Go figure. But, we concede, there is a problem. In fact, there has been a whole string of problems, from Enron to Parmalat. British companies have largely stayed on the sidelines as far as the most spectacular frauds are concerned. Over and above that – but no less worrying for investors – are the panoply of ‘accounting irregularities’ which, whilst perhaps quite innocently committed, still serve to undermine confidence in the FDs’ numbers. Consider, for example, the damage to Shell’s value – and reputation – because it miscategorised some of its reserves.
Against this background, a new report from the ICAEW urges boards to get their FDs back to work in their value-creation role. The pendulum, they say, has swung so far towards the corporate governance stuff – the compliance, the stewardship, the risk and control issues – that there’s been little time for FDs to think about strategic and business development issues.
Eric Anstee – former FD of Old Mutual and Eastern Electricity and now the chief executive of the ICAEW – rightly says that his institute in particular, and the UK in general, can be proud of their contribution to good corporate governance practice in recent years. He says that’s because of the strong ethics base in the UK profession. No doubt. But while it’s perhaps tempting to wonder why it is that such an ethically-founded profession actually needs yet more rules and regulations, the real problem lies in the ever-increasing complexity of accounting standards, business practices, outsourcing, financial instruments, information technology, securities laws, and the rest. As great as it would be for FDs to move on and start creating value, we worry that the increasingly Heath Robinson nature of modern commerce creates more than enough business process weaknesses to keep FDs busy.