London calling

Women, audit and party conversation in the UK.

Ernst & Young has promised that by 2015 some 30% of its new partners will be women and 10% will come from a black/ethnic minority background.

Managing partner Steve Varley said the Big 4 firm was committed to being the most diverse and inclusive employer in its industry. He sees it as an opportunity for the business, clients and people. Varley cited the firm being named Employer of the Year 2012 in Stonewall’s Workplace Equality Index as one of his highlights of the year.

Currently, 28% of the E&Y UK leadership team and 18% of partners are female. He stressed: “I know we can do more and I know we need to move forward so that we focus not just on gender, but also on the ethnic diversity of our people and partners.”

Varley admits that Ernst & Young is being bold in setting the aspirational goals for three years time. “We are clearly not there yet and aspirations alone won’t drive change, but we believe diversity and inclusiveness is a business imperative.”

Tendering will restore trust.

The UK Financial Reporting Council has published a revised Corporate Governance Code calling for all FTSE 350 firms to put their external audit contract up for tender at least every 10 years, unless explained.

The ICAEW’s Jo Iwasaki said: “ICAEW supports the introduction of a retender of the audit contract provided a comply and explain alternative is available.”

This, says the ICAEW, may help to alleviate the perception that long tenure reduces audit quality and auditor independence. It is also felt that investors will benefit from the increased communication over audit tenure, details on the timing of tenders and the selection process, as it will allow them to assess the effectiveness of both the process and the external auditor.

The ICAEW also said that more frequent tendering, which the revised Corporate Governance Code intends, may help increase competition. At the same time providing “explain” as a genuine alternative to “comply” would give businesses the freedom to carry out tendering at a time when it is right for them.

The FRC’s changes come as the Competition Committee announces it can’t find any collusion in the audit market. The Commission is part way through its audit market investigation and admits “certain features in the supply of audit services to FTSE 350 companies appear to be conducive to tacit coordination based on the identity of clients”. But it can’t find anyone guilty of something they haven’t done.

Time to talk accountancy

The ACCA has said the accountancy profession will continue to lose credibility if it fails to educate the public and other stakeholders about the important role accountants play, both in society and business.

A recent report Closing the Value Gap says there is a perception gap between the profession and the public when it comes to trust.

It asks all accountants to start talking about what they do and engage in direct discussions with the public about what it means to be an accountant. Party conversations may never be the same again!

A recent consumer survey found that just 29% of the public trusted accountants. Nurses had a trust percentage of 82% and teachers 69%.

Interestingly, the report also found that 70% of accountants accept that the profession was partly to blame for the financial crisis.

Critics of the report have felt the ACCA is blaming the public for accountants’ inability to communicate.

November 2012 - Graham Hambly