Institute of Chartered Accountants in England & Wales

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The Institute of Chartered Accountants in England & Wales (ICAEW) was established by a Royal Charter in 1880^[1]. It has over 130,000 members. Over 15,000 of these members live and work outside the UK. The Institute also has some 9,000 students.

The Institute is a member of the Consultative Committee of Accountancy Bodies (CCAB)^[2], formed in 1974 by the major accountancy professional bodies in the UK and Ireland. The fragmented nature of the accountancy profession in the UK, is in part due to the absence of any legal requirement for an accountant to be a member of one of the many Institutes. This is because the term accountant does not have the same legal protection in the United Kingdom as that given to, say, doctors and lawyers. There are, though, certain legal rights and duties which are available to professionally qualified accountants. For example, individuals who operate in the areas of audit and insolvency must be registered and only members of certain chartered accountancy bodies (such as the ICAEW) are eligible for such registration. Likewise individuals who describe themselves as "chartered accountants" must be a member of an accountancy body which holds a 'Royal Charter' and if working in public practice these chartered accountants must comply with additional regulations such as holding indemnity insurance and submitting to regular and independent inspections.

The ICAEW has 2 offices; the main one is in Moorgate, London and the other in Central Milton Keynes, in the newly built Hub:MK complex.

Contents 1 Admission to membership 2 Membership categories 3 The Faculties 4 History 5 Recent developments 6 Criticisms 7 References 8 See also 9 External links

[edit] Admission to membership

To be admitted to membership of the ICAEW, applicants must generally complete 450 days of relevant work experience (training) and pass a series of examinations. The work experience lasts between three and five years and must be with an employer or employers approved by the Institute for training. The examinations are in two stages, professional stage (twelve papers) and advanced stage (two papers and a case study, which must be taken in the final year of training).

Existing members of ACCA, CIMA and CIPFA of over five years membership may be admitted, subject to passing an Examination of Experience ([1]) and sponsorship by two ICAEW members. Members of equivalent bodies in other European Economic Area countries and Switzerland may also be admitted to membership after passing an aptitude test, provided they are a citizen of an EEA state or Switzerland.

The Institute has mutual recognition agreements in place with:

• Institute of Chartered Accountants of Pakistan
• Institute of Chartered Accountants of Scotland
• Institute of Chartered Accountants in Ireland
• Institute of Chartered Accountants of Australia
• Canadian Institute of Chartered Accountants
• New Zealand Institute of Chartered Accountants
• South African Institute of Chartered Accountants
• Institute of Chartered Accountants of Zimbabwe
• Hong Kong Institute of Certified Public Accountants

ICAEW members may be admitted to full membership of the above institutions after passing an aptitude test or subject to other specific requirements.

[edit] Membership categories

• Members have the designation ACA (Associate) or FCA (Fellow) after their name.

• Fellowship is intended to designate those who have achieved a higher level of professional experience. It is awarded, on application, to those members who have attained at least ten years of membership and who, at the date of application, have complied with the Institute's requirements on continuing professional development in the preceding three years and have no outstanding disciplinary charges against them.

[edit] The Faculties

The ICAEW includes a number of specialist faculties which provide additional benefits and information to members who can select which faculties to join on payment of an additional annual fee. The Faculties currently cover: Tax, Audit & Assurance, Finance & management, Information Technology, Corporate Finance and Financial Services.

The faculties of the ICAEW were originally conceived as being centres of technical excellence for professionals working in each of six key areas. The faculties provide support and technical expertise but members who join them are not necessarily technically expert themselves. ICAEW members are attracted to join one or more of the faculties because they perceive that they receive value for money for the additional subscription through the magazines, books and other benefits they obtain including formalised opportunities to network with professionals who have similar interests, experiences and goals.

Each Faculty has two masters. Their staff are employed by the ICAEW and are part of the Technical Directorate of the ICAEW. However they also have responsibilities to those members who have chosen to pay an additional subscription to belong to the faculty or faculties of their choice. Some of the faculties are obliged to provide information and resources to all members of the ICAEW albeit that Faculty members receive additional benefits and material that are not made available to all members of the ICAEW.

The faculties are also responsible, through their staff and volunteer members, for representing the ICAEW's views on relevant subjects. This includes making representations to Government, responding to consultation papers and discussion documents as well as formulating and promoting a programme of thought leadership activities relevant to the faculty's main focus.

[edit] History

Until the mid-nineteenth century the role of accountants in England and Wales was restricted to that of bookkeepers in that accountants merely maintained records of what other business people had purchased and sold. However, with the growth of the limited liability company and large scale manufacturing and logistic in Victorian Britain a demand was created for more technically proficient accountants to deal with the increasing complexity of accounting transaction dealing with deprecation, inventory valuation and the Companies legislation being introduced.

To improve their status and combat criticism of low standards, accountants in the cities of Britain formed professional bodies. The ICAEW was formed from the five of these associations that existed in England prior to its establishment by Royal Charter in 1880.^[3]

1. The Incorporated Society of Liverpool Accountants, formed in January 1870^[4];
2. The Institute of Accountants in London was formed in November 1870^[5], comprising 37 members under the leadership of William Quilter. In 1871, standards for membership were established with new members having to show knowledge and aptitude through successfully passing an oral examination. Initially the London Institute restricted its membership to that city, but as other institutes were established elsewhere (for example, in Manchester, Sheffield and Liverpool) it was decided to remove this restriction and as such in 1872 it simply became known as the Institute of Accountants to reflect its new national coverage;
3. The Manchester Institute of Accountants, formed in February 1871^[6];
4. The Society of Accountants in England (1872)^[7];
5. The Sheffield Institute of Accountants (1877))^[8].

In 1957 the ICAEW merged with the Society of Incorported Accountants (founded 1885 as the Society of Incorported Accountants and Auditors)^[9].

[edit] Recent developments

In 2005 the ICAEW sought to merge with the Chartered Institute of Management Accountants (CIMA) and the Chartered Institute of Public Finance and Accountancy (CIPFA). However, this project proved unsuccessful. The Institute also announced at this time that it was considering dropping the reference to England and Wales in its title to become the Institute of Chartered Accountants. However, this plan was also withdrawn.

The Institute introduced a new syllabus in 2007. In order to make it more appealing to prospective students the policy of time-barring students has been removed and the exams which need to be taken will become more flexible as a modular structure is to be introduced. In addition to paper based assessments, there are now computer based assessments of objective test questions (multiple choice). According to the ICAEW website the pass rate for the initial sittings of these exams was around 60% for the basic accounting paper, substantially lower than the pass rate in the old syllabus for the comparative early hurdle exams.(Ref needed)

[edit] Criticisms

The ICAEW has allegedly been lax in disciplining its members ^[10][11].^[12][13]

The ICAEW imposes discipline on its members by reference to its disciplinary by-laws ^[14] The liability for disciplinary action is set out in 4, 5 & 6. The problem is that the 2 main liabilities for disciplinary action are entirely subjective. For example, what exactly constitutes bringing the profession in to disrepute? Most people would imagine lying during the course of an investigation (analogous to wasting police time, perverting the course of justice and/or perjury), for example to breach this hurdle. This isn't necessarily so. How often does an accountant have to perform his duties inefficiently and incompetently and to what an extent to breach the hurdle? The hurdle is decided by the ICAEW who clearly have a vested interest in defending their members. The first hurdle to overcome is that a complainant's case will be dealt with by the ICAEW Head of Assessment and Conciliation. He can dismiss the case without referring it to the Investigation Committee. A complainant must then somehow persuade him to pass it on to the Investigation Committee.

If the Investigation Committee back the Head of Assessment and Conciliation then the complainant can take their case to a Reviewer of complaints. ^[15]. The address to which correspondence to the Reviewer of Complaints is sent is that of the ICAEW HQ. The reviewer of complaints is appointed and remunerated by the Council of the ICAEW on a renewable basis for a period not less than 3 years.

The other body responsible for ensuring that the ICAEW conduct themselves in a satisfactory manner is the Professional Oversight Board (POB) of the Financial Reporting Council ^[16]. Unfortunately, in the case of accountancy breaches, POB can only make recommendations to the ICAEW regarding their conduct, they have no powers "either to overturn any decision which the ICAEW has made in a case or to direct how the body should handle a case".^[17].

A complainant could write via their MP to the Secretary of State for Business, Enterprise and Regulatory Reform ^[18]. Clearly, an individual complaint even of a substantial nature is unlikely to lead to immediate reform of this organisation, however.

Finally, a complainant could pursue a case that an ICAEW member has broken the ICAEW code of ethics^[19] with the International Federation of Accountants (IFAC)^[20] an international body which developed the code of ethics on which the ICAEW code of ethics are based on. Unfortunately, IFAC only require that their member bodies' code of ethics are no weaker than IFACs. They do not ensure that the member bodies actually take any regard of or enforce the code of ethics, rendering the code of ethics a pure PR tool.

The IFAEW decided in May 2007 that they would hold disciplinary tribunal hearings in public from January 2008 - this was first requested by the Financial Reporting Council in 2002 who pointed out that not holding public hearings was a clear breach of the human rights act^[21]. However, they can exclude members of the public from all or part of the hearings and no member of the public has to be present in order for the hearing to proceed. The IFAEW is also able to decide as to how they wish to advertise the time and location of the public hearing. I've been unable to find any such announcement on the internet.

[edit] References

[edit] See also

• British qualified accountants
• Accountant

[edit] External links

• Key Facts and Trends in the UK Accountancy Profession - July 2007
• Key Facts and Trends in the UK Accountancy Profession - November 2006
• Official website of the ICAEW
• Consultative Committee of Accountancy Bodies
• Audit and Assurance Faculty home page
• Corporate Finance Faculty home page
• Finance and Management Faculty home page
• Information Technology Faculty home page
• Tax Faculty home page
• Financial Services Faculty home page
• IFACnet Homepage
• CharterQuest Homepage
• ICAEW's 'IT Counts' social networking website, launched in 2008