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so how did we do?





P20 CORPORATE GOVERNANCE Ethics and the psychological contract

THE PRICE IS RIGHT “A poor pricing strategy can result in a loss of customers and a backlash from stakeholders” Page 14

DIGITAL DARWINISM It’s time to come out of your shell


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EDITOR’S COMMENTS Make 2014 your year You may notice that this issue of NQ is bigger than previous ones. So make sure you keep going all the way to the back. Big Data is a hot topic and we’ve got it covered in this issue. It is going to have a big impact on your working lives, so it is vital you understand what it is all about. Hopeful we can help you here. Sorry, but there is never a chance to stand still, even as an NQ. So we have a look at the ICAS Tax professional qualification (ITP) and spent a day as a City trader. The London Academy of Trading’s Natasha Page was a great host, and she really will let you go on a taster session if you are interested. Take a look at There is always a big emphasis in NQ on entrepreneurship – we understand that many of you will be looking to set up on your own. To this end we have asked leading entrepreneur Aaron Etingen for his advice on when is the best time to go it alone. The ACCA has provided two features this time around. The association’s professional development manager, Clare Hodgson, sets out exactly what you need to do to remain ‘compliant’. Head of futures research Faye Chua is also on hand to explain the technology trends that are reshaping the profession. Accountants need to embrace these changes and become knowledge experts. By embracing new technology you become the ‘go to’ person. That has to be better than sitting in the back office hoping change doesn’t get to you! Remember, you can take a look at all the 2013 issues by going to www.issuu. com. The next issue of NQ will hit your inbox in March, but before then please help us spread the word. NQ magazine is free and your colleagues can sign up at Graham Hambly, Editor (

90% of New Year resolutions end in failure. P10 ACCA NQs need to complete 40 units of CPD each year. P18

40 units


The number of accountancy and audit firms going bust has jumped 41% in 2013. P4 The amount of study needed to become an online trader. P16

350 hours


The number of respondents who think pricing is the most effective way to grow profitability. P14


Pain of recession still evident Many accountancy firms are still having to deal with the fall-out from the recession. That has led to one firm shutting up shop and handing back the key every three-and-a-half days. The number of accountancy and audit firms going out of business has jumped by 41% in the last year, as profitability and cash flow come under increasing pressure, particularly for smaller firms. In total, 103 firms in the accountancy and auditing sector became insolvent this year, up from 73 in the previous year, with RSM Tenon the most high profile example. Syscap CEO Philip White said: “Although the accountancy profession will benefit from the economic recovery – many firms are still absorbing the damage done to their businesses by the recession.” He explained that high street practices found that some of their smaller clients tried to do without any professional advice as a cost-cutting measure. Even larger accountancy firms have found it hard to keep the rates they charge for work moving up in line with inflation. Larger accountancy firms have also suffered from the collapse in M&A and corporate finance work. Accountants, White emphasised, have been hit as a result of government policy – most notably the exemption of an ever-increasing number of businesses from the need to get an audit done.

A really positive response – mainly Bankruptcy is too expensive!

Going bankrupt in England and Wales is now so expensive it can easily outweigh the debts that led to insolvency, according to Elaine Moore, writing in the FT. A report commissioned by BIS found that accountants and insolvency specialists charge hourly rates of up to £800. With individuals able to be made bankrupt with debts of just £750 these costs can dwarf the original debts. Currently, there are no statutory limits for fees and it was pointed out that one compliance adviser told the researchers that practitioners simply “work within the rules and their own moral compass”. Moore highlighted the case of former pop star Kerry Katona who has gone bankrupt twice in the last five years. Katona had revealed her original debt of £82,000 had spiraled to £430,000 as a result of the accountancy and legal fees. This has not gone unnoticed by debt advisers, charities or the government, and you can expect some ‘announcements’ as early as this month. 4

One year on from key updates to the UK Corporate Governance and Stewardship Codes, early indications are that UK companies are responding in a positive manner to the changes introduced by the Financial Reporting Council in October 2012. While most companies are only required to report formally in 2014 on how they have applied the 2012 version of the code, many are already disclosing their boardroom diversity policies. There has also been an increase in the level of audit tendering activity. However, on the minus side, the report shows that early adoption of new reporting recommendations on the activities of the audit committee and confirmation that reports and accounts are fair, balanced and understandable has been less widespread. FRC chairman Baroness Hogg said: “Companies and investors need to demonstrate that there is substance behind their statements of good intent. While both have made progress in this regard there is clearly more still to do.” She felt the variable quality of explanations of compliance remains an Achilles heel. Hogg stressed: “While companies are getting better at describing their actual governance arrangements, many still struggle to articulate clearly why they have chosen to deviate from the Code and we would recommend that companies refer to FRC guidance released on this.” NQ Magazine January 2014

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Paying the price Devolved taxes for lack of sales

Debenhams’ finance boss Simon Herrick hit the headlines for all the wrong reasons recently. He quit the retailer just days after the company warned of poor sales during the key Christmas period. Herrick joined Debenhams just two years ago, but has been under pressure from investors since announcing profit warnings in February 2013. Herrick’s letter to suppliers just eight days before Christmas was also made public. He was seen to be asking for a 2.5% discount on their supply prices, and it was assumed that this was a last-minute attempt to boost falling profit margins. The £7.5m headquarters move also put Herrick in the spotlight when announcing the half-year results. He is seen as straight-talking, but the big job of any FD is to manage market expectations. Still, he will be paid a year’s salary of £410,000 plus other benefits, amounting to around a £500,000 pay-off.

This year is going to be an historic one for Scotland, with a referendum on whether it should become an independent country. It should not go unnoticed, however, that from 1 April 2015 Scottish ministers will have powers to administer new ‘devolved’ taxes to replace the UK Stamp Duty Tax (SDLT) and Landfill Taxes. Until then, as Baker Tilley’s David Wilson explains, the UK government remains responsible for these. That means it can introduce changes prior to the introduction of replacement Scottish taxes. Transitional rules will be in place when SDLT is withdrawn and the new Land And Building Transaction Tax is introduced, but anyone considering buying, selling or leasing property in Scotland needs to be aware which tax is due and when! A new tax collection body, called Revenue Scotland, will be established to collect and administer the devolved taxes. It will have authority over penalties, anti-avoidance rules, resolving disputes and mediation. Appeals relating to the devolved taxes can be submitted to the new Scottish Tribunals service.

New year, new you CABA is launching its first ‘Your Winter Wellbeing’ campaign, which will focus on helping chartered accountants with a wide range of difficulties they may face during the winter months. Its ‘New Year New You’ campaign will focus on longerterm solutions to problems such as emotional support, debt advice following on from Christmas spending and career support. Over the years, CABA has found that people tend to enjoy the Christmas break before tackling any deeprooted problems in the New Year. Kelly Feehan, CABA’s service manager, said: “Clearly, these are often difficult matters for individuals to acknowledge and chartered accountants are making difficult and brave decisions in their desire to bring about genuine change. Facing up to these problems usually requires expert help and it is here that CABA can provide a high level of support.”

More details about ‘Your Winter Wellbeing’ can be found at NQ Magazine January 2014



What are the technology trends reshaping the finance profession? The ACCA’s Faye Chua reveals all


he top 10 most impactful technologies that have the potential to reshape the accountancy profession in the UK and around the world have been identified in an in-depth report from ACCA’s Accountancy Futures Academy and IMA (Institute of Management Accountants). Called ‘Digital Darwinism: thriving in the face of technology change’, our report says that the profession and business landscape will be impacted by: mobile; big data; artificial intelligence and robotics; cyber security; educational; cloud; payment systems; virtual and augmented reality; digital service delivery; and social. The trends were identified from interviews with global academics and experts in the accountancy and 8

technology industries, alongside a survey of more than 2,100 ACCA and IMA members globally. Respondents were asked to what extent they expect technological developments to transform the way accountants and the finance function do business over the next decade. The profession has always taken technology to its heart, and in some respects is seen as an early adopter. But the report also asserts that the accelerating advances in technology will demand new skills and competencies from accountants and finance professionals, from change management to knowledge of data extraction tools in the mining of business intelligence. So let us look specifically at three of the 10 specific technologies:

●M  obile: 75% of UK respondents say it will impact business in the years ahead, compared with a massive 95% in Australia, the highest score among global respondents. ● B ig data: The UK is one of the least clued up about the impact it will have on business at only 52%, alongside Ireland, who scored the lowest at 47%. Again, Australia scored the highest, at 91%. ● Cybercrime: Only 51% of UK respondents are concerned about the risks associated with cybercrime, compared to 74% in Africa, where respondents were the most concerned despite the continent being the least at risk, according to the report, from cybercrime attacks. NQ Magazine January 2014


Digital Darwinism: come out of your shell Chris Gentle, partner and head of research at Deloitte, and member of ACCA’s Accountancy Futures Academy was quoted in our report as saying: “Accountants and finance professionals must be open to the changes created by big data, cloud, mobile and social platforms, and face up to the demands of cybercrime, digital service delivery and artificial intelligence. The future will not be like the past and we will all need to adapt.”

Agents of change Accountants and finance professionals around the world are influential agents of change – they’re adept at using technology to advance their careers, their clients and the organisations where they work. But there is a warning in our NQ Magazine January 2014

research – that UK accountants need to flex their influence more within their own businesses and practices and with their clients, as UK accountants score amongst the lowest for tech influence. Only 45% of accountants and finance professionals in the UK said they influence technology decisions amongst their clients, and only 66% within the organisations where they work. So there are, of course, challenges ahead for the profession. It needs to shape the technological future rather than be shaped by it. The profession needs to be proactive; the changes ahead are an opportunity to redefine their role and the extent to which they are involved in short and long-term technology related decisions. They need to adapt to survive – hence the ‘Digital Darwinism’ title of this extensive report.

There are many actions the profession needs to take to deal with the challenges of the top 10 technological developments. They need to develop and change management styles, to assess risks and address security issues; they will need to explore further the impact of automation and prepare for changing working patterns. But ultimately, they need to use technology to add value, and to use their influential positions as trusted advisers to business to bring about change. NQ

Faye Chua is head of futures research at ACCA



Make it a happy new y

Kelly Feehan offers guidance to NQs on how they can make 2014 a happy and successful year 10

NQ Magazine January 2014



he end of the year tends to pass in a blur for NQs, with a raft of work and social commitments that are fun and fulfilling but also demanding and tiring. As a result, many NQs enter the New Year in a more reflective mood, recognising that this is an ideal time to take stock of their lives and asking: “What do I want to change?” According to a recent survey about New Year resolutions, there has been a noticeable shift in the kind of pledges that are made. Not surprisingly, losing weight is the most common but other popular ideas that might resonate with NQs today are saving money, spending less time on social networking sites and leaving work on time more often. But what is the best way to make these resolutions work? According to research by psychologist and author Richard Wiseman, nine out of 10 end in failure with those that lead to success tending to have these factors in common: ●C  oncentrate on one resolution: don’t try to do too much at once. Decide which single thing you really want to achieve and focus on that. ●M  ake your choice as early as possible: a spur of the moment choice of resolution is unlikely to reflect what you really want. Take some time to reflect on your decision. ●D  on’t just repeat ‘old’ resolutions: if you have failed at a resolution before, having another attempt can be dispiriting. Even if you’d still like to achieve that goal, take a new approach. ●M  ake sure it is about your own desires: don’t just decide to lose weight because everyone else in your office says they want to. What do you really want from life? If it is to learn to play the tuba, then follow your heart. ●D  on’t be vague: make your resolution as specific as possible. If you want to lose weight, think about how much; if you want to run a marathon, decide which one.

NQ Magazine January 2014

PERSONAL DEVELOPMENT ●T  ell friends and family: making sure everyone knows about your resolution is a good way to get support and use the ‘fear of failure’ factor to your advantage. ●R  emind yourself of the benefits associated with your goals: stay motivated by remembering exactly why you want to achieve your resolution and how it will make your life better. ●R  eward yourself: every time you reach a milestone on the way towards achieving your resolution, give yourself a small reward to stay motivated. ●K  eep a diary: note your progress so that you can see how far you have come. ● G et back on the horse: if you give in to temptation and fail in your resolution, treat it as a temporary setback rather than the end of the process. Everyone backslides once in a while. Interestingly, Professor Wiseman also says that there are specific gender differences when it comes to achieving resolutions. Men are more likely to be successful if they set specific goals, such as losing a pound of weight a week; women are more likely to do well if they tell family and friends about their aim, benefitting from the support of others. Making genuine changes in your life is rarely easy – especially when you are an NQ trying to cope with the pressures of work while maintaining some kind of social life. But keep these points in mind when you are making your resolutions and you will be more likely to succeed. ● Information about all kinds of subjects that may form part of your New Year resolutions – from losing weight to achieving a better work-life balance – can be found at NQ

● Kelly Feehan, Service Manager, CABA 11


Harnessing Incorrect analysis of big data is hitting the bottom line, says new CIMA survey


ig data, in its most basic terms, refers to the tools and processes that allow an organisation to create, manipulate, and manage massive quantities of information in real time. It is also now a buzzword thrown around businesses as they seek to exploit this data revolution. But incorrect analysis of this plethora of organisational data is having a significant impact on revenue, says over one-third (34%) of global finance professionals surveyed by CIMA and AICPA (American Institute of CPAs). The international survey of 2,000 12

CGMAs (Chartered Global Management Accountant) finance professionals, including those working at CEO and CFO level, revealed that 86% of organisations are struggling to turn growing volumes of data into valuable insight – and are suffering as a result. In addition, almost half (44%) of respondents said their organisation did not have the sufficient technological tools in place to understand new trends impacting their business and only 53% are investing in the capabilities to harness the benefits. The top three reasons for organisations not introducing new or improved practices are the costs, the

value not being understood, and time pressure. Worryingly, the findings are in stark contrast to the estimated impact of big data in the future, with 87% of respondents saying big data and better analytics will change the way business is done over the next 10 years and those who do not harness the concept will find themselves at a competitive disadvantage (86%) by the end of the decade. Respondents said the main barriers their organisation faces when attempting to extract valuable insight from data are: â—? D ifficulties in bringing data together NQ Magazine January 2014


g big data from different databases and silos (62%). ● E nsuring the business captures reliable, good quality data in the first place (51%). ● E xtracting insight from non-financial data (46%). ● E nsuring insight gained from data is used to improve performance (43%). ● Identifying meaningful trends and insights in a mass of data (39%). ● Intelligent visualisation and reporting of data (34%). People need to start getting more involved, and not just hope that the IT team finds a solution! Finance is one function that has a significant role to play. NQ Magazine January 2014

CIMA Technical Specialist Peter Simons said: “Big data is increasingly becoming a core business asset. According to our recent survey, 93% of respondents agreed that finance has an essential role to play in helping organisations benefit from data-related projects. “Finance professionals, especially CGMAs, are well placed to do this by helping organisations translate analytical insights into commercial insights to create value.” He added: “Delivering on this potential will make closer business partnering more important than ever. It is an opportunity that the finance

function simply can’t afford to miss.” Taking advantage of these opportunities will be challenging. It creates a need for new skills, tools and ways of thinking. But an evolution is required and if companies, and people, can take the step up, they can ensure their commercial advantage. They can ensure their future success. NQ

● The results of the survey feature in the CGMA report, ‘From Insight to Impact – Unlocking opportunities in big data’. 13


The price is right! Pricing is among the most sensitive of corporate issues, so why is it so rarely discussed as a discrete business issue?


haky consumer confidence, stiff competition and increased transparency offered by the internet are forcing organisations to reappraise how they price their goods and services, says a new report from Big four firm PwC. ‘The Power of Pricing’ survey of over 500 companies worldwide highlights some significant and also surprising trends in how companies set prices. More than 40% of respondents consider pricing to be the most effective way of growing profitability. However, only 26% believe increased prices will drive profits over the next three years, while a significant minority (17%) believe that profits will decline along with their prices. 

 PwC partner David Lancefield said: “Pricing is one of the main levers you can pull to make an impact on your bottom line. It’s especially important to get it right in a world in which investors and customers are more demanding than ever. Yet only 5% of respondents feature in the top quartile of all aspects 14

of pricing performance.” 

The results also show that as many as 60% of respondents adopt the most basic approaches to setting prices, including matching competitors’ prices or applying a fixed mark-up to costs. More sophisticated approaches, such as pricing based on customer willingness to pay, are less common. 
 Nazanin Naini, a senior consultant at PwC, said: “The greatest challenge for companies is to understand where they generate real value and to reflect this in their pricing. Many companies claim to be customer centric, yet understanding what customers really value is one of the most commonly stated challenges, with only 13% of our survey respondents telling us they have deep insight into their customers’ willingness to pay. “Furthermore, we often see companies taking a scattergun or uniform approach rather than, for example, setting prices in a way that rewards loyalty and customers generating high profitability, as

opposed to those most costly to the business.” Companies often underestimate the importance of having the necessary people and systems to support an effective pricing strategy. Nearly half of the survey respondents don’t have a pricing team to make fully considered recommendations on pricing. As a result businesses often give their sales force discretion to discount from list prices, making profit targets less achievable. Lancefield added: “Our research suggests that the infrastructure to support smart pricing decisions is not fit for purpose. Almost half the respondents struggle to develop an IT infrastructure that supports pricing, while 37% struggle with governance and decision-making. “A poor pricing strategy can result in a loss of customers and a backlash from important stakeholders. When it’s done well, it’s the most powerful and effective way to achieve profitable growth.” NQ NQ Magazine January 2014

a new

direction in tax Become an ICAS Tax Professional Businesses need tax professionals. As the economy twists and turns, businesses need to know that tax professionals are on hand to provide direction. Now it’s time for a new direction in tax: the ICAS Tax Professional (ITP). ITP is relevant to tax professionals developing their knowledge and skills in the early stages of their tax career, and also those who have been working in tax for some time and who wish to consolidate their skills and knowledge. ITP is delivered jointly by ICAS and tax training experts, Tolley Tax Training. The ITP qualification will provide you with relevant tax skills and knowledge, a deep technical tax expertise and skills development for advising clients. As a CA, ACA, ACCA, ATT, CIMA or part qualified CTA, you are eligible for a number of exemptions. To join the growing community of ICAS Tax Professionals call 0141 272 2614 or visit for more information.

For more inFormation Visit



Trading places NQ magazine tried its hand at online trading. Is this something you would like to do? Read on, to see how we got on…


ow do you land a job in the City? Getting a foot in the door has become increasingly difficult, with graduate programmes being cut and a tightening up of in-house education. A key to success is gaining practical experience and rolespecific ‘transferable’ training in a professional environment – step forward the London Academy of Trading (LAT). Part of Aldersgate Investment Management Group LLP, the LAT was formed to give trainees the tools they need to become successful in global financial market trading. LAT offers a Diploma in Applied Financial Training, which is accredited by the Association of Business Practitioners and regulated by OFQUAL. That means you get a qualification recognised by the industry. This Level 5 diploma aims to provide the foundations and knowledge to start a successful career in financial market trading across forex, futures, stocks, commodities and indices. It was stressed that the diploma does not just teach 16

you about making money – it is about getting a qualification that has real value, too. Online learning is a key part of the programme and there are pre-recorded and daily webinars to download and watch. All together you get around 350 hours of tutoring. In the last month (it’s a three or four-month course) you get to go on the trading floor, where you are guided and mentored in trading techniques. The programme is also good for those who are not academically strong – the emphasis is on the practical. But be warned, there is still a two-hour closed book written exam at the end of the programme. You will be expected to trade every day and provide P&L reports. A strategy presentation is another key part of the final phase. This is good preparation for anyone who will be later looking for private investors. The cost of the course is around £5,000, and there is an opportunity to pay by instalments. The courses start every month on a rolling basis. NQ Magazine January 2014


LAT’s Nastasha Page told NQ that she is more than happy to arrange a ‘taster’ session for those interested in the scheme. Be careful – you will be hooked, it is really good fun! To find out more contact her on or take a look at You can follow them on Facebook, Youtube, Twitter and LinkedIn. NQ

TRADER FOR A DAY... NQ magazine’s Graham Hambly spent the morning at the London Academy of Trading on their senior portfolio management floor in the centre of the city to talk to students and tutors, who were studying and teaching the Diploma in Applied Financial Trading. When we turned up at 9am many of the traders and students were well into their working day. LAT’s Natasha Page was on hand to talk us through the programme. She stressed that the whole aim of the diploma is to help get recruits ‘desk-ready’. She felt the blended online tutoring and professional NQ Magazine January 2014

The Professional Trading Financial Programme was launched in cooperation with LSBF, and the Level 5 Diploma qualification by the London Academy of Trading is offered in partnership with LSBF Online

simulations really help to do this. When we visited it was very busy, with five tutors on hand to provide guidance. The first thing they do is open an account for us, and then explain how to track shares and currencies using the Saxo platform. Trainees are encouraged to do lots of trading so they get used to the process. We were told that ‘price’ is everything – because they are trading for just a month it is one of the few times they will be encouraged to think short-term! Page also explained that most of the academic stuff is front-loaded and 80% of it comes in the first month.

Interestingly, when we were visiting there were two women on the course and about 10 men. We were told that trading could be an area that women could excel at! Apparently, a lot of men are ‘macho traders’, a bit over-confident. That means they invest in more risky stock and often do worse on the trading exercises. With so many experts around we had to ask about the current state of the market. We were told it was a bit dull – “it has gone up but also gone sideways, so it is not trending anywhere,” said one trader. But remember, things change. 17


Keep up-todate Here’s a quick guide to ACCA’s CPD requirement


CCA members are required to complete continuing professional development (CPD) throughout their careers. The ACCA’s approach to CPD is designed to help you maintain and develop the knowledge and skills you need to succeed in today’s dynamic and demanding business environment. CPD is flexible and can be acquired using a range of learning methods – if the activity is relevant to your current or future role then it can count as CPD. ACCA's CPD requirement recognises that members need practical yet flexible options for achieving CPD. We offer four different CPD routes: ● Unit route ● U  nit route – part time or semiretired ● ACCA Approved Employer route ● IFAC body route The unit route is for members who plan and organise their own CPD. If you follow the unit route you need to complete 40 units of CPD each year; one unit is the equivalent of one hour of learning. While 21 units must be verifiable, the other 19 can be non-


verifiable. When planning your CPD it is important to focus on its relevance to your role and career ambitions. ACCA members are required to complete and submit a CPD declaration each year by 1 January. You are required to keep CPD evidence for three years in case you are selected for a review (we only request evidence when you are selected for a CPD review). New members are required to participate in ACCA's CPD programme from 1 January of the year following admittance to membership. An ACCA affiliate who has held affiliate status for three years or more must participate in relevant and sufficient CPD if they are not fulfilling any of the practical experience requirements required for qualification and admission to membership.

CPD support and resources We want to help you get the most out of your CPD activity, so take advantage of all the resources ACCA offers in our CPD hub, My Development. Here you can find a

great range of flexible, interactive and affordable learning resources covering a whole host of relevant technical and business skills. There’s a variety of learning formats too, including: articles, online courses, face-toface events, podcasts, webinars, research and qualifications. For further information on ACCA’s CPD programme, try our online coaching tool – the CPD i-guide. NQ

Clare Hodgson is Professional Development Manager at ACCA Useful links My Development – ACCA’s CPD hub member/cpd.html Managing your CPD – guidance on ACCA’s CPD requirement member/cpd/members-cpd.html CPD i-guide – online coaching tool Quick guide to CPD content/dam/acca/global/PDFmembers/2013/2013-Q/Quick%20 guide%20to%20CPD%20final.pdf

NQ Magazine January 2014


Taking a new direction in tax How getting ICAS’ Tax Professional qualification can help you improve your career prospects


he ICAS Tax Professional (ITP) qualification offers tax professionals a flexible, relevant and comprehensive route to enhance their tax knowledge and career prospects. Delivered jointly by ICAS and tax training experts Tolley, the qualification structure and syllabus content have been developed in consultation with tax practices to deliver and test the relevant tax skills and knowledge of a tax professional. The qualification is open to tax professionals developing their knowledge and skills in the initial stages of their tax career, and to those who have been working in tax for some time. It is also relevant to qualified chartered accountants looking to build on their tax expertise. ITP is delivered as both a dual qualification with the CA and as a standalone qualification. One of the first employers to train ITP students was KPMG, and to date more than 250 KPMG Tax Business School students have embarked on the ITP qualification. Paul Long, chief operating officer of tax at KPMG LLP, said: “Our trainees study a combined CA/ITP qualification allowing then to benefit from a seamless transition between the two. This is driven by consistency in the learning materials, delivery and exams. The ITP builds on the strengths of the CA qualification, providing deep technical knowledge, and equipping trainees at an early stage of their career with the level of skill and knowledge our clients expect NQ Magazine January 2014

from a tax professional.” David Irish is currently taking the CA qualification alongside ITP at KPMG. He commented: “When I started at KPMG, the ITP qualification had just been launched and I was part of the first intake to study towards the new qualification. Despite the qualification being brand new, it struck me how detailed the syllabus and learning materials were”. Irish works in corporate tax, specifically focused on the financial services industry. He added: “The qualification has proved invaluable – on a daily basis, I come across problems and issues where I can apply what I learned during my ITP studies.” As a standalone qualification, ITP provides students with a flexible approach to learning. Jennifer Houston, an assistant tax manager at RSM Tenon – which was recently

acquired by Baker Tilly – was the first person to qualify as an ITP earlier this year. She said: “ITP has expanded my knowledge and understanding of all key taxes, assisting me in developing skills which I am already applying to a variety of client scenarios. ITP covers a wide range of tax issues that are likely to be faced with on a daily basis. It’s very flexible in nature if you don’t want to sit all exams at different levels in one sitting.” Houston considered the qualification to be hard work but she said: “The support is there to help get you through it. It is challenging but really worth it.” NQ

Enrolments for the September 2014 exams are now open. For more information call Matt Mills of ICAS on 0141 272 2614 or go online to 19


Being human LSBF’s Steve Priddy explores corporate governance, ethics and the psychological contract


t a recent workshop on corporate governance and ethics I used a slide about the quality of risk management and internal controls as set down by a large multinational corporation in the banking sector. I asked the attendees whether they could identify the identity of the business, and was very disappointed when one guessed correctly that it was Lehman Brothers, and that the slide came from a presentation only months before the biggest corporate bankruptcy in history… I went on to explore where we are with corporate governance. This is no longer a side issue in the business and finance world. I was speaking on a Monday and the previous weekend’s FT had at least eight stories pertaining to corporate governance, one actually making the leader column. Yet for all the bluster and hand wringing around the details of, for example, the Combined Code in the UK (not forgetting they do governance 20

completely differently in Germany), there continues to be a rather pedestrian box-ticking feel to how the regulations are developing. And, as I tried to demonstrate to my audience, it is all pretty much top down, from the perspective of the board of directors. Equally important in my view is the perspective looking up the organisation, often characterised as the

‘psychological contract’, or ‘how we do things around here’. What I want to set down here is a few facts about an employer who I worked for over 20 years in various roles, departing of my own volition at the end of 2007. Of course, I realise I was lucky in that sense. First of all, for readers of NQ, some facts and figures:



Profit before tax


Profit share to staff


Profit margin before profit share


Corporation Tax


Effective Corporation Tax rate


Ratio of average staff salary to highest paid salary

10.4 times

Worldwide staff numbers


Source: Financial Statements 12 months to 31.3.12 and own calculation

NQ Magazine January 2014

CORPORATE GOVERNANCE It is a company often compared to John Lewis Partnership, which evolved as the result of something of a vanity project. Originally founded in 1946 as a conventional human partnership, the founder sought for an organisation that would carry his name into posterity and one that it would be impossible to take over. The journey, not without bumps along the way, saw the human partners give up their shares in the business for a salary; the establishment of a partnership with two corporate partners; the takeover of one partner by the other; and then embedding this corporate entity in a trust framework where the beneficiaries are existing employees and pensioners, and the trustees are members of the main board and pensioners. The organisation breaks many of the corporate governance rules. For example, there is no CEO, the main board consists of 12 executive and only two non-executive directors. Members of the workforce are effectively shareholders since every employee is allocated a number of shares, based on earnings and length of service. The sole purpose of the shares is to serve as the basis for calculating a bonus

NQ Magazine January 2014

paid twice a year, based on profits and seeking to distribute a considerable amount out of profit, the remainder being paid out as corporation tax or transferred to reserves. The shares cease to exist when one leaves the firm’s employment. But the psychological contract is also about a series of often mundane aspects. For example, at this firm payday was the 15th of every month, the founder’s philosophy being that employees should be rewarded fairly, two weeks in advance and two in arrears. The annual staff survey response rate at over 80% amazed the organisers; apparently, only the BBC manages to achieve a higher rate. The final salary pension scheme, closed in 2008 to future accruals, unlike many similar arrangements, did not take contribution holidays when times were good. The firm works in the property and construction sector. Its site staff are provided with generous death and serious injury insurance. That benefit was extended to all staff without question. The firm is an active member in disaster relief agencies and allows staff time off for those activities. I could go on.

One of the most distinctive features of this organisation was the continued attention and deference paid to a speech given by the founder in 1969, and nowadays known as ‘The Key Speech’. This is a rambling contemplation of business, philosophy, ethics, design and profit. However, the one phrase that is, or was, embedded in the culture of the place was the term ‘…straight and honourable dealings’. Looking back now I realise more certainly than ever before that corporate governance is not about tablets from on high, nor is it about change management programmes driven by management consulting fads. It is actually about messy, spirited, honest, often egotistic individuals doing their best to get it right, for their customers and their fellows. NQ What’s wrong with that?

Dr Steve Priddy is Head of Research at LSBF





NQ Magazine January 2014


Aaron Etingen offers advice on what to expect when you launch your own business


very entrepreneur, at some point in their career, will be faced with the same question: how can I be sure it’s the right time to give up the safety of my job and become a full-time entrepreneur? Making this leap of faith is not a decision to be taken lightly. If your company has reached this stage, it probably means that you are confident about your business model and product. In most cases, the main cause for concern tends to be a business’s financial stability. The big question then becomes: “Will I be able to maintain my lifestyle? Will I be able to pay the bills?” Although the current economic instability means that things can change overnight, there are some steps we can all take to ensure that our entrepreneurial ventures are worthwhile. Planning: If there’s one universal truth in business, it’s that there will be bumps on the road to success. Research is vitally important. Taking risks is essential for the success of any entrepreneur, but being prepared and having a safety net for when things don’t go as planned is the difference between those who make it and those who don’t. Good planning, understanding of your market and a sound development strategy will ensure that even the biggest setback is accompanied by two steps forward. The people factor: Companies are made of people. The people you choose to have around you will directly affect the success of your business. This is particularly relevant for startups as they tend to be short-staffed, with the few people who are there performing business-critical tasks. If you are a one-person business, you should never be scared to ask for advice. Be open to the thoughts and opinions of anyone who could help you, whether that’s parents, a university lecturer, a friend, a competitor, a service provider, a solicitor or a customer. There will always be someone out there who knows more about a topic than you do – don’t be

NQ Magazine January 2014

shy of asking for their advice, they will probably like it. Get your numbers right: This is where most first-time entrepreneurs get it wrong. In my last column I said that, as an accountant, you are probably better placed than most when it comes to the financial side of your business. Although securing financing can be daunting, today there is a wide range of funding options available for selfstarters. Whether you are securing help from incubators or venture capital, angel investors or crowdsourcing, it’s important to ensure you can cover costs and survive the odd rainy day. You will never completely eliminate risk – you can research every angle, hire the right people and have a great source of investment, but if the economic scenario changes, or your competitors are quicker to react, it could all be for naught. So perhaps the most important lesson of all is: sooner or later you’ll have to go for it. Don’t be afraid of failure! It’s part of being an entrepreneur, and what’s more it will probably be the source of your most important lessons; not just about business, but also yourself. NQ

Aaron Etingen is chairman and founder of the London School of Business & Finance (LSBF) 23


Head in t New research shows small firms are demanding services that many accountants are failing to provide


ome 88% of the UK’s SMEs are demanding cloudbased services, but only 37% of accountants are providing them, according to a new survey from accountancy software developer Intuit. Its ‘The Changing Role of Accountancy’ study shows that the vast majority of UK small businesses now expect their accountant to embrace cloud-based solutions and more than half (58%) are willing to pay more for the privilege. These findings highlight a gap between the services accountants currently offer their small business clients, and the level of innovation that SMEs are now demanding. Intuit surveyed 200 small businesses and 100 accountancy firms across the UK, and found that accountants need to move from desktop to cloud-based software or risk losing clients. The research, conducted by Coleman Parkes in September and October 2013,


highlighted that 40% of SMEs believe their accountants are far too traditional to move to the cloud and almost two-thirds (72%) believe their accountants should update their software to the cloud. This includes being able to provide an up-tothe-minute service anytime, anywhere and on any device including laptop, tablet and smartphone. Mike Williams, Intuit’s head of business, commented: “The findings from our study serve as a plea from SMEs to British accountants to embrace new technology and offer new services. Small firms expect this and many are increasingly looking for their accountants to drop the ‘number cruncher’ label and offer cloud-based services. It is a worry that 62% of accountants don’t recognise the additional revenue opportunities associated with providing business-consulting advice, despite almost all (95%) of their customers willing to pay more.”


NQ Magazine January 2014


the cloud According to the survey, nearly two-thirds (65%) of small business owners expect their accountants to operate as strategic business advisors, with 82% expecting their accountants to be more proactive in developing value-added services. Many business owners may not be prepared to wait for traditionalist accountants to embrace modern practices, and are likely to transfer their businesses into the hands of more progressive accountants if they don’t step up and embrace the cloud. Robert Welch, Director of London tour guide company smallcarBIGCITY, said: “It’s crucial that our accounting practices evolve with our business to enable us to run efficiently and remain competitive. As we look at ways in which we can improve our company operations, one of the obvious places to start is in managing our finances. Businesses can’t turn to their bank managers for advice in NQ Magazine January 2014

the way they could years ago, so having an accountancy firm who can offer business advice as well as offering an accounting system that is accessible anywhere is key to the sustainable growth of our business.” Intuit’s Williams added: “The study should act as a wake-up call for accountants, highlighting how the profession has irreversibly changed in a time of rapidly evolving technological advancements and heightened client expectations, specifically related to cloud-based offerings. Accountants must move with the times and offer the services required by the small businesses of today in order to stay ahead of the curve and retain NQ a healthy client roster as we enter 2014.”


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