institute’s members for the pro-merger vote. ‘We have
shown yet again that CIPFA members are prepared to rise above self-interest and
think about the interests of the profession and the public,’ she said.

Her views were echoed by Ashtead-based Roy Foster, a chartered accountant who
viewed the events in Moorgate with dismay. ‘Fundamentally, [ICAEW] members need
to consider what’s best for the profession rather than as individuals,’ he said.

It is hoped that the merger failure has headed off, for the moment, fears
that the ICAEW would move away from the Consultative Committee of Accountancy
Bodies and go its own way on issues affecting the profession.

But while the other institutes see the CCAB as the most appropriate vehicle
for the profession to lobby, Anstee continues to argue for acquisitive-style
consolidation.

One issue, which particularly concerns ICAS and ACCA and highlights the
difficulty the institutes face in working together, has been the ICAEW’s
withdrawal from collaboration on continuing professional development. ICAS chief
executive Des Hudson has called for the institute to come back on board.

The ICAEW’s executives have decided that CPD is a matter of market
differentiation in terms of enticing the new recruits, and therefore the CCAB
has been dropped.
Yet with the bad blood created between the ICAEW and the Scottish institute over
the ‘Institute of Chartered Accountants’ name row, attempts by ICAS to improve
relations are very likely to fail.

Anstee is thought to be still pushing for the ICAEW to change its name to
‘ICA’, while ICAS vigorously opposes any attempt and clambers for the moral high
ground by calling for another meeting between the two parties to reach a
solution.
The ICAEW chief executive has classed ICAS’ strategy of public opposition to the
name change as ‘unpleasant to the profession’.

There are other ongoing issues, too. For example, Anstee admits that small
practitioners’ concern over the tax implications of Abstract 40, the
clarification of revenue recognition rules set to hit small accounting firms,
could have contributed to the ICAEW losing its merger battle.

He believes that many practitioners feel ‘disenfranchised’ from the institute
for not doing more to prevent the clarification having an adverse effect on
practices. ‘Members have looked at that as not supporting them,’ he says.

Meanwhile the ICAEW members who have been vocal in their opposition to the
merger have claimed it failed because members do not want the qualification
diluted, and argue that a bigger institutewould lead to greater administration
without necessarily a bigger lobbying voice.

Bruce Lawson, who has campaigned vigorously against the merger, said that the
result proved that a super institute’s increased weight in the eyes of the
government would have been ‘marginal at best’.

And don’t forget CIMA. Although it has remained aloof from the merger soap
opera, after it ducked out of the initial ICAEW/CIPFA proposals, it is still
open to persuasion, according to chief executive Charles Tilley. The profession
remains in flux, with many questions yet to be answered.

The CCAB has received a body blow following the ICAEW’s pull-out from CPD
collaboration.

The ICAEW has claimed a mandate for change despite failing to achieve a
voting majority set out in its own constitution.

And relations between institutes are more fraught than ever. Expect much more
from this long-running, and bad-tempered, saga.

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