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May 27, 2010

Alan Thomson interview: Kicking goals

New Institute of Chartered Accountants in Scotland president Alan Thomson is something of a minority within the institute, being a ‘foreigner’. He tells Carolyn Canham about the institute’s geographic and demographic diversity and the opportunities accountancy can bring.

Alan Thomson

Alan Thomson’s professional career began in an unconventional way for a FTSE 100 finance director – playing as a striker for Scottish first division football clubs.

The new Institute of Chartered Accountants in Scotland (ICAS) president is also in a minority due to the fact he has lived outside of Scotland for almost all his career. But Thomson says this minority status is something he feels good about. He is proud of ICAS’s international reach and its diversity, and enthusiastic about the inclusiveness of the accountancy profession.

“More than a third of the membership lives down south in England now, and every so often we get a foreigner – someone living in England – to be the president of the institute. It was my turn this year,” Thomson explains.

Although Thomson calls himself a foreigner, he was born and bred in Scotland. His initial ambition was to be a professional footballer and that’s what he did for six years – starting off with the Glasgow Rangers, where he played for the reserve team, before moving to Hamilton, where he played in the first team.

“As soon as I joined [Hamilton] I realised I had better find myself a proper career,” Thomson recalls. “They didn’t pay you much money to be a professional footballer in those days, so I trained to become an accountant.”

 

Joining the profession

Thomson began working in a small Glasgow firm in 1967. He qualified in 1970 and then joined Arthur Andersen.

“They sent me on my first assignment to Geneva and after a year said ‘would you like to go back to Scotland’. I said ‘no thank you, I quite like living offshore’,” he recalls.

So Thomson went to Paris, working for Price Waterhouse for a time, before leaving the profession to go into business. His business career took him to the US and then back to the UK. He’s never lived back in Scotland.

Thomson says his international and diverse career captures the nature of ICAS these days. More than 60% of new accountants joining live outside Scotland.

“If you look at the demographics of how our institute used to be, it was always just something for Scots, particularly those living in Scotland… but now it is very much international,” he says.

 

Snapshot: Alan ThomsonBreaking through the glass ceiling

Thomson is also keen to point out a swing in gender demographics.

“At the age of 45 and over, 10% of our accountants are ladies and 90% are men. At 30, it is 50:50,” he explains.

“We produced a publication last year about the glass ceiling and how ladies in accountancy can actually break through. We had our first lady president about 15 years ago and our second a couple of years ago and I tell you there are more coming through now.”

Thomson is also enthusiastic about the way the accountancy profession can cross social and class divides.

“We had 1,000 graduates last weekend who joined the institute and I told them this is a meritocracy,” he explains.

“My original perception of these accounting institutes was they were for fairly well-off people in the profession, but in fact I come from quite the opposite background.

“I didn’t come from that [well-off] background and I didn’t become a partner in an accounting firm, I became a finance director in a business,” he says.

“You could see a lot of graduates nodding and saying ‘yes, I can empathise with that’ because now that we have 1,000 students a year coming through, most of them come from normal backgrounds, rather than money backgrounds.”

 

Getting ahead

When Thomson returned to the UK in the 1980s, he began working in public companies with large international operations. This eventually led to a position as finance director at Smiths Group, a FTSE 100 global technology company.

Throughout his high flying business career, Thomson had virtually no involvement with ICAS. This was mainly due to his view that the institute was a professional body for Scottish people living in Scotland, so he saw himself as an outsider.

This changed about 10 years ago.

“I got a call in the late 1990s from the institute and we went through a very strange conversation beginning something like: ‘Are you Alan Thomson? Did you qualify in 1970?’,” Thomson recalls.

“I said ‘I don’t know where this conversation is leading’ and he said ‘well Mr Thomson, I’m the secretary of the Institute of Chartered Accountants of Scotland.

“I said, ‘I’ve paid my subs for 30 years’.

“And he said ‘yes, that’s the problem we have with you. We have six FTSE 100 finance directors’ and he listed who they were, got to five, and then said ‘Mr Thomson, nobody in the institute knows who you are. What do you do? What’s your background? You’ve never crossed the door in 30 years’.”

The absence of ICAS involvement for so much of Thomson’s career is one reason he’s so adamant young people should get involved.

“An alumnus system should be created to make them interested in getting involved because there is so much they can contribute,” he explains. “We have got 18,000 members and only about 400 of them have had anything to do with the institute.

“When you talk to Harvard guys for example, my lad has just finished at Harvard, and the university grabs them and never lets them go.

“What I have got to do is try and see if we can get more involvement from the youngsters and also from the retired community, because of the number of people who are retiring now at 60, but are going to live until they’re in their 80s or 90s, and they are looking for things to do.

“The accounting profession and the whole industry needs straight talkers and people with experience who are prepared to give something back and that is one of my challenges – how do I get some of these old grizzlies to get up in the morning and say ‘I’ll go to Edinburgh and get involved in some sort of project’?”

Thomson’s strategy for getting more members involved with ICAS is simple – by picking up the phone.

“It’s about telephoning them, saying ‘what’s your interest?’ and networking.”

 

Advocacy time

Now that Thomson is involved with ICAS at the very highest level, he has a number of issues he wants to push.

The first is simplifying annual reports.

“The issue with accounting at the moment is we produce far too much information in core documents such as companies’ annual accounts,” Thomson explains.

“People want to read the reports to find out how a company is doing but at the moment it’s like reading War and Peace. I sit on a French board of a company called Alstom and its annual accounts last year were 250 pages. This year they will probably be close to 400.”

Thomson plans to “make a lot of noise” during the next year about investigating how companies can produce more focused reports that explain what a company is about, what the major risks are, what the key numbers are, who is on the board and who the senior managers are. He wants reports that can be read in minutes rather than hours.

These reports could also point readers to the company website, where they can access more detailed information on areas such as sustainability, pensions and the remuneration report.

Thomson says that to make annual reports more useful, management commentary will also have to change.

“Management has to take that on the chin and say ‘here are the key issues’,” he explains.

“One of the recommendations I am going to come out with in the next few months is the report should set out what the company is all about, what it does very concisely, what are the risks, what are the key performance indicators and how are they doing against them.

“It is not just on financial things; it is all the non-financial reporting you are going to see more of. There is sustainability, health and safety, the whole governance issue and you just can’t avoid it anymore.”

 

Audit spotlight

Another issue Thomson has his eye on is audit, in particular the expectation gap between what the public think audit is supposed to deliver and what it actually is set up to do.

“I think there is an inclination to allow or encourage the audit profession to speak much more widely about the businesses they audit and they are involved with,” he explains.

“At the same time, you have got to couple that with the fact that auditors are petrified that their whole business is up for grabs if they get it wrong.”

There is currently an argument that audit doesn’t add much value.

Speaking as an accountant in business, Thomson says that if auditors can come up with ways to add more value, companies will be prepared to pay for it.

Thomson also believes there is also an opportunity, in the current environment where politicians and banks are held in deep public distrust, for accountants to prove they have integrity, ethics and are honest brokers that people can go to.

“We’ve got all sorts of ideas that we would like to get going, which is why we have to get our members involved and also people from related professions – actuaries and the legal profession – to try and help the public.

“In places like Scotland there is very little financial expertise, for example, in the Scottish Parliament, and there is a real opportunity to go forward in a non-political way. I do vote, but the fact is, it is not a political thing, it is helping the people in Scotland and the people in the whole of the UK understand what is going on in the wider economy because people are listening to politicians and newspapers, which have all got vested interests.”

With his plans to round up the ICAS troops and tackle issues as widespread as complexity in financial reports and ethics in politics and banks, Thomson has his work cut out.

But with the energy and enthusiasm that has seen a career that has spanned professional football to the FTSE 100, it’s a challenge he is up to.

 

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