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17/04/2012 15:17


Editor’s choice

With the cricket season getting under way, we visit Durham County Cricket Club for our cover feature this month and hear from chief executive David Harker FCCA about its development, its ambitions – and the Ashes. See page 14

A FINE BALANCE As Facebook gears up for what is expected to be the biggest ever flotation by an internet company, we look at what it takes to be a finance chief in the online world. It appears that while the principles might be much the same as for any other business, the dynamics of an internet company are very different, involving high-speed change and the frequent ripping up and rewriting of plans (page 22). It’s a more acute version of the dilemma facing any finance professional involved in business planning: how to balance the need for planning ahead with the need to respond quickly to changing conditions, threats and opportunities. Too rigid a plan will mean losing out to more agile rivals, while too loose a plan will result in confused managers aimlessly meandering in different directions. It’s a centuries-old dilemma. Chinese philosopher Confucius said that a man who does not plan well ahead will find trouble at his front door, but there’s also a Latin proverb that says it’s an ill plan that cannot be changed. As with all things, the answer lies in trying to identify the right balance for a particular business – a challenging judgment. One business that seems to have got this right is the subject of our big interview this month, Durham County Cricket Club. Its chief executive, David Harker, talks about how the business responded to events such as the demise of its sponsor Northern Rock while continuing to work towards its long-term goals such as hosting international test matches. He also talks about the importance of coaching, development and engaging with younger cricket fans, which gives me an excuse to use another Chinese proverb, and one that is particularly relevant to a global body such as ACCA: ‘When planning for a year, plant corn. When planning for a decade, plant trees. When planning for life, educate people.’

Chris Quick,

TAX MONSTER The Pastygate affair exposes the sheer futility of the political manoeuvring that bedevils attempts to reform the UK’s labyrinthine tax system. Page 28

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ROLE CALL Scenario planning, decision-making, compliance policing – tomorrow’s accountants will have plenty more on their plates. Page 80

EXPERT INSIGHTS Join ACCA and KPMG for a free, one-hour webinar as we explore how the finance transformation agenda is evolving through shared services and outsourcing.

BIG AMBITIONS? For your next career move check out www.

19/04/2012 12:12

AB UK EDITION CONTENTS MAY 2012 VOLUME 15 ISSUE 5 Editor-in-chief Chris Quick +44 (0)20 7059 5966 Asia editor Colette Steckel +44 (0)20 7059 5896 International editor Lesley Bolton +44 (0)20 7059 5965 Sub-editors Dean Gurden, Peter Kernan, Eva Peaty, Vivienne Riddoch Design manager Jackie Dollar +44 (0)20 7059 5620 Designers Robert Mills Production manager Anthony Kay Advertising Richard McEvoy +44 (0)20 7902 1221 Head of publishing Adam Williams +44 (0)20 7059 5601 Printing Wyndeham Group Pictures Corbis ACCA President Dean Westcott FCCA Deputy president Barry Cooper FCCA Vice president Martin Turner FCCA Chief executive Helen Brand OBE


ACCA Connect Tel +44 (0)141 582 2000 Fax +44 (0)141 582 2222 Accounting and Business is published by ACCA 10 times per year. All views expressed within the title are those of the contributors. The Council of ACCA and the publishers do not guarantee the accuracy of statements by contributors or advertisers, or accept responsibility for any statement that they may express in this publication. The publication of an advertisement does not imply endorsement by ACCA of a product or service. Copyright ACCA 2012 Accounting and Business. No part of this publication may be reproduced, stored or distributed without the express written permission of ACCA.

Accounting and Business is published by Certified Accountant (Publications) Ltd, a subsidiary of the Association of Chartered Certified Accountants. ISSN No: 1460-406X 29 Lincoln’s Inn Fields London, WC2A 3EE, UK +44 (0) 20 7059 5000

Audit period July 2009 to June 2010 138,255

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14 Bowled over Underpinning Durham County Cricket Club’s plans to play a lead role in the English game are the robust financial and business foundations being laid by David Harker FCCA 18 Producer’s cut Tax credits have boosted box office receipts – now they will be extended to high-end TV dramas, reports Stewart Jell 22 Worldwide reach Every dotcom needs a finance chief, but what does it take to be a social media or internet CFO? 26 Positive outlook In his regular quarterly report, ACCA’s Manos Schizas sees a new-found optimism among professional accountants around the world

19/04/2012 12:10


There are six different versions of Accounting and Business: China, Ireland, International, Malaysia, Singapore and UK. See them all at


Your sector



06 News in pictures A different view of recent headlines

33 The view from Ben Bidnell FCCA of Shipleys, plus news in brief

08 News in graphics We show a story as well as tell it using innovative graphs

34 Tweets of shame Off-the-cuff posts from employees can expose a firm and its clients to much embarrassment…

10 News round-up A digest of all the latest news and developments

36 …but Twitter is an important part of a successful digital marketing campaign, say the profit doctors

12 Politics Speculation about the contents of the Queen’s Speech


VIEWPOINT 28 Robert Bruce A tax on hot, but not cold, pasties proves just how surreal the UK’s tax system can be 30 Peter Williams Why a business plan, while irksome, is inescapable for success 31 Jane Fuller The UK’s ‘comply or explain’ model is not delivering gender-balanced boardrooms 32 Dean Westcott ACCA’s global forums have a vital role to play, says the ACCA president

39 The view from Marc Fecher ACCA of Kingston Smith, plus news in brief

TECHNICAL 54 Update The latest on financial reporting, auditing, tax and law 59 Accounting solutions The problem solvers at PwC answer two questions on accounting for joint ventures 60 CPD: annual reports Less clutter means that users can identify the key points about a business’s performance 63 CPD: Finance Bill 2012 A review of the recent enterprise initiatives introduced to encourage investment 66 CPD: strategy How to get the most out of strategic thinking by creating and evaluating strategic options



Accounting and Business is a rich source of CPD. If you read it to keep yourself up to date, it will contribute to your non-verifiable CPD. If you read an article, learn something new and apply that learning in some way, it will contribute to your verifiable CPD. Each month, we also publish an article or two with related questions to answer. If they are relevant to your development needs, they can also contribute to your verifiable CPD. One hour of learning equates to one unit of CPD. For more, go to

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69 Congratulations to all Our quarterly listing of new ACCA members, here showing those who achieved membership in the first three months of 2012

40 Outsourcing An ACCA roundtable shows there is no retreat from the path of finance transformation 44 Sir Christopher Evans The biotech entrepreneur is boosting the business of science in his homeland of Wales

47 PUBLIC SECTOR 47 The view from John Whiting of the OTS, plus news in brief 48 Richard Douglas The head of the government finance profession denies that it’s a bad time to be an accountant

51 FINANCIAL SERVICES 51 The view from Michelle Murphy FCCA of Lloyds Banking Group, plus news in brief 52 Rebalancing act Arguments for and against the UK moving its economy away from financial services

ACCA NEWS 75 CPD ACCA’s website now has a new, improved, CPD section 78 Diary ACCA events across the UK 80 Global forums Introducing ACCA’s Accountancy Futures Academy 82 Council Highlights from the first meeting of 2012

19/04/2012 12:11


News in pictures


National League for Democracy (NLD) supporters celebrated Aung San Suu Kyi’s milestone election to political office in Myanmar. PM David Cameron later visited the country – the first visit by a UK PM since 1948


The Bahrain Grand Prix was set to go ahead despite ongoing violent protests against the ruling Al Khalifa family


Pope Benedict XVI criticised the 50-year-old trade embargo placed on Cuba by the US, during a threeday visit to the island

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Some 30 fountains in London, including those in Trafalgar Square, were turned off due to the hosepipe ban. Parts of England are in drought because of extremely low rainfall over two successive winters


Conservative mayoral candidate Boris Johnson pledged to cut how much Londoners pay for City Hall by ‘exploiting the possibilities of shared services’ and ‘bringing in the private sector’


Chancellor George Osborne expressed shock that some of the UK’s richest people have organised their finances so that they pay virtually no income tax. For more on tax, see page 28


JCB reported the best financial year ever in its 66-year history, due to strong growth in traditional markets and the emerging economies. Turnover in 2011, at £2.75bn, was 37% greater than in 2010

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19/04/2012 12:13

News in graphics


Quarter 1 2011

685 Deals £26.0BN Value

Quarter 2 2011

624 Deals £13.8BN Value

Quarter 3 2011

606 Deals £24.0BN Value


APRIL 2012

Quarter 4 2011 535 Deals £19.3BN Value




Quarter 1 2012


478 Deals £17.1BN Value


JUNE 2011


APRIL 2011




Both the number and value of announced M&A deals with British targets have seen their fourth consecutive quarterly fall, and have dropped to their lowest level since the 1990s, according to Thomson Reuters data analysed by Grant Thornton. Each fish equals 30 deals

COMPETITIVENESS CLIMBS CAREER LADDER Asked what attribute contributes most to a finance professional’s success in financial services, UK CFOs in the sector prioritised the traditional virtues. The survey, by recruitment consultancy Robert Half, gave little encouragement for those who champion the importance of ‘soft skills’.


e Competitive natur



h Leaders


Strong technical/ analytical skills


Risk taking


Effective communication



c Futuristi outlook

Strong interpersonal skills

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Now a constant among the drivers of inflation, the long rise in oil prices has also been cranking up the cost of running company car and delivery fleets. The Federation of Small Businesses warned that the Budget’s failure to cut fuel duty would hit business hard and that the Fair Fuel Stabiliser mechanism would not bring prices down. The graphic shows the pump price of diesel in pence per litre on the first Tuesday of each quarter, according to figures from the Department of Energy and Climate Change.

20/04/2012 11:34





The banana skins index, a measure of anxiety levels in the financial sector, is at its highest since it began 13 years ago. Survey respondents say that the greatest threat facing the sector is the fragility of the world economy. The Banking Banana Skins 2012 survey is produced by the Centre for the Study of Financial Innovation and PwC. Figures for 2010 are in brackets.


RANK 7 (–)


















Professional staffing

Finance IT


Ability to respond to change from within



Ability to respond to change from outside




RANK 8 (7) RANK 9 (12)

Organisational complexity



RANK 5 (1)



RANK 3 (5)




RANK 10 (8)



The role of in-house finance teams is under the microscope again as CFOs look to expand their level of influence and encourage innovation and growth. Although the CFO’s role has developed in recent years, most believe that their focus over the next two years must revolve around day-to-day operations and greater engagement with external stakeholders. Respondents to KPMG’s survey From Keeping Score to Adding Value indicate that a number of challenges stand in the way of creating a more forward-looking and integrated finance department.


High risk Moderate risk Little or no risk Don’t know

Relationship with other company groups


Asian cities are challenging the top spots in the rankings for most competitive global city, in a survey by the Economist Intelligence Unit for Citigroup, Hot Spots: Benchmarking Global City Competitiveness. Singapore was the highest ranked Asian city out of a field of 120 global markets. US and European cities however remain the world’s most competitive, despite concerns over ageing, infrastructure and large budget deficits.

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9 8

1 10

2 =4

7 =4




17/04/2012 12:58


News round-up


The government has missed its own 6 April deadline for the introduction of the reporting of carbon emissions. The Department for Environment, Food and Rural Affairs says that a decision will be taken soon on whether companies will be mandated to report on climate change emissions. A Freedom of Information Act request by WWF revealed that 61% of responses to a Defra consultation exercise favoured mandatory reporting. The 6 April deadline was set by the 2008 Climate Change Act.


The Financial Reporting Review Panel is to co-operate more closely with the Audit Inspection Unit, providing the AIU with information it has obtained on a voluntary basis. Other changes in FRRP procedure are intended to improve its transparency. It may now issue press releases where it has become public knowledge that the panel is engaged in an enquiry and announce where an intervention has led to a company correcting or clarifying its published accounts.

RSM TENON UNDER PRESSURE Turnaround specialist Donald Muir is reported to have been appointed

by RSM Tenon to achieve significant efficiency savings. This follows a profit warning issued in January and a review of previous years’ accounts that could lead to a restatement. It was also reported that newly appointed CEO Chris Merry and CFO Adrian Gardner have each been awarded more than two million shares in the company under a performance incentive scheme. RSM Tenon declined to comment on either report. The company’s share price collapsed from 35 pence a year ago to 5.5 pence in March, before recovering slightly.

COLLINS APPOINTED KPMG CHAIR Simon Collins is to be KPMG’s new UK chairman and senior partner. He will take over from John GriffithJones, who retires at the end of September. Collins is currently global head of KPMG’s transactions and restructuring group. He founded KPMG’s debt advisory practice in 1998, joining from NatWest where he was global head of debt structuring. He is a member of the KPMG Europe executive and board, KPMG’s global advisory executive and the KPMG India oversight board, as well as the UK government’s Industrial Development Advisory Board.


Sir David Tweedie, president of the Institute of Chartered Accountants of Scotland and former International Accounting Standards Board (IASB) chair, has called for large companies to change auditors more frequently. Tweedie told the Financial Times that the average 48-year audit tenure for FTSE 100 companies was ‘pretty cosy’ and that it was insufficient to merely change the personnel doing the audits,’ arguing that it should require a ‘jolly good reason’ for retaining a firm for more than 15 to 20 years. Sir David also questioned whether auditors should conduct consultancy work for audit clients and predicted that a major firm was likely to emerge from Asia to challenge the Big Four.

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Former BDO senior partner Simon Bevan has joined Grant Thornton as a partner in its London audit practice. Bevan has been appointed to work with Charles Hutton-Potts, the head of London audit, to develop the firm’s large privately held audit practice and its listed client base. Bevan left BDO last summer after 11 months as senior partner and 30 years with the firm. He then took a nine-month sabbatical, mostly in China where he is a visiting professor at Xiamen University.


Former KPMG International chairman Timothy Flynn has been nominated by the board of JPMorgan Chase to become a director. The appointment will take effect after the shareholders’ annual meeting in May, assuming it is approved then. Flynn was elected chief executive of US KPMG in 2005 and became chairman of KPMG International in 2007. He joined the firm in 1979 and stepped down from his role at KPMG International in October last year.


CFOs will increasingly focus on keeping investors happy, according to a report by KPMG, ‘From Keeping Score to Adding Value’. There will also be more attention paid by CFOs to innovation and growth, while seeking to increase their influence over the range of their companies’ activities. ‘Having focused unrelentingly on efficiency drives and cost-cutting initiatives since the start of the current economic crisis, many finance executives are now looking to help their organisations grow again,’ said Patrick Fenton, partner and UK head of financial management consulting at KPMG.


Sir David Tweedie

Mazars has appointed two nonexecutive directors, who will act as an advisory board to assist the firm to co-ordinate its provision of services to FTSE 350 companies. The new directors are John Grosvenor, a former senior global partner with PwC, and

19/04/2012 12:13



As the European Union releases a consultation on gender imbalance on corporate boards, the debate continues over whether quotas are only way to create equality, or whether the UK’s ‘comply or explain’ approach is more realistic


Gerald Raingold, a former managing director of the investment banking and capital markets division of BNP Paribas in London and Coopers & Lybrand accountant.


Simon Michaels has been re-elected managing partner of BDO for a second four-year term. Michaels has been with the firm since 1987, when he joined as a trainee. He headed up the firm’s business restructuring practice from 2004 until his election as managing partner in 2008. Michaels promised that the firm would invest to grow the business, while focusing on service, efficiency and innovation.

of accounting, leading the FRC’s work on the development of its priorities on international accounting standards and in finalising changes to UK generally accepted accounting principles (GAAP). The FRC’s director of auditing, Paul George, has been appointed executive director of conduct, with responsibility for supervisory and disciplinary matters.



Leading law firm Gateley has chosen KPMG as its new auditor, in place of Grant Thornton. A spokeswoman for Gateley said: ‘We went through a tender process a few months ago and following that we appointed KPMG. We wanted to get everything in place ahead of the end of our current financial year and the start of the new one on 1 May.’


Ian Hannam, chairman of capital markets at JP Morgan Cazenove, has been fined £450,000 by the Financial Services Authority for market abuse. Hannam has disputed the decision and is referring it to the FSA’s Upper Tribunal. The decision relates to Hannam’s disclosure of information to promote sales of a client’s shares in advance of a market announcement. There is no suggestion that Hannam or any other party made a financial gain from the disclosure, which was of a new oil find by Heritage Oil.

FRC APPOINTMENTS ANNOUNCED Melanie McLaren has been appointed by the FRC as its executive director of codes and standards, taking lead responsibility for maintaining an effective framework of UK codes and standards, including accounting and reporting standards. Michelle Sansom becomes director

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latest FirmWatch. PwC’s role as administrators of the Coryton oil refinery and the Game Group gave it substantial newspaper exposure. The second most highly reported firm was KPMG, which handled the administrations of Peacocks, La Senza and Blacks Leisure. The most commonly quoted accountants in the press were Andrew Goodwin and Nida Ali, both of Ernst & Young’s

KPMG: new insurance standard priority


Margaret Cole, the Financial Services Authority’s managing director of enforcement and financial crime, is to join PwC as general counsel of its UK firm. She will become a member of the UK executive board in the autumn. Ian Powell, PwC’s chairman and senior partner, said: ‘The complexity of current and proposed legislation affecting PwC and our clients requires a general counsel with extensive experience, expertise and judgment.’


PwC has the highest national media profile of any accountancy firm, according to analysis conducted by The Morning Account in its

The International Accounting Standards Board (IASB) must prioritise the production of a new insurance standard, argues KPMG. The latest financial reports from global insurers show significant variations in the accountancy practices used, says the firm. ‘The current lack of consistency in the way insurers report their financial results makes it difficult for analysts and investors to analyse and compare insurers’ performance,’ said Mary Trussell, insurance partner at KPMG. ‘In an era where there is tough competition for capital, the complexity and lack of comparability of insurers’ financial reports puts the industry at a disadvantage to other sectors.’ The firm says that convergence ‘is urgently needed in 2013’.

Item Club, with Grant Thornton’s Mike Warburton third, reflecting his near ubiquitous role in analysing the impact of the Budget.


Wording in our cover feature on Deloitte’s work on London 2012 in last month’s issue may have created the impression that the firm received substantial fees from LOCOG and other Olympic bodies, when in fact, as a sponsor of the Games, Deloitte has paid for the privilege of doing this work, an investment which generates a return through the way in which the sponsorship is activated – particularly in building client relationships and by impacting recruitment and retention of star performers.

19/04/2012 12:13





On 9 May Parliament will play host to the Queen’s Speech, which will announce the government’s legislative plan for the year ahead. Speculation about what it will include fuels the Westminster bubble, but according to intelligence the speech is expected to include the bill to close down the Audit Commission, public sector pensions and a bill to implement the Vickers Report on Banking. The government’s programme will also feature bills carried over such as the Financial Services Bill and the Local Government Finance Bill. Whatever the case, the government will be hoping for better headlines than the Budget produced, when it managed to upset Cornish pasty eaters, grannies and charities among others. If nothing else they will hope for a more welcome reception from the right-wing press, which in the absence of a robust opposition from Labour have been the main source of headaches lately. It’s going to be a hot spring in Westminster. Petros Fassoulas is head of policy, Europe and Americas, at ACCA

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The Big Four firms have been warned by European Commission officials to back off from ‘over lobbying’ against proposals to increase audit market competition. ‘The lobbying has been fierce and has been excessive in our view,’ Commission official Arvind Wadhera told a meeting of the European Parliament’s Legal Affairs Committee. Philip Johnson, chairman of the Federation of European Accountants (FEE), told the committee that it should amend its reform proposals. ‘Pure audit firms, mandatory rotation, restricting nonaudit services will isolate the EU on the global stage and reduce the level of expertise within audit firms and make the profession less attractive,’ he said.


The Financial Reporting Council is streamlining its structure, reorganising operations around two key work areas: codes and standards, and conduct. This will, FRC chairman Baroness Hogg explained, ‘enable it to mobilise all the expertise in its operating bodies to strengthen the UK voice in international debates on corporate governance and reporting’. Peter Large, executive director – governance at ACCA, responded: ‘This is good news and bodes well for the future in terms of providing a platform for effective and proportionate oversight of the accountancy profession. In addition, a strong, independent regulator is crucial when it comes to representing a UK voice on the global stage on audit, corporate governance and financial reporting issues.’

APB JOINS CALL FOR SCEPTICISM The FRC’s Auditing Practices Board has joined calls for auditors to show greater scepticism. Richard Fleck, chairman of the APB and a director of the FRC, said: ‘The critical importance of professional

scepticism to audit quality is widely recognised but, as we previously found, there is a lack of consensus as to its nature and its role in the audit.’ He said that the APB’s new briefing paper, Professional Scepticism, would assist auditors to take a consistent approach in displaying scepticism towards clients and to broaden the understanding of what is meant by scepticism in auditing.


The government has endorsed the creation of a new business finance advice service being developed by ACCA, the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland. The initiative is in response to the report Boosting Finance Options for Business, commissioned by business secretary Vince Cable and produced by a taskforce headed by Tim Breedon, CEO of Legal & General. ACCA chief executive Helen Brand said: ‘We welcome this report on boosting finance options for businesses and we are delighted and excited to be involved in this initiative...We see this as a significant government endorsement of professional accountants.’


The European Commission has published a green paper on ‘shadow banking’, proposing possible measures to increase regulation of the sector. ‘Shadow banks’ are defined as credit issuing bodies involved in activities such as securitisation, the lending of securities and the provision of ‘repo’ finance. These bodies include money market funds, investment funds, insurers and various special purpose vehicles (SPVs). The Financial Stability Board estimates the value of the shadow banking sector as having grown from €21 trillion in 2002 to €46 trillion in 2010, representing 25% to 30% of the total financial system.

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02/04/2012 15:13 11:23 17/04/2012


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CEO interview

13/04/2012 16:39



Underpinning Durham County Cricket Club’s plans to play a lead role in the English game are the robust financial and business foundations being laid by David Harker FCCA


leven men are the public face of Durham County Cricket Club (DCCC), chosen from a squad of batsmen, bowlers, all-rounders and a wicketkeeper. The club itself has risen to cement its place as one of the leading forces in British cricket. But behind the scenes, another team is working just as hard at putting the club on the business map. It’s headed by chief executive David Harker. The North-East businessman has been at the club since 1991, having been bitten by the cricket bug during his time as an accountant, when he was seconded to the club by Price Waterhouse, as it was then known. Operating as part of what he describes as ‘a small but ambitious team of five’, Harker joined DCCC as a financial controller in 1991, just as it embarked on its opening year as a first-class county (the first club to have been granted that status in more than 70 years). Having been an amateur club since its formation, DCCC was on the verge of an amazing transformation that, 20 years later, saw the Emirates Durham International Cricket Ground host an England one-day international showdown against India. Harker has been at the heart of the club’s rapid development, having been appointed chief executive in 2000. The club became a private limited company under Harker’s watch and was able to apply for – and secure – equity and funding that financed major development projects to improve its Chester-le-Street ground, as well as investment in the team and coaching facilities. It also allowed Harker to

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instil an ‘ethos change’ and appoint a management team that he believed could guide the business to success. Under Harker’s leadership, with support from a high-profile non-executive team, DCCC is now unrecognisable from the minor county club it used to be. And in just over a year, its position on the world cricketing stage will be further reinforced, when the eyes of the nation – and indeed the world – home in on the ground when it hosts a live Ashes test match.

Rising from the Ashes ‘The Ashes represents an opportunity for us to gain a huge amount of exposure and have people here and around the world see what we stand for,’ says Harker. ‘The thing that has helped us to achieve all that we have in a relatively short period of time has been the fact that we’ve constantly had a focal point – a target. Whether it be developing the stadium, hosting test matches or winning trophies, that goal has been the trick for us. The Ashes test gives us something else to strive for and aim towards. We want to use that to drive the next stage of growth.’ The club’s aims are ambitious. Not only is it hosting the event, which will see DCCC welcome up to 85,000 spectators, but Harker is spending a significant amount of time working to secure investment needed to bring a whole new dimension to the club, in the form of new hospitality and accommodation facilities. The intention is that by summer 2013 the area adjacent to the club’s ground will be the site of a 150-room hotel.

The tips *

‘In my experience, being flexible – applying the broader skills I gained during my days as an accountant – has been invaluable in helping me progress.’


‘Building a strong team you can trust is important. It has been one of the catalysts that has contributed most to DCCC’s growth.’

‘We only play cricket around 40 to 50 days a year and most of that is non-profit making; therefore to meet stadium overheads we need to bring in as much non-cricket revenue as we can,’ says Harker. Securing a live concert featuring Tom Jones on 14 July is part of that drive. Around 10% of DCCC’s turnover is generated by gate receipts, season tickets and membership; combined with funding from the England and

13/04/2012 16:39


The CV 2000

Appointed chief executive of Durham County Cricket Club.


Became Durham County Cricket Club’s financial controller.


Audit senior at Price Waterhouse.


Local government officer at Durham County Council.

Wales Cricket Board, it amounts to about half the club’s revenue. For this reason Harker is constantly looking for new ways of making DCCC’s assets work better.

Looking outwards With the Ashes on the horizon and another international test match scheduled for 2016, strengthening DCCC’s international reputation going forward is the top priority. ‘Our academy has been a real success story,’ says Harker. ‘Paul Collingwood, Steve Harmison, Graham Onions and most recently Ben Stokes have all come through it. I’m excited by the opportunity to take that overseas. The vision is to use the Durham brand and academy to create new income streams, with Durham academies in overseas territories earning revenue through the coaching and development facilities they provide, as well as raising commercial sponsorship. ‘Reaching out internationally was born out of the demise of Northern Rock. We were fortunate to have them as a sponsor for a long time, but at the time of their difficulties, we had to think again about our development.

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Focusing on the North-East gives us a very small pond to fish in, so we’re constantly exploring ways of broadening DCCC and becoming relevant outside of the region, attracting national organisations to become involved with us.’ Though building international awareness is something Harker sees as representing a significant opportunity for the club, working at the grassroots remains central to its ethos. Harker is convinced that engaging with people at a local level – particularly the next generation of young cricket fans – is a must if the club is to continue to pull in big crowds in the future. ‘We’ll never be the oldest club or the biggest club, but we can be the most engaging club in world cricket. We’ve developed a reputation as a friendly, effective venue, and I’d like to

take that forward, not just into staging international cricket matches, but in all the work we do. While disposable income is tight, we need to work harder to persuade people to spend their money with us, and building that experience and brand is how we do that. We’re selling the spirit of cricket.’ With so many different strands of development ongoing and a team of more than 70 to oversee, Harker is performing a fine balancing act, something he believes has been helped by his ‘solid grounding’ in finance and accountancy. He found his vocation late, going to university at the ripe old age of 24, the first member of his family to study for a degree. He says that being trained in the broader principles of business as an accountant has stood him in good stead throughout his career.

13/04/2012 16:39


The basics DURHAM CCC 1882

Club founded, turning professional 109 years later, when it was awarded first-class status.


Club revenue for year to April 2011.


DCCC’s fixed assets, rising from £5m on Harker’s appointment without a significant hike in debt.

‘AS SOON AS PEOPLE ON THE OTHER SIDE OF THE TABLE REALISE YOU’RE A QUALIFIED ACCOUNTANT IT GIVES YOU A KIND OF GRAVITAS AND AUTHORITY’ ‘When I first came here I was essentially the bookkeeper. Becoming chief executive was a big step forward and meant my remit became much broader, covering all aspects of business. My grounding in accountancy gave me the confidence to deal with commercial matters, which I don’t think I would have otherwise had. As soon as you’re in any meeting and the people on the other side of the table realise you’re a qualified accountant it gives you a kind of gravitas and authority,’ adds Harker. ‘Becoming qualified has been hugely beneficial for me. To be part of ACCA

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and have the support of a wider network is very important. We have a team of three in finance, at various levels of qualification, and the professional training has been invaluable.’

Self-sufficiency Harker hopes his tight control over the club’s financials and behind-the-scenes work to secure on-site hospitality developments by 2013 will create the self-sufficient operation he is aiming for. Though the balance sheet for 2011 shows a £938k loss, he is setting his sights on profitability by 2013, and consistent growth thereafter.

‘There is still a lot of work to be done to get us to that position. We won’t be profitable before 2013, so we need to manage our affairs accordingly up until that point. The Ashes will be key. But the ancillary services like the hotel – independent facilities that will sustain the business – will also be vital. ‘Cutting costs to get to profit quickly is not a difficult thing to do, but the key is not to make decisions that undermine the business. The aim is to be progressive, looking to the future, looking at the level of facilities and service we want to offer and reconciling that with the financials.’ He says the hospitality arm of business currently earns around £3m, but once the club has realised its goals, it could be more like £10m. ‘And growing our international reputation will open up new revenue streams. The main thing, though, is that all of what we do has cricket at its heart. Cricket really is our raison d’être, and I think that is what has helped us to achieve all we have – and hopefully continue to achieve great things in the future.’ Louise Robinson, journalist

13/04/2012 16:39



Tax credits available to UK film producers and their international partners have boosted box office receipts. Now it will be extended to high-end TV dramas, reports Stewart Jell


ccording to a recent report issued by the British Film Institute (BFI), annual UK cinema admissions increased by 1.4% to 171.6 million in 2011, the third highest total of the last decade. The gross value of those ticket sales was £1,040m, up 5% on 2010. The strong performance of a number of independent British films, such as The King’s Speech and The Inbetweeners Movie was a major factor behind the growth in box office revenue and, in the UK, the aggregate spend of feature films that commenced principal photography in 2011 was £1,260m. One of the reasons for this large

investment in the UK film industry is the availability of funding from the UK’s tax relief system, known as the Producer’s Tax Credit (PTC). For films that qualify as a British film via the Cultural Test, a UK film production company is eligible to claim the PTC from the UK government. The PTC invariably forms part of the overall financing of the film, and how much of a film budget the government will ultimately assist in financing is dependent on the spend on qualifying costs by the production company. Only spend on production costs that are ‘used and consumed’ in the UK is eligible for consideration when

calculating the amount of PTC that can be claimed. But for a film where the vast majority of the production costs are ‘used and consumed’ within the UK, the PTC could be as much as 18% of the overall budget. The PTC is therefore of huge importance to the UK film industry and this has been recognised by the UK government’s decision to continue the film tax relief until the end of 2015. In January this year, prime minister David Cameron stated: ‘The UK film industry, the skills and crafts that support it, and our creative industries more widely, make a £4bn contribution to our economy and an incalculable

The UK film industry is set to continue enjoying tax relief until at least 2015, which will be welcomed by the Bond franchise and many other production companies

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17/04/2012 16:54


HBO chose to film an episode of the new Game of Thrones series in Northern Ireland due to the tax incentives offered to TV productions in the country at the time

contribution to our culture.’ It is reassuring for the UK industry to know that there is a firm commitment from the UK government, but also a welcome message to the rest of the world that the UK is a leading country in which to develop and produce film.

International appeal The message has certainly been heard by a number of leading US studios. The market share of UK films produced with US studio backing in 2011 by the likes of Universal Pictures, Walt Disney and Warner Bros was 22.7%. The message has also been embraced by seven other countries, namely Australia, Canada, France, India, Jamaica, New Zealand and South Africa, with which the UK has official co-production bi-lateral treaties. Productions that qualify under one of the treaties are eligible to apply for the benefits of the UK’s tax relief system. While the UK film industry has already had the benefit of the PTC and knows it will continue for another three years, there has been no comparable incentive for the UK television industry, which has not benefited from tax incentives since the sale and leaseback tax breaks were abolished a decade ago. The message that this has put out to the UK, as well as the rest of

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the world, is in stark comparison to that of the film industry. It has not just been a case of failing to attract television to the UK. Partly through the lack of any incentive to produce in the UK, UK television producers have, on occasions, taken the decision to produce overseas. Recent dramas telling a British story but made overseas include Birdsong, Strike Back, The Tudors, Camelot, Parade’s End and the Julian Fellowes’ drama Titanic. Whereas the UK film industry has

Regional Development Fund. There is the potential that the programme could run for many series and, with such a lengthy level of investment, the impact on the immediate infrastructure of the region is considerable. US television networks actually formalised their concerns over the lack of any tax incentive by writing to the UK government stating that they are not likely to undertake UK-based television productions. The US studios have certainly

WHILE THE UK FILM INDUSTRY HAS ALREADY HAD THE BENEFIT OF THE PTC, THERE HAS BEEN NO COMPARABLE INCENTIVE FOR UK TELEVISION embraced large US studios, the UK television production community has only been able to watch as large networks, such as HBO, sought the tax incentives of Northern Ireland, which have not been available elsewhere in the UK.

Ripple effect HBO commissioned a third series of the award-winning Game of Thrones and the production continues to receive funding from Northern Ireland Screen, supported by Invest NI, as well as a contribution from the European

been lobbying for incentives for UK TV productions. Glenn Whitehead, executive vice president business and legal affairs at HBO, says: ‘The UK is one of the best places in the world to film and we would love to bring more productions there. We have found that the UK has highly skilled people and exactly the right infrastructure to make great television. However, without a television incentive in place, the UK is a more expensive option to shoot than other territories in the world. ‘In fact, 85% of our total production spend is currently focused on countries

17/04/2012 16:54


George Osborne has announced the introduction of incentives for British high-end television productions, such as Downton Abbey, partly filmed here at Bampton, Oxfordshire

with tax incentives. We were pleased to base Game of Thrones in Northern Ireland, where grant funding was made available. Our investment, which totals tens of millions of pounds, has had a major impact on job creation and the long-term infrastructure, benefiting the economy hugely,’ Whitehead says. Eric Shain, Disney ABC Cable Networks Group vice president, production finance lobbied culture minister Ed Vaizey, saying: ‘We do not currently have the UK on our upcoming production radar due to a lack of tax credits being offered to TV productions.’

High drama One report suggests that incentives could generate an influx of £350m into the drama industry alone, while another, focusing on the animation sector, concludes that any cost to the government would be recouped within three years. The Department for Culture, Media and Sport is understood to have urged the Treasury to introduce measures to safeguard the future for British animation and high-end drama. It was therefore with widespread relief that those in the UK TV production industry heard chancellor George Osborne announce the introduction of incentives for the production of British high-end television productions in his Budget

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PRODUCER’S *THE TAX CREDIT speech on 21 March. The incentives will also cover video games and television animations. Consultation will take place over the summer with legislation planned to be introduced in next year’s Finance Bill, as state aid approval will be required from the European Union. Speaking after the Budget, HBO’s Whitehead commented: ‘Today’s news on a new tax incentive has turned the UK from one of the most expensive options into a competitive and affordable location. We would, therefore, love to bring more productions to the UK.’ Although the details have not been announced, it is expected that the scheme will operate in the same way as the PTC, with dramas with a budget in excess of £1m per hour benefiting from a 25% credit. While this proposal is aimed at the top end of television programming, it is an incentive that is desired and required. Once it has been established and its success is acknowledged and tangible, then it will hopefully allow the relief to filter down to programming with smaller budgets, thus embracing the whole television industry – as is the case in the film industry.

Films must score 16 out of 31 points to classify as British and access UK tax relief. Points are awarded for degrees of British content:

Stewart Jell is a principal at Shipleys LLP in London. Most of his clients are either in the entertainment and media industry or closely linked to it

Once classified as culturally British, the relief is calculated as 20% of qualifying expenditure used and consumed in the UK.


Film setting Lead characters Subject matter or material Language of original dialogue

CULTURAL CONTRIBUTION 4 Contribution to British culture

CULTURAL HUBS 2 Principal photography/visual effects/special effects/research and development/shooting/visual design/layout and storyboarding 1 Music recording/audio post production/picture post production/ voice recording for animation


Director Scriptwriter Producer Music composer Lead actors Majority of cast Key staff Majority of crew

17/04/2012 16:54

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02/02/2012 17/04/2012 11:05 15:13


HOW TO BE AN INTERNET SENSATION Whether it’s a giant like Facebook or a small online startup in its infancy, every dotcom needs a finance chief, but what does it take to be a social media or internet CFO?


acebook is going public. In an IPO that could value the company at a possible $100bn, the social media giant is set to cease being a private company and have its shares traded publicly. For investors the flotation, expected in May, is one of the most eagerly anticipated launches in years and the event will place new strains on the company’s management, including Mark Zuckerberg, its wunderkind founder and CEO.

some point even computer nerds need the help of someone who knows about finance, someone who can do the financial modeling and who will understand how much money the company will need and where to get it. Enter the chief financial officer.

Potential difference Yes, every dotcom needs a finance chief. But, with their high reliance on advanced technologies, youthful cultures, unique insight into the

‘THERE ARE PEOPLE WHO ARE INCREDIBLY TALENTED IN LARGE COMPANIES WHO ARE DISASTROUS IN SMALL COMPANIES. THOSE PEOPLE DON’T PERFORM WELL WITH FREQUENT CHANGE’ Attention tends to focus on the heads of internet and social media enterprises. Facebook’s genesis and Zuckerberg’s character have been dissected in a Hollywood movie, but many of the others have had reams written and said about them. Larry Page and Sergey Brin of Google, Reid Hoffman of LinkedIn, Yahoo!’s Jerry Yang and David Filo have all been subjected to intense media attention and analysis. How did they do it, where did they come from, what do they know? All questions associated with trying to understand how these internet and social media businesses got up and running, and proved so successful. But they didn’t do it alone. At

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behaviour of their customers, their stratospheric growth rates and tendency to target, or even create, hitherto unexploited markets, dotcoms have the potential to be very different in nature from more traditional companies. That could mean a CFO has to be of a different sort too, willing to work in a different way to finance leaders in mainstream companies. Christian Jennings, finance director at, says: ‘Every business is fundamentally the same in terms of its principles. You create a product or service that consumers buy. However, the dynamic of a dotcom is very different.’ Bearing that in mind, it’s worth taking a look at the background

of CFOs at some of the most highprofile internet and social media companies to see where they come from. After all, it is their experience that will provide the career springboard into these top dotcom jobs. What stands out immediately is that internet experience is not a prerequisite for occupying the finance chair at a company based online. A quick glance at Facebook, Google, LinkedIn and Yahoo! reveals CFOs that have very mixed backgrounds. Indeed, only one, Steve Sordello at LinkedIn, is steeped in the world of dotcoms with time spent as CFO at TiVo and Ask Jeeves, the internet search engine. The others come from quite diverse backgrounds. Yahoo!’s Tim Morse, was at Altera Corp, which makes chips and components for computers. Of the four, Patrick Pichette at Google comes from the biggest former employer, having once been vice president in charge of finance and other functions at Bell, the Canadian telecommunications giant providing traditional landline and mobile phone infrastructure, and internet services. Perhaps most interesting is David Ebersman, CFO at Facebook, who at only 41 is already Zuckerberg’s senior by 14 years. Ebersman comes from a biotech background, having previously been CFO at Genentech, the maker of cancer drugs, among other medicines. All would have had a heavy focus on research and development and knowing how to understand its cost and when it will make a return. And almost

13/04/2012 16:40


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13/04/2012 16:40


all would have had public company experience, essential for an ambitious internet company looking to go public. It’s important because the demands on CFOs in internet-based companies come in two parts. The early fastgrowth stage, followed by a more mature stage in which flotations happen and when expansion will not only be about organic growth, but also acquisitions. It is this nascent stage where many finance chiefs begin. Francis Costello, chief operating officer at the San Diego-based StockTwits, a kind of Twitter for stock market investors, is a former management consultant who also runs finance. His lack of a formal accounting qualification is not uncommon among internet businesses. ‘We are not terribly financially complicated, so you don’t need the high-powered pure CFO,’ he says.

Keep it running However, finance is high on his agenda. Core to the finance expert’s brief is ensuring there is enough money to keep the business running as it grows its user base and customers. ‘You’ve got to make sure that raising capital is aligned with business strategy. The most important thing is having a financing plan that matches the operating plan,’ says Costello. For a more traditional bricks-andmortar business that would sound like stating the obvious. After all, business plans might be set for three to five years at a time. But for the young business (StockTwits was founded in 2008), business plans can be redrawn at frequent intervals as the startup learns more about its market and how its consumers behave with its service. ‘The velocity of change is how frequently you tear up the plan and rewrite it,’ says Costello. ‘That could be dramatically rewriting plans every six months.’ Costello suggests, however, that revision of the plan can happen even quicker, possibly even every 60 days, depending on accounting periods. It means, of course, that when adjustments come around so often,

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Headhunter Kate Butler of Russell Reynolds boils down the attributes of a social media or internet finance chief to this: It’s about working in a fast-paced business culture that is constantly evolving.’ No arguments there. But the characterisation leaves a lot unsaid about the multi-layered roles internet CFOs inhabit. Christian Jennings recently took over as finance director at online greeting card supplier and has given considerable thought to the skills and competencies of an internet CFO. ‘In the very early stages, as with any business, it’s about cashflow and keeping your books in order, ensuring appropriate levels of working capital as the business grows – potentially rapidly. But as the business develops you need to be thinking about strategic planning and forecasting more effectively.’ With the business changing at such an accelerated pace, a premium is placed on reliable forecasting and knowing exactly what is happening to the business. ‘In many ways the internet acts as a perfect market. Analytics are critical to understanding your performance and the behaviour of the customer in a dotcom environment,’ says Jennings. He adds: ‘You need a budget and you need a plan, but if you stick rigidly to an assumption you made six months ago in a dynamic environment that is rapidly changing, or if you can’t adapt, there’s a risk you’ll be left behind. As an FD you are forecasting in your head almost on a weekly basis.’

forecasting becomes a deadly serious business for the finance chief. Headhunters tasked with finding the next generation of CFOs also recognise the demands they face. Kate Butler, a specialist with recruitment experts Russell Reynolds in placing technology CFOs, says many skills are required by finance leaders for internet companies that become big publicly quoted businesses, including knowledge of governance and acquisitions. But some of the key demands remain the same.

Evolving environment ‘It’s about working in a fast environment that is constantly evolving,’ she adds. ‘You will be working with entrepreneurial people who are prepared to take a risk and back their idea with money.’ She insists that finance chiefs are moving to internet companies from more traditional companies because dotcoms and social media outfits simply cannot find enough talent within their own ranks. But it takes work to adapt and some changes have to be taken on the chin. Cultural differences mean

dotcoms require quite a different approach. ‘People just muck in and take responsibility whatever their core job description and don’t get obsessed with job titles,’ says Butler. She adds that moving to a dotcom is about ‘being shifted from working with a huge team and budget to being very hands on, but also being strategic.’ Impressing internet employers is therefore not about how many people were on your team and the structures you created, but your knowledge of the business and its drivers. ‘You need to talk about the numbers and show your understanding of the business, in terms of the challenges. As opposed to talking about managing a large team with a financial controller,’ concludes Butler. Francis Costello sums it up. ‘There are people who are incredibly talented in large companies who are disastrous in small companies. Those people don’t perform well with frequent change or by doing stuff themselves and being more resourceful, instead of doing things by the book.’ Gavin Hinks, journalist

13/04/2012 16:40



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17/04/2012 15:13


Taking the pulse of the global economy In his regular quarterly report, ACCA’s Manos Schizas sees a newfound optimism among professional accountants around the world When the results for the third anniversary edition of the Global Economic Conditions Survey came in last week, I must admit I was sceptical. The share of respondents reporting confidence gains in their own organisations had nearly doubled from 16% to 29%, and while the majority (54%) still believed that the global economy was deteriorating or stagnating, that figure was down from 73% in the previous quarter. Fearing embarrassment, I started ticking off objections. Turns out that the rise in confidence was not due to biases in the sample. Nor was it skewed by one or two days of positive newsflow; it was based not only on perceptions but also on fundamental improvements in demand, business dynamism and access to finance. It was reflected in rising investment and employment. It was consistent across regions and industries, although the Americas and Western Europe seemed to have benefited the most, as did manufacturers and distributors, particularly in the high-tech sectors. Business dynamism has risen the most in the Americas and Asia Pacific,


Our findings confirm suggestions of an improving climate: 19% of the UK sample reported confidence gains, up from 10% in late 2011, while 23% now believe the global economy is improving or about to do so. Still, the UK economy appears to be lagging behind Western Europe as a whole, including Ireland. Attitudes towards government spending have also been changing in light of disappointing growth. Although members’ expectations for the medium term haven’t really changed (63% expect government spending to fall against 62% in late 2011), more than half (54%) now expect government to underspend over the next five years, up from 44% in late 2011. Finally, while respondents report fewer problems, especially around financing, they also report fewer opportunities: only exports and innovation were cited by more respondents in early 2012 than in late 2011.

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while Africa, still ahead of the rest on the confidence scoreboard, seems to be losing ground. Governments have helped too, even though members generally think that many major economies, including both the US and its straight man, China, are over-spending. On the other hand, policymakers hoping to deliver growth despite austerity in Western Europe and elsewhere have been frustrated in their efforts.

A NEW-FOUND DYNAMISM CAN BE SEEN IN MANY DEVELOPING AND TRANSITION ECONOMIES Much more encouraging is the fact that a new-found dynamism can be seen in many developing and transition economies, with businesses securing new orders where previously they would not have. In the Asia Pacific region and the Americas this has led to a bounce in investment and new hires. This is a very welcome trend; investment has been subdued since the end of the ‘green shoots’ stage of the global recovery, which lasted from mid-2009 to mid-2010. This investment is focusing on two kinds of opportunities in particular. Customer insights, namely the need to understand and benefit from spending decisions under new constraints, is one; the other is supply chain optimisation through deepening relationships and a stronger focus on quality. It’s as though iPad sales were driving the entire world economy. I’m not even sure they don’t any more. The dark side of this new-found dynamism, however, is rising input prices. If even this very timid recovery is accompanied by rising inflation, then a full-blown recovery is likely to provide a challenge for central banks and other policymakers. And when interest rates are forced up again, both business and sovereigns had better be ready.

19/04/2012 12:15

27 THE ACCA/IMA GLOBAL ECONOMIC CONDITIONS SURVEY – HOW TO TAKE PART The views of ACCA members are highly valued and receive widespread media coverage. The Q4 2011 survey was quoted in the press around the

world more than 500 times. So why not have your say when the next quarterly survey opens on 11 May? Everyone can participate – simply look for the link




Q1 2010

Q2 2010

Q3 2010


THE DANGER DOWNPOINT The ACCA Confidence Index correlates strongly with economic growth globally. A reading of below -13 suggests the economies of the developed world are contracting and the global economy is slowing to a halt.

Q4 Q1 2010 2011

30 20 10 0 -10 -20 -30 -40 -50 -60 -70 -80

Q2 2011


More significant influence on confidence

Breaking down the ACCA Confidence Index geographically reveals some striking variations, with members in Africa still showing most confidence.

0 -10 -20 -30 -40 -50 -60 -70 -80

in AB Direct or watch out for the email invitation. The survey is carried out in association with the US-based Institute of Management Accountants (IMA).

Q3 2011

Q4 2011


The ACCA/IMA Global Economic Conditions Survey follows 38 different indicators of trading conditions and firms’ responses to them, as well as two indices of business confidence and perceptions of the global economy. In the list of factors shown here, we’ve used statistics in order to tease out the effects of different aspects of the business environment, both positive and negative, on confidence.

Total Q1 2009–Q1 2012 sample: 20,881 responses from ACCA members around the world

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 Q1 2010 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012


Business confidence remains in negative territory. The graphics show the percentage of respondents saying they have gained business confidence, minus those who have lost it.

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19/04/2012 12:15



Pastygate and the tax spaghetti [

The slapping of a tax on hot, but not cold, pasties is symptomatic of just how surreal the UK’s tax system can be, says Robert Bruce, with reform stymied by political point-scoring

The popular press made much of the UK’s annual Budget and its aftermath this year. Squabbles broke out about the lowering of the top rate of income tax, the inclusion of ‘grannies’ within the tax regime, and the point at which a Cornish pasty was warm enough, or cold enough, to either warrant an extra tax hit or not. The media gleefully dubbed it ‘Pastygate’. It was all seen as traditional political knockabout, a sort of Punch and Judy show involving the chancellor of the exchequer and the public. But it was not just about the British appetite for reducing serious issues to a bit of fun. The underlying reasons are starker. The UK tax system has become incoherent. So it is small wonder that the popular arguments about tax tend towards the bizarre end of the spectrum. Much of this has to do with the disconnect between what tax is for and what politicians, of all political hues, think it is for.

John Whiting, tax policy director at the Chartered Institute of Taxation, says: ‘At base, tax is all about raising money to meet government expenditure.’ Whiting has been at the forefront of explaining tax in simple terms for years now. And since 2010 he has also had an important post under the aegis of the Treasury. He is tax director of the Office of Tax Simplification (OTS). So what he says next is interesting: ‘Tax only gets complex when you add social engineering. Using tax for social engineering means that you lose sight of the simple objective.’ And there lies most of the confusion. There are probably two approaches to

tax. One is to simply raise the revenue. The other is to juggle with measures which have very little to do with raising revenue but have a huge amount to do with currying favour with voters. ‘It is like being back in colonial times,’ says George Bull, senior tax partner at Baker Tilly. ‘You have to be photographed having shot the tiger.’ And these social engineering measures, much as they grab the headlines, represent a very tiny part of the revenue-raising efforts. Together, income tax, national insurance and VAT raise around £360bn. The reduction in the 50% top rate of income tax, for example, took barely £1bn out of the tax take. The issues which grabbed the headlines, pasties included, had almost nothing to do with raising enough revenue to pay for hospitals, schools and so on, and everything to do with political point-scoring. The headlines from the Treasury would have you think the top 1% of taxpayers pay hardly any tax at all. In fact, the top 5% of incomes supply 47% of all income tax receipts, while the bottom 50% provide 10.3% of those receipts.

Sabotaged by politics It is very difficult for any efforts to simplify and bring coherence to the tax system to make an impact with all this extraneous noise going on. ‘Every step forward by the OTS is followed by another step back by the government in making the process more complex,’ says Chas Roy-Chowdhury, head of tax at ACCA. ‘We have the OTS in place but the government is not doing what it is talking about.’ The result is a vast amount of tax legislation which is virtually unscrutinised by parliament. ‘We keep trying,’ says Whiting. ‘I still believe in trying to simplify. But when I see a 670-page Finance Bill I tend to sigh

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19/04/2012 12:14


slightly. The bill is actually longer than the explanatory notes. There is no way parliament can effectively scrutinise 670 pages.’

An overloaded boat The problem is the sheer mass of accretions to the system pasted on by politicians like children adding lumps of mud to a sandcastle. The veteran tax expert Adam Broke, now of Mercer & Hole, once likened it to adding more and more Lego to a tottering building. Since the tax structure has grown in such a haphazard way, it is almost impossible to rationalise it without bringing the whole structure down. But noble efforts are being made. The OTS has laboured heroically to try and bring the national insurance and PAYE systems together and has come up with significant simplification measures for small companies. Last year the Mirrlees Review into the tax system was published. However, there have been few signs of enthusiasm from the government. ‘How do you turn the economic and cerebral arguments into reality?’ asks Francesca Lagerberg, head of tax at Grant Thornton. ‘The execution of it would be very hard.’ The government is enthusiastic about implementing a general antiabuse rule, a GAAR, but politicians may find it does the things they don’t

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appear to want. In theory, it would establish a principle against which tax actions would have to be measured and cleared. The rules, in theory, would go. ‘You would sweep away the antiavoidance legislation,’ says RoyChowdhury. Lagerberg adds: ‘A GAAR doesn’t simplify. It will need decades of court cases.’ In countries with a GAAR, like South Africa and Canada, it has taken years for it to bed down and be effective. As one tax adviser put it: ‘It won’t work unless HMRC has a system capable of giving answers. Currently it is a nightmare. With a GAAR it would be worse. HMRC doesn’t have the technical staff to provide the clearances.’ In the end it comes down to clarity and revenue-raising. The nonsense

around pasties should have no part in it. ‘The way the government has conducted the debate suggests that tax policy should not be left to politicians,’ says Bull. ‘To retain credibility they have to behave as if they are capable of sustained policy thinking rather than knee-jerk policy.’ Small wonder that minds are turning to the idea of putting technocrats in charge. The Treasury would decide how much needed to be raised to run the country. Someone else would decide the simplest way to raise it. ‘The ambient temperature of pasties!’ says Lagerberg in despair. ‘How can room temperature be relevant to tax?’ Robert Bruce is an accountancy commentator and journalist


The Mirrlees Review, set up by the Institute for Fiscal Studies, is the largest recent inquiry into the UK tax system and how to fix it. ‘The current system is inefficient, overly complex and frequently unfair,’ it reported. ‘Government, through the tax system, takes around £4 in every £10 earned in the economy. It is not surprising that getting tax design wrong can be hugely costly. Yet the level and quality of debate on tax policy is inadequate; there has rarely been any clear sense of direction from governments; and expensive and damaging mistakes have been all too common.’ And the consequences are unsurprising: ‘In the UK poor tax design contributes to an inefficient housing market, distortionary taxation of financial services, excessive reliance on debt finance, employment levels lower than they need be, and distorted and inefficient savings and investment decisions.’

19/04/2012 12:14



The plan’s new fan [

The annual drudgery of drafting a business plan, with its delusional prophecies and scant relation to actually running the business, is as irksome as it is inescapable. Or so Peter Williams used to think…

When a business contact mentioned recently the business plan that he was writing, I did well to suppress my immediate impulse to scoff. Disillusioned after various sterile experiences, I hold it to be a universal truth that working up a business plan is one of the more tedious ways to waste time at work. It conjures up the worst aspects of production by committee, ending in a fantasy saved from sustained derision only by the fact that it will be left on the shelf or the server deservedly unread. However, my contact – who runs a successful and established business – explained a very different process. Spurred on by a course at a leading business school, he reckoned the business plan should be more about the business than the plan. The mistake I had been making was to see the plan as an end result in itself. Like a chapter in a book, it needed to be

hurriedly closed so we could all get on with actually running the business. Instead, his plan was more like a project planning exercise – indeed, he used some heavy-duty project management software. He aimed to describe where the business should or could go, who was going to achieve its objectives, and how. In short, his plan was about how to set out, start and complete a journey rather than simply imagining a destination. My former cynicism is by no means unusual. Cranfield School of Management found that many business people reckon that a business plan is a waste of time. And there is

some evidence to support this view. For instance, W Randall Jones’ book The Richest Man in Town chronicles the secrets of America’s self-made millionaires – one of them is not to bother writing a business plan. Cranfield research confirms that a business plan isn’t a prerequisite for solid success, although it did discover that enterprises with some sort of plan tended to outgrow rivals by 30%. Cranfield’s Professor Andrew Burke condemns as a false dichotomy the choice between a rigid business plan and no plan at all (the ‘suck it and see’ approach). He says the best plans merge both approaches, with the business going out to the market trying to sell its product or services and then shaping its plans according to response. So a business plan should not be the equivalent of a commercial horoscope trying to foretell the future, but about building in adaptability so the organisation can sustain its attempt to exploit the opportunity that it originally identified. The key element in the plan that must tie up is the connection between the qualitative story that sets out the vision and the story told by the financial projections. If those links aren’t there, it suggests there is no realistic engagement with the market and would-be investors will run a mile. Businesses often start out with one idea but find the market is telling them something else. A good plan should be regularly consulted and constantly modified; it should help the business to evolve rather than constrain it with just one scenario. Logically then, if somewhat ironically, these volatile times can make the business plan a reason for confidence, not cynicism. Peter Williams is an accountant and journalist

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19/04/2012 12:21



Comply or delay? [

The UK’s ‘comply or explain’ model has successfully promoted best-in-class governance by setting aspirations rather than rules, but is not delivering gender-balanced boardrooms, says Jane Fuller

When reading the European Commission’s consultation on gender imbalance in corporate boards in the EU, I almost expected the question, ‘Have you stopped beating your wife?’ to be levelled at male directors. Viviane Reding, the Commission’s vice-president and justice commissioner, clearly thinks the case for more women at the top is inarguable and that progress to address the imbalance has been too slow. So consultation question 2, ‘What additional action… should be taken to address the issue,’ is obviously a leading one. Note the underscore – who would dare answer ‘none’? Although further self-regulatory moves have not been ruled out, Reding said in launching the consultation: ‘I regret to see that despite our calls, self-regulation so far has not brought about satisfactory results.’ She is ‘not a great fan of quotas. However, I like the results.’ France wins the EU prize for kick-starting progress by going for quotas of 20% by 2014 and 40% by 2017. Norway blazed the 40% trail in the mid-2000s. There are a number of unsettling issues here. First, I share Reding’s impatience on this one, but I have long supported the UK’s approach of nudging business to reform itself through codes of best practice under the discipline of ‘comply or explain’. Second, I would love to be sure that companies with more women on their boards do better. But, while evidence is mounting, it could still be coincidental with the rise of sectors that are more female-friendly. France may have been in the vanguard on this issue in the past couple of years, but the CAC 40 has been a relatively poor performer since the start of 2010. Third, it is difficult to draw the line between legislation and guidance in

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attempts to reform behaviour that is not criminal. The intersection between public policy and commercial freedom to operate with a minimum of political interference is particularly fraught. This is especially so when the stock-market voting machine – price – is capable of discounting for weak governance. So where should the line be drawn between hard legislation and softer codes or self-regulation? In the wake of the financial crisis, the latter approach

has been challenged. After looking into what constitutes an explanation under comply or explain, the UK’s Financial Reporting Council (FRC) found that ‘explanations are indeed sometimes rather perfunctory’. In its attempt to harden up the monitoring process, the FRC brought investors and companies together to debate what constitutes a meaningful explanation. The painfully obvious elements included that the company ‘should give a convincing rationale for the action it was taking’. While this brings home the importance of the Stewardship Code, which aims to improve investor engagement, it still sounds soft from the Reding viewpoint. One of the best arguments for codes backed by comply or explain is that a higher ‘aspirational’ goal can be set than in a hard rule, which provides a minimum standard. This is how the UK has led the way in corporate governance over the past 20 years. It continues to do so on the election of directors and the independence and reporting of audit committees. But it is indeed soft to suggest that Lord Davies’s 25% target for women directors is aspirational, or to allow a comply-or-explain let-off for companies that fail to retender an audit within 10 years. Of course the EU can be criticised for being trigger-happy in making hard rules. But if the UK wants to defend comply or explain, which has often served it well, two things need to happen: investors must show they can police it effectively, and regulators should ensure that desirable reforms happen at a decent pace. Jane Fuller is former financial editor of the Financial Times and co-director of the Centre for the Study of Financial Innovation thinktank

17/04/2012 18:11



Landscape painting


Divining the business landscape of the future is a tricky art, but ACCA’s global forums can help, says president Dean Westcott

Near the back of this edition you will find an article from ACCA’s new Accountancy Futures Academy, which looks at what will shape the professional landscape of the future and what we need to do to ensure we and our businesses are prepared. It is critical that an organisation like ACCA has a means of bringing together expert opinion to provide a long-range forecast of the business climate, and the academy, along with the other global forums, has a vital role to play in highlighting the key trends along with the driving forces and ideas that will shape our profession. We can make some educated guesses about the future. We know that there is a shift in economic influence from west to east and from north to south. Technological advances could result in core accounting functions being automated, meaning that accountants will need to be well placed to offer more analysis and judgment on the information which is produced. The first symposium for all global forum chairs, which took place in London recently, addressed the pressing challenges and opportunities facing us. Forum chairs said that the profession needs to restore public trust and confidence, as well as avoid being so overwhelmed by the need for regulatory compliance that it loses the ability to contribute to business performance. These challenges show the way to opportunities. In the corporate sector, for example, there is an opportunity to redefine the role of the finance professional, with accountants having the potential to take a lead role in areas such as risk management and corporate governance. By drawing on ACCA’s longstanding core values, the global forums will make major contributions to a number of debates and will not only reflect on but influence policy and remind the public, businesses and government of the enduring value that accounting professionals bring to the table. Articulating this value is not easy when the profession is under stress. It will mean challenging the forces which are pushing accountants towards over-emphasis on compliance. But I am sure that the forums will help us meet this challenge and will support us in setting out how much public value we bring to the table. Dean Westcott, ACCA president and interim CFO, West Essex Clinical Commissioning Group, UK

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13/04/2012 16:41



People trading on eBay and other internet transaction sites who fail to pay tax on their profits are being targeted by HMRC. Traders have been told to use the e-Markets Disclosure Facility by 14 June to make disclosures, with tax payments to be made by 14 September. Lower penalties will be imposed than if traders are caught by HMRC. Marian Wilson, head of HMRC campaigns, said: ‘This is part of a wider HMRC initiative to provide support and guidance to the public on tax evasion and is aimed at people using online marketplaces to buy and sell goods as a trade or business. Those who only sell a few items and who are not traders are unlikely to be liable to pay tax on what they sell and will not be targeted by this campaign.’ HMRC warns that it will collate information from different sources to target online traders who do not voluntarily make disclosures.

The view from: London: Ben Bidnell FCCA, principal, Shipleys Q Tell us about your career journey to become principal of Shipleys. A I started my career at the ripe old age of 18 at Deloitte (which was then known as Touche Ross) at its Cambridge office in a team specialising in ownermanaged businesses. I initially sat the AAT exams and then passed the ACCA exams in 1999. I subsequently moved to London and worked for Haines Watts before joining Shipleys in late 2002. I was then promoted to principal in 2007. Q Describe a typical client. A My clients are typically owner-managed, AIMlisted, have an overseas connection or are part of a complex group; but they all require corporate finance advice of one form or another.


Tax refund adviser Rift calculates that £180m of tax refunds are being unclaimed each year by UK construction workers. It believes that around half a million permanent employees could be eligible for tax refunds on travel between temporary workplaces. The firm says that while the self-employed normally deduct travel expenses as part of their annual self-assessment, PAYE workers often fail to claim back legitimate expenses. Rift says that almost £12.5m of tax refunds are going unclaimed in London alone, with a further £4.7m unclaimed in both Birmingham and Glasgow.

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Q One of your clients was a diamond mine in Sierra Leone, could that have been perhaps the most unconventional business you have had to audit to date? A Every client has their own particular set of circumstances which makes them unique and unconventional! The diamond mine in Sierra Leone was certainly a journey into the unknown for the first visit, but, if you ignore the surroundings, the finance department was like any other and it even used Pegasus for the accounts package. Q What has been your greatest achievement so far? A I was recently told by a director of a struggling family owned business that my input had been key in securing the company’s future. In the current economic climate, I’m proud of that.


Aim: To help entrepreneurs do the deal which moves their business to the next stage

33 Practice The view from Ben Bidnell of Shipleys; the dangers of off-the-cuff posts on Twitter; but how the online social network is vital for digital marketing 39 Corporate The view from Marc Fecher of Kingston Smith; ACCA roundtable finds no retreat from outsourcing; Sir Christopher Evans and the biotech business 47 Public sector The view from John Whiting of the OTS; the head of the government finance profession on why now is a good time to be working in the sector 51 Financial services The view from Michelle Murphy of Lloyds Banking Group; the pros and cons of the UK moving its economy away from financial services

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Tweets of shame Be aware that off-the-cuff posts to social media sites from employees can expose a firm and its clients to a world of embarrassment and unwanted attention


Could 140 characters ruin the reputation of the company or accountancy firm you work for, besmirch your boss’s character, or tell the world your client is having an affair with the office cleaner? You bet they could, especially if they happen to be published on Twitter, arguably the biggest social media phenomenon of the past two years. Ever since the age of email arrived, we have all had to be sensitive to the opportunities and threats of electronic media. Hammer out a few cross words in a hurried moment, press Send and bang – if you’re really unlucky you go viral and over the next few hours your rant about your mother-in-law will tickle millions across the globe. Microblogging site Twitter and other social media networking sites such as Facebook and LinkedIn take that threat to an even greater level. It’s so quick and easy to tweet or post a message that its publication to thousands, possibly millions, of readers can take place in seconds. Then there really is no going back. As Katie King, founder of social media agency Zoodikers Consulting, puts it: ‘Inappropriate remarks to thousands of people in one tweet could damage a reputation that may have taken years to build up.’ Small wonder then that while many organisations recognise the opportunities presented by social media to connect with new clients and potential recruits, they are also unnerved by the risks. Research by law

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firm Olswang in 2011 found that nearly half of AIM-quoted companies had been victims of untrue allegations or rumours on the internet. Gavin Ingham Brooke, chief executive of PR consultancy SPADA, identifies two particular areas of risk that his accountant clients are worried about. The first is reputational risk; the


potentially thousands of Twitter followers or LinkedIn connections they have built up. ‘It’s difficult from an intellectual property point of view to get those,’ he says.

Copyright issue Dennis says there is potential copyright in a single tweet. And he emphasises

THE USUAL DEFAMATION LAWS APPLY, SO A TWEET SHOULD NOT ‘LOWER A PERSON IN THE ESTIMATION OF RIGHT-THINKING MEMBERS OF SOCIETY’ second is the amount of time that social media can take up. ‘The return on investment may not be obvious,’ he says. ‘There’s a worry that a lot of time and effort may be leeching staff away from more productive activities.’

Know the law Research last year by PR firm Kelso Consulting found that the typical midtier accountancy firm had seen an 80% rise during the previous 12 months in the number of staff signed up to business networking site LinkedIn. Social media usage within the profession is spreading fast and brings with it legal threats and challenges. Mark Dennis, a media specialist at law firm Taylor Wessing, says that most social media accounts are in people’s own names, so an organisation cannot demand the account is handed over when the employee leaves. A departing individual can therefore take with them

that Twitter carries the same sorts of legal risk as any other publication. It is important that tweets do not breach privacy, confidentiality or data protection laws. The usual defamation laws apply to Twitter, meaning that a tweet should not ‘lower a person in the estimation of right-thinking members of society generally’ or cause that person to be shunned or avoided. Where someone has made a libellous comment on their own Twitter page, a company is unlikely to be liable for it, says Dennis, but the comment could still cause the company significant reputational harm. Thankfully firms are not completely powerless. Andrew Granger, an employment lawyer also with Taylor Wessing, says as long as firms have a clear code of conduct in which they set out the behaviour they expect of their employees, they would be within their rights to discipline an employee who

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used social networking sites to make offensive comments. Pam Loch of employment law firm Loch Associates advises companies to revise their employment contracts specifically to address the threats of social media. Drawing up a social media policy is also crucial to mitigating risk. Mid-tier accountancy firm Grant Thornton rolled out its first social media policy in February. According to Paul Thomas, its head of digital communications and social media, the firm wanted to set some clear ground rules to help staff use networking sites responsibly.

Lose the brand

** WHAT TO INCLUDE IN A SOCIAL MEDIA POLICY * * * * * * * * * * * * *

Be professional and polite: ‘tweet as you would be tweeted’. Don’t discuss confidential or classified material or break data protection laws. Respect copyright and privacy, particularly when posting images and videos. Don’t use the trademarks of other organisations where it is not justifiable. Don’t post inappropriate photos. If you want to reference a client in a tweet, ask their permission first. Avoid excessive personal use of social media. Separate your personal and professional use of social media. Watch your spelling. Be transparent – make it clear that the views expressed are your own. Make use of the privacy controls on networking sites. Before accepting a new connection on LinkedIn or Facebook, consider first whether that connection is appropriate for you. Don’t do anything to compromise your independence in the eyes of the public. For accounts in a firm or company’s own name, consider what you are saying and why, what should and should not be discussed, and who will manage the social media policy, compliance, confidentiality and consistency.

For more from the The Law Society, see

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The policy complements the firm’s existing code of conduct and covers matters such as the behaviour expected of a professional, confidentiality and not posting videos and photos of clients without getting permission. With a few exceptions, it also forbids staff members from setting up Grant Thornton-branded accounts: staff accounts must be personal and they must make it clear that any political views are their own. Fortunately, most accountants are professionals who understand the high standards of behaviour expected of them. James Taylor, a business restructuring executive at BDO, uses Twitter because it’s a ‘great conversation-starter’. He explains: ‘I avoid making direct or specific comments about any clients or potential clients that could be read in a negative way. I follow the main guideline from the firm: think before you type.’ Sally Percy, journalist

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The profit doctors Julia Payne and David Bowler of Incisive Edge explain how to make effective use of Twitter and Facebook, and harness social media in your digital marketing

Q: SHOULD WE BE USING SOCIAL MEDIA? A: YOU’D BE MAD NOT TO Q I run a mid-sized accounting firm and am trying to expand business. Everyone seems to be talking about social media, but I’m reluctant as I’ve heard both good and bad things. My main concern is that I don’t want to appear frivolous and unprofessional. JULIA Social media is just one element of digital marketing. Digital or online marketing is an essential part of every company’s business plan. Without doubt, people are researching professional services companies online before deciding which one to use. DAVID A good place to start is to find out whether people are talking about you. Type your company’s name into a search engine (such as Google or Bing) to see what, if anything, people are saying about your firm. Then type in a generic industry word for your company and your area (eg ‘accountancy, Orpington’) to see how you stack up against competitors.

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If you do not appear on the first few pages of the search engine’s hits, you may want to invest in SEO (search engine optimisation) to improve your position in the listings. Another route is PPC (pay per click) advertising, which lets you place adverts on relevant websites to attract prospects to your site. Your website is your company’s online face, but to be seen it needs visitors. Your goal is to drive traffic. JULIA With social media, remember that you are talking to real people, in real time. It lets you listen to and engage with your target audience. It’s about creating a relationship and building trust with both your prospective and actual client base. The upside here is that you have a potential audience of millions just waiting to engage; the downside is that you need to think before you type. If you’re a celebrity, people may well be interested in your innermost thoughts, but if you’re not, then your content

must be appropriate and interesting, attracting individuals to find out more. Preparation can be time-consuming and returns may not be immediate, but if you get it right, social media can be a cost-effective (and hugely successful) marketing and lead-generation machine. Effective strategies can generate significant results in weeks. DAVID As tempting as it may be to tell everyone how wonderful your company is, the most successful social media campaigns are subtle and interactive. Share information simply to be helpful. Linkedin, Twitter, Google and Facebook are all B2B tools. Spend time setting up your profile on each, focusing on getting the tone right and then have fun. Start by targeting your local audience and then broaden out. Engage, listen, assist and inform, while gently reminding your audience of the merits of your firm. When they next need help, your name may be the one that springs to mind.

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Q: AM I BEING A TWIT ON TWITTER? A: TWEET AS A PERSON, NOT AS A BUSINESS Q I can’t seem to get the hang of Twitter. What am I doing wrong?

DAVID Congratulations on being one step ahead of most of your competitors. Even though everyone’s talking about Twitter, not everyone is tweeting or, if they are, they’re not tweeting effectively. Yet it’s such an easy thing to do. It is currently an underused B2B tool, although it will not remain that way for long. Persist and get the hang of it now, so you’re one step ahead of your competitors. JULIA Set goals. If you are using Twitter as part of a marketing initiative, make sure there is a strategy, however simple. Tactical attempts at social media – for example, just tweeting randomly – don’t add significant value to your audience and are usually too company-focused.

‘retweet’ (forward your tweets on to their audience), and recommend you. JULIA Relevance is vital. Ensure you tie your content back to what’s going on in your local market and the wider industry. The Holy Grail of social media is to become a thought-leader in your industry. Lead from the front with your opinion, but remember: not all publicity is good publicity, so stay on the right side of controversial. DAVID Social media is also the ideal tool to engage with existing clients. They are very well informed about the services your company offers and can also offer their personal insights, which may help prospects decide in your favour. Assuming that you have

THE HOLY GRAIL OF SOCIAL MEDIA IS TO BECOME A THOUGHT LEADER IN YOUR PARTICULAR INDUSTRY Your social strategy needs to put your clients at its heart, centring on their needs rather than yours. Begin by understanding how both your clients and relevant influencers use social media. Do you know who they are, what they like and what inspires them? Remember, people come first. DAVID A personality in social media is a must. People buy from people, not companies. Work to engage with others on Twitter, and write as a person rather than as a business. Nobody is interested in jargon, terminology or brand-speak, no matter how exciting you may find it. If your tweets are relevant, concise, helpful and regular, others will look out for them and will

delivered on your promises, existing clients should also be disposed to buying more of your services, so there can also be an opportunity to up-sell and cross-sell. DAVID Twitter, as with any form of social media, is only truly valuable in providing return on investment when it is both tracked and measured. While financial analysis may require commercial tools, at the very least set key performance indicators, so you can compare the viability and success of your social media campaign, not only as part of your marketing strategy but as part of your overall company strategy. If you don’t know your Klout score, you should.

David Bowler and Julia Payne, the profit doctors, are co-founders of Incisive Edge – revenue generation specialists delivering results-led strategy, sales, marketing and digital expertise for ambitious companies.

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17/04/2012 16:43

A good MBA is like a prescription  for career progression “I know that senior management value an MBA  and I wanted that competitive edge to progress  my career. The fact that the Oxford Brookes University MBA was online and distance learning meant I could fit it in to my own time.� 

Brian Elliott MBA FCCA

deputy chief accountant, World Health Organization



Spreadbetting company WorldSpreads Ltd has been forced to close by the Financial Services Authority through the Special Administration Regime. The move follows the discovery of accounting irregularities: the company was placed into special administration to mitigate clients’ losses. Administrator KPMG will review client cash holdings positions and return as much cash as possible to clients. Where there are losses, customers may have access to the Financial Services Compensation Scheme. Worldspreads Ltd is a subsidiary of WorldSpreads plc, which is incorporated in Dublin and listed on the AIM and the Irish Stock Market. The Irish company MarketSpreads, a former subsidiary of WorldSpreads, was separately suspended by the Irish Central Bank because its auditors, Ernst & Young, were unable to provide an opinion on its financial statement.

FSA chairman Lord Adair Turner


Confidence in corporate leadership can affect companies’ share prices by as much as 36%, according to a Deloitte report, The Leadership Premium. The conclusions were based on a survey of leading market analysts in the UK, US, China, India, Japan and Brazil. They awarded an average premium of 15.7% for effective leadership and a discount of 19.8% for poor leadership. Margot Thom, managing director of Deloitte’s global talent and human capital consulting team, said: ‘This report uncovers a tangible metric that has a real impact on the long-term shareholder value of organisations.’

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The view from: Corporate finance advice: Marc Fecher ACCA, partner, Kingston Smith Q How did you get into accountancy? A As a student in Manchester I set up a small business renting houses to students. After graduating with a degree in economics and working in a manufacturing business in Germany, I realised that a formal business qualification would be invaluable. Q What is your area of expertise? A I joined Kingston Smith in 1997 and specialise in giving corporate finance advice to a wide range of clients. In 2000 I founded Devonshire Corporate Finance, our specialist advisory business regulated by the Financial Services Authority. My role is to advise clients on their long-term strategic business objectives and help them achieve their aspirations. Q You are a regular contributor to national trade publications and a regular speaker, what satisfaction do you get from sharing your expertise with peers via different channels? A I often speak to audiences that don’t have an accountancy or corporate finance background. Making sure that I can explain points in a way that they understand is very satisfying. But my favourite session is always the question and answer, as this allows me to think on my feet. Q What are the main issues affecting corporate firms these days? A Cash, cash and cash – those that have it want to put it to use and those that don’t are looking for it. Never before has ‘cash is king’ been more true! Q In these challenging times, how important is the corporate accountant’s role? A Being able to spot the early warning signs of trouble ahead, and enabling businesses to make good decisions are as important as ever.


Location: London Work motto: Make it happen


39 Corporate The view from Marc Fecher of Kingston Smith; ACCA roundtable finds no retreat from outsourcing; Sir Christopher Evans and the biotech business 33 Practice The view from Ben Bidnell of Shipleys; the dangers of off-the-cuff posts on Twitter; but how the online social network is vital for digital marketing 47 Public sector The view from John Whiting of the OTS; the head of the government finance profession on why now is a good time to be working in the sector 51 Financial services The view from Michelle Murphy of Lloyds Banking Group; the pros and cons of the UK moving its economy away from financial services

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Much more than just cost-cutting An ACCA roundtable on the effects of outsourcing on finance functions has made it clear that there will be no retreat from the path of finance transformation ACCA recently brought together a number of key corporate, consultancy and public sector finance leaders to discuss the impact of outsourcing on finance functions. As well as sharing their own personal experiences and highlighting such key issues as costs, communication, careers and the impact of change, the group also responded to ACCA’s recently published report, Finance Transformation: Expert Insights on Shared Services and Outsourcing.

Is cost still the driving force behind outsourcing? Cost has always been regarded as one of the major forces behind the drive towards outsourcing, and participants in the discussion agreed that this was often where the move began, but then was quickly matched with other business imperatives. As Gurbinder Sanghera, finance business partner for Barclaycard’s shared service centre, said: ‘As we continue to strive after profit, the cost line comes under a lot of pressure, so cost is a starting point and was the primary objective for why we went down the route of outsourcing in the first place. But the key is that our approach, as an organisation, was not to just follow the supplier model route, but to build a global finance team that

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would work 24/7, treating our colleagues [in the shared service] exactly as we would treat our colleagues in the UK. The key then becomes building capability.’ Susie West, chief executive of Sharedserviceslink, observed that if the finance leaders who set up shared service centres 10 years ago were asked why they had done so, they would identify cost as the overriding reason. ‘But now, when you think about what a shared service can do, you realise that there are layers of capabilities, and it shifts from being a

finance issue to a business issue,’ she said. ‘You start off with one intention, but then you end up with something much bigger.’ The cost of compliance was a further aspect raised by the participants. ‘Cost was the key driver, but what I have seen more recently is things like compliance and centralisation,’ said Melanie Knight, head of Capgemini’s shared services practice. A more centralised service could also reduce costs by creating uniform processes and procedures. ‘You can tell the business how much it costs to

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do something in a non-compliant way,’ West observed. Knight added: ‘If the finance function is good, it will cost less than 1% of the total costs of the business, so looking at the costs of the function really only means tinkering around the edges and not hitting the bottom line. But if you have all your data centralised and you can trust your data, and also have robust governance, you can start to give genuine business insight and competitive advantage.’

The communication and connectivity conundrum Ensuring that the outsourced function is able to communicate with the retained function and the wider business was regarded as a key component for the ongoing success of any outsourcing project. BP finance manager Bryan Taylor said: ‘Connectivity traditionally has been face to face. With the shared Left to right: Roger Acton, regional director, Europe and Americas, ACCA, and Richard Jackson, personal tax finance director, HMRC; Melanie Knight, Capgemini, and Casandra Daubney, Rowan Tree UK; Igor Aksyonov, accounting directing and EMEA controller, First Data; Jamie Lyon, ACCA; and Gurbinder Sanghera, Barclaycard


According to ACCA’s report, Finance Transformation: Expert Insights on Shared Services and Outsourcing over the Last 10 Years, finance leaders have increasingly turned to shared services and outsourcing as a primary strategy for change. They have looked at the delivery models, asked how transforming operations can release more cash, develop better insights to support decision-making, and provide better service to the business. Yet ‘transformation’ remains an imprecise term. As Gautam Thakkar, global head of enterprise services BPO at Infosys, told the researchers: ‘Everyone wants transformation, but no one knows how to define it.’ But, as Deloitte BPO partner Peter Moller observed: ‘Consolidating transaction processing will continue to make good business sense. There will be no turning back.’

One size does not fit all The scope for transformation varies according to business priority – it could simply focus on finance function processes or represent a more fundamental shift in the vision and purpose of finance change. As George Connell, finance operations and centre finance lead for Shell, said: ‘Strategically, we refocused shared service centre performance from attaining service level agreements to being a true business partner.’ And as KPMG sourcing advisory director Claudio Altinin said, objectives can vary from ‘quick wins’ to ‘game changers’, where benefits are felt far beyond the finance function.

Correlation between ambition and strategy The ACCA report found that, where efficiency was the main goal, outsourcing became the model of choice. But where the driver was for skills, depth and expertise, then centralised shared services became more prevalent. As Yahoo’s Caroline Curtis said: ‘Our shared service centres bring many benefits: speed of execution, a reduction in operational risk, specialised capability when it may be needed with, for example, regulatory issues, operational flexibility and ability to control talent development effectively.’

Cost remains starting point Efficiency is always the ticket to entry, delivering more for less. But advisers agree that finance leaders should think more strategically from the outset. Why start with pure transactional activity?

Not all outsourcing providers are the same Some providers claim industry knowledge, others major in finance and accounting delivery. This will affect the journey and the appetite to outsource higher-value finance functions.

Success rests on change management Graham Russell, director of BPO at WPP Group, said: ‘In all these finance transformation journeys, the hardest part is change management. People don’t know what they don’t know… there’s a natural pushback to change.’ But providers are perplexed, asking why buyers have not yet learned to manage change. (continued on page 43)

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services organisation we have got, people who you used to be able to walk down the corridor to see are now a plane-ride away. We planned for an element of that, but not as much as we should have done, leading to a cost mismatch against expectations.’ But it was agreed that ensuring the correct level of connectivity and communication was money well spent. As Taylor said: ‘There is always a balance between connectivity and cost. Connectivity costs money, but it always has a value and trying to get the correct balance requires up-front planning.’ And communication between the business and the outsourced function

and providers needed to be weighed against the longer-term aspiration of developing a key business asset. But investment in people’s careers appeared to have the upper hand. ‘Providers need to build pride in the organisation, and get the career structures right so that they can demonstrate superior staff retention and keep pace with regulatory change,’ Ashley Carter, BDO’s director of global outsourcing, argued. It was acknowledged that there would be a need to break down ‘them and us’ attitudes and ensure uniform access to training and career development opportunities. As Sanghera noted, Barclaycard’s captive

‘YOU NEED TO HAVE A LARGER RETAINED TEAM. A SMALL TEAM MIGHT NOT HAVE THE KNOWLEDGE OR BANDWIDTH TO COACH THE OFFSHORE TEAM’ should not be forgotten once the new function is up and running. As Taylor said: ‘When you go through the transition you have quite a detailed stakeholder engagement programme. That needs to continue to live and breathe once you have gone live because, in many ways, it is a project for the rest of its life.’

How are careers and skills maintained in the new environment? Building the best skillsets and career options for the outsourced function remains high on the agenda. Concerns that training and developing outsourced staff that then take their skills to other outsourced functions

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organisation had adopted the same model as the retained function, with access to the same materials and secondment opportunities. Allied to this, questions were raised over how it would be possible for an outsourced function to provide business insight if it was one step away from the business. As Taylor commented: ‘It is a hurdle to overcome, as there are people in the shared service centre who have never touched or experienced the business, and so do not know what the data means. I could spot a problem in the data, but I could only do that because I had worked in that business unit six or seven years ago. ‘People need to know what the

The venue: Hospital Club, London numbers relate to. A solution is to have people that have worked in the business or can be brought in and out of the business.’ The size of the retained team needs to be considered in this context as well. ‘You need to have a larger retained team. A small team might not have the knowledge or the bandwidth to coach the offshore team,’ Taylor commented.

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Retained function prime driver of value According to Ernst & Young partner James Meader, both leaders and providers cite the lack of focus on the retained team as a major obstacle to transformation success – roles are not well articulated and new models are required that emphasise business rather than finance capabilities.

Client-provider relationship misaligned Alignment can make or break an outsourcing journey. Arguments range from what is core versus non-core in a finance function to cultural values, targets and incentives. Much depends on the level of trust.

Service delivery Hitting service level agreements does not necessarily mean great service. As Genpact’s Pascal Henssen said: ‘Green SLAs across the board do not mean you are a happy customer.’

What are the challenges ahead? A key issue raised was how to develop the finance leaders of the future in an outsourced environment. As one roundtable participant said, the feeder pool for the CFOs who will be appointed in 20 years’ time is now to be found in Budapest. There was a feeling that a training ground in financial skills could be lost, and the challenge would be how to fill that vacuum. ‘The skills [in such centres] are good up to a certain level,’ Taylor said, adding that any skills shortages could be related to both geography and cost. However, Jamie Lyon, ACCA’s head of corporate sector and co-author of the report, argued that as the scope for outsourcing the finance function expanded, so too would the opportunities and training requirement for employees in such organisations. As Casandra Daubney, founder of

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consultancy Rowan Tree UK, noted, the challenge would be to ensure the organisations are not constraining their staff, and not allowing a skills gap to be created, or to widen any further. Lyon also argued that the CFO of the future would be required to have had direct experience of working in or with an outsourced finance function. All agreed that there would be no turning back on the path of finance transformation. Philip Smith, journalist Left to right: Sunil Dhiman, finance business partner, Barclaycard; Tim O’Connell, head of accounting for global compliance and outsourcing services, Grant Thornton; Susie West, Sharedserviceslink; Ashley Carter, BDO; David Buchan, financial control and governance, Department of Transport; and Bryan Taylor, BP

19/04/2012 14:37



Evans above With his credentials speaking for themselves, biotech entrepreneur Sir Christopher Evans has been given the task of boosting the business of science in his homeland of Wales It’s St David’s Day and several hundred Welsh business people have gathered at a hotel in Cardiff to have breakfast with one of the principality’s most successful entrepreneurs. Biotech businessman Sir Christopher Evans launches his presentation at the ACCA Cymru Wales event with the iconic picture of Welsh rugby star Scott Williams diving over the line to score a last-minute, match-winning try against England during the latest Six Nations campaign. The gathered assembly roars its approval. ‘It was bloody marvellous,’ says the 55-year-old who grew up in Port Talbot, the son of a steel worker. ‘The thing about that game is that Wales won, but we achieved something we had never done before – we lifted the Triple Crown at Twickenham.’ He explained it was because the team had people behind them that truly believed in them, that got behind them and put money into the team effort. ‘Everyone, both mentally, psychologically and financially, got behind the team,’ he says. It is an achievement he is hoping to replicate now that he has been tasked

UK_YCORP_Evans.indd 44

with putting Wales firmly on the global biotech map, and this is what he is in Cardiff to promote. He tells the audience that the Welsh executive has asked him to help formulate a science policy for Wales.

Selling out It is a sector that is worth some £1.3bn to Wales, has world-leading academics and scientists, a number of leading international businesses, such as GE Healthcare and Siemens Diagnostics, together with some exciting start-ups and spin-offs. Commerce, academia and the government all want the sector to grow and succeed, yet he cites the example of a Cardiff University biotech company that should have been developed in Wales, but was sold to the US. Indeed, Sir Christopher’s own companies have been developed and sold in London, Oxford and Cambridge, but not in Wales. ‘We have some really smart, young entrepreneurs and scientists in Wales, but we need to back them. My job is to come up with the vision,’ he tells the audience. ‘We have a long way to go and it is going to be hard, but I hope

the business and financial communities will stick with us.’ There is no doubting Sir Christopher’s enthusiasm, but how does he ensure that this enthusiasm is translated into successful businesses? ‘It starts with me, but then you need people around you who can input the things that are key, otherwise you end up just being a brilliant guest speaker,’ he jokes after his speech. ‘People who are running the [Welsh science] panel have to listen and want to do these things, and you have to go off and implement them. I’m a practical person, not theoretical, and tend to be quite hands on… but you have to have people that can take things forward.’ Sir Christopher is no stranger to moving things on. In his time as a serial scientific entrepreneur, he has established 45 successful science companies, 20 of which have been floated on a number of different stock exchanges. He is cited as the founder of the ‘Cambridge Cluster’ of biomedical companies, which has grown from a handful of companies around the university city in 1987 to now some 350 companies, with a

19/04/2012 15:05



How to succeed in the business of science and live the dream the Evans way: 1 2 3

Never give up Believe in yourself and your vision Don’t trust too many people in business 4 Put in the hard yards 5 Do it yourself 6 Plan for success 7 Seek the views of experts 8 Employ energy, intelligence and enthusiasm 9 Avoid conflict and politics 10 Take cash from value and recycle.

UK_YCORP_Evans.indd 45

‘I’M A PRACTICAL PERSON, NOT THEORETICAL, AND TEND TO BE QUITE HANDS ON… BUT YOU HAVE TO HAVE PEOPLE THAT CAN TAKE THINGS FORWARD’ combined worth of $7bn (£4.5bn). In 1996, he founded venture capital firm Merlin Biosciences, which went on to become Excalibur Fund Managers (continuing the Arthurian theme) and now manages a fund valued at $600m. Over this period, the fund has helped create 35 companies worth more than $3.5bn that have collectively developed over 200 new medical products. This includes companies that created the

world’s first gene medicine product to treat brain cancer and the world’s first stem cell product to be clinically trialed on humans for strokes. He was awarded a knighthood for services to the biotech industry in 2001, following an OBE in 1995. His business card lists a further 14 sets of initials, including many scientific qualifications and professorships, underneath his name.

13/04/2012 16:43



Evans: passion for business

So does the man whose fortune is estimated to be in the region of £120m think that enterprise is innate, or can it be learnt? ‘I have given lots and lots of lectures on entrepreneurship and enterprise courses all over the world and you can [learn to be an entrepreneur]. Even in schools, after 30 minutes you can infect hundreds of children where they literally feel: “I want to be like him, I


At the BioWales 2012 conference in March, Welsh business minister Edwina Hart launched a £100m fund that could transform life sciences in Wales. The fund aims to complement the Welsh government’s new science strategy, which includes a further £50m for science and R&D in Welsh universities over the next five years. The £50m will be used to attract ‘star’ professors into the country. The minister said: ‘This investment is one of the biggest commitments made by any country into a fund of this type. It is a very significant commitment given the current economic environment, but reflects our confidence in the fact that Wales has significant advantages in life sciences and our determination to push ahead immediately with getting investors in.’

Wales; and for producing the young entrepreneurs of tomorrow, and teaching them that enterprise is the thing to do, because they are not going to move into someone else’s big company in Wales because there isn’t enough of them. They need to move into the enterprise zone and start building their own companies. ‘But the government needs to ensure sufficient financial resources are

‘WE HAVE ALL TAKEN ENOUGH RISK ON THE BANKS, AND THE BANKS NOW NEED TO TAKE A RISK ON OUR SMEs AND BACK US UP’ want to do what he does!” That is part of the process where they have already latched on to an icon, a vision. But then it needs to be followed through by the teachers who say that this is how you get to where he or she is.’ He argues that teachers should focus on the exciting elements of subjects, so that the children are always enthused and excited. ‘The single most important thing in education is having an exciting teacher,’ he says. ‘Dull teachers produce poor results.’ Education and how we produce the entrepreneurs of tomorrow is clearly a major concern for Sir Christopher, who is keen to stress the importance of enterprise to the younger generation. This is particularly true for parts of Wales that have witnessed the disappearance of traditional employment opportunities. ‘The education system is really important for getting young wannabes to become scientists in Wales and to stay in

UK_YCORP_Evans.indd 46

available, and that is my job, to convince the government what to do.’ What about the banks, should they be lending more? ‘Yes, absolutely,’ stresses Sir Christopher. ‘Banks need to lend considerably more to SMEs in Wales. We’ve all taken enough risk on the banks, and the banks now need to take a bit of a risk on our SMEs and back us up. There’s not enough equity cash to put petrol in the engine that will fuel the growth of the SME sector. The banks do need to step up.’ Wales.

Battling red tape

He is, like so many entrepreneurs, frustrated with the amount of regulation and red tape that he needs to navigate during the business day. ‘I’ve given up. I find all the admin, red tape and over-regulation burdensome, and I run away from it. Admittedly, my people deal with it, but I do get reminded of it every now and again. I have to be careful about what I say,

what I do and what I write. But I’m honest, I’ll tell you how it is and then we take it from there.’ And what does tomorrow hold for this incredibly busy scientist? ‘A whole mass of gigantic disappointments, frustrations, fights and battles, but potentially huge successes, rewards, cash, down-the-pub celebrations. All rolled up into one, and even I don’t know the timing of any of it. I closed a deal yesterday, but I didn’t have time to celebrate as I was on my way down here to Cardiff.’ Talking of celebrations, Sir Christopher is no more enthusiastic than when talking about his love for rugby. The Welsh international games hold a special attraction for him as he is able to get together with his old school friends from Port Talbot. ‘We start at 11am, we go to my box in the stadium, stay there all day and then head out to the old pubs in St Mary’s Street, Cardiff, until my driver picks me up at midnight and drives me back to my home in the Cotswolds. It’s great, I love it and I’m so looking forward to the next game.’ Before that he has the small matter of launching his vision for life sciences in Wales. Today’s St David’s Day event shows there is a real determination among the business community to reinvigorate the Welsh economy – as the impassioned audience stand to sing Hen Wlad Fy Nhadau, one is left with a feeling that if such passion can be translated from the rugby pitch to enterprise, then Sir Christopher could be backing another winner. Philip Smith, journalist

13/04/2012 16:43

Public sector


The UK will be hit by a potential underfunding of £800bn of pensions liabilities by 2050, the International Monetary Fund (IMF) warns in its latest Global Financial Stability Report. The IMF says the UK and other governments have consistently underestimated increases in longevity. As well as increasing the payments needed through state pensions, the ageing population could cause occupational schemes to go broke, forcing the state to bail them out. The IMF calculates the cost of pensions is equivalent to about half of current GDP in most developed countries, but could be as much as 59% of GDP in the UK – with Japan and Germany facing even tougher burdens. To meet the higher costs, governments need to allocate extra resources of 1% to 2% of GDP every year for the next 40 years. ‘Longevity risk potentially adds one-half to the vast costs of ageing up to the year 2050,’ said the IMF.

The view from: Tax simplification: John Whiting, tax policy director, Office of Tax Simplification Q How serious a problem is tax complexity? A Anybody who looks at the size of the orange and yellow books will see that we have an enormous tax code. Even an ordinary small businessman will usually cite tax as one of his problems – not just that he has to pay it, but the difficulty in dealing with it. Businesses spend too much time dealing with tax and worrying about tax. People fear getting it wrong, even if they are paying advisers to deal with it. Q What are the benefits of tax simplification? A We are never going to get a simple tax system in this country. But hopefully we will get a simpler tax system. That translates into a system that is easier to deal with; easier to know that you are getting it right. Q How big a challenge do you face? A It is a huge challenge. One of the challenges is to convince people we can get it simpler. This year’s Finance Bill was 670 pages long.


Caroline Gardner has been approved by the Scottish Parliament as the new auditor general for Scotland. She takes over from Robert Black, who became the first auditor general for Scotland and has been in post since 2000. Gardner was deputy auditor general of Audit Scotland from 2000 to 2010, including six years as controller of audit. She has since been appointed by the UK government’s Department for International Development as CFO to the Turks and Caicos Islands Government, as part of the process to improve financial management in the country.

UK_YPUB_intro.indd 47


Q What is your time scale? A The OTS has a five-year mandate, which is the same as the Star Trek mission – which went on considerably longer. I suspect the OTS may do the same. Maybe we will never finish. I hope that at the end of the mandate people will say life has got better. One of our key recommendations which is being taken on board is to bring together tax and national insurance, which is not a simple task. Q What do you do away from work? A Family life – I am married, with three daughters and two labradors. I watch cricket, enjoy music, do some DIY and read history.


Staff: The OTS has five full-time equivalents (FTEs). HMRC and the Treasury provide three-anda-half FTEs. Firms provide secondees. Hours: Whiting is contracted to work 60 days a year – but does more.


47 Public sector The view from John Whiting of the OTS; the head of the government finance profession on why now is a good time to be working in the sector 33 Practice The view from Ben Bidnell of Shipleys; the dangers of off-the-cuff posts on Twitter; but how the online social network is vital for digital marketing 39 Corporate The view from Marc Fecher of Kingston Smith; ACCA roundtable finds no retreat from outsourcing; Sir Christopher Evans and the biotech business 51 Financial services The view from Michelle Murphy of Lloyds Banking Group; the pros and cons of the UK moving its economy away from financial services

19/04/2012 12:41


Public sector

Driving force: Richard Douglas, alongside ACCA chief executive Helen Brand, speaks to public sector finance professionals at a recent ACCA event

Challenge and change A bad time to be a public sector accountant? On the contrary, says the head of the government finance profession, Richard Douglas: it’s all about change, not cutbacks We may live in uncertain times, but there’s little doubt about the financial picture in government for the next few years: all departments will be facing shrinking budgets and resources along with constant demands to deliver ever greater efficiency savings and value for money. Finance professionals will not only have to help their colleagues respond to these pressures, but also cope with them themselves. You have to wonder who would want to be a finance professional in government today. Richard Douglas, though, believes that government is an excellent place for a finance professional to be. As head of the government finance profession – a role he combines with being director general of policy,

UK_YPUB_Douglas.indd 48

strategy and finance at the Department of Health – Douglas confesses to being ‘sort of addicted’ to government finance and says this is one of the best periods to be involved in it. ‘It is fantastic to be in finance,’ he says. ‘The biggest challenges we face are also the biggest opportunities. In a few years we will begin to see finance making a difference in government. Not only will we have delivered deficit reduction, but we will have also protected the service outcomes and the most vulnerable in society.’ Douglas is determined that for finance the next few years will not consist of retrenchment, but a transformation of the function which he believes will put it at the heart of

decision-making in government. Although the government’s Finance Transformation Programme is chaired and overseen by the Treasury, Douglas and fellow senior finance professionals have taken ownership of what will be a wide-ranging cultural change. ‘We’ve taken a grip and given it our own force and momentum,’ he says. ‘We decided not to just let the Treasury do it and then whinge about it.’ Speaking to an audience of public sector finance professionals at a recent ACCA event, Douglas outlined how finance in government – and the people who work in it – would have to change over the coming years. Talent management will play a key part, he believes. ‘In central

19/04/2012 12:40


government we exist in departments. We’ve not been very good at managing professionals and working across departments. When you look across the senior tiers of Whitehall financial directors, we have not, with one or two exceptions, grown our own; we have had to go out to other sectors. Obviously it’s right that we are open to people of all backgrounds, but something has gone badly wrong if we cannot develop our own as well.’

Accelerating professionalisation At the moment the finance community in central government consists of over 22,000 people, over 4,800 of whom have professional qualifications. The latter figure has more or less trebled over the last 10 years, and Douglas wants to accelerate the professionalisation trend. Although the overall number of staff working in finance will decrease, he wants the proportion of professional staff to grow. ‘That’s not to denigrate nonprofessional people in finance roles,’ he adds. ‘I have great people working for me and they will continue to add value. I’m not going to remove people just because they have not got a piece of paper. What I want is people who are committed to finance.’ But there are pitfalls in professionalising the function. ‘People start to think that finance is something the finance department does and

All change: Whitehall wants to bring a new kind of individual into government finance services and IT accelerates, finance professionals will increasingly move away from transaction processing towards more general business support roles. ‘That’s not undervaluing the technical and professional skills we have as accountants,’ says Douglas. ‘But those are the basic underpinning.’ The type of professional Douglas is looking to recruit in future will also need to be very strong in the soft skills of influencing and communication.

‘YOU NEED THE ABILITY TO CREATE HEADROOM, NOT JUST TO BRING PEOPLE IN, BUT TO MOVE PEOPLE UP. IF NOT, YOU LOSE YOUR BEST PEOPLE’ nobody else,’ warns Douglas. ‘I don’t want to see that. I want it to be at the heart of what everyone does.’ Ensuring an understanding of finance across the department will mean not just developing the financial skills of non-finance staff and supplying them with better management information, but also changing the role of the finance professional in government. Over the next few years, and particularly as the adoption of shared

UK_YPUB_Douglas.indd 49

‘People say to me, “Finance isn’t at the top table; people don’t listen to me.” My question back to them is, why? Is it about them or about how you present, how you influence people? How do you get things done?’ Similarly, finance professionals need to get out and about in their organisations and communicate more. ‘Traditionally, people in the finance profession felt they gained power and influence by hoarding information, by being the so-called expert, so people

had to come to them,’ he says. ‘They were not good at communicating and hadn’t focused on how you communicate to influence.’ These skills need to be underpinned by a broader business knowledge. There are two simple things you need to focus on, says Douglas: ‘One is understanding your business, really getting about within the organisation, understanding what all the bits do and why they do it, and not sitting back in the finance function.’ And this needs to be augmented by knowledge of other sectors. ‘It’s fundamentally important that people start to learn from what happens in other businesses. We’ll help people move between organisations and do secondments, and also help them to get back in again.’ Douglas hopes to attract a different type of individual into government finance, one whose success will be based on a combination of skills and experience but also personal attributes. ‘To really succeed in finance you’ve got to be resilient,’ he says. ‘People are not always going to like or accept what we say. You have to help people make difficult decisions. We also want people to be innovative. We are not going to succeed by doing the same stuff we did before.’

No easy ride Building that new cadre of professionals is not going to be easy in the current climate of restrictions on headcount, although this is necessary if the cultural change is to succeed. ‘You need the ability to create headroom, not just to bring people in, but to move people up. If you can’t do that, you lose your best people,’ he says. ‘That can be a difficult sell, even to the Cabinet Office.’ In terms of selling government finance to new recruits, though, Douglas believes he has a compelling story for the right individuals. ‘I wouldn’t sell it on the pay, I’d sell it on the challenge,’ he says. ‘Doing finance in government is very exciting and very rewarding. You can see you are doing things that make a real difference.’ Mick James, journalist

19/04/2012 12:40




Page 1

DATA PAGE Bank Base Rates

Date 7.8.97 6.11.97 4.6.98 8.10.98 5.11.98 10.12.98 7.1.99 4.2.99 8.4.99 10.6.99 8.9.99 4.11.99 13.1.00 10.2.00 8.2.01 5.4.01 10.5.01 2.8.01 18.9.01 4.10.01 8.11.01 6.2.03

Rate 7.00% 7.25% 7.50% 7.25% 6.75% 6.25% 6.00% 5.50% 5.25% 5.00% 5.25% 5.50% 5.75% 6.00% 5.75% 5.50% 5.25% 5.00% 4.75% 4.50% 4.00% 3.75%

Retail Prices Index

Date 10.7.03 6.11.03 5.2.04 6.5.04 10.6.04 5.8.04 4.8.05 3.8.06 9.11.06 11.1.07 10.5.07 5.7.07 6.12.07 7.2.08 10.4.08 8.10.08 6.11.08 4.12.08 8.1.09 5.2.09 5.3.09

Rate 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 4.50% 4.75% 5.00% 5.25% 5.50% 5.75% 5.50% 5.25% 5.00% 4.50% 3.00% 2.00% 1.50% 1.00% 0.50%

Source: Barclays

Mortgage Rates Date 1.6.01 1.9.01 1.10.01 1.11.01 1.12.01 1.3.03 1.8.03 1.12.03 1.3.04 1.6.04 1.7.04 1.9.04 1.9.05 1.9.06

Rate 7.00% 6.75% 6.50% 6.25% 5.75% 5.65% 5.50% 5.75% 6.00% 6.25% 6.50% 6.75% 6.50% 6.75%

May 2012

Figures compiled on 13 April 2012

Date 1.12.06 1.2.07 1.6.07 1.8.07 1.1.08 1.3.08 1.5.08 1.11.08 1.12.08 1.1.09 1.2.09 1.3.09 1.4.09 4.1.11

Rate 7.00% 7.25% 7.50% 7.75% 7.50% 7.25% 7.00% 6.50% 5.00% 4.75% 4.50% 4.00% 3.50% 3.99%

Existing Borrowers - Source: Halifax

January February March April May June July August September October November December

1997 154.4 155.0 155.4 156.3 156.9 157.5 157.5 158.5 159.3 159.5 159.6 160.0

1998 159.5 160.3 160.8 162.6 163.5 163.4 163.0 163.7 164.4 164.5 164.4 164.4

13th January 1987 = 100

1999 163.4 163.7 164.1 165.2 165.6 165.6 165.1 165.5 166.2 166.5 166.7 167.3

2000 166.6 167.5 168.4 170.1 170.7 171.1 170.5 170.5 171.7 171.6 172.1 172.2

2001 171.1 172.0 172.2 173.1 174.2 174.4 173.3 174.0 174.6 174.3 173.6 173.4

2002 173.3 173.8 174.5 175.7 176.2 176.2 175.9 176.4 177.6 177.9 178.2 178.5

2003 178.4 179.3 179.9 181.2 181.5 181.3 181.3 181.6 182.5 182.6 182.7 183.5

2004 183.1 183.8 184.6 185.7 186.5 186.8 186.8 187.4 188.1 188.6 189.0 189.9

2007 4.2% 4.6% 4.8% 4.5% 4.3% 4.4% 3.8% 4.1% 3.9% 4.2% 4.3% 4.0%

2008 4.1% 4.1% 3.8% 4.2% 4.3% 4.6% 5.0% 4.8% 5.0% 4.2% 3.0% 0.9%

2009 0.1% 0.0% -0.4% -1.2% -1.1% -1.6% -1.4% -1.3% -1.4% -0.8% 0.3% 2.4%

2010 3.7% 3.7% 4.4% 5.3% 5.1% 5.0% 4.8% 4.7% 4.6% 4.5% 4.7% 4.8%

2011 5.1% 5.5% 5.3% 5.2% 5.2% 5.0% 5.0% 5.2% 5.6% 5.4% 5.2% 4.8%

2012 3.9% 3.7%

Source: ONS

HM Revenue & Customs Rates “OFFICIAL RATE”*

Effective Date 6.3.99 6.1.02 6.4.07 1.3.09 6.4.10

Rate 6.25% 5.00% 6.25% 4.75% 4.00%

*Benefits in Kind: Loans to employees earning £8,500+ - official rate of interest. Official rate for loans in foreign currencies: Yen: 3.9% w.e.f. 6.6.94; Swiss F: 5.5% w.e.f. 6.7.94 (previously 5.7% w.e.f. 6.6.94).


Effective Date 27.1.09 24.3.09 29.9.09

Rate 1.00%/1.00% 0.00%/0.00% 3.00%/0.50%


Effective Date 6.12.08 6.1.09 27.1.09 24.3.09 29.9.09

Rate 5.50% 4.50% 3.50% 2.50% 3.00%


Effective Date 6.11.08 6.12.08 6.1.09 27.1.09 29.9.09

Rate 2.25% 1.50% 0.75% 0.00% 0.50%

w.e.f. 6.3.09 0.00% (0.00%) 0.00% (0.00%) 0.75% (0.00%) 0.75% (0.00%) 0.75% (0.00%) 0.75% (0.00%)

w.e.f. 6.2.09 0.00% (0.00%) 0.00% (0.00%) 1.00% (0.50%) 1.00% (0.50%) 1.00% (0.50%) 0.75% (0.25%)

w.e.f. 9.1.09 0.00% (0.00%) 0.00% (0.00%) 1.50% (0.75%) 1.25% (0.50%) 1.25% (0.50%) 1.25% (0.50%)

Encashment rates shown in brackets. Above rates are paid gross but are liable to tax.

Late Payment of Commercial Debts From 1.7.10 1.1.11

To 31.12.10 30.6.11

Rate 8.50% 8.50%

From 1.7.11 1.1.12

To 31.12.11 30.6.12

Rate 8.50% 8.50%

The Late Payment of Commercial Debts (Interest) Act 1998 For contracts from 1.11.98 to 6.8.02 the rate applying is the Bank of England Base Rate that was in place on the day the debt came overdue plus 8%. The Late Payment of Commercial Debts (Interest) Regulations 2002 For contracts from 7.8.02 the rate is set for a six month period by taking the Bank of England Base Rate on 30 June and 31 December and adding 8%.

LIBOR January February March April May June July August September October November December

2009 2.17% 2.05% 1.65% 1.45% 1.28% 1.19% 0.89% 0.69% 0.54% 0.59% 0.61% 0.61%

2010 0.62% 0.64% 0.65% 0.68% 0.71% 0.73% 0.75% 0.73% 0.74% 0.74% 0.74% 0.76%

2011 0.77% 0.80% 0.82% 0.82% 0.83% 0.83% 0.83% 0.89% 0.95% 0.99% 1.04% 1.08%

2012 1.08% 1.06% 1.03%

3 MONTH INTERBANK - closing rate on last day of month

2007 201.6 203.1 204.4 205.4 206.2 207.3 206.1 207.3 208.0 208.9 209.7 210.9

2008 209.8 211.4 212.1 214.0 215.1 216.8 216.5 217.2 218.4 217.7 216.0 212.9


2008 3.6% 4.6% 4.8% 4.8% 4.2% 3.4% 3.2% 3.2% 2.8% 3.6% 2.3% 2.5%

January February March April May June July August September October November December

2009 210.1 211.4 211.3 211.5 212.8 213.4 213.4 214.4 215.3 216.0 216.6 218.0

Whole GB economy unadjusted *Provisional

2009 -1.7% -5.7% -1.1% 1.7% 0.9% 1.1% 0.3% 0.3% 0.9% 0.7% 0.8% 0.7%

2010 217.9 219.2 220.7 222.8 223.6 224.1 223.6 224.5 225.3 225.8 226.8 228.4

2011 2012 229.0 238.0 231.3 239.9 232.5 234.4 235.2 235.2 234.7 236.1 237.9 238.0 238.5 239.4

Source: ONS

2010 0.6% 5.2% 6.6% 0.4% 1.1% 1.1% 1.8% 2.1% 2.3% 2.1% 2.1% 1.3%

2011 3.5% 1.0% 2.1% 2.5% 2.4% 3.3% 3.0% 2.1% 1.8% 2.1% 2.1% 2.0%

2012 0.2%*

2010 535.7 537.2 543.1 552.7 547.6 538.5 544.8 546.6 529.6 534.9 528.4 522.7

2011 522.6 523.3 524.8 525.3 525.4 529.6 533.1 524.6 525.5 531.8 520.4 510.7

2012 514.2 514.3 528.9

Figures include bonuses and arrears Source: ONS

House Price Index 2008 619.1 626.1 616.9 618.0 603.5 588.3 577.5 567.7 561.0 544.2 527.1 512.8

January February March April May June July August September October November December

2009 517.2 515.3 508.3 508.6 520.7 514.0 520.1 524.1 533.5 535.4 536.0 541.3

All Houses (January 1983 = 100)

Exchange Rates

Certificates of Tax Deposit up to £100K £100K+ 0-1 mth £100K+ 1-3 mth £100K+ 3-6 mth £100K+ 6-9 mth £100K+ 9-12 mth

2006 193.4 194.2 195.0 196.5 197.7 198.5 198.5 199.2 200.1 200.4 201.1 202.7

% Change Average Weekly Earnings

% Annual Inflation January February March April May June July August September October November December

2005 188.9 189.6 190.5 191.6 192.0 192.2 192.2 192.6 193.1 193.3 193.6 194.1

2006 2007 2008 2009 2010 2011 2012

YEN 205 233 198 142 142 133 132

MARCH US$ SFr 1.74 2.27 1.97 2.39 1.99 1.97 1.43 1.63 1.52 1.60 1.60 1.47 1.60 1.44

Source: Halifax on last working day

€ 1.43 1.47 1.25 1.08 1.12 1.13 1.20

2006 2007 2008 2009 2010 2011

DECEMBER YEN US$ SFr 233 1.96 2.39 222 1.99 2.25 130 1.44 1.53 150 1.61 1.67 127 1.57 1.46 120 1.55 1.45

€ 1.48 1.36 1.04 1.13 1.17 1.20

Income Support Mortgage Rate Effective Date Rate

Effective Date Rate

Effective Date Rate

17.12.06 18.2.07 17.6.07

12.8.07 13.1.08 16.3.08

18.5.08 16.11.08 1.10.10

6.58% 6.83% 7.08%

7.33% 7.08% 6.83%

6.58% 6.08% 3.63%

From 1.10.10 the standard interest rate will be the BoE published monthly avge mortgage interest rate. Can claim mortgage interest on, up to £200,000 of the motgage. Waiting period 13 weeks.


Judgment Debts: High Court (& w.e.f. 1.7.91 County Courts) 8% w.e.f. Decrees: Court of Session & Sheriff Courts 8% w.e.f. 1.4.93 (previously 15% w.e.f. 16.8.85). 1.4.93 (previously 15% w.e.f. 16.4.85). Funds in Court: Special Rate (persons under disability) 0.5% w.e.f. NORTHERN IRISH COURTS 1.7.09 (previously 1.5% w.e.f. 1.6.09). Basic Rate (payment into court) Judgment Debts: High Court: 8% w.e.f. 19.4.93 (previously 15% w.e.f. 0.3% w.e.f. 1.7.09 (previously 1% w.e.f. 1.6.09). 2.9.85). County Court 8% w.e.f. 19.4.93 (previously 15% w.e.f. 19.5.85). Interest in Personal Injury cases: Future Earnings - none. Pain & Interest on amounts awarded in Magistrate Courts 7% w.e.f. 3.9.84. Suffering - 2%. Special Damages: same as “Special Rate” - see Funds ADMINISTRATION OF ESTATES in Court above (½ Special Rate payable from date of accident to date of judgment). England & Wales: Interest on General Legacies: 0.3% w.e.f. 1.7.09 Interest Rate on Confiscation Orders in Crown & Magistrates Courts: (previously 1% 1.6.09). Interest on Statutory Legacies: 6% w.e.f. 1.10.83 (previously 7% w.e.f. 15.9.77). same rate as applies to High Court Judgment Debts.

All rates and terms are subject to change without notice and should be checked before finalising any arrangement. No liability can be accepted for any direct or consequential loss arising from the use of, or reliance upon, this information. Readers who are not financial professionals should seek expert advice.

Data specially compiled for


the adviser’s portal

The UK’s largest provider of savings and mortgage data

Tel: 01603 476 476

Financial services


Two former directors of Cattles plc and its Welcome Financial Services subsidiary have been fined and banned from regulated financial services activities. The Financial Services Authority (FSA) fined Cattles’ former finance director James Corr £400,000 and Welcome’s finance director Peter Miller £200,000. The FSA also banned John Blake, Welcome’s managing director, and fined him £100,000. Cattles and Welcome have been publicly censured by the FSA for publishing misleading information regarding the quality of Welcome’s loan book. The named directors were found to have acted without integrity in discharging their responsibilities. Cattles was a subprime lender. The 2007 annual report stated that £0.9bn of Welcome’s £3bn loan book was in arrears, when if accounting standards had been properly applied the figure would have been £1.5bn.


Investment banks must do more to protect themselves from financial crime and to implement anti-bribery and corruption controls, the FSA says. Visits to 15 firms carried out last year found most were exposed to continuing risks. Weaknesses included failing to fully take into account rules on bribery and corruption; inadequate risk assessments; ineffective risk oversight; and failure to audit risk assessment. Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: ‘Overall, the sector has been too slow and too reactive in managing bribery and corruption risks.’

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The view from: Banking: Michelle Murphy FCCA, senior manager, retail finance operations, Lloyds Banking Group Q Describe your role. A My team are responsible for preparing all Basel and Financial Services Authority (FSA) integrated regulatory reporting disclosures for the retail division of Lloyds Banking Group. Following the acquisition of HBOS in 2009, Lloyds Banking Group, and in part the retail division, has been going through a number of integration activities, which we have successfully delivered to ensure continued production and management of all existing Basel and regulatory reportage. Q What is a typical day? A Some days can be extremely long when cyclical reporting is required by the FSA and we have extremely short turnaround times for delivery. My team must work in partnership with each of the product areas (ie mortgages, credit cards, personal loans and personal banking teams) as well as with our risk and group finance colleagues. Given the current economic challenges, increased regulatory and governmental scrutiny and competitive environment, retail banking is continually evolving. This results in a challenging but rewarding and interesting environment within which to work.

51 Financial services The view from Michelle Murphy of Lloyds Banking Group; the pros and cons of the UK moving its economy away from financial services

Q How would you advise those starting out in their careers? A Take every opportunity open to you, as it will almost always lead to something positive for the future. To date, for me, thankfully every opportunity has led onto bigger and better things.

33 Practice The view from Ben Bidnell of Shipleys; the dangers of off-the-cuff posts on Twitter; but how the online social network is vital for digital marketing

Q What would you be if you were not an accountant? A Either working abroad with endangered animals in a conservation area or in connection with biological scientific research.

39 Corporate The view from Marc Fecher of Kingston Smith; ACCA roundtable finds no retreat from outsourcing; Sir Christopher Evans and the biotech business


Location: I’m based in Bristol Staff: Total levels circa 100,000

47 Public sector The view from John Whiting of the OTS; the head of the government finance profession on why now is a good time to be working in the sector

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Financial services

Rebalancing act With the aftermath of the credit crunch causing much soul-searching, is it time for the UK to move its economy away from financial services? We weigh up the arguments Like a furnace in a busy factory stoked with fuel 24 hours a day, the debate about whether to rebalance the UK economy away from financial services and towards manufacturing rages perpetually. The recent contrast between Germany’s resilient manufacturing-based economy and the sluggishness of the UK’s servicebased economy is simply the latest phenomenon to add fuel to the fire. In the decade before the credit crunch, financial services were key to buoyant UK growth in both gross domestic product (GDP) and tax revenue. But that did not last. The government spent hundreds of billions of pounds on bailing out the banking sector, whose near-collapse created a financial panic that plunged the economy into a severe slump. Moreover, a dive in banking profits slashed tax revenue from financial services companies by 45% between 2007 and 2010, according to research by PwC for the City of London. Buffeted by these events, the government’s debt abruptly doubled in three years, to reach 85.5% of GDP in 2010. This sudden manifestation of a

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government debt crisis, caused by the malaise in financial services, has forced Whitehall to rein in spending sharply – depriving the economy of support from fiscal policy just when it is needed most. As a result, analysts predict puny economic growth at best this year. The argument for rebalancing the economy away from financial services is founded largely on the view that the credit crunch – and the slow recovery from it – has revealed an uncomfortable truth: the UK became dangerously reliant on financial services for output growth and tax revenue. Between 1997 and 2010 financial and insurance services enjoyed an increase in gross value added (GVA) – a measure of their contribution to the economy – of 135%, according to figures from the Office for National Statistics (ONS). GVA growth for the economy as a whole was little more than half that. ‘Putting all one’s eggs in one basket is a bad policy’, says Tim Page, economist at the Trades Union Congress. ‘There is a greater recognition than before that it is more prudent to encourage greater balance.’

Page’s antidote is for the government to ‘target key strategic sectors’ – creating the conditions for them to grow through measures including tax incentives and investment in flagship projects. As a successful example of the latter, he cites the French government’s 1970s patronage of the high-speed TGV rail network, which helped make the country a world leader in transport equipment by creating a market that benefited French companies.

Skillseekers Asked how the government can pick ‘key strategic sectors’, Page says Whitehall needs to ask itself, ‘Where’s the overlap between where we have the skills and expertise, and where the big export markets are going to be in the future? That’s where we want to focus.’ He sees potential in high-skilled sectors within manufacturing, such as environmental technology, which could make use of Britain’s large number of science graduates. ‘The world’s growing economies will want environmental technology’ – but Germany and Scandinavia are ahead in this field because

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their governments have, unlike Britain, singled out the sector for aid. Tony Dolphin, chief economist at the centre-left Institute for Public Policy Research, also believes in an activist government policy designed to help industries with future global growth potential to thrive. He acknowledges the need for governments not to waste money by backing lame-duck companies. ‘The whole idea of bailing out British Leyland is way in the past. But it’s justifiable to identify a part of industry that you’re good at and back it to the hilt.’ British Leyland was a bankrupt carmaker rescued through part-nationalisation in 1975. However, this view leads him to an interesting conclusion. ‘The one thing we seem to be good at is financial services. Because we’re good at it, we run a huge trade surplus in it.’ He concludes: ‘Given how slow the recovery is, it feels like shooting ourselves in the foot to say, “We don’t want to do so much of this any more, we want to switch over to manufacturing, even though there are many parts of manufacturing that we’re bad at.”’ Financial services forms a key plank of the CBI employers’ organisation’s call for a ‘rebalancing’ of the economy – away from spending fuelled by Britain’s high

consumer and government debt and towards exports and investment. ‘Financial services is a hugely important export sector, worth £47.7bn in 2011,’ says Anna Leach, CBI head of economic analysis. The organisation thinks finance is a cardinal example of a UK industry able to profit from growing demand for services among emerging economies’ expanding middle classes. ‘It’s not true to say that we have an over-reliance on financial services, or that our eggs are all in one basket,’ adds Leach. ‘There are many other sectors of equivalent size, or larger’ – including manufacturing. Its 10.0% share of GDP is higher than financial services’ 8.8% – although many analysts predict that manufacturing output is set to fall below financial services output.

Don’t play ducks and drakes The sector’s large trade surplus testifies to its international economic success. Ruth Lea, economic adviser to the Arbuthnot Banking Group and a member or the Shadow Monetary Policy Committee at the free-market Institute of Economic Affairs, says it is ‘perilous’ for the government to ‘play ducks and drakes’ with a sector that is so ‘highly respected internationally’, by consciously trying to rebalance the economy away from it. ‘Would I like to see a healthier manufacturing sector? Of course. Would I like to see subsidies towards this? Not really. That’s a case of picking winners, and how’s the government to know which industries

would do better than others?’ Her prescription for success is, rather, ‘to create the conditions so that any business can flourish, rather than to pick a particular industry’. Economists say that these conditions include low interest rates and as little red tape as possible. Lea concludes: ‘If we have a comparative advantage in financial services, if we’re good at it, that’s what we should continue to do.’ However, some analysts argue that banks’ comparative advantage is based, at least in part, on the implicit subsidy that comes from the government’s willingness to shoulder the liability of UK banks in moments of crisis. Leaving aside this indirect aid, advocates of rebalancing the UK economy are sceptical about the free-market argument that governments should get out of the way, to allow sectors with a comparative advantage to predominate through the mechanism of the free market. They point to the example used by Ha-Joon Chang, economist at Cambridge University and native of South Korea. Chang argues that if, after the Second World War, the South Korean government had not given assistance to electronics and other growth sectors of the future, it would still be relying on the two industries in which the country had a comparative advantage more than half a century ago: seaweed and fish. David Turner, journalist


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19/04/2012 12:39


Technical update

A monthly round-up of the latest developments in financial reporting, audit, tax and law FINANCIAL REPORTING IFRS 1 AMENDMENTS The International Accounting Standards Board (IASB) has issued amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, addressing the treatment of loans from governments at below-market rates of interest. The amendments are mandatory for periods beginning on or after 1 January 2013 and provide first-time adopters with relief from full retrospective application of IFRS in respect of such loans. Earlier application is permitted. MICRO-ENTITY REPORTING The UK Financial Reporting Council (FRC) and the Department for Business, Innovation and Skills (BIS) have recently released a joint press release regarding their project to simplify financial reporting for very small businesses – so called micro-entities. The update is a response both to the feedback received in relation to the discussion paper jointly published by the FRC and BIS last year, and to the recent European Council (EC) agreement regarding accounting requirements for micro-entities. BIS has stated that, in principle, the government intends to take advantage of the option now available to member states under the revised EC arrangements, and will consult on implementation in due course. The responses to the discussion paper will now be used to help

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inform how the financial reporting regime for the smallest companies can be made less burdensome and more informative.

AUDITING REVISED ISA 610 The International Auditing and Assurance Standards Board (IAASB) has issued a revised version of ISA 610, Using the Work of Internal Auditors. This addresses the responsibilities of external auditors when using the work of internal auditors. Revisions have also been made to ISA 315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment, to explain how the internal audit function and its findings can assist in making risk assessments. The revised standards are effective for audits of periods ending on or after 15 December 2013. In revising ISA 610, the IAASB has also agreed requirements and guidance on the responsibilities of external auditors where they intend to use internal auditors to assist them during the audit. The IAASB has been liaising closely with the International Ethics Standards Board for Accountants (IESBA) and will only incorporate the further changes into ISA 610 when the IESBA has completed its deliberations on proposals to change the definition of engagement team.

The change in definition will address a perceived inconsistency in respect of the ability of external auditors to use a client’s internal auditors. REVISED ISRS 4410 Many entities rely on their accountants to assist them in preparing their financial statements. The IAASB has issued a revised version of International Standard on Related Services (ISRS) 4410, Compilation Engagements, which addresses the practitioner’s role and responsibilities, including the considerations prior to accepting an engagement and the importance of quality control. The wording of the compilation report is also expanded to clarify the role of the practitioner and explain the key features of a compilation engagement. The revised standard is effective for compilation reports dated on or after 1 July 2013. WITHDRAWAL OF DOCUMENTS The Auditing Practices Board (APB) has announced the withdrawal of the following documents: Practice Note 14, The Audit of Registered Social Landlords in the United Kingdom (Revised), issued in March 2006. Practice Note 27, The Audit of Credit Unions in the United Kingdom issued in January 2009. APB Statement of Standards for Reporting

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Accountants Applicable to Small (Charitable) Companies, issued in February 2009. Bulletin 1997/3, The FRSSE: Guidance for auditors. Bulletin 2000/3, Departures from Statements of Recommended Practice for the Preparation of Financial Statements: Guidance for auditors. Bulletin 2001/1, The Electronic Publication of Auditor’s Reports. Bulletin 2002/2, The United Kingdom Directors’ Remuneration Report Regulations 2002. Bulletin 2002/3, Guidance for Reporting Accountants of Stakeholder Pension Schemes in the United Kingdom. Bulletin 2005/3, Guidance for Auditors on First-time Application of IFRSs in the United Kingdom. The various documents have been withdrawn either because they have been superseded, they are no longer relevant or because the references to auditing standards, law and regulations are outdated.

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PROFESSIONAL SCEPTICISM The APB has issued a paper that sets out its views on the nature of professional scepticism and its role in auditing. It builds on a previous paper published in 2010, Auditor Scepticism: Raising the Bar and the subsequent feedback paper. The paper is designed to provoke new thinking and

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broaden the understanding of the need for, and meaning of, scepticism in the context of auditing. LATEST CHARITIES GUIDANCE The APB has published an update to Practice Note 11 (Revised), The Audit of Charities in the UK, and a related update to the illustrative charity auditor reports in Bulletin 2010/2 (Revised), Compendium of Illustrative Auditor’s Reports on United Kingdom Private Sector Financial Statements ended on or after 15 December 2010. These updates have been made to incorporate new legislative references to the Charities Act 2011. The amendments do not require any changes to audit processes and procedures. The APB has also: Updated the guidance for legislative changes in Scotland and Northern Ireland. Revised the wording in some charity audit reports.

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Yvonne Lang, director, and Kern Roberts, associate director, Smith & Williamson, www.

TAX FINANCE BILL (NO 4) In the 2012 Budget, the chancellor challenged business to invest and export in order to build the economy. In return, he set out the actions the government will take in order to help

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build the appropriate environment. It will provide: A stable economy. A fairer, more efficient and simple tax system. Reforms to support growth. So has business received the help it needs? The Finance Bill runs to 227 clauses and 38 schedules, and business has been promised a number of consultations on key areas. The clauses and schedules detail: Basic information like the tax rate changes. Support for business, including patents, research and development and real estate investment trusts. Three enterprise initiatives – Seed Enterprise Investment Scheme (SEIS), venture capital trusts and the Enterprise Investment Scheme (see more on page 58). These are useful changes to help encourage further investment in business. For example, the SEIS provisions provide that

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the investment relief is a reduction of income tax calculated as 50% of the amount the investor subscribes for shares. This is subject to an overall limit of 50% of £100,000 on the amount of relief that can be received in any one year. The changes to capital allowances. Schedule 48 highlights employer asset-backed pension contribution changes, which apply retrospectively and have been highlighted in earlier issues of Accounting and Business. There are highly significant changes impacting on property businesses and transactions in property. For more details on the changes, go to www2. The progress of the bill can be followed at http://services.parliament. uk/bills/2010-12/ financeno4.html Explanatory notes can be found at

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* explanatory_notes.pdf ARBITRATION SERVICE HM Revenue & Customs’ alternative dispute resolution (ADR) service seems to be one of its best kept secrets. There is no doubt that arbitration is a good, well recognised and valuable form of dispute resolution. While there were initially some doubts about the independence of the service, the practitioners who have used ADR say it works well. If you have dismissed ADR, it might be worth another look. As highlighted last month, HMRC states that ADR provides ‘small and medium enterprise customers with an alternative way of resolving tax disputes in compliance checks’. It covers VAT and direct taxes and doesn’t affect the taxpayers’ review and appeal rights. It works by involving an ‘independent person from HMRC (a “facilitator”)’, who will to try to broker an agreement between the taxpayer and HMRC officer.

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Technical update

The aim of ADR is to resolve tax disputes quickly and efficiently. Suitable cases for HMRC’s ADR pilot can be found at adr/appendix-a.pdf Please let use know if you have used the service and how you found the process. Email advisory@ REAL TIME INFORMATION HMRC’s Employer and Agent Strategy Team has provided updates on payroll cleansing in advance of Real Time Information (RTI), FAQs on RTI and legislative links on RTI. The team provides informal highlights as a result of listening to employer feedback and working in partnership with stakeholders. The recent updates are not a surprise as we are now one year’s payroll away from RTI. There is some concern over payroll data and whether it will be correctly picked up. HMRC is asking employers to make sure the data they hold and provide is correct. They highlight in the support documentation

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that ‘before joining RTI, employers and pension providers will need to go through a payroll alignment process to help ensure that information on their payroll can be matched efficiently to the correct individual record. Improving data quality is important preparation for a successful transition to RTI’. View the support material at get-payroll-right.htm As ACCA has previously highlighted, you should ask your payroll software provider if they are ready for the changes and also make sure that there are no changes in the information that you will need to provide them with. The FAQs have been updated with a number of new questions. These include RTI and BACS, pension providers, student loans and individual employees. The FAQs can be found at rti/employerfaqs.htm ENGAGEMENT LETTERS You can find an update and details of the revised

ACCA engagement letters at www2.accaglobal. com/uk/members/ technical/practice/ practice_management/ accapractice_tools/acca_ res/engagement_letters, including how to obtain them. The letters cover client management, terms and conditions, audit, non-audit, taxation and other services, for example, management accounts preparation, forecasts and payroll services. They also include pro forma policies. CAMPAIGNS As highlighted last month, HMRC is continuing with its targeted tax campaigns. The e-market campaign was launched on 14 March and is aimed at ‘people who are trading online to sell goods and services as a trade or as a business but aren’t paying the right amount of tax’. The disclosure opportunity closes on 14 June. As highlighted last month, consideration of whether someone is in business is not straightforward and

HMRC has recognised this. When considering if an individual is operating as a business you may wish to consider the badges of trade information at tax_badgesoftrade Electricians taking advantage of the Electricians’ Tax Safe Plan only need to tell HMRC that they will be making a disclosure by 15 May. They will then need to have made a full disclosure and paid tax, interest and penalties by 14 August. PHOTO BOOKS HMRC Brief 4/12 highlights the First-tier Tribunal decision reached in the case of Harrier PLC. The decision highlights that HMRC accepts that a photo book will be zerorated unless ‘the photo book’s pages have the appearance and quality of individual photographic prints; or the photo book that is held out for sale is capable of being dismantled, with individual pages that are removable or where individual pages can be easily removed without damaging the binding (for example, spiral binding)’. For more information, go to vat/brief0412.htm TOOLKITS The Expenses and Benefits from Employment Toolkit and the National Insurance Contributions and Statutory Payments Toolkit have been updated and can be used for 2011–12 tax returns.

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For more, go to www.hmrc. CONSULTATIONS The Gift Aid Small Donations Scheme consultation is open for comment until 25 May. The consultation proposes that charities and community amateur sports clubs will be able to claim a top-up payment equivalent to Gift Aid on small cash donations collected in the UK. It is proposed that this could be up to £5,000 each year. A small donation is one that is £20 or less. The consultation on a simpler tax system for small businesses is open for comment until 22 June. It proposes that small business will be ‘taxed on the basis of the cash that passes through their books’. It proposes that businesses will not be able to use the cash basis if they are: Small businesses with receipts of more than £150,000 in any year. Property businesses. Farming businesses. Registered for VAT but not using the VAT Cash Accounting Scheme. Subject to corporation tax, including limited liability partnerships. Financial trading businesses. Individuals who are members of Lloyds and who are carrying on underwriting business as defined by section 184(1) of the Finance Act 1993. The consultation on the Above the Line (ATL) Research and Development

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credit is open for comment until 22 June. It proposes that businesses would be eligible to claim for ATL credit for accounting periods beginning after April 2013. It seeks views on the credit’s design and sets out proposals on how it could be implemented. You can find the above consultations plus other others on possible changes to income tax rules on interest, proposed changes to tax rules on manufactured payments and the real estate investment trust consultation at http:// and www. fullindex.htm

LAW CHARITY COMMISSION The Charity Commission is calling for charities to better protect themselves against fraud and financial crime. This is in response to the National Fraud Authority’s report ( uk/about-us). The Annual Fraud Indicator shows that charities estimate that they lose 1.7% of their annual income to fraud, most commonly payment fraud, fraud by employees or volunteers and cyber fraud. The commission has published its new strategy for dealing with fraud, financial crime and financial abuse at uk/our_regulatory_activity/ our_approach/protecting_ fraud.aspx It states that the ‘aim of the strategy is to prevent

problems from occurring in the first place by alerting charities to the risks of fraud and financial crime and by providing online guidance to help them to manage these risks’. The commission also has a toolkit to help charities manage the risk of fraud. The fraud and financial crime chapter can be found at www.charitycommission. activity/counter_terrorism_ work/compliance_toolkit_ index_3.aspx

support is * What available?

PENSION REFORM All businesses with one employee or more will soon be required to automatically enrol eligible jobholders into a pension scheme and contribute to that individual’s pension. In an ACCA vodcast, Susannah Hines, customer propositions manager from The Pensions Regulator talks to Glenn Collins, head of technical advisory at ACCA UK, answering questions on workplace pension reform, what it means for businesses and what needs to be considered. She provides answers to the following questions: What is auto-enrolment? What are the new timeframes? What is it that employers actually have to do? How do employers identify whether a staff member is eligible for auto-enrolment? Who is responsible for registration and are there penalties for nonregistration?


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EXPORT ADVICE As highlighted last month, if you want to know more about how to prepare your business for exports, take a look at our export vodcast. In it David Smith, a lecturer and business consultant, answers questions on achieving business growth and the challenges of the export market. He provides practical advice and answers questions that include: Why would a business want to consider exporting when it hasn’t done so before? How easy is it to consider exporting? What should a company do before starting to export? What business models are available to conduct export business? Where should a company consider exporting to? How should a company go about exporting? What are the big risks and pitfalls for a new exporter? What help is available to an inexperienced exporter? Both vodcasts can be viewed at www2.accaglobal. com/uk/members/ publications/podcasts and you can also find additional guidance at members/technical/ advice_support

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Glenn Collins, head of technical advisory, ACCA UK

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Technical update

Help at hand

ACCA launches new kitemark scheme to help businesses find finance advisers ACCA and other professional bodies, in association with the Department for Business, Innovation and Skills, are launching a new service to enable businesses to identify members in practice who provide independent advice on business finance. The Business Finance Advice service will ensure smaller businesses have access to a wide choice of ‘kitemarked’ advisers across the UK on a whole range of business finance options. The aim of the service, due to go live in January, is to help educate businesses so that they are equipped to ask the right questions when it comes to accessing appropriate finance. Accountancy firms will in turn be encouraged to offer a broader range of services to smaller business clients.

services provided, the history of the business, details of the management team, the business operations and the amount and intended use of the finance required, including exit opportunities for investors.

What you will be able to offer

This generally covers raising finance from an outside investor, without making a public offering. This might entail raising equity from investors, such as business angels or venture capitalists. It will also include consideration of the Seed Enterprise Investment Scheme, Enterprise Investment Scheme and venture capital trusts.

To join this free scheme, all ACCA members in practice are required to complete an opt-in form covering four specialisations. These are briefly described below and further details and the opt-in form will be available soon. If you have any comments or questions about the scheme or would like to be informed when the opt-in form is available, email

Business plans This covers the review and preparation of a business plan from the starting point, establishing its purpose, how it will develop and who its target audience is, through the journey of its uses. A business plan should: Consider the most appropriate forms of finance for the business. Consider the growth and changing finance options during the life of the business. Help secure finance. Provide details of the business’s objectives. Be a benchmark for the future. Be a window on how the business is managed. Focus on the business’s objectives. Test if the business or a new income stream is viable. Test if a new market is viable. Improve the business and help identify inefficiencies. Give a business the best possible chance to succeed. Consequently the plan will need regular updates and will be very comprehensive, including details of markets served by the business, such as export markets, the products or

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Business startups This covers the requirements of a startup and considers the most appropriate forms of finance. It would include personal funding of a new business that may come from any assets that the entrepreneur has, including personal savings, money released from personal assets or from the entrepreneur remortgaging their home. It also includes finance from friends and family.

Small-scale equity issues

Bank loans and overdrafts This covers the funding options available and how applications for loans and overdrafts should be structured; the security; if any, that might be required from the applicant; and the likelihood of success of an application given the borrower’s track record. Consideration of the appropriateness of business support options, such as the National Loan Guarantee Scheme and Enterprise Finance Guarantee, is also a requirement.

ACCA and Barclays have used their combined expertise to pull together information for entrepreneurs who want the right finance for their business. The finance ‘journey’ can be found at The journey looks at finance options, how to match the options to different business types, how to write a good business plan and the application for finance.

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Accounting solutions This month PwC authors answer two questions on accounting for joint ventures under IAS 31, IAS 38, SIC 13 interpretative guidance, and IFRS 11


Entity A, a mid-size luxury goods manufacturing company, needs funding to market one of its key brands globally that it has been selling on the local market for many years. Entity A enters into a joint venture agreement with a multinational distribution company, Entity B. At the inception of the joint venture entity (Entity JV), Entity A contributes its key brand in exchange for 60% of Entity JV’s share capital, and Entity B contributes cash for 40%. An independent valuation arrived at a fair market value of C1,500 for Entity A’s brand. Entity B therefore contributed C1,000 to the joint venture. The shareholdings are unequal, but both Entity A and B need to agree strategic financial and operating decisions unanimously. Entity JV therefore qualifies as a joint venture – to be precise, a jointly controlled entity – under IAS 31, Interests in Joint Ventures. How should Entity A and Entity B account for the transaction, assuming that both entities apply the equity method of accounting for jointly controlled entities? The initial cost of investment in Entity B’s books is a straightforward C1,000. But the accounting in Entity A’s books is more complex. As the brand was developed internally, it is likely to have little or no carrying value on Entity A’s balance sheet. But when ownership of the brand passes from Entity A to Entity JV, it would meet the definition of an intangible asset under IAS 38, Intangible Assets, so it should be initially recorded



in the joint venture’s books at cost. In this case, ‘cost’ would be equivalent to the fair value of the shares issued by Entity JV – that is, C1,500.


At inception, Entity JV therefore has net assets of C2,500. Applying the equity accounting method in its consolidated accounts, Entity A will recognise its

PwC’s practical guide to applying IAS 34, Interim Financial Reporting, is out this month, updated to reflect standards effective for 2012 year ends. It provides comprehensive guidance on IAS 34, an illustrative set of condensed interim financial information for a fictional existing IFRS preparer and a disclosure checklist. Copies of Manual of accounting – interim financial reporting 2012 are available to order from

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share of net assets as being C1,500. But, as the brand Entity A contributed had no value on its balance sheet, would this simply result in a ‘gain’ of C1,500 by forming a joint venture? The answer is ‘not quite’. The interpretative guidance in SIC 13, Jointly Controlled Entities – Non-monetary Contributions by Venturers, only permits recognition of such gains up to the level of the equity interest held by other venturers – in other words, Entity A cannot recognise the unrealised gain on the 60% of the brand, which it effectively still owns through its stake in the joint venture. Under the equity method of accounting, the unrealised part of the gain is removed from the income statement and is instead eliminated against the investment in Entity JV. So at the inception of the joint venture, Entity A will recognise the investment at C600 – that is, C1,500 less the unrealised gain of C900 (C1,500 x 60%). IFRS 11, Joint Arrangements, applies to financial years beginning on or after 1 January 2013. Both entities A and B should re-assess under the new guidance whether their involvement in the joint arrangement would give them the right to Entity JV’s net assets or rights to individual assets and obligations to liabilities. Assuming they conclude that the joint arrangement gives them right to net assets, the accounting would be the same as described above. This is because both entities would continue to apply the equity method of accounting, and the recognition of the unrealised gain would still be prohibited. This month’s solutions were compiled by Imre Guba and Iain Selfridge of PwC’s Accounting Consulting Services

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Bin the clutter Clutter in annual reports obscures relevant information and makes it harder for users to identify the key points about a business’s performance, says Graham Holt

The effects of clutter have typically come in for little consideration by the preparers of annual reports, but the phenomenon is increasingly under discussion, with initiatives recently launched to combat it. The Financial Reporting Council (FRC) in the UK is one organisation that has called for a reduction in clutter in annual reports. And the International Accounting Standards Board (IASB) commissioned the Institute of Chartered Accountants in Scotland (ICAS) and the New Zealand Institute of Chartered Accountants (NZICA) to make cuts to the disclosures required by a group of International Financial Reporting Standards (IFRSs), and to produce a report. Clutter in annual reports can be a problem for users. It obscures relevant information and makes it more difficult for users to find the key points about the performance of the business and its prospects for long-term success. The main observations of a discussion paper, called Cutting Clutter, that was published by the FRC were: There is substantial scope for segregating standing data in a separate section of the annual report (an appendix) or putting it on the company’s website. Immaterial disclosures are unhelpful and should not be provided.

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barriers to reducing clutter are * The mainly behavioural. should be continued debate * There about what materiality means from a disclosure perspective. It is important for the efficient operation of the capital markets that annual reports do not contain unnecessary information. It is equally important that useful information is presented in a coherent way so that users can find what they are looking for and gain an understanding of the company’s business and the opportunities, risks and constraints that it faces. However, a company must treat all its shareholders equally in its provision of information. It is for each shareholder to decide whether to make use of that information. It is not for a company to pre-empt a shareholder’s rights by withholding information.

Too many rules? A significant cause of clutter in annual reports is the vast array of requirements imposed by laws, regulations and financial reporting standards. Regulators and standard setters have a key role to play in cutting clutter both by cutting the requirements they themselves already impose and by not imposing unnecessary new disclosures. A listed company may have

to comply with listing rules, company law, IFRS, the corporate governance codes and (if it has an overseas listing) any local requirements, such as those of the Securities and Exchange Commission (SEC) in the US. A major source of clutter is that different parties require differing disclosures for the same matter. For example, an international bank in the UK may have to disclose credit risk under IFRS 7, Financial Instruments: Disclosures, the Companies Acts, the Financial Services Authority’s disclosure and transparency rules, the SEC rules and Industry Guide 3 as well as the requirements of Basel II’s pillar 3. One problem is that different regulators have different audiences in mind for the requirements they impose. Their attempts to reach more actual or potential users can lead to a loss of focus and structure in reports. There may be a need for a proportionate approach to the disclosure requirements for small and mid-cap quoted companies that take account of the needs of their investors, as distinct from those of larger companies. This may be achieved by different means. For example, a principles-based approach to disclosures in IFRS, specific derogations from requirements in individual IFRSs or the creation of an

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adapted local version of IFRS for SMEs. Time and cost pressures can lead to defensive reporting by smaller entities and to a preference for easy options, such as repeating material from a previous year, cutting and pasting from the annual reports of other companies and including disclosures that are of marginal importance only.

a tendency for companies to repeat disclosures simply because they were in the annual report last year. However, while explanatory information may not change from year to year its inclusion remains necessary to an understanding of aspects of the report. There is merit in a reader of an annual report being able to find all of

TIME AND COST PRESSURES CAN LEAD TO DEFENSIVE REPORTING AND A PREFERENCE FOR EASY OPTIONS, SUCH AS REPEATING MATERIAL Behavioural barriers There are behavioural barriers to reducing clutter. The threat of criticism or litigation is one. The risk of future litigation may outweigh any benefits from eliminating catch-all disclosures. As a result, preparers of annual reports are likely to err on the side of caution and include more detailed disclosures than strictly necessary to avoid challenge from auditors and regulators. Removing disclosures is seen as creating a risk of adverse comment and regulatory challenge. Disclosure is the safest option and therefore often the default position. Preparers and auditors may be reluctant to change this unless the risk of regulatory challenge is reduced. There is also

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this information in one place. If the reader of a hard copy report has to go to a website to gain a full understanding of a particular point, it heightens the risk of making the report less accessible. And even if the standing information is kept in the same document but relegated to an appendix, that may not be the best place to facilitate a quick understanding of a point. A new reader may be disadvantaged by having to hunt in the small print for what remains key to a full understanding of the report. Preparers wish to present balanced and sufficiently informative disclosures and may be unwilling to separate out relevant information in an arbitrary


manner. The suggestion of relegating all information to a website assumes that all users of annual reports have access to the internet, which may not be the case. A single report may best serve the investor, by putting all the information in one reference document rather than scattering it across a number of delivery points. Yet shareholders are increasingly unhappy with the substantial lengthening of reports in recent years. This has not resulted in more or better information but more confusion as to the reason for the disclosure. A review of companies’ published accounts will show that large sections such as the statement of directors’ responsibilities and the audit committee report are almost identical. Materiality should be seen as the driving force of disclosure, as its very definition is based on whether an omission or misstatement could influence the decisions made by users of the financial statements. The assessment of what is material can be highly judgmental and can vary from user to user. One problem may be that disclosures are being made because a disclosure checklist suggests they may need to be made, without assessing whether disclosure is necessary in a company’s particular circumstances. However, the whole point of such

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checklists is to include all possible disclosures that could be material. Most users of these tools will be aware that the disclosure requirements apply only to material items, but often this is not stated explicitly for users. One of the biggest challenges is the changing audience for the annual

make this problem worse but, in a wellorganised report, users will be able to bypass much of the information they consider unimportant especially if the report is online. It is not the length of the disclosure of accounting policies that is itself problematic, but the fact that new or amended policies can be

IN A WELL-ORGANISED REPORT, USERS WILL BE ABLE TO BYPASS MUCH OF THE INFORMATION THEY CONSIDER UNIMPORTANT report. Its original purpose was to report to shareholders, but preparers now have to consider many other stakeholders including employees, unions, environmentalists, suppliers, customers, etc. The disclosures required to meet the needs of this wider audience have contributed to the increased volume of disclosure. The growth of previous initiatives on going concern, sustainability, risk, the business model and others identified by regulators as key has also expanded the size of the annual report.

Big but perfectly formed It is not necessarily the length of the report that is the problem but the way in which it is organised. The inclusion of immaterial disclosures will usually

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obscured in a long note running over several pages. A further problem is that accounting policy disclosure is often boilerplate, and provides little detail of how companies apply their general policies to particular transactions. IFRS requires disclosure of ‘significant accounting policies’. In other words, it does not require disclosure of insignificant or immaterial accounting policies. Omissions in financial statements are material only if they could, individually or collectively, influence the economic decisions that users make. In many cases, they would not. Of far greater importance is the disclosure of the judgments made in selecting the accounting policies, especially where a choice is available.

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A reassessment of the whole model will take time and may entail changes to law and other requirements. For example, clutter could be removed by not requiring the disclosure of IFRS in issue but not yet effective. Currently, disclosure seems to involve listing each new standard in existence and each amendment to a standard, including separately all those included in the annual improvements project, regardless of whether there is any impact on the entity. The note is then a list without any apparent relevance. The IASB has asked for comment on its forward agenda in which it acknowledges that stakeholders have said that disclosure requirements are too voluminous and not always focused in the right areas. However, the drive by the IASB has been to increase disclosure to address comparability between companies. Therefore, in the short to medium term, a reduction in the volume of accounting disclosures does not look feasible, although the IASB will be considering this area for its post-2012 agenda. Graham Holt is an examiner for ACCA, and associate dean and head of the accounting, finance and economics department at Manchester Metropolitan University Business School

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Finance Bill 2012 ACCA’s Mirela Dewshi and Mary Fraser review enterprise initiatives in the Finance Bill 2012, introduced by the government to encourage investment and growth

The chancellor has challenged business. He has challenged it to invest, to export and to build the economy. In return, he has set out the further actions the government will take in order to help to build the appropriate environment. This includes reforms to support growth. The Finance (No 4) Bill includes three enterprise initiatives to encourage growth by investment in business. The first, the Seed Enterprise Investment Scheme, is aimed at small business startups and is, on the face of it, the most generous, as it is aimed at the riskiest investments. Changes have been made to the Enterprise Investment Scheme (EIS) and the Venture Capital Scheme to increase some limits, simplify the scheme rules and give further incentive to invest.

Seed Enterprise Investment Schemes Schedule 6 of the Finance (No 4) Bill 2012 introduces Seed Enterprise Investment Schemes (SEIS) into UK tax provisions from 6 April 2012. These provisions are there to run alongside the EIS and the Venture Capital Trust (VCT) regimes and are presented as amendments to the Income Tax Act 2007. Unless otherwise specified, references are to the proposed legislation as amended. The scheme relates to shares issued from 6 April 2012 until 5 April 2017, but this term may be extended. It is

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available to individual investors in small companies, but not to investors in partnerships or LLPs (section 257AA). The investment limit for a qualifying individual in a fiscal year is £100,000 (section 257AB). However, the investor cannot claim tax relief until the company has spent at least 70% of the money invested (section 257CC). The individual must not be an employee of

are not held for the requisite period or if the company ceases to meet the trading requirement (section 257DB). The relief is income tax relief of 50% (section 257AB) and any gain will be exempt (sections 257AE and 150E TCGA 1992), provided the investor (or spouse or civil partner) held the shares for the three years following the issue (section 257AC). Where a spouse or

AN INDIVIDUAL WILL RECEIVE TAX RELIEF ON THEIR INCOME TAX COMPUTATION WHEN SUBSCRIBING FOR SHARES IN A QUALIFYING EIS COMPANY the company from the date of its incorporation until at least three years following the issue of the shares. A director is not an employee for this purpose (section 257BA). The investor must not have a ‘substantial interest’ (more than 30% of the ordinary share capital or votes (section 257BF and 257BB), and anti-avoidance provisions counter prearranged exits or loan arrangements (section 257BC, 257BE and 257CD). Investment must be in cash and must be invested in shares which are fully paid when issued (section 257CA). The shares cannot carry a preferential right to dividends, assets on a winding up, or redemption (section 257BB). They must be held by the investor for three years after the issue. There will be a clawback of relief if the shares

civil partner receives the shares from the original investor, it is the recipient who will be charged to tax on any clawback on a disposal (section 257H). Relief under Schedule 5BB of TCGA is available for reinvesting the proceeds of assets that would otherwise give rise to a chargeable gain (section 257AE). To obtain the relief: The company must be new, incorporated within the two years prior to the issue of the shares. The shares must be issued to raise money for a new trade and the cash raised must be spent within the two years following issue (section 257HF). The total of SEIS investments must not exceed £150,000. The company must exist for the purpose of carrying on one or two new qualifying trades (section 257DC).

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must have a permanent * Itestablishment in the UK and its shares must be unquoted (section 257DD and 257DF). The company must not be a member of a partnership or similar entity (section 257DH and 257DM). The total value of the company’s gross assets must not exceed £200,000 at the time of issue. The relevant proportion of the assets of a related company must be included in this total (section 257DI). The total full-time equivalent employees must not exceed 25 at the time of issue; employees include directors for this purpose (section 257DJ). There must be no EIS or VCT investment in the company before the SEIS shares are issued (section 257DK). The relief must be claimed and the individual must receive a compliance certificate from the issuing company (section 257ED). The company cannot issue the certificate until it has spent at least 70% of the cash for the purposes of the qualifying activity (section 257CC). Insignificant amounts unspent are ignored. The company also needs authority from HMRC before it can issue the certificate. To do this it must give a compliance certificate under threat of penalties for fraudulent certificates or claims (section 257EC, 257ED and 257EF).

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The claim must be made within five years of the normal self-assessment filing date (section 257EA).

Enterprise Investment Scheme and Venture Capital Trust In the Budget the chancellor announced amendments to the EIS and VCT rules to help companies which face barriers in raising external equity finance to compete for finance, making it easier for these companies to grow. Schedule 7 of the Finance (No 4) Bill 2012 contains the changes to the

The scheme provides tax relief where an individual subscribes for new shares in a qualifying company. The relevant shares must be issued for genuine commercial reasons, and not as part of a scheme or arrangement the main purpose of which is the avoidance of tax. The company must not guarantee the investor any sort of return on their investment. There must not be any prearranged exits. A qualifying EIS company is an unquoted trading company carrying on its activities mainly in the UK.

THE CHANCELLOR ANNOUNCED A NUMBER OF AMENDMENTS TO THE EIS AND VCT RULES TO HELP COMPANIES RAISE EXTERNAL EQUITY FINANCE Enterprise Investment Scheme, and Schedule 8 the amendments to Venture Capital Trusts. When subscribing to shares in a qualifying EIS company, an individual will receive tax relief in their income tax computation. From 6 April 2012 income tax relief is given as a tax reducer at a flat rate of 30% (20% prior 6 April 2012) on the lower of the amount subscribed or £1,000,000 (previously £500,000). The tax liability can be reduced to nil by EIS relief, but cannot create a negative figure for the tax liability. Significant changes to EIS surround the criteria for a qualifying company.

There are certain prohibited or excluded trades for EIS purposes. Some of these activities are banking, insurance and other financial activities, legal and accountancy services, farming and market gardening, managing hotels, managing nursing or residential care homes and property development. The comprehensive list can be found in sections 192–200, Income Tax Act 2007. The EIS rules place a limit on the value of the assets of the company. From 6 April 2012 the gross assets of the company must not exceed £15m (section 11a), previously £7m, before the share issue and must not

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You can read more about the schemes at

exceed £16m (section 11b), previously, £8m, after the share issue. The full-time employee limits qualifying condition for companies and groups have been increased from 50 to 250 from 6 April 2012. The maximum amount raised through EIS has increased by £3m and from 6 April must not exceed £5m per annum. The company must use 90% of the cash raised from the issue of EIS eligible shares within 12 months and the remainder within 24 months, for trading purposes. To obtain income tax relief, the investor must not be connected with the issuing company. An investor is connected to the company if they are an employee or a partner of the company. An investor can be a director of the company as long as they receive only reasonable remuneration for their services. An investor is also connected to the issuing company if they directly or indirectly possess or are entitled to acquire more than 30% of the ordinary share capital or they can exercise more than 30% of the voting rights. In considering whether the 30% limit has been breached, the shareholdings of spouse, parents, siblings and children must also be considered. There will be a clawback of the income tax relief originally given if an investor disposes of their shares within three years of issue.

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If the shares are sold within three years, to an unconnected third party, the income tax relief to be withdrawn is the sale proceeds multiplied by the rate at which tax relief was originally given. The clawback cannot exceed the original tax reducer. So if the shares are sold at a profit, the investor tax liability is increased by an amount equal to the original tax reducer. The increase is in the year in which the shares are disposed of.

Venture Capital Trust If an individual subscribes for shares in a VCT, a 30% tax reducer is given on the lower of the amount subscribed or £200,000. As with EIS investments, the tax reducer is limited to the individual’s tax liability. A VCT is actually a company whose shares are quoted on a stock exchange. The company must ensure that at least 70% of its investments are in shares in qualifying companies. A qualifying company meets similar criteria to EIS qualifying companies. As with EIS there are restrictions with regard to trade, number of employees, company assets limit before and after the investment, as well as a maximum amount raised in a year through the issue of shares qualifying for VCT. The bill includes increases for employee numbers (section 9), company asset limits (section 8) and

amounts raised in the year (section 2) that apply from 6 April 2012 and mirror the EIS limits. A VCT cannot invest more than 15% of its funds in any one company. So from an investor point of view, an investment in VCT is less risky than an investment in an EIS. As a VCT invests its funds in a number of different companies, the investor is spreading the risk over a number of companies. An important difference from EIS is that dividends on the first £200,000 invested in VCTs in the tax year are tax free. Also a VCT company must distribute at least 85% of the income which it derives from its investments. There is a withdrawal of income tax relief if an investor disposes of their shares in the VCT within five years. Income tax relief will also be withdrawn if the VCT loses its HMRCapproved status within five years. If VCT shares are sold at a profit, the gain is exempt from tax, regardless of the length of ownership. Any losses on a sale of VCT shares will never be allowable. However, the above exemption only applies to the first £200,000 of shares acquired in the year. If a VCT loses HMRC approval, the investor is treated as disposing their shares at the market value on the day approval is withdrawn. Mirela Dewshi, technical adviser, and Mary Fraser, technical consultant, ACCA

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Weighing up your options This month Dr Tony Grundy demonstrates how to get the most out of strategic thinking by creating and evaluating strategic options for the business

The third in this series of five articles examines a crucial phase of the strategy development process: generating and evaluating strategic options (defined as alternative strategies in the first article in this series). This follows on from the more analytical tools explored in the second article, and entails a great deal of strategic thinking.

As many legs as you like Few systematic models exist for generating strategic options. Igor Ansoff created a very simple but rather limited grid (the Ansoff matrix) which displays existing products versus new products along one axis, and existing versus new markets along the other. To go beyond that I have created a more powerful method that accommodates far more than just two variables or ‘degrees of freedom’. I call it an ‘optopus’ as it has eight variables (although in practice you can have as many or as few variables as you want) ranged around and linked to a central circle that lists the options created by those variables. The eight variables are: value creation: the different ways in which your product adds value for the customer value delivery: the technologies, media and distribution to take the product to market alliance: different partners and different types of alliances, doing different things acquisition: different types and different targets to do different things divestment or outsourcing geography: national, regional, global market sectors customer segments.

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The strategic option grid Criteria

Option 1

Option 2

Option 3

Option 4

Strategic attractiveness Financial attractiveness* Implementation difficulty Uncertainty and risk Acceptability (to stakeholders) Attractiveness score: 3=high 2=medium 1=low benefits less costs – net cashflows relative to investment


These variables can be refined or added to – for example, brand and pricing options could be included. Let’s explore the potential of the optopus through the Virgin Galactic. Essentially, the idea behind Galactic was to develop a technology capable of delivering paying passengers into space for a suborbital flight. Travelling at a height of around 50 miles above the Earth these passengers would then see the planet from a distance in all its glory and in a state of weightlessness at a ‘budget’ price of $200,000. The reusable spacecraft would be so light (and could fold its wings to create extra drag) that it could dispense with a heavy heat shield to prevent it burning up on re-entering the atmosphere. And with a fin to act as a sail, it wouldn’t need so much fuel.

I visited Virgin Galactic’s HQ in 2008, taking with me around 90 strategic business ideas generated from the optopus, including: market sectors: corporates (eg acquisition deal meetings), governments (eg to promote ecological awareness) customer segments: business millionaires (by industry), celebrities/wives (footballers/pop stars, etc), the not-so-rich (by sponsorship or lottery), groups of friends value-creating activities: astronauts club/season ticket holders, as a present (a very big one!), differential pricing (premiums seats/service), two or three flights at once, 50-mile-high club, weddings value delivery: TV channels (eg

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celebrity knock-out programme in space), alliances, NASA divestment/outsourcing: different aeroplane manufacturers geography: by customer (eg US, Europe, Middle East, Japan, China), by flight anywhere subject to launch sites (world network). On the basis of these ideas, Galactic certainly has potential for being a global business. The ‘so what?’ arising from this analysis is the sheer richness of opportunities that the technique reveals within the Virgin Galactic context. It appears far more effective than brainstorming.

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Discussion of the criteria and scores should not be abstract but as specific as possible. Each criterion is scored for attractiveness: very attractive gains three ticks, moderately attractive two ticks, not very attractive one tick; half-ticks can also be allocated (for example, a high ‘implementation difficulty’ and ‘uncertainty and risk’ might muster one tick combined). The strategic option grid can be used for many options including market development, product/services, new technology, sourcing, acquisitions, divestment and alliances. The grid is effective for a number of reasons. Visually it has columns for

STRATEGIC OPTIONS THAT AMASS FEWER THAN FIVE TICKS ALTOGETHER IN THE GRID SHOULDN’T BE TOUCHED WITH A BARGEPOLE Strategic option grid Once the optopus has been created, it is time to do the option evaluation with the help of the strategic option grid shown opposite. The grid has the following five key criteria: strategic attractiveness: the external market attractiveness (based on market growth, Porter’s five forces and perhaps PEST analysis) and the relative competitive position financial attractiveness: the long and short term returns implementation difficulty: the sum of difficulty over time to achieve the strategic goals uncertainty and risk: the volatility of the key assumptions stakeholder acceptability: the extent to which stakeholders look favourably (or not) on an option.


four, if not more, strategic options, which will help foster creativity among senior managers. The decision criteria allows managers to think about options in a more objective way. They also reflect the unconscious and informal, decision-making rules that managers actually use – especially the criteria of ‘financial attractiveness’, and ‘uncertainty and risk’. The best way to use the grid is to: explore the available options look at the ‘degrees of freedom’ consider how a strategic option might be achieved, and the timing options develop a ‘cunning plan’ for each of the options do the evaluation scores, based on what is behind these criteria check out any facts – where

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evaluations look very sensitive ask yourself what’s the one big thing you’ve missed? – the ‘challenge’ process Count up the number of ticks each option has. Those with a total of 12 to 15 ticks are attractive strategies on the face of it but will still need testing; those with 10 to 11 ticks probably lack cunning; those with eight or nine will need a lot more work; those with five to seven are off the menu unless they can be completely rethought; and those with fewer than five ticks shouldn’t be touched with a bargepole. These scores will move up and down quite a lot as you goes through a ‘challenge and build’ process. Try to make them more cunning, so that shifts of two ticks in the total scores are common. Possible pitfalls of the grid are: ‘strategic attractiveness’ may be scored without real thought about the environment or Porter’s forces ‘financial attractiveness’ may be conceived solely in the context of the short and medium term, and not include long term as well ‘implementation difficulty’ may be largely subjective, based mainly on the general kind of strategy rather than detailed thinking about enablers and constraints, and particularly how these will change over time; it may also lack much thought about the ‘how’ ‘uncertainty and risk’ may be merely a global assessment and lack any granular thinking about specific assumptions ‘stakeholder acceptability’ may be done without thinking who all the stakeholders are, and how their agendas differ



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may be no cunning plan at all, * there or for what will be done and how; as a result, many of the scores may end up looking weak simply because of a lack of truly inventive thinking. Most managers and accountants will relapse into mediocre thinking

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Make your product easier to buy Just removing the difficulties of buying something can lead to increased sales. Alternatively, making it easier for the customer to buy more (mentally, emotionally and physically) can facilitate sales volume.

SIMPLY AVOIDING THE DESTRUCTION OR DILUTION OF CUSTOMER VALUE CAN GENERATE REAL COMPETITIVE ADVANTAGE especially where there are low scores – it is a lot to ask to be cunning and to evaluate at the same time. An example of what can be done can be found in my book, Be Your Own Strategy Consultant, which contains a list of cunning checklists developed for Dyson.

Tips and tricks

If there is a constraint, think why it is there and how it can be avoided Rather than by resorting to simplistic brainstorming, it may help to consider why a constraint exists anyway. Focus on constraints one at a time, always beginning with the most critical Instead of focusing on all constraints simultaneously, pick them out one at a time to challenge and dissolve, beginning with the hardest. If that one is simply too daunting, pick off a number of the easier ones first. You don’t always have to add value Most writers on strategy focus on adding value, but simply avoiding the destruction or dilution of customer value can generate real competitive advantage, as Dyson demonstrated when it said ‘goodbye to the bag’.

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Make your product irresistible Set yourself the mental goal of making your proposition so compelling that it becomes irresistible. Study your competitors Competitive analysis is not particularly done well by many companies; some don’t do it at all. But doing competitor analysis is only the first stage in answering the question, how can we do things even better than them? Building barriers to imitation It is not always important to protect against imitation. While in theory each part of a business’s competitive advantage might be imitated, it would be very difficult indeed to copy all the elements of that advantage.

Change the rules of the game The rules are not fixed – and you can change them. Suppose you were starting an estate agency industry from scratch at the present time. Would you have expensive BMWs for your senior sales agents? Smart cars? Abandon mindsets (at industry, company and personal levels) Forget not only how your industry (and company) does things currently, but also how you yourself do and even think about things. Imagine you just started in the organisation today Forget your own experience, agendas and thought patterns which have been shaped by the organisation. If you were not in the market already, how would you now enter it and with what business model? Advise yourself Here it may pay to conduct a special version of the out-of-body experience, imagining you are your own management consultant. Dr Tony Grundy is an independent consultant and trainer and lectures at Henley Business School in the UK


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Celebrating new members [

We continue our quarterly listing of new ACCA members, here showing those who achieved membership in the first three months of 2012. Congratulations to all!

Clare Abu Rahmoun Esther Agnes AddaeAboagye Dawn Louise Addison Ekanem Ekpenyong Adebanjo Olufolahan Adegoke Enoch Adeyemi Donna Adlard Jean-Francois Agossou Ibrahim Ahmad Ahmad Ashar Hameed Muhammad Zeeshan Ahmed Reem Ahmed Adil Ahmed Saeed Ahmed Aimen Aman Loan Oladipo Ajayi Jane Chiamaka Akadiri Farah Akhtar Bukola Akintola Oluwaseyi Ayodeji Akinwale Mohammed Jafar Akram Abid Akram Amanda Jane Al-Dakkak Laith Al-Hilfi Temitope Alabi Yaqoob Alam Ping Kiu Alden Nicholas Martyn Alexander Theresa Mari Alexander Vinitha Alexander Muhammad Asghar Ali Mohammed Junab Ali Lindsay Ann Allan Victoria Allen Elena Allnatt Gwen Haidee Alner Edward Senyo Kofi Ameevor Mark Amphlett Simone Anderson

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Lynne Anderson Samantha Andrews Luke Andrews Stuart Andrews Benjamin Angless Maria Kathleen Angliss Jonothan Anton Temitayo Olatunde Aremu Naomi Ariyo Guy Armitage-Norton Asad Hussain Ashir Shakeel Saleem Caroline Areathea Ashmore Vikki Louise Ashton Arfan Aslam Ruth Astill Irene Athanas Neil Atherton Sharan Athwal Malcolm Oslo Atuona Kirnjit Kaur Atwal Oluwaseun Awofisayo Michael Dzidzor K Awuye Charm Myae Aye Zia Azam Azizah Bt Abu Bakar Samantha Jayne Bache Tihomir Dimitrov Baev Mirza Sonaver Baig Elaine Bailey Lelia Mae Bailey Kalbir Singh Bains Mahboob Ahmed Bajwa Ravinder Bal Rosemary Frances Balfour Lynsey Banks Harpreet Kaur Banwait Alexander Jamal Bari Lilit Barkhudaryan Jonathan Barnard Samantha Barnett Kerry Louise Barnett Duncan David Barnfather

Rachel Elizabeth Barrett Tom Barrett Luke Barrett Patrycja Barry Nizam Bata Kerry-Louise Batkin Lucy Bawn Fraser Baxter Misba Beg Beh Khay Sing Ariola Beja Adam Belk Stuart Benham Marion Benjamin Jennifer Bennett Amanda Bentley Judit Berge Sarroca Angelique Bester Kalpana Bhalla Aarti Bhanderi-Shah Koushik Bhattacharyya Satnam Singh Bhogal Omar Hashem Bhuyian Zsuzsanna Bianca Karen Bibby Tania Bibby Linda Birch Emily Birkby Christopher Blackburn Sharon Blackwell Richard Bladen Anthony Andrew Blades Andrew Bland Christopher Blenkin Mary Boden Katherine Boden Prabha Bokka Avtar Singh Boparai Monique Borchert Parsa Borumand Bernadett Botar Elizabeth Bowler Mark A Bramhall Anna Yakovlevna Brandon

James Brewerton Richard Brewster Troy Brooks Mark Brooks Colin Patrick Brown Natasha Brown Andrew Brown Adam Brown Anna Brown Allan Philip Brown Birute Brusokaite Alison Bryant Ian Buckley Luke Buffoni Thomas Bull Gemma Bullimore Muhammad Abbas Bundeali Sarah Bunting Frances June Burnell Nicola Burnett Dale Burridge Katherine Burrows Ryan Marc Byrne Gemma Louise Bytheway Hilal Cakmak Steven Calder Julian Calverley Christopher Calverley Matthew James Cambridge Marie Cann Huijing Cao Nicola Carter Joanne Caruana June Casey David Anthony Cassells Jonathan Cawood Tara Cawthorne Ian Chadaway Su Min Chae Amelia Chai Han-Sheng Gemma Challoner Ka Fai Chan

17/04/2012 17:32


Careers Jaymin Chandaria Kateryna Chandramohan Chris Chapman Mohammad Khalil Chaudry Youmna Cheema Xu Cheng Atul Chhabra Sydney Chikalipah Ramneet Chima Avery Chin-Ying Tsai Farishna Chohan Bradley Choules Qaiser Aziz Chowdhry Karshing Chung Philip Simon Church Aleksander Ciejka Neil Clarke Gavin Clarkson Josie Clements Debbie Coates Nichola Coles Lisa Colley Adam Colquhoun Jillian N Colteste Christopher Comens Catherine Anne Connolly Tarryn Honor Conradie Sophie Constantinou Karen Conway Derek Conway Amanda Jayne Cook Tobias Cook Aidan Cooley Jennifer Cousins Matthew Crabtree Victoria Craig Sarah Jane Crean Laura Crebbin Lee Crooks Kathy Crozier Stuart Andrew Cunningham Jakub Czarnecki Leanne Clare D’Cruze Gintare Dabasinskaite Li Dai Mark Dakin Parvez Dalal Gira Dalal Laura Dale Jessica Daly Kathryn Daniel Owolewa Daramola Timothy Edward Darke Ana Carolina Das Neves Silva Jennifer Davies

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Kerrie Davies Mathew Thomas Davies Jacqueline Denise Davison Jamie Dawes Emma Louise Dawson Christopher Dawson Samantha Day Charmaine Roxane Day Katie De Gouveia Sarah Jane Dean Julia Deegan Chrispin Quincey B Deigh Jack Delaney Christina Yan Denziloe Salma Begum Desai Rohan Desai Aldo Desmily Renata Dexter Penny Jean Deyes Scott Dhillon David Thomas Dickinson Mark Dillon Amanda Irene Joanne Dingwall Elaine Dinsley Christopher Dodds Lauretta Zoe Dodsworth Marie Doherty Theresa Emetome Dokpesi Olga Doljikova Tegan Donnachie Rebecca Donnelly Liubov Dorokhova Delfina Silva Dos Santos Sharanjeet Dosanjh Justine Doughty Francesca Dowdle Perry Michael Lee J Dowell Alex Downes Yvette Doyle Rachel Doyle Steven Doyle Simon Drennan Cong Du Henrico Du Plessis Richard Dunkley Graham Dyer Lee Dyson Louise Easton Karen Elaine Eckworth Oluwatosin Ifeoluwa Edwards Michael Edwards Jenna Edwards Lauren May EdwardsFowle Samuel Eede Mohamed El-Bakhchioui

Tamer El-Shoura Victoria Elliott Heather Anne Elstone Adam Elwell Matthew Brian Ely Rebecca Emery Lordy Terese Emmen Hayley England Louise English Agnes Nalova EpeeBekima Victoria Nicole Errington Michelle Grace Erskine Gbemisola Oladunni Esuturie Katherine Sarah Evans Miriam Non Evans Grainne Kathleen Evans Paul Evans Natasha Eves Irene Veronica Fadden Modupeoluwa Famakinwa Kamar Farooq Fazal E Haq Andrea Jane Fearnley Nives Feely Oluwaseyi C Femi-Adeniyi Nicholas Fenwick Michael Ferguson Shaun Patrick Ferguson Stephan Ferreira Chelsea Ferreira Terezia Fidermakova Wendy Field Jennifer Fielding James Finney Glenn Finnie Martyn Stuart Finnis Kerry Anne Firman Anne Fitzpatrick Simon Fitzpatrick Oliver Flanagan Helen Jane Fleck Kyle Flynn Peter Michael Flynn Damien Ford Matthew Forman Jennifer Fourie Peter Frain Kreshnik Frakulla Kirsty Franks David Daniel Freeman Joanna Frost Rachel Frost Louise Elizabeth Fry Andrew Ray Fuller Marica Dionnette Fuller Nicola Louise Fuller

Sophia Fuller Andrew Peter Fulton Nicola Gabb Nicholas Matthew Gale Nathan Galer Neil Gandhi Paul Alexander Gardiner Richard Maxwell Gardner Chloe Gee Christopher Gent Shefiat O George Obuenwe Chiaralisa Giaco Zoe Gibbons Jason Gibbs Tariq Gilani Christopher Gilbey Chris Gill Sharon Gillespie Premila Gilligan Florin Leandru Ginghina Thomas Ngugi Gitau Matthew Given Harry Glasstone Chantelle Louise Gledhill Vanessa Glenn Philippa Glover Isabelle Goguelin Chetanraj Goindo Philip David Goldhawk Holly Golding Mohammed Tayyib Gondal Monica Gonzalez Carralero Alistair Goodall Andrew Goodwin Ryan Goodwin Barry Michael Gordon Zoe Rebecca Gorman Zena Marie Graham Matthew Granger Julie Gray Selina Green Vivian Morandarte Green Susannah Green Joseph Greenslade Michael James Greensmith Sandeep Singh Grewal Lee Griffiths Gethin Bryn Griffiths Gemma Ruth Sarah Groves Julie Groves Phuong Lan Guest Linhao Guo Sheetal Gupta Benjamin Guvenc

17/04/2012 17:32


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Neil Guy Magdalena Guzy Anthony Chukwuemeka Gwam Catherine Elizabeth Gwynn Caroline Jane Hadfield Ashvin Dhanji Halai Greg Robert Hales Christopher Andrew Hall Amanda Halpin James Nicholas Samuel Ham William Easton Hamilton Hana Hamon Ryan Hampshire Matthew Thomas Hardeman Joseph Matthew Hardiman Robert Hardwick Olena Harina Haroon Ur Rasheed Heather Harris Adam Harris Tejal Kantilal Harry Tracy Hartley Shirley Elaine Hartnell Laura Harvey Mohammed Hasan Julianne Hassall Iqtidar Ul Hassan Laura Ruth Hawkins Dawn Ruth Haworth Andrea Marie Hayes Gurpal Hayre Kelly Hayward Natalie Helliwell Amanda Deborah Hemmings David John Hepburn Darren Herbert Tyne Heritage Sofiane Heumissi Leander Heyken Rosaleen Hilferty Sean Hill Joseph Hime Krishma Hirani Calum Hodges Jason Kendal Hoford Stephen Hogg Karl Hohenauer Rebecca Holborow Gemma Louise Holden Laura Jane Holmes Nicola Jane Holt Kristopher John Holt

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Louise Christine Honeysett Neil James Hoolahan Kerry Hopper Spencer Horsey Kyrie Horton Seyed Mehdi Hosseini Graham Edward Hough Kevin Steven House James Howard Claire Hoyle Yan Fei Huang Helen Huang Sui Quan Rebecca Hughes Christopher Hullott Jonathan David Robert Hunter Andrew Hunter Farhana Huq Kenan Mehmet Hursit Moshin Hussain Rizwan Hussain Azhar Hussain Zaheer Jaffer Hussein Darren Thomas Hutchinson Victoria A J Hutchinson Ejiro Theodora Ideme Iffat Haidarali M Suleman Yomi Damola Ijiti Thomas Gareth Ilbery Niranji Rukshani Ileperuma Catherine Illien Mark Robert Ilsley Noreen Imam Ebunoluwa Osede Imeokparia Stafford John Ingham Zahid Iqbal Angeline Ishemunyoro Christopher Isles Frederick U Iyekekpolor Thomas Peter Jack Sally Jackson Anju Sebastian Jacob Rebecca Jacobs Sophie James Dewi Ap Gwyndaf James Nicholas Brian James Amanda James Jenny Louise Jarvis Dinesh Jayabalan Dharshani Kanchana Jayatilaka Tafadzwa Walter Jemwa Frederick William Jenner Kamille Alicia Jennings Bingru Ji

Jie Sha Jiang Emerson John Colin Johnson Kurt Louis Johnson Shona Jones Christopher Jones Helen Rebecca Jones Kelly Jones Kevin Peter Jones Oliver Gareth Jones Leon Jones Barbara Louise Jones Jonathan Jones Llinos Ann Jones Samuel Jones Dean Jones Fiona Jones Benjamin Jordan Stephanie Joyce Agnieszka Kaczmarek Malgorzata Kaczmarek Rajkamal Kalsi Sajid Karim Ram Karki Keiko Kawazoe Kay Thwe Oo Syed Najam Ul Saqlain Kazmi Ariyanna Keddie Shola Raliat Kehinde Gyorgy Kelemen Amie Kelleher Nicholas J B Kelly Nicola Kennedy Simon Patrick Gilles Kent Samantha Keogh Nadia Kerim Matthew Kerry Lisa Maria Kershaw Lisa Anne Kershaw Sandra Lee Kewley Mai Khadga Deewas Khadka Cyrenne Khaliq Adnan Khaliq Sarfraz Khan Sameer Khan Bakht Khan Fakhoruddin Khan Zaman Arshad Khan Kashif Mahmood Khan Sanjar Iqbal Khan Ritha Khanam Pavandeep Khangura Ali Omar Khattab Khawaja Moeed Ahmad Emma Louise Kilminster Sun Hee Kim

Sandra Teresa King Tara King Agata Kleszcz Daniel Knight Matthew Knight Caroline Jayne Knott Sanae Kondo Bartlett Debbie Rose Koop Rita Naa Klorkor Korley Mohamed Baimba Koroma Tamba Koroma Marta Kostecka Michelle Kriel Nataliia Krotiuk Timothy Kuchanny Gemma Kumar Michael Dinesh Kumaresan Lucie Kunova Femina Kurle Zaneta Kvitnickiene Thin Kyu Richard Lacey Richard Alistair Lacey Alec Laing Mi Young Lake Claire Lakey May My Lam Wa-On Aaron Lam Michelle Lam Jonathan Lamboi Konstantin Laskov Kim Lassemillante Anthony Le Brun Janine Leal Daniel Leszczuk Min Li Shuai Li Adam Lickorish Kalpesh Mohanlal Limani Matthew Lincoln Victoria Lindley Florence Little Andrew Littlejohn Yuexia Liu Julia Long Nicholas Longford Lesley Longley Amanda Jane Lording Ozayr Lorgat Lou Yi Iain Loudon Gareth Lovett Gurjeet Charlie Singh Lovlee Matthew Lowe Andrew Lowe

17/04/2012 17:32


Careers Shelley Lowther Lu Xiang Wen Samantha Lunn Daniel Lynch M Imran Hafeez Malik Sarah Mac Dougall Monika Maciukeviciute Linda Maciver Christopher Robert Mack Laura Mairi MacKay Poonam Madani Jaya Devi Nisha Mahabir Baldeep Mahal Monzer Mahmoud Abel Mahowa Azhar Makda Frazer Malcolm Bilal Malik Vineeta Malik Joseph David Malone Shabana Mamaniat Hoi Yan Man Sabin Manandhar Hardeep Singh Mangat Frances Mannings Mao Shan Wen Leanne Marks Catherine Louise Markwell Andrea Marsh Harriet Marshall Thomas Martel Sheena M K Martin Joyce Natsai Marufu Antonina Maryliv Dee Mason Rachael Matthews Jane Sarah Matthews Jane Matthews Jeanettie Matthews Jay Maurice Alan Maw Lee Maxwell Lucy Maynard Sinead Mc Cartan Paul Edward Mc Neilly Helen Mcallister Claire Mccarthy Kristine McCaul Kevin McCaw Rasa McClure Richard McColl Sophie McDonnell Nicole McEnaney Edward Mcfadyen Colm Mcgrath Virgil Mcgrath Anna-Molly Mcguire Robert Mckechnie

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Kelly McKeown Jared James McKerron Dean Mckinney Sarah McLaughlan Don McMenzie Andrea Lesley McMullan Stephanie McPherson Lisa McVeigh Frances Mcveigh Brian Meade Sarah Winifred Meaden Tope Medupin Lewis Meek Paul Robert Mehta Hasitkumar Kanubhai Mehta Sachin Mehta Satish Kumar Mehta Yirgaalem Mekonen Aida Meredith Andrew Morgan Meredith Charlotte Metson Mark Metters Jahangir Miah Paul Mildon Mark Millard Joanna Miller Christopher Miller Susan Dawn Miller Hannah Milligan Lindsay Marie Milloy Oliver Mills Ryan Millson Claire Milton Ming Kam Leung Nadia Misbah Dhillan Mistry Jacqueline Mitchell Evelina Mitreva Meenu Mittal Tendai Mnangagwa Modunkwu Ezinwannedinma Mohammed Ali Khan Mohammed Umar Qureshi Laura Jane Moloney Alistair Douglas Montague Angela C Moore Andrew Morris Thi Chau Hang Morris Neil Howard Morris Karen Elizabeth Morrison William Morrison Clare M Morton Julia Moss Erika Isolde Mosser Johannes Mostert Habib Ahmed Motiwala

Muhammad Mubashir Muhammad Ali Muhammad Amin Asif Muhammad Fasahat Khan Muhammad Husnain Haider Muhammad Junaid Khan Muhammad Owais Khalid Muhammad Yasir Aishah Muhammed Saba Rita Marie Muldoon Natalie Mullineux Andrew Graham Mulvenna Matthew Denne Munday Daniel Mundroina Mark Muoki Nyali Andrew Murrell-Cooper Vitantonio Musa Edmore Musunduza Ramona Naidu Rob Nalias Nan Jin Nayab Wardah Charlotte Elizabeth Naylor Nirmal Nepal Kayleigh Jo New Kate Newman Zachary Newmark Dora Ngoma Greg Nichols Claire Nicholson Roderick Ivor Nicol Josina Peter Njambi Owen Toochi Nnaji Lucy Nolan Joanne Norman Oksana Novak Catherine Nowell Sanaz Nowroozi Clare Louise Noyelle Jaime Nyland Dan O Riordan Graeme O’Callaghan Joan O’Kane Ian O’Toole Paul Oakley Sejal Odedra Emmanuel Boakye Ofori Adejumoke Fatimo Ogun Oluseun Adetunji Ogunbajo Adewale Olaiya Ogunjumelo Temitayo Ojo Michael Yemi Ojo Isaiah Olaniyi Oladebeye Oluwaseun Oladunjoye Victoria Olu Audu

Oluwasesan T Oluwafemi Adekemi Opadere Simon Orange Deborah Ormes Iain Ormrod Emma Osborn Ashraf Otman Graeme Oudney Natalia Owen Lesley Marie Owens Neil Owens Olufunmilayo Rebecca Owonka Christopher Oxley Claire Oxley Temitope Oyedero Oyefuga Alloysius Uviesa Oyeye Gaynor Victoria Page Rachel Page James Painter Tousit Palit Christopher Palmer Andrew Palmer Evelina Panchal Sujit Pancratius Pang Zhiling David Panter Tony Papademetriou Panicos C Papageorgiou Pratap Parajuli Carole-Anne Park Curtis Parker Laura Parkes Laura Parsonage Gareth William Parsons Danielle Parsons James Partington Kauser Parveen Razvana Parvez Marketa Pasova Dawn Linnsey Passman Vipulkumar Jayantilal Patel Mubarak Alli Patel Komal Patel Bhavin Patel Hatal Patel Mitul Patel Trishal Patel Maruti Patel Shivani Patel Meeta Patel Brijesh S Patel Ankit Patel Vikram Patel Nishitkumar Patel Ejaz Patel

17/04/2012 17:33



Hemali Patel Jonathan Paterson Lesley Patience Tracy Payne Thomas Reginald Payne Kathleen Theresa Payne Richard James Payne Katie Pearce Andrew Pearce Timothy Ronald Penson Simon Ian Penter Cadine Cathy-Ann Pereira Hayley Pereira Marisol Pereira Sousa Clare Perez Matthew Pert Vladislav Perunov Brigita Petrova Richard Anthony Phillips Richard William Phillpott Stephen John Pike Lorraine Pinto Rachael Piper Hayley Pitt Marta Barbara Plowucha Kenneth Pocock Sara Poke Abigail Porter James Porter Sarah Jane Potter Louise Poulton Alexi Andreas Poyiadzis Sabrina Pozzuto Noreen Ann Prentice Karen Suzanne Price Andrew Priest Ryan Prynne Rhian Elizabeth Pugh Matthew John Pugh Mathan Puspanandan Yasmin Angela Putz Petra Putzier Qasir Jamal Mark Quayle Samantha Quinn Rabiya Qadeer Anna Monika Radwan Saifur Rahman Alabur Rahman Gurpal Singh Rai Laveena Rai Oyeniyi Wasiu Raimi Christine Rainey Brendan Ramage Rishi Krishna Ramano Robert Ramsay Nadeem Raziq Stacey Rea

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Emma Jane Readfern Matthew Richard Reeves Adelaide Opokua Regan Matthew Reid Zhen Ren Lucy Renaut Aimee Victoria Rhodes Bethen Richards Andrew James Richards Jacqueline Faye Richards David Jonathan Richards Emma Richards Patrick Ridge Belinda Margaret A Ridout Carrie Anne Riley Joanne Louise Ritchie Robeel Riaz Elisabeth Roberts Richard Robertson Michael David Robinson Keith Michael Robson Sean Rodwell Philip C H Rogers George Melville Rogers Adam Rollason Edward Rooney Louise Roper Andrew John Rosewell Bibiana Rosivalova Louise Round Robert Thomas Rowe Matthew Rowe Sam Rozati Dina Rozenman Sabah Rumjaun Lisa Rushton Geoff Russell Roza Urszula Sadlo Kofi Adu Safo Bashir Bille Salat Saleh Mohamed Shuaib Katerina Salivarova Nicola Sampford Joji Samuel Elizabeth Samways Phil Sanderson Karndip Sandhu Andreia Lucia Sangalli Asfaq Sardar Amer Habib Sattar Nico Savvas James Russell Saxton Elliot Scarr Maria Schumacher Douglas Scott Martin Searle Dweesen Seeboruth Pauline Selkirk

Sorooban Selvaratnam Akilan Selvathiraviam Olga Semenova Natalia Semenova Diyana Senderowski Rossana Sgobbio Donna Louise Shade Sita Shah Neha Shah Chirag Pradip Kanaiyalal Shah Abhay Shah Aarohi Shah Keval Shah Deepan Shah Mita Shah Moueed Shahid Shahid Mahmood Tatsiana Shaliuta Alexander Shaw Sheheryar Ali Cecile Shepherd Janette Lynne Shepherd Tara Sherlock Milena Sherman-Clark Dongling Shi Barry Shields Iryna Shkilna Stephanie Olubunmi Abosede Shogbesan Brian Michael Short Craig Shorto Meghna Sibal Faiz Siddiqui Deepa Sidhpara Jaspreet Singh Sidhu Katarzyna Sigalas Sijuwade Jolaade Toyosi Kristin Carol Simmons Erika Simon Jonathan Simons Laura E Simpson Christine E Simpson Priya Singh Chandarmohn Singh Andrew Singleton Paul Sinnott Dharshan Sivajee Rob Skidmore Susanne Elizabeth Skinner Emily Skinner Emily Skivington Stewart Slater Lucy Slaughter Gemma Danielle Small Daryl Smallwood Julie Smith

Alexis Smith Sarah Smith Timothy Smith Philip Allen Smith Chris Smith William Anthony Smith Karen Smith Devina Somrah Shruti Kandarp Soni Chintu Soonucksing Evan William Sosower John Soughton Lyndsey Southwell Zara Southwood Stephen Spaul Daniel Spencer Anupam Kumar Srivastava Andrew Peter Standen Victoria Steed Gemma Lisa Steer Sarah Stemp Natalie Stevens Claire Elizabeth Stevenson Melanie Stock Alexander Stone Anna Kim Storey Yvonne Storr Peter Styles Iwona Suchcicka Anish Sudhakar Gary Sulley Farzana Sultana Ashok Suman Diana Summerhill Sutharsan Sundareswaran Jamie Sunnucks Laura Swann Dominick Sweeney Syed Fahad Amjad Syed Mamun Razzak Syed Mohammed Shoeb Kasim Symonds Herman Carlos Tadonteu Talimeta Vijay Tailor Abimbola Taiwo Nina Heather Takoordyal Daniel Talbot Sally Ann Talbot Jamie Tan Lay Ling Garry Shung Yue Tang Johnny Tang Matthew Tang Liam Tanner Carla Jane Tannous Charlotte Tappenden Sophia Tariq Asif Martin Joseph Tarren

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Waqar Nawaz Waqas Sagar Sarah Ann Ward Sean Michael Ward Shelley Ann Ward Violetta Warlikowska Kim Louise Warner Jacinta P Watkinson Sally Watson Paul David Watts Sarah Watts Robert Watts Matthew Wayte Alex Weaterton Claudia Webb Davina Webb Louise Margaret Webster Ian Webster Anthony Richard West Thomas West Naomi Westwood Zoe Whiteman Jamie Whitley Damian Williams Stephen Williams Elizabeth Williams Matthew Williams Melanie Wilson Martin Wilson Beverley Wilson Gregory Wilson Hayley Wilson-Potter Pauline Bridget Wise

Daniel Witchell Adam Woakes Charles Wolfe Gary Woodall James Woodhead Kelly Woodman Toni Woodward Philip John Woolfenden Michelle Alice Jane Wray Jacqueline Wray Lindsay Wright Panpan Wu S Xiao Xiong Zhuan Lili Xu Lei Yang Liu Yang Yang Yan Amy Yeh Chen San Theo Yiangou Robert Christopher Young Gar John Yu Kirsty Anne Yuill Agnes Wanjiku Zadrozny Mayank Zala Celina Xiaodan Zang Zara Imtiaz Khan Yuanyuan Zhang Mei Mei Zhang Ni Zhang Jia Zhang Galyna Zharova Tom Zjalic

19/04/2012 15:01



Website revamp showcases CPD Looking for skills development opportunities on the ACCA website has been made even easier, as Ros Leah, ACCA’s head of professional development, explains All professionals recognise the importance of developing their skills and keeping abreast of developments. CPD helps you not only to maintain competence but also demonstrate to employers your ability to progress and take on new responsibilities. ACCA wants members to maintain the highest professional standards because their skills, judgment and integrity can add value to organisations, economies and society at large. When ACCA made CPD mandatory in 2005 there were many misconceptions, in particular that it meant attending face-to-face courses. This has changed as members have gained CPD through e-learning, acting as workplace mentors or learning at work – undertaking tasks for the first time, consulting an expert about a workplace or client issue, etc. There is still a place for attending seminars and conferences and reading articles, but it is now widely recognised that individuals are looking for greater variety and blended learning solutions. In an age when information is immediately accessible, everyone wants access to learning at a time and place that is convenient for them. The revamped CPD section of the ACCA website at cpd offers one-stop access to articles, e-learning, podcasts, online seminars, research and qualifications from partner organisations, and contains over 160 e-learning modules. You will find details of face-to-face courses on your local ACCA office site. Learning opportunities have been put under subject headings to make it easy to view the range of information available. You will also find details of how to meet your CPD requirements. We hope the new resource will meet the demand for more accessible CPD. This is just the first step in improving

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Learning opportunities have been brought together within each CPD subject heading members’ experience of the website when looking for CPD and further improvements will appear this year. The demand for e-learning has increased as professionals have become time-poor but also because the quality of e-learning has improved. ACCA’s research has confirmed there is no decrease in quality with technology-enhanced learning and assessment compared with physical, classroom and paper-based learning and assessment. Interviewees for the research included Richard Pollard, PwC’s global development leader, who said: ‘On an average day there might be facts I need to know and skills or techniques of which I need a reminder. I want that now. I don’t want it three months ago when I was at a training centre, and I can’t remember what I was learning.

I certainly don’t want it in six months’ time when I’ve been booked to go on a classroom session.’ Online learning and assessment technologies offer sophisticated ways to interact with learning content. You can fast-forward to more demanding modules, and pinpoint and address areas of weakness much more quickly. Remember, learning will be considered verifiable if it is: relevant to your career you can demonstrate how you have applied it you can prove it took place – eg copies of course materials, notes from learning, contact details of a third party who can substantiate activity completion, a certificate of course/assessment completion. For more information, go to

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16/04/2012 17:43


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Audit senior

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Service lines include accounts preparation, audit, VAT and bookkeeping services. Industry sectors – leisure, property, investment holding companies, international trading companies FSA registered companies.

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Head of finance

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A fast-growing entrepreneurial business is currently recruiting a Head of Finance. This is a key role within the business and has a significant amount of contact with the CEO and other senior executives.

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Financial controller

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The role is to provide an effective accounting service to a range of internal and external customers that may help meet the strategic imperatives of the business.

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To provide full financial control and management services to the management and programme teams within Suas and thereby support the delivery and expansion of the organisation’s educational mission.

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Over 22,000 ACCA MEMBERS anD students have registered their CVs on ACCA cAREERS Everyday on ACCA Careers on average we have.... l 150 new candidates register l 11,352 page views l 44 new jobs posted l 253 job applications Employers we are already working with include Shell, PWC, Deloitte, KPMG and BBC.


“ACCA Careers gives me the latest and most varied range of job opportunities from all the major organisations and recruitment firms, along with great tips and advice to help me push my career forward.” Ian Chadaway, Burgis & Bullock To advertise with ACCA Careers there are 2 options, using our online self-service you can post a job right now at or you can contact our dedicated account management team on +44 (0)20 7902 1210

16/04/2012 16:59


ACCA diary


ACCA UK runs an exciting programme of events across the country. You can find more information on any event by visiting

EMPLOYMENT-BASED MEMBERS’ NETWORKS CORPORATE SECTOR 17 May, Thursday Managing Through Double Dip Recession, London Speakers: Manos Schizas, senior policy adviser, ACCA; Neil Blake, Ernst & Young and ITEM Club; and Allan Monks, JP Morgan Chase

INTERNAL SECTOR 23 May, Wednesday Risk and Reward, London Speaker: Paul Moxey, head of corporate governance and risk management, ACCA To book, register at https://

REGIONAL MEMBERS’ NETWORKS AND DISTRICT SOCIETIES Please note the majority of events take place in the evening but please check the websites listed for times and details.

ENGLAND 15 May, Tuesday Change Management, Manchester 15 May, Tuesday Finance Bill 2012, Milton Keynes 15 May, Tuesday Budget Update, Ashford 15 May, Tuesday Budget Update, Ipswich 16 May, Wednesday E-business/E-professional – Effect on Business, Bromley

UK_A_diary.indd 78

16 May, Wednesday Tax Update, Newcastle upon Tyne

13 June, Wednesday Social Media Update for Business, Cambridgeshire

14 June, Thursday Summer Site Visit and Networking, Broughton

21 May, Monday Tax Discussion Group, Brentwood

14 June, Thursday Virgin Media: Lean Model Site Visit, Bradford

To book, visit http://www. events

22 May, Tuesday Marketing You and Your Business, Norwich

14 June, Thursday Commerce and Cohesion, Nottingham


22 May, Tuesday Budget Update, Enfield

15 June, Friday Guernsey Quarterly Networking Lunch, Guernsey

15 May, Tuesday A Practical Approach to Private Company Acquisition, London

15 June, Friday Jersey Quarterly Networking Lunch, Jersey

15 May, Tuesday Business and Corporate Taxes Update, London

To book, visit http:// members/networks/regional

15 May, Tuesday Employment and Personal Taxes Update, London

SCOTLAND 15 May, Tuesday The Role of Mentor, Dundee

16 May, Wednesday Financial Reporting – Update and Refresher Part One, London

7 June, Thursday The Financial Challenges of Running a Modern Local Newspaper, Inverness

16 May, Wednesday Financial Reporting – Update and Refresher Part Two, London

13 June, Wednesday Pension Update, Aberdeen

17 May, Thursday Internal Audit Conference – Internal Audit Under Pressure, London

23 May, Wednesday Clearing Head Trash, Nottingham 23 May, Wednesday Midlands Business Dinner, Birmingham 24 May, Thursday Legal Updates, Plymouth 24 May, Thursday Network and Develop: Forensic Accounting Introduction and Update, Leicester 24 May Thursday Network and Develop, Isle of Man 24 May, Thursday See You at the Tribunal?, Leeds 26 May, Saturday Spreadsheet Forecasting and Evaluation, London 31 May, Thursday Budget Forum, Croydon 31 May, Thursday Network and Develop, Birmingham 11 June, Monday How to Get the Most From ACCA as a Member, Cobham

19 June, Tuesday Stress Reduction, Dundee To book, visit www.accaglobal. com/scotland/events

WALES 17 May, Thursday VAT Update including Charities and Partial Exemptions, Swansea 24 May, Thursday Making a Difference – Leadership and Management Skills, Denbighshire

17 May, Thursday Employers and HMRC – PAYE/P11D Danger Zones, London 18 May, Friday Current Tax Strategies for Owner-Managed Companies, London 19 May, Saturday Summer Update for Practitioners: Business Advice Conference, London

17/04/2012 12:53

79 Elections to Council 19 May, Saturday Saturday CPD Conference Two, Glasgow 23 May, Wednesday UK Property Taxes Including VAT, Isle of Man 28 May, Monday Practical Cash Management, London 30 May, Wednesday VAT and the Global Marketplace, London 11 June, Monday Exceptional Presentation Skills for the Finance Function, London 13 June, Wednesday Incorporation and Disincorporation in 2012, London 13 June, Wednesday Spring Tax Update Including the Budget 2012, Kingston 14 June, Thursday Guide to Practical Audit Compliance for Partners and Managers Day One, London 15 June, Friday Accounting Standards Update, London 15 June, Friday Corporation Tax Update, London 15 June, Friday Guide to Practical Audit Compliance for Partners and Managers Day Two, London For more information or to book your place, visit http:// or email professionalcourses@

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As ACCA’s governing body, Council plays a pivotal role in ACCA affairs. It ensures that ACCA operates in the public interest and delivers the objectives stated in its Royal Charter. It sets ACCA’s overall direction through regular approval of strategy. It acts as a link between members and the professional body, and leads the organisation in the interests of both. It is accountable both to members and the public interest. It acts for all members and future members (today’s students). It provides leadership of ACCA and stewardship of its resources. Council develops policy for ACCA as a whole and Council members are volunteer custodians acting for the well-being of the whole organisation. Whatever their geographical or sectoral bases, Council members do not represent particular areas or functions and are elected by the membership as a whole. ACCA members of all ages and backgrounds are encouraged to stand for election to Council. Long-term or technical experience is valuable, but so is proven ability to participate actively in strategic decision-making. Council experience as such is not necessary. However, an understanding of good governance is essential, and personal and professional integrity must be of the highest order.

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ACCA expects members to bring the following skills and attributes to Council: an ability to take a strategic and analytical approach to issues and to see the big picture an understanding of the business and the marketplace communication and networking skills an ability to interact with peers and respect the views of others decision-making abilities an ability to act as ambassadors in many different environments planning and time management a willingness to learn and develop. Nominations are now invited for election to Council at the 2012 AGM. Candidates must be nominated by at least 10 other members in good standing. They should supply a head and shoulders photo and an election statement of up to 180 words, which should not include references to email addresses or websites. Candidates are also required to sign declarations of their willingness to comply with, and be bound by, the code of practice for Council members. Further information on the Council election process, including pro forma of nomination forms, may be obtained by writing to the Secretary at 29 Lincoln’s Inn Fields, London WC2A 3EE, by faxing +44 (0)20 7059 5561, or by emailing (please put ‘Council Elections’ in the subject box).

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Social housing sector members sought ACCA’s technical department is looking to set up a panel of members with an interest in financial reporting and other accountancy-related issues by housing associations and other registered social housing providers. We would like to hear from members in this sector who are either working in a housing association or registered social housing provider, have such organisations as clients, or encounter them in a related role.

It is proposed the panel will meet around twice a year in London. Participation will also be possible by phone and webcam. Topics will include replacing the current UK financial reporting standards for the sector with one standard based on IFRS for SMEs, and the future revision of the 2010 Statement of Recommended Practice. If you are interested in joining, please email or

17/04/2012 12:53


ACCA global forums

Tomorrow’s world ACCA’s Accountancy Futures Academy is exploring the future role of accountants. It will be radically different, say academy chairman Ng Boon Yew and futurist Rohit Talwar The world is undergoing a period of profound transformation driven by global political, economic and technological shifts. Taken together, these forces suggest that the role and expectations of the accountant of tomorrow and the industry they inhabit could be radically different from the profession today. So how can the profession prepare for an uncertain future when we all feel there is already a full agenda dealing with today’s challenges? Recognising the need to help accountants explore these long-term drivers of change, ACCA has started the Accountancy Futures Academy. Its mission is to provide a radar to highlight the trends, driving forces and ideas that could shape the future global business and accountancy landscape. The first output from the academy is a consultation with members of ACCA’s global forums. The objective is to identify the drivers of change that accountants should be thinking about to prepare them for future challenges. This article looks at some of the emerging findings from the study being coordinated by Fast Future Research. The changing economic landscape is seen as central to any exploration of the future of business. We are in the middle of a period of deep economic uncertainty. For accountants, this puts the spotlight on our risk and resilience plans – how are we factoring in the potential collapse of key parts of the economic infrastructure in individual markets or globally?

Increasing influence While mature economies focus on surviving and navigating the current turbulence, emerging economies are growing, particularly the BRIC nations. It is clear that the BRICs will have an increasingly influential say in how

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global economic systems are shaped and governed. These countries are presenting global accountancy firms with opportunities, in terms of markets to expand into, but also challenges as a potential source of future rivals. Could we see multinationals transferring their accounting business to firms from the BRIC economies? Political power can be expected to follow financial power, with both China and India having more of a say on the evolution of the key institutions of global governance. This could give both countries the platform to set the rules and agenda for the new so-called Asian century. This could have far-reaching implications for how the global accountancy profession evolves in future, especially with regards to the definition and adoption of uniform global accounting standards. Could these standards come to reflect Eastern rather than Western practices?

Population shifts Demographic shifts are reshaping the make-up of the global population. By 2050, the Asia Pacific region will have grown by more than the populations of Europe and North America combined, with Europe itself expected to shrink by around the size of Germany. Global life expectancy is projected to continue increasing and enforced retirement ages abandoned. This raises questions about how we effectively manage and provide career opportunities for multiple generations in the workforce. The business of business is also undergoing fundamental change – with new business models offering the potential to transform our notions of risk and value. Firms are increasingly opting to switch from ownership of fixed assets to renting the services provided by those assets – cloud computing is one such example. The

risks of new product development and new venture creation are also being transformed by crowd-sourcing models such as, which enable entrepreneurs and innovators to raise the necessary financial commitments from the customer before embarking on the project. Sales approaches such as aggregated buying and the auction model are increasingly being used by businesses to sell their offerings. How will accounting practices and risk assessments need to change to take account of a rapidly changing set of business models with often unpredictable revenue streams? The financial crisis has highlighted the need for businesses to construct ‘living wills’ to facilitate an orderly unravelling of their affairs in case of insolvency. Accountants can play a key role here, but how deeply will the finance function need to be embedded


Chairs of ACCA’s 10 global forums met for a Global Forums Symposium in March in London to discuss the issues that will be confronting the accountancy profession over the coming months and years. A presentation based on the research described in this article provided a basis for lively discussions on a wide range of topics including global economic uncertainty, audit, complexity, regulation, adding value, principles, sustainability, investors and reporting, the public sector and fraud. The forums aim to further thinking on current and future issues in a number of specific areas, as well look at the challenges and opportunities facing the accountancy profession generally.

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Accountants must learn to plan for and think in terms of multiple possible scenarios. An emerging competence is developing the agility and processes to cope with ever-shorter business cycles. Accountants also need to become adept at navigating and tackling operational and regulatory complexity and the rising number of non-financial indices used to measure value. The need to play a bigger role in business decision-making and the globalised nature of work mean accountants seeking international opportunities will have to expand their strategic, language and cultural skillsets. The backlash from the financial crisis, combined with greater moves towards environmental sustainability, will also result in growing regulatory requirements for accountants to act as public interest watchdogs.

in the transactions, products and pricing models of the organisation to appreciate the scale and detail of what needs to be unravelled? The growing complexity of business and the need for integration are placing greater demands on information technology. IT has revolutionised the

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workplace – digitising workflows and assets, and creating new opportunities with people generating real-world fortunes from buying and selling virtual assets in online environments such as Second Life. Advances in artificial intelligence could lead to further automation of accounting functions.

Further down the road, technological advances could mean we download core accounting data directly into our brains. The core question is whether the roadmap for accounting systems development will be flexible enough to cope with a range of possible business scenarios. Taken collectively, all these drivers suggest we are now entering a period of fundamental change for the global economy, for the general world of business and, as a result, for the accountancy profession. Ng Boon Yew FCCA is chairman of ACCA’s Accountancy Futures Academy and executive chairman of Raffles Campus. Rohit Talwar is a global futurist and founder and CEO of Fast Future Research

19/04/2012 17:49


ACCA news

Council highlights

Inside ACCA 80 Global forums Introducing ACCA’s Accountancy Futures Academy 78 Diary ACCA events across the UK 75 CPD The ACCA website now has a new, improved, CPD section

Council’s first scheduled meeting of 2012 took place on Saturday 10 March. The guest presenter was Katrina Wingfield, chairman of the ACCA Regulatory Board, who presented its annual report for 2011. The Regulatory Board was established after the AGM in May 2008 and brings together all of ACCA’s arrangements for regulation and discipline in a single entity. It stands at arm’s length from Council and the majority of its members are lay individuals. The report of the Board for 2011 covered the third full calendar year of its operation. It focused on a successful regulatory event organised in October 2011, at which Sir Ian Kennedy was guest speaker, and the establishment by the Board of an Overview of Regulatory Procedures Working Party. Council was pleased to note that the report overall underscored the Board’s commitment to continuous improvement in regulation and was reassured that, going forward, the Board would continue to provide proactive oversight of ACCA’s disciplinary and regulatory processes. A number of other issues were considered in Council’s formal sessions: Council met in discussion groups to debate the competitive landscape in the global profession and ACCA’s response to it. Council considered the regular report of chief executive Helen Brand. This covered ACCA’s performance, as well as a review of its strategic development and developments in the wider profession. On a recommendation from the Resource Oversight Committee, Council approved the

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Nairobi: next meeting



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proposed budget for the organisation for 2012–13. Following a recommendation from a group of standing committee chairmen, Council also approved achievement measure targets put in place to track ACCA’s strategic performance in 2012–13. At the request of the Regulatory Board, Council considered its policy with regard to ACCA students who hold AAT practising certificates. Council agreed to maintain its current policy to recognise only professional-level, IFAC member bodyissued practising certificates and not to introduce any dispensation for AAT practising certificate holders. Under the terms of membership regulation 3(f), Council agreed to invite into ACCA membership four senior accountants from Indonesia – Rosita Uli Sinaga, Ahmadi Hadibroto, Irhoan Tanudiredja and Langgeng Subur. Council was pleased to approve the signing of a renewed Mutual Recognition Agreement with the Malaysian Institute of Certified Public Accountants. Council confirmed Anthony Harbinson as its preferred nominee for vice president 2012–13. (The formal elections for ACCA’s officers will take place at the annual Council meeting immediately following the AGM on 20 September 2012.)

Council’s next meeting will be in June 2012, when it will meet in Nairobi, Kenya as part of the biennial series of meetings held in ACCA’s key international markets.


ACCA chief executive Helen Brand has been awarded an honorary degree by BPP University College in recognition of her services to the development of education and training for the accountancy profession. Brand said: ‘This is a real privilege for me and for the whole of ACCA. I know that ACCA shares BPP’s values when it comes to training the accountancy professionals of the future.’ Professor Carl Lygo of BPP said: ‘Our students, faculty and clients will benefit from the expertise, knowledge and reputation that Helen will bring to BPP.’


The trainee development matrix (TDM) for ACCA students has been overhauled. The tool, used by trainees to plan and record their achievement of Practical Experience Requirements (PER), has been renamed My Experience. It will remain accessible via myACCA, and a reminder pop-up will prompt trainees to update their own experience status regularly. They no longer have to provide an annual PER return. More at

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19/04/2012 12:50

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AB UK (UK edition) – May 2012  

The May 2012 edition of Accounting and Business magazine

AB UK (UK edition) – May 2012  

The May 2012 edition of Accounting and Business magazine