RegulationAccounting StandardsA future in jeopardy?

A future in jeopardy?

UK accounting bodies face challenges often absent from discussion

Such a question and possible analysis is missing from the recent report by
the Public Oversight Board for Accountancy (POBA). Professional bodies face a
variety of challenges that are rarely debated at professional meetings.

Advances in computer technology have harmonised and deskilled many of the
tasks traditionally performed by accountants and threatened their earning
capacity. In response, the professional bodies have changed their syllabuses to
produce more analytical accountants. However, this is under challenge from
universities. Increasingly, graduates with MBA and MSc qualifications hold
senior corporate positions. Such qualifications do not impose annual membership
fees.

The diverse membership of accountancy bodies makes it difficult to formulate
policies that can serve the entire membership. A large number of accountants
working in industry and commerce take their instructions from directors rather
than professional bodies.

In pursuing regulatory matters, government’s paramount concern is to secure
confidence in capitalism. Accountancy bodies are simply a means to an end. Their
future role and survival is of little concern to any government.

The gradual raising of small company audit thresholds means that relatively
few members need to be licensed and monitored. Faced with contracting regulatory
powers, professional bodies have taken to licensing members operating in other
fields, but many resent the accompanying cost and bureaucracy.

Faced with challenges in their home markets, some accountancy bodies have
taken to aggressive expansion overseas. In the short term, this may generate
some revenues and alliances, but will inevitably raise questions about the
governance and regulatory structures. In due course, overseas members would
resent the imposition of policies from the UK.

Buffeted by the possible loss of regulatory privileges, accountancy bodies
have sought refuge under the umbrella of the International Federation of
Accountants (IFAC), an organisation funded and controlled by major auditing
firms frequently implicated in headline scandals. Such an alignment is likely to
further erode public confidence in accountancy bodies.

Major firms may need the professional bodies to advance their agenda through
lobbying and the adoption of IFAC standards. But they have the financial and
political resources to do the same themselves.

Even this avenue does not offer a rosy long-term future for the accountancy
bodies.

Prem Sikka is professor of accounting at the University of Essex

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