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Participants:
Judge: Kevin
Bampton KB
Clerk to the court: Fiona Church FC
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Representing
the prosecution:
Professor Richard
Wilson - Loughborough University Business School RW
Steven Boxall - Boxall, Jones and Company SB
Andrew Hopkin - Assistant Director of Environmental Services,
Derby City Council AH
Bill Murphy - The Derbyshire Business School WM
Representing
the defence:back
Ian Herbert
- The Derbyshire Business School IH
Neil Gray - Managing Partner, Pannell Kerr Forster (Nott'm) NG
George Tansely - Acting Chief Executive of Business Link
Southern Derbyshire GT
Neil Wilson - Interfleet Technology Ltd. NW
Andy Bell - Corporate Business Manager - National
Westminster Bank plc AB
Outline
transcript of proceedings
KB Declares
the court in session and explains the charge to be answered, in
the context of instructions to the jury.
KB Explains the unusual circumstances of the situation (including
time constraints, nature of the tribunal and nature of the defendant)
Not a court
of law, but a tribunal of fact. The standard of proof for the 'prosecution'
is not a question of proving beyond reasonable doubt'. Evidence
not under oath, but jury can make their own minds about the qualifications
and weight to be attributed to speakers.
Nonetheless
the judge will seek to maintain the order and dignity of the occasion.
Role of jury
and clerk (FC) explained in the context of the tribunal. Jury advised
that they may pass paper questions to the bench to be addressed
to witnesses if it assists the proceedings.
The role of
the clerk will be to prompt witnesses and advise the tribunal where
necessary.
In summary,
the closest proceeding to the current matter is an inquest. To this
end, the jury should address themselves to the following to issues:
1. That
the accounting profession no longer adequately serves or adds significant
value to modern British business; and
2. That
any value added to British business is 'paper value', added by accountants
and quantified by that profession.
In essence
therefore this is an inquest to determine whether British accounting
is terminally moribund.
The verdicts
that the jury should consider are the following:
Misadventure
- that British business practise and demands have changed so far
that British accounting itself no longer plays a significant role
in adding value.
Malfeasance
- that through complacency or its own actions and omissions
(including failure to adapt) accounting and accountants have lost
touch with their constituency.
Open verdict
- that the charges are ill founded, not proven or indeed that
accounting is, by and large, alive and well and adding genuine value
to British business.
The jury will
be invited to give reasons for their decision.
During the
course of the proceedings the judge will interject with questions
or clarifications where it will expedite or assist the jury in its
deliberations.
Ask the prosecution
to open the case.back
Case
for the prosecution
FC Asks
the prosecution to outline their case - calling on RW to outline
his qualification to present the charge.
RW Outlines the nature of the prosecution's case against accounting
- explains the difference between 'accounting', and 'finance'.
- suggests that the UK's lowly position in international 'wealth
league' is due to large numbers of accountants who don't add value.
(Hayes & Abernathy; Johnson & Kaplan)
- problem of left hand versus right hand companies (Doyle; Wilson).
- highlights the inappropriate orientation of accountants which
reflects partiality in two respects: retrospective introspection
(MBTI), and organisations as seen via AIS filter.
- indicates the technical preoccupation of accountants with irrelevant
conventions (including resistance to change - e.g. intangible assets,
SMA; limiting bases of AIS design - e.g. need for balanced scorecard
approach; constraints provided by rigid systems - e.g. need to go
'beyond budgeting'.
- the interests of users need to be facilitated via enhanced financial
literacy rather than simply suiting the convenience of compilers
of financial reports.
Steven
Boxall - Boxall, Jones and Company, Chartered Surveyors
FC Asks
for clarification of a couple of points then asks SB to speak about
his experience of the orientation of accountants and the impact
this has on his role as a user of accounting information.
SB Responds
saying that accountants are preoccupied with their own introspective
outlook and jargon. They do not understand or attempt to understand
business people and business problems.
Andrew
Hopkin - Assistant Director of Environmental Services, Derby City
Council
FC asks AH
to speak about the technical preoccupation of accountants and their
resistance to change (e.g. to embrace environmental reporting).
AH explains
how the technical preoccupation of accountants inhibits developments
in organisations facing significant change.
Bill
Murphy - The Derbyshire Business School
FC asks WM
to talk about issues relating to financial literacy.
WM explains
the difference between financial awareness and financial literacy,
indicating how accountants need to relate more to the needs of users
of financial reports.
FC asks RW
to briefly conclude the evidence
RW concludesback
Case
for the defence
FC Asks
the defence to outline their case - calling on IH to outline his
qualification to defend the charge.
IH Outlines
the nature of the defence's case of accounting
- explains the difference between 'management accounting', 'financial
accounting' and regulatory driven auditing. (within David Allen's
past/future, insiders/outsiders model)
- suggests that the rise in numbers of accountants is correlated
to the rise in GDP
- dismisses RW's suggestion that the UK's lowly position in Wealth
league is due large numbers of accountants and suggests that America
(near the top) has a similar structure.
- explains the importance of accounting to the efficient operation
of capital markets
- explains how accounting is central to stewardship of the business
through analysis, planning and control
- explains how accounting informs decision making, leading to economy,
efficiency and effectiveness. Briefly describes hard and soft accounting
techniques.
- explains how the role of accounting is moving from the technostructure
to a support function and how it underpins the separate but linked
concepts of knowledge management and the learning organisation.
(noun and verb) demonstrates the importance
of both by referring to the valuation of companies such as Experian
(£4bn - 4.10.99)
- explains how accountants need to service the needs of different
stakeholder groups and this gives rise to a certain amount of role
conflict.
Concludes that
creative tendencies are stymied by directors who want accountants
to act as the financial conscience of business and play devil's
advocate to other people's suggestions.
for full text of IH's case for the defence click here to go to
court summary
Neil Gray - Managing Partner Panell, Kerr Foster Chartered
Accountants
FC Asks
for clarification of a couple of points then asks NG to speak about
financial regulations, auditing, consultancy and developments in
training accountants.
NG explains
about financial regulations, auditing, consultancy and developments
in the profession as per the ICAEW report Chartered Accountants
in 2005.
George Tansley - Chief Executive of Business Link Southern
Derbyshire
FC asks
GT to explain to speak about the value of accountants to smaller
companies i.e. those without recourse to capital markets.
GT explains
the value of accounting to the development of smaller companies
i.e. those without recourse to capital markets. He will assert that
while it may be difficult to prove the value of accounting directly
to companies, as a member of the community of business advisors
he sees a strong link between companies that make use of accounting
and those companies that survive and prosper. He will assert that
from his own experience a common cause of business failure is lack
of financial analysis, planning and control.
Neil
Wilson - Operations Director, Interfleet technology Ltd Railway
Consultants
FC asks
NW to talk about his experiences as a manager using the output of
the accounting function at Interfleet. She asks him to briefly describe
Interfleet's business and identify their criteria for strategic
success.
NW - explains
how Interfleet was a part of a nationalised industry and the changes
that privatisation has brought about. Interfleet is a technical
engineering consultancy whose main source of revenue is the recharge
of staff time involved on a variety of tasks for infrastructure,
rolling stock and transport management systems.
Criteria for
success involves:
a) the long-term optimisation of profit based upon;
continual investment in training, research and development,
customer relationships,
teamwork, and
management of the company's knowledge base.
b) on a day-to-day
basis Interfleet's product is time, a perishable commodity - time
cannot be stock piled and sold in the next period - accurate, real
time data, is needed to manage what in many ways is a virtual organisation
spread wherever there are railway lines.
FC Asks
NW how he sees the process of accounting
NW suggests
that, as an engineer, accountancy is really a feedback and control
system. He explains this further through the analogy of a car journey.
* IH references back to this in summing up with the 3 time horizons
of accounting.
- importance of feedback, accurate data, looking ahead, making adjustments.
FC What
value do you see in accountants?
NW Firstly,
as a company director, they ensure that I comply with all the statutory
duties of my office. People forget that if the company does not
comply fully with all the regulations imposed upon business, and
this involves a lot more than simply filing accounts, then directors
can be held personally liable and even end up in jail!
Secondly,
they fulfil an important role in helping the business to achieve
its objectives by understanding the business and helping management
to anticipate and to overcome constraints.
I know that
the popular image stereotypes accountants as the men, and women,
who love to say NO! But at Interfleet I think we are fortunate in
having an accounts team that has a 'can do' culture.
FC I'm intrigued
by the second point but will you tell the court exactly what they
'can do' to help.
NW Well, if
I could answer the question from another direction.
KB If you must,
but ensure that you do answer the question
NW Earlier
this year, Interfleet completely changed its management information
system. The changeover was well planned and in the nature of these
things actually went quite smoothly. However there was a period
of some weeks when the usual supply of information could not be
relied upon to have the high level of integrity that we need to
run the business efficiently or make decisions on resource planning
and progress chasing etc.
We got through
this period, but not without other senior managers and myself spending
an inordinate amount of time an effort trying to work out where
we were, and how we were doing. Instead of getting on with the real
business of management - taking the company where we want it to
be.
NW then explains
how Interfleet have a need for both detailed and summary information
and the two time dimensions, past and future.
Referring to the diagram in the bundle.
Finally, he
explains how Interfleet is embracing the concepts of the learning
organisation, by sharing and centrally storing knowledge.
Andy
Bell - Corporate Business Manager - National
Westminster Bank plc AB
FC asks AB
to talk about the short-term outlook of the capital markets and
the negative
impact that he believes this has on the long term health of British
business.
AB talks about
the short term outlook of the capital markets and the negative
impact that he believes this has on the long term health of British
business. He refers to the practice of creative accounting and suggests
that this is largely motivated by business managers who have shorter
term personal goals (set to meet the expectations of shareholders)
than what might strictly be best for the long term future of the
organisation.
FC asks
IH to briefly conclude the evidence
IH concludes
for the defence referring to the 3 different time horizons of accounting:
past,
present and future using the analogy of the driver's-eye view from
a car.
FC asks prosecution to respond
RW counters
some of the evidence and identifies some of the issues of communication
and perception that have become apparent.
FC asks defence
to respond
IH agrees with
some of the issues identified and suggests some solutions.
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Summing
up and verdict
KB then takes
over management of the case from the bench and asks both sides a
number of questions.
KB then sums
up the evidence that he has heard and then directs the jury to consider
the two charges and reminds them of their options.
Jury exits
and considers verdict
Panel take
questions from the floor
Jury returns
and delivers verdict
KB summarises
the trial and suggests both accountants and the users of information,
follow a behaviour modification programme with specific recommendations
to include for example.
- co-operation
- dialogue
- teamwork
- raising financial literacy
- abandonment of jargon and technical terms etc, etc.
Defence and
prosecution both agree to abide by the orders
KB closes the
case - approx. 8pm. back
return
to court case summary
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