Memorandum 16
Submission from the Association of Chartered
Certified Accountants
INTRODUCTION
ACCA (the Association of Chartered Certified
Accountants) welcomes the inquiry into the Funding for Equivalent
or Lower Qualifications (ELQs) and for the opportunity to submit
written evidence. ACCA would be delighted to provide oral evidence
into this inquiry.
EXECUTIVE SUMMARY
— Current proposed exemptions to the
ELQ policy proposed by the Government should be widened to include
those qualifications which are designed to give students access
to professions with established demand in the UK economy.
— Specifically, there should be an
exemption for the study of accountancy given the skills shortage
in this area and its importance to the economy and wider society.
— The effect on accountancy training
if the funding for ELQs are withdrawn will be potentially significant—it
will impact on the number of mature students obtaining a qualification
which enables them to contribute positively to the UK economy.
— To help address the specific impact
on mature students, there should be an extension to the exemption
for students who received their awards more than five years ago
and part-time students.
ABOUT ACCA
1.1 ACCA (the Association of Chartered Certified
Accountants) is the largest and fastest-growing international
accountancy body with 296,000 students and 115,000 members in
170 countries. We work to achieve and promote the highest professional,
ethical and governance standards and advance the public interest.
1.2 ACCA provides qualifications to people
pursuing careers in accountancy, finance and management. We do
this in partnership with many organisations and support students
and members throughout their careers. Our mission is to provide
opportunity and access to people of ability around the world and
to support our members throughout their careers in accounting,
business and finance.
1.3 ACCA has recently won its fourth Queen's
Award for Enterprise, this time in the category of International
Trade, in recognition of its significant contribution to global
business.
EXEMPTION FOR
ACCOUNTANCY
Access to the professions
2.1 ACCA understands the Government's goal
to withdraw funding for ELQs which do not add to the overall skills
base of the UK. However, ACCA believes that sector and role specific
degrees, such as accountancy, which lead directly to employment
within the professions should be made exempt from the ELQ funding
proposal.
2.2 Current proposed exemptions to the ELQ
policy by the Higher Education Funding Council for England (HEFCE)
cover subject areas such as undergraduate medicine and dentistry,
social work and teacher training. These degrees all lead to professional
occupations. These exemptions should be widened to all sector
and role specific degrees which lead to professional occupations
where there is a demonstrable skills shortage and/ or societal
need. Accountancy qualifications are one such example of this
type degree and a skills shortage has been identified (see section
4). Therefore, an exemption for accountancy should be made.
ACCA Qualification
3.1 As highlighted in the Leitch Review
of Skills in England, bridging the gap between vocational and
academic learning, engaging employers with learning and providing
qualifications for competence in the workplace must all be addressed.
The accountancy profession, and ACCA in particular with its integral
links to employers, is meeting these challenges and providing
a bridge between universities and employers.
3.2 To qualify as a professional accountant
with ACCA, students must, in addition to passing 14 exams and
completing a Professional Ethics module, undertake relevant practical
experience over a minimum of three years. Therefore, a key component
of the ACCA Qualification is gaining relevant practical experience.
The ACCA Qualification will prepare individuals for a challenging
and demanding career as a professional accountant and, like all
professions, it is not sufficient to solely rely on theoretical
knowledge developed through an exam process to help achieve this.
The ACCA Qualification is designed by and for accountants to provide
the accounting knowledge, skills and professional values which
will deliver finance professionals who are capable working across
all sectors, industries and services.
3.3 ACCA works closely with UK universities
to ensure there is close articulation between the accountancy
degrees and the professional qualification. There are 48 Universities
in the UK which have designed their accountancy qualification
to meet the needs of the accounting profession and are awarded
maximum exemption from the ACCA examinations. This means that
of the 14 examinations students are required to pass in order
to become a professional accountant, nine can be satisfied by
a first degree in accounting from one of these Universities. The
diagram below illustrates this relationship between the UK Universities
and ACCA. A further 10 UK Universities also teach students directly
for the ACCA Professional level examinations.
Skills shortage in accountancy
4.1 There is a skills shortage in accountancy.
The Big Four accounting firms are recruiting internationally to
meet their staffing demands, despite the fact that almost 34,000
professional accountants qualified between 2000-5 in the UK[22].
The Association of Graduate Recruiters reported in their winter
survey 2006 that despite increased numbers of graduates in the
UK, there were significant skills shortages in certain sectors
and therefore employers were facing difficulties filling vacancies—with
one in four vacancies in accountancy and professional services[23].
4.2 In March 2006 the Financial Reporting
Council in the UK issued a report titled "Review Of How Accountants
Support The Needs Of Small And Medium-Sized Companies And Their
Stakeholders". This identified that some accountants, particularly
those in smaller practices, reported a shortage of "good
quality" bookkeepers. "Good quality" was defined
as having appropriate skills in accountancy and bookkeeping systems
together with a basic level of business acumen. If businesses
are forced to employ the services of unskilled finance staff,
the quality and integrity of financial information relied upon
by investors may be jeopardised, which will have a significant
negative impact on UK PLC.
4.3 Looking globally, the skills shortage
in accountancy is a result of a number of factors which includes
increases in world trade and regulation; employee mobility and
the emergence of new economic markets such as Brazil, Russia,
India and China; and the need to handle increased risk, scrutiny
and compliance within business has created demand for professionally
qualified accountants. Supply has not met the demand and this
has led to a shortage of finance professionals required to support
the growth of the world's major economies. This issue is likely
to continue for some time and will be exacerbated by the impact
of an age demographic across most developed economies, leading
to further skills shortages.
Possible effect on accountancy if funding for
ELQs are withdrawn
5.1 Accountancy skills are vital for the
growth of the economy. ACCA believes that the withdrawal of funding
of ELQs will have a negative effect on the number of students
who will study for accountancy unless an exemption is made. This
is because accountancy has proved a particularly attractive choice
for mature students. In the UK, ACCA has 71,000 students. 76%
of ACCA's students are over 25 years old and 45% are over 30 years
old.
5.2 Withdrawal of funding creates a further
obstacle to prevent mature students from obtaining a qualification
which will enable them to contribute positively to the UK economy.
An extension of the exemption to students who received their awards
more than five years ago and part-time students would help to
mitigate the impact on this group.
5.3 ACCA has not been able to undertake
full research on the probable effect of the withdrawal of funding
for ELQs. However, there are some key facts which indicate the
effect that possible withdrawal of funding for ELQs will have
on accountancy in the UK. Research by the Professional Oversight
Board[24]
in 2006 provides figures of graduate entrants to training with
the six Chartered Accountancy bodies in the UK, and breaks this
figure into the number of students holding a degree and those
holding a "relevant" accounting degree (as defined by
the accountancy bodies). Using ACCA as an example, from an intake
of almost 60% of students held a degree with nearly 40% holding
an accounting degree.
5.4 ACCA has to date been contacted by Manchester
Metropolitan University, Northampton University and The Open University
who all expressed concern at the possible effect of the withdrawal
of funding for ELQs on accountancy training. ACCA can commit to
undertake full research on this issue should this be requested.
RECOMMENDATIONS
— Current proposed exemptions should
be widened to include qualifications which are designed to give
access to professions with established demand in the UK economy.
— There should be a specific exemption
for accountancy given that the skills shortage in this area and
the importance to the economy and wider society.
— There should be an extension to the
exemption to students who received their awards more than five
years ago and part-time students.
January 2007
22 Professional Oversight Board, Key fact and trends
in the accountancy profession, November 2006 Back
23
AGR Winter Survey 2007 http://www.agr.org.uk/ Back
24
Professional Oversight Board, Key fact and trends in the accountancy
profession, November 2006 Back
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