The professional values they embody, as much as their technical skills, are essential for the latest generation of CAs as they make their mark on the business world
“I declare that I will conduct myself in a manner that maintains and enhances my own professional reputation, that of my fellow members and ICAS. As a CA, I commit myself to acting in the public interest and will conduct myself with integrity, objectivity and in accordance with the high ethical standards of ICAS.”
Some 230 new CAs stood with existing ICAS members to make that declaration at our admissions ceremony in Edinburgh last month. That declaration summed up the essence of the accountancy profession. It analyses what is the DNA of the professional accountant.
The Edinburgh ceremony was not a graduation ceremony – graduation symbolises an end. Being a CA, however, is for life. This ceremony marked the beginning of a journey in the profession. These young men and women are now professional accountants, implicitly trusted by the community at large.
Trust is crucial. The auditor acts as the guardian of the public interest. With separation of ownership and control, the auditor acts for the remote investor, giving him assurance that the representations of management are fairly presented. Similarly, CAs as CFOs, whether at a multi-national company or an SME, are expected to carry out their duties ethically, seeking to ensure that management has accurate information to guide the company’s future. The professional seeks the truth.
The role of accountancy is central to the modern economy. Capital markets are based on trust. Occasionally, that trust collapses, with devastating consequences. In the United States, when the scandal concerning Enron, WorldCom and others broke, the stock markets shuddered, as people wondered whether they could trust financial reports. Integrity and high ethical standards were missing from the behaviour of some accountants in those scandals.
I remember well listening to the Chinese Premier Zhu Rongji, opening the World Congress of Accountants in Hong Kong in 2002 by declaring: “There must be no false accounting.” This was not a political soundbite. It came from the Prime Minister’s former experience in trying to conduct China’s financial affairs, which eventually he declared was impossible, as the information was totally unreliable. He set off to create a new cadre of accountants, eventually founding three major accounting institutes in China, the motto for all of which is “No False Accounting”. That was the standard.
When I became a CA apprentice in the late 1960s, there were no accounting standards. The partners at Mann Judd Gordon used to discuss the day’s accounting issues with the apprentices each month. We learned by example – no false accounting! These rock-solid men embodied the declaration above and sought to ensure that the professional values they believed in were passed on to the next generation of CAs.
While it can be argued that accounting standards improve the consistency of financial reporting – which they undoubtedly do – many standards are there, in the first instance, because the profession failed to act with integrity.
The fact that the Accounting Standards Board had to be created in 1990 was largely due to the failings of professionalism in the 1980s. Off-balance-sheet vehicles hid debt and losses. Profits were manipulated through the use of acquisition provisions and the extraordinary item, a supposedly rare event, which was used by 53 per cent of major British companies each year (compared to a rate of five per cent in the United States at the time). Change was needed.
As I prepared to meet our new members in Edinburgh last month, I was hugely impressed with their intellectual firepower. I know the future of the profession will be in good hands; it will be these young CAs who bring about change when it is needed for the profession to thrive.
There will always be some who will argue that change is impossible. It never is. Those that say something is impossible should get out of the way of those trying to make it happen. I know that many of our new members will have been asking, “What does the future have in store for us?” As I told them, that’s the wrong question; the real question is: what do they hold for the future? Their role is to use the insights their training has given them, and, observing the declaration they have just made, to go out and make a difference.
In the meantime, it’s off to Achiltibuie for me – the Summer Isles, snow-covered hills, fresh farm eggs and smoked kippers for breakfast. It’s a wonderful world.