Martin Wilson on Education, Regulation, Governance
At the outset of his term in office as President of the Institute of Chartered Accountants in Ireland, Martin Wilson has no shortage of major projects on the horizon. The process to implement the Strategic Review Group recommendations is gathering pace and the establishment of the Chartered Accountants Regulatory Board recently got the go ahead in a ballot of ICAI members. A new premises, and changes in the way in which the ICAI is governed, are just some of the other issues he will be tackling over the coming year.
Martin Wilson has a strong background in the financial services sector. Mr Wilson is the first ICAI President for 10 years to come from a business background. He says the one thing he has learned from his years in industry is that competition is healthy:
“A lot of people think that there isn't competition, or enough competition, in financial services but if you stand back and look at the way propositions are being priced in the business sector, if you look at the way institutions are trying to attract personal customers, whether they be mortgage or loan customers, you can see that there is serious competition.”
Citing his personal experience, Mr Wilson asserts that employment in the financial services sector has doubled in the last ten years. He says that the industry has made a significant contribution to the well being of Ireland Inc., and he sees no let up in the demand for good people - including qualified Chartered Accountants.
“I firmly believe that a strong financial sector is important to the well being of the economy now and in the future. The major banks are strong institutions. Whether or not they all remain in the hands of Irish investors is another day's work. The most important protection that the institutions have is to be as successful as possible, to have a share price that reflects their strong position and so makes it difficult for them to suffer at the hands of international predators.”
As Mr Wilson embarks on his year in office, he already has a number of major projects on his agenda, not least the continuing implementation of the recommendations of the Strategic Review Group (SRG).
“The SRG set out to take the ICAI to the year 2015 as a minimum so the implementation of their recommendations is not just a 2006 / 2007 initiative. It requires us to look into the future and the area where we will see most change is regulation.”
The setting up of the Chartered Accountants Regulatory Board marks a significant change for the ICAI.
“The main rationale for having independence is to improve the position of the Institute in the public mind, to ensure that we are seen to be totally transparent in the way our profession is regulated and to have an independent board regulating the activities of the profession will in my opinion be in the public interest. And if it is in the public interest it will be in the members’ interest.”
Mr Wilson suggests that one of the positive spin offs will be that Membership Services and the representation of members' interests will move higher up the ICAI agenda.
“That's not to say that it wasn't always high on the agenda but the perception of members was that regulation had usurped representation.”
“Serving the members it is not just about representation. It also involves communication - providing services that members require and need in the areas of taxation, life long learning, and indeed publishing, and providing the kind of basis from which members can seek appropriate guidance and thought leadership from the ICAI is extremely important if we are going to take the Institute to the next level,” Mr Wilson added.
In view of his business background, I asked Mr Wilson about his perception of the penetration of the CA brand at Chief Executive and Chief Financial Officer level in major Irish companies: “I look around at the Chartered Accountants that are CFOs and Chief Executives of PLCs and I really think we are the best represented profession in that area. I could list people that are CEOs of Aer Lingus, of Ulster Bank, of Paddy Power, of VHI, and so on. Similarly you could list off the Chartered Accountants who are in high profile positions as CFOs - Peter Lynch at Eircom, Fergal O’Dwyer at DCC and Conor Hayes at RTE to name just a few.”
“The important thing in ensuring our brand and the employability of Chartered Accountants is to make sure that our education is up to the appropriate level. We need to continually review our intake - and to ensure that to the maximum extent possible we are getting the best and the brightest students. We then have to make sure that the syllabus that we are using to qualify these people is relevant to business and that we have a flexible and appropriate training mechanism - that is not solely through the profession.”
At the post-qualification stage, the Institute has recently extended mandatory Continuing Professional Development (CPD) to Chartered Accountants working outside of public practice. CPD is moving to an output rather than an input measurement so ICAI members will in future have to look more closely at preparing development plans, actioning those plans, and measuring the output. Mr Wilson says it is incumbent on the ICAI to ensure that it offers appropriate qualifications, diplomas, and courses to help its members develop their skills - soft and technical - on an ongoing basis.
When it comes to serving on boards and audit committees, Mr Wilson says ICAI members should be taking on these responsibilities with their eyes open.
“The responsibilities associated with being a member of an audit committee or a board, and the sanctions that may be meted out against individuals who are found not to have fulfilled their duties properly- these are the kinds of areas that are worth considering. Good corporate governance, audit committee membership, non-executive director roles and responsibilities are all appropriate for post-qualification courses, diplomas and further qualifications,” Mr Wilson suggested.
The SRG recommended changes in the way in which the ICAI is governed, proposing the creation of a de facto board of directors below the Council, to be known as the ‘Executive Board’, charged with carrying out the operational responsibilities of the Institute on a day to day basis.
The SRG also recommended the establishment of four subsidiary boards: Members Services; Technical; Education & Training; and Marketing & Development. Each of these would be made up of both executives and volunteers.
It was recommended that Council should be expanded to represent more fully the fact that there are now more than 15000 ICAI members. Asked about the status of these recommendations, Mr Wilson said that it is an objective of his, during the course of his presidency, to implement these recommendations.
Importance of market research
Another key objective is to conduct market research both amongst ICAI members and other stakeholders: “We need to measure and track that research and continually update it so we can see how we are performing. I strongly believe that if something isn't measured it doesn't get done. If it is all ‘gut feel’ it is too much of a lottery for an Institute of our size. So protecting and developing our professional base and protecting and developing our brand is of paramount importance. We have already commenced work on gathering together the data necessary for us to do the appropriate level of brand audit,” Mr Wilson explained.
On the ICAI’s plans for new premises in Dublin and Belfast, the new President expects to see significant progress during his term in office.
“The objective is that in Dublin we would develop a landmark building of the order of about 60,000 sq ft. that will be able to carry out most if not all of the training and lifelong learning programs for students and for qualified members within the Republic of Ireland. With regard to Northern Ireland we are at an advanced stage to lease a premises in the centre of Belfast which will be of the order of 16,000 sq ft. and again it will have the capacity to carry out most of the training and life long learning requirements of the Institute in Northern Ireland. Both of these require significant investment but both have been in principle approved by Council and are necessary and appropriate in the context of the ICAI's position in professional and business life in Ireland.”
While it is early days in both of the projects Mr Wilson is hoping that building of a new head office for the ICAI will have commenced during his presidency.
AUDIT EXEMPTION LIMIT
On the audit exemption limit, Mr Wilson says “We are delighted that Minister Ahern has listened to the case made by the Institute on this issue. The current position whereby there is a differential of €5m between the Irish threshold figure and the UK figure was in nobody’s interest. The announcement by the Minister recognises, in line with broader Government policy, that regulation should be measured and proportionate. ICAI has long argued that there is a difference between what is appropriate for the SME sector and larger public interest entities. ”
Protecting the term ‘accountant’
Commenting that we are in the first full year of the operation of IAASA in the Republic of Ireland, Mr Wilson talked about the importance of developing good working relationships. IAASA has a consultation process underway to examine the protection of the term ‘accountant’ and Mr Wilson says the ICAI ‘will be not found wanting in terms of our submission in that regard’.
Limited Liability Partnerships
Limited Liability Partnerships is another important issue on which ICAI has been working on this with its sister accountancy bodies (and other professional bodies) and is now well positioned to make detailed submissions to Government.
Auditor liability is another thorny issue - particularly in the UK - where the question being asked is whether society would be well served by the demise of a further big firm. The revised 8th Directive is expected to tackle the issue. I asked Mr Wilson if that means that the work being undertaken by the ICAI is effectively ‘on hold’ at the moment.
“I wouldn't like to think that the work that we are doing is on hold but it will be influenced by the documents that issue from Brussels. We expect to see that documentation towards the end of this year and our strategy is to pursue the issue in Ireland and be ready to make whatever submissions are necessary to ensure that the wishes and desires of our members are reflected in the ICAI’s submissions.”
Relevance of the ICAI
Although his own background is in business, Mr Wilson is anxious to represent all of the ICAI constituency during his term in office.
“I would not want to give anybody the view that I will be batting for business only during the course of my presidency. I have a strong belief that the foundation of our profession comes through the practice stream and I don't believe many of our members that are in business and successful would have been as successful had they not been exposed to what occurs in practice. I am conscious that regulation is perhaps stifling the work of the professional accountant but rest assured that the Institute will be doing everything it can within reason to limit the burden of regulation on its members while recognising that there is a belief in the public domain that the days of chaps regulating chaps, and self regulation in general, should be consigned to the past.”
“The relevance of the Institute to all its members is important. Member services have improved dramatically in the past year. I believe they will continue to improve and I look forward to leading the Institute over the next year in what I think will be a very exciting and busy time - and a very productive time."
Daisy Downes is Editor of Accountancy Ireland.