Ian McCartney is hardly your archetypal Santa Claus. But the trade minister’s early Christmas present may turn out to be the best gift the accountancy profession has been given by any government for decades.
At the moment, some in the profession are rather sniffily examining the contents; weighing up whether they should try to exchange the contents in the January sale. They should not. Instead, they should work with the government to get the system working as quickly and effectively as possible.
The crucial element of this new regulatory system is the effectiveness of the Foundation and the Review Board. The complaints from some – but by no means all – are about the proposed composition of the these two bodies.
The role of the Foundation will be to safeguard the system’s independence and ensure it is working in the public interest. Foundation members will be nominated by the usual representatives of the great and the good – the CBI, Bank of England and Stock Exchange. It is to be a practice-accountant-free zone but accountants are hardly likely to be upset by the names these bodies produce. The nearest thing to radical comes in the shape of the National Consumer Council – the DTI-funded, but independent, UK consumer watchdog.
Below the Foundation is the Review Board, which will have a reviewing role on the auditing, ethics and investigations boards. Among the six or eight board members will be a solitary practising accountant. And the boards themselves will comprise 60% independent members, 40% accountants.
It is this minority role for the profession – and the fact that it will pay for the whole shooting match – which has left some miffed. They grumble that while the framework is self-financing, it is not self-regulation.
But that is the trend – ask the financial services industry.
But, in breaking the link between the payment of the piper and the playing of the tune, the DTI has given the new system the greatest chance of success.
Equally, critics of the profession could argue this is just regulation of a lot of chaps in suits by another lot of chaps in suits.
These proposals are – with the exception of the 60/40 split – what the profession said it wanted and the bodies have been working assiduously but quietly with the DTI over the autumn to ensure a meeting of minds.
This isn’t state regulation – no one wants that. But neither is it the form of self-regulation which has struggled so badly over the last two decades. It is a radical package and hard for some accountants to accept, but accept it they should.
Peter Williams, chartered accountant, is editor of the newsletter Electronic Finance
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