But there is no room for complacency, says technical director. By Tim Cooper, editor, email newsletters, CIMA.
When CIMA's director of technical development, Richard Mallett FCMA, joined us in January 2001 he wasn’t expecting to enter a political storm.
For 20 years before that he had worked in high-level finance roles at Boots, Sainsbury's and Reed International/Reed Elsevier. But one of the most challenging events of his career was awaiting him at CIMA.
Mallett said: 'Soon after I joined, Enron happened, followed by the inevitable political pressures around the world. We were invited to attend a Treasury select committee meeting with the ICAEW and ACCA for a grilling by the politicians. That wasn’t quite what I was expecting to be doing.’
Treading carefully
Has the accounting profession improved its image since then? 'The UK experienced similar events to Enron a few years earlier, for example, with Polly Peck and Maxwell,’ said Mallett. ‘Many checks and balances were put in place then. After Enron, they were reviewed. I don’t want to be complacent because you can never say never. But there is a good framework in the UK, which has been further refined.’
He said that the US probably over-reacted to the problem with Sarbanes Oxley. But they are recognising that and 'pulling back a bit'. He said: ‘The profession has got back some of the trust it lost. But it needs to tread very carefully to retain that trust and credibility.’
Mallett believes the UK accountancy profession is probably one of the strongest in the world because it is guided by principles not prescriptive rules. He added: 'There are strong benefits with the UK system - for example the concept of a true and fair view and "comply or explain”. The rest of Europe is picking up on these. There are a number of problems with the US system.'
Promoting thought leadership
Despite the early political hurdles, the job has been one of the most rewarding to date. Highlights include the development of the CIMA strategic scorecard, and the pensions liability and report leadership work. Mallett said: ‘When we see a product that we are proud of and hear people saying good things about it – that’s always a great moment. But it takes a lot of work to get to that point.’
The technical department plans to group initiatives such as these into a thought leadership project. Mallett explained: ‘The project will establish an infrastructure for attaining, promoting and disseminating thought leadership.
‘There are some good examples of thought leadership that we have achieved already. We have become a respected commentator on the UK's Operating and Financial Review, for example. The Financial Times published a CIMA opinion piece two days after the Chancellor announced the abolishment of the statutory nature of the review. There are two other recent examples. One is the article "The pension liability, managing the corporate risk". We have also formed a group with PricewaterhouseCoopers, Radley Yeldar and Tomkins, called Report Leadership.
Elsewhere, the technical team is proposing changes for the CIMA chair of accounting and financial management at the London School of Economics. The position has been held for the past seven years by the eminent Professor Michael Bromwich, who is soon to retire. Mallett said: 'We are looking at how to move it forward. One proposition is to have three part-time CIMA professors, possibly in different continents. That will help to give us creativity and global reach.'
Close relationship with IFAC
To add to his demanding workload, Mallett has also been working as a technical adviser for the International Federation of Accountants (IFAC). IFAC represents about 150 member bodies and 2.5 million accountants worldwide, more than half of whom work in business.
Mallett advises members of the federation’s Professional Accountants in Business (PAIB) Committee. This included Bill Connell, a CIMA member and ex-Council member, who chaired the committee until 31 December 2006.
'Bill changed the committee and its focus significantly,' said Mallett. 'We did a lot of work on it. I will now be advising two CIMA members on the PAIB Committee. Alfred Ramosedi is a CIMA member based in South Africa who joined the Committee last year. Keith Luck, who joined this month, was also recently appointed finance director general of the Foreign Office in the UK.'
One of the PAIB’s biggest pieces of work has been on enterprise governance, published jointly with CIMA. That was also the birthplace of CIMA's Strategic Scorecard.
Mallett is also involved in the sub-group that is developing IFAC's international management accounting statements and good practice guidance.
This association is part of a long-standing and growing relationship between CIMA and IFAC. Our chief executive, Charles Tilley, has been on the IFAC board for two years. Our director of education, Robert Jelly, is a technical adviser on the education standards board. And we also have a member on the developing nations committee, Lalith Fonseka from Sri Lanka, who is advised by Kathy Grimshaw, our director of international development, and Sam Louis, our regional director, Southern Africa.
Mallett said: 'It is important to keep a close relationship with IFAC. The federation recognises the strength of CIMA, the resources we can bring and the expertise of our membership. We make sure the relationship benefits CIMA and its members. We also publicise IFAC documents and initiatives such as the knowledge net. It’s a “google for accountants” - a focused search engine.’
Hearing the voice of business
CIMA’s technical department is also involved with the Federation of European Accountants (FEE), especially in financial reporting. Nick Topazio, CIMA’s business and financial reporting specialist and Jim Metcalf, a volunteer member and chairman of the Financial Reporting Development Group, are both in the FEE accounting and financial reporting groups.
Mallett said: ‘There are many other relationships like this. For example, I am an observer on the 100 Group’s Financial Reporting Committee. It means we hear the voice of large business. We are always on the lookout for experts in financial reporting who would like to engage with CIMA in this area. We are about to launch a virtual community of practice for financial reporting, so that is another way people can get involved.’
Under Mallett’s direction, alongside Kim Ansell, head of technical resources, CIMA’s technical department has grown in size and stature. He said people hear the word ‘technical’ and think it must be a dry job. But it’s important to stress the breadth and importance of the department’s roles.
Mallett believes the department has three main roles:
- the voice of members - by responding to consultations and representing CIMA's view to government, standard setters and others
- member support - through the technical information service (TIS), topic gateways and academic research to find out what is working well in companies
- reputation and profile – in Mallett's words, ‘we aim to get the CIMA brand out there, to earn the respect of decision makers’.
Topic gateways
TIS offers technical support to members, which historically involved people emailing or calling with questions. However it is increasingly moving towards self service through our topic gateways. Mallett said: ‘TIS still takes about 1,000 enquiries a year, but we are hoping that more people will go to the web. There are more than 20 topic gateways now.’
Another crucial part of the role is to build links with academia. Mallett said: ‘As part of our Royal Charter, we must develop and promote the science of management accountancy. We do this through our own technical specialists and thought leadership. But not all good ideas are invented here. We also work with academics with ideas of what we want and they come back with proposals. Our funded research is recognised as world class.
‘Last year the department began a seedcorn funding initiative. This is for developing researchers who perhaps don’t yet have a track record or for those with a concept that they want to develop.’
The department also sponsors academic and practitioner conferences.
A window on strategy
What is the latest on CIMA's strategic scorecard? Mallett said ‘During our work on enterprise governance (PDF 750KB), we studied companies from around the world that had performed well or badly. We found there was good oversight in many areas such as compliance and financial accounting. But there seemed to be little oversight of business performance.
‘So we looked at the strategic scorecard as a means of giving oversight. As well as acting as a tool for management, it also shows independent, non-executive directors how management is taking forward the strategic process in a transparent manner.
‘At CIMA, we have used the strategic scorecard successfully but we are keen for other organisations to do so. We found that EMI, for example, had already been using it for some time. And we are talking to a number of other organisations about trialing it.’
Testing of the strategic scorecard in companies is still in the early stages but Mike Lewis, director of risk at EMI, has already said he regards it very highly. A discussion paper on the scorecard was published in March 2005. An executive report and summary will follow in the first quarter of this year, giving guidance on implementation. Case studies should follow that.
It’s another step towards building the reputation of CIMA and of the profession around the world.
Contact: Richard.mallett@cimaglobal.com or tis@cimaglobal.com.