PracticePeople In PracticeProfession shocked by ACCA merger plan

Profession shocked by ACCA merger plan

ACCA's decision to go over the heads of the CIMA and CIPFA councils provokes criticism and praise as accountants digest surprise plan for a 'merger of equals'. Lawrie Holmes, Phillip Inman and Damian Wild report.


P> *?Compact? 30-member central council will oversee the new body?s operations

*Three divisions for business (78,000 members), public sector (24,000 members) and practice (18,000 members), each with its own 18-24 member steering committee

*70-member representative assembly to provide forum for all members to voice views

*Centralised core functions, including syllabus and examinations, professional conduct and regulation, and finance and IT, would save ?at least #2.5m? a year to ?be passed on to members in the form of improved and additional services?

ACCA this week took the accountancy world by surprise by launching a direct appeal to members of CIMA and CIPFA to merge with it to create what would be Europe?s largest accountancy body.

ACCA chief executive Anthea Rose said the 14 June mailing to all 120,000 members of the three institutes was the start of a ten-week publicity campaign which would include market research interviews with members of the three institutes.

Rose said the decision to go direct to members over the heads of the CIPFA and CIMA councils was deliberate, although the chief executives of the two bodies were informed in advance. Previous merger attempts had foundered in council wrangles and ACCA wanted to know the authentic views of members before putting its proposal formally to council members.

She said she hoped the proposal would be put to all three institutes? annual meetings next year. It will need Privy Council approval but Rose said the new merged institute could be operational as early as 2000.

In the proposal document, ACCA said the new body, as yet unnamed, would give members of the institutes a better range of services both in the UK and internationally. ACCA president Michael Foulds said the decision was driven by government pressure for fewer institutes and requirements of an increasingly global profession. It would have greater influence with governments and other organisations.

Foulds stressed the new body would be ?an equal partnership? and would not be dominated by ACCA, which has 60,000 members, compared with CIMA?s 47,000 and CIPFA?s 13,000.

ACCA said its plans for governance offered ?enhanced accountability? with a democratically elected 30-member council similar to its own, rather than the co-opting system in the other institutes.

CIPFA chief executive David Adams said there was an argument for a strong unified UK profession in the global accountancy market but feared the ACCA approach risked polarising the profession into chartereds and the rest. CIPFA member Labour MP Harry Cohen said: ?This is not the way to go about it. We need agreement.?

Austin Mitchell, Labour MP, said: ?It is not helpful to start consulting other people?s members before you have agreed proposals with their governing bodies.?

Not least among those taken by surprise by the ACCA merger bid was the English ICA, whose dominance would be threatened by the new institute. As Anthea Rose outlined her plans to the press, English ICA president Chris Swinson and chief executive John Collier were sipping tea at a Buckingham Palace garden party.

Swinson and Collier were left out of ACCA?s party because their members have scuppered merger attempts in the past and the certifieds want to give them no such opportunity this time around.

In its effort to bypass the CIMA and CIPFA councils, ACCA knows it is unlikely to win the support of many institute council members and officials. CIMA would not comment officially at all, while David Adams, CIPFA chief executive, acknowledged ?brief discussions in very broad terms? with ACCA before it announced its plans. ?We feel there are dangers with this approach,? he said. ?It is premature to go to members.?

But ACCA may not be able to count on member support either. ?I don?t think members – certainly in this region – would be very enthusiastic,? said David Worthington, CIPFA?s North-West secretary. ?I can see the advantages of rationalisation in the profession but I still think it is a very, very important place CIPFA has got.?

CIMA council members were nervous about offering opinions before Friday?s council meeting, which will undoubtedly discuss ACCA?s move.

One said: ?I?m in favour of consolidation, it makes lots of sense. But I don?t think many members will take kindly to ACCA taking the lead.?

Council member Rod Davies agreed. ?Lots of mergers in business don?t succeed because they are not implemented properly.? He said he was against mergers ?because competition leads to higher standards?, but could live with it ?if it was a genuine mer-ger of equals?. He added it was unfortunate ACCA had used ?hostile? tactics in its merger bid.

Another council member said the merger was the ?obvious thing to come out of the regulation review?. They said much would depend on reaction at the council meeting. ?Our members will be influenced if the council thinks it is a good idea.?

ACCA members seemed more positive. Gilbert Holbourn, a partner with Saffrey Champness, said he had to qualify as a chartered accountant just to become a partner with his firm despite already having the certified qualification. ?The sooner we get to a unified profession the better,? he said. ?I think we should be speaking with one voice.?

On the face of it, news of the proposals did not faze the chartered institutes. Ian Marrian, ICAS deputy chief executive, said a larger body south of the border would not necessarily make it more inclined to join a UK-wide super-body. ?A merger is certainly not on our agenda,? he said. ?The members have indicated they don?t want it but you can never say never.?

With her president and chief executive AWOL, an English ICA spokeswoman would only say: ?It?s an interesting initiative that Anthea has come up with.?

MERGER ATTEMPTS 1970 An attempt to merge the six bodies into three serving England, Scotland and Ireland failed

1988 Joint working party recommended – Institute of Chartered Accountants of Great Britain

1989 Talks between English and Scots ICAs failed when Scots voted against

1990 Merger discussions between English ICA and CIPFA broke down

1993 Bishop proposals to reduce six institutes into three eventually shelved

1995 Following breakdown of Bishop proposals, English ICA discussed merger with CIMA, aborted after ICA members voted against

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