Ensuring compliance with the ICAEW's new CPD requirements

The Institute of Chartered Accountants in England and Wales (ICAEW) has recently updated its Continuing Professional Development (CPD) requirements, marking a significant shift in the professional development landscape for accountants.

From November 1, 2023, the ICAEW requires its members to complete a minimum number of CPD training hours annually, with a proportion of these hours being verifiable and including at least 1 hour of ethics training.

“Training is becoming increasingly important as part of a company’s control environment,” says Ian Greenwood, Partner at KPMG UK. “This is due to a complex business environment and an ever-growing list of accounting standards and regulatory pronouncements.”

The specific number of hours required is determined by the category the member falls under, and a CPD record with evidence of training must be kept and retained for at least 3 years after the CPD year ends.

Preparing for the changes

To prepare for these changes, it’s crucial to understand what counts as verifiable hours. CPD training includes a wide range of activities, as long as evidence is obtained to explain how it is relevant and how it helps meet your learning needs. Examples include courses, webinars, podcasts, coaching, problem-solving, reading articles, and panel discussions.

“In order to be verifiable for CPD, the activities must be objective and fact-based rather than personal perspectives, capable of being corroborated, and retained, documented, and stored in an observable format,” Greenwood explains.

Training providers like KPMG play a crucial role in helping professionals meet these new requirements. They offer bespoke training and workshops on accounting and financial reporting, tailored to meet specific requirements.

This includes refreshers on specific areas of IFRS, UK GAAP, and US GAAP, annual updates on hot topics, ESG reporting updates, and workshops on new contracts/commercial arrangements.

A rise in ethics violations

Over the past few years, the UK accountancy market has been embroiled in a series of scandals that has led to many wondering whether members of the profession feel pressured to breach ethical codes of conduct.

In July 2023, the audit leader of KPMG’s Netherlands affiliate has stepped down from his post and other staffers will leave their jobs following an internal review into exam cheating—ethics violations that have plagued accounting firms around the globe.

In November 2023, a group of junior PwC audit staff were reprimanded by the ICAEW for sharing assessments for an assessment in a ‘group chat. They were all ordered to pay a fine of £2,107 and were found in breach of the Code of Ethics for professional behaviour.

In 2022, EY was forced to pay $100 million after auditors cheated on an ethics exam. The accounting giant was found to have withheld evidence from the US Securities and Exchange Commission when some of its audit professionals were doing to have cheated during exams required to obtain and maintain CPA licensees.

These might seem small violations for those looking from the outside in, but this behaviour has also given way to bigger issues.

The 2001 Enron scandal will be marked in many experienced accountants’ minds as one of the biggest accounting errors of the century. Enron Corporation was a US energy, commodities, and services company based out of Houston.

It was discovered in 2001 that the company had been using accounting loopholes to hide billions of dollars of bad debt, while simultaneously inflating the company’s earnings. The scandal resulted in shareholders losing over $74 billion as Enron’s share price collapsed from around $90 to under $1 within a year.

Then in the UK there was Carillion which led to KPMG has settling a £1.3bn lawsuit brought by Carillion’s liquidators, who claimed the auditor was negligent and missed serious red flags in the outsourcing firm’s accounts ahead of its disastrous collapse in 2018.

The lawsuit – which related to audits of Carillion accounts between 2014 and 2016 – was launched by Britain’s official receiver, that was attempting to recoup losses on behalf of Carillion’s creditors which are owed money by the failed company. Those creditors included HMRC.