We must learn from history: ICAS President's column
Only by maintaining the highest standards can CAs help steer the debate about trust in the right direction, says ICAS President Sandy Manson CA.
As accountancy students in our final year at Edinburgh University, it was with a sense of anticipation that we would scan the careers notice board for details of the drinks parties hosted by the accounting firms as part of the “milk round”.
Today, of course, there are many other routes for young talent to gain what I believe is the best accountancy and business qualification in the world.
When I participated in this rite of passage, there were eight large international accounting firms. It was during this series of gatherings that I met the one I was determined to join, Arthur Andersen. Thankfully the feeling was mutual - though I suspect they were harder to convince than I was!
In my nine years with Arthur Andersen, they more than delivered what they promised as an employer and trust levels in the organisation were high.
We must protect our professional reputation and retain a high level of trust in the work we do and the value we deliver.
It was, therefore, with shock and sadness some years later that I watched from the outside as the firm became a casualty amid a major accounting scandal. The market’s trust in this once great brand had evaporated almost overnight.
If Arthur Andersen’s demise taught us anything, it is that whatever the short-term price, we must protect our professional reputation and retain a high level of trust in the work we do and the value we deliver.
It was Winston Churchill who said that those who don’t learn from history are doomed to re-live it. As a profession, we must learn from history.
The fallout from the recent collapse of Carillion has only added to the barrage of criticism regarding audit quality and independence, and threatens to erode trust in our profession.
This is a strong reminder of how an unhelpful narrative is gaining resonance in ever-wider circles and in time will inevitably seep through into public consciousness, unless we respond.
Business failures understandably make the headlines, but let us not forget how much good audit work is happening day in, day out. That said, we need to put our own house in order before the regulators do.
This is not just about trust in our profession, it is also about trust in business in general.
To try to ensure there is balance in this debate, we also need to go on the front foot and tell the public about the work our profession does, not only supporting enterprise and growth, and educating new generations of accountants and business leaders, but also helping achieve a safer and more sustainable society.
Strong independent regulation also has a key part to play in restoring public confidence. That is why we welcome the Kingman review of the Financial Reporting Council (FRC), which aims to make the FRC the best in class for corporate governance and transparency, while fulfilling its role of helping make the UK a safe business environment.
This is not just about trust in our profession, it is also about trust in business in general. The annual Edelman Trust barometer revealed yet another fall in the level of trust in business.
Being a CA is about being trusted to do the right thing. Everyone is better off in a society where trust is high.
Reasons cited included lack of transparency, the level of executive pay, tax avoidance and, most concerningly, that corruption is not being tackled sufficiently. It’s uncomfortable reading.
At some point, each of us will face pressures which seek to influence our judgement and principles, and it takes courage to do the right thing. At ICAS we stand fully with you and will support you in facing these challenges because, above all, being a CA is about being trusted to do the right thing. Everyone is better off in a society where trust is high.
We can all play a part in helping restore trust in business and our profession; seeking the truth unrelentingly, doing the right thing and dealing robustly with those members who fall below the standards we expect. We are a great profession and we must adapt and evolve to keep it that way. Arise CAs.