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What do the chief operating officer of the BBC World Service Andrew Hind and Des Hudson, the estranged former chief executive of SMG publishing, have in common? Both turned their backs on the ACCA chief executive position just days before they were due to start.
Speculation over why both men decided to jump ship has been rife: disagreements with the then CEO, Anthea Rose; changes to the remit of the job; remuneration. Whatever the reason, the empty hot seat was fast becoming an embarrassment and a thorn in the side of the association.
So ACCA must have breathed a huge, collective sigh of relief when Allen Blewitt agreed to take the position in November. This time things went smoothly. There were no last minute about-turns and Blewitt officially stepped into the hot seat three weeks ago.
Does Blewitt’s appointment mark the beginning of a new era for ACCA? Judging by his demeanour it would seem that way. His approach may be direct, but it’s a far cry from Rose’s single-minded management approach. ‘Let me just say my style is a lot more collaborative,’ Blewitt says.
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His comments will be music to the ears of many ACCA members. But his predecessor, Anthea Rose, is a hard act to follow. During her 11-year reign, she grew the association from a somewhat irrelevant body to a truly global beast. It is now the largest international accountancy body in the world, boasting more than 300,000 members and students globally.
‘There is more to do if we are to be seen as a genuine leader,’ says Blewitt. ‘My big picture view is I’d like us to be influential, because we are making a substantive contribution to the leadership of the profession. We are seen as a large, innovative and responsible major professional body.’
But Blewitt is no fool. He knows he has his work cut out for him before ACCA is seen in the same light as the ICAEW, especially in terms of lobbying power. ‘I think that’s an area where ACCA can do more,’ he says. ‘I would like to see us exercising influence before legislation and regulations are produced.’
It’s an area in which Blewitt claims some track record, most notably in his previous incarnation as director of ACCA’s Asia Pacific region, and before that deputy chief executive of the ICA in Australia.
‘I think, given the size of ACCA in the UK, we would quite rightly say to government: “We deserve a hearing, we represent a lot of members who are working in regional UK in touch with SMEs. You need to listen to what these are saying because they are the grass roots of the economy in the UK.”‘
And the straight-talking Blewitt certainly has his views. In particular he feels the reputation of the profession is the single most important challenge that all the bodies face. And he doesn’t pull any punches. ‘The International Federation of Accountants has brought out a new code of ethics for accountants,’ he says. ‘It’s not enough just to have an ethical code. I think the leaders of the profession and the leaders of business have to establish tone from the top.
‘And if people breach a company’s ethical code, that is just the same as financial misfeasance. They walk ð end of story. Until people treat breaches of ethical conduct with the same degree of seriousness as they treat breaches of financial conduct then we won’t have employees taking ethical code seriously.’ Heavy-handed regulation, in particular Sarbanes-Oxley, is by no means the answer. ‘Sarbanes-Oxley was a classical political response to a financial and accounting disaster. In time, if we talk three to five years out, I suspect we’ll see it as an over-reaction.’
This is not to say Europe has much to brag about. ‘I think that people in Europe who stood on the sideline and threw stones are now having to rethink because we’ve had Parmalat, Adecco, Ahold and so on,’ he says. ‘Now people that were a little holier than thou are having to rethink their position.’
He says that the UK would be ‘horrified’ if a Parmalat-type debacle occurred at home, but adds that the real danger of such a scandal occurring is related to the economic cycle.
‘When the animal spirits of rampant capitalism come to the fore you will find people cutting corners. Don’t assume that regulation per se is the answer to all prayers. It just isn’t. There will always be human frailty that you just can’t regulate away,’ Blewitt says.
But the UK is heading in the right direction. The new Financial Reporting Council is, he says, ‘a much better model’ than its earlier incarnation. He describes the Higgs and Smith reports as ‘quite profound, quite serious minded reviews’. The combined code he sees as ‘fundamentally sound’.
And he makes no bones about the ‘over-reaction’ of the business community to Higgs and Smith. ‘I think it looks a bit pale now when we look at what’s been happening in Europe,’ he says.
He accepts that the UK may move further into line with the US regulatory environment, describing the Security and Exchange Commission’s approach as ‘our way or no way’. But that’s not to say it is necessarily the most attractive route.
‘They may have the most muscle, but that doesn’t make them correct. There’s an industry of people who find their way around rules-based approaches,’ he says. Non-executive directors (NEDs) have an important role to play in the future of corporate governance. ‘They have to be the conscience of the shareholders,’ he says. But in order to be successful they will have to severely limit the number of companies they act for.
‘I’ve seen in Australia a number of very, very capable directors withdraw from companies to concentrate on a very small portfolio. There was a number of very high-profile NEDs who had nearly 20 companies, and that was clearly unacceptable,’ he says. ‘I hope you’ll find institutional shareholders exercising their muscles and saying “that is not viable”‘.
One of Blewitt’s biggest bugbears is the government’s decision to increase the audit threshold to £5.6m. While those in business see the warnings from the profession as self-interest, Blewitt is adamant that there’s far more to it than that.
‘I have a feeling that it’s a nice popular thing for the government to do, to say that we are cutting red tape. What I’m concerned about is that the training ground for audit in small firms will dry out,’ he says.
He is equally scathing of the government’s controversial approach to clamping down on money-laundering and terrorism. ‘On the one hand they’re trying to get auditors and accountants to be absolutely scrupulous in detecting money-laundering.’ He then describes the apparent contradictory decision to raise the threshold for a mandatory audit as ‘a bit of nonsense’.
Blewitt could also become instrumental to the future of any legislation to cap liabilities that the DTI may approve. After just over a week in the job he was already calling for a high-level summit between everyone involved in the debate.
The argument so far has been hijacked by ‘self-interested groups screaming’ and ultimately the debate is going round in circles. His calls have received widespread approval from all corners of the industry.
The CBI conceded there could be value in some sort of large-scale public summit. Charles Tilley, chief executive of CIMA, said getting issues into the open was ‘a good idea’, while David Wood of ICAS offered resounding support to Blewitt’s call for a summit, describing it as ‘the only way forward’. Even the DTI said several respondents to the ongoing consultation had raised the same issue and it ‘would be happy to facilitate’ such a meeting.
Blewitt has already made a commitment to have regular dialogue with the chief executives of the Consultative Committee of Accountancy Bodies. And, as a lover of choral music, he will be hoping that on auditor liability and the profession’s reputation issues, they will all be singing from the same hymn sheet.