CIMA is to withdraw from membership of the CCAB. As the world’s largest management accountancy body with a strong and growing global presence, CIMA is focusing its resources where they have the largest benefits for our members and students, the public interest, business as a whole and the science of management accountancy.
CIMA’s agenda is to develop and support the role of financially qualified business leaders who work in organisations around the world. Therefore the CCAB, with its emphasis on audit, has diminishing relevance for the institute.
CIMA sees the UK’s Financial Reporting Council (FRC) as the independent statutory regulator for the sector and plans to play an active role in both the FRC and International Federation of Accountants (IFAC) to pursue its strategic global ambitions where relevant to our stakeholders.
Please see the Q&As below for more information.
Q: Why has CIMA quit the CCAB?
A: CIMA has departed from the CCAB because on 24 January 2011 CIMA’s proposal that the CCAB accept our desire to go to binding arbitration on fees paid by CIMA to the FRC was denied.
The CCAB has, up until now, apportioned the payments from the principal accounting bodies to the FRC. We had developed a case, illustrated with facts and figures, as to why the current situation was inequitable for CIMA and were happy to put the case to an external arbitrator, but the other bodies were unwilling for this to take place. Such an outcome would have left CIMA members and students continuing to pay what it sees as a hugely disproportionate proportion of the FRC’s income.
CIMA has been paying a significant amount of money every year, essentially in support of the audit profession; money which should be focused on management accountancy, how it benefits the public, and the interests of our members and students.
Q: So will CIMA cease to be regulated by the FRC?
A: No, not at all. CIMA believes that the CCAB has not shared out the fees to the FRC fairly given that CIMA is not an audit body. However it recognises that the FRC is the statutory body for UK accountancy bodies and would contribute to the industry’s fees to the FRC on a basis that is fair and proportionate.
Q: Why does CIMA have a different view on this to the other CCAB bodies?
A: The other CCAB accountancy bodies have statutory obligations relating to audit and qualifications that CIMA does not have. CIMA is focused on developing and supporting the role of financially qualified business leaders on a global scale. It is not surprising that those with different agendas to our own have found themselves unable to respond positively to CIMA’s demand.
Q: Why shouldn’t CIMA pay an equal amount?
A: Some years ago the CCAB devised a formula to provide funding to the FRC for its work, which CIMA wholeheartedly supports and wished to continue funding on an equitable basis.
An analysis of FRC’s work by CIMA led us to believe that while the issues for which our members have expertise as financially qualified business leaders are an important component of the FRC’s work, they are not as substantial as the work done on audit related matters, which is familiar territory for most of the other bodies.
CIMA proposed a principled case, based upon the common public policy view that the costs of regulation should be borne by the regulated community. This meant that CIMA’s contribution to the CCAB’s formula for funding the FRC should diminish and for the most part, those of audit responsibilities should contribute more.
Q: Will this move impact negatively upon CIMA’s standing in the accountancy profession?
A: This will not be the case. CIMA is the world’s leading and largest professional body of management accountants and employers around the globe, who depend upon the 183,000 members and students whom choose us because of our world class status. In line with our global reach and strategy, we will continue to play an active role in the International Federation of Accountants (IFAC) and do not believe that our departure from the CCAB will detract from our continuous growth.
Q: Won’t CIMA be sidelined?
A: CIMA is a global organisation with many stakeholders. We will remain members of IFAC. We also recognise that the FRC is the statutory body for UK accountancy bodies and would accede to a requirement to contribute to the industry’s fees to the FRC that was fair and proportionate.
Q: Won’t the withdrawal devalue the CIMA qualification? What about job adverts that call for ‘CCAB qualified’ applicants?
A: CIMA's decision to withdraw from the CCAB will not affect the institute's standing in terms of our professional accountancy qualification. Historically, many job adverts have called for 'CCAB qualified' accountants as shorthand for, and to avoid, spelling out every member body. The CCAB itself had no qualification and only referred to the qualifications of its Chartered member bodies.
Going forwards, CIMA has agreed with the Head of Government Accounting Services that all related job adverts will call for 'CCAB, CIMA or overseas equivalent' qualifications and we are in the process of contacting leading recruitment agencies to inform them of this requirement.
Q: What did the CCAB do?
A: The CCAB undertook a range of activities on behalf of the six UK accountancy membership bodies. Full details of their remit and activities can be found at www.ccab.org.uk.
The CCAB was formed to represent the UK accountancy bodies as one united voice, but in many instances most institutes preferred to represent themselves. The CCAB required all bodies to agree on any joint activities and this often proved difficult due to the different focus of each body.
Q: Will the membership fee go down?
A: This is unlikely because the institute has a number of commitments and any savings CIMA achieves are likely to be directed back into activities that help promote the science of management accountancy and support our members and students worldwide. However, this is a matter for council when it considers the next annual budget.
Q: How does the proposed joint venture with the AICPA affect this deal?
A: There is no connection between the two decisions. The fact that they were announced at a similar time is purely coincidental. Both decisions are in line with CIMA’s strategy to promote management accountancy on a global level.