This year, on top of everything else, finance directors will start to comply with new Continuing Professional Development (CPD) requirements.
The new CPD schemes were triggered by the International Federation of Accountants, whose International Education Standard 7 requires the introduction of CPD for all active members of IFAC member bodies. As a result, the various accounting institutes in the UK have been revamping their schemes.
Not all FDs will be affected this year, as the institutes have different start dates. For example, FDs who are members of the ICAEW are among the first to be covered, with the ICAEW’s CPD scheme going live from 1 January 2005. ICAS’s CPD scheme launches in January 2006.
ACCA is phasing in its CPD scheme over three years. This year it will cover members admitted since 1 January 2001, and in 2006 members admitted between 1 January 1995 and 31 December 2000. All remaining members will be included in the new scheme in 2007.
CIMA’s new CPD framework has been approved by its council, but has to be endorsed by a membership vote in June. If all goes well, it should become mandatory for all CIMA members from January 2006.
The CPD schemes may differ in the detail, but they all share the same objective. “Each body has a different approach to the implementation, but we are all together in terms of the principles,” says Anna Coen, ICAEW director of policy and development for education and training.
Much emphasis is placed on members taking personal responsibility for considering their own development needs. The ICAEW scheme, for example, focuses on a ‘reflect, act, impact’ process. Members are expected to reflect on the responsibilities they face in their roles and their resulting development needs before taking appropriate action to fulfil those needs. They should then consider the impact of those activities in meeting the development needs previously identified. Each year, all ICAEW members will be required to complete a declaration that they have completed the ‘reflect, act, impact’ process. “Our approach is about the individual member taking personal responsibility rather than us imposing rules and an hour-based system,” says Coen. “Most professionals and FDs do this anyway. The system was developed to reflect what they do, so it links in with their work.”
ICAS, like the ICAEW, has not specified any minimum amount of structured or private development activity that members must complete. ICAS also stresses the importance of members deciding for themselves what CPD activities to undertake. “We are transferring over to an output-based situation,” says Ann Davidson, CPD assistant director. “We are not setting any required hours or dictating any core competencies. Individuals take responsibility for what they need to do. We are not going to measure anything. We are monitoring and looking for a robust process of professional development.”
Monitoring is an important element of the new CPD schemes. The ICAEW and ACCA, for example, will ask a sample of members to submit evidence each year to substantiate their declaration of compliance. Those in positions of higher responsibility, such as FDs, are more likely to be sampled. ICAS, too, will conduct risk-based sampling, though every member will be monitored within a five-year period.
The institutes have tried to minimise the burden of CPD compliance. Both ICAS and ACCA, for example, have linked their schemes to employee development programmes run by employers. “We are going into organisations with very good staff development schemes in place and checking they work as intended,” says Stephen Heathcote, ACCA head of training and development.
ACCA members not covered by such accredited schemes will follow an alternative CPD-compliance route – the unit scheme. “With the unit scheme, the members track their learning and development, and make sure it’s relevant and meaningful to them in their roles,” says Heathcote. “Members have responsibility to make sure they are doing relevant development and thinking about their learning needs.” For its unit scheme, ACCA will require 40 units of CPD (approximately 40 hours) to be completed. CIPFA has also decided to set a minimum compliance requirement, but one that covers all its members. CIPFA FDs will therefore need to complete 120 hours of verifiable CPD over a three-year period, with a minimum of 20 hours completed in any one year.
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All the institutes are planning to offer considerable support and guidance to their members, including examples of what other members are doing to achieve CPD compliance. FDs in the first batch to be covered by the new CPD schemes would be wise to have a look now.