Host: Philippa Lamb 

Guest: Michael Izza, Chief Executive, ICAEW 

Transcript

Philippa Lamb: Hello, and welcome to the Insights in Focus podcast. For this episode, we’re doing something different. For the first time, we have just one guest and his name may be very familiar to you: ICAEW Chief Executive Michael Izza.  

Michael has been in post for 18 years and at the end of March is moving on to fresh challenges. In that time, he has been busy steering the Institute through a prolonged financial crisis, navigating a pandemic and its highly complex aftermath, and grappling with the early stages of a global tech revolution. Now, almost a quarter of the way into the 21st century and with tech and eco changes transforming the global economy, Michael is here to share his views on the future of the profession and to tell us what he’s taking away from his time at ICAEW.  

Michael, thanks so much for joining us. You’ve been with ICAEW I think since 2002, haven’t you? And you took on the CEO role in 2006, just before the financial crisis. What did you think when you walked through the door? What did you think your priorities were going to be? 

Michael Izza: Well, if we go back to 2002, my first day was not the day I expected because unbeknown to me, the previous month, the ICAEW Council had not approved the budget. So I walked through the door on third of January and the first thing I had to do – no induction – was: “You need to look at the budget. In two weeks’ time, we’ve got an extraordinary council meeting to see what you think of the budget.” Focus.  

PL: You really had to hit the ground running.  

MI: Absolutely.  

PL: And the 2006 timing, just ahead of the financial crisis, that must have been a challenge?  

MI: It was. When I took over, one of the things that sticks very much in my mind was that there was an accountancy journal at that time, called Accountancy Age, and they ran a front page with my picture on – I have to say it wasn’t a particularly flattering picture! And it said: One man, 127,000 problems. The article was expressing a view that ICAEW was actually a very difficult organisation to run because, although it’s a professional body, for chartered accountants, we are a broad church. And they all want something very different. Trying to satisfy that wide range of stakeholders had proved very challenging to my predecessors. So that was the backdrop to me walking in. And then, as you say, the financial crisis hits.  

PL: So you must have walked in with a raft of priorities in your mind, you knew what sort of shape the Institute was in, but then the financial crisis came. So did you have to park some of that and move into other areas that you hadn’t expected to tackle quite so fast? 

MI: Well, the first thing that was very much in my mind was that we had to get some growth back into the Institute, because although I’ve mentioned that number – 127,000 – the growth was very, very slow. We needed to look at that – it was clearly a priority. The other priority was that in 2006 we had effectively rebranded ICAEW, and it changed from being the Institute of Chartered Accountants in England and Wales to being ICAEW. We went through a whole series of brand workshops with members and they were very protective of their Institute. But what they said was our biggest challenge was that the Institute might well die through lack of interest. So we had to prove our relevance. And a lot of that was focused on the brand. So notwithstanding the financial crisis, those were two of the things I was really conscious of on day one – growth and relevance. 

PL: Presumably you were thinking about role and purpose for the Institute too – it wasn’t just a branding exercise, was it? It was a reinvention, to a degree?  

MI: It’s absolutely about purpose. Because when you’re a professional body, one of the characteristics of a professional body is that you expect your members to act in the public interest, and to put others before themselves. Now, that’s something we all learn in our training, but often forget with the passage of time. And if that was something that had slipped people’s minds, and they were more interested in “What’s in it for me?”, you have to remind them that the purpose of ICAEW is something that’s really quite special. And that public interest, public benefit angle is something we should cherish. So we had to remind them of why we were important, why we’re relevant, and why we are important across the whole economy, which led us very nicely to the financial crisis. 

PL: Well, yes, because you had the opportunity there to demonstrate exactly those things. Because you personally, and obviously the Institute as a whole, were very close to those seismic events – the financial crisis and, indeed, the pandemic. 

MI: So taking the financial crisis first – people listening to this podcast today, who didn’t experience it, might not appreciate how difficult it was to see the queues of people down Moorgate trying to get their money out of Northern Rock. You know, that was really a sight that would pull you up short. 

PL: Something people didn’t expect to see in this country? 

MI: A run on a bank, yes. And in addition to that, our members were concerned about their financing – was the financing going to be problematic? And of course, Lehman Brothers collapsed. Our members in practice, the auditors, were all concerned about their audit opinions – could they actually give a going concern opinion on some of these banks, when their counterparties might collapse overnight, and who knows what that would result in? These were really, really big issues. Without wanting to overplay the role of ICAEW in this – because, you know, this was being dealt with at a global level – we were certainly inputting into the regulatory structures, the government, the Bank of England, with our particular insights, that hopefully helped us navigate through that crisis.  

PL: And you worked closely with government at that time? 

MI: Yes, on the specifics. Northern Rock, and Bradford and Bingley, and the Dunfermline Building Societies all effectively collapsed. And one of the things that the government had to do was look at whether or not any compensation was going to be paid to the shareholders. So they wanted to appoint an independent valuer who was going to look at this. This is quite a contentious thing, because that valuer was going to look at residual value – should there be any distribution? So I chaired the panel that appointed the valuer for Northern Rock, and then Bradford and Bingley, and then Dunfermline Building Society. Now chairing the panel might seem like a relatively straightforward thing to do. But I seem to remember that for Northern Rock, we had 15 parties tendering to be that valuer. And because it’s government, you know, you have to be seen to be fair. It took a hell of a lot of time. 

PL: While events were actually unfolding very rapidly? 

MI: Absolutely. And you knew that at the end of it, someone wasn’t going to be happy.  

PL: A difficult time.  

MI: Yes. But we got through it.  

PL: There’s been so much changed since then. I was thinking about it earlier, and wondering what were the biggest things in terms of fundamental change. I’m wondering if it’s the proliferation of data– just the extraordinary quantity and breadth of data collection now, and the professional at the heart of it, collecting and attempting to use that data in a productive and constructive way, rather than just collecting it for collecting its sake? Do you see that as a big challenge?  

MI: Absolutely. As I leave ICAEW shortly, I can look back on what is effectively the first quarter of a century. And ICAEW, which has been around since 1880 in its current incarnation, can take a long-term view of these issues. If you go back to the turn of the century, before I was at ICAEW I worked in the dotcom business, so I’m aware of technology and how we’re starting to change things. But what we were on the cusp of then was an explosion of data. And if you are coming into the workplace today, it’s very difficult to visualise how much of a change there’s been since the turn of the century. There has been exponential growth. There’s a there’s a phrase which I like to use, but I can’t claim to have originated, that we’re drowning in data but we’re starving for insights. And you know, this is such a big challenge. Chartered accountants are actually at the centre of this, because ensuring that data integrity is there, that data can be used to make management-useful information and then management and the board can act on that data is actually a really big, really big thing. And the growth of that continues today. We we’ve seen data analytics come through, but today, we are probably going to see a further shift with generative AI and how generative AI takes these data, puts them into common data models, and makes it more useful. And then I would postulate that that’s probably going to also move to one side when quantum computing comes in. But that’s for another day.  

PL: It’s fundamentally changing the way accountants work and the work that they do. Do you think it will make work for the profession more interesting in the sense that some of the repetitive routine processing is just disappearing? Now it’s machines that are doing this for us? 

MI: Absolutely. If we have a vision for how we see chartered accountants operating within this data area, it’s as custodians of data – you know, someone who’s got to make sure that this data has integrity, is capable of being used. But the processing of it will be down to machines, who can do it far better than we can. So we then have to evaluate that output. And that’s where chartered accountants need to be. So when people ask, are you bothered about the future of the profession, well, obviously, we can’t rest on our laurels. But when we look at the jobs that are going to be replaced, or changed, it’s probably not going to be at the chartered accountancy level – not at the start anyway. It’s going to be at those processing clerical jobs, which to some degree have already disappeared in many finance departments.  

PL: That explosion of data has a dark side as well, doesn’t it? It’s leveraged the opportunity for bad actors – we’ve seen fraud rapidly rising. That’s another one for accountants to deal with, isn’t it, right now? 

MI: Fraud today is at epidemic proportions. We may not observe that in our day-to-day activities. But ICAEW, through its regulatory activities, works closely with government and law enforcement, and we see some of the statistics as to how many frauds are being perpetrated. As I say, it’s epidemic proportions. 

PL: Yes, we’ve covered it on the podcast more than once – the numbers are amazing.  

MI: And you just know that for every pot of gold that is out there, someone is trying to work out how they can access it by nefarious means. If we take the pandemic, for example, the chancellor – now the prime minister, wanted to do the right thing, wanted to support business. But I remember saying to my wife on the morning of that announcement, there’ll be somebody now sitting down, working out how they can manipulate that to their benefit. And of course, we know there are billions of pounds that potentially never going to be collected.  

PL: And that brings us to a less tangible role for accountants, and that’s about ethics, isn’t it? Because we can have a regulatory framework around fraud, we can legislate – but the way in which accountants do business and the way in which they advise their clients, that’s about ethics, isn’t it, underpinning everything we’ve talked about so far? Have you seen as much progress in that area as you would like? 

MI: That’s a really interesting question, because we always talk about ethics being at the heart of the accountancy profession – and let’s hope that it is. We all have it drummed into us through our training contracts, and plenty of other professions also claimed to be ethical. I think whether or not you are an ethical profession comes down to how you behave, and how others perceive you to behave. And like other professions, we occasionally let the halo slip, because none of us are perfect. And I think it behoves ICAEW to constantly remind its members about the importance of ethics, and not to assume that you’re an ethical person who never needs to reflect on a decision that they’re making as to whether or not it might be ethical. I’ve seen some people who I would, on face value, think are very ethical people, make mistakes that with reflection, they should probably have understood didn’t smell right. And they shouldn’t have done it. 

PL: Because people can do bad things, can’t they, and not always for bad reasons? 

MI: Absolutely. As I actually leave ICAEW, one of the things that I’m very pleased about is that we’ve been running a survey for eight years now with a research group called Edelman looking at trust in the profession, because ethics and trust, I think, are two sides of the same coin. And in 2023 chartered accountants were the most trusted professionals in the UK, with the exception of doctors and nurses. Over an eight-year period, we’d moved up, up, up, up, up, and I think that’s a great place for me to leave it to my successor because, you know, we worked hard on this. Now, it can all go backwards very quickly. But that’s how we’re perceived today by business. 

PL: Yes, as you say, there’s always more work to be done. It’s this idea of embedding ethics in everything an organisation’s doing rather than it being a course you go on, or a conversation you have at an awayday. That idea of embedding it in the culture – it’s hard to do, isn’t it, although it’s easy to talk about? 

MI: Of course it is. And we talk about ethics being a golden thread. One of the things that we have wanted to do over the last 20 years is make sure that we embed it. So we’ve been quite resistant, historically, to doing things like ethics qualifications and things of that nature, because it should be all-pervasive. It shouldn’t be something that you do, and then put it down and move on to something else. It’s actually part of everything people in business do. 

PL: Am I right in thinking it’s now become a mandatory part of CPD? 

MI: Yes, that’s with effect from November 2023. So we are requiring all of our members to work through an ethics module. It’s not particularly time-consuming. But can I just say, if anyone’s listening to this and is in two minds as to whether they should do it now, or put it off until near the deadline, I found it really useful. And many people I know, who are very experienced business people, have confirmed that view. So you might well learn something.  

PL: In business, accountants can often be the person around the executive or the board table, questioning whether actions are right or appropriate. That can be a tough one, and can be a very lonely and challenging position. Have you found yourself in that position? 

MI: Yes, I have. And as we know, many chartered accountants train in practice, and then move out into industry. It’s a well-trodden path and it has been a path that’s existed for decades now. But when you actually make that move from a professional firm – and many people in that firm may be pretty smart people, probably from a graduate background, professionally qualified – you go into a business environment where you might be the only professional, and that makes it a lonely place. It’s even lonelier if the firm is one where you have to effectively provide the guide rails within which they can operate and they’re always trying to test those. So yes, I have been in that position and I know it’s not easy. But lots of things in life aren’t easy.  

PL: And it’s the job isn’t it – it’s part of the job.  

MI: It is, and the job isn’t just to say no; the job is to say, well, that’s how you could do it. But if you do it that way, I want no part of it.  

PL: Shall we talk about sustainability? We talked about tech, but I know sustainability is very close to your heart. How transformative do you think this whole movement is going to be – is being – for the profession?  

MI: Well, let’s talk about purpose. When we think about a profession, and we think about why people want to be part of a profession, they generally want a career that’s going to provide them with a good income. But many people also want to make a difference. And my view is that the single most important priority facing the planet today is, how are we going to transition to a world of zero carbon, or low carbon in which we can reverse some of the damage that’s been done during the Anthropocene. chartered accountants have got a really important role to play. Now, it wasn’t me that said that. There’s a quote that’s often attributed to the then Prince of Wales, now the king, which is that chartered accountants are going to save the world.  

It wasn’t actually the Prince of Wales who said it, it was said by a chap called Peter Bakker from the World Business Sustainability Council. But I was very happy for the Prince of Wales to repeat it. And what he was saying was that, actually, the thing that’s going to cause people to look at the issue and deal with it is measurement, reporting, and assurance. And those things are at the heart of what chartered accountants do. And he envisaged that, initially, through perhaps the business sector, but it’s got to be a whole-economy approach. And it’s got to be a global approach.  

So one of the things I think ICAEW can be very proud of – and this isn’t down to me, because nothing is done by one person alone; there was a real collective effort on this – is that we have raised the consciousness of sustainability within the accountancy profession, to a level whereby people now talk about it as being core. And it’s going to be as important as tax, audit, corporate reporting, corporate finance, that that’s how people see it today. Now, we are still in the process of finalising what some of the reporting standards would be. But I was very pleased that I was on the Treasury’s high-level steering group that was formed after Cop 26. That reported last year with a new sector-neutral framework for net zero transitions. This is going to become the gold standard that businesses are going to have to think through and adopt. And where does this planning tool sit? The finance department. Who should be leading it? The CEO and the CFO. 

PL: Engaging with hearts and minds, interrogating existing strategies, all those influencing conversations – those are for accountants too. 

MI: Absolutely. And if you are listening to this and thinking, I don’t do that in my organisation, can I encourage you to look at the ICAEW sustainability hub; there are some fantastic resources there. But it also shows what your peers have been doing. Because for 15 years now, we’ve seen finance departments leading this within companies. So don’t wait to be asked, take the initiative.  

PL: Because as you say, awareness is high. But this is still very much a developing area, isn’t it, and I think it’s fair to say there’s still a lot of confusion about what sustainable practices should actually look like – what will genuinely make a difference rather than perhaps creating the right impression or short-term wins? This turf is not set in stone yet – to mix my metaphors; there’s a lot of work to be done on collaborative joint understanding of what needs to be done, how it should be done? 

MI: I’m on record for the conversations I’ve had with government and regulators about them being flexible, as businesses and professionals start to work in this area. Because some of the things that have been done today, in three years’ time will be shown actually to be suboptimal. And perhaps people shouldn’t do that. And any type of planning, which looks into the future, has inherent risk. So I’ve been particularly keen that regulators, when they look at the work that’s been done in this area, whether by listed companies, whether by auditors or assurance providers, remember that it doesn’t have the integrity that corporate reporting has today. And it will be some time before it gets there. Because in some cases, we’re still working out how to do it. But what we can’t do is wait 10 years until we’ve figured out how to do it perfectly, because another 10 years will have elapsed. We need to start making the transition now. And we should have started 10 years ago.  

PL: It’s tricky, because it has to happen now, no question about that. But those possibly suboptimal solutions that people are perhaps putting in place now run the risk of undermining the message, undermining the endeavour, when they’re shown to be suboptimal in two, three or five years’ time. So there’s a lot to be done in terms of messaging, isn’t there, for the accountancy profession? 

MI: If you come back to the role of ICAEW and what we can do, no one should be doing this alone. We should be comparing our collective notes. And there are some organisations who’ve been trailblazers in this area for a decade or more. We should learn from their experience, and this should not be proprietorial. This is too important for it to be proprietorial, there needs to be a collaborative approach, a sharing approach. And I include that not just within the UK, but internationally as well. We in the UK have been at the vanguard of this. And we can help others get up that learning curve much more quickly than we’ve been able to. 

PL: Discussions like this always touch on legacy, don’t they? Some people are more preoccupied with it than others. But you must have thought about it? 

MI: Yes, but legacy seems like the sort of phrase that people use when they’re shuffling off their mortal coil. Hopefully, I’m not going to do that. I’m just going on to the next phase of my career. But when you’ve got an organisation that’s been around since 1880 and is going to continue, hopefully, long after I’m the chief executive, all you can really do is look at the shape it’s in today versus the shape it was in when you took it over. And if we look at ICAEW today, it’s got 170,000 members, it’s got 38,000 students – that’s the future; that’s the pipeline. It’s well resourced. It’s well respected. We are a confidant of government and governments. We talk to NGOs, we straddle the whole of society. ICAEW is in a great place today, and my successor has got an excellent platform from which to do something really interesting. My legacy is that. 

PL: It sounds like you’re reasonably satisfied with what you’ve managed to get done. I suspect you have a list in your head of things that you would like to have done that hadn’t happened, but generally you’re pleased with where it’s gone?  

MI: I did my best.  

PL: No one can say more than that. Are you able to tell us what you’re going to move on to? Are you going to take some time and think about what seems most interesting to you? 

MI: I need some time off to recharge the batteries. And without wanting to sound in any way like I’m not up for a challenge, the period since the pandemic has been pretty hard. And I think when I talk to my peers – and this isn’t just professional bodies, this is in CEO roles more broadly – they found the pandemic challenging and the aftermath challenging, and I need to recharge my batteries before I decide what to do next. It won’t surprise you to hear that the things I’m gravitating towards are sustainability, and the net zero transition, and what I can do to help with that, but also technology. I said that I used to work in a dotcom business, I’m really interested in where technology is going to take the profession, and indeed society going forward. So those are two things that interests me. I’m also very interested in public service. So actually giving something back either through the government or charities also appeals to me very strongly. 

PL: Will you feel able to completely leave ICAEW behind, do you think? 

MI: Well as a member I shan’t be leaving ICAEW behind so just to confirm I shall be retaining my membership. I think it’s important that the Institute knows I’m here if they ever need me to do anything, but I’m not going to be sitting around waiting for the phone to ring. I’ve got other things I want to do. 

PL: Yes, it sounds like it! Michael, thanks so much for being with us. It’s been fascinating.  

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