‘Dull but rich’ accountants under pressure

Copyright: David Lawson 2001

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Monty Python may have been voted the best comedy show of all time but none of those will have come from careers masters and entrepreneurs.  They struggled for years to overcome a contempt for financial wizardry after a nerdy Michael Palin and bowler-hatted John Cleese marked accountants as dull, dull, dull and often dull.   US psychologists now say bean counters are born dull. Many of them seem to agree, according to a survey by the online service Accountingweb. ‘I’m OK. But everyone else is dull,’ said almost 40% of respondents.

   Try telling that to the senior partner of a surveying firm trying to attract bright young things. ‘Dull but rich,’ said one, wincing at the amount needed to entice a graduate away from one of the top accounting firms. ‘They pay 50% more than we can.’ In fact, dull is the last term that should be used for a profession that has transformed itself from routine bean counting to all-powerful consultancy in the decades since Monty Python joined its legendary parrot in the sky.

 ‘You are Masters of the Universe,’ veteran MP Austin Mitchell told a conference organised by Accountingweb earlier this year. The power of the ‘Big Five’ firms is equivalent to several small nations, generating worldwide fees of around $60bn.  Firms like PricewaterhouseCooper, Ernst&Young and  Arthur Andersen have their fingers in every kind of economic pie, advising not just  companies but whole governments. Only the giant US and German banks come close.

  There are around 200,000 accountants in the UK. ‘Far too many,’ David Bishop, a former president of the Association of Certified Chartered Accountants, told the conference ‘Breeding like rabbits,’ says Mitchell. But that does not stop the number rising as six – count them - SIX training bodies churn out more every year. One of the great current debates involves a new, global qualification which has split the various bodies into warring camps.

 And many hopefuls are still turned away. Entry requirements to a firm like PwC are a First Class or good Second degree from a ‘quality’ university, says partner Barry Gilbertson.  But not everyone works for the top dogs. Nor is everyone trotting cheerfully to the bank. A vast undercurrent of chartered, certified, management and public finance accountants make up the infantry of business and government. Little clues emerge about the pressures they are under. For instance, Whitbread recently revealed that accountants have overtaken policemen, soldiers and firemen in the queue to run a pub. And most of those are between 25 and 35.

   So what are these crushing pressures that drive a bean-counter to drink? ‘Much the same you find in a profession like surveying,’ says Peter Wyman, a partner at PwC. ‘Increased regulation, globalisation, technology.’  Firms are continuing to merge into giant, sprawling conglomerates under pressure to  match the global needs of big clients. That can marginalize smaller ones and  add countless rungs to the career ladder for those aiming for the top. Size frightens governments, leading to extra regulations such as the separation of audit and accounting functions being demanded in the US. This kind of regulation is sure to spread abroad, says Wyman.  

  Technology is another factor combining threats and promises. Bishop points out that Cisco, which vies with Microsoft as the world’s largest company, can use computer power to  produce annual accounts in a mere seven hours. Wyman points out that it still requires hundreds of accounting man-hours to get to that stage but cannot deny that simple bean counting is dying.  Even the higher functions are under threat. Companies will not have finance directors within 10 years, says Bishop. The role will be out-sourced – which is ironic, considering accountants are so deeply involved as management consultants stripping companies back to their core functions.

   Property professionals will recognize the undercurrent of fear, as  their in-house functions are also threatened by the same forces. In fact, the gulf between the two professions is rapidly eroding as they   are pushed to working more closely together. ‘Accountants never used to be involved in property. Now they are deeply involved in discussing the function and value,’  says Matthew Hill, of Arthur Andersen. A raft of reforms have taken place, bringing the two professions into partnership – and occasional conflict.

  Companies are being driven to offer greater shareholder value and strip back to core competencies. That often involves a more vigorous appraisal of property assets. Layered on top of this development are changes in accounting rules to bring leases onto balance sheets and force all property costs through profit & loss accounts.  ‘Every public company will  now have to value its leases. The question is whether this is done by accountants who acquire property knowledge or by valuers,’ says Hill.

  Far-sighted surveyors realised the dangers a decade ago and pleaded for accountants to be allowed into partnerships. Some even lobbied for mergers with the powerful management consultancies. Industry dinosaurs blocked progress: the institutions prevented mixed partnerships while senior partners feared loss of control to bigger accounting firms.  Yet this has now happened by default. Mergers with US firms have often put  financial experts in control.  Meanwhile, accountants rebuffed by surveying firms  formed their own property teams. At first, this was to handle receivership business in the recession, says Hill, one of 25 surveyors in Arthur Andersen’s London office. Now they chase the same consultancy business.

 The partnership of different professionals has become crucial to the industry. The higher profile and closer examination of  bricks and mortar within accounts is not the only factor. ‘Tax efficient vehicles are seen as the future of property and this involves accountants and surveyors working closely together,’ says Hill.  The relationship is not always comfortable, however. Many surveyors still look on those in the Big Five as subsuming themselves to minor departments, or unable to make it in the mainstream. Barry Gilbertson, who heads up around 80 surveyors at PwC, is adamant that the opposite is true.

  The big firms don’t pay more without expecting something more in return, he says. Entry requirements are higher: ‘I doubt that many with a first class degree come into surveying,’ he says. Training standards are also more severe: ‘We are required to do 60 hours a year. The RICS has set 60 hours over three years,’ he says. One of the first comments newcomers make is related to the level of brightness and ability to think laterally in the average accountant. This all makes it more difficult to recruit high calibre surveyors capable of holding their own against their accounting peers.

  Even the accountants feel that pressure, as the queue for pubs indicates. Perhaps when their numbers are matched by surveyors it will indicate that these professional partners have reached equality.

Main representative bodies:

-         Institute for Chartered Accountants - separate bodies for England/Wales, Scotland and Ireland with total of  139,000 members and around 19,500 students

-         Association of Chartered Certified Accountants - 72,000 members and 160,000 students spread across the world.

-         Chartered Institute of Management Accountants - about 45,000 members and 80,000 students across world

-         Chartered  Institute of Public Finance Accountants -12,500 members and 1,300 students

Big Five Firms: PricewaterhouseCoopers, KPMG, Arthur Andersen + Andersen Consulting, Ernst & Young Deloitte & Touche .They are a combination of business models: alliances, companies, partnerships.

Medium sized practices include Grant Thornton, BDO Stoy Hayward. They tend to specialise and have difficulties forming long-term international alliances. Independent accountancy companies have also started to come into the market

Key Issues

o       Globalisation – employers seeking international qualification; regulators want to deal with global agencies; national accounting standards are being replaced by global standards; anyone with an Internet connection can study for and sit exams at home.

o       recruiting and retaining the best people

o       avoiding costly litigation

o       offering consistency in quality across the world

o       forming strategic alliances

o       anticipating likely client demand

o       pre-empting the competition

Source: ACCA