Andrew Harding - executive director of ACCA UK

Can you explain the role of ACCA?

Andrew Harding:ACCA is a global professional body which trains, regulates and represents accountants in the UK. It has 300,000 members and students in 160 countries worldwide. It aims to provide opportunities in the accountancy profession for people of ability, regardless of their background.

Do you have a pro-active role in your relationship with government?

Andrew Harding:We liaise with governments around the world. In the UK, we are involved in shaping the agenda for the profession and, as a regulator, we converse regularly with the DTI which supervises our work.

So given this dialogue with the DTI, what do you think of recent press reports suggesting that the DTI is a waste of money?

Andrew Harding:In the areas in which we liaise with the DTI, we have found it to be quite effective, particularly in giving direction and advice.

How have the Enron and WorldCom scandals affected the reputation of the accountancy profession in the UK?

Andrew Harding:Although they notionally took place in the US, Enron and WorldCom affected the accountancy profession around the world. When news of WorldCom broke there were some in the profession who said that it couldn't happen here but, to be honest, that was very complacent - it could quite easily happen here.

There is a job to be done in ensuring that we do have effective controls in place in order to minimise the risk of this. The professional accountancy bodies have to work to rebuild the reputation of the profession.

But we must also remember that Enron and WorldCom were not just, or even mainly, accounting scandals. Poor corporate governance and just plain greed played a major part.

Do you think the controversy has had the effect on putting people off joining the profession?

Andrew Harding:It's not something that we've seen. In fact, for a number of years, ACCA has seen a consistent growth in the number of graduates attracted to the qualification and that growth has held up. I think it's an excellent basis for a career. ACCA in particular is a broad based qualification which allows its members to use it as a springboard into a career, not necessarily in auditing - the commercial sector is wide open to them and many focus on that as the starting point.

Do you think that as a result of the Enron scandal, fixed term contracts will become the norm between auditors and their clients?

Andrew Harding:No - while the government is going to produce something on this, all the signs are that it will focus on the rotation of the audit partner rather than forcing companies to move audit firms entirely.

There are an awful lot of complications when it comes to rotation. The majority of audit claims occur in the first couple of years of a new auditor coming in. While there may be a perception that if the auditor stays around too long he becomes too close to the client, similarly, you could also say that he then understands the issues very well.

We are talking to the DTI about this and at the moment the government is consulting on the future of regulation of the accountancy profession.

We've got an oversight structure which we don't think is working as effectively as it could be. It's lacking a strong strategic direction. What we would like to see is the structures streamlined and made more effective. We would like to see a restructuring so that standards are in one place and oversight is in another.

We want to see responsibility for the Auditing Practices Board - the body which sets standards for company audit work - move to the Financial Reporting Council, which already supervises the standards for the preparation of company accounts. The Accountancy Foundation, the Review Board and the Ethics Standards Board should also merge into a single body.

The present UK regime is over-complex, with too many regulators tripping over each other, duplicating effort and clouding accountability. Separating standard setting from regulation will enable a streamlined Review Board to concentrate on the task of ensuring that the professional bodies - and the independent disciplinary machinery for public interest cases - work effectively in the public interest.

We think this is the way forward for the government. It has got to make sure oversight and standard setting are effective and this segregation is necessary.

Patricia Hewitt has said that action must be taken on a global scale to restore confidence. However, Digby Jones told ePolitix recently that "the last thing in the world we need is to muzzle every labrador in Britain to get at one rottweiller." Who do you agree with?

Andrew Harding:The government clearly needs to act in order to restore public confidence. It also needs to be seen to do something positive - it's not going to be a case of moving the deckchairs around as the ship goes down. I think what would be a mistake would be for the Government to focus on this just as an audit problem. There are far wider matters which need to be considered here, particularly the corporate governance and management ethics issues. We would be very disappointed to see ministers just focus on auditors rather than these other key areas.

How important is the accountancy profession to UK plc and the business community as a whole?

Andrew Harding:For companies, the cost of raising finance depends on the risks which the capital markets perceive. Credible, high quality financial information means lower risk and cheaper money. Also, the accountancy profession has for years been a major employer in the UK and it is a major source of business support and advice - particularly where you consider the SME sector. In this sector there isn't a lot of in-house financial expertise and businesses will look to their accountant for the expertise and advice that they don't necessarily possess themselves.

So SMEs are an important sector for you then?

Andrew Harding:Yes - it's a big area for UK plc as well, accounting for 98% of all enterprises. Many ACCA members are involved in either working within or advising the SME sector. We have our own small business unit at the ACCA which focuses on these specific issues.

The Opposition has often claimed that small businesses suffer because of too much red tape. Given your experience of the sector, do you agree with this argument?

Andrew Harding:We have found that, for every piece of de-regulation, ten additional pieces of regulation take its place. The government has de-regulated the audit requirement but, to be honest to most SMEs, this is really a gesture more than anything, given the costs of other regulation which has come in.

Is lifelong learning a key issue for ACCA?

Andrew Harding:It's something we believe strongly in. There was a time when, after an accountant qualified, he or she felt that, having earned a meal ticket it would never be necessary to do anything else ever again. This is obviously not the case and probably wasn't really the case 20 years ago - people who think that are putting their career prospects at risk.

ACCA now offers a portfolio of qualifications, including an 'entry level' Certified Accounting Technician, a professional qualification linked to a university degree, an MBA and a whole range of diplomas and certificates in subjects like international accounting and corporate governance. We encourage all our members to continue their professional development, it's compulsory for those in practice, and we encourage them to do 35 hours of training - which amounts to a working week - during the year. Within this, we provide them with guidance on how they should do this. But it needs to be focused on their job and where they are going. It's not necessarily keeping up to date with all the exam papers; it's about keeping up to date with the skills that matter in their businesses.

Most accountants seem to start their career in the profession straight out of university. Should more be recruited from later in life?

Andrew Harding:I think what you've described there is the traditional route into chartered accountancy. Its very much a minority route into the profession - to come out of university and go straight into the corporate machine.

As far as we're concerned at ACCA, we have a fundamental open access to the profession. This means we attract a people from a lot of different backgrounds - we attract a substantial number of women and mature students, for example. ACCA appeals to them because of the open access and flexibility in the training, as well as the long-term opportunities which arise.

How do you see the accountancy profession developing over the next 10 years?

Andrew Harding:I think that in ten years time you will see it valuing ethics in a different way. I think Enron has resulted in a sea-change in the profession. In terms of the actual make up of the profession, you will see it no longer dominated by men. I think you will also see it very heavily engaged in the SME sector.

I think the other big change you're going to see is in the area of corporate and social responsibility. This is a big thing for ACCA, business and the world economy. It's an area which big business has started to embrace over the last decade and interestingly we've now seen SMEs take an interest as well. I know that big businesses have to try and look good in order to appeal to investors but SMEs see it as a good way to engage local communities - so its something that adds value across the board.