Since then, on the face of it, there’s not been a lot of change. True, tea (and coffee) now usually comes from a machine or from Starbucks, but the names of the firms I looked at all those years ago are still there, more or less, and they still perform the audits of many of the largest companies in the UK.
But the underlying reality is very different. Let me set out some of the differences – not necessarily in order of importance.
Back then, we had the Big Eight firms. Now we have the Big Four https://www.accountancyage.com/tag/big-four/- and they really are big, much, much bigger than the large firms were in 1969. When I started out the profession was almost entirely male.
The figures are improving, with 25% of members and 48% of students of the accountancy bodies now female.
Responsibility for the accounting and auditing standards used by accountants remained with the profession. Now, both are set independently, and international accounting standards (and auditing standards) were a gleam in the eye of Sir Henry Benson, a major proponent of a switch. Next year will see international standards come into force.
Regulation, professional conduct and discipline have all changed. Thirty five years ago they were handled by the professional bodies. The intervening years have seen responsibility switch to the recently reformed Financial Reporting Council.
The president of the ICAEW was usually ‘chosen’ from amongst the senior partners of the big firms. These days, the ICAEW president is elected from council by council, and both CIMA and the ACCA have appointed their first presidents from outside the UK.
Three decades has also seen a transformation in the career options for qualified accountants. ICAEW members once worked almost entirely in practice.
Now, nearly half work in industry and commerce, and across all the UK professional bodies only some 70,000 out of a total of more than 320,000 work in practice.
Accountancy qualifications from most of the bodies were seen as enough for whatever you did afterwards, back in the late sixties. Now, specialisation and more qualifications are necessary. The days of the real ‘general practitioner’ are largely behind us.
There has been constant talk about the structure of the profession. There was once talk of merging nearly all the UK’s accountancy bodies to create one ‘British’ Institute. After many failed attempts at merger over the years, the idea of some form of realignment of the bodies is being revisited.
Ironically, the profession was under fire at the end of the sixties as well. An article in The Guardian in October 1969 was headlined ‘Auditors under a cloud’ and went on to observe that ‘… on two separate occasions recently the accuracy of auditors’ reports has been questioned in public.
‘This is obviously a highly unsatisfactory situation, and unless steps are taken to restore faith in our auditing firms by ensuring that they really do act as shareholder’s watchdogs, a major row will break which will do the accounting profession lasting damage’.
Now, accountants are working in the aftermath of Enron, Parmalat and a profession that is fighting back. Plus ca change …
But what will be the shape of the professional practice in years to come?
The business models of the Big Four will evolve as they always have done.
The larger practices have been incredibly robust and adaptable and I’ve no reason to think that they will not adapt again. In the current environment, auditors have to be seen to be truly independent and do no other work for the companies they audit – but they can still do lots of other things for those that they don’t.
The next tier of firms is undergoing huge changes right now. Some are picking up the crumbs from the Big Four, others are developing their own niches and others again are looking at more commercial alliances or bringing in a more corporate culture as a consequence of a stock exchange quote.
This is the part of the market hardest to read but the signs are that more consolidation is on the way.
And smaller local practices are much more specialised than they were and are likely to be more so in the years to come. Some of them are immensely successful and generate a good living for their owners. Others are much the same as 35 years ago, but with less emphasis on audit and accounts preparation work. IT has taken the drudgery out of accounts preparation and the better firms have moved to provide added-value services.
For me the future of the professional practice is as bright as ever.
The best will continue to combine business skills in running their affairs with professional knowledge used in helping clients. They will remain well-respected and prosperous. Others will be slower to adapt and less prosperous. It has always been that way.
I’d love to write a similar piece to this one in 35 years time, but somehow I think that a current student with PwC is more likely to do so. I am confident that our profession will still be around – changed but still there – perhaps even with some of the same names?
- John Collier is director of Glenn Irvine International Executive Search and a former secretary general of the ICAEW