News analysis - Tearing itself apart.

It was a shattering end to a weekend that had started so well for English ICA secretary-general John Collier and institute president Dame Sheila Masters. Attending a function two Sundays ago they had every right to feel satisfied. After a series of council meetings where it seemed any proposal put to council members by the institute executive would be voted down, the three-day long meeting in Northampton had been remarkable for the level of agreement drawn from a previously divided group of minds. Not only had council members backed the controversial proposals to replace the institute’s much-loved General Practitioners Board and BCAB with new ‘member focuses’, they had also been persuaded to put the controversial debate over electives behind them. Last summer members rejected the demands of the Big Five to introduce optional papers into the syllabus. Now, just six months later, Collier and Dame Sheila felt they had truly found a third way: a unified qualification that met the concerns of those members who blocked proposals to allow students to specialise early on, but also one that was sufficiently business friendly to persuade large firms that it could deliver them the multi-skilled financial consultants of tomorrow. If it had always seemed an unlikely conjuring trick, it was at that fateful function that it became clear it was doomed to fail. Ernst & Young, Collier and Dame Sheila were told, would announce the very next day that they would not be putting their annual crop of 300 students through the institute’s scheme with effect from the autumn. Instead they would opt for the Scots. Their worst fears – that the threats of last summer would be realised – had come true. It wasn’t just English ICA officials that were caught on the hop: outside of the offices of Ernst & Young and the Scots ICA, the decision took the profession at large by surprise. But it was only the announcement that was sudden, not the negotiations. Those had been going on at a series of meetings in London and Edinburgh since the electives vote last summer. Ernst & Young audit head, Geoff Norman, said as long ago as last June: ‘It appears the English ICA is unable to deliver what is needed to take our profession forward. We will be giving serious consideration to alternative training approaches.’ But given the massive consultation exercise launched by the institute since then, officials had thought they had seen off that threat. Effectively hamstrung by the intransigence of a majority of their members, they had not. It was a very different John Collier who, on the Monday morning, announced the changes to the syllabus agreed at the weekend, to the one who dealt with the fallout from the E&Y affair on the Tuesday. At the start of the week he had said confidently: ‘We feel much more optimistic about the future of the institute.’ Within 24 hours he was forced to defend it against charges that the withdrawal of E&Y could signal the beginning of a spate of departures by Big Five and other large firms. The big question mark now hangs over the other large firms – the Big Five alone account for 60% of the institute’s annual student intake. E&Y could be just the first in a long line of dominoes. Already, the signs are not good, despite claims by Professor Brian Chiplin, the institute’s director of education and training, that there is ‘no evidence that anybody else will follow suit’. KPMG is another firm looking away from Moorgate Place. ‘Our new joiners are currently strongly mandated to take the Scottish route but many come to us with the understanding that they would receive training via the English institute and we are not in the business of reneging on that understanding,’ says a spokesman, though he is willing to hold out an olive branch to the institute. ‘KPMG,’ he adds, ‘believes that increased competition between the institutes may well result, next year, in an improved offering from the English institute, which has obvious benefits for individuals, the firm and of course our clients. The situation remains under review.’ The message from the firm’s rivals is very much ‘watch this space’ with an increasing number stressing their already close links with the Scots ICA. The biggest of them all counts itself among that number. PricewaterhouseCoopers’ head of assurance and business advisory services, Rodger Hughes, says: ‘We were very disappointed with the failure of the electives vote, but we are encouraged by what we have seen so far from the ICAEW in its attempt to come up with a training programme that is relevant for the future. ‘This has not yet been finalised and until we see it in its final form and understand how it will work in practice we can not make any final judgements.’ In all of this it should not be forgotten that pressure on the English ICA is not just coming from the top. It may simply be a matter of time before we see PricewaterhouseCoopers University offering tailored MBAs to its own trainees, but pressure at the other end of the training market is no less acute. More and more smaller practices are opting for ACCA training principally on the grounds of cost, again eating up a fertile ground that was once the almost exclusive preserve of the English institute. The council meeting that secured support for the institute’s new qualification had looked like the beginning of the end in opening up a new chapter for English chartered accountants. Now it looks like only the beginning of another massive shake-up of all that was once taken as given within the profession. ?: