Armstrong: Public Trust in Accounting Profession Has Diminished

The Regional Director, Middle East, Africa and South Asia, Institute of Chartered Accountants in England and Wales, Mr. Michael Armstrong, participated in the recently concluded 48th Annual Accountants’ Conference organised by the Chartered Institute of Accountants of Nigeria. In this interview with James Emejo, he said attracting foreign direct investments into the country requires strong governance and transparency in accounting reporting and quality of audits. He also stressed the need to rebuild public trust in the accounting profession

As the regional director for Institute of Chartered Accountants in England and Wales (ICAEW) in the Middle East, Africa and South Asia (MEASA), what are your key responsibilities?
I have a very exciting job which I’m very proud to be helping my institute- the Institute of Chartered Accountants in England and Wales. I’m based in Dubai which is where our regional centre is for ICAEW serving the Middle-east, Africa and South-Asia. My role is very much to assist the institute in executing its strategy and the strategy is being developed in support of our vision, a vision of a world strong economies and it’s very much the case to have a world of strong economy: you have to have individual countries with strong economies and that’s where the critical work of professional chartered accountants comes to play. Strong national economy come about by attracting foreign investment and that can only be done if a country has strong governance, transparency in accounting reporting and accountability and those elements are something where the professional accountant has strong role to play.

You have been a partner at KPMG since 1988. What has been your experience and contribution in building such a strong brand?

I’ve had the good fortune of spending 35 years with KPMG. And certainly, first, that was in London and latterly in the Middle-east. What I found was that the critical part of working for one of the big four accounting firms was developing people and staff to serve and excel in providing exceptional service to clients. And the second ingredient was making sure clients received value added services which allows them to benefit from services provided. So certainly there are two aspects and the most fundamental is developing the brand of international accounting firm. I have to look after the staff to make sure they are excited and ensure that they have the right training to excel in their profession and by doing so, they are rewarded. In fact, it’s important for accounting firms to strive to be employers of choice in any given economy. By doing that, they’ll be motivated and excited to provide the best possible expertise to clients.

So what have been your biggest challenge in carrying out your duties?

I think the greatest challenge relates to those two aspects: one is making sure not only obtaining the right staff, but retaining the high flyers and make sure they continue to be motivated and equally making sure that the best services are provided to clients in a variety of industries and I think this is always a challenge for any accounting firm to make sure that they distinguish themselves to be appreciated by the firms and companies they seek to serve. Most importantly also is to strengthen the reputation of accounting, ensuring quality of audit and by that, when the accountant is serving the public interest, it builds the trust. Unfortunately, trust at the moment is an area which is being diminished in recent years by a number of high profile scandals in the media.

Concerning the waning public trust in accounting practice, what do you think is the way forward?

I like to borrow the words of my CEO, Michael Izza: This is very much a watershed moment for the accounting profession. The accounting profession is alert to the fact that public trust has diminished and there’s an urgent need to rebuild that trust. This challenge has to be accepted and is being accepted by the accounting firm to make sure they deliver quality audits going forward. We are at a time when we can take better benefits of emerging and developing technology and I see an important ingredient of re-establishing and rebuilding trust as required through the medium of enhanced technology which would be used to strengthen quality audit.

How relevant is trust in rebuilding the accounting profession to the Nigerian economy?

Going back to my previous point about the vision of a world of strong economy, I have depended on having a strong national economy. This is obviously the case also for a strong economy in Nigeria. The accounting profession in Nigeria has a huge role to play in ensuring public trust and that the economy thrives. I am pleased to say, as I saw during this ICAN conference that the members of ICAN are very much aware of this and they’re putting significant efforts into developing their professionals, making sure they’re well prepared to deliver a quality audit that is demanded and to ensure that the public has trust in the accounting profession going forward.

How has the accounting profession managed to utilise the benefits of social media in light of the worrisome trend of fake news?

I will certainly agree with you that there are positives and negatives associated with social media and professional chartered accountants need to be fully aware of that. On the bright side, it’s a great communication skill. Members and students can communicate with one another, share ideas, share best practice; they form communities which deal with specific issues whether it’s an emerging IFRS accounting standards or whether it’s topical issues of international standards of auditing- certainly, these got to be debated online by communities through the social media aspects. However, as you quite rightly said, in our modern world today, where fake news is rampant and people are using several social media for spinning various approaches, spinning the perception and spinning the feedback they want to give, we need to be careful. So, I just remind all professional chartered accountants of their obligation to have a healthy sense of scepticism. What this means is by all means, read and consider, but please do not take as absolute truth all that they hear in the media in whatever form that happens to be.
You’ve to use the professional skills to have the scepticism and make one’s own interpretation and analysis so one could then benefit from the information that’s available.

What was your key message to accounting professionals during this year’s ICAN conference?
I had the good fortune of being invited to join a panel, fellow panellists with the senior partners of the big four accounting firms here in Nigeria and we discussed and looked at the challenges and opportunities of the accounting firms of the future. I had four main points- the first was to encourage audit firms to rethink their approach to the required skill sets of accountants; to look at the services they offer; to look at the culture of the firm’s they’re operating; and to also look at their operating models that make sure they’re fit for the future. The second point I had related to the need to make the appropriate investment at the right time in technology to make sure they’re being sufficient and accurate as possible. When we talk about technology, there are four main areas that I was considering and we refer to these as ABCD- first by artificial intelligence, second, by block chain, third by cyber security and four by big data and data analysis. My third important point relates to encouraging the firms to listen to the younger generation and I think there’s a lot to be learnt by listening to the younger generation in terms of what they’re looking for, what excites them, how they’re going to make their contribution and that would influence the structure of firms as well. And my fourth and final point relates to the imperative of collaboration.

I think collaboration among firms, collaboration among institutions; that’s why I’m delighted that my institute- ICAEW is collaborating closely with ICAN. Earlier this year, my president met with the president of ICAN to sign a memorandum of understanding to evidence the collaboration that we have going forward in technical collaboration, support on professional aspects and to ensure that we encourage more membership of our respective institutes: and it’s in that regard that something tangible has come out whereby ICAEW has developed the pathway scheme to enable members of ICAN with five years of experience to become our members in certain circumstances as well. I think this is showing not only the level of cooperation which is important among institutes but giving great opportunities to our members across the globe.
How can the accounting profession grapple with the vulnerability of the internet especially as they are encouraged to embrace digitalisation in their operation?

I see cyber security as a key issue for business across the globe, Nigeria no exception. In fact, it becomes so important that cyber security tends to be only the agenda of all boardrooms these days. Cyber security is developing quickly. The approach to ensuring that security is developing equally quickly and what we are seeing is that the traditional internal controls approach is not robust enough to deal with that and therefore, the accounting firms are developing new techniques to probe and look at penetration testing of the cyber security to make sure they’re robust enough to make sure a company doesn’t have a fundamental business catastrophe.

What would be your advice for young Nigerians who intend to take up accountancy as a profession?

Well, I met Nigerians briefly in their country and I’ve met a number of Nigerians around the world. Obviously, Nigerians are well-adapted to having sense of fun and this has to be in any profession. To excel in a profession, you have to enjoy it. And I believe Nigerians must keep this sense of fun; they must work hard. Yes, the profession is changing continuously, but that is a good thing. It gives people new opportunities which allows them to develop new skill set and develop its people. So that commitment, making sure that they get the right experience, taking on tasks which challenges them would give them huge job satisfaction. And I believe that being part of professional group of chartered accountants will give one the life skills necessary to enjoy life.