Sir David Tweedie CA discusses the lessons learned throughout his career
By CA magazine
7 December 2023
From academia to auditing industry, ICAS Past President, Sir David Tweedie CA, has always used integrity as his compass. He tells Ryan Herman why ethics and trust trump all – even celebrity
Study helps but experience is everything
I did a PhD on incomes policy, which was a big thing in the 1960s. Then the department at Edinburgh University asked if I’d stay on as a lecturer when I finished. I declined: how could I teach business to others when I’d been a student for seven years?
Don’t leave the teaching to HR
When I was President of ICAS, I remember this guy who was a senior partner at one of the Big Four going on about “profit per partner”. I said: “Tell me how many hours per partner you spend on teaching students.” He replied: “Oh, that’s the HR department’s job.” And I said: “No, it’s not, it’s yours. You’re not delegating.”
I was so lucky when I was a trainee, because the partners I started out with took a big interest in me and would help with all sorts of things.
Nothing beats on-the-job learning
When I started out, you were under supervision for the first year, auditing the cash book. The next year you’d be doing the debtors ledger; then, by the third, you’re running the job and you could just put a set of accounts together. My last letter in CA magazine as President suggested that once our new CAs pass their exams, we should give them a shoebox with a load of rubbish in it and say: “Do a set of accounts from that!” Because that’s what we used to do and that teaches you what accounting is all about.
Look beyond the numbers
I once did an audit of a small Scottish family textile firm. They were just scraping a living. I went in and, blow me, the profit suddenly was about 10 times what it had ever been before. So I did the audit twice and couldn’t find anything wrong.
It turned out to be very simple. They only made two products – one with a huge margin, another with a tiny one. They spent most of the time making the product with a small margin, then they ran short of materials and were forced to make the one with a big margin. And they made a fortune – they had been making the wrong product for the previous 10 years!
I remember thinking then, we are their finance director. We shouldn’t just do the audit of small companies, we should actually get in and say: “Look, this is what you should be doing…”
Be prepared to walk away
It’s a tough thing to do, but I was trained that way in Glasgow. A friend of mine found something was going on in a company’s accounting and its chairman wasn’t prepared to change it. A senior partner contacted the chairman and his exact words were: “You either change this, or you take this audit and stick it up your a**e!” That was Glasgow accounting, that was the atmosphere I was brought up in. You didn’t have to have a code of ethics in those days. But in the firm I worked for, you would just not do anything that was wrong. In those circumstances, you have to be prepared to walk away.
Be prepared to be unpopular
When I came down from Scotland to become Chair of the UK Accounting Standards Board, I was horrified by what went on in London. I found there were all sorts of schemes, such as merchant bankers trying to manipulate profits and make the balance sheets look better. It was all phony, and I got very angry. I thought accounting was a complete mess.
So, Ron Dearing (the chap who invented the Accounting Standards Board review panel and the Urgent Issues Task Force) and I went round to the big firms’ senior partners and said: “We can stop this, but we need your help. We’re going to set up this task force, we’re going to take these schemes one by one and we’re going to eliminate them.” We went after all these things that should never have happened in the first place.
Honesty is non-negotiable
There is something very, very important in accounting, and that is trust. And it wasn’t there. The subtitle [of our book The UK Accounting Standards Board, 1990-2000: Restoring Trust and Honesty in Accounting] is the important bit – that’s what it was about. It’s about calling the shots as you see them. There’s no excuse for not doing it. And people have made a good living, especially the investment houses, the merchant bankers. They hated what we did. We destroyed some of their business, and that was deliberate because they were destroying the reputation of British accounting.
Always keep your evidence
I was catching a Virgin Atlantic flight to the States. I booked it well in advance and I was in Heathrow three hours before the flight. Then I was called to the desk half an hour before and told, since I was “late” arriving, they had to give my seat away, which was a blatant lie. I absolutely exploded. I was seated in the next row and asked the stewardess to tell me who was in seat 2A. She said it was Eddie Izzard. “Great,” I said. “Could you ask if he could autograph his boarding pass for me?”, which she did.
I sent that boarding pass to [Richard] Branson with a filthy letter of complaint [about being bumped for a celebrity]. I was given God knows how many air miles, which I gave to my secretary who used them to fly to Prague for her honeymoon. I never flew Virgin Atlantic again. Being in audit teaches you the importance of paper evidence.
Get a good moral grounding
I’d advise any young CA just starting out to read the ethics paper, “The Power of One”. It sets out beautifully the role you have in society as an accountant. I think the thing that’s more important than anything else is your integrity.
If you would like to share your experiences as a CA, please email camagazine@therivergroup.co.uk
