Accountant, a Sustainable Profession

You are studying accountancy. A profession with over one hundred years of history, once founded in response to massive accounting scandals. A profession based on solid financial understanding and trust. A profession with respect, which makes the practitioner traditionally one of the notables of the village; together with the doctor, vicar and notary.

Nowadays, the auditor often operates through large, international audit and advisory organizations. Famous names, read in neon letters on impressive office buildings, in prime locations along the highways. Large buildings with inside hundreds of professionals, swarming daily to their clients. Strong employers that demand the best of knowledge and commitment, but also offer the necessary concerning development opportunities and working conditions. Organizations that are attractive to young, ambitious professionals. For many students of economics or accountancy, starting a career at PwC, EY, Deloitte, KPMG, BDO, Mazars or another large office is an important first goal after completing their studies.

Under Fire
However, the accountancy student who reads the newspapers regularly (paper, digital or mobile), might have had mixed feelings over their choice of study over the past year. The accounting profession is under heavy fire. That’s nothing new, it began with Enron in the US, just after the turn of the century. Criticism of accountants has since become a permanent factor. But in 2014,criticism in our country was felt harder than ever before. This mainly had to do with coverage of a number of incidents where accounting firms played a role. That these incidents often related to work years ago, did not soften the negative image of the profession.

“These were not isolated incidents,” emphasizes NBA chairman Huub Wieleman. “Several studies, both marked by the Financial Markets Authority and the NBA, clarify that the quality of the audit should be better. Files are not always complete, procedures are sometimes not being followed, and parts of the financial statements are not getting enough attention. That really needs improvement. ”

In late September, the AFM came back with a critical report on the quality of controls at the four largest audit firms, with as consequence a storm of negative reports on accountants in all media. ’Leak for auditors is still not over’,’ The Hague fed up with accountant ‘,’ Down with culture of complacency,” are mere a couple of articles of De Financiële Telegraaf, that spent an entire front page to auditors. And you are studying accountancy.

Improvement Plans
Politics also had concerns about the quality and independence of the auditor. Therefore, Dutch Parliament sent the accounting profession in May 2014 home with a firm mission: improve the quality of audits, ensure adequate internal oversight of audit firms and restore confidence in auditors. The accountancy sector got four months to write an appropriate improvement plan; to be ready on the desk in September.

“Our best decision then was to put the realization of that improvement plan into the hands of young accountants,” said Wieleman. “A group of young partners of audit firms has swept their agendas and has spent a long summer on the elaboration of the report In the Public Interest, a report containing 53 measures, which should result in the improvement of audit quality. But just as important as these measures, is that they first have thought carefully about the causes of inadequate quality. For weeks, the working group has discussed with regulators, scientists, investors, directors and officers, to get a good picture of what is not going well in the accounting profession and what solutions are seen before. ”

Culture and Behavior
How can controversial incidents occur in organizations with qualified professionals, in a strictly controlled environment? Again and again culture and behavior came up as the most important answer. “A culture in which commercial interest is seen as the main motive for all the action, is a breeding ground for making bad choices,” says Wieleman. “A favorable economic environment and years of fine revenue and profit increases have created a culture of complacency, in which the public interest was too easily ignored. The economic crisis and the introduction of independent supervision by the AFM show that those days are definitely over. The auditor must return to his roots: an attitude in which independence, professional skepticism and expertise form the basic principles, in which no concessions can be made; principles associated with the DNA of every accountant, auditor of each organization and thus our entire profession. ”

The report of the working group stressed: individuals may make mistakes, but audit firms must provide an environment in which that risk is minimized, an environment where people are encouraged through appropriate incentives to deliver quality work and where errors are taught. Therefore culture and behavior get much attention in the report.

Implementation
The report In the public interest has been well received by politicians. Both Minister Dijsselbloem and Parliament have expressed compliments for the analysis and the proposed solutions. Now comes the rapid and vigorous implementation of the measures, which is already in full swing, says NBA chairman Wieleman: “Minister Dijsselbloem has taken a number of measures relating to the assignment by the Supervisory Board, to pour them into new legislation directly. The first bills are available this spring for consultation. The role of management in the selection and appointment of the auditor is over, the Supervisory Board is now in the lead. This requires a lot of the board members themselves. ”

Other measures ask for effort by the NBA and the relevant accounting firms themselves. These firms are busy with the implementation of culture programs and appointing their own Supervisory Board. Not easy, if you look closely at the independence rules that have to be taken in consideration. The composition of the board should be changed, as are the rules for appraisal and remuneration of auditors: only quality can come first.

The NBA sets up a monitoring committee, which will closely monitor the progress of the implementation by the accounting firms. Moreover, a digital monitoring tool will be developed together with the AFM, which should reflect the long-term quality improvement. Also the NBA is working on improvements as a professional oath for all accountants, on an accountancy lab which contributes to the innovation of the accountancy profession, and on the abolition of existing goodwill, arrangements for renewal of training and more.

A rainy Afternoon
Wieleman tempers simultaneously exaggerated expectations: “Such a broad package of measures is not something you can fix on a rainy afternoon. Implementation takes time and it sometimes hurts. But it should. As for politics, this improvement is the last chance for us to restore order as regards to quality. There is no time to lose. “The latter is no exaggeration: “Otherwise we will do it and it becomes blunt,” warned PvdA member Henk Nijboer recently, at a conference for accountants.

Does the accounting profession still have a future? Absolutely, if it is up to the optimistic thinking NBA chairman: “I have every confidence that we are working to restore the quality and reputation of our business sustainably and make the auditor again what he or she is supposed to be: a trusted counselor of society, someone with guaranteed qualities, who is not afraid to tell a client the truth. Bottom line is that the client will also improve by that. Every day, I still enjoy being an accountant; it’s  a beautiful profession. ”

Reputation of Auditors
Is it as bad with the reputation of accountants as is sometimes claimed? At the end of 2013, the NBA had the Reputation Institute, part of Erasmus University in Rotterdam, do thorough research on the reputation of accountants among users and stakeholders. The accounting profession received an average figure of 6 on a scale of one to ten from the respondents; similar to other professionals such as doctors and lawyers. Students were more positive, their grade went towards a seven.

Finance Minister Jeroen Dijsselbloem on the Accountantsday 2014: “It is your responsibility to society to offer clarity on the relevance and meaning of the numbers. What I expect from you is that the label you put on financial statements is a quality label. That can only rest when the risks and weaknesses of a company have been made visible, your research has been done carefully and your reporting is clear on all the pluses and minuses. Also, your attitude towards your client should be independent and critical. You should put the public interest first. And only then, if you have met all of these criteria, you should give your signature for approval. “