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Getting back to basics
05 June 2009
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New ICAI president Tom Fitzpatrick talks to Larry Ryan about his plans for the accountancy body and the culture shift required if Ireland is to beat the recession
Tom Fitzpatrick of FMB Chartered Accountants recently succeeded Jim Aitken as president of the Institute of Chartered Accountants in Ireland (ICAI) – the country’s largest and oldest professional accountancy body.
It’s a busy time at the ICAI. As well as having to nurse its members through the financial downturn, it is in the throes of relocating to a new purpose-built training centre and office complex in Pearse Street, Dublin 2. Despite the headaches that such a move entails, Fitzpatrick is hugely enthusiastic about the project.
“It’s a real investment and it shows confidence in our future. We’ll have state-of-the-art audio-visual facilities for tuition. We’ll be able to stream up to six lectures going on simultaneously in the same class – and it’s all coming in on target and on budget.”
In the times we’re in, Fitzpatrick admits it’s a rare beacon of good news.
“Obviously, the difficult economic circumstances are impacting on ourselves and our members. Some of them have lost their jobs and we’ve got to try and help them through the difficulties. We’re freezing subscriptions for the current year and we’re trying to get a reduction in student tuition costs,” he says.
“Part of the problem is that many good clients who would pay fees quickly no longer have the cash. It’s incumbent on practices to help their clients through a recession and, very often, that means working for them even when you’re not getting paid. That’s presenting difficulties for some of our members.”
Fitzpatrick has been around long enough to witness a few recessions come and go but concedes that he hasn’t seen anything as deep as this one.
“The severity of it is quite staggering. It’s a horrific set of circumstances. There is still some wealth in the country but, the fact is, people aren’t spending and the retail sector is going through a terrible time,” he says. “We’ve a lot of clients that are just hanging on by their fingernails – and practices too. That pressure is being felt all the way down to sole practitioners.”
As we look to battle out of the mire, Fitzpatrick advocates a step back and a complete reassessment of our commercial culture.
“We’ve had an unprecedented period of prosperity and that can change attitudes.
I think we need to rekindle some of the attitudes that existed in times gone by – especially putting a value on jobs. In the ’60s and ’70s, the benchmark for successful people was the numbers they employed.
“Somehow, that value diminished. Maybe in the early ’90s it became smart not to employ people. I think we need to try and reintroduce that culture. It has to permeate at Government level, union level and with employers. Everyone has to go that one step more if it means creating or even retaining jobs because that’s the key to pulling out of this recession.”
Fitzpatrick and his colleagues have at least noted signs that our competitiveness is gradually being re-established.
“There is a pretty strong adjustment taking place in the private sector. Necessity induces people to go for productivity gains, reduce costs and question everything. Businesses are taking less for granted and becoming more hungry, lean and efficient.
“Whether it happens quickly enough is another matter because there are so many uncontrollables such as energy costs.”
A recent ICAI survey found that more than 97 per cent of accounting firms reported that their clients have experienced difficulties securing finance. Fitzpatrick admits it’s a key factor but has some sympathy with the banks.
“Banks are doing the best they can. They’re already grappling with a bad debt situation and don’t want to compound it by lending more to companies who are at present losing money.”
NAMA also gets a tentative thumbs-up.
“At least it’s a plan. In the absence of NAMA, the uncertainty would be even more. Some people suggest that banks that are now insolvent by virtue of their impaired loans should just be allowed to go bankrupt because the shareholders have already, by and large, taken the hit. That’s a pretty hard way to look at things – there would be other side-effects to that approach.
“The important thing is we go through a proper consultation process to ensure it will work well and equitably. The last thing we want is rushed legislation that’s full of holes causing more problems and uncertainty down the line – allowing perhaps the lawyers to benefit too much from it.”
Fitzpatrick heads up the corporate recovery and insolvency department at FMB and has a high regard for perhaps the only sector currently showing any growth.
“An ill wind blows some good. But the profession is much better geared now to handle the workload. There’s a lot more knowledge around. It’s a better regulated sector too and there is a good concentration of expertise.
“Also, there’s more and more effort going into avoiding the insolvency process, whether it be examinership or liquidation, through the re-organisation route or sometimes through voluntary agreements with creditors.”
He also insists that corporate Ireland now enjoys an excellent level of legal compliance – a boost for the chances of an economic rebound.
“On the advent of the ODCE, there was a certain disquiet that this was another layer of bureaucracy but the more effective policing procedures have changed the culture of ‘Ah, it’ll be ok tomorrow’.
“Like any organisation, it will have its teething problems in terms of finding its way and sometimes making mistakes, but I think the ODCE is a very important arm to have in a climate where you have such financial disruption and so many business failures.”
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