Learning to work by the book

ACCOUNTANTS have been under the spotlight ever since the highly damaging corporate failures of the early Noughties: Enron and WorldCom in the US, Adecco and Parmalat in Europe. The unprecedented scrutiny resulted in questions being raised about the behaviour of certain individuals and firms in particular, and the effectiveness of the profession as a whole to train and regulate qualified accountants.

The profession was quick to react to the concerns - recognising that accountants are at the heart of business confidence and play a crucial role in providing stakeholders with reliable financial information.

There were a number of developments that accountants had to get to grips with quickly. The introduction of International Financial Reporting Standards (IFRS) was given a kickstart by problems in the Asian markets in the late 1990s, when it was realised that greater transparency was needed in the way companies presented their accounts. The standards have become compulsory for listed companies this year.

And following the Enron and World-Com scandals, tougher corporate governance rules were introduced through the Sarbanes-Oxley legislation in the US, which has had a major impact on accounting regulation around the world.

The new rules and regulations provide challenges and opportunities for would-be and existing accountants.

No professional currently working can rely on qualifications that were gained years ago, while businesses are prepared to pay premium rates for experts in IFRS and Sarbanes-Oxley (Sox) compliance.

This is not just because they need to meet the requirements of new regulations but also to meet the demands of increasingly empowered stakeholders, who are becoming more vocal at AGMs and more discerning when reading annual reports and accounts. They want to see evidence that finance professionals have the knowledge, skills, values, ethics and attitudes in a rapidly changing business environment.

Currently, there are not enough people in the UK with experience of IFRS or Sox, which means that many more accountants will have to be trained in these crucial areas. And more legislation and requirements are likely in five years' time as the business landscape changes again.

All of which makes it critical that finance professionals - along with the organisations that employ them - ensure that training is given a high priority.

The signs are encouraging - research by the Association of Chartered Certified Accountants (ACCA) has shown that in response to the greater emphasis being placed on finance professionals keeping their skills up to date, nearly half of all employers surveyed have increased their training budgets.

In common with other accountancy bodies, ACCA has already moved to ensure that all its qualified members will maintain and develop their skills, as well as being able to demonstrate integrity, objectivity and willingness to take a firm stand on difficult issues.

It has developed ACCA Realise, a new continuing professional development (CPD) scheme, which introduces a requirement for members to declare that they are working to the highest ethical standards.

ACCA will be responsible for ensuring that its members complete CPD, by monitoring declarations and ensuring the studies they are undertaking are effective and relevant to the needs of their employers or clients.

ACCA will also provide guidance on best practice and behaviour for members when they sign ethical declarations. This provides an influence that is independent of their organisation's culture.

The need for this is demonstrated by Sherron Watkins, a " whistleblower" at Enron, who noted that colleagues, including accountants, did not realise they were doing anything wrong because their moral frameworks and judgments had been overwhelmed by Enron's culture.

ACCA and other professional bodies will be responsible for ensuring that members comply with the new requirements through their umbrella group, the International Federation of Accountants, which requires all members of the profession to engage in continuing education throughout their careers from January 2006.

Companies may find that governments or regulators will require them to report publicly on how the finance professionals they employ have maintained appropriate skills, knowledge and ethical standards.

THERE are clear benefits to businesses and financial professionals in being able to demonstrate this. It will provide assurances to stakeholders and clients about those who prepare financial information, it should enhance the reputation of professional accountants, maintain their effectiveness and distinguish between unqualified and qualified staff.

Employers need to be aware of the form and level of study that professional accountants must take to comply with their accounting bodies' CPD schemes.

They must also ensure they support their finance staff, not just those who are members of professional bodies.

Employers should consider if they are ready for the move towards more regulation of the preparers of financial information. Are finance professionals provided with adequate training opportunities? Are they confident they remain up to date and follow good practice and ethical guidelines? What guarantee could they provide about the effectiveness of finance professionals to stakeholders?

There is also the issue of reward.

Surveys in the UK show that people were much more concerned to have broader responsibilities and new challenges from a job promotion than they were to get a pay rise.

One report by an online recruitment site was drawn from 3,700 responses among UK employees to a web-based survey. People who had received a job promotion in the past five years were asked to state what was the one change in their working lives they had most wanted from the promotion.

Three out of four decided that "being given bigger responsibilities" was their priority. Only 17 per cent of respondents placed "getting a pay rise" first.

Therefore, enabling employees to develop skills to tackle new responsibilities through structured and relevant CPD should be seen as good for employer and employee alike.

* To find out more about ACCA's CPD scheme, go to www.accaglobal.com/realisecpd

(c)2005. Associated Newspapers Ltd.. Provided by ProQuest Information and Learning Company. All rights Reserved.