Accountancy & Management: Regulation fears resurface: Institute members uneasy about conflict between advice and discipline

OF ALL the issues with which the Institute of Chartered Accountants in England and Wales is grappling, regulation must be the most difficult.

It is not just that an organisation whose membership ranges from sole practitioners in the provinces to members of Britain's biggest firms has trouble convincing the sceptics that its approach is consistent, there is also the problem of the institute being responsible for disciplining its members at the same time as promoting their interests.

Some in high places within the organisation seem to think this issue is old hat, but many members of the profession are uneasy about the subject, citing the comparatively lenient punishments meted out to Michael Jordan and Richard Stone, the Coopers & Lybrand insolvency specialists, over their Polly Peck conflict of interest case.

Others worry that the years spent investigating affairs such as Barlow Clowes threaten the organisation's standing as a regulator. And last week's council meeting demonstrated that the matter was alive and well in its upper echelons.

Under discussion was a plan introduced by Ian Plaistowe, president of the institute last year and now chairman of the professional conduct directorate, designed to allay fears that a request for advice or guidance could lead to an appearance before the bench on a professional conduct or practice regulation charge.

Mr Plaistowe wrote in a cover note on the proposals that those responsible for providing the advisory and guidance services could not recall 'a single instance in which it has been necessary for such a report to be made, but that does not mean the fears are groundless or unreal'.

As a result, it was proposed first to make ethical support services separate from the professional conduct directorate - a change to be marked by 'the physical removal of staff and the erection of real (not Chinese) walls'.

Second, there was a plan to exempt members of the institute and employees of the secretariat who provide ethical advice to members from the duty of reporting misconduct.

It was emphasised that this did not affect the discretion enjoyed by every citizen to report to the proper authorities crime and similar serious misconduct.

The separation of ethical support services from professional conduct had an easy enough passage. The only real challenge was a suggestion that the new body would be truly independent if moved outside the institute itself.

However, Jock Worsley, chairman of the Chartered Accountants' Joint Ethics Committee - the body to which the new department will report - told members that ethical guidance and advice was very much tied up with the institute.

To take responsibility for this area away would be 'an admission of failure', he said.

More problematic was the exemption from the duty to report misconduct - and not for the reasons that might be thought.

Rather than worrying about how such a change might look to those outside who have accused the profession of lacking vigour in dealing with the failings of individual practitioners, many members were concerned that the proposed exemption did not go far enough.

In particular, Maurice Ede, a sole practitioner, seemed to strike a chord when he said the line between ethical and technical advice was difficult to draw. While backing the planned change, he brought up the issue of perceptions - saying that people did not believe that walls between the institute's various departments existed. Consequently, there was a danger that a well-intentioned inquiry could lead a member into trouble.

What would happen, it was asked, if somebody phoned up saying they had a technical query and were therefore directed to somebody in that department, but it turned out that the problem was really ethical? Would the technical person feel obliged to report the matter?

Efforts were made to reassure members that such a situation would not arise since the real nature of the inquiry would be spotted in time.

Meanwhile, representatives of the big firms, such as Price Waterhouse's Graham Ward and Touche Ross's Ken Wild, were less circumspect. Mr Ward said there was an 'urgent need' for the change, while Mr Wild said he could not imagine a situation where a request for technical advice could lead to disciplinary action.

But this divergence of views has a lot to do with the distinctions among the firms themselves. While the likes of PW and Touche have extensive back-up teams offering help on technical and other issues, smaller firms are - in the words of one member - living in an increasingly complex world, where such developments as FRS3 could cause confusion and misunderstandings.

Although the fact that the institute's ethical advisory services deal with about 12,000 inquiries a year does not suggest a general reluctance to come forward, there seems to be a widespread feeling that the numbers might be much higher if there was some exemption.

Here, of course, is the dilemma. If members do not feel that they are getting the right kind of service from their professional body they will consider it to be failing in its trade association role. But if that same body does not work hard to maintain its members' standards it will be seen to be falling short of its responsibilities as a regulator.

The proposal was eventually accepted. But not before Ian Hay Davison, one of the most respected members of the profession, made a contribution guaranteed to jolt anybody there complacent enough to feel that events had reached a satisfactory conclusion.

The debate had epitomised the problem of not addressing the question of whether the institute is a regulator or a trade union, he said. This was the 'inherent conflict that we continually refuse to face'.

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
politicsIs David Cameron trying to prove he's down with the kids?
Dominique Alderweireld, also known as Dodo de Saumure, is the owner of a string of brothels in Belgium
newsPhilip Sweeney gets the inside track on France's trial of the year
Cumberbatch was speaking on US television when he made the comment (Getty)
Life and Style
Arts and Entertainment
Tom DeLonge, Travis Barker and Mark Hoppus of Blink-182 pictured in 2011.
musicBassist Mark Hoppus and drummer Travis Barker say Tom Delonge is 'disrespectful and ungrateful'
Arts and Entertainment
Olivia Colman and David Tennant star in 'Broadchurch'
tvBroadchurch series 2, episode 4, review - contains spoilers
cyclingDisgraced cycling star says people will soon forgive his actions
Britain's Prince Philip attends a Garden Party at Buckingham Palace in London
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Ed Sheeran will play three sell-out gigs at Wembley Stadium in July
Lena Dunham posing for an official portrait at Sundance 2015
Arts and Entertainment
Under the skin: Sarah Kane in May 1998
theatreThe story behind a new season of Sarah Kane plays
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea