Many practitioners now approaching retirement can cast their minds back to 1969 and remember the high points of that year. Neil Armstrong took man’s first steps on the moon, Concorde had its first flight, the death penalty was abolished – and Accountancy Age was born.
Back then, Accountancy Age was published by Michael Heseltine’s Haymarket Group, and was the first independent journal for the accountancy profession, circulated free to some 70,000 qualified accountants, including members of the Institute of Cost and Works Accountants (now CIMA) and the Association of Certified and Corporate Accountants (now ACCA).
Non-accountants could purchase the magazine for the princely sum of two shillings.
If you compare that first issue to a recent copy, it is surprising to find that the thrust of the editorial content and the issues dominating the agenda remain virtually unchanged.
The lead story on the first front page concerned a threatened crisis at the Inland Revenue caused by staff shortages and legislative complications. The board of the Revenue had called for a three-year standstill on all tax legislation, while the accountancy profession was demanding simplification and the removal of anomalies and hastily conceived proposals – not much change there then.
Problems caused by the dual role of accountants also featured prominently in an article highlighting the potential conflict of interest when auditors also act as consultants – accountable in the first role to shareholders and in the latter to the board.
This story had been triggered by the concerns of management consultants, who felt under threat as a result of the institute relaxing its advertising rules and allowing firms’ consulting arms to market their services.
Another editorial supported calls from Lord Shawcross, then chairman of the City Takeover Panel, for the accountancy profession to clarify current practices. Shawcross was concerned about inconsistencies in financial reporting, and the fact that the existing limited guidelines were not mandatory. It all sounds remarkably familiar, as the introduction of international financial reporting standards in 2005 looms large.
Then, as now, Accountancy Age included profiles of leading figures in the business and professional world. First under the microscope was Sir Joseph Latham, who had recently left AEI following its takeover by GEC. Ironically, the disputes about AEI’s profit forecasts that Shawcross was in part referring to in his editorial became the starting point for the creation of the Accounting Standards Committee, the forerunner of the Accounting Standards Board.
And as if to prove that some stories never go away, the first issue also contained an interview with ICAEW president Ronald Leach. His most pressing concern was the recent unsuccessful attempt to integrate the various accountancy institutes. Consolidation was, in his view, essential – a view shared by several of his successors, but never by the majority of the members. In 2004, the talks between ICAEW, CIMA and CIPFA are ongoing.
Two other subjects that cropped up during the Leach interview – the possibilities and complexities of incorporation for accounting firms, and auditor rotation – are as relevant today as they were in 1969.
Leach recognised that firms in the future would need to raise capital from external sources to fund their development, and that incorporation would help to protect them from unlimited liability at a time of rising legal claims and escalating insurance costs. Now, discussion is on the merits of LLP status and liability capping.
Leach was open-minded on the subject of auditor rotation and argued that, in his experience, a close auditor relationship with management did not place independence in jeopardy.
Another of his predictions borne out by events is the increasing consolidation of firms and the globalisation of the top few, and clients shifting towards large firms and a single worldwide auditor. He also predicted a near graduate-only profession.
It’s only when you get to the advertising section, presided over in those early days by Maurice Saatchi, that the most obvious differences spring to light, and it becomes clear just how much has changed in 35 years.
Those perusing the recruitment section would see that candidates for the position of partner designate in an accountancy firm could expect a remuneration of £3,000, while some jobs paid a whopping £5,000.
Although back in 1969 very few restrictions were placed on product advertising, the same could not be said of professional promotion. Firms were forbidden from advertising or marketing their services in any way. Indeed, members of the profession were not even allowed to mention the name of their firm in media interviews (although they could give their own names and refer to themselves as chartered accountants).
The changes that have taken place in the last 35 years affect almost every aspect of our working lives, and yet the issues currently exercising the minds of the accountancy profession have changed very little. When Accountancy Age celebrates its 50th anniversary in 15 years’ time, much of the profession might take comfort from that.
Phil Shohet and Andrew Jenner are directors of Kato Consultancy.
News stories you might see in 35 years’ time
- The National Audit Office conducts audits of ‘problem’ private sector companies
- There is one official accounting institute
- The cabinet is populated by accountants rather than lawyers
- International accounting standards are global
- The heads of the FSA and the FRC are political appointments
- The SEC is the regulator of the world’s markets
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