Self-regulation: time’s up

The profession’s last-ditch attempt to preserve self-regulation appeared to be fatally undermined following the refusal of CIMA to present a united front when proposals go forward to the government this week.

The management accountants’ decision to reject key elements of the new regulatory watchdog, to be known as the Review Board, is likely to force the Department of Trade & Industry to end the profession’s right to self-regulation, according to senior figures in other bodies.

Backbench Labour MPs, including Jim Cousins and Austin Mitchell, said it would also spur their campaign to sweep away the old regulatory regime in favour of independent regulation.

Details of the proposals, which leaked out last week, reveal the Review Board will be owned by a foundation and will be made up of four units -” ethics, auditing, investigations, and discipline and review of the regulatory machine. All four units will be limited companies owned by the foundation.

CIMA, which voted narrowly to join the Review Board last summer, has refused to join the ethics unit and the investigations and discipline unit. It argues both these units will be concerned with auditors responsibilities and the costs should be borne by those bodies that regulate auditors.

Senior figures in the profession believe CIMA’s argument is inconsistent given that it wants to join the auditing unit.

English ICA vice-president Chris Swinson, who has drafted the scheme, confirmed the Irish ICA had also pulled out of the investigations and discipline unit. He argued the Review Board met the criteria set down by the government for independence and would be a robust watchdog for the entire profession despite the defections. He added: I don’t think CIMA’s attitude will undermine the scheme in the long run. The focus of public concern is directed at accountants in public practice.’

Cousins said he would make representations to Ian McCartney, the minister charged with introducing Labour’s pledge to create ‘a framework of independent regulation for the profession’.

Leader, page 18.

Related reading