The review of disciplinary rules for chartered accountants was always going to be a low-key affair, according to the English ICA executive.
Any proposals for change would only lead to some fine-tuning of the procedures, said new president Chris Swinson, arguing the system was not broken and therefore did not need fixing. A high-powered barrister – Michael Beloff, QC – has nevertheless been drafted in to conduct the review at a cost to the institute of #500 per hour. It might be a small review, but it is obviously not a cheap one.
According to Swinson: ‘The main point of the Beloff review is to make sure the rules we have in place for discipline are consistent with justice. This was never set up to be a grand public consultation and we do not think there’s a lot wrong with the rules, but we have to look to see if we are at the cutting edge. The invitation was circulated only to council members. The arguments are much more delicate than some would suggest.’
A cosy chat, then, rather than a grand debate. But back in February, several councillors called on the institute to take heed of the farcical outcome of the Tim Smith affair (when the cash-for-questions former MP was given a small fine and a reprimand) and conduct a root-and-branch review.
Peter Mitchell, head of the Small Practitioners Association, wants public confidence in the whole process of disciplining members to be restored.
He also has a separate demand that the rights of practitioners in small firms should be enhanced. In particular, he is concerned that many members are deterred from defending themselves because the institute refuses to pay back their costs after they are found innocent.
Council member Douglas Llambias says the relationship between the institute’s disciplinary procedures and the Joint Disciplinary Scheme needs to be clarified. He wants to avoid a repetition of the situation when KPMG in the US refused to take part in a JDS investigation of the Ferranti/International Signals & Control crash.
Mitchell and Llambias also agree that a notice of the review should have been sent to members and other interested parties. ‘After all, they are the people at the sharp end with experience of the process,’ says Mitchell.
There are Swinson supporters. Coopers & Lybrand partner Peter Wyman, who is pushing a massive overhaul of the institute’s education curriculum, backs the Swinson softly-softly line. But former Arthur Andersen boss Ian Hay Davison says the trend away from self-regulation will spell the end of internal discipline in the next three to five years. ‘A review in these circumstances would be a waste of time,’ he says.
Swinson neatly side-stepped committing himself to a long and politically debilitating Royal Commission-type study of the rules at the February council meeting. He asked the council to delegate the task of drafting the terms of reference to the executive and the newly formed professional standards office, and to represent them to council. Mitchell, the principle protagonist, agreed.
Terms of reference were drafted and slipped into the documents for the March meeting. Councillors were told that Beloff would accept submissions until 30 May.
Immediately, Mitchell regretted his decision. The fear that executive members were only prepared to tinker had been realised. A flurry of letters were exchanged with the then president Chris Laine, but to no avail.
The institute remains resolute that a limited review should take place, despite the row that has erupted.
Yet there is hope for dissenters. Beloff has been asked to consider how the ‘content and approach adopted in the disciplinary bye-laws compares with that of other professional bodies’. And the path towards a more open disciplinary process has already been trodden by the ACCA.
It compensates members found innocent and refuses to tolerate firms in foreign jurisdictions taking an obstructive line with its investigators.
No changes to sister firms abroad
As Anthony Booth, an ACCA director, says: ‘ACCA’s bye-laws and regulations are specific in requiring members to co-operate with the association in fulfilling its regulatory function, and failure to comply would lead us to question both their fitness and propriety and may give rise to disciplinary action.’
ACCA, which also holds disciplinary proceedings open to the public, is drafting rules to allow complainants to recover costs where the member is found guilty.
Back at the institute, the Big Six firms have so far ruled out any changes affecting sister firms abroad. They say the marketing of their firms as ‘global’ entities should not be reflected in the institute’s rules. They want to avoid being pushed into signing agreements with their sister firms in other countries that could lead to cross-border disciplinary actions.
Not least, because their sister firms would refuse.
Several council members, who asked not to be named, say the institute will need to fit in with the Review Board proposals for self-regulation which have gone forward to the Department of Trade and Industry if the review is to be a worthwhile exercise. Otherwise, they say, the regulation of chartered accountants will look even more archaic.
The Review Board proposals are secret, but are unlikely to gain approval without following the ACCA line.
But so far the dissenters have been outplayed. They have held a straight bat with their chin in the air in response to a series of googlies from Swinson. The next few weeks will show if they can turn the tables and start scoring some points of their own.
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