The titles of UK accountants sound grand as is fitting for a kingdom and unlike many other countries, the UK has professional associations with long traditions, the jumble of abbreviations of which truly confuses a bystander. To explain what is behind the resounding names and what really are the requirements for accountants, we prepared the guide to UK accountants.
Author: Ivar Veskioja, 1Office UK director
The tax systems and the field of accounting in some countries can be relatively simple and on one level. The professional qualifications of an accountant are not very common and these qualifications do not carry a significant role on the employment market. Therefore people with a very different preparation and skillset apply for the same position within the countries. The employer makes the recruitment decision on the basis of the candidate’s work experience so far and responding to professional questions. In the UK it is only simple to understand the professional skills of a provider of accounting services or an accountant being recruited if the assessor knows the content of the qualifications common in the field.
Accountant or bookkeeper
The professional titles accounting assistant, accountant and chief accountant are in use in some countries, the professional title financial manager (or CFO) is also indirectly related to the field. None of them are related to a comparable or defined qualification. In the UK there are two clearly distinguished terms, accountant and bookkeeper, both without a legal meaning. While there must be a legal ground for using the professional title doctor or barrister, anyone can use the name accountant or bookkeeper, one does not have to be a member of any professional association for it. Bookkeeper is a lower position, which is mainly related to entering transactions from source documents or other data formats. In some countries it is an accounting assistant who helps an accountant with entry work. In the UK an accountant is normally a member of some professional association. That way an accountant receives a qualification that is understood by the employer and client, which enables him to define and sell the skills. In addition mandatory continuing professional development or CPD and professional indemnity insurance arise with the membership of a professional association. A bookkeeper may also be a member of some professional association or a trainee of some professional association offering the qualification of a chartered accountant.
Royal accountants
To use the name chartered accountant, the accountant must be a member of one professional association operating on the basis of royal charter in the UK or a Commonwealth country. There are six such professional associations. The oldest of them was founded in Scotland in 1854. Full members of all six are chartered accountants with certain variations in the name. The professional title chartered accountant can only be used by a full member of these associations, who has taken all of the necessary exams and passes repeated further training. A trainee cannot use this professional title.
Institute of Chartered Accountants of Scotland (ICAS)
ICAS was founded by Royal Charter in 1854 as the first professional association of professional accountants in the world. Its member has the right to use the professional title chartered accountant (abbreviation CA). The professional association has 21 000 members and trainees. Regardless of its name the activity of the organisation is not geographically limited to Scotland. The association’s members are in the South of England as well as other countries. Headquarters are located in Edinburgh, Glasgow and London.
Institute of Chartered Accountants in England & Wales (ICAEW)
This accountants’ professional association was founded in England by Royal Charter in 1880. A member of the association has the right to use the professional title chartered accountant (abbreviation ACA or FCA). The first letter of the abbreviation refers to the experience of the member and the position in the association:
• ACA is an associate chartered accountant and
• FCA is a fellow chartered accountant.
The latter of these names shows a greater status and longer experience. There are a total of over 144 000 members of the association in the Commonwealth joining the old colonies of the British Empire and also in other countries. The ICAEW has members in for example Belgium, China, Hong Kong, Indonesia, Vietnam and the United Arab Emirates. The association has its headquarters in London and Milton Keynes.
Chartered Accountants Ireland (CAI)
In Ireland the accountants’ professional association was founded by Royal Charter in 1888. Similarly to a member of the ICAEW a member of the CAI has the right to use the professional title chartered accountant (abbreviation ACA or FCA). There are 23 000 members across the world. The CAI’s activity is also not geographically limited regardless of its name. The association’s headquarters are in Dublin and Belfast.
Association of Chartered Certified Accountants (ACCA)
A member of the ACCA, that has become the world’s largest accountants’ professional association this decade, has the right to use the professional title chartered certified accountant. There is again the word associate before the professional title of a junior member (abbreviation ACCA) and a senior member receives the fellow status (FCCA). The ACCA organisation was founded in 1904, however the Royal Charter on the status of the professional association was only issued in 1974. It is the younger brother of the ICAEW that was founded in England, which began to fight against the closedness of the ICAEW and ICAS. The Association has over 178 000 full members and 455 000 trainees. The ACCA also operates in the Baltics. The organisation has over 90 offices in total and its headquarters are located in London.
Chartered Institute of Management Accountants (CIMA) and Chartered Institute of Public
Finance and Accountancy (CIPFA)
CIMA and CIPFA are two smaller associations operating on the basis of a Royal Charter.
The title of a full member is
• in CIMA chartered management accountant (abbreviation ACMA or FCMA) and
• in CIPFA chartered public finance accountant (abbreviation CPFA).
ICAEW tried to join both organisations with itself in 2005, but this failed.
Other recognised professional associations
There are also other recognised professional associations besides the associations operating pursuant to Royal Charter, for example the Association of International Accountants (AIA) and Association of Authorised Public Accountants (AAPA). The latter of these is the sub-organisation of the ACCA from 1996. The professional title of a full member is
• in AIA international accountant (abbreviation AAIA or FAIA) and
• in AAPA authorised public accountant (abbreviation AAPA).
In addition to the eight aforementioned professional associations the professional title accountant is also given by the Institute of Financial Accountants (IFA), the Association of Certified Public Accountants (CPA) and the Institute of Certified Practising Accountants (ICPA). The professional title of a member is
• in IFA incorporated financial accountant (abbreviation AFA or FFA);
• in CPA certified public accountant (abbreviation ACPA or FCPA) and
• in ICPA certified practising accountant (abbreviation CPA).
Professional associations of accounting assistants
Accounting assistants have their own professional associations. The most well-known are the Institute of Certified Bookkeepers (ICB) and the Association of Accounting Technicians (AAT). The abbreviations MAAT and FMAAT are used for members in case of the latter. The name member in practice (MIP) is also used, which gives the member the right to offer his service on the market independently. AAT cooperates with CIMA, CIPFA, ICAEW and ICAS. ACCA provides the accounting assistant with the qualification certified accounting technician (CAT). A person with such a qualification does not have a right to offer the service independently. The International Association of Bookkeepers (IAB) operates in addition to the ICB and AAT, which offers the accounting and payroll qualifications as part of the the Qualifications and Credit Framework (QCF) programme. In IAB members use the professional title abbreviations AIAB, MIAB and FIAB and the professional title registered bookkeeper.
Auditors and professional associations
Members of ICAEW, ACCA, CAI, ICAS and AIA may operate as an auditor under the supervision of the professional association after the relevant qualification (audit qualification). The qualification is also valid in other Member States of the European Union. All auditors therefore hold the qualification of a chartered accountant but not all chartered accountants hold the qualification of an auditor. In order to gain the qualification of an auditor one must also practice at a certified auditor’s or employer’s for three years. The exams of the accounting and audit direction are partially overlapping. A practising certificate from one of five professional associations is necessary for working as a registered auditor. A practising certificate also requires a three-year documented traineeship.
Options for gaining a professional title
There are many ways to gain the professional title of chartered accountant in the UK, for example one can qualify as its bearer also through the mutual recognition of the qualifications of a foreign accountant. Secondary education is required to commence the regular way, i.e. as a trainee at the professional association, the chartered accountant’s qualification received is considered equal to a master’s degree. It is mostly a three- to five year training time, at the end of which the trainee may become a full member of the professional association (at the junior or associate level). Three years of documented training at an authorised employer or full member is the normal minimum time, which must be spent as a trainee. In the case of ACCA 14 exams must be taken to become a full member, which include financial management, reporting standards, commercial law, taxation, audit, business analysis, good practice of corporate governance and professional and business ethics.
Depending on the location of the exam centre, exams can be taken either every three or six months. The trainee’s professional activity is strictly limited by the professional association’s code, among other things the trainee cannot offer a service and submit annual reports independently.
After qualifying as a full member i.e. a chartered accountant an independent third party public practice may be held by an accountant, who also has a practising certificate. Gaining this certificate may take another three years on the example of the ACCA, if the documented traineeship required for gaining the certificate was not commenced during studies. As when qualifying as a chartered accountant, a three-year documented traineeship is also required for gaining a practising certificate. In absence of a practising certificate it is possible to work within a company with the professional title of chartered accountant or under the supervision of an accountant with a practising certificate. The employer or supervisor must register at the association to offer a suitable traineeship to its trainee or full member for gaining a practising certificate. Such training may already be commenced before achieving the status of a full member.
Professional associations, umbrella organisations and requirements for a jobseeker
It may be noted in the job advertisement that the candidate must be a member of CCAB, a professional accountant or qualified accountant. The meaning of all of them is the same: the candidate must be a full member of one professional association that is part of the CCAB membership or in a respective professional association of a foreign state. The CCAB or Consultative Committee of Accountancy Bodies was founded in 1974 and this umbrella organisation includes ICAEW, ACCA, ICAS, CAI and CIPFA. CIPFA stopped its membership in 2011 as it found that the CCAB has focused too much on audit since the founding of the Financial Reporting Council (FRC) in the UK. The FRC, which performs the role of the Accounting Standards Board in some countries’ terms checks the national activity of all of the professional associations of accountants.
Offering an accounting service on the UK market
It is not economically feasible for a small company to keep a chartered accountant on its payroll. Therefore a chartered accountant is rather an external consultant who helps to organise accounting work in relation to software as well as operational processes. A chartered accountant also helps to find an efficient and economical solution for data entry work. The aim of chartered accountants working as service providers is to serve more clients by doing work with a great added value. Their main services are tax advising and tax accounting. The tax system in the UK is very complicated and private persons may also need the help of an accountant when preparing their tax return. Companies using the help of a chartered accountant do their own entry work or transaction recording. A monthly data entry may not take place in a small company due to quarterly or annual value added tax assessments. Entry works could also be purchased from another company because many chartered accounting firms do not do any entry work at all. The chartered accountant submits an annual report and tax return on the basis of data received from the enterprise and uses its own programme for it if necessary.
A company, which fulfils two of the following three conditions needs an auditor for submitting the annual report: annual turnover exceeding 6.5 million pounds, balance sheet total exceeding 3.26 million pounds and/or more than 50 employees.
Using a chartered accountant is not a requirement imposed by law for a company exceeding this threshold. At the same time the auditor may not agree to perform its duties if the company does not have an accountant at the chartered accountant level.
