There has been much uncertainty since the UK public voted in the 2016 referendum to leave the EU. Negotiations went back and forth between Brussels and London, and until the very end of 2020 it seemed as if the UK would end its transition period without a deal. At the 11th hour an agreement was struck and a 2,000-page document published, but many questions remain unanswered, especially about services. Joe Pickard speaks to Andrew Harding, chief executive – management accounting at the Chartered Institute of Management Accountants, and James Barbour, director of policy leadership at the Institute of Chartered Accountants of Scotland, about what the agreement means for UK accountants
The Accountant: How reassuring to business is this trade agreement following years of uncertainty? Does it go far enough?
Andrew Harding: We welcome the trade deal announced between the UK and the EU. It gives businesses some certainty around the rules they now need to operate under, which is even more important as businesses also continue to deal with the impact of the coronavirus pandemic and associated restrictions on their business. However, we would like to see more done on services and recognition of qualifications, in particular for professional services, in the future.
James Barbour: The trade agreement provides a degree of certainty which we welcome, although there will undoubtedly be teething issues. The deal also provides the basis for further alignment in the future, for example the provisions on mutual recognition of professional qualifications, which we hope will result in a process that will work effectively and efficiently.
TA: How worrying is it that this does not cover services?
AH: We hope that a deal covering services can be concluded in the coming months. We think it is important for the accounting sector to be included in any future agreement on services between the UK and the EU.
JB: While we would have preferred a more holistic deal, it had been known for a long period that the deal would not cover services to any significant degree, therefore this is not surprising. There are, however, other negotiations taking place with regards to matters such as future equivalence and adequacy in a number of areas, where agreement in early course would be beneficial.
TA: How will it affect accountants in the UK?
AH: The UK-EU trade deal as it currently stands means the mutual recognition of professional qualifications, such as those held by accountants, will now have to be negotiated on a country-by-country basis. However, we would like to see a UK-EU-wide deal reached on mutual recognition of professional qualifications in the future.
Management accountants are not impacted in the same way as professionals in reserved areas, such as auditors, as CIMA is the global awarding institution for its professional qualification and CGMA designation.
JB: That will depend on the client base of the accountant or for those in business the extent to which their employer is impacted by the changes.
The UK government has published letters setting out some of the implications in terms of financial reporting and auditing, and we understand that further guidance is being developed to provide help and guidance to UK regulatory authorities and professional bodies to help them benefit from the framework for the recognition of qualifications, as well as other recognition paths. We hope that such matters can be progressed in early course.
TA: Will any MoUs you have with EU member states be impacted?
AH: None of our MoUs with EU member states are impacted. We will continue to work on MoUs with business and academic partners in the EU as we do elsewhere in the world.
TA: What advice and support are you providing to your members?
AH: We have created a dedicated resource centre to support our members through the changes and help them find the information they need. We work closely with our members in the UK, the EU, and around the world to ensure they have the guidance they need to help their organisations navigate the post-Brexit world.
JB: We will continue to advise our members to refer to the information available on the UK government website and where applicable, the respective websites of EU member states. We will of course be involved in discussions with relevant parties, including the UK government, to progress matters such as the mutual recognition of qualifications.