Accountants’ report shows how it should be done

Press, 2 December 1987, Page 40

Accountants’ report shows how it should be done

DAVID HAY

By

What this country needs is more accountants! I can find people who do not agree. But it is a widely recognised truth, especially among those in the accounting business.

We can find some interesting information in the 1987 annual report of the New Zealand Society of Accountants. It is more formal than most annual reports, and includes a lot of information — but no colour pictures. Instead, it is embellished with newspaper headlines about accountants.

The report explains how many chartered accountants we have (14,529 at July 1). The society gained 779 new members in the year. That is not a vast increase. The society will still take 20 years to double in size, and at this rate it would not be until the year 3987 that New Zealand will have three million chartered accountants. Most organisations might not see this rate of growth as a major problem.

But the society’s executive director, Mr Ross Macdonald, says in the report, “The serious short-

age of accountants and the inability of the universities to cope with the number of students seeking to study accountancy are related issues which have serious implications for the orderly growth and development of our profession.” Mr Macdonald’s comment highlights a reason why it is hard to measure how much of a shortage there is. That is because this year’s 779 new accountants all began their training at least six years ago. And since accountancy students might drop out, fail their exams, or even switch to studying law, there is no way of telling how many future accountants are in the “pipeline.” Of course there is no exact measure of how many will be needed, either. But there seem to be clear signs that employers cannot find the accounting employees they need.

At the other end of the pipeline, the difficulties that students with an ambition for accountancy have are well known. They face entry restrictions at all the country’s

universities except Lincoln University College and Waikato University. There has always been another way in — the traditional route of studying part time and sitting the society’s own exams. Now there are some major changes which will make that difficult route a

little less accessible. The Society of Accountants will be much less deeply involved in the education business. Instead there will be National Certificate in Business Studies, taught at all Polytechnics, which will be a basic qualification for accountancy and other studies; and a National Diploma in Accountancy. There will also be a final examination that all future accountants from 1991 will have to sit (to give New Zealand graduates a similar share of stress and hard work to that which their friends have in Australia, United States, oi

Britain?). The diploma will be the most difficult part of the programme for students getting their qualification this way. And the educational authorities have approved only four institutions to teach it. They are the Auckland Technical Institute, Manukau Polytech, Waikato Polytechnic, and the Technical Correspondence Institute. It would have been a difficult decision but it could be something of a blow to the pride (and ambition), of those in the rest of the country.

The basics of the work that these future accountants will do have not changed much. The basic “products” sold by public accountants are still audits and accountancy services, with an expanding area of consulting services. More accountants work in industrial, commercial, or service companies — preparing accounts, or in management. The society’s annual report illustrates that 32 per cent of members are employed in the private sector. Another 27 per cent work in public practice, 7 per cent in the public

sector and 1 per cent in education. (The remaining 33 per cent are not “accounted” for in the report. I do not think we should take that to mean they are unemployed, however.) The Society of Accountants’ own set of accounts is generally the model of good accounting that we would expect it to be. Perhaps this is the last organisation which still publishes supplementary information to report the impact of changing price levels (“inflation accounting”). It is a sign of good communication that the financial statements do not flinch from reporting a bad result, and explaining how it happened. The reduced income is due to losses in the previously “income generating” area of continuing education courses — which is now a much more competitive business area. As the report could say “Annual income $1.36 million, annual expenditure 51.17 M, result happiness” (in 1986). In 1987: “Annual income $B9l thousand, annual expenditure $1.07M, result misery” — or at least an

unexpected increase in members subscriptions.

The annual report of the Society of Accountants is more than just another set of accounts for a club. It is a show case of accounting presentation, and it seems to live up to its obligation to give a good example. As well, it helps to give idea of social trends, towards our civilisation becoming a “society of accountants.”

David Hay is a chartered accountant and part-time lecturer at Lincoln University College.

A review of the society’s accounts