Merger discussions heat up the industry

Three U.K. accounting designations are exploring a consolidation that, if approved, will reshape the global professional accounting landscape 

By Robert Colman

A year ago, The Guardian newspaper ran a scathing article about the “internecine warfare” among the various accounting bodies in the U.K. Although the article probably over-dramatized the division among these organizations, like any country with multiple accounting designations, there has been a certain amount of competition — and in Britain, there are a lot of competitors.

The U.K. has six unique designations (often referred to as the big six): Chartered Institute of Management Accountants (CIMA), Chartered Institute of Public Finance and Accountancy (CIPFA), Institute of Chartered Accountants in England and Wales (ICAEW), Institute of Chartered Accountants of Scotland (ICAS), the Association of Chartered Certified Accountants (ACCA), and the Institute of Chartered Accountants of Ireland (ICAI).

The associations have attempted to merge in the past and do collaborate in the Consultative Committee of Accountancy Bodies (CCAB), which is the UK representative in dealings with the European Commission. The CCAB also provides a forum in which matters affecting the profession as a whole can be discussed and coordinated, giving the profession a unified voice in discussions with government.

There has yet to be a successful attempt at merging any of these organizations. However, because they understand that divisiveness isn’t in the public interest, this situation may change very soon. In July, CIMA, CIPFA and ICAEW announced that they had initiated “exploratory talks” toward consolidation. CIMA representative Nadia Manuelli says this has happened “because [the organizations] have conducted internal strategic reviews and identified similar agendas and complementary strengths. The potential would be a single, global professional body with an unrivalled membership, range of skills and powerful influence.”

The influence of such a merger would be remarkable. It would represent in excess of 200,000 accountants and more than 85,000 students. It would also represent a number of specialty streams in the accounting profession.

“The three bodies all have really excellent qualifications,” notes a release on the ICAEW Web site. “They also share a significant core of common content and reflect similar educational philosophies. The new body will maintain the quality and relevance of its suite of qualifications. Existing standards of entry will be maintained, as will routes to qualification for existing students of each body.”

Clearly, such a merged organization would likely include a choice of streams — covering everything from financial management, audit and assurance, tax, and corporate finance — much like the proposed merger of CMA Canada and the Canadian Institute of Chartered Accountants.

“This is a tremendous opportunity for us to demonstrate that the whole really can be greater than the sum of the parts,” said Mike Barnes, president of CIPFA. “A new institute built on the impressive foundations of three highly successful organizations would be able to command a position of tremendous influence in the global profession.

“Of course, the proposal will have to be worked up and tested very carefully,” he continued. “We must be able to demonstrate with real conviction that it serves the public interest and that it offers practical benefits for members.”

Indeed, it would be rash to suggest that a merger of these three organizations is anything close to a done deal. At press time, one of the organizations had yet to go to its board with the full proposal. Once that has been done, there are still many discussions and details to review. The hope is that it will go to a vote of the members by June 2005 at the latest. Regardless, it’s a clear signal of change in the international accountancy industry that everyone will be watching carefully.

Whether or not the merger is successful, it is a clear indication that professional accountants in many jurisdictions are looking at innovative ways to meet the needs of the global marketplace and address critical issues such as standard-setting, member competency, enhanced services, and quality growth.

“Consolidation does have significant attractions,” noted Steve Freer, CIPFA’s chief executive. “It would create a simplified structure and a more joined-up profession, better equipped to deal with both the inexorable convergence of public and private sector standards and the sharing of innovation and good practice across the economy.”

“As the challenges facing the global accounting profession become more complex, the need to maintain a strong voice on that international stage becomes paramount,” says Steve Vieweg, CMA, FCMA, president and CEO of CMA Canada. “The common core beliefs and knowledge at the heart of strong associations comes to the fore. The forces driving the potential merger of CIMA, CIFPA and ICAEW very much parallel those that face CMA Canada as it considers a potential merger with the Institute of Chartered Accountants of Canada. More and more professional accounting associations are recognizing that strategic partnerships are a key element in the ability to compete effectively on the global stage.” 

Robert Colman is editor-in-chief of CMA Management. 

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