PracticePeople In Practice1998 Review – ACCA merger bid

1998 Review - ACCA merger bid

It wasn't just the Big Five which were busy trying to merge this year. ACCA, home to the nation's certified accountants, was hard at it too.

The association launched a high-profile ten-week campaign, secretly planned for 13 months, designed to woo members of CIMA and CIPFA. ACCA’s aim was to create a single professional body representing the interests of all three bodies.

Unfortunately, CIMA and CIPFA were having none of it.

The campaign got off to a shaky start when 120,000 members of all three bodies received an unsolicited ACCA mailshot – at a cost of #250,000 – setting out the proposal and prompting claims that the association had ignored traditional communication channels.

That, said ACCA chief executive Anthea Rose, was exactly what the association wanted to do. Previous merger attempts had foundered in council wrangles and so, this time, ACCA was keen to discover what grass-roots members really felt before going to the councils.

Within days, CIMA president Peter Layhe had urged members to reject ACCA’s plan for a ‘super institute’ containing business, public sector and practice arms with centralised core functions, although he agreed that long-term rationalisation was a worthy goal.

CIPFA chief executive David Adams, however, condemned ACCA’s bid as ‘misplaced, irrelevant, inept, ingenuous, divisive and dangerous’.

Inevitably, a PR war developed, peppered with claim and counter-claim.

ACCA, which issued a weekly tally of responses and support rates, boasted of 75% backing from 11,500 respondents after just two weeks. CIMA retaliated that 89% of its members registering an interest online opposed the plan.

For the first time, websites were employed as real-time virtual battlegrounds.

CIMA and ACCA in particular slugged it out on the Internet, posting articles, letters and press releases on the Web.

CIMA’s council eventually debated the proposals and its response was predictable – ACCA’s ‘takeover’ bid did not provide a satisfactory base to go forward.

By week five, support for the plan across all three bodies was waning and ACCA’s dissident Reform Group prepared a bid to censure the association’s president Michael Foulds for spending almost #500,000 on promoting the scheme.

The death knell was sounded for the plan a week later when CIPFA rejected the merger, as the mood surrounding it turned increasingly sour. CIPFA president Margaret Pratt objected to ACCA’s ‘megaphone diplomacy’ tactics and claimed less than 20% of her members backed the merger.

It was clearly time for a change of tack. ACCA’s Rose asserted that a merger between the three could take place within two years, and stressed the campaign had highlighted the need for rationalisation. ‘The fact they’re all talking is an achievement,’ she said.

The plan was in its coffin – but it was still twitching. All three sides were agreed on the need to rationalise, and CIPFA chose to poll its members on the matter.

Then came the ‘quiet phase’. Officially, the campaign was over, and it is now widely accepted that ACCA and CIMA have fallen out over the plan.

But behind the scenes, ACCA is understood to be still talking to CIPFA about a way forward. ACCA’s dream may not be dead after all.

Regulation: the government acts

Chris Swinson’s proposals for a review board to regulate the profession reached fruition in 1998 with the announcement this month from DTI minister Ian McCartney that the Department of Trade and Industry would accept Swinson’s proposals for a cross-CCAB foundation.

But getting to this stage has not been easy. It took a government reshuffle and a change of heart at CIMA before there could be a meeting of minds.

What is more, Swinson’s plans, although mostly accepted by McCartney, have by no means been accepted wholesale by the DTI.

The review board, as set out in Swinson’s proposals, is to be owned and funded by an independent foundation and will oversee four areas of regulatory activity – ethics, investigation and discipline, regulatory review, plus a revamped Auditing Practice Board. Each area will have its own board.

But accountants will be in a minority on the key bodies – with a 60:40 split in favour of independent figures. What is more, only one in eight members of the foundation’s review board overseeing all regulatory activity will be an accountant.

CIMA, having raised objections to the plans last year, was still refusing to join the ethics, investigation and discipline units early in the year, arguing that they would be concerned with audit and should therefore be funded by those bodies that regulate auditors. Commentators raised fears that CIMA’s continuing objections would prompt the DTI to end the profession’s right to self-regulation altogether.

But in April, the management accountants’ body finally dropped its objections after ministers indicated that the Swinson plans stood a good chance of success providing all the accountancy bodies signed up to it.

The turning point was crucial.

The plan was given the green light by Peter Mandelson when he succeeded Becket in a cabinet reshuffle – but with the warning that self-regulation would be reviewed after five years.

The penalty for failure would be an imposed statutory framework. In September, Mandelson announced 60% of the board’s members must be independent, representing consumers and public interest.

At the same time, he confirmed that the DTI was putting forward a bill to allow firms of accountants to register as limited liability partnerships.

But the profession will pay a price. Firms registering as LLPs must prepare plc-style accounts and must also introduce appropriate insolvency cover.

At the end of a two-month consultation period, McCartney confirmed DTI acceptance of the Swinson plan, but reiterated warnings that the new regime must be seen to be successful within five years.

Reaction in the profession showed firms had expected a trade-off. ‘Politically, we knew it was not going to go all our own way. McCartney had to prove to his political colleagues that he was no pushover,’ said one source.

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