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FINANCE SUPPLEMENT - CIPFA MERGER ANALYSIS

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Two of the country's leading accountancy bodies are attempting another merger, but not all members believe the move...
Two of the country's leading accountancy bodies are attempting another merger, but not all members believe the move adds up, says Kerry Lorimer

A strong, united voice for the accountancy profession - or two failing organisations clinging together like shipwreck survivors?

Members of the Chartered Institute of Public Finance & Accountancy will vote this autumn on proposals to merge with the Institute of Chartered Accountants in England and Wales.

The leaderships of both institutes are pulling out all the stops to convince members that consolidation is in everyone's best interests. But they know that winning the support of the grass roots - many of whom regard rival institutes with suspicion or out-and-out hostility - is far from guaranteed.

In the past, proposals for consolidation across the accountancy profession have foundered on precisely these fears. Earlier this year, the Chartered Institute of Management Accountants pulled out of the merger talks, saying it needed more time to discuss the proposals with its members.

Although CIPFA and ICAEW have put a brave face on it, saying they will set a powerful precedent by going ahead with the merger anyway, there is no doubt CIMA's move rattled confidence in the proposals among members of the other two institutes.

Windsor & Maidenhead RBC head of finance John Taylor, a CIPFA member who supports a three-way merger, says: 'It worries me if CIMA are taking a step backwards because that will encourage other people to do the same thing.'

One London treasurer says: 'CIMA has looked at the proposals and said 'they're crap and we're glad we didn't join in'.'

Last time round, over three-fifths of the members of ICAEW voted in favour of a merger, but it was not enough to meet the requirement of a two-thirds majority. Many fear the same could happen again.

'They will put the block on it because they are too scared to join us,' says one county finance director. 'We're willing to share what we do with other people because we think it's quite good. But traditionally the other part of the profession doesn't want to work with local authorities because we're perceived as 'people who don't do proper accounts'.'

One ICAEW member contacted the CIPFA online forum to urge CIPFA to 'merge with CIMA if you want but please leave us alone'.

This member predicts the merger will not happen. 'Having spent 120 years developing such a successful premier brand, there's no way [members] are going to vote it down the swanee,' he says. '[ICAEW president Paul] Druckman's tactics are getting more and more desperate and ridiculous.'

But even if ICAEW votes in favour, are CIPFA members guaranteed to do the same?

Stephen Hughes, strategic director of resources at Birmingham City Council, says the time has come to bury traditional rivalries.

'There are a great deal more public/private partnerships leading to the use of private sector accounting techniques in the public sector,' he says.

'On the other hand, there is growing concern about the governance and probity of private sector concerns, and they have imported many of the techniques traditionally adopted by the public sector to maintain accountability to stakeholders.'

Many directors of finance support the merger on efficiency grounds. 'How can you support six different accountancy institutes in one country?' says Gareth Moss of East Staffordshire BC. 'It's a nonsense. The merger has to be a good thing.'

Others remain to be convinced, fearing the size of ICAEW's membership - 126,000 to CIPFA's 14,000 - will mean the focus of public sector accountants will be lost.

'I am not convinced by the propaganda,' says another director of finance in London. 'If I had to vote now, I'd vote against it. I fear we will be swamped by the ICAEW. CIPFA is asking people to give up their qualifications, and it's not clear what the benefits are.'

Some CIMA members have contacted

CIPFA's online forum to warn of the dangers of integration. One says that, having read the draft proposals, it was clear the proposals had been driven by the ICAEW. For CIPFA to surrender its own charter and adopt the ICAEW one is 'nonsense', he says.

'This is specifically the reason why CIMA is not joining the party. We do not want to lose our charter and adopt the ICAEW, which is seriously declining in respect, popularity and recognition.'

Another says: 'I would advise CIPFA members to be very careful with the ICAEW.

'The average age of its members is increasing dramatically and the institute is suffering from a serious lack of student registrations.

'Do CIPFA members want to be absorbed by a declining institute? Do you want the CIPFA qualification to disappear from the picture? Do you want your qualification to decline going forward?

'These are some key questions you need to ask yourselves before voting for or against the merger with the ICAEW. Remember, CIPFA is far too small to rescue the ICAEW.'

What does ICAEW really think of CIPFA?

ICAEW pays tribute to CIPFA as a 'world-leader in its field . . . at the cutting edge of public sector standard setting'.

President Paul Druckman notes: 'With public services now accounting for 30%-40% of the global economy, this represents a huge growth area for the profession.'

But Tony Morwood-Leyland, an ICAEW member who works in the public sector and backs the merger, says CIPFA as a separate institute does not confer the stature on members it should.

'CIPFA members feel out in the cold sometimes - the accountants don't get a lot of kudos out of it, they don't think they're as good as us,' he says.

What does CIPFA really think of ICAEW?

CIPFA chief executive Steve Freer describes ICAEW as 'a very impressive organisation'.

However, many members say ICAEW is losing clout nationally and internationally.

'ICAEW is struggling financially and has no international presence,' says one CIPFA member.

'Prestigious, exclusive and high-quality accountants are no longer heard of because they have fewer members and many are 40 yearsold or over, compared with other accountancy bodies who are young and enterprising,' says another.

'The consolidation proposal from ICAEW is an ongoing desperate search for survival and recognition.'

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