My friend and former City, University of London, colleague Prof Atul Shah attended the Institute of Chartered Accountants in England and Wales AGM this week, with the specific aim of asking its Executive questions on what is going on there. Atul is a fellow of that institute.
This is his report of what happened. I don't necessarily agree with Atul on all issues, but I do think he is right to say that it is the job of academics to stand up to power.
I attended the Annual General Meeting of the Institute of Chartered Accountants in England and Wales this week, and report here with Richard's permission.
There was a good audience of about 100 people. Most Council members were there, plus some executives, including the CEO.
I had written to them in advance, suggesting that I had questions to ask, and submitted the general themes. It took a lot of courage and homework to prepare these. I am sorry to say that many of my academic peers might write critical accounting papers, but few actually directly speak truth to power, even though our current crises demand that all activist scholars should do so. Not all of them are ICAEW members, so they cannot come to the AGM, but they could write letters to the President.
I raised some of the most serious issues facing the profession:
- The complete break of the profession from academic research, meaning that it really is a trade association, and not a professional body, something which members should feel ashamed of. This is in spite of the fact that world-leading interdisciplinary research in accounting is headquartered in the UK.
- Over £160mn of money accumulated from fines, largely paid by the Big 4 firms of accountants as a result of their audit failures. This sum is sitting in reserves with no clear strategy for its use.
- The significant regulatory capture of accounting by the Big 4, which is a global phenomenon, is also visible and real here in the UK.
- The significant importance given to accounting by King Charles III, who founded A4S (Accounting for Sustainability) and is the ICAEW patron by the Royal Charter, which should make the ICAEW a public interest profession and not a private corporate trade association.
- The ICAEW's non-compliance, in my opinion, with the Equality Act 2010 which requires public bodies to ensure equality of access and opportunity, with many protected characteristics, including gender, race, religion, disability, and more.
I encourage readers to study the 2024 accounts and look for words like audit failures, the crisis arising from the lack of professional trust, rising inequality, the environmental crisis, or even serious threats to our professional reputation. They are not there in the way I think would be appropriate. That is because these accounts are as much a spin as corporate reports, and that represents failure for a profession whose core responsibility is to protect the public interest.
Here are the specific questions I asked:
- Under the Equality Act 2010, we are obligated to collect membership data on a variety of protected characteristics and to ensure adequate resources are provided to support minorities, their progression, and to avoid any discrimination. Since we have 200,000 members, the diversity of this membership needs to be surveyed, reported, and monitored regularly, as is done by the SRA (Solicitors Regulatory Authority) to whom we benchmark. It has been 15 years since the publication of the Act. When will the ICAEW comply with its legal obligations? ICAS appointed a 35 year-old Sikh President a few years ago. Are we still living in the land of Empire?
- Many academic critics have called the ICAEW a trade association, not a professional body. This is a serious challenge to the credibility and sustainability of the profession and the standing of each of our esteemed members gathered here today. Some of the most pioneering and advanced inter-disciplinary research in accounting originated in Britain, yet it has not percolated into the professional curriculum. At the British Medical Association, research is regularly discussed, even in local chapter meetings. Our Royal Charter is seriously at stake due to the systemic failures of accounting, taxation and auditing. His Majesty said at the launch of his Accounting for Sustainability project (A4S) nearly twenty years ago, "There was a time when we could say that there was either a complete lack of knowledge, or at least room for doubt, about the consequences for our planet of our actions. That time has gone. We now know all too clearly what we are actually doing and that we need to do something about it urgently. Better accounting must be part of that process.” My PhD examiner, the late Professor Anthony Hopwood at the LSE, was an adviser to the King on accounting reform, and A4S has done wonderful work in transforming culture and leadership in accounting.
- Although not discussed in the 2024 accounts, we have a profound regulatory and systemic crisis in terms of consistent audit failures, with 30 current investigations, and nearly £160 million of money from fines already collected. These scandals have brought the profession into disrepute, a key part of ICAEW ethics code. Most of the fine money came from Big 4 audit failures, some of whose former senior partners sit on our Independent Board. The latest audit failure investigation by the FRC into EY and NMC Health resulted in a 550-page draft report. How much of this money is going to be applied to support research and training in the profession to ensure systemic reform, remove structural conflicts of interest, and what are we doing to teach students about the political, social, environmental and cultural impact of accounting, and its implications for social inequality? In particular, why is politics avoided altogether in the accounting curriculum, when it is a core reality of so much corporate accountability today? I also flagged up the outstanding work of Accounting Streams, and the application for a £1mn of funding, which was flatly rejected by the ICAEW. The project has achieved huge global success in spite of the ICAEW's rejection, with very few resources.
- Two of our most senior Board members were senior leaders in PWC tax and KPMG audit, activities which subsequently led to investigations by the FRC, and the Court of Luxembourg, where a LuxLeaks whistleblower was tried rather than protected, leading to severe fines and reprimands for the firms. Given that the ICAEW does extensive vetting of all leaders, how was it that such leaders were permitted to lead our profession with significant authority, and what signal does this give the world about the integrity and independence of the ICAEW from the Big 4 firms?
I know, you want to know what responses I got.
The CEO, Mr Vallance, offered to invite me to meet him about what the ICAEW could do to work with academics, to which I said it should not just be me but many others too, with outstanding research records. Active engagement and consultation with the academy was not a part of his refreshed strategy, which was announced yesterday.
On the Equality Act question, I was told that the SRA is not a good comparator as it has more specific legal obligations, and we cannot force members to respond to questionnaires. I responded to say we must follow best practice.
As to the other questions, one member accused me of self-publicity, and the Chairman, Mr Peter Wyman, was asked to reply to my question on the independence of the Board appointment process, to which he said all was fair and reasonable.
A few Council Members did come up to me afterwards and said they were happy I asked those critical questions and would like to follow up with the Executive on what I said.
One member took pains to explain to me how friendly and welcoming everyone was in the Council. I think I have started a reflection, but change is likely to be at a snail's pace.
I am glad I did my bit to flag the issues and show them what public interest professionals can do. An elderly man sitting next to me said he agreed with my probing - the profession today is completely unrecognisable from his own experience of the past.
I was particularly shocked by the total ignorance about what academics research and teach among Council members, let alone professional members. This is the reality today, and inter-disciplinary accounting education and training across the Board is an urgent need for the hour. it is core to practicing sustainability, not just talking about it. I think if the profession is not careful, it could lose its licence to train accounting experts altogether. It must invest in education which promotes professional judgement, scepticism and public interest protection, not private profiteering.
As far as the research-practice gap, we academics need to be much more self-conscious about our detailed theoretical research in top journals, whilst the world is burning away. We have a duty to become politically active, with Lord Prem Sikka as an exemplar and role model.
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Don’t know anything about this – but this from LSE may be tangentially relevant:
https://blogs.lse.ac.uk/businessreview/2025/05/28/how-to-reshape-the-accounting-profession-to-attract-younger-talent/
This is very good and indeed very relevant to the issues I am facing. The ICAEW needs to hold a critical debate on accounting education – it has great buzzwords like future-ready or career-ready accountants, but what does this mean?
It is an indictment of accounting as a profession if its members are unaware of research in its area, cannot evaluate or apply it, and simply do not care about this. The ICAEW and the ACCA in particular are unique professional bodies in disregarding and rendering its members ignorant of academic research. Their serving of private rather than public interests, unlike academic research, has deleterious effects. For example declining numbers of young people are wanting to study accounting or enter the profession.
However, change may be afoot. The 2025 UK Benchmarking Statement for accounting, prepared by academics, accounting profession officials and employers, requires the content and delivery of UK degrees to develop broader skills , e.g. critical analysis, communication, team working, and incorporate more research, often on sustainability, which is interdisciplinary, and addresses the needs and concerns of a wider range of constituencies. This is consistent with recommendations of reports globally by teams of academics, practioners and employers since the 1970s, which the profession has largely ignored.Moreover, its accreditation of accounting degrees has stultified progress towards these ends by emphasising technical calculations rather than broader considerations. Within academia we await information from the profession on how and whether future accreditation will further the new Benchmarking requirements. Or should university accounting degrees simply ignore accreditation? This ‘divorce’ would be damaging and regretable for both parties but is becomng a possibility.
Recently academics have called for a redefinition of accounting. They critique traditional definitions of accounting as predominately technical practice and propose a multidimensional alternative definition of accounting for shaping a better world, stating: “Accounting is a technical, social and moral practice concerned with the sustainable utilisation of resources and proper accountability to stakeholders to enable the flourishing of organisations, people and nature”. (Carnegie, Parker and Tsahuridu, Australian Accounting Review, 2021) This has attracted considerable support within academia and is consistent with the new Benchmarking requirements.
Academic accountants, within The Accounting Streams project (https://accounting-streams.org/), have prepared online first year accounting courses and teaching materials that follow the revised redefinition of accounting. They have received no payment for doing this and the courses are freely available for tusers. Despite modest funding, this altruistic project is attracting global attention. Hopefully it will gain more external financial and support to develop it further.
In summary, major changes, primarily but not exclusively, within academia are reshaping the scope and mission of accounting. The profession needs to be know more about this, collaborate, and provide support.
Many thanks, Trevor.
Much to agree with.
Accountancy is one of the very few professions that are not regulated. Anyone can call themselves an accountant, whether they have an accountancy qualification or have never opened an accountancy text book and struggle to add a column of figures. Is the lack of academic rigour a reason for that and would regulation be a good thing to aim for?
Yes
Thank you Trevor. You have been a pioneer in Accounting Education, and it is very good to have your endorsement. We cannot have a sustainable society if such powerful and influentional professional bodies behave in the protection of private interest. Challenge lies at the heart of accountability, and none of us should fear asking questions at such important meetings. Also leaders should welcome critique.
This chimes with two other topics Richard has explored today, bonds and taxing wealth.
The UK is resistant to new ideas, unless they originate in the hallowed halls of Whitehall and long-standing politicians. The Treasury is part of the problem, since it likes Britons to be kept in the dark. Political lies are tacitly encouraged rather than the public educated.
Imperialism also plays a part, as Prof Shah hints. Then there is the nationalist upsurge in Scotland, in response to English colonialism.
Until the whole class structure is broken down, “we know best” will drive out better standards. “We know best” people are responsible for the lack of judgement in accounting, overwhelmed by endless tick-box rules and conformity requirements.
I suspect that the many lies of Brexit have started a process in which the people will rebel against “We know best”, but it will take decades to transform the UK into a capable, successful, society. With decent accounting.
The first link in the post to “study the annual reports” is broken somehow. Contains a reference to a Google Chrome browser extension instead of the full address. The address is clear enough for me as a “techie” but others might just see the error and give up.
Sorry…
Thank you Prof Shah – I had heated arguments with a former President of ICAEW who was at the time (maybe still is) a Partner in KPMG, about standards in the Accountancy Profession; this was shortly after KPMG was embroiled in an audit furore. I had difficulties (1963) in obtaining a training contract to become a Chartered Accountant (Articles), mainly because I am female, but also because of my background. I refused to go to ‘finishing school’, nor did I go to University as I then saw little point in it although I had places offered to me, and in any event, my first choice of career was music and my Father would not allow that! I qualified in 1967 and a short while later went to work in Paris, where they were equally against women in business, but took me on as they were desperate for French speaking Chartered Accountants (it was during the riots of 1968/69). Times have moved on with discrimination against women now frowned upon, but there are many forms of discrimination, as you mention. After Paris, I worked as an employee for a while, and then went self employed with clients telling me that I was not a typical Chartered Accountant. In those early days of sole practice, I attended various CPE lectures – at one such for ‘small practitioners’, the lecturer was a member of the the professional standards disciplinary department and he started his lecture with the statement ‘rotten, the lot of you’ thus proving to us all the discrimination within ICAEW against small and sole practice. Many of us complained as we believed that we had higher standards than many larger firms. Richard has previously pointed out on this site that the monies from disciplinary fines are just sitting on the ICAEW Balance Sheet – ICAEW could do so much good with that but seem too blinkered to do so. I am now (thankfully) retired.
Thanks, Susan.
Much to agree with.
I made a formal compliant against the first oerson who ever reviewed my firm for the ICAEW – and I gather he was sacked. He was working in the role solely because he had a massive grudge against small firms and made the mistake of telling me.
as far as I know, the person who told us that we were all ‘rotten’, was finally fired – we were not told this, but I met him at a social gathering (he was on the same table as me – ouch), and he was looking for a job – needless to say, I informed everyone on the table what he had done, and I believe that wished that he had not attended!
Admiration…..
The number of investigations and reprimands against small firms has always far outnumbered equivalent partners of Big Firms even though the size of their scandals is much much bigger. This is why it is so critical that if Big Firm partners are appointed to top regulatory roles they are fully checked out.