Loughborough University - Role of Finance

Accountancy profession in the dock

Accountants were put on trial last night, accused of failing to communicate with members of the management team.

The trial, in the University of Derby's purpose built courtroom, sought to establish if 'accountancy' adds value to British business.

For the prosecution, Professor Richard Wilson, of Loughborough University Business School, argued that accountants have an introspective, backward facing, outlook and fail to make use of opportunities to engage in wealth creation. He was assisted by members of the Derby business community including Steve Boxhall head of Boxall, Brown and Company and Andrew Hopkin, Chief Executive of Environmental Services at Derby City Council. Between them they suggestedthat while financial information is essential to prosperous companies, in the main accountants have difficulty in communicating and explaining such information to other members of the management team. Comparing the training of accountants with hospital doctors, Professor Wilson argued that "accountants specialise in accountancy far too early. They should seek wider experience of business before deciding which particular discipline they wish to specialise in". He added, "accountancy, like other professions in the UK, could be so much more effective if they were able to stand back and look at problems and opportunities from a number of perspectives"

Ian Herbert, defending, of the Derbyshire Business School dismissed the prosecution's suggestions and argued that while accountants have much to offer, they are restricted by short term outlooks on the part of company managers. "Accounting serves a number of needs and there is a distinction between financial and management accounting," he explained "both play a part in assisting management in decision-making.

Andrew Bell, Corporate Business Advisor for National Westminster Bank supported this view but defended company directors, saying that much of this short termism was imposed on business by city investors. George Tansely, Acting Chief Executive of Business Link Southern Derbyshire, also speaking for the defence, suggested that in his experience, strong financial discipline based on relevant information was essential to survival. He added "there is also a case for improving financial literacy amongst managers who use financial information, but conceded that accountants must play their part in helping users more.

The jury, drawn from local business executives, returned an open verdict. In summarising the proceedings the 'Judge' for the evening, Kevin Bampton, from the University's Division of Law, said that he had heard some persuasive evidence from both sides. He said is was clear that accounting had a role to play in supporting decision making at all levels, especially in the new virtual organisations, based upon knowledge and people, rather than factories. However, he went on to say that there had been some significant points raised by the prosecution and accountancy must not become complacent. In the global market place ever aspect of company activity is under scrutiny, accountants must be prepared to justify their worth he concluded.

Aimed at promoting the value of accountancy to business, the trial provided a thought-provoking look at some of the issues of communication and perception between accountants and the decision-makers of UK companies.

The event was hosted by the University's Derbyshire Business School in conjunction with the Chartered Institute of Management Accountants (CIMA) and the Institute of Chartered Accountants in England and Wales.

Nottingham and Derby CIMA branch event.

Shock horror. Derby University had the temerity to let its courtroom be used to try the accountancy profession for failing to serve the needs of business. What is more the Chartered and the Management accountants voluntarily put themselves up for this ritualised piece of blood-letting.

Presiding over this tribunal was the judge for the evening, Kevin Bampton from the University's Division of Law, a suitably aloof character with a suspiciously sharp sense of humour. The jury was made up of Derby and Nottingham's great and good. The matter in hand said the judge came down to "Was there any value added by British accountants. There were dark assertions that the work of the profession was an elaborate hoax, nay a conspiracy even". To gasps, not to mention the odd snigger, from the court he asked whether the "British accountancy profession was terminally moribund."

Professor Richard Wilson started the attack, with all the reasonableness of an academic whirling an assegai. Accountants spent most of their life describing the past in great detail, he asserted. They looked backwards and inwards. In his view the world needed forward and outward looking, more intuitive accountants in touch with the world they served. He took a swipe at the personality of accountants - was nothing sacred in his world? Was he not an accountant himself? Accountants it seemed never made it to the top of the invitation lists to parties. So much so that he rarely owned up to the old party chat up line "and what do you do?". Did not accountants have a near monopoly in being cast as bores. His first witness, an estate agent backed up the story by relating that when he received the phone call asking him to attend the court he fell asleep on the phone. George Tansely of Derbyshire Business Link refuted these outrageous claims, retorting that he was proud to be an accountant; more than that he had a full social life and was available for any speaking engagements that the gallery or jury might have for him. The judge chided him for his shameless self advertisement and encouraged the court to move on from this cult of personality.

Ian Herbert took up the cudgel for the defence. The whole capital system relied on a constant flow of information. The consistency of that data was a crucial ingredient of properly functioning markets. Accountants helped to ensure that consistency. The profession was moving on - less of its activity was for regulatory needs and more for financial management. It was becoming less introspective, more outward looking. In fact it was becoming more enlightened. So fulsome was the defence that the judge had to ask Ian to be enlightened himself and trend towards brevity. He called Andrew Bell a bank manager and Neil Gray a practising chartered accountant as striking exhibits of his thesis and supporters of his cause. The judge, struck by the proliferation of professions in the courtroom, exclaimed that it was rare to have so many contemptible professions at the same time in the same place.

There was much debate about whether accountants were right or left brained. Could they only analyse or could they be creative. At the end of the evening nobody knew. Accountants were highly skilled, but were all their skills put to good use?

At last the jury was sent out. The tension mounted. Would it be a verdict of misadventure, malfeasance, or an open verdict. The jury filed back in. They declared it open. Accountants were useful and respected, but the prosecution had scored some points. Accountants could do better. The judge sentenced the profession to be placed on probation for no less than a thousand years, thanked the jury and dismissed the court. Next time perhaps the accountants would put the lawyers in the dock. It was time to head for the bar. Case closed ..or open…depending on your point of view.


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