Diplomat-cum-engineer Anton Colella outlines his vision of the future
ANTON Colella, newly installed as chief executive of the Institute of Chartered Accountants of Scotland (ICAS), sees one of his immediate priorities as the building of bridges with the institute’s counterpart south of the border.
In his first interview since taking over on 2 October, Colella told The Herald that rapprochement is now required with the much larger Institute of Chartered Accountants in England and Wales (ICAEW).
Anton Colella soon expects to meet the English institute’s recently appointed chief executive Michael Izza — another 45-year-old who, like Colella, is of Italian descent — to thrash out how relations might be improved.
Colella, a one-time religious education teacher in Glasgow who formerly headed the Scottish Qualifications Authority, said: “I get the impression there are still some tensions.”
Anton Colella was referring to last year’s battle over names which erupted when the ICAEW sought to rebrand itself as the “Institute of Chartered Accountants” as part of its planned merger with the public sector accountants’ body CIPFA. The chosen name infuriated accountants north of the border, who could see no reason why the merged outfit should consider itself above geography.
Colella’s predecessor, Des Hudson, enlisted the support of first minister Jack McConnell to help torpedo the English institute’s plans.
Despite the embarrassment of its failed nuptials with management accountants’ body CIMA and CIPFA, and the opposition of many of its members to further attempted marriages, Izza remains committed to growing ICAEW through mergers. Izza has claimed that consolidation is in the profession’s long-term interests. “If the UK is fragmented, it punches below its weight and sometimes we don’t have the inf luence we should,” he said.
Anton Colella begs to differ. “Consolidation is not on the horizon for ICAS. We will, however, be looking to work very effectively with the other professional bodies in the UK. We will be working very hard to ensure we identify areas where we can collaborate.”
ICAS, with its 16,388 members and annual revenues of £15.7m, is dwarfed in terms of size and resources by most rival institutes. ICAEW has 127,800 members and revenues of £61m; ACCA generates £72m from its 109,600 membership, while CIMA has 67,600 members and revenues of £34m. Even so, Anton Colella remains convinced the ICAS brand is sufficiently strong for it to win in the international arena without recourse to mergers.
He concedes, however, that ICAS is going to have to do a better job at differentiating itself from rival institutes to have a long-term sustainable future. “We are still and will always be the world’s first professional body. What we have to do is clearly define the USP (unique selling proposition) that goes with that.”
Speaking in his corner office in CA House, overlooking the main Edinburgh to Glasgow railway neat Haymarket railway staion, Anton Colella sketches out how he thinks this might be done. One way is to ensure ICAS plays a key role in the current debate about the future of accountancy.
He said: “One of my priorities is to look at how we contribute to the ‘thought leadership’ for the profession globally. We need to execute that role in a way that demonstrates gravitas, maturity and leadership.”
As part of its contribution to “thought leadership”, Anton Colella says ICAS will continue to campaign for the adoption of principles-based, rather than rules-based, global standards for financial reporting and accountancy. “Rules-based standards would only undermine the professionalism of the sector, limiting the scope for the exercising of professional judgment. Clients don’t want their accountants to be mere box-tickers.” He added that the technical team at ICAS is working on case-studies that should demonstrate the merits of a principles-driven approach.
Anton Colella also hopes his recent speech on skills at the 17th World Congress of Accountants in Istanbul — which was attended by 5,000 accountants from around the globe — will play a part in reinforcing the image of ICAS as pivotal to the ongoing debate.
When it comes to regulation, Colella sees no contradiction between the institute’s role as a policeman and helping to promote members’ interests.
“I believe there is such a thing as supportive and developmental regulation . . . If we’re going to have a regulatory function, we have to be seen to be regulating well and to be regulating effectively. Within that, we have to be cognisant of the price related to regulation.”
In terms of keeping costs down, Colella explained how the institute has pioneered the use of advance cost orders by a self-regulatory professional body.
Essentially, these will require defendants to make up-front payments towards the cost of complex tribunals even before their cases are concluded. The approach, partly designed to save ICAS members’ money but also to speed up disciplinary hearings, was approved by the Privy Council in September. “This is a world first for any professional body, “ Anton Colella stressed.
Colella added that any fears that the new “polluter pays” approach to disciplining errant accountants might be in breach of their human rights have been allayed following the intervention of Michael Beloff QC, an expert on institute disciplinary procedures.
Anton Colella is pleased that the Financial Reporting Council, whose powers were extended in 2003 following the Enron and Worldcom accounting frauds, is seeking to identify the limits to its own regulatory footprint. He says: “The FRC is developing a new strategic framework that starts to clarify the boundaries of its responsibility.”
Not surprisingly, given his career in education and at the SQA, Anton Colella has made “seeing how we can modernise in the area of education in terms of courses, examinations and delivery” another priority. He said: “Unlike some of the other institutes, we’re not obsessed by numbers of registered students. We’re much more interested in the quality of the students. We want CA to be seen as THE prestigious accountancy qualification not just by employers but by prospective students.”
ICAS has been very successful at growing its student numbers under Anton Colella’s predecessors — David Brew, Professor Ian Marrian and Des Hudson. Indeed, it has grown student numbers faster than any other accountancy institute over the past six years. In that period, the number of students registered with ICAS has grown by 59.6 per cent, or by 9.8 per cent a year.
However, in absolute numbers of students ICAS still remains relatively small, with 2,636 students passing through its courses last year, a mere 0.7 per cent of the total of 367,000 students registered with UK and Irish accountancy institutes.
The surge in student numbers was helped by ICAEW’s refusal to adapt its training approach to suit the requirements of Big Four firms. This created scope for ICAS to muscle in on the English and Welsh institute’s patch. Today all Ernst & Young’s UK students are being trained by ICAS, while PricewaterhouseCoopers has moved 40 per cent of its training to the Edinburgh-based institute.
This has also given ICAS a platform from which to broaden its reach, with a first-ever batch of 12 students from mainland China recently starting their ICAS training. Upon qualification these dozen auditors are due to return to the People’s Republic to work in one of E&Y’s network of offices there — and they may take on honorary roles as advocates of ICAS training. Given that Colella was responsible for opening an SQA office in China, he has other plans up his sleeve to accelerate ICAS’s presence in the former Communist republic.
Anton Colella is also embarking on developing a strategy to take ICAS forward to 2015. This will replace the previous Fast Forward to 2010 strategy, which incorporated, among other things, the move to continuous professional development. He said: “We’re looking at the organisation itself and looking at how it can become more dynamic in serving the needs of members and fulfilling its role as a professional institute, both within the UK and beyond.”
One requirement will be to ensure that the needs of members working in industry and commerce, who represent 41 per cent of the membership base, are not neglected. Colella wants this process to be as inclusive as possible: “We will be consulting with members on this over the next six months. We would like to hearwhat they would like us to be focusing on”.
Given Des Hudson’s legacy of putting the institute on a firmer financial footing and taking the initial steps to reduce ICAS’s £2.2m pension fund deficit, Anton Colella has a sound platform on which to build.
This article was published in The Herald on 27 November 2006