Professional bodies are unusual, at least in English law. They require a Privy Council charter to entitle them to operate. The ICAEW's charter was granted in 1880. It's latest summary of that charter says:
The ICAEW operates under a Royal Charter, working in the public interest. Its primary objectives are to educate and train Chartered Accountants, to maintain high standards for professional conduct among members, to provide services to its members and students, and to advance the theory and practice of accountancy.
Why do I make this point? Well, only because Jason Holden and I have been having a debate in the comments on this blog about the duty of an accountant. Jason says :
"it is the government (of the day) that has a duty to society as a whole, and the professional advisor who has a duty to his/her client"
and I say accountants have
" an ethical duty to society first and their client second (and I think this is essential as it is the basis of the licence a society grants to a profession which enables it to extract its super-normal profits in return for the privileges it is given)".
Jason still disagrees with me, and that's his right. But, look at how the ICAEW put this: they say the charter is for 'working in the public interest' and I cannot reconcile tearing the tax code to pieces with the public interest. Nor can I reconcile tax avoidance in general with that purpose. And it's also clear from the interpretation of the Charter that the ICAEW itself uses that the public interest comes first.
There's a lot of debate in the CSR world on companies 'licence to operate'. I think it time we did the same for the professions, and that they took action to preserve that right. In my opinion, that licence is at risk and radical reform is needed to ensure its continuation. That will only happen if society sees it as worthwhile. And questions will continue to arise as to whether that is the case whilst accountants and other professional people continue to abuse the societies which grant them the licence to make super-normal profits.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Oh Richard, I think we are going to disagree, again. The Royal Charter says public interest, not society as a whole, its intention is to safe guard the public, and I interpret this as my individual clients, who are members of the public.
I think you are going too far in your interpretation; surely the intention of the Charter is to protect and serve the best interests of your clients (public interest) who pay your wages and not keep a wider eye on the public good (society as a whole), as I have already said society as a whole is the responsibility of the government of the day.
You also mention super-normal profits, these (except in certain circumstances) have not been seen since the 80s, which I am sorry to say I only started training towards the end off and therefore didn’t share in the super-normal profits.
But if someone does earn a high income so what, aren’t we entitled to profit from our own endeavors and hard work, I feel your arguments are becoming a bit blinkered by socialist ideals Richard.
You state:
‘There’s a lot of debate in the CSR world on companies ‘licence to operate’. I think it time we did the same for the professions, and that they took action to preserve that right. In my opinion, that licence is at risk and radical reform is needed to ensure its continuation’.
The is no such license to operate in the UK as you don’t have to be qualified as either an accountant or tax advisor to operate here, it is a very free market economy. There is a lot of competition on both price and service offerings.
The profession will continue of that there is no doubt, but it is and will continue to change, for the smaller practice gone are the days of audits, these often expensive and fruitless exercises are now being replaced by business advisory and wealth management services. It is these services that can benefit the client, unlike have paid £000s for an audit.
Advisors I know and meet these days certainly have no expectation of being owed a living they are very competent and clever people who do their best for their clients, but they want rewarding for not only 5 years plus of professional education but also for their talents.
And by talents I mean those who are able to interpret the tax system to the advantage of their clients, and this Richard is not tax avoidance as your refer to in your posting but mitigation, again if you don’t like the fact good/clever advisors are able to do this then push for a simplification of the tax system, it’s the only way it can work, but I for one wouldn’t have a clue where to start, because what ever you do some section of society will be worse off, that’s just a sad fact of life!
Jason
I’m afraid we continue to differ. What you describe is the private interest of your clients, which is clearly in direct contrast to the public interest of cociety, to which the charter refers. I really do not think it possible to impute public interest to an individual and in that case all your logic that follows is, I think, wrong.
I also happen to think, based on my pretty broad view of the market, that chartered accountants do continue to earn super-normal profits from the privelige of status granted to them (albeit, secured by examination). The market is competitive, and the reality is, as you say, many can rival the service chartered accountants offer, but they have to usually offer a price differential to win the business, purely because of that bit of paper us ‘qualified’ people have.
Richard
I have not seen those ‘without a bit of paper’ offering lower prices to gain business.
The public have a choice, you use someone qualified, regulated and insured or you don’t.
The thing I don’t understand Richard, accountancy is a business, why do you take this dim view of these business people earning high incomes?
As you are aware the public can use anyone they wish, they can negotiate the fee at a level they are happy with etc etc, just like with any business they don’t have to buy their services from one source they can shop around.
Also, I think very rarely would the private interests of an individual concur with those of society at large, but then we are in a FREE society and not a socialist society/environment, thank god!