Accountancy watchdog faces scrutiny over CEO's six-figure 'payoff'

The global professional body for chartered accountants is facing intense scrutiny over a secret six-figure severance package being handed to its retiring chief executive.

Sky News has learnt that the Institute of Chartered Accountants in England and Wales (ICAEW) has agreed to pay Michael Izza a lavish sum of money when he steps down at the end of the year.

City sources cited rumours that the payment could amount to as much as twice his annual base salary of £492,000, although a person close to the organisation claimed that the accurate figure was closer to £250,000.

The ICAEW refused to quantify the sum on Monday, saying it would be published in its next annual report.

Nevertheless, the decision to award Mr Izza the money is expected to draw attention, because his exit was positioned three months ago as his retirement from the accountancy profession.

It is also likely to trigger questions among ICAEW stakeholders over its lack of transparency, given that the payoff was not disclosed in a public statement about his departure.

One industry source suggested his departure exit could also include benefits that were not part of the headline figure.

That statement did, however, hail Mr Izza's advocacy "for the reform of audit and corporate governance".

In its latest annual report, the ICAEW disclosed that its chief executive was awarded deferred variable pay of £138,000 in 2022, in addition to his £492,000 base salary.

The total of £630,000 was £1,000 less than he received the previous year.

It is the latest financial controversy to draw in the ICAEW, which itself is regulated by the Financial Reporting Council.

The accountants' body has come under fire for hoarding fines imposed on major auditors rather than disbursing them to groups of stakeholders who have been disadvantaged by corporate governance failings.

In the case of Silentnight, the mattresses retailer, the ICAEW pocketed a £13.5m penalty rather than using the money to reimburse pensioners who saw their retirement pots hit by its collapse.

In response, Mr Izza said last year that the system of financial punishments for its members "was never intended to operate as a compensation scheme for third parties who may have suffered losses as a result of actions of ICAEW members and member firms".

Last month, a study by Sheffield University into the ICAEW's accounts accused it of a lack of transparency, and said it was at the centre of "an obvious conflict of interest".

Cited by The Times, Richard Murphy, a professor of accounting who also founded the Corporate Accountability Network, said it was "wholly 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 just as unacceptable that to date none of those fines have been put to use to compensate society for the harm that chartered accountants have caused and that the ICAEW has not published plans as to how it will do this," he wrote.

A spokesman for the ICAEW said it would provide a statement by 3.30pm in relation to the terms of Mr Izza's departure, but failed to do so in time.

It subsequently said: "In March, Michael announced his decision to retire from ICAEW by the end of this year.

"The terms of his departure are in compliance with his contract of employment."

Julia Penny, the ICAEW president and chair of its board, paid tribute to Mr Izza when it announced his retirement.

"Michael has successfully led the transformation of the organisation to the world leader that it is today," she said.

"He will be greatly missed by us all and we are very grateful for his dedication to the organisation and his many achievements during the past 21 years."

The search for Mr Izza's successor is under way.