War of words

It is not a pretty sight when professional bodies attempt to belittle each other. And it does not impress clients.

By Andrew Heathcote
BRW. 30 June 2005

The decision by the Institute of Chartered Accountants in Australia (ICAA) to bombard the Australian media with advertisements critical of their main rival, CPA Australia, has created angst in the profession. The "word war" has been used to describe the deteriorating relationship between the two professional bodies, but infighting is not the most telling consequence of the advertisements. More important is the insight into whether the profession really understands what clients want from their professional service firms.

The recent advertising blitz by the ICAA is one of the most comprehensive undertaken by a professional body. It started on June 12 during the television programs Business Sunday and Meet the Press and in the days following, large print advertisements appeared in big daily newspapers and BRW. The amount the ICAA has spent on the blitz is a closely guarded secret but the bill will be big.

Apart from being subjected to questions about whether the advertisements are an appropriate use of member funds, the ICAA has come under fire for misinterpreting what business wants from them. Understanding changes in client expectations is a crucial, but challenging art for professional services firms.

The advertisements headed 'A Message to Australian Business', have short and simple messages. They state: "Research has indicated confusion between chartered accountants and CPAs. These are not the same. The chartered accountant qualification is a graduate diploma. The CPA qualification is not. The chartered accountant qualification is credited towards UK registered auditor status. The CPA qualification is not. Over 60% of CFOs in Australian Top 500 companies are chartered accountants. Put simply, a CPA is not a chartered accountant."

The directness of the advertisements is unusual and some accountants say it has started a war between the country's two biggest accounting bodies. The chief executive of the ICAA, Stephen Harrison, says this was not his intention. "It is part of a branding campaign we started in 2003 to raise awareness of chartered accountants and what they do. The research we have done has clearly identified that there has been misattribution between some of our advertising and the CPAs. So it became apparent to us more recently that we needed to get out into the marketplace and establish that the two brands are not the same."

The outgoing chief executive of CPA Australia, Greg Larsen, says the advertisements are misguided and damaging, but denies CPA Australia will respond with a derogatory advertising campaign of its own. "Why would you spend a considerable amount of membership subscriptions worrying about the difference between the two bodies rather than trying to encourage more people to come into the profession?

"CPA is an international entity with 25% of our members resident overseas," Larsen says. "The institute really only operates in Australia. Therefore they are only focused on how they are going in Australia and I guess they must feel they are not going all that well."

Larsen says he has received calls from members of CPA Australia and ICAA who have been disappointed by the advertisements. It seems reasonable to assume that they may have also finally put to rest lingering debate about whether the two groups will put aside their differences and reconsider a merger. Harrison says that not all ICAA members are pleased with the advertising strategy. "We have had some feedback from members and to be frank, some are happy with it and some are not," he says. "We did expect that some of them would be concerned that this was more aggressive than we have been in the past. But it was not our intention to be aggressive. We intended to be assertive and to demonstrate that there is a difference. It is not a declaration of war between the two accounting bodies. I think people are always sensitive to comparative statements. But unless you make comparative statements it is very hard to demonstrate there is a difference."

Who cares?
Although the advertisements appear as "messages to Australian business", some experts are left wondering whether business still cares about the distinction between CPAs and chartered accountants. One explanation for why the ICAA's research shows that business confuses the two groups is that most companies see them as reputable bodies and are not fussed which group their advisers belong to.

It has also been suggested that the ICAA's late advertising campaign will help it avoid reporting a big surplus in the year to June 30, 2005. In the year to June 30, 2004, the ICAA reported a surplus of $2,648,000 which is equal to 9.2% of the total receipts from members' subscriptions. Some members complained that the surplus was too large. Spending heavily on advertisements during June may help the ICAA avoid criticism about the 2005 result.

A CPA and partner of the Canberra firm Everalls DFK, John Mann, says the advertisements restrict the accounting profession's ability to solve the main problems it is facing: succession planning and getting graduates into public practice. "When people read this they must ask themselves why they would bother being an accountant." He says clients are likely to be equally unimpressed. "Clients must look at these ads and be wondering what has happened to the accounting profession. Clients are interested in strong and productive relationships with their advisers. I would think that 99% of businesses couldn't care less about whether their accountant is a chartered accountant or CPA."

The managing partner of the mid-tier firm Moore Stephens HF in Melbourne, Kevin Neville, says he was uncomfortable with the advertisements. "The institute should be promoting its members. I found this too negative and it doesn't address what business is really interested in hearing."

Neville is a member of the ICAA and CPA Australia. He says that when the firm hires senior staff it does not base its hiring decision on whether candidates are chartered accountants or CPAs. "We are looking for either qualification. Then it comes down to the quality of the person."

The national chairman of the mid-tier firm PKF Australia, Paul Bull, disagrees. He believes the stance taken by the ICAA is the right one. Bull says his firm undertook a survey two years ago to determine whether PKF should keep the term chartered accountant in its advertising and branding. The term was retained after the survey results showed that clients value the chartered accountant affiliation.

Bull believes long-standing confusion in the market about the distinction between CPAs and chartered accountants has not been corrected. PKF is predominately a chartered accounting firm but has some CPAs on staff.

Bull says he supports the ICAA's attempts to end the confusion because he believes chartered accountants have a competitive advantage. "It is fair to say we have extensive professional development and training, and I think we are ahead of most organisations where CPAs are heavily involved. With more and more things for accountants to be on top of, it is important for people to know that there is a different level of training and experience."

Not surprisingly, Larsen denies CPAs are less valuable to business than chartered accountants. He says: "A professional qualification is often a necessary prerequisite, but the difference between them is not of great interest to most employers. What is of interest to business is that they get highly competent people who know how to prepare financial accounts and are attuned to governance and ethics. A professional accountant stands by their profession. They will be prepared to say they will not produce a set of accounts when they don't accord with accounting standards or provide a true and fair view. That is what business wants from a professional accountant."