Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Time to go legal? By Dan Martin

by
6th Oct 2006
Save content
Have you found this content useful? Use the button above to save it to your profile.

Dan Martin

Earlier this year, the Irish government said it believed there was merit in giving legal recoginition to the term 'accountant'. Dan Martin asks AccountingWEB members whether UK ministers should follow their Irish counterparts' lead and give the professional legal protection.

The term 'accountant' currently does not have legal protection in the UK meaning anyone can set themselves up as an accountant. This has led to calls from various groups to give legal recognition to the profession. Earlier this year, in the Republic of Ireland ' where the situation is the same as in the UK - trade and commerce minister Michael Ahern confirmed the government believed there was merit for giving the recognition the pressure groups demand. In a statement, Ahern said that the Irish Auditing and Accounting Supervisory Authority (IAASA) had reported to him on the results of its deliberations on the issue. "The underlying difficulty", the minister said, "and the reason for asking IAASA to look at this question, lies in the absence of a legal or uniformly accepted definition of the term "accountant". This, allied to usages such as, for example, 'turf accountant' creates an inevitable looseness such as to allow persons to style themselves as 'accountants' who do not, perhaps, have any underpinning qualifications, with obvious implications for the general public".

Responding to Ahern's comments, the Institute of Chartered Accountants of Scotland (ICAS) urged UK ministers to follow Ireland's example. ICAS chief executive Des Hudson said: "Protecting the term accountant isn't about protecting the interests of the profession ' it is first and foremost about protecting the public from unregulated and unqualified cowboys who currently are able to describe themselves in the same way as our highly qualified CAs."

But is ICAS right? Should the UK government afford legal recognition to the accountancy profession? If so, what benefits would it bring? Offering legal status term for the term of accountant legal may be a positive step, but are there other issues which the profession needs to address? Is the real problem that there are too many qualifications offered by too many institutes and associations? Is it time for the accountancy bodies to agree on a limited range of qualifications ' one for business and one for practice ' which would lay the foundation for legal recognition. We put those questions to AccountingWEB members.

To regulate...

Several members agreed that regulating the term 'accountant' is necessary and would bring significant benefits. Gary Taylor related a story of how when he took on the accounting and tax affairs of a company, he was hit with various problems when he tried to contact the firm's previous accountants. "It...seems the individuals who presented themselves as partners of XYX & Co Certified Accountants were members of ACCA but did not have practising certificates. They claim that the business cards they presented at the meeting with the client were misprinted with "Partner" and it was really two other individuals who were the partners behind XYZ & Co Certified Accountants," he said. "However it now seems that these two individuals were not members of ACCA so no help there from the Institute. It has been suggested that since the firm doesn't advertise as XYZ & Co Chartered Certified Accountants then the firm is not bound by the rules of ACCA."

Taylor said his experiences show "a clear case of the unregulated use of the term "accountant" being used inappropriately and without any sort of responsibility as to quality of service offered."

"Bob" agreed that some form of control is needed, particularly in the public practice sector. He said with no regulation, the public are often confused. "How on earth are they supposed to distinguish between one "accountancy" practice and another, let alone turf accountants," he claimed. "I have no doubt that there are some very good non-qualifieds around but I do have to ask myself if they are so good why don't they take the extra step and get the qualification? I do believe that at very least there should be some sort of central registration or licensing of anyone holding themselves out to the public as an 'accountant'."

Nick Paulley, director of Chartax Accounting and Taxation, said recognition of the profession would help to provide clarity in the marketplace. Many of the public are not aware accountant is not a protected title so are shocked when they discover their accountant is not formerly qualified, he said, while qualified accountants have professional expenses insurance to cope when things go wrong. "A number of unqualified firms charge ridiculously low fees for work but compete in the same marketplace," he said. "I often make the point that a good accountant could always go and get a job for £50K+ so they are unlikely, if they are any good, to try to earn less when they are self-employed. Recognition of the term accountant will at least put the different fee levels in perspective."

Alastair Harris agreed that regulation is necessary. "I find it difficult to believe that it is possible to practice as an accountant without any formal qualifications," he said. "You have to accept that to practice as a lawyer or doctor then qualification is required. [It] should be the same for accountants."

Stephen Kendrew, from Newcastle-under-Lyme based accountants SHK, said accountability is key. He acknowledged that many 'unqualified' accountants do good work but more accountability should be introduced. "The advantage of having a qualified accountant is that they are accountable to an institute and have PII if they get things wrong. This does not always apply to unqualifieds. The worst examples of accountancy I have seen (over my 25 years or so in the profession) have been from unqualifieds and the client usually has nowhere to go other than pay someone else to put things right."

"By all means allow unqualifieds to call themselves "accountants". In my experience many of these give a very good service to their clients. But, there needs to be more accountability, and compulsory PII, to weed out the ones who are incompetent and have no right to call themselves accountants."

Or not to regulate...

In contrast to those members backing legal recognition, others disagreed saying it is not necessary. Neil Wilson, director of West Yorkshire-based Aldur Systems, said he did not see where a problem existed as the systems were in place for dealing with negligent accountants. "If somebody does a bad job then you sue them for professional negligence," he said. "The courts have a high standard requirement for anybody who claims to be acting as a professional and are not shy at awarding the necessary damages. If accountants can't justify what they do, and the quality of the qualification in the market place then they deserve to go bust - just like their clients have to if they fail. Regulation should always be a last resort."

Debate in this issue often focuses on 'qualifieds' versus 'unqualifieds'. In his response to the Irish government's move on legally recognising accountants, ICAS chief executive Des Hudson referred to it as helpful against "unqualified cowboys". Several members however argued that there are many unqualified accountants who provide excellent services. One of them was Dave Collier, finance manager for Horton Housing Association. He said many people are put off from taking qualifications because of an increase in regulation, bureaucracy and cost. 'It is true to say that many newly qualifieds are less competent than many unqualifieds who may be "qualified by experience" so what is the value of a qualification?," he said. "My main job is running a £3.5m turnover group and I do a bit of private work as well and call myself an accountant. If I had to pay to be a member of a professional body I wouldn't be able to work for small clients without charging a lot more. If clients think that they will get a better service and better protection with a qualified accountant they are free to choose. Solicitors have a dismal reputation for client service as does their governing body - do we really want to emulate them?"

Get our house in order

If the words of many of our members are to be believed, it is likely that giving legal protection to accountants will bring many benefits to the profession. However, before such a move is made, the profession may need to address other issues to provide the foundations for legal recognition. Many people argue one of the issues is to limit the range of qualifications on offer to provide more clarity in the industry. On that point, Jhatish Mande asked: "Why have no many accountancy bodies?"

"We cannot justify regulation unless we put our house in order - each CCAB body has its own CEO, office, exams, and often members speak derogatively of members of other CCAB bodies," he said. "The only reason I can see for having so many accountancy bodies is so that the officers can keep their jobs. There is nothing a joint body cannot do which is currently done individually. Dare I say it, cutting this duplication this may even result in low subs for us all."

Chartered accountant Simon Lever argued that before dealing with legal recognition for the profession, the issue of merging accountancy bodies into one must be dealt with. He related how his father, also a chartered accountant, voted in 1948 for a merger of the existing accountancy bodies. The result went against the proposal. "Until there is one body which talks for the profession, the public, and most businesses, will not understand what the profession stands for and its integrity and standards," he said. "If the vote in 1948 had gone the other way, within 20 years there would have been one voice for the profession and it would have made the whole profession a respected one in the eyes of the public."

"Those without qualifications should be afforded some way of being recognised for the work that they do - the majority of which is to the same standard as most qualified firms. There does however need to be a cut off point after which anyone wishing to use the name accountant must prove his/her worthiness to do so, either by way of qualifying by experience or by membership of an accountancy body."

Jason Holden, principal at accountancy practice Holden Associates, also argued that the accountancy institutes and organisations have a major part to play. "I feel the Institute's moves are more about protectionism than for the benefit of the public," he said. "Currently a visit from the Institute only covers have you got the right files and engagement/disengagement letters etc in place, no check is made of actual ability and quality of advice, and until that it is also looked at these visits do not ensure anyone who qualified some 10, 20 or 30 years ago is necessarily better than someone with 10, 20 or 30 years experience."

"I am sure the debate will go on, but if it truly is the public the institutes are seeking to protect, then the best method of protection is knowledge, and make sure people know that not everyone who calls themselves an accountant is professionally qualified, and let the public decide who they want to use."

To view the original comments in full, click here and here.
Tags:

Replies (10)

Please login or register to join the discussion.

avatar
By danbywiske
19th Oct 2006 10:42

ICPA needs support from all ........ why?
I wonder how many of you remember when the CIOT was young... you could join just by proving experience, or by submitting a 5000 word thesis on an aspect of taxation (for fellowship).

It pulled people in, gained in stature, and then moved to a 2 level exam, which split with the first part going for the ATT.

From this the body developed in reputation until it gained chartered status.

At present you can join the ICPA only if you have a minimum of 5 years practice experience (as a member) or as a student if you are emplyed in accountancy or studying for a recognised accountancy qualification.

If the industry is to be regulated in any way then we all should support and promote the ICPA to make it the recognised minimum starting point for operating as an accountant. With all qualifieds and all decent unqialifieds backing it there would be the funds to promote to the public (and lobby government) that not ICPA means not an Accountant.

Then, like the CIOT the ICPA can develop, ensuring a minimum standard has to be achieved by anyone in future who wishes to call themselves accountants - the other professional accounting bodies can then continue to promote themselves as higher qualifications (or merge together as many members have been asking them to do for many years).

For information - i'm putting my money where my mouth is and applying to join the ICPA in addition to my other institute memberships.

Thanks (0)
avatar
By Essex FCCA
19th Oct 2006 16:56

Public perception
We all know that there are good "unqualified" or "qualified by experience Accountants" and bad qualified Accountants but it would probbaly be fair to say that overall and in percentage terms, there are more bad unqualified Accountants than bad qualified Accountants.

What I believe is the most important aspect is that of public perception. If someone calls themselves an Accountant then the ordinary man in the street may in many circumstances think that person to be qualified even they are not, even if they are not holding themselves out to be qualified.

Why not therefore let anyone still call themselves an Accountant but if they are not qualified, make sure that it says so on all correspondence and advertising. This way the public and potential clients are fully aware and can make a fully informed decision on whether to engage someone's services.

Thanks (0)
avatar
By AnonymousUser
07th Oct 2006 09:44

What about the end result?
The term accountant has become part of the language but interestingly it does not exist in MOST languages in the world.

But whether it's legal or not, I think the most important factor or point might be the end result of the accountant's work... which should be helping the client contol his finances better.

The thinking here seems to go toward legal responsibility when things go wrong - legally wrong. Shouldn't there be some qualification based on what clients want and their view on what they receive?

Or is the clients' view totally irrelevant to this issue? Pray tell my learned friends... ;)


Best wishes
Harry Kafka
http://www.accountancymarketing.co.uk

Thanks (0)
avatar
By AnonymousUser
08th Oct 2006 09:16

Existing unquals need not worry
Very much like when auditing was regulated, any existing people in practice would have to be brought into an umbrella professional body.

I do not think that ICPA et al need to be concerned by this development in the UK.

Everyone I have spoken in the lobbying process recognises that existing unqualified practising accountants would have to be able to continue in business.

However, in future, I can see that you would need as a minimum AAT PC to practice (for many non-audit clients I believe that the AAT qualification and PC will be sufficient).

I dont think many people 'in power' are talking about CCAB body members only.

Thanks (0)
avatar
By nickja
06th Oct 2006 12:06

defining "accountants"
The argument shouldn't be about protectionism because the ability to pass exams and pays subs doesn't make a person an effective accountant. Nor should it be about alienating those, qualified or unqualified, who do a good job for their clients. Surely, it's all about protecting potential users of accountants from cowboys, regardless of qualification?

Trying to educate potential users as to what they should look for in an accountant - and the alleged protections inherent in using someone governed by a recognised body - just doesn't work. If it had, this argument wouldn't have gone on for as long as it has.

And suggesting that a local plumber screwed by poor service can resort to the legal system completely ignores the fact that our legal system is beyond most people's financial range.

2 suggestions that might help people looking for an accountant:

1 Anyone using the title accountant/offering accountancy services must carry professional indemnity insurance, display the current certificate, as with other forms of liability insurance, and quote the policy number on his/her letterhead.

2 Develop and publisise an easily understood "kite" mark - available only to those "accountants" who can produce a minimum of say 20 positive client testimonials and who are not present on any HMRC blacklists (as if such things would exist!). Not sure who would administer this -local trading standards?

Protecting the public is what this should be about and that's not something I'm convinced professional institutes are capable of seen to be doing.

Thanks (0)
avatar
By pauljohnston
06th Oct 2006 18:11

Good Accountants or Not
Just one point not covered by any of the comments that I have seen is the level of competence. Despite reading about unqualified which I am and in the process of starting the climb to full qualification at aged 50 years (ACCA). I have come up against poor work by qualified accountants even to the extent that Company Accounts don't cast up. What I would like to see is a regular compentency check for diffferent levels accepted by ALL the professional bodies. This would then make it easy for the public to choose whom they wanted. We (accountants)are responsible to get shot of the cowboys.

So how about it - rather than trying to tie up the word Accountants and letting politicians screw it up!

Thanks (0)
avatar
By slarti
06th Oct 2006 13:37

Control needed for the protection of the young
My niece has just started work with a company, and thought that they were training her to be an accountant.

What they are actually training her to be, I eventually dragged out of her and her mother, is an accounting technician, but the term accountant is the term casually used by many who are offering accounting technician training, and by quite a few of those who have the AAT qualification.

In my experience these people do not have the training or experience to call themselves accountants, but have been persuaded by the people selling the courses that that is what they are.

I am a QBE company accountant, having been the company accountant for a number of companies over a number of years and would quite happily change that term to commercial manager or financial controller, both terms used by past employers for the post of company accountant, if it stopped people being duped into thinking that they are going to become an accountant by taking AAT.

Thanks (0)
Tony Margaritelli, ICPA Chairman
By Tony Margaritelli
06th Oct 2006 12:12

Accountants Under Fire
We at the ICPA have monitored the situation regarding the protection of the term Accountant and indeed Acountancy Services for some considerable time.

We have noted the disparaging terms used by the Chair of the ICAS and others to those Accountants who are not members of a CCAB organisation and we are totally opposed to the protection sought.

We are constantly confronted with comments about "Public Interest" and how this whole drive for protection is to safeguard the public and definately not to appease the organisations general practice members because they have done so little for these members in recent times.

No evidence of public unrest has been provided save for the usual postings about the quality of work by unqualifieds when new clients are taken on.

This of course cuts both ways as we all know.

Our website at www.accountantsunderfire.org.uk has been generating a great deal of Interest and has provided us with a significant amount of data to use should this drive for protection proceed.

Thanks (0)
avatar
By danbywiske
03rd Nov 2006 11:11

Regulation
I agree with Huw Baker, but regulation should be done properly.

The idea is to ensure that those giving advice/preparing accounts are qualified to do so, therefore to regulate properly to give accountancy advice you need to have a recognised accountancy qualification, likewise to give tax advice you should be a chartered tax advisor, and for management advice you should be a member of the chartered management institute..........

Hands up how many accountants (qualified or not) give tax or management advice WITHOUT having any qualifications in those fields? you cannot expect to regulate one patch whilst offering unqualified advice in other areas .... its called having a level playing field.

Making a mistake when adding up accounts is minor compared to giving poor (or bad) advice for tax planning or developing the clients business. On behalf of those of us who have spent time money & effort to extend our qualifications I propose that we first try to get Tax & business planning regulated (since thats where most problems arise from), and only when that is done do we move to regulate the provision of accountancy services
(its called getting your own house in order before moaning about the neighbours)

Thanks (0)
avatar
By frauke
24th Nov 2006 12:40

Who thinks it is required - the Public or Accountants?
I and I suspect pretty well everyone who has had to dealt with Estate Agents understand why people feel they need to be regulated. For the same reason we all understand why investment advisors found themselves regulated with the advent of the Financial Services Act.
But Accountants? How often do we hear about "rouge" unqualified accountants, that cause havoc with their dealings with the General Public?

The only complaints that occur seems to be against the qualified, Chartered or otherwise. I consider they are already regulated well - as by the numbers of disciplinary cases that do go forward to the various Institutes. Of course there are those that committ criminal offences, but that makes no difference if you are qualified or not.

It is only when the public at large is put at risk that we need to worry - and as far as I can see, it is only the profession that seems to think there is a problem.

Thanks (0)