- ICAEW faces scrutiny over lavish severance package for CEO Michael Izza.
- Rumors suggest the payment could be double his annual base compensation.
- The decision raises concerns about transparency and accountability within the organization.
Despite a long disagreement over audit firm penalties, the ICAEW is lavishly rewarding retiring CEO Michael Izza.
The global professional organization for chartered accountants is under intensified scrutiny regarding the six-figure severance package given to its departing chief executive.
The Institute of Chartered Accountants in England and Wales (ICAEW) has consented to pay Michael Izza a lavish sum of money when he steps down at the end of the year.
According to rumors circulating in the city, the payment could be as much as double his annual base compensation of £492,000, but a source close to the organization stated that the actual amount was closer to £250,000.
Monday, the ICAEW refused to quantify the amount, stating that it would be disclosed in its upcoming annual report.
Nevertheless, it is anticipated that the decision to award Mr. Izza the money will garner considerable attention. Given that his departure was announced three months ago as his retirement from the accounting profession.
Given that the severance payment was not disclosed in ICAEW’s public statement about his departure. It is also likely to raise concerns about the organization’s lack of transparency.
According to one industry source, his departure could also include benefits not included in the headline figure.
However, this statement lauded Mr. Izza’s advocacy for “reform of audit and corporate governance.”
The ICAEW disclosed in its most recent annual report that its chief executive officer will receive deferred variable pay of £138,000 in 2022 in addition to his £492,000 base salary.
The sum of £630,000 was £1,000 less than the previous year’s total.
It is the most recent financial scandal involving the ICAEW, which is governed by the Financial Reporting Council.
The organization of accountants has been criticized for hoarding fines imposed on key auditors. Instead of distributing them to groups of stakeholders who have been harmed by corporate governance failures.
In the case of Silentnight, the mattress retailer, the ICAEW pocketed a £13.5 million fine. Rather than reimbursing pensioners whose retirement funds were affected by the company’s bankruptcy.
Mr. Izza responded that the system of financial punishments for its members “was never intended to function as a compensation scheme for third parties who may have suffered losses as a result of the actions of ICAEW members and member firms.”
Last month, Sheffield University found the ICAEW to have “an obvious conflict of interest” and lack transparency.
Accounting professor and founder of the Corporate Accountability Network Richard Murphy, cited by The Times, stated that it was “entirely unreasonable” that the ICAEW “should be enriched every time one of its members is fined for harming the public by delivering substandard work.”
“It is equally unacceptable that to date none of these fines have been used to compensate society for the harm caused by chartered accountants and that the ICAEW has not published a plan for doing so,” he wrote.
The ICAEW’s spokesman promised to announce Mr. Izza’s departure by 3.30 p.m., but he didn’t.
“In March, Michael announced his intention to retire from ICAEW by the end of the year,” the statement continued.
The parameters of his departure are consistent with his employment contract.
The ICAEW president and board chair, Julia Penny, paid tribute to Mr. Izza upon the announcement of his retirement.
She stated, “Michael has successfully led the transformation of the organization into the global leader it is today.”
“We will miss him and are appreciative for his 21 years of service and many accomplishments.”
The search for Mr. Izza’s replacement has begun.
