Accountants and regulation - time to get real

JD Dublin

Folks
For those of you that are not accountants, or have no interest in the accountancy professions, read no further.

For those of you that are, can you tell me - are the institutes in these islands we live on for real when it comes to regulating their own members.

On the one hand we have a large accounting practise letting directors blithely borrow large sums of money, with no apparent affect on the practise.

On the other we have struggling accountants, sometimes working from their kitchen table, getting mugged by their professional bodies.

If it wasn't so serious, it'd be funny.

I think it's time for the little guys to band together, give the institutes the two fingers and lobby government to let them get on with their job as record-keepers to small and medium-sized enterprises. It's time for the larger practises to get their own institute and run it whatever way they want and let them take the consequences.

mickbyrne

I hear you JD - Are you ACA

JD Dublin

Mick I am but I hear the same all over from ppl in practise.

Now yesterday eve I read that they have appointed the former Controller & Auditor General to investigate how the loans in a large bank were given out to directors, at 2 of who are ACA.

The question is will they strip these guys of their qualifications? I dont think so because they ( the professional bodies ) are legally inept. A bunch of smart lawyers hired by the defendants will f. them senseless in an in camera hearing.

Meanwhile Johnny Bookkeeper who also has ACA or ACCA or CPA after his name will be mugged in a complaint because he doesnt have the nous or the money to hire a lawyer.

What about yourself - ACA or ACCA?

prinz

Sounds about right to me, and I haven't qualified yet. Coming from a small practice your place on the list of priorities for cai is way down the list, on everything from getting books, to confirming timetables, to actually being listed as a student with the institute. Something tells me the same standards would not apply if I was Big4.

censuspro

There was a thread on this last year surrounding the whole Anglo, E&Y connection. The outcome was that CARB was looking into it but I haven't heard anything since. It appears to be a case of the tail wagging the dog when it comes to ICAI and the Big 4 firms.

Unfortunately you wont get much feedback on this forum as most of the posters on here are students mainly interested in exemptions and exam related topics, little or none have much work experience or knowledge of the Industry.

dbran

Hi

This may be true but I think if we lost self regulation we would be in a heck of a worse mess then we are now.

The "accountancy regulator" would just become a political appointment by the government of the day to a body for people who barely understand accountants let alone the complex issues that are faced by the profession today.

We would have a whole plethora of unworkable rules brought in just to satisfy the political flavour of the month and opinion polls. This would ultimately lead to increased fees, ultimately less compliance with regulations and no real improvement of standards. In fact the opposite

Anyway just my 2c

Dbran

JD Dublin

Dbran you are right in that we might be in a worse mess.

I think we can improve massively on what exists, perhaps we could have a designation for Big 4 auditors who look after public interest companies, and another set of rules for smaller companies.

We need to ditch the requirement for an audit when companies are late with their filings - the profession needs to stand up to the Companies Office and the rest of the Civil Servants who currently run the show.

However it could be worse. We could have a two tier system with the Big 4 charging whatever they like for audit work, benefitting from juicy consultancy contracts from government.

We could have non-compliance with rules and regulations in the larger companies, where issues would be brushed under the carpet. That's not to say there arent compliance issues in the SME sector.

We could have a massively expensive set ( ACA, ACCA, CPA, CIMA and IIPA - 4 and counting...) of professional bodies charging victims, sorry members, whatever they like to 'regulate' them.

We could have a Companies Office forcing companies to have an audit when they are late with Annual Returns which is the major cause of audits, and the victim, sorry auditor, in the middle looking for an economic fee to carry out an audit.

Could it really get worse?

If the accounting profession could cop on to themselves and present a united front to all ( business, Govt, regulators, Revenue ) then we would not be in as big a mess as we are. We could deal with offending firms in a stronger way, because there would be nowhere else for them to get registration as auditors.

I dont see 2 Medical Councils, 2 Law Societies, 2 Architects Institutes. I dont see the minister of the day ( Pat Rabitte ) setting up a new institute ( IIPA ) in competition with the Irish Dental Association ( or whatever ) without a squeak from the existing Institutes. But then of course the powers that be in the Big 4 are not competing with anyone except other Big 4 firms, so a few extra members on the bottom rungs is not going to affect them.

The other professions still have self regulation, and are theres nobody saying they dont have issues.

censuspro

JD Dublin wrote: »

Dbran you are right in that we might be in a worse mess.

I think we can improve massively on what exists, perhaps we could have a designation for Big 4 auditors who look after public interest companies, and another set of rules for smaller companies.

We need to ditch the requirement for an audit when companies are late with their filings - the profession needs to stand up to the Companies Office and the rest of the Civil Servants who currently run the show.

However it could be worse. We could have a two tier system with the Big 4 charging whatever they like for audit work, benefitting from juicy consultancy contracts from government.

We could have non-compliance with rules and regulations in the larger companies, where issues would be brushed under the carpet. That's not to say there arent compliance issues in the SME sector.

We could have a massively expensive set ( ACA, ACCA, CPA, CIMA and IIPA - 4 and counting...) of professional bodies charging victims, sorry members, whatever they like to 'regulate' them.

We could have a Companies Office forcing companies to have an audit when they are late with Annual Returns which is the major cause of audits, and the victim, sorry auditor, in the middle looking for an economic fee to carry out an audit.

Could it really get worse?

If the accounting profession could cop on to themselves and present a united front to all ( business, Govt, regulators, Revenue ) then we would not be in as big a mess as we are. We could deal with offending firms in a stronger way, because there would be nowhere else for them to get registration as auditors.

I dont see 2 Medical Councils, 2 Law Societies, 2 Architects Institutes. I dont see the minister of the day ( Pat Rabitte ) setting up a new institute ( IIPA ) in competition with the Irish Dental Association ( or whatever ) without a squeak from the existing Institutes. But then of course the powers that be in the Big 4 are not competing with anyone except other Big 4 firms, so a few extra members on the bottom rungs is not going to affect them.

The other professions still have self regulation, and are theres nobody saying they dont have issues.

The institutes were trying to get the term "accountant" protected but there doesn't seem to be any movement on it in recent months. I've heard that in order for this to happen the UK govt would have to be in agreement but apparantly in the UK they feel that the words chartered and auditor are sufficient.

I think the reason the other institutes didnt make a fuss over the IIPA was because they felt it was better to have an institute that was regulated than to have people running around calling themselves accountants with no regulation at all.

I agree what you're saying about having 5 different accountancy bodies not including the ITI. However, The ICAI and CPA were close to a merger a few years ago but they couldnt get it past their own members. Rumour has it that if the term accountant gets protection then some of the bodies will merge, my bet would be CPA and ACCA considering that they already have mutual recognition in place.

The government contracts going to the same firms is also very frustrating. I've submitted a few payroll and accounts tenders on the e-tenders website and just cant seem to get a look in, and if you have a look at the NAMA website you'll notice that the contract for tax advice was awarded to PWC.

Beaulieu

JD Dublin wrote: »

Folks
For those of you that are not accountants, or have no interest in the accountancy professions, read no further.

For those of you that are, can you tell me - are the institutes in these islands we live on for real when it comes to regulating their own members.

On the one hand we have a large accounting practise letting directors blithely borrow large sums of money, with no apparent affect on the practise.

On the other we have struggling accountants, sometimes working from their kitchen table, getting mugged by their professional bodies.

If it wasn't so serious, it'd be funny.

I think it's time for the little guys to band together, give the institutes the two fingers and lobby government to let them get on with their job as record-keepers to small and medium-sized enterprises. It's time for the larger practises to get their own institute and run it whatever way they want and let them take the consequences.

I'm ACA & along with many friends consider the Institute to be unrepresentative of members...share your frustration

JD Dublin

Censuspro, this is just tinkering around the edges, we need a Big Bang. IIPA = ICAI, ACCS, CPA saying it's only the little guys that are affected.

I've never used tenders.ie.

Beaulieu, most ppl r frustrated with their prof body, but some of the stuff they carry on with is verging on criminal - its capitalism for the smaller fish, and socialism for the big guys. NAMA / Wall Street bailouts - sound familiar?

censuspro

JD Dublin wrote: »

Censuspro, this is just tinkering around the edges, we need a Big Bang. IIPA = ICAI, ACCS, CPA saying it's only the little guys that are affected.

I've never used tenders.ie.

Beaulieu, most ppl r frustrated with their prof body, but some of the stuff they carry on with is verging on criminal - its capitalism for the smaller fish, and socialism for the big guys. NAMA / Wall Street bailouts - sound familiar?

Profits are privatized, losses are nationalized.

mickbyrne

JD, I'm ACCA, Regulation is definitely tougher for small practices rather than large, but I cant complain about the costs, courses they run are very competitive unlike the chartered. A two hour CPD course usually costs €20 - €40, unlike the rip off that chartered is. Annual subs are much cheaper as well.
I firmly believe that even though "Chartered" is the sought after qualification, you guys are greatly let down by your institute. Your institute is controlled by what the big four want. The pay off for your higher fees is less regulation, which ultimately is leading to poorer standards. The ‘training’ the big four offer is extremely poor in comparison to what smaller practices offer, and having my own practice the quality of info I receive from a charted practice compared to an ACCA or CPA practice is very poor.
Eventhough ACCA regulation is over the top their system treats everyone the same – and that is what is important at the end of the day.

JD Dublin

Mick I dont know what chartered practises you are getting jobs from so I wont comment there.

I'm not just saying this, but some of my best friends etc are CPAs, ACCAs so rather than getting into a slagging match lets agree there are good accountants and bad accountants everywhere. What letters are after their name is a different matter.

Agreed that the CPD is a rip-off if you are foolish enough to pay ICAI. Lots of ACA use ACCA training, not just ACCA institute training but the training firms that are mainly geared to ACCA. I have PII with the brokers that have the CPA group scheme - because they are cheaper...

Agreed the ACA subs are also a rip off, I dont know that the ACCA subs are but I do hear ppl grumbling about them.

ICAI do treat practises the same - therein lies one problem - same level quality audit for Smurfits as for the guy with the corner shop.

My beef is that its capitalism for the small guy and socialism for the big guys.

mickbyrne

I agree with you on all your points, especially the one size fits all. I’m finishing off a credit union audit file (following the chartered audit programme) and the level of testing required is extremely detailed, but also extremely important.
QUESS WHAT – ONE OF THE TEST IS TO REVIEW THE TRANSACTIONS ON ALL THE DIRECTORS LOAN ACCOUNTS !!!!!.
If PWC had followed this programme instead of their own, it’s likely that the fiasco that they stood by and watched would never have occurred!!!!!
By the way got my practicing cert renewal form which I can complete very easily on line yesterday. Cost of renewal is £350.

JD Dublin

Mick I'm finishing off a few ITRs here before heading for the hills tomorrow, it wasnt PWC on Anglo it was EY as far as I know.

I agree if the simple things are done, then it is easy to find the bloopers in a set of accounts. Only the people involved know why they ignored the signs that must have been there, also the directors ( ACA s included ) who took out the loans must have signed Letters of Rep. So its an open and shut case even from here.

It goes back to the regulation though - if there was one prof body then the whole country would be better served end of story, stronger representation for the profession. Also that one body could be stronger with it's members, cause as of now an 'accounant' down the road can undermining the prices and doing a worse quality job, with no qualifications, and theres nothing that can be done about it. There is no prohibition on him using the word accountant, chances are he has no CPD, no PII, no subs, no monitoring visits.

Absolute madness having all the institutes we have.

mickbyrne

The economies of scale would also be far greater. ACCA will never merge because of their world wide nature.

Rather than having one, I would suggest having one body for practices outside the top 10 and let the top 10 be self or government regulated. If the same institute was representing me as representing a big 4, we would never get anywhere. I sit on a committee for the institute and know that things which would help small practices are being held up by 'issues' the big 4 have.

It's ridiculous at this stage that the term accountant is not controlled properly. Just recently I had to re-audit accounts for a charity which were being filed by an non qualified as audit exempt because turnover was below the threshold!! These are the kind of people we have to compete against. Best of luck with your ITR's. Hope to get back to them Friday when CU is finished.

oopsbritney

Very good op, I'm shocked the role of auditors hasn't been brought up in the Anglo case.

dbran

Ah yes.

But I believe that the big 4 "destroy" the record of the detailed audit work that is done and just keep the audit programes initialled and ticked and the audit assertions schedule.

That way it cuts down on storage costs but also is handy in that they dont have to say what work they did or even whether they actually did the work at all.

I have never worked in the big 4 myself but have heard this from several sources who have worked there.

dbran

mickbyrne wrote: »

I agree with you on all your points, especially the one size fits all. I’m finishing off a credit union audit file (following the chartered audit programme) and the level of testing required is extremely detailed, but also extremely important.
QUESS WHAT – ONE OF THE TEST IS TO REVIEW THE TRANSACTIONS ON ALL THE DIRECTORS LOAN ACCOUNTS !!!!!.
If PWC had followed this programme instead of their own, it’s likely that the fiasco that they stood by and watched would never have occurred!!!!!
By the way got my practicing cert renewal form which I can complete very easily on line yesterday. Cost of renewal is £350.

crapmanjoe

dbran wrote: »

Ah yes.

But I believe that the big 4 "destroy" the record of the detailed audit work that is done and just keep the audit programes initialled and ticked and the audit assertions schedule.

That way it cuts down on storage costs but also is handy in that they dont have to say what work they did or even whether they actually did the work at all.

I have never worked in the big 4 myself but have heard this from several sources who have worked there.

dbran

dunno where you heard that but it's definitly wrong

I'm in big 4 audit and every work paper is fully stored away and are kept in storage for 7 years ( think it's 7 years)

and not to get into the whole director loan thingy again but as far as I know what took place is not illegal

and the directors compensation declaration has changed this year, before directors had to disclose their year end loan balance, now they have to also disclose the largest loan position held at any point during the year!

You can't blame EY for following standard audit procedures

boardswalker

What exactly is the point of the audit?
The Big 4 will take the big fees but when something goes wrong they cry "but that was not what an audit is meant to do".
So why don't they put up in lights just what we can expect from an audit.
And I think the answer is that what it does actually deliver is worth very little.
"we are watchdogs not bloodhounds."
I would modify that to deaf, dumb and blind watchdogs.

mickbyrne

crapmanjoe wrote: »

You can't blame EY for following standard audit procedures

YES YOU CAN - Audit procedure should be designed to match the client being audited. Standard procedures are just a guide. Being trained in a small practice you get a much better understanding for the substance of transactions and how to design tests which will pick up things being hidden away.

mickbyrne

boardswalker wrote: »

What exactly is the point of the audit?
The Big 4 will take the big fees but when something goes wrong they cry "but that was not what an audit is meant to do".
So why don't they put up in lights just what we can expect from an audit.
And I think the answer is that what it does actually deliver is worth very little.
"we are watchdogs not bloodhounds."
I would modify that to deaf, dumb and blind watchdogs.

I agree with you. How can you audit the transactions of a bank where there are millions of transactions per annum, especially when the important transactions with directors are being ignored. The internal audit function should be given a statutory remit. These people are in place year round. If they don't to their job properly they should be jailed, and whistle blowers should be given more protection.

Don't get me wrong. I do not believe in a police state, but I do believe that everyone should do their own job right. This way, we wouldn't be in the economic hole that we are currently in.

whatawaster

mickbyrne wrote: »

I agree with you. How can you audit the transactions of a bank where there are millions of transactions per annum, especially when the important transactions with directors are being ignored. The internal audit function should be given a statutory remit. These people are in place year round. If they don't to their job properly they should be jailed, and whistle blowers should be given more protection.

Don't get me wrong. I do not believe in a police state, but I do believe that everyone should do their own job right. This way, we wouldn't be in the economic hole that we are currently in.

yeah quality candidates will really be queueing up for that job

mickbyrne

We've all seen the white collar crime being punished in America. In this country the justice system is a joke. A banker can get away with bed and breakfasting illegal loans (well it will take four of five years to put a case together that will be capable of being prosecuted) whereas someone in the district court will get 6 months for robbing a tv. Until such a time as all crime is treated the same, we will still have problems with corruption and lobbying in this country. And it is this which has caused our problems to be much more severe that other countries.

The alternative is to publish accounts to international investors who now dont believe what they are being presented with as they have had the wooll pulled over their eyes once before.

JD Dublin

crapmanjoe wrote: »

and not to get into the whole director loan thingy again but as far as I know what took place is not illegal

and the directors compensation declaration has changed this year, before directors had to disclose their year end loan balance, now they have to also disclose the largest loan position held at any point during the year!

You can't blame EY for following standard audit procedures

As yes joe, but if it didnt stink to high heaven, then why reduce the balance at each year end?

Does it not fall in the domain of 'window dressing' in that substantial tarnsactions are undertaken before and after the year end the net effect of which is to distort the balance sheet as at the year end?

Now at the risk of calling you an apologist for that sort of 'thingy'...... well there you have it.

I think you'll agree not E&Y's proudest moment.