PracticeAccounting FirmsStill hitting the headlines

Still hitting the headlines

Four years on from the collapse of Enron and you would have thought accountancy news would have calmed down, slipped back into its mundane habits and reacquired its old grey mantel.

But a survey of the year’s news reveals that not to be the case. In fact a
non expert would be hard pressed to find another profession or business sector
in the country where so much was happening so fast.

Listed companies had to come to terms with international financial reporting
standards, new rules from the US on internal controls and the prospect of
introducing a mandatory operating and financial review. Then there was the new
corporate governance guidelines regulating the make up of company boards.

This then was the year in which accountants, whether in business or practice,
were forced to grapple with more new rules than in any other year in recent
memory.

Executives have been forced to adapt, alter their trajectories, invest in new
staff and spend so much time on getting the rules right that they risk
forgetting their primary role -­ that of running the business. Will it be worth
it?

Let’s hope so because it is costing millions. That said, we are a long way
from knowing for sure. As most experts will tell you, if an executive is
determined on wrongdoing, it’s almost impossible to stop him.

If 2005 raised one other big issue it was the future of the Big Four, as
Ernst & Young faced destruction at the hands of Equitable Life. An Equitable
victory would have left the UK with a Big Three and a serious worry about
conflicts of interest and competition.

The immediate threat was averted when Equitable’s case collapsed, but the
question of whether we have enough large auditors remains. The Audit Quality
Forum is set to continue its review of competition issues and there are
suggestions that the Department of Trade wants to see the next tier of firms
grow and take on the Big Four. Officials at the DTI must have breathed a sigh of
relief when it became clear the competition problem would not be worse than it
could have been.

There will be those who claim the year also saw the profession lose two
golden opportunities ­ one beyond its control, and the other within its grasp.

Firstly, the loss of the OFR came after the chancellor’s bizarre decision in
November. Bizarre because of the work invested in it and the consensus that it
could be a force for good.

Secondly, ICAEW members scuppered plans for an institute merger with CIPFA.
There were good reasons for a merger, but the institute has still to make the
business case that will capture members’ imaginations.

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