Institute Of Chartered Accountants In England And Wales Research Articles

The pursuit of organisational authenticity in the chartered accountancy profession in Great Britain

In contrast to the conventional focus on recruits and members, this paper examines identity construction in professional organisations. It explores authenticity work – identification activity directed at external audiences to assert distinctiveness. The focus is on commemorative celebrations of the Institute of Chartered Accountants of Scotland (ICAS) and the Institute of Chartered Accountants in England and Wales (ICAEW) during the twentieth century. Evidence from archival and published documents demonstrates that the chartered bodies in Britain were anxious to assert their uniqueness in an increasingly congested professional field. The analysis shows that ICAS made authenticity claims based on its unique position as the first accountancy body in the modern world and emphasised its status as the originator of the institutions of the accountancy profession. The ICAEW, by contrast, initially stressed its alignment to progress and modernity and later emphasised its standing as the leading professional body located at the centre of economic and political power. It is suggested that comprehending the authenticity claims of these organisations is potentially significant to understanding the fragmentation of the chartered accountancy profession in Britain.

The blockchain impacts in accounting auditing / Os impactos da cadeia de bloqueios na auditoria contábil

This paper aims to identify the main impacts of Blockchain as accounting audit as well the advantages and disadvantages facing future challenges to auditing. The methodology used was basic qualitative research, and review topics with exploratory aims, such as technical procedures. The data collection was in CAPES (Coordination for the Improvement of Higher Education Personnel) and ICAEW (The Institute of Chartered Accountants in England and Wales) websites and the data analysis and interpretation consisted in classifying and deducting. It was identified that Blockchain is little related to accounting auditing. Results show that the number of financial institutions and organizations that invest in Blockchain is rising, considering that it is related to a distributed ledger that provides a major transparency in the financial transactions of the organizations, which suggests that in the very near future financial institutions and organizations will use Blockchain to interact with each other and in this context internal and external auditing might be continuous, having in mind that in Blockchain financial transactions are available in real time for the auditors and available to auditing. In addition, the distributed ledger enables auditors to access information in new formats, and consequently changes in work roles will occur. In this way, corporative reports will have more consistent and reliable information. However, many countries do not know how to regulate Blockchain or do not offer any legal environment to it.

Social class and social mobility among ICAEW members from the interwar period to the present day

ABSTRACTIn the recent political and academic debate over social exclusivity and inequality in Britain, accountancy has come in for specific criticism. The Milburn panel on fair access to the professions concluded that accountancy has seen the greatest decline in social mobility. Through the use of a postal questionnaire of members of the Institute of Chartered Accountants in England and Wales (ICAEW), this study challenges this assessment by demonstrating that historically the ICAEW has always had a significant proportion of members from the lower middle and working classes. However, in recent decades there has been an increase in the proportion from the upper middle class and a decline in those from the lower classes. This shift was not due to educational changes such as the decline of grammar schools or the rise of the graduate profession but resulted from the reduced role of medium- and small-sized firms in recruitment and training and the rise in importance of the largest accounting firms which have always tended to take on trainees from higher social backgrounds.

Brexit and the Trump Era: The future of IFRS

Following the uncertainty of regulatory reform under Brexit and the new Trump Administration Era, this installment of Accounting Matters explores the future of international financial reporting standards (IFRS). I interviewed Mr. Hans Hoogervorst, Chairman of the International Accounting Standards Board (IASB), and Mr. Michael Izza, Chief Executive of the Institute of Chartered Accountants in England and Wales (ICAEW). The two give their opinions on what they see as the lasting impact of Brexit and the Trump Era on their organizations and accounting standards internationally.

The Global Risk Regime New Roles for Auditors

In the aftermath of the financial crisis the G20’s Financial Stability Board (FSB) invited auditors to play a more prominent role in assisting the FSB in its mandate to stabilize the global economy. The Basel Committee on Banking Supervision (BCBS) in its response to the financial crisis introduced new requirements aimed at achieving closer alignment between banks’ risk reporting and accounting systems. In the summer of 2015 the Institute of Chartered Accountants in England and Wales (ICAEW) published a consultation paper at the request of the UK’s Prudential Regulation Authority on providing assurance services for calculating banks’ risk weighted assets (RWAs) and capital ratios. Also in the summer of 2015 the Regulatory Oversight Committee (ROC) of the FSB published a consultation paper on establishing relationship data to create an authoritative record of control and ownership structures of legal entities aligned to the accounting principles applied in the preparation of consolidated financial statements.These and other initiatives provide the foundation on which the role of auditors and accountants in global regulatory regimes are being extended to support post-crisis initiatives aimed at restoring reliability and stakeholder confidence in banks’ risk reporting. This paper reports on the role of auditors in regulatory oversight and offers perspectives on further involvement. The authors explore existing mandates and potential expanded roles to include: the BCBS’s independent validation of compliance with its risk and data aggregation principles including that risk controls be as robust as financial accounting controls; the use of auditors third party assurance services applied to banks’ risk weighted asset (RWA) and capital ratio calculations; for accommodating the FSB’s newly designated privacy agent for masking derivatives counterparties; for assuring adherence to criteria for new securitizations and derivatives regulations; to validate legal identities and their ownership structures within the ROC’s new global legal entity identification system (GLEIS); and to extend auditors financial reporting taxonomies to prospectuses, articles of incorporations, contracts and other source documents.The authors draw comparisons with these regulatory developments and the US’s Sarbanes Oxley (SOX) legislation, and similar legislation in other jurisdictions that were enacted with the aim of reducing the risk of material misstatements in financial reporting. They consider whether the role and responsibilities of auditors framed in SOX legislation should be extended to risk reporting.Finally, the authors see an expanding role for accountants and auditors to adapt financial metrics and reporting to achieve more comprehensive and precise disclosure of accepted risks in audited financial statements. Risk Accounting, Confidence Accounting and Sustainability Accounting have already entered the accountants’ lexicon. These represent both a risk quantification and an accounting challenge as regulators seek to more fully engage accountants and auditors in achieving greater financial stability while risk adjusting the financial system.

Patterns of Learning in the Accountancy Profession Under an Output-Based Continuing Professional Development Scheme

Since 2004, professional accountancy bodies in membership of the International Federation of Accountants (IFAC) have been required to adopt mandatory continuing professional development (CPD) schemes. This research explores the learning activities of members of the Institute of Chartered Accountants in England and Wales (ICAEW) which introduced an output-based CPD scheme in 2005. To do so, a survey was carried out among its members. The findings show that the ICAEW's output-based scheme has given responsibility for learning to the individual. With the exception of those not currently in work, both formal and informal learning activities are perceived as being equally relevant. However, accountants are far less likely to describe their informal learning activities as CPD. In an environment where careers are likely to last longer and to involve more transitions, learning activities still primarily focus on competence in the current role rather than on developing skills to support future careers.

Governance benefits of new assurance reports

The use of external assurance is one of many ways to add credibility to information. This article firstly discusses the concept of external assurance as defined by the International Auditing and Assurance Standards Board (IAASB) and its limited application to date outside the statutory financial statement audit. The article then discusses the experience of the Institute of Chartered Accountants in England and Wales (ICAEW) in applying the IAASB framework for external assurance in practice. The benefit of external assurance is primarily to enhance confidence in information for the benefit of users of information who have little control over its production. However, the benefit of external assurance potentially can extend beyond enhancing the credibility of information. Through a case study of developing an assurance reporting framework on internal control in the United Kingdom in 2006, the article firstly demonstrates the benefit of stakeholder engagement in the process. By taking part in collective decision-making over the scope of reporting and related responsibilities, stakeholders obtain a better understanding of the role of assurance reporting and thus are able to align their expectations. Collectively agreeing the basic elements of an assurance reporting framework also means that parties need not negotiate them along with other individual engagement terms, thereby saving time and cost. Secondly, where stakeholders decide to opt for an ‘assertion-based’ assurance reporting framework, management reports on its internal control procedures and their effectiveness and professional accountants opine on management assertions. This assurance process can facilitate better governance as management explicitly owns primary responsibility over the information rather than attributing it to external accountants. The article finally considers the use of external assurance reporting in a wider context. Assurance services, conducted on a voluntary basis and outside the scope of a statutory financial statements audit, can enhance the credibility of specific information that is relevant to certain stakeholders without adding unnecessary burdens to others that have little to gain from this assurance process. This may be particularly relevant to financial institutions subject to increased scrutiny because of the recent crisis in the banking sector.

Consolidating the public accountancy profession: The case of the proposed Institute of Chartered Accountants of Great Britain, 1988—9

This article examines a 1988 proposal to consolidate the Institute of Chartered Accountants of Scotland (ICAS) and the Institute of Chartered Accountants in England and Wales (ICAEW) into the Institute of Chartered Accountants of Great Britain (ICAGB). During the debate on the proposal, it became clear it was associated with the viability of the ICAS and the self-interest of the largest training firms. The proposal failed in 1989 when it was accepted by ICAEW members but rejected by ICAS members. The first objective of this article is the detailed reporting of the ICAGB proposal to provide a historical record. The second objective is an analysis of the proposal to identify significant themes relevant to the history of professionalization in accountancy. These themes include managing a professional project, the influence of the state, the role of large firms, detached leadership, the role of individuals, associational brand names, and balancing commercialization with professionalization.

‘All sorts and conditions of men’: The social origins of the founders of the ICAEW

The early organisation of accountants in Scotland during the 1850s and 1860s has excited the intellectual curiosity and research endeavour of a number of students of professionalisation. By contrast, until recently there was a dearth of academic interest in institutional developments in England and Wales during the 1870s and 1880s. Yet, organisations such as the Institute of Chartered Accountants in England and Wales (ICAEW) which emanate from this period soon became the most significant players on the British professional scene and were to exert considerable influence on the development of accountancy institutions and professional ideologies in several locations. Exploiting a variety of genealogical sources this paper seeks to fill a void in the literature by analysing the social origins of the founding members of the principal professional association in England and Wales. It provides evidence of early chartered accountancy as a destination for long distance, upwardly mobile males, both intergenerationally and intragenerationally. The rate of self-recruitment among the founders of the ICAEW is shown to be low. The proportion of founders deriving from the upper and upper-middle classes is revealed to have been markedly less than that of their Scottish counterparts. The paper contributes to understandings of the complex professionalisation of British accountants, the extent of social mobility in Victorian Britain, the pathways to social advance in a class-based society, and illuminates the social complexion of one of the ‘new’ professions which emerged during the nineteenth century.

Disciplinary action against members of the founding bodies of the ICAEW

PurposeThe purpose of the paper is to present an analysis of the disciplinary action taken against members of the founding bodies of the Institute of Chartered Accountants in England and Wales (ICAEW). This exercise illuminates an aspect of accounting's past which has tended to be overlooked in conventional histories of the profession.Design/methodology/approachAn analysis of the internal records of the ICAEW has been conducted. In addition, the archives of the ICAEW's predecessor bodies, entries in various censuses and contemporary sources have been reviewed for relevant material.FindingsAnalysis of the records of the ICAEW and its founding bodies reveals a number of cases where disciplinary action was taken for breaches of ethical principles. The expulsion of a member, however, was always preceded by an external “prompt” such as the member's conviction on criminal charge, his disappearance or bankruptcy. This perhaps suggests that the early professional bodies were more inclined to protect the private interests of their members rather than the public interest.Originality/valueThe paper's findings add to the literature on the professionalisation of the British accountancy profession. By focussing on the less‐celebrated aspects of the founders' behaviour, this paper puts the success of the profession in achieving public acceptance into sharper perspective.

Harmonising intergroup relations within a professional body: The case of the ICAEW

The leadership of the Institute of Chartered Accountants in England and Wales (ICAEW), from about 1948 onwards, began to transform its basic mission from representation of the interests of ‘public accountants’ to representation of the interests of ‘chartered accountants’. This paper explains why and how chartered accountants in business achieved better recognition and representation within the ICAEW. It is known that the ICAEW's Taxation and Financial Relations (T&FR) Committee was the first committee in the history of the British accounting profession to take responsibility for drafting technical documents in general and Recommendations on Accounting Principles in particular. This paper examines the dynamics surrounding the creation of this key Institute committee on which business members were for the first time represented. It reveals that the T&FR Committee played a fundamental role in improving the level of integration between practising and business members by: (1) providing an effective mechanism for promoting contact and collaboration between practising and business members; (2) demonstrating the contribution that business-based accountants could make to the resolution of important technical issues of relevance to the accounting profession; and (3) creating a mechanism from which members with an enhanced perception of the role of business members could be elevated to positions on the ICAEW's ruling body, the Council.

‘A Public Expert in Matters of Account’: Defining the Chartered Accountant in England and Wales

This study addresses the attempts by the Institute of Chartered Accountants in England and Wales (ICAEW) to set its professional boundaries based on the performance of work in order to create a definition of the specialist chartered accountant or ‘public expert in matters of account’. The article, located in the 1880–1900 period, provides an insight into the activities and arenas in which chartered accountants could engage. The complexities associated with this demarcation between permissible and non-permissible activities, revealed through a series of ‘test cases’, were exacerbated by the ‘grandfather clauses’ contained in the ICAEW's Royal Charter.

CONSTRUCTING THE ‘WELL QUALIFIED’ CHARTERED ACCOUNTANT IN ENGLAND AND WALES

Fundamental to the pursuit of the professional project by the Institute of Chartered Accountants in England and Wales (ICAEW), in the early years of its existence, was the construction of the “well qualified” chartered accountant. This involved the introduction of onerous examinations, lengthy vocational training and significant financial hurdles, which together confined membership to the wealthier sections of society. Prior studies concentrate on the external implications of the ICAEW's policies, and have accepted, though left unexamined, the significance of entry hurdles in achieving exclusionary closure. The major focus of this paper is to examine how the ICAEW differentiated its membership from outsiders on the grounds of education and training and how the fledgling Institute employed credentials to distinguish the “chartered accountant” brand from non-chartered accountants. In further contrast to prior studies, we examine the internal tensions generated as a result of the precise shaping of the ICAEW's definition of the “well qualified” chartered accountant.

Cutting to the core? A reflection upon recent education policy debates within the Institute of Chartered Accountants in England and Wales

Knowledge is widely regarded as a characteristic of professions, but given the ever-increasing knowledge base, professional accountancy bodies have begun to question whether professional examinations can continue to cover all areas relevant to the work of accountants. At the heart of the debate about how the professional knowledge base is to be defined lie questions about how chartered accountants are ‘made’. This paper discusses the introduction of a ‘core and options’ model for professional accountancy education as a possible means of ‘making the chartered accountant’. Using Porter's (1981) theory of historical explanation, it discusses an episode in the recent history of education policy at The Institute of Chartered Accountants in England and Wales (ICAEW) which illuminates aspects of the core and options model. The paper concludes that, while the introduction of core curricula in accounting education can be justified on educational grounds, the rejection of core curricula by ICAEW suggests that educational debates were strongly influenced by the wider political, economic, social and professional environments and the resultant educational policy can be viewed as the product of a variety of competing agendas.

How not to mount a professional project: the formation of the ICAEW in 1880

This study addresses ‘the inevitable dilemma facing [leaders of] an occupation’ seeking to progress the professionalisation process through organisational formation, namely that ‘if too many are included as eligible, it may downgrade the whole membership, while if the line is drawn too narrowly, those left out may be of sufficient ability to form a rival body’ (Macdonald, 1995: 192). It examines this dilemma in the context of the formation of the Institute of Chartered Accountants in England and Wales (ICAEW) in 1880 through the merger of five accounting societies formed during the previous decade. We show that creation of the ICAEW was engineered by London City-based accountants, primarily those who had directed the affairs of the ICAEW's elite predecessor body, the Institute of Accountants. We will argue that, through organisational fusion, the ICAEW's leaders expected to achieve organisational closure of the public accountancy profession in England and Wales, but this endeavour was flawed because of their failure either to adopt a sufficiently inclusive strategy at the date of formation or to address that deficiency in the years that immediately followed. This created an alienated population of ‘country accountants’ and left available a substantial reservoir of public accountants from which the first competitor organisation formed—the Society of Accountants—was able successfully to recruit.

CORPORATISM AND UNAVOIDABLE IMPERATIVES: RECOMMENDATIONS ON ACCOUNTING PRINCIPLES AND THE ICAEW MEMORANDUM TO THE COHEN COMMITTEE

This paper re-examines the conclusion reached by Bircher [1991], and other researchers, that the Institute of Chartered Accountants in England and Wales (ICAEW), through the content of the series of Recommendations on Accounting Principles (RoAPs) that it developed and then incorporated into its memorandum submitted to the Cohen Committee on Company Law Amendment, molded the radical accounting provisions contained in the Companies Act, 1948 (CA48) “in the form of its own programme” [Bircher, 1991, p.293]. It is argued that (1) the Board of Trade (BoT), through the formation of the Cohen Committee, prompted the qualitative change in the content of the second five RoAPs, which were drafted to accord with the content of its submission to the Cohen Committee, and (2) before the ICAEW memorandum was submitted to the Cohen Committee in February 1944, a corporatist structure is discernable in the relationship between the BoT and the ICAEW causing the leaders of the ICAEW to align its interests with the BoT's priorities for the amendment of company law.

Accounting Principles, Internal Conflict and the State: The Case of the ICAEW, 1948–1966

The series of Recommendations on Accounting Principles (RoAPs) issued by the Institute of Chartered Accountants in England and Wales (ICAEW) between 1942 and 1969 demonstrated the willingness of a professional accounting body to take a degree of responsibility for the form and content of British corporate financial reports. RoAPs 12 and 15 focused on the enduring problem of whether and how to take account of changing prices when constructing published financial reports. This article reveals disagreement between practising and industrial members in general, concerning how to address this issue, and examines the way in which the Council of the ICAEW sought to resolve this internal conflict within the constraints imposed by the need to be seen to behave in the ‘public interest’. Major discord between the two main categories of membership emerged within the operation of the Taxation and Financial Relations (T&FR) Committee. What were judged by the ICAEW's leadership to be the extreme views of the industrial members were marginalized and suppressed by bypassing the normal channel for designing RoAPs and, instead, formulating them at the higher level of the Parliamentary and Law (P&L) Committee. The conflict between practising and industrial members continued in the period following the publication of RoAP 15, when further attempts were made to tackle the problem of accounting for inflation.

New reporting models for business: who needs them?

The Institute of Chartered Accountants in England and Wales (ICAEW) has recently launched a major new project to address the growing international concern that existing business reporting models are inadequate, and that recent attempts to develop new solutions and reach a global consensus have failed. David Illingworth, President of the ICAEW, explores how key players in the market including investors, managers, regulators and commentators can begin to assess the underlying issues which need to be addressed and shape a reform program that meets their collective aspirations and needs.

Oral history, accounting history and an interview with Sir John Grenside

This article arises out of a programme of oral history funded by the Institute of Chartered Accountants in England and Wales (ICAEW). It discusses the issues involved in setting up and carrying through the programme and the advantages and disadvantages of the technique particularly with regard to accounting history. It uses as an example an interview with one of the leaders of the accountancy profession in the period since the Second World War - Sir John Grenside. Grenside discusses his training and the changes he saw and helped bring about as senior partner in his firm, Peat Marwick Mitchell. Grenside was also one of the leading lights in the ICAEW in the 1970s and early 1980s and was the architect of the Joint Disciplinary Scheme on which he gives his views as well as on the recent troubles of the profession.

Problems and politics of regulatory fragmentation: The case of the Financial Reporting Review Panel and the Institute of Chartered Accountants in England and Wales

The UK regime for financial reporting and auditing was radically altered in 1990 and 1991 by two separate developments. When removing sole responsibility for setting accounting standards from the accounting profession, the opportunity was taken to establish a monitoring body, the Financial Reporting Review Panel (FRRP), to oversee compliance with company law and accounting standards, and with powers to apply to the courts for rectification. In addition, a new regulatory system for auditors was set up. This paper considers the problems arising between the regulatory responsibilities of the Institute of Chartered Accountants in England and Wales (ICAEW) and FRRP. In 50 cases (up to September 1999) FRRP found defects in accounts, 49 of which were audited by firms regulated by ICAEW, but no disciplinary action was taken by ICAEW until 1999. The way in which the new audit regulations were grafted onto the existing ICAEW disciplinary regime is considered, and the anomalies arising from that explored. The cases resulting in ICAEW's disciplinary action are compared with the other cases together with some evidence from finance directors and audit partners with experience of dealing both with FRRP and an ICAEW disciplinary investigation. The relevant theories relating to professional bodies and regulation are also reviewed. Finally, the authors review the problems identified in this study and make suggestions as to how they may be addressed.