ACCA myths and misconceptions

[Wandering Star]

Here is some advice for students of ACCA and I would also like to clear some misconceptions which run through our accounting profession in Pakistan.

First of all

A ‘qualified’ ACCA is a person who has

a) …completed the practical training as per ACCA’s requirement.

AND

b) …cleared the professional examinations.

AND

c) …obtained the membership certificate which includes the legal right to use the ACCA designation.

Practically speaking, in Pakistan and some other regions, ACCA ‘affiliates’ are called or considered ‘qualified’ which is definitely wrong. (…calling yourself as ‘qualified’ if you have only completed the examinations is also illegal and subject to disciplinary procedures by your institute.) It makes ACCA’s generally look incompetent when they say ‘they have qualified’ and don’t even know how to send a print job on a network. They are simply discrediting their own profession.

Anyway, in the United Kingdom, European and Middle Eastern markets, ACCA, ACA, CIMA qualifications are considered practically equivalent and a lot of your actual worth comes from training experience and how well you manage to ‘market yourself’ in an interview. A lot will matter where you work, if your firm has a majority of ACCA’s as its managing partners, expect to be given preference. Take ICAS’s (Scotland) example. ICAS is the oldest institute of chartered accountants in the world and predates ICAEW. There is quite a bit of rivalry between ICAS and ICAEW in the UK with ICAS claiming higher ‘prestige’ and ICAEW claiming more market penetration. ICAEW has nearly 10 times as many members as ICAS and ICAS simply pleads no contest here in member counts because it considers its examination and training requirements more rigorous. ICAS’s examinations are considered by many to be the hardest accountancy examinations in the world and they have exclusive rights to the ‘CA’ designation (rather than ACA) for use in the United Kingdom. Nevertheless, CA’s and ACA’s start on equivalent footing in UK unless of course, your recruiter is a CA rather than an ACA. As another example, CIMA may not be considered as well as ACCA or ACA in a practice, but in the industry it’s considered perfectly equivalent and in some cases CIMA is rated even higher than ACA or ACCA.

I would like to add, ICAEW’s market prestige has drastically fallen in the past few years, mainly due to mismanagement. Search for ICAEW on accountancyage.com and you will come up with all sorts of articles regarding ICAEW’s troubles. They have been doing their best to attract people away from ACCA or CIMA and a lot is about to change. (Training offices now sprouting up all over the world is simply part of changes in ICAEW policy). ICAP thinks ICAEW is some ‘untouchable mother body’, which is unsurprising, since majority of the people who are involved in running ICAP were originally ICAEW qualified who got their ICAP certificates through reciprocal arrangements. (ICAEW’s final exam pass rate was nearly 80% in 2005, out of only 800 students appearing compared to about 50% for ACCA”s final exam’s.) The huge drop in ICAEW recruitments explains the small number of candidates who appeared, with more and more preferring ACCA and CIMA now compared to a few years back.

Coming back to Pakistan’s case, an ACCA is sometimes given less preference to a local ACA because of the following reasons

1) ACA’s are allowed practice certificates by local legislature in Pakistan, ACCA’s aren’t.

2) The profession policies are managed by FCA’s who obviously don’t like ACCA’s. This is called professional rivalry and will always exist.

3) ACCA’s training requirements are more ‘flexible’ than ACA’s, which creates a false impression of relaxation and less discipline. (In the UK, one of the major reasons ACCA’s market worth has grown is actually because of their more flexible requirements)

4) There is a much smaller number of fully qualified ACCA’s than ACA’s in Pakistan, and although as many (or more, since ACCA's pass rate is consistent) ACCA’s as ACA’s complete the exams each year, the actual number which is annually admitted to ACCA membership in Pakistan is lower. The accounting profession is dictated by majority.

5) ACCA’s were not examined in local laws and tax. (They now are, but that was introduced only recently so market penetration of qualified ACCA’s who are well versed in local law and tax wont happen any time before the end of 2007.)

6) ACCA is relatively new in Pakistan. Employers and the market in general, are not aware of ACCA or its intrinsic value and when they ask ICAP for advice, ICAP tells them it’s a foreign qualification with no ‘scope’ in Pakistan.

7) Coaching centers are focusing too much on minting money and do not assist in professional grooming or development at any level. Their ‘counseling’ is solely restricted to showing tricks to students on gathering as many degrees as possible.

8) From a student point of view, ACCA is VERY expensive compared to ICAP, and failure is simply not affordable by most ACCA students, since they can risk losing a whole years saving on just two or three papers along with the ridiculously high subscription fees. Failure can be particularly hurtful in ACCA and that is why some people don’t recommend it, especially to those with humble backgrounds.

9) While the overall profession policies are managed by qualified FCA’s - the actual accountancy profession image in Pakistan's employment market is managed by people who never managed to fully qualify due to some reason or the other. These finalists, because they never passed, consciously or unconsciously, imagine 'ACA' as some sort of ‘legendry’ and ‘mythical’ qualification, simply because of a fact of human nature that something you can’t achieve is the stuff of ‘legend’. These people can, and will do the work of a qualified Chartered Accountant at a lower cost hence they are much highly sought after by employers and in good demand.

10) ACCA’s brand image has drastically improved in the past decade and this is considered threatening by ICAP. ICAP is protecting its interests by de-recognition of ACCA to ensure that the value of chartered qualifications remains intact, otherwise people would simply use ACCA as a back door to qualifying ICAP and never care about developing the ACCA profession as they are doing so now. It’s a complicated paradox, but generally speaking ICAP’s anti-competitive policies have helped ACCA create its own worth. Pakistan’s economy simply can not afford so many qualified accountants. There are nearly 100 times as many qualified accountants in the UK compared to Pakistan simply because they can be afforded by the economy. ICAP admits ACCA’s worth by its policies, otherwise if they found ACCA worthless they simply would have ignored ACCA like MCOM or MBA Finance.

In an accountancy and audit role a fresh ACCA affiliate with no experience is practically worthless and wont get productive any time soon, but obviously in more general management roles where financial analysis and strategic planning is involved, such as consultancy projects, fresh ACCA affiliates or finalists (especially those who have gained the Bsc. Hons after completing Stage 2) are far more precious than those MBA Finance graduates who start anywhere from 10-35k. An intelligent ACCA affiliate or finalist, who can write good reports and utilize his skills with numbers to advise on business strategy, is worth at least 30k in a management consulting role, even if he has no experience at all.

From a recruiter’s point of view, it’s easy to judge who is the more ‘book keeping type’, whether he/she is a student of ACCA or ICAP. Naturally, an analytical mind is very, very rare and a person who can generate business ideas rather than know the ins and outs of how Sage Line 50 operates is worth many times more. Sage 50, IRIS and tricks in MS-Excel can always be taught to anyone with basic I.T aptitude.

ACCA is not just about accounting and audit. ACCA’s management and business strategy related assessment is better than all other locally available qualifications and ACCA students should use this to their advantage when it comes to managerial roles. Really, if I want someone just to do my book-keeping and keypunching, I’d hire a B.COM or a CAT or an ICAP Module A-B.

DO NOT UNDERSELL yourself if you are an affiliate with no experience and an employer misguides you by saying ‘this is the maximum slab of 6k’ for your qualification. There is NO such 'slab' for ACCA's. How much you earn is right now determined by how well you utilize your skills and present yourself. These employers only want book keepers and key punchers and you will damage your worth if you fall for their tricks. You are not a book keeper. As a book keeper you are worthless. Just like a PhD in Theoretical Physics from MIT would be worthless in book keeping, you are also worthless in that role. It is NOT your scope of work.

Needless to say, ACCA’s should look for more analytical and planning roles if they have already cleared their exams and have no experience. They have no future in the audit profession in Pakistan as long as ICAP’s anti-competitive policy is around, so they should be perfectly aware of that. Training in a practice is ideal and the best option, but ACCA students/affiliates should choose firms where there are lots of fellow members of your same institute, since it will keep you more aware of issues affecting your own profession.

Audit training, of course makes you a ‘real’ accountant and polishes a ‘munshi’ into a reporting specialist. If you have training in audit, you will be able to appraise and troubleshoot financial statements three years down the road if you choose to stay in the same line of practice. A qualified accountant does not produce accounts himself, but rather, his role is to ensure they are produced while at the same time maintaining a delicate balance between all relevant stakeholders’ wishes.

Full time employment in audit firms and their management consultancy divisions will pay less than the industry, but the exposure you get from them is well worth it.

If you don’t like the audit training option and want to make more money you can just go towards business management. I believe ACCA’s financial management exams are fairly equivalent to or tougher than most assessment schemes of the best business schools in Pakistan.

I would advise ACCA students going for the industry against training in bookkeeping roles in a single organization, since it does not carry enough exposure to match their professional qualification. Work in at least two organizations to receive a minimal level of diversification, since information systems vary. Contrary to popular belief, training in a large organization where systems are more formalized is not as rich as working in a medium sized organization under good supervision. Concentrate on designing and appraising information systems rather than just ‘feeding’ data. The true nature of an accountant’s professional training is defeated when after three years he only knows the ins and outs of the system in one organization. It is the reason why it’s recommended to keep your training as diverse as possible. You can be a financial controller or just a book-keeper, it’s your choice.

Avoid banking like the plague, especially consumer banking. Although it may pay well you are simply wasting your studies since that is something anyone can learn. If you manage to get into the corporate planning department of a bank, that would be a good option although.

Pay scales vary so there’s no specific yardstick. I have seen fresh ACCA Affiliates or finalists with no experience getting paid anywhere from 5-15k/mo in book-keeping roles. Halve the aforementioned and that’s what they get paid as stipends when they are training in an audit practice. Fresh affiliates or finalists where roles are more analytical and are assisting in corporate planning and risk management can earn 15-50k depending on the job description. Fully qualified ACCA’s usually get around 40k-50k at start which is about the same as ACA. In one specific case, I have seen an ACCA earning more than the ACA in the same organization, where the ACCA was actually a business planning analyst while the ACA was simply a tax advisor, and both had the same level of experience.

Of course if you manage to get in a multinational where long term employee retention is considered a critical success factor, expect to get paid up to twice the comparative industrial medians.

The actual examination quality and curriculum of ACCA is higher than ICAP’s local examinations. A lot of ICAP PE I & II students have been using ACCA texts to study for the financial management exams, since they are more succinct and usually not littered with recycled and irrelevant information. In some cases, a fully qualified ACCA who has had a good, diverse training experience is actually considered better than a qualified ACA by employers who know the examination structure of both institutes and are aware of ACCA’s more analytical examinations. ICAP also has a habit of recycling the Shukla, Mukherjee, Meigs etc. for some odd reason, and this practice has continued to this day. ICAP's curriculum is also unnecessarily bloated with repetition intended to give the impression of a 'thorough' study course but, why the THREE law papers? All UK based accountancy qualifications have one dedicated law paper, the rest of the law you need to know is well distributed over the remaining part of the syllabus. ICAP also has twice the number of examinations that ICAEW and ICAS have - for reasons unknown...

ICAP students have the current edge in local law and taxation, but I believe ACCA is already examining Pakistani law and tax since last year so that edge will be gone in the near future when more ACCA trainees qualify. Besides, the UK taxation system is considered one of the most complicated around, and those who have passed the Tax Planning paper of ACCA should know that they have the aptitude of any local chartered accountant in the tax field on any given day at any given time. I have also heard that this optional tax paper of ACCA is also notoriously difficult, and is avoided by most people wishing to clear the examinations sooner.

Download ICAP’s most recent PE level Business Management exam and you will see those age old MCOM grade questions asking you to ‘define’ and regurgitate rote learned stuff. Take a look at ACCA’s Business Planning paper and you will be treated to a ridiculously long 60 mark case study where actual application of all those ‘rattas’ will be asked for. ACCA’s advanced auditing exam is considered by many to be the one of hardest auditing exams of any institute in the world. Overall ACCA’s examination have a much more practical focus, and compensate for the relaxation on a minimum training period before you sit the final exams, since practical training helps a lot in ACCA’s later stage examinations.

Passing the ICAP examinations is a different matter, where it is a well established fact that only the most perfect scripts have a chance of passing. More disturbingly, ICAP’s examinations and assessment policies undergo sudden changes after every few attempts, which is rather unfair for students who are risking their careers. ACCA (or any other UK institute like ICAEW or ICAS) changes their exam policies after careful deliberation and consultancy with all stakeholders including students. This is a very long process and usually takes years, and only after a consistent pattern of assessment has already started to stagnate. ICAP's passing rates are market demand driven, which is a reasonable and reliable basis of maintaining quality, but changing assessment policies every now and then is definitely not good.

No doubt, the students which ICAP qualifies are professionals who have attained near perfection, but ICAP’s sudden changes in assessment policy have disrupted the careers of many individuals and have hurt ICAP’s repute. You can never be sure of two ICAP qualified ACA’s having similar skill levels when one of them qualified in a session where there were only 10 pass outs and the other qualified along with 300 of his peers in the preceding session. ICAP has a lot to prove if questioned that the standard of ACA’s it has produced over the years has been consistent or not.

Age also plays an important role here when securing jobs. Since an ACCA affiliate has no experience requirement to sit the final exams, ACA’s usually are older and more mature, since they already have a lot of practical experience behind them compared to an ACCA Affiliate, who in nearly 90% of all cases starts calling himself ‘qualified’ when he actually isn’t and isn’t doing the marketability of his profession any good at all.

Educational institutes are also not helping at all. Most of them are run like businesses and their ‘fast track’ programs brainwash students into passing exams as early as possible and collecting as many ‘degrees’ as they can. Sadly, unlike what many are led to believe, rigorous study in the ‘get rich quick’ mentality with absolutely no focus on professional training has become a staple of these so called ‘coaching’ centers and it only turns out bookworms rather than enterprising professionals.

Another alarming aspect is how many students are led to believe the false notion by their teachers that ACCA is actually a step below achieving ACA and is a ‘fast track’ to ICAP membership, where in the case you never pass ICAP’s exams, you will still have a degree in your hands compared to just being a CA-Inter. This is, simply put, a con to gain more revenue at the expense of your parents money AND your career, since you may go for more classes after your coaching center has duped you into studying for a ‘higher’ qualification’. Given the current exemption scheme, going for ICAP, after completing ACCA’s exams just to gain a supposedly ‘higher’ qualification is utter foolishness and an exercise which should only be undertaken if an audit practice certificate is the only goal in life you will ever have.

If you really want to go for a truly higher qualification, go for CFA or diversify your portfolio by going for another field of study, such as developmental economics. Pakistan is in dire need of honest and selfless economists and ACCA’s have the brains to go for it and contribute to their country, rather than just obsessing about accounting and audit.

Currently, ICAP has more marketability in the audit profession within Pakistani borders and that will continue for the foreseeable future.

You have to learn to market yourself. It’s the duty of ACCA’s to work for their own profession and going for menial book-keeping and 'chief accountant' roles after achieving full membership is simply degrading yourself. Comparing the actual qualifications side by side, it’s all about your experience and how well you demonstrate it at a job interview.

Last but not least, your personal presentability and communication skills will give you the final edge in securing a job and in the eyes of many, are the most important aspect of a person’s professional life.

I would like to add a footnote for all those ICAP and ACCA students who have been hurling dirty insults at each other on this web forum in abysmally poor language “Grow up.”


If you have any questions feel free to ask here.