Last week, ICAEW completed a consultation exercise into proposed changes in their CPD policy. If as looks likely, the proposals go ahead, they will affect all members in practice, from November 2022, and members in business as well from November 2023.
A bit of background may be helpful. Traditionally ICAEW members have been asked to follow a system called RAID. It is a process that looks like this:
- Reflect on your current role and learning needs
- Take appropriate Action to address those needs
- Assess the Impact of that action to ensure their needs have been met
- Declare annually their CPD status for the previous year
No apologies for the fact that the acronym is so tortuous. I didn't make it up! Proponents of RAID have always maintained that this is a more rigorous approach than counting hours or units, which they dismiss as a box-ticking exercise.
Personally, I have never agreed with that point of view. Hours based systems are only box-ticking if the individual in question chooses to engage with them in a cynical way. A few people no doubt do that, but with the RAID system, the rogues would simply do nothing. As Chair of ICAEW's Practice Assurance Committee, I certainly came across plenty of individuals who, when asked why they had not done any CPD, said:
"I reflected on my current role and learning needs and concluded that I had none."
I have never been vocal about this, partly because these individuals represented a small minority, and partly because I clearly have a commercial interest in the schemes professional bodies adopt, and that seemed at odds with my role as Chair of the PAC committee. But I do think it is an inescapable truth that it is harder to abuse an inputs system (one based on the number of hours) than it is an outputs one like RAID. In short it is easier to measure and evidence an inputs-based system and that is something you would think accountants would like.
So what are ICAEW proposing? The details can be seen on the ICEAW website, but here is a summary:
Firstly, there will be a mandatory ethics requirement for all members. ICAEW are promising to provide resources in this area, but details haven't yet been released.
From November 2022, Members in Practice will continue to follow the RAID approach, but will be required to complete a minimum number of hours of CPD, that number determined by which category of risk they fall into:
Category 1 - This includes PIE auditors, members involved in audit regulation, monitoring or enforcement within the firm. Requirement: 40 hours CPD of which 30 must be verifiable.
Category 2 - Responsible Individuals and members involved with large corporate audits as defined in the Companies Act 2006, pension scheme audits and charity audits. Requirement: 30 hours CPD of which 20 must be verifiable.
Category 3 - Members in practice as well as those involved with small entity audits. Requirement: 20 hours CPD of which 10 must be verifiable.
Critically, the firm will be responsible for ensuring that its employees are compliant with the new CPD policy. QAD inspectors will check and review training records as part of their review.
Members who are not in practice have an extra year on the existing RAID system, although they will have to comply with the new ethics requirement.
From November 2023, members in business will be subject to a similar risk categorisation to Members in Practice.
So why are ICAEW doing this? On the consultation page, they talk about how times have changed since the introduction of RAID in 2005, and how the new system will provide greater clarity. That may be true, but it seems likely that this statement is the driver:
"There is also an increasing expectation on the part of ICAEW’s oversight regulators that professional bodies should be expecting to see more tangible evidence that their members are keeping themselves up to date with developments in areas where they are asked to provide advice and assistance and that this evidence is more closely and regularly monitored with disciplinary consequences for those who do not comply."
The new policy has not been finalised, of course. This has been a consultation exercise. But if the pressure is coming from the oversight regulator, it seems pretty likely we will see the proposed changes, or something very like them, coming into effect from November 2022.
Alan Nelson is an author for accountingcpd. To see his courses, click here.