By Mark Lewis, Managing Director at Rutherford Cross, a market leading search and selection business focusing exclusively on senior finance professionals in Scotland
ON the front wall at CA House in Edinburgh, where ICAS, the world’s oldest professional body for accountants, is based, the organisation’s motto “Seek The Truth” is proudly displayed. This has served as a beacon of the principles the accountancy profession is built on since ICAS was founded in 1854.
Much has changed in the 170 years since, but perhaps never before has the pace of that evolution been so great. It makes trust in the profession and its practitioners of paramount importance, and nobody is more aware of that than ICAS CEO Bruce Cartwright CA.
When Cartwright took the top job at ICAS in 2018, accountancy was about to encounter a string of high-profile corporate collapses, including Carillion and Patisserie Valerie, that thrust the profession into the public spotlight, bringing heightened media scrutiny with it.
Questions were raised about the role of auditors and trust in the process was at a low point. It didn’t help in an environment where tax-avoidance schemes had already eroded public perception of accountancy amid a series of HMRC crackdowns.
We are still to see the implementation of legislative reforms recommended following the separate Sir Donald Brydon, Competition and Markets Authority (CMA), and Sir John Kingman reviews of the UK auditing system ordered in the wake of those major corporate collapses.
Cartwright expects the new measures, including the creation of a new regulator – the Auditing, Reporting, and Governance Authority (ARGA), to replace the Financial Reporting Council (FRC) – to come into play in the second half of this parliamentary term, and potentially as early as next year.
However, the former PwC partner and head of corporate restructuring in Scotland says many of the recommendations have been enacted by the industry already in a move he believes has been essential in maintaining the trust the profession is founded upon.
“People asked: ‘Where were the auditors, and why didn’t they step in?’, Cartwright explained. “And while auditors do not manage companies, mistakes were undoubtedly made. However, positive changes have come in their wake.
“While much has happened in the world since Kingman, the CMA, and Brydon to delay the implementation of their recommendations – Brexit, the war in Ukraine, and the cost of living crisis to name a few – the profession has not stood still, and audit firms have looked introspectively and made voluntary changes without the need for legislative intervention.
“The proposed legislation will focus on roles in the corporate ecosystem, with directors to be accountable for their actions and auditors to provide that independent assurance on what is being reported.”
Trust is the cornerstone of accountancy, and makes the role practitioners play even more important in this age of enhanced transparency, and particularly against a backdrop of rapidly advancing technological and sustainability demands.
Previously in this series, we discussed the growing importance of accountants and auditors in ensuring organisations meet their climate change responsibilities. In this age of enhanced transparency – and amid increasing accusations of greenwashing – the significance of this function is elevated even further. The same is true of developments in technology and particularly AI.
At one time, Cartwright explained by way of example, accountants might check a sample of 100 randomly selected purchase invoices from a collection of folders – possibly out of a population of 500,000 in a year – and look for any discrepancy to test the process.
Now, in certain circumstances, those 500,000 can be checked in around 30 seconds at the push of a button and examined by exception. Cartwright believes these developments place an even greater emphasis on the role of human input, and the importance of trust and transparency.
“AI was on the agenda six years ago, but even as drones are doing stock counts and the technology deals with huge volumes of work in certain areas in seconds, I don’t believe we’ve seen the real impact of it yet,” Cartwright said. “Even as it evolves, I don’t think we’ll ever see a point where human involvement – that essential intuition and emotional quality – is removed.
Technology is only as good as the algorithms and data it’s trained on, and there’s something about the human brain that can override it and see when things are not right – an intuition, backed up by professional judgment.”
Cartwright believes those who embrace and understand developments in technology and sustainability will be those who thrive as accountancy continues to evolve – provided they keep ethics and trust at the core of what they do.
It’s the reason ICAS has woven ethics throughout the new curriculum for its flagship CA qualification.
“This is the most exciting time I can remember in accountancy. The pace of evolution is getting quicker, but the fundamentals of the profession remain the same,” he explained.
“Accountants will always need to exist, and as the breadth of what they cover widens, there have never been more opportunities.”
Diversity is also essential to the future of the profession, and the pipeline for attracting talent into accountancy should be as broad as possible to foster diversity of thought, experience, background, and skills.
There’s a misconception accountants must excel in maths but Cartwright says this isn’t necessarily true.
Far more important, he stresses, is a strong ethical foundation, cynicism, and a critical mindset that ensures trust in the profession and the organisations they represent.
“We are committed to widening the net and opening doors to people from more backgrounds to get into accountancy, and as a profession we need that, as it brings new talent and new perspectives into the industry,” Cartwright said.
“There’s real optimism and excitement about the future of the profession. New challenges will arise, but the core principles of ethical leadership and trust remain. The accountancy profession offers endless opportunities for those willing to be brave and ambitious while holding onto the ethical strand that has guided it for close to two centuries. It’s our job to ensure the door is open.”
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