Three-way regulation

The key feature of ACCA’s model for a new body for the profession issed ‘umbrella’ approach. three specialist divisions – for business, practice and the public sector – operating under an umbrella council concerned with the public interest and professional standards.

We considered a number of possible structures but are in no doubt that the one which we have put forward offers the best balance.

On the one hand, it maintains the highest professional and technical standards and provides effective regulation across the profession; on the other, it will deliver better value to members and invest in the new ideas, new skills and new technology on which future success will depend.

CIMA has described the ACCA model as a ‘hybrid’, and has proposed instead that there should be separate groupings for the regulated and non-regulated parts of the profession.

This was not a view which it held when it sought to merge with the English ICA just two years ago. Nor is it consistent with another argument advanced by CIMA president Peter Layhe, when he warns that the establishment of two bodies will ‘create a polarised profession’.

CIMA members are being asked to support two mutually contradictory arguments. Furthermore, the argument for two sectoral bodies does not make sense; indeed, it signals the view that management accountancy is not really a full part of the profession.

Regulation is the raison d’etre of professional bodies; without it, they are mere trade associations or representative organisations. The key role of a professional body is to specify appropriate standards of conduct and practice and, where its members fail to meet those standards, to take suitable disciplinary action.

Everyone subject to regulation

CIMA’s position implies that it sees this role as relating primarily, if not solely, to auditing and public practice. ACCA disagrees.

These issues affect all professional accountants. All of us – not just those working in statutory areas – must operate to the highest ethical and technical standards and must be subject to effective regulation.

All aspects of accountancy – financial management and reporting as well as the audit process – must be subject to a framework which ensures the quality of our work and enhances the standing of the profession. CIMA’s proposal to restructure the accountancy profession into regulated and unregulated groupings risks marginalising many members as second class.

Through its governing council, the new body will ensure there are appropriate requirements for all members. The council will set the standards of competence and practice expected of them.

It will oversee the development and maintenance of an appropriate ethical and technical framework and the new body’s regulatory and disciplinary functions.

It will ensure that, whether they work in practice, business or the public sector, members of the new body all operate to the highest standards of probity, competence and expertise.

ACCA recognises, of course, that within the overall standards framework, those working in different areas have different priorities and interests.

Hence the proposal for three separate divisions, each providing services and communication to its own membership group. Practising accountants already pay separate and additional fees for their practising certificates to offset expenditure on statutory regulation. This will continue in the new body.

Employment trends suggest that the number of self-employed consultants is likely to grow over time. The whole world of work is changing. People no longer stay with the same company for life.

Accountants expect their professional body to support them throughout their careers. A merged body with the accumulated experience of regulation, training and support for public practice will be better placed to support CIMA’s 1,500 practising members, as well as those who move from traditional management accounting roles to self-employed consultancy.

Splitting the profession into regulated and unregulated sectors would reduce flexibility. A member embarking on self-employed consultancy work after a career in industry, or one who wished to move out of practice perhaps to join one of the companies which had used his or her firm’s services, would have to resign from one professional body and join another.

By contrast, ACCA proposes a qualification structure which will be both relevant to individual sectors and transportable across the profession. Against the background of new employment patterns with more job mobility, the new body will provide both a variety of routes for those who wish to enter and advance in the profession, and the ability to move between its various branches.

Business acumen is essential

Financial managers are increasingly required to take on more strategic roles; they need well honed interpersonal skills, marketing abilities and business acumen. But, a professional accountancy qualification still provides a valuable position on the corporate ladder.

And, if they are to compete on equal terms with MBAs and corporate treasurers, the standing of their professional body will be crucial. The new body’s standards of conduct, ethics and competence and the overall reputation which derives from its regulatory function will ensure their qualification has that necessary edge.

David Leonard is chairman of ACCA’s merger task force.

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