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Quarterly issue 4

ICAEW President David Matthews on the vital role accountants have in ensuring strong financial management and transparent reporting in public finances

Author: ICAEW Insights

Published: 26 Nov 2020

What does the pandemic mean for attitudes to risk and for the social contract that has underpinned the free market?, asks ICAEW President David Matthews.

As the UK, parts of Europe and the rest of the world deal with a second wave of COVID-19, business leaders and their advisers will be refocusing their attention on some key challenges posed by the pandemic. 

One of these is risk exposure, including risks in supply chains and the impact on international trade. Major geopolitical shifts – the recent US election, US/China relations, the resurgence of nationalism – will also direct business leaders’ minds towards trade policy, including what these developments will mean for free trade and our economies.

The other dynamic concerning business leaders is what the pandemic means for the social contract that has underpinned the free market economy for the past few decades. 

This contract is coming under greater scrutiny as businesses, particularly the large tech firms, evolve into dominant global behemoths. How will consumers, trading relationships and democracy in general be affected? In the UK, massive investment and regeneration is needed, and our own government has made clear its intention to narrow the north-south economic divide.

Chartered Accountants – as individuals but also as a profession – are so central to economic activity that we have a major role to play, not just in helping steer businesses through these choppy times but sharing our expertise with governments.

There are three areas where we can play an important role in relation to trade and economic policy as the UK government seeks to address these challenges. 

The first is working with the UK government to support the recovery in a sustainable way. Next, working with tax authorities to improve the fairness and effectiveness of the tax system in the light of changing trade patterns and business models, particularly in terms of where profits are made and taxed. And third, in the management of public finances, supporting strong financial management and transparent reporting.

We are living in an age of rapid change affecting all aspects of our lives, whether it’s societal expectations, financial instability or technological change. These developments are moving at pace and we have to ensure that we remain up-to-date and relevant. 

We as an institute have to ensure that our members are armed with the necessary knowledge and tools to stay ahead of the curve, and be able to make our contribution to society.

At the start of the COVID-19 crisis, when people were searching for information to understand what the government support schemes meant and interpret the details, ICAEW provided that guidance. 

I am determined that our Institute and our members should be the first ports of call for individuals, businesses and the wider public when looking for timely, objective and authoritative advice and insights on some of these key matters.