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June 28, 2011

John Hannaway: Q&A

Photo of John Hannaway, president, CAI














New president John Hannaway hopes to lead Chartered Accountants Ireland to success, as it strives for growth and prosperity. Özge Ibrahim reports on how Hannaway hopes to overcome the challenges of  a slow-moving economy and rebuild the reputation of the institute.

Ireland’s economic woes have been widely reported, and its impact has been felt by the Irish profession. Upon his recent appointment, John Hannaway announced his organisation would fearlessly lead the debate on regulation and accountability. In an exclusive interview with The Accountant, he outlines exactly how the institute plans to achieve this as it strives to rebuild its reputation, set against national plans for economic recovery.

The Accountant (TA): What are your aspirations as president?

John Hannaway (JH): Chartered Accountants Ireland recently launched its new five-year strategic plan. So, my job is simple – to really crack on with bringing the strategy to life – to implement it.

That strategy has five r’s (repair, reconnect, recruit, reduce and reshape). But as a child growing up in Northern Ireland I was only taught the three r’s at school. So, during my year in office, I want to focus on three: recover, rebuild and regenerate.

We need to recover our collective pride in our profession – which I never lost – and stand up for what we stand for. Adding value, bringing vision is a personal mantra that, for me, sums up chartered accountancy.

To recover our pride we must first repair our reputation, ensure the highest levels of corporate governance for business, be fearless in leading the debate on regulation and accountability and become even more engaged with the communities we serve. So, tackling reputational issues is rightly the first – and most important – of our 5 strategic pillars.

Rebuilding confidence in our financial institutions and restoring a steady flow of risk and working capital is essential if we are to stimulate the private sector and restore national pride.

Of course, the credit crisis was not solely an Irish phenomenon – in the five years prior to 2008, 11 American banks collapsed. But in 2009 alone, a staggering 140 US banks failed, with a further 139 going under in 2010. And around 53% of US banks have now failed stress tests, as compared to just 8% throughout the EU.

The crisis in banking is particularly pronounced here. So, we must fix the Irish banks; we must regulate to ensure there can never be a recurrence; and we must ensure a return to prudent lending policies that inject much needed risk finance into the economy.

Pull quote by John Hannaway, president, CAIChartered accountants are at the heart of finance – there is hardly a banking application, a raise of equity funds or a NAMA plan that does not involve a chartered accountant on at least one side of the negotiating table – and often on both sides. So, we have a unique insight and can offer informed opinion.

In terms of regeneration, elections on both sides of the border now offer both jurisdictions the opportunity to deliver policies to capitalise on global recovery and stimulate exports, inward investment and the availability of risk funds to back expansion and growth.

Public sector spending restraint, combined with a lack of consumer confidence, means in the short-term the private sector will be the main driver of recovery.

Our profession is pledged to support the Irish government and the new Stormont Assembly in delivering on those elements of their programmes for government that will regenerate the respective economies, drive wealth and job creation and foster close and harmonious cross-border collaboration.

TA: How do you intend to carry out these plans?

JH: One of the first actions I took as president was to form a reputation committee that will have a much wider brief than our already established future of auditing working group. I have initiated a strategic overhaul of our communications strategy to ensure we speak out on the issues that matter to our members and to our nation.

As an open economy, Ireland sustained the blows of the international downturn but many of its problems were home-grown. It will be many years before the country will recover from the collapse of its biggest banks, where inevitably our members held positions of considerable authority. The inquiry by the Chartered Accountants Regulatory Board into events at Anglo Irish Bank is ongoing and we are completely committed to learning the lessons that arise.

The effects of the economic downturn have been felt surely by every member in our organisation.

In these more straightened times there’s an obligation for this Institute to demonstrate value in every aspect in our offering, from building the brand – what many members tell me they see as their ‘professional insurance policy’ – to CPD and training places for students. This is a core aspect of our strategic plan.

TA: What are the main aspects of this strategy plan?

JH: The last time we had a major strategic review – over 5 years ago – it lead to the creation of CARB (Chartered Accountants Regulatory Board – our independently managed and operated regulatory function), the construction of a state-of-the art student training centre, the launch of publishing and a major revision of our syllabus and educational system.

But, the economic environment and global landscape for professional services has changed beyond all recognition in the past five years.

Thus, it was very opportune that we reformed our strategy development board to set the roadmap for the next five years.

Under the fantastic leadership of council member Stephen Prenter, the strategy identified five key themes that will set the agenda for council business going forward. In that period we are determined to repair our reputation, reconnect with members, recruit the best students, reduce member subscriptions (by 20%) and to reshape our governance procedures.

We recognise that no profession, regardless of its history, can rest on its laurels. The business world is ever changing; it has become more diverse and more complex. Chartered accountancy, if it is to prosper, must be prepared to change with it.

TA: What are your thoughts on the EC Corporate Governance paper and how do you think the proposals will impact the profession in Ireland?

JH: The EU Green Paper is a welcome addition to the corporate governance debate and Chartered Accountants Ireland will definitely be replying to it.

It’s difficult at present to assess just how useful the Green Paper will be as its questions are so wide ranging. But its two preliminary questions are particularly relevant. Firstly, should there be a differentiated approach to corporate governance procedures across different sizes of listed companies? And secondly, how should good corporate governance apply to unlisted entities recognising that principles designed for the listed sector cannot simply be transposed to private companies, as the challenges they face are very different?

In my view, while the principle of good corporate governance is a constant, one size does not fit all and thus it’s essential that relative size, complexity, risk and societal import is factored into the debate. Otherwise we risk stifling enterprise and competitiveness.

I suspect the solution is that Europe prescribes a framework for systemically important companies whilst individual countries develop appropriate local codes for other entities. For our part, Chartered Accountants Ireland is a regular commentator on and contributor to best practice in governance, and issues a series of regular e-journals on the subject.

But we can, and are, doing more. A recent initiative being led by our vice-president Brendan Lenihan is called Better Governance, Better Business. In essence its outcome will be the publication of best practice behaviours, as well as actions, specifically aimed at improving Irish companies governance-leading, as the title suggests, to better business.

TA: In a recent speech you said the CAI would become more engaged with the communities you serve. How do you propose to do this and how will this be beneficial?

JH: Chartered Accountants are typically closely involved in their local communities. There is hardly a school across the island that does not include a chartered accountant on its board of governors or management. We are actively involved in charitable and pro bono activities. Yet, our efforts are not coordinated and, in the main, are not visible.

So, one of the key plans I have to increase community engagement is to launch a national Chartered Accountants Charitable Action (CACA) day that will harness the skills, talents and enthusiasm of our 20,000 members and 5,000 students to raise much needed funds and publicity for charities.

The intention is that 50% of the proceeds will go to a single national charity and the remainder will be distributed to local causes nominated by our local members.

In addition we hope to roll out an initiative, called the Chartered Accountants Voluntary Advice (CAVA), across the rest of the Island. CAVA provides low-cost and free advice to those in financial difficulties and/or stress, thus marrying perfectly our financial expertise with those in need in our local communities.

TA: Are you using any particular technology to connect with members and help spread the message of the organisation?

JH: Chartered Accountants Ireland has been at the fore of embracing all new communications tools in connecting with our members. New platforms also allow us to support our members with timely professional information.

For instance, in the area of corporate governance, the institute issues a regular corporate governance bi-monthly electronic journal to give members practical and detailed guidance in this area.

This is a relatively recent addition to the list of e-newsletters our members already receive in tax, financial services, member benefits and more.

In addition to using LinkedIn, Facebook, Twitter and Flickr, the Institute’s website is heavily used and a trusted resource for information, CPD courses and membership transactions.

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