(Prem Sikka, Professor of Accounting, University of Essex)
(The Accountant, March 2000, page 14)
After the 17th February extraordinary general meeting, the leadership of the Association of Chartered Certified Accountants (ACCA) might allow itself a brief smile. However, bigger challenges from the policies of the state, the impact of IT and an expanding membership will not be so easily negotiable.
By acting as a statutory regulator of the UK auditing and the insolvency sectors, ACCA has become an arm of the state.. The state is now a key player in its future survival. Under the weight of deregulatory ideologies, the government is reviewing small company audit thresholds. The informed opinion is that the turnover threshold will be raised from £350,000 to a million pounds, and eventually to the European Union requirement of £4.2 million.
As a result, very few ACCA members will need to be licensed to carry out a statutory audit. ACCA’s role as a regulator and social status will be diluted.
In the insolvency sector, the Association is one of the UK’s eight regulators. It regulates just over 100 practitioners. It is vulnerable to political concerns about efficiency, economies of scale and consolidation of regulators. In pursuing regulatory matters, government’s paramount concern is to secure confidence in capitalism. Accountancy bodies, in their regulatory capacity, are simply a means to an end. Their future role and survival is of no concern to any government.
In managing its diverse membership and student body, the Association has opted for a centralised model. Rather than regionally autonomous councils within a United Nations type of structure, the control is exercised from London. It imposes policies about regulations, discipline and ethics that apply to western, eastern, Islamic and other members. The tensions are obvious.
Since 1996, non-UK members sit on ACCA council. However, the council’s main strategy is about ACCA presence in the UK. The geographical composition of the membership is changing rapidly. Nearly 50% of the 72,000 ACCA membership is now outside the UK. More than 70% of its 165,000 students are outside the UK. The growth in membership will be outside the UK.
An identity-crisis will deepen. Members in Hong Kong, Malaysia, Australia and the USA are demanding more autonomy. Members in Malaysia have launched two rebel Internet sites but the ACCA leadership does not want to devolve real power. Instead, it created an International Assembly, a talking-shop with no real power to take decisions.
In the face of rising nationalism and maturity that encourages people from emerging economies to develop their own social infrastructure, ACCA’s strategies are now limited. It can continue with centralised control and alienate the local membership, which would probably drift away, or be poached by fast developing indigenous accountancy bodies.
Alternatively, it can create locally autonomous councils with the prospect that they will, in time, declare independence from London. Either way, the prospect is that the Association will splinter.
In 1998, the Association launched an unsuccessful hostile take-over bid for two rival accountancy bodies. The idea of combining three or six accountancy bodies with very diverse membership is highly complicated. Whichever way the future consolidation of the profession crumbles, the scenarios for the ACCA are negative.
The future consolidation of the profession (whether in the UK, or the European Union), if any, is likely to be on functional basis, possibly separating accountants in industry and commerce from the rest. The public practice wing probably splitting into those who carry out large company audits and the rest.
Most UK accountants work in industry and commerce. Increasingly, through the provision of MBA and MSc qualifications, the universities are challenging the traditional value of professional education. Most accountants working in industry value letters after their name and are not concerned whether they are from universities or the accountancy bodies. Their loyalties are to their organisations and not to ACCA - or any other accountancy body.
Major accountancy firms have little need for any accountancy body, other than possibly as lobbying fodder or as providers of low-cost education. Such functions can be performed by accountancy firms themselves. Major firms have the lucrative consultancy sector in sight. ACCA members have little presence at this sector. Most ACCA practitioners are at the lower-end of the market, dealing with small company audits, book-keeping services, tax returns, VAT returns and related activities. They have to compete with software packages which are getting cheaper and easier to use.
Faced with the disappearance of niches, such as small company audits, and the impact of competition (e.g. IT), ACCA practitioners will find it hard to secure real increase their incomes. They are likely to demand lighter regulation and thus further challenge the social position of the ACCA. None of the above scenarios accommodate the ACCA’s non-UK membership.
The next decade will pose major challenges to the ACCA. The prospects are of a diminished social status, possible splintering of the membership and a decline in the income of many ACCA members.
The membership needs opportunities to freely debate the issues. But this is almost impossible. Alternative voices are demonised and attacked. The ACCA’s in-house magazine is censored. It rarely publishes any critical articles or letters. Members are excluded from council meetings and cannot question council members about their strategies. They do not directly elect the leadership and hence have little opportunity to influence future policy directions.
The proposed bye-law changes will make it harder for concerned members
to organise EGMs and call the leadership to account. So the prospect is
of a weaker ACCA.