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Cat burglar
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A shameful time to be an accountant

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With the profession rocked by three recent reports into scandalous failures, Philip Fisher is considering retraining in a more socially acceptable profession, such as cat burglary.

28th Jul 2022
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On the day that I became a fully qualified accountant, I couldn’t wait to tell everyone I knew – not to mention various random passers-by – that having negotiated a series of tough examinations, I had graduated to one of the most respectable professions that the nation can offer. Now, if someone at a dinner party asks me what I do, there is going to be a temptation to change the subject or, if pushed, claim to be a second-hand car salesman or maybe even a cat burglar, rather than admitting the sorry truth.

What has become of a once highly regarded profession? On AccountingWEB in the past week, three stories, each emanating from the soon-to-be defunct Financial Reporting Council (FRC), have trashed our industry.

Poor sample audits

First, their annual report on the inability of major firms to carry out basic audits took for granted the weaknesses long recognised in the Big Four (who, to be fair, are showing signs of improvement) and turned the spotlight on to BDO and Mazars.

One can always celebrate the news that the quality of auditing is improving. This year fewer projects failed to come into the categories of either good or requiring limited improvement. The problem is that 25% of all sample audits carried out by the leaders of our profession still failed to negotiate even this very low bar.

Impressively, Mazars only managed to carry out 62% of audits to this standard, while the BDO score wasn’t too far above half. In other words, approximately 40% of the sample audits were poor.

The ultimate measure is those that needed significant improvements and, in case anyone does not have the time or desire to read the report, three of the eight Mazars audits reviewed and four of the 12 from BDO fell into this category. That is shocking.

It must also put into question the proposals to improve the quality of FTSE 100 audits by appointing mid-tier firms to work alongside the Big Four.

Cheating in exams

In recent months, AccountingWEB has reported on a succession of scandals involving the Big Four in North America. Each of these resulted from cheating on examinations on a very large scale.

According to Securities and Exchange Commission (SEC) reports, it appears that these took place on an institutional basis and, in an effort to head off stand-up comedians by being more ironic than they could ever manage, the most recent efforts by EY centred on cheating in ethics exams.

In each case, these have resulted in multi-million-dollar fines, although it isn’t apparent that very many heads have rolled. As always in these situations, you can be pretty sure that any job losses would be in inverse relationship to seniority.

As a response, the FRC has felt obliged to send letters to the CEOs of tier 1 audit firms and professional bodies seeking assurances from audit firms and professional bodies in this country on exams cheating. That is a terrible indictment of their lack of trust in the morality and ethics of those running the UK accountancy sector.

Fraudulent documents

Completing the hat-trick is the sorry tale of KPMG, whose staff not only carried out disastrous audits of Regenersis and Carillion but then prepared fraudulent documents in an attempted prevent the FRC investigators from learning the truth.

Perhaps predictably, those at the FRC took a dim view of a top firm of accountants treating them like fools. The upshot is that the partnership has a hole in its bank balance of approximately £18.5m after fines and costs are taken into account, while the lead partner is £250,000 out of pocket and has been excluded from membership of the ICAEW for 10 years.

Assorted senior managers will not be working in the profession for seven to eight years, which is a shame because that will make it harder for them to find the resources to pay fines of between £30,000 and £45,000.

While FRC’s actions might seem commendable, any self-respecting accountant would have to say that they did not join this profession to be associated with a bunch of incompetents who screw up audits or crooks who falsify documents and/or prefer to cheat in exams rather than do the necessary studying.

Alternatively, perhaps I am living in the past and should decline to renew my professional association membership while looking to a belated change of career. Does anyone know any good cat burglars who need an enthusiastic apprentice?

Replies (5)

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By Paul Crowley
28th Jul 2022 13:22

These are audit matters, not accountancy.
If only there was an effective regulatory body for auditors that gave out penalties at a punitive level, like the ICAEW does with the tiny little traders.

Thanks (6)
Replying to EbenezerScrooge:
By Mike18
29th Jul 2022 12:21

Get a grip on yourself! Such reactionary views.

Thanks (1)
Tornado
By Tornado
28th Jul 2022 16:29

There are Qualified Accountants, and then there are Qualified Accountants.

I cannot say that any of my clients associate me with these scandals,or even care about them anyway. This sort of thing happens frequently in the world of big business, Government and myriad other organisations, and is just taken with a pinch of salt by many as they are not directly affected.

So hold your head up high, Philip and remember that you are just as cuddly and honest as you ever were and people will respect you for it.

Thanks (0)
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By Hugo Fair
28th Jul 2022 19:40

The sad fact is that I doubt you could think of any profession (even in the modern loose sense of 'a group of people doing roughly the same sort of thing, like footballers) ... which would get universal approbation for probity and trustworthiness from a random selection of the population.

Why, I suspect that even some cat burglars are regarded as dishonest! :=)

Thanks (1)
paddle steamer
By DJKL
02nd Aug 2022 10:48

At least take comfort in the fact that you are still regarded more warmly than bankers.

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