The see-through accountant

The man charged with taking creativity out of company accounting has ruffled some professional feathers, writes Roger Trapp; profile; Sir David Tweedie

ON ONE wall of Sir David Tweedie's seventh-floor eyrie on the edge of the City of London there is a newspaper bill bearing the words "The Most Hated Accountant in Britain?". Its presence demonstrates both that the occupant of the office has a sense of humour and that he is not a complete novice at the sort of controversy in which he has found himself recently.

The notice was spotted outside a shop in Scotland by his brother-in-law. He, explains Sir David, naturally assumed it referred to some fraudster and not to the then newly installed head of the body charged with restoring the reputation of the accountancy profession in the wake of the spate of corporate collapses that brought the 1980s to a close. "That was back in 1990 or 1991 and we had hardly got started then," he adds, pointing out that there was a general expectation of outrage in certain quarters over the Accounting Standards Board's attempts to clear up the worst abuses of "creative accounting" - the practice of stretching the rules to present company figures in the most flattering light.

Though some company directors and merchant bankers were dismayed to see their way of life being overturned, Sir David's charm quickly won the backing of auditors and others involved in the preparation and interpretation of accounts for an approach based on consensus and openness. After an initial rocky ride, he and his colleagues on the ASB have lately had such an easy time of it that when Sir David's original five-year term as chairman was recently extended until the beginning of the next century, it went almost unreported. Which only makes it more surprising to see the public spat that has culminated in this mild-mannered elder in the Church of Scotland labelling a leading accountancy firm's critique of his approach as displaying "all the vision of a mole and the eloquence of a whoopee cushion".

Sir David is much more at home with words than most accountants, and is known for his jokes. In his view, for instance, those who favour making restructuring provisions based on what they intend to do, rather than what they are obliged to do, practise "psychoanalytical accounting", while he has remarked that accounts are similar to haggis - they look wonderful on the outside but you don't really know what is inside.

Early on in his stint, he likened auditors to supermarket trolleys - only supermarket trolleys, he said, had minds of their own. But genuine abuse is not his style. Even Ron Paterson, the Ernst & Young technical partner who is chiefly responsible for the document criticising the ASB's recent "statement of principles" that has aroused his ire, is a personal friend. "I've known him for about 15 years and we've been in each other's houses," says Mr Paterson, stressing that the row is not personal and "doesn't mean we hate each other". He agrees with Sir David that the real rivalry between them probably centres on Partick Thistle and Falkirk, the almost equally unsuccessful football teams that they support.

Friends and colleagues suggest that he has reacted to this latest development in a long-running - albeit lower-key - campaign by E&Y in this way because he is not as tough and thick-skinned as people think. Gerry Acher, head of audit at KPMG and of the audit faculty at the Institute of Chartered Accountants, sees him as a genuine conciliator who "enjoys consulting and wants to listen", but adds: "He's very sensitive to unfair criticism."

It is also possible that he sees the challenge to the ASB's statement of principles as an attack on what is coming to look like his life's achievement. But if that is the case, it is curious that he insists that he only took up accountancy by accident. The son of a roving Scottish mining engineer, he was born over the border in Newcastle, but was largely brought up in Stirlingshire. He arrived at Edinburgh University in the mid-1960s and stayed on to do a PhD in incomes policy, finishing it, he reflects ruefully, just as the new prime minister, Ted Heath, abolished it. "I was an expert in a subject that didn't exist," he says.

He was offered a lectureship in the university's business studies department, but turned it down on the grounds that he had not yet experienced the real world and opted to train as an accountant. And so he stepped on the first rung of a ladder that was to take him to his present position.

His initial foray into the outside world was not to last long - just three years with a firm in Glasgow - before he returned to Edinburgh, to become a lecturer in accounting and then dean in the social sciences faculty.

But, while he took up the first of two visiting professorships, he abandoned full-time academia once again when invited to become technical director of the Institute of Chartered Accountants of Scotland. This was to be another three-year spell, which ended with his appointment as a partner with then national firm of KMG Thomson McLintock. After the merger that created the firm now known as KPMG, he became national technical partner and began a weekly commute between Edinburgh and London that continues to this day.

In keeping with the caricature of the Scottish accountant, the lifestyle was prompted by money - in particular, the impossibility in the late 1980s of finding an affordable London home to match the one overlooking the sea at North Berwick that he and his wife Janice own. As a result, Janice remains in the house in the rolling countryside 25 miles outside Edinburgh - looking after the family - while he lives in a flat in London's Barbican complex.

Sir David says the arrangement has turned out well because it enables a total split between work and family. During the week he is at his desk by day, while - such is his reputation for wit - spending many evenings singing for his supper at official dinners. Not one for the bright lights, he spends free evenings reading history. But work stops when the plane touches down at Edinburgh on Friday evening.

True to his insistence that he is a country boy at heart, most of the weekend appears to be spent outdoors. A committed rugby fan who is as happy discussing the finer points of back play as the intricacies of accounting, he is a debenture holder at Murrayfield and was there with all the family for yesterday's crucial Calcutta Cup match. Today will see him watching one son, Mark, try out for junior representative honours on the left wing. His other son, Ross, turns out on the athletics track to show the pace he inherited from his nippy hockey-playing father. Throughout the year, Sir David enjoys walking - either in the country around the family home or in the Highlands and Islands (he and his wife last year celebrated their silver wedding anniversary on Skye) - and gardening. Significantly, he suspects, he has no interest in weeding or the fiddly aspects of horticulture - preferring such activities as building ponds. "I like big pictures rather than details," he says.

Like many comments about himself, this is somewhat self-deprecatory. All who know him are agreed on his humour, his integrity - and his intellect. Sir Bryan Carsberg, a former member of the ASB, who in 1995 gave up the position as director-general of Fair Trading to become chairman of the International Accounting Standards Committee, says: "He is very keen to understand problems and get to the bottom of things. He works away until he really understands it." Gerry Acher adds that, although he never looked after any big clients in his time in practice, "he really understands the pulls and pushes of dealing with them." This has helped him develop the board's method of approach, he says.

True to form, Sir David himself characterises his policy as a "simplistic" one that involves making accounts understandable to ordinary people rather than just accountants. In contrast to E&Y and other proponents of traditional methods (and technical terms), he wants assets and liabilities to be "what your mum would recognise them to be". In other words, it is all about transparency and showing a clear picture, and if that means results will be volatile rather than following a smooth upward curve, so be it. He is happy to debate difficult upcoming areas such as the treatment of derivatives and taxation, but he is tough enough that what emerges is unlikely to deviate from these overall principles.

It was airing views like these while at KPMG in the late 1980s that put him in the frame when Sir Ron Dearing, the former Post Office chief who became the first head of the Financial Reporting Council, was looking for someone to head its subsidiary body, the ASB.

Half a decade later, and now 51, he has lost none of the fervour that got him the job. But he does regard it as strange that he is now regarded as part of the Establishment.

"I've always thought of myself as a rebel," he says, reflecting that it is almost like being the old gunfighter watched by the young rivals who do not know whether to shoot you straight away or to let you draw first. "I prefer to be the rebel."