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Former FT editor: accountancy should be a mainstream reporting issue

Author: ICAEW Insights

Published: 08 Sep 2021

As editor of the Financial Times for 15 years, Lionel Barber was at the forefront of finance. He tells ICAEW Insights about his new book and the importance of accountancy in the paper’s coverage.

Barber’s book, The Powerful and Damned, charts his editorship from 2005 to 2020, marking the end of New Labour through the coalition government to the austerity-era Conservatives and beyond. 

Written in the form of diary entries sprinkled with footnotes from the present day, Barber’s book covers an array of watershed moments, starting with the 2008/9 financial crisis, moving through to the waves of economic turbulence created by the Scottish and Brexit referendums, and ending just before COVID-19 hit the UK in March 2020. He considers the ongoing pandemic a “10 on the Richter Scale'' when it comes to comparing the impact on business and individuals.

“Coronavirus is unique because it's a public health crisis and it's totally global,” Barber told ICAEW Insights. “It has exposed weaknesses in the public health system and in political leadership, which is quite different from the global financial crisis – it’s attacked completely different parts of the economy.”

Accountancy role ‘one of the most important at the paper’

Barber joined the Financial Times in 1985, with the accountancy beat forming part of his role as a reporter, and he recalls one of his first stories at the paper was an item on shared company audits. Fast-forward to 2010, and Barber recalls a conversation with Roula Khalaf, his successor as editor, when she was his deputy. 

“We agreed the accountancy job was one of the most important at the paper and we really needed to put a good reporter in,” said Barber. “The stories are huge and should be a mainstream business and financial reporting issue – but are often not. That's because it's undiscovered information. The stories are there but people just don't read primary sources.

“Somebody spent time putting that annual report together,” he continued. “And it’s supposed to be the CEO’s voice. If it's a load of gibberish, this tells you something about the company’s culture. It just requires somebody to look a bit more closely.”

A new era of corporate transparency?

Following the recent white paper on corporate governance and audit reform, many believe we're now moving into this era of unparalleled corporate transparency, in areas as diverse as taxation, environmental impact reporting.

Barber’s book records several cycles of failure that have prompted increased regulation, most notably in entries chronicling the 2008-9 credit crunch. So does Barber believe that this time around new rules will encourage a more open environment and hold wrongdoers to account?

“I'm a little cynical about the promises made when people talk about a new era of transparency,” said Barber. “However, I think there are a couple of differences between now and previous attempts to bring in similar measures.

“Firstly, technology has allowed people to expose things they consider to be fraud or wrong. It’s a fundamental change because it allows people to uncover and distribute information at scale and speed. It applies to individuals like [NSA contractor] Edward Snowden, right through to wide scale leaking like the Panama Papers. This is new. And I think that's where the pressure for transparency lies. 

“Another factor is the level of public deficit,” Barber continued. “The pressure on governments to recoup via revenue means there's renewed impetus towards reform of the international tax system. I think there's political wind behind that. While the G7 meeting back in July wasn’t a complete breakthrough, it was an important step regarding tax on multinationals.”

However, Barber argues that while ‘big tech’ and other global entities have made huge amounts of money both before and during the pandemic and acquired concentrated power largely unchecked by regulation, they shouldn’t necessarily be labelled as transgressors or villains.

“They’re very effective and have strong business models. Their defence is in the footnotes – ‘we were just applying the rules of the system so we can do this’. But you see some pretty egregious examples of companies paying very little tax within the rules, and I think those days are numbered.”

Pandemic brings ‘creative destruction’ to business models

After decades covering events, fluctuations, and crises, does Barber believe there are lessons to be learned by business that can be accommodated into the post-pandemic rebuild?

“One of the lessons is rethinking business models,” he said. “Clearly, technology has shown us different ways of working. I'm not saying everybody should work at home because I think office culture matters, but it's created opportunities for more flexible working and that could have a profound impact and help level the playing field for all kinds of disadvantaged groups.

“The second lesson is that the pandemic has turbocharged internet-based businesses across the board. I remember saying a decade ago that we need to completely rethink the way the FT is covering companies because technology is changing the way they are constructed and operating.

“Combine this with pandemic shifting people’s work habits and lifestyles, and I think we're going to see a creative destruction the likes of which we've not seen since the 1920s,” concluded Barber.

The Powerful and Damned is now out in paperback and is available at all major book shops.

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