.png)
.png)
ICAEW “right behind” quality standard that experts call “ill-conceived”
A leading membership body for accountants has come under heavy fire for giving its unqualified backing to a new standard for ethical behaviour in tax.
The Institute of Chartered Accountants in England and Wales (ICAEW) this week hailed the Fair Tax Mark (FTM) as “an initiative we are right behind”, calling it “a step in the right direction for assessing the quality and transparency of a business’ publicly available information of their tax activities”.
But the ICAEW Tax Faculty’s online support for the mark – relaunched last week after a major revamp – was quickly and strongly attacked by tax experts.
“I do not believe the ICAEW should support this initiative without total transparency and accountability”, commented Baker Tilly partner David Heaton, who questioned the FTM’s scoring system and cast doubts on the “ability of the self-nominated scorekeepers to make any reliable, informed decision based on their completed application forms that would inspire confidence in the assessment for outsiders.
“I do not believe that they can assess in any meaningful way any individual business or automatically arrive at a view that ICAEW should or would support,” he said, claiming he had been “astonished” to see the institute endorsing the FTM in The Guardian on 20 February, when executive director of technical strategy Robert Hodgkinson was reported to have said, “All consumers want to know is, has [a company] passed or failed?”.
Heaton also criticised what he saw as a lapse in the ICAEW’s insistence on transparency in tax: it had rushed to applaud the untried FTM but would “slap down any auditor who signed a clean… report without a very detailed audit, fully planned, executed and documented, with demonstrable absence of conflicts of interest, and with an opinion supported by evidence, that can be inspected and validated by an independent outsider.”
Many other visitors to the ICAEW site were equally damning, calling the FTM, which awards marks to participant firms for the quality of their corporation tax reporting, “ill-conceived”, “a propaganda campaign”, and “like a group of mates who will be handing out the mark to their mates, and refusing to hand it to their non-mates”.
“Who decided that it was appropriate for the institute to endorse… this self-promoting lobby group,” asked corporation tax specialist David O'Keeffe, owner of Aiglon Consulting, London.
Jeremy Newman, formerly of Wilkins Kennedy, wrote that it was “very premature for the ICAEW to throw its weight behind the FTM in such an unequivocal fashion”. He set out a number of reasons for his claim, including the new tax standard’s “lack of weighting of profits and tax liabilities” and its “failure” to define its meaning of fair.
The FTM’s creator, anti-avoidance campaigner Richard Murphy, defended the rigour of his tax standard by insisting, “We could not be more transparent… We publish our full methodology and score card. As for accountability, I suspect we're at least as accountable as many ICAEW member firms, albeit (I accept) without an institute to refer to.”
He added, “We also make clear that what we are assessing is the information a company puts in the public domain - which is why, of course, we are restricted to dealing with corporation tax.
“Our approach complies with normal governance standards: comply and explain. When it comes to fairness we doubt the FRC could find fault with our approach: it is ‘fair’ as in ‘true and fair’, a concept long-recognised, if ill-defined, in accountancy.”
Murphy went on to express disbelief at “how undesirable many accountants seem to find” the FTM organisers’ aim of “improved tax reporting by companies for the benefit of all stakeholders”.
He wrote, “It is an entirely voluntary scheme that we hope some companies and maybe ICAEW member firms will see advantage in using… Those that don't can simply ignore it. Isn't that a market choice? We're a little surprised how opposed so many commentators are to the idea that we should offer such a choice when it seems that most [ICAEW] members believe in the merits of the marketplace, as I do too.”
The ICAEW was asked to comment but had not done so at the time of publication.
UPDATE: The ICAEW commented on its own post on Monday 3 March, claiming it supported the FTM in principle because “reasonable measures designed to increase transparency in company accounts should be welcomed. This includes disclosure of tax related information.”
The organisation ended by writing, “In short we believe that the FTM is a positive development but that to succeed it needs further work and above all it must be seen as clearly independent in the same way as accounting standards.” [sic]
Your title suggests that people are aggressively shouting the ICAEW down.
To me the general thrust looks more like people asking ICAEW questions after being shocked by the announcement.