Incorporating NQ magazine
EY now the largest recruiter of PQs Just under 20,000 PQs were signed up by the UK’s top 75 accountancy firms last year, says the new annual survey from Accountancy Daily. The latest figures show the number of trainees studying towards a professional qualification in these firms levelled off in 2020, to 19,741. The Big 4 take on the bulk of
these students, some 12,150. That, however, is 3% down on last year. Both EY and KPMG took on more PQs in 2020, with EY becoming the biggest recruiter for trainee accountants. It signed up 3,831 PQs in total. Meanwhile, both Deloitte and PwC made big cuts in trainees last year. In 2018, PwC took on 4,273 trainees, but in 2020 it had reduced this to
2,713. Deloitte recruited the lowest number of trainees at 2,064. Below the Big 4, BDO grew student numbers by 18%, taking on 1,328 (1,130), and Grant Thornton recruited roughly the same number of PQs as 2019, at 991. The survey also looks at the most popular qualifications, and perhaps not surprisingly the
ICAEW dominates, as in previous years. Some 11,118 trainees are studying the ACA qualification – that’s 72% of the total. EY still favours the ICAS qualification, and this helps to make it the secondmost popular qualification. There are also 1,113 ACCA students in the top 75, 535 CIMAs, 89 CIPFAs and 1,502 AATs.
AAT REMOTE EXAMS GIVEN GREEN LIGHT
AAT remote invigilated (RI) exams have now gone ‘live,’ following a hugely successful pilot scheme. However, AAT said the RI exams will be rolled out on a phased basis, so that it can “continue to manage the risks and ensure quality”. AAT’s remote invigilation pilot was launched in September 2020 with partners PSI. And while it was due to end in December 2020, it was extended until March 2021. Suzie Webb, director of education and development (pictured, right), told PQ magazine that the extension was to allow more students to participate across a slightly wider range of assessments and to provide AAT with a richer evidence base for evaluation. That evaluation is now complete, and RI exams are here to stay. This is a massive boost for AAT studiers who were unable to sit assessments when colleges closed in the first wave of the pandemic last year. Students were also left high and dry as individual centres made their own decision about whether they stayed open or not as the country opened up again. Assessments were still ‘being affected’ at some venues even at the beginning of 2021.
In all, 29 training providers were approached for the pilot, all of whom were approved for the relevant qualification being offered through the pilot. The providers also had to meet certain additional criteria, such as not having had any recent sanctions or malpractice investigations. Premier Training was one of those involved in the pilots. Operations director Rose Crockett
praised the move: “It is a fantastic opportunity for AAT students to sit selected assessments from the comfort of their own homes. It also means they can keep progressing through their AAT qualification.” Webb revealed that the pilot went extremely well, providing AAT with a wealth of useful data and feedback, both from students and providers. She said: “The overwhelming majority of feedback was positive, as well as identifying some areas where improvement could be made.” Pass rates for RI exams are also looking good. Webb explained: “Evidence thus far demonstrates pass rates are in line with expectations for the same assessments when being taken via the usual method in a training provider/assessment venue, but this is something we will continue to monitor and evaluate closely.” However, Webb stressed that RI exams will not suite everyone. “Many students continue to prefer to sit at their training provider venues, as this is more familiar to them,” she said. • Check out the latest AAT pass rates and our feature of Qual ‘22 inside this issue.
IN THIS ISSUE reporting a rise in wages and the return of bonuses, according to a survey from GAAPweb
A note from the Editor I recently sat down with senior people at ACCA to discuss problems at the June exams. Both Claire Bennison and Leigh Currie were genuinely upset about what had happened, wanted to listen, and were totally transparent and honest about where the problems are and what they are trying to do to make it right. We would like to see a clear action plan moving forward, where ACCA shows its PQs more pastoral care. I once went to a restaurant and found a plug from a sink in my salad! Me and my guest were given the meal for free, and rightly so. If something goes wrong with the exams students should get proper recompense. Maybe an ACCA student working group could be set up to work out what that should be! That said, perhaps the most important thing for us still is to get you qualified. Resilience is the name of the game. You have to brush yourself off and get ready for the September sitting. The ACCA qualification is a fantastic passport to a wonderful career. PQ magazine will be with you on the journey and ACCA is working hard to offer support, too. Graham Hambly, Editor and Publisher, PQ magazine News 04 AAT pass rates AVSY success rates remain low
10 ICAEW exam woe Institute apologies for tech failings in June’s AA sitting
05 ACCA exam nightmare ACCA chiefs pledge to do better by their PQs going forward
12 CMA probe Competition and Markets Authority investigate tech giants over fake reviews
06 ACCA voucher scheme Association launches pre-paid vouchers redeemable against exam entry fees
Features, etc 14 Have your say How ACCA can put right its exam nightmare; and more ACCA problems in Pakistan. Plus our social media round-up
08 AIA spotlight Streamlined professional qualification launched 09 2021 Index Status Report The rise and rise of reporting on an accrual basis
16 CIMA exams We know what the examiner really wants from case study exam sitters 18 The jobs market PQs are
20 A question for Tom So what’s the difference between OCI and OCE? Tom Clendon explains all 21 ACCA spotlight What will the finance function look like in the future? ACCA’s Clive Webb makes some predictions 22 AIA’s new qualification Association launches new professional qualification and online learning platform 23 International standards Financial instruments, and all you’ll ever need to know about amortisation 24 New proposed audit body Will the new corporate audit body be a costly distraction and a drain on talent? 26 AAT AQ 2022 The AAT is shaking up the way the qualification works, so what will be different? 28 AAT PT exam The basics you need to know to tackle the Personal Tax paper 30 Keep it simple Neil Da Costa looks at the way close companies operate 31 AAT pass rates We have all the important numbers, from December 2020 32 CIPFA spotlight Top advice from three studiers who have been there, done that when it comes to the strategic case study exam
p22 34 ACCA PM exam Why you should take a visual approach to calculating variances 36 Credit and cash sales In the latest in her AAT series, Teresa Clarke explains this concept 37 Free Xero certification Boost your CV with these gifts from us 38 Leadership Be prepared for changes to the workplace 39 Careers Life at Rolls-Royce with our Apprentice of the Year; Agony Aunt Karen Young’s sage advice; and our book review 40 Fun The lighter side of life; and more great PQ giveaways The columnists Lisa Nelson What we can learn from the 70-20-10 theory 4 Robert Bruce Finance chiefs hold the keys to change 6 Prem Sikka It’s time to clamp down on essay mills
Anna Kate Phelan Making remote exams work for you 10
To subscribe go to www.pqmagazine.com
TUTOR IN YOUR POCKET
Calling all ACCA PM students – here’s a unique chance to win your very own private tutor for the december sitting. Yes, you can win a course with Jo Tuffill! See page 25 for all the details PQ Magazine August 2021 PQ Magazine August 2021
LISA NELSON What we can learn from 7020-10 In the 1980s, a model emerged based on research by Morgan McCall, Michael M. Lombardo and Robert A. Eichinger. It was called 70–20–10. Managers were asked how they learned best in the workplace. The findings were surprising: 70% of learning came from experience, experimentation and reflection (experiential learning), 20% from working with others (social learning) and only 10% from formal learning. But the research wasn’t looking at how students should learn – remember these were managers, and the low percentage for formal learning has been criticised. So why am I telling you about this? Well, it’s because it highlights that formal learning is only one part of the learning process. It’s important for sure but don’t underestimate the value gained from something like social learning, for example – talking with your fellow students, asking questions and figuring out answers together. Think of social learning as the glue that holds together information learned from more formal sessions. As for the experiential learning so valued in the workplace, this is why thinking of realworld examples and attempting questions can be so effective. They force you to reflect and experiment as you try to make what you have learned fit within different contexts. Maybe 70–20–10 does have a few lessons for students as well! Lisa Nelson is Director of Learning at Kaplan
AVSY pass rates ‘stay low’ AAT PQs seem to be struggling to pass the Advanced Diploma Synoptic Assessment, with the pass rate now hovering just above 50% at 53.3%. The newly compiled worldwide pass rates show students sitting the Introduction to Business and Company Law at Foundation also seem to struggle – with a pass rate here of 57.8%. Then there’s FSLC, which has a 65% success rate. The rest of the assessment pass rates range from 71% to 97.9% (that’s BPLS). That all translates into a CBA pass rate for Professional of 68.8% and for Advanced it’s 75%. Both of these stats are actually up on the previous overall pass rate figures. When it comes to getting a
distinction just 3% were handed out to those who are awarded the Professional Diploma in Accounting, and the number of distinctions given out for the Foundation in Accounting and Business has fallen to 16% (it
Practical training is key AAT PQs will give themselves a huge advantage in the jobs market if they integrate their study for the qualification with practical accountancy training, says Future Connect’s Umar Tariq. Future Connect was recently shortlisted in two categories at the PQ magazine awards. And when we visited one of its AAT’s had just landed a management accounting job paying £42,000.
This is not an unusual event either; since September last year more than 273 of its AAT trainees have landed a job, many their
Students don’t want remote learning Students at the University of Manchester have launched a petition calling on lecturers to move back to the lecture halls, rather than staying online next year. Vice-Chancellor April McMahon told the student paper ‘The Tab’ that moving forward the university would be moving to a blended learning approach, with a mix of
face-to-face and online teaching. More than 5,000 students – and counting – have signed a petition calling for a return to in-person lectures. If this does not happen then students want to see a reduction in their fees. The petition was launched by Emily Bennet, who said: “UoM has decided that blended learning should continue in the long term
was 19%). Meanwhile, the number of distinctions awarded for the Foundation Certificate in Accounting rose to just under 50% (49%). • Check out all the latest pass rates on page 31. first. Tariq stressed that for many of its students this was their first accountancy role, and he knows that it is the practical training it provides that gets them the job. Future Connect uses a panel of experts to ensure all its training is in line with the latest legislative changes. By combining expertise from practice and academia it ensures all bases are covered too. • We are joining forces with Future Connect for a new IFRS series, and Practical Insight videos. So watch this space. with only ‘interactive’ content being delivered in person. “Students are obviously unhappy with the decision as we don’t feel like we were adequately consulted on the matter, and particularly for humanities subjects this change would result in drastically lower contact hours per week as non-interactive lectures make up the majority of the content in many degree programmes.”
In brief Pap Qual 22 explained In a few months’ time the new AAT qualification is being introduced. Training Link’s Mark Hempinstall has provided us (and you) with a fantastic video in which explains what it could all mean for you. Check it out at https://vimeo. com/574032702. You can read Mark’s piece on page 26 of this issue, too. Pap CIMA free resits until 31 July The CIMA free exam resit offer runs out on 31 July 2021. 4
If CIMA PQs are unsuccessful in their exams up to that date they will be eligible for a free resit. No shows are excluded and only one free resit will be applied during the promotional period. The offer is valid for OTs exams at Operational, Management and Strategic level. It is also available for students who fail the Operational case study. However, students should note it excludes the Management and Strategic level case studies. For more go to https://tinyurl. com/3c6dppby
Pap ACCA June exams – instant poll Open Tuition’s instant poll for June’s exams shows SBR and both tax papers were deemed the hardest. Some 42% of SBR sitters found the summer exam ‘hard’ and a further 27% called it a ‘disaster’. ATX wasn’t far behind, with 63% describing it as either hard or a disaster. The ‘easier’ exams, according to the poll, were LW, AA and SBL. Students will now have to wait until 19 July and ‘results day’ to see if the polls are
reflected in the pass rates. • See more paper feedback on page 14. Pap Bucking the trend Some 67% of PQs received a pay rise in 2020 despite the pandemic, according to a new GAAPweb poll. The gender pay gap was also very much in evidence, with male PQs reporting average a salaries of 29% more than their female colleagues. • Check out the full report on page 18. PQ Magazine August 2021
ACCA exams chaos
ACCA – making things better PQ recently had an open and honest discussion with Claire Bennison, the head of ACCA UK, and Leigh Currie, director of Customer Service, about the problems June exam sittings
The June exams in the UK were hit with huge delays as technical issues swept through exam centres. In all, nine out of 75 venues were affected. PQ magazine was inundated with calls and emails about the problems from students who wanted answers, and quite honestly had lost patience. We asked ACCA for a meeting and Claire Bennison and Leigh Currie came online to answer your questions. The first thing we have to say is that both Bennison and Currie genuinely stressed how disappointed they were about the experience of some UK sitters this June. They took on board both our and your criticisms, particularly of the continuing problems with the Monday set of exams.
PQ Magazine August 2021
Leigh explained that every system is rigorously checked and simulations are run over the weekend before the exams. Yet despite this there have been continual problems with the last three sittings. Additional tech has now been put in place. ACCA has been able to get to the bottom of the problems – be they power issues/ shifts, hardware issues or internet connectivity. But this is of little comfort to those who put in all the
hard work for this one day! ACCA is taking onboard one of our suggestions immediately. They will be asking all exam centres to provide photographic evidence of the exam set-up before exams start. Bennison said that she was disappointed it had come to this, but it had “got to that point”. We had said students have to show the invigilators of the RI exams their room, so why shouldn’t the exam centres do the same for ACCA? Bennison also said there was a balance to be made between the number of centres and accessibility. There is a concern that students could end up with fewer venue options, increasing the cost to students and creating more pressure on exam day. We asked about providing a free remote resit exam to students who had their exams cancelled, which happens at the lower levels as these exams run into the second week. Currently, ACCA does not have
enough content for this, but they felt this was a good idea and promised to explore this as an option going forward. We also felt that if this was not possible, then the affected June sitters should be given a free revision course for September, so they are not disadvantaged. Again, they promised to talk to their learning partners about this. The pictures of the cabling at some centres shocked them and Currie said: “It’s disappointing they didn’t meet our standards.” And we called for a totally refund of exam fees and a free resit for those students affected. Some only received a £30 discount if there was a slight delay (three hours). Both Bennison and Currie wanted to explain how much their teams really care, and although it doesn’t change students’ situation, they will be working 24/7 to make things work better.
ROBERT BRUCE Finance chiefs hold the key to change There has been much debate over how much power a finance director or CFO has in the corporate arena. Are they omniscient because their skills span the whole of a board’s strategy? Are they the spider at the heart of the web? Do their figures pull the corporate strategy this way or that? Or are they traditional accountants, never seeing the wood for the trees? This debate is now sharpened. I sat in on talks recently about how far finance can tackle the climate crisis. These discussions have been going on for years and they have made tremendous if gradual progress in that time. The mantra of measuring being the route to managing, and thus forcing change, has been at its heart. But the story of finance and the climate crisis has been one of a need for finance to constantly up its game. So it was good in the heart of the recent discussions to hear CFOs going on the offensive. They argued the natural behaviors of finance people were aligned with tackling change – searching for solutions, constantly questioning and bringing a dose of cynicism to the approach. Tracking and reporting was seen as critical. And crucially, as one CFO said, “we hold the pen on this”. CFOs get to say what people are accountable for and dictate how the business thinks. And the final rallying cry was that this was a ‘super, super exciting time for finance people’. Onwards and upwards. Robert Bruce is an award-winning writer on accountancy for The Times
ACCA launches new exam voucher scheme Employers and learning providers can now buy on-demand exam vouchers for their ACCA students. Both can now purchase the vouchers, which can then be issued to their students. Students then use them instead of paying when they book remotely invigilated on-demand CBEs. ACCA said this will allow students to bypass payment by entering their voucher ID when booking their RI on-demand CBEs.
The exam vouchers are available from ACCA partners at the British Council. In order to provide them to students, employers and training providers need to: • Select the location where the student will sit the exam. • Use the ‘purchase exam vouchers’ link to visit the British Council website and buy the relevant exam vouchers. • Once they receive the vouchers
A PwC guarantee PwC UK has told candidates with offers to join its school and college leaver programme that their places are guaranteed, even if they don’t achieve the grades previously required. More than 100 students received offers for this year’s programme, which is one of
Get Back to Basics Accountancy is simple if you know the basics. PQ magazine is building its Back-to-Basics video series with the help of award-winning lecturers. In the latest addition to the series, Tom Clendon looks at assets, where he explains it’s all about control. And it’s this control that helps
they need to pass it to the student. • The student can then use these vouchers to book their exam. The exam vouchers are not currently available in all locations. ACCA is planning to extend this service to all of them, as PQ magazine went to press. For more go to https://tinyurl. com/f2fwd32n
the ways PwC has broadened access beyond graduates. Depending on the role, 96 – 112 UCAS points are needed to join the scheme, which gives people the opportunity to train and take professional qualifications while earning. Laura Hinton, Chief People Officer at PwC, said: “We’re very
aware of the disruption caused to education by the pandemic and the additional pressure it’s put on students studying for their A-levels. By removing grades as a prerequisite for acceptance this year, we hope to provide some certainty and reassurance. “Given some students will have been impacted by the pandemic more than others, this year it feels fairer to guarantee entry to the programme to all students who have successfully made it through our selection process, regardless of their A-level results.”
you understand when a resource becomes an asset. You can find an accompanying article by Tom in the June issue of PQ magazine. Checkout: • Assets, with Tom Clendon – https://vimeo. com/545939340 Trail Balance, with Michele Baker – https:// vimeo.com/500074449 • Financial Maths for AFM and FM
students, with Sunil Bhandari – https://vimeo.com/446780185 •Strategic Planning Process, with Sean Purcell – https://vimeo. com/437139421 Double Entry Bookkeeping, with Tom Clendon – https://vimeo. com/429252329 Weighted Average Cost of Capital (WACC), with Sunil Bhandari – https://vimeo. com/536755049
In brief Pap Meaningless sustainability reporting A total lack of standardisation in sustainability assurance means half of current reporting is almost meaningless, according to a new study by IFAC and the AICPA and CIMA. Without proper transparent assurance the study says it becomes impossible to ‘believe’ the sustainabilityrelated information that is being reported. There are also significant differences in practices across different jurisdictions. The worry 6
for the report authors is for those that do obtain assurance it is often being provided by consultants, and not by independent professional accountants who possess the combination of skills, qualifications, experience and professional ethical obligation to act in the public interest. Pap Time to learn new tricks? Rolls-Royce CEO Warren East knows how to engender himself to his workforce – he recently said that frankly they
were “a bit old”. A spokesman for Rolls-Royce had to apologise to anyone offended by East’s comments, saying the 60-yearold was simply trying to make the point that the company needed to attract young engineers, who will be able to solve the dilemma of how a company dependent on building fossil-fuelled engines can decarbonise its business. When East joined Rolls-Royce he criticised it for its ‘accounting fog’, which he felt confused investors over cashflows and earnings.
Pap How ethical are you? Take the CCAB test The CCAB is asking accountants to take a short, anonymous survey to help identify workplace cultures that may be encouraging unethical behaviours. CCAB said: “As accountants, ethics must always be at the forefront of every decision that we make. The survey is open from 28 June to 8 August, and you can find the simple 10 minute survey at https://tinyurl.com/ yp8dhcwk PQ Magazine August 2021
AAT Distance Learning
Unrivalled support and super savings – it all adds up. We’re marking the launch of our Connect@Premier initiative with £170 off AAT Accounting courses and £30 off AAT Bookkeeping courses throughout July. Connect@Premier combines the expertise of thousands of students and the Premier Training team – to provide unrivalled support for AAT learners. We also offer interest-free instalment plans for all courses as well as FREE Xero training and certi⇒cation. You can start Premier Training’s AAT distance learning courses on any day and ⇒t your studies around your job and other commitments.
Get Started Today Start your studies the same day 24 hour online access with instant access to tutor support.
Learning Resources Award winning learning resources including printed books, eBooks & e-learning, videos and quizzes.
Assignments Prompt marking turnaround – marked by a tutor (not a computer).
Enrol before midnight on 31st July 2021 to enjoy these savings and forge your career in accountancy. Xero Advisor Certi⇒cation
Premier Training has teamed up with Xero and is pleased to offer the Xero Advisor Certi⇒cation Equivalency Course FREE OF CHARGE to anyone who enrols.
It’s time to clamp down on the cheats
Technology has enabled students to take online lectures and trawl the internet to produce informed work. The downside is that there are ‘essay mills’, offering fake essays and dissertations to cheating students for a fee. Instead of mastering the subject, students are able to find businesses offering tailor-made essays. Students present these as their own work. Imagine the catastrophic consequences where someone who has failed to understand the principles of building a bridge qualifies on the basis of fake work, and then designs a bridge. The bespoke nature of the essays makes it hard for teachers and plagiarism software to detect that the essay may not be the student’s own work. The full extent of cheating is not known. The UK is estimated to have some 932 operational essay mills who openly advertise their services on the internet. Some suppliers of cheating services are also known to use blackmail and extortion once students have used their essays. The government has done little to check the essay mill industry. In this vacuum, the House of Lords has debated a Private Members’ Bill that would make it a civil and criminal offence to provide or advertise cheating services to students in higher education in England. The Republic of Ireland and Australia have already enacted similar legislation. Hopefully, the UK would join them later this year. Prem Sikka is Emeritus Professor of Accounting at the University of Essex
AIA launches streamlined professional qualification The Association of International Accountants (AIA) has unveiled its new streamlined professional qualification. It means the number of exams for those taking the AIA accountancy route has been reduced from 16 to just 10, and for those taking the auditor route the number of exams drops from 17 to 11. Available worldwide, students can choose to study entirely online with AIA Achieve Academy, or through a combination of online and face-toface teaching. AIA believes its new professional qualification offers: • A quicker, more affordable
route to becoming a qualified accountant or statutory auditor. • Increased focus on the wide range of business and finance skills needed by practitioners. • Greater portability of skills between business sectors through optional papers. • Greater accessibility – students
Powering up the Prudential Code A strengthened Prudential Code will be published by the end of 2021, CIPFA has announced. This professional code of practice aims to ensure local authorities’ financial plans are affordable, prudent and sustainable. The key changes being brought forward are to paragraph 45 of the Prudential Framework, which currently states that “authorities must not borrow more than or in
advance of their needs purely in order to profit from the investment of the extra sums borrowed”. The revised Code will include
Islamic finance first Birmingham City University has launched the UK’s first accounting and Islamic Finance undergraduate degree. The BSc (Hons) will see students study Islamic economics, while developing an understanding of corporate social responsibility in modules exploring how businesses are taking greater responsibility in helping to move towards a cleaner
and more sustainable planet. Course leader Shaista Mukadam said: “Islamic finance uses tools to ensure a fair and equitable distribution of wealth, resources and growth based on profit, loss and risk-sharing, while achieving the United Nations’ sustainable development goals and ensuring ethical and sustainable processes in business and finance.”
accord. The deal follows the initial agreement at the G7 summit (see PQ magazine, July, page 10). UK Chancellor Rishi Sunak said: “The UK has been pushing for reforms to make the global tax system fairer for years and last month we achieved a historic agreement. I’m pleased to see the momentum has continued and welcome the OECD’s progress today. The fact that 130 countries across the world, including all the G20, are on board, marks a further step in our mission
to reform global tax.”
can choose between studying online from any location, or through a combination of online and face-to-face teaching. • Online assessment throughout the qualification. • Stand-alone paper in ethics to enhance critical thinking in relation to professional ethics. AIA President Shahram Moallemi said: “We are excited to launch the new AIA professional qualification, which will equip accountants with the skills and tools needed to thrive in the changing world of finance. The streamlined qualification offers an exciting new route to qualification with an increased emphasis on core skills and ethics to support accountants in their careers.” For more information visit https:// tinyurl.com/y3wkjx66 • See page 22 for more on this clarification and examples of what is and is not classified as prudent borrowing activity. These added principles are intended to protect the public purse and avoid misinterpretation of the Code’s provisions. CIPFA CEO Rob Whiteman (pictured) said: “We are confident that the proposals we will be implementing will put an end to actions that either push the boundaries of the Prudential Code or intentionally misinterpret its provisions.” Mukadam added: “Students on the course will be taught the philosophy around these principles and will be encouraged to find ways to implement them in realworld scenarios. It’s not just a course for Muslims, it’s about an ethical way of doing finance based on the teaching of Islam.” To find out more see Birmingham City University’s virtual open days on 17 October and 22 November: go to https:// tinyurl.com/yk4mv4nn
Taxwatch Pap Countries agree minimum rate More than 100 countries have now agreed to accept a global minimum corporation tax rate of 15%. The Organisation for Economic Co-operation (OECD) has brought together the 130 nations, which it now believes will end the ‘race to the bottom’ and deliver $150 billion more in tax every year for governments across the world. However, nine countries, including Ireland, did not sign the
Pap Call for clarity on status More clarity is needed on plans to devolve Air Passenger Duty (APD) to the Scottish Parliament, says the Chartered Institute of Taxation (CIOT). It pointed out that a UK government plan to cut aviation taxes to boost Union connectivity runs contrary to the Scottish Government’s plans for the tax. The CIOT was responding to a Treasury consultation on the
future of aviation tax that has proposed reducing the amount of APD paid on domestic flights. The Scottish Government had previously supported a similar approach to the tax, but reversed this position in 2019, arguing it was incompatible with its climate objectives. In contrast, Scottish ministers have now pledged to look at the possibility of increasing the tax once it has been devolved to Holyrood and replaced by Air Departure Tax.
PQ Magazine August 2021
‘The New Equation’ unveiled by PwC
PwC has announced bold plans for its international network. ‘The New Equation’ has been described (by PwC) as “a revolutionary approach to see new opportunities and serve clients as they work to build trust and deliver sustained business outcomes”. To deliver on this promise PwC reportedly plans to increase its workforce by 100,000 worldwide in five years. Expanding the workforce by a third doesn’t come cheaply, and it said it will spend $12 billion to reach its goal. In the UK, overall staff numbers will rise from 22,000 to 26,000. Global chairman Bob Moritz said: “The profound changes in the world mean that our clients can only succeed by creating a virtuous circle between earning trust and delivering sustained outcomes.”
PQ Magazine August 2021
Living in an accrual world By 2025, some 50% of the world’s governments will be reporting on an accrual rather than cash basis, a new report from the International Federation of Accountants and CIPFA is predicting. The 2021 Index Status Report found in 2020 some 30% of the 165 jurisdictions it looked at reported on an accrual basis. That’s up 6% on 2018. IFAC stressed that by providing a comprehensive view of government finances, accrual reporting helps ensure that expenditure of public funds is transparent, public officials
are held accountable, and future liabilities are recognised officially and planned for properly. It explained that with governments under more financial strain than ever following the huge levels of pandemicrelated expenditure, understanding the overall picture and making the best use of the remaining resources is crucial to long-term recovery.
In addition to the support of regional and international organisations, effective implementation of accrual accounting relies on the skills of public sector accountants to interpret the richer, more comprehensive data; as more governments move to accrual, the need for need for public sector accountants will increase correspondingly.
Sage move by Manchester Met Manchester Metropolitan University plans to boost its accounting and finance degree with IT and professional skills from this September with a new tie-up with Sage. Manchester Met will be using Sage Business Cloud Accounting and Sage Qualifications interactive e-learning portal for all its accounting and finance students.
This new qualification will be a mandatory unit for second year students studying for their BSc Accounting and Finance course. The unit also covers key skills in both accounting software and cloud computing. The collaboration is the first in which Sage Business Cloud is being deployed by a university course using the innovative Sage Data Automarker, which allows
learners to easily submit data for automatic assessment and immediate feedback. After completing the unit, students will have a full qualification that showcases the development of high-quality accounting attributes and technological skillsets that are demanded by the industry. The programme will also be supported by AAT.
ANNA KATE PHELAN Making remote exams work for you The global pandemic, while absolutely tragic, was a catalyst for many innovations. Remote invigilation of exams in the comfort of your own home via the internet is now a standard option offered by many of the major awarding bodies. There are many benefits to this method of exam delivery. Students are no longer impacted by the stress of having to get up early to traverse potentially long distances to take their exam, consequently there is a distinct cost reduction as students no longer have to pay for public transport costs or overnight accommodation, and of course, students are shielded from Covid-19 in the safety of their home. There are several aspects to consider when taking a remote invigilated exam rather than a test centre-based exam. You must ensure you complete all practice tests offered by your body and make sure any necessary software applications have been downloaded ahead of time. You do not want to encounter any technical issues on the day of your exam so that you can focus fully on achieving the best result possible. Additionally, make sure your internet connection is sufficient for the software requirements and that you have read the awarding body’s instructions on appropriate exam behaviour. Lastly, ensure you are in a quiet, well-lit room where you won’t be disturbed; a chatty family member may breach the awarding body’s guidelines and jeopardise your result. Good luck everyone! Anna Kate Phelan is Senior Product Manager at Eintech
Software issues for ICAEW sitters ICAEW has apologised to students who experienced ‘issues’ with the data analytics software in the June Audit and Assurance exam. It appears it hasn’t been able to fix the problems from March! The ICAEW admitted some students who sat the paper on 6 June experienced slow loading times, lagging and reference material that didn’t load. This, says the ICAEW, was due to a server issue which was resolved within 10 minutes for the majority of students. However, we have heard of students who waited over three hours to sit their exam. Others had their exams suspended, and they had to wait for it to be rebooted.
Work where you want, says Deloitte Big 4 firm Deloitte is giving its 20,000 UK staff the ultimate choice about where they work. Deloitte’s CEO Richard Houston has gone on record as saying all of its UK people will be able to choose when, where and how they work in the future, once it is safe to do so. Deloitte says that it has long championed agile working, and has allowed extended flexible working since 2014. Yet, while less than half of the firm’s UK workforce worked from home on a regular basis pre-Covid-19, the pandemic has accelerated Deloitte’s hybrid working model. It opened all its offices on 17 May 2021. EY recently told its 17,000 staff 10
PQ management accountant A successful organisation, based in Blackburn, is looking to recruit an ambitious part qualified or NQ management accountant.
Students also reported problems with the TC exam and their tax tables. Sitters said it was it the same in March, and now some are dreading a repeat in September. ICAEW explained it gave additional time to those students who it could see were impacted by these issues.
New degree launch by Queen Mary Queen Mary University has joined forces with PwC and the ICAEW to launch a new degree in accountancy, and joined PwC’s Flying Start degree Programme. Students who take the degree will receive paid work placements at PwC, enabling them to ‘earn while they learn’ at the leading Russell Group university. The Flying Start programme, lasting four years, combines a BSc in accountancy with handson, invaluable experience in the workplace. Students will undertake three paid work placements in years two, three, and four of their degree. The three work placements add up to about half of the approved
JOB OF THE MONTH
technical work experience and 12 of the 15 professional exams required to qualify as a chartered accountant, with most students continuing to build their career with PwC after graduating. The degree programme, opening for application in September 2022, will have 60 places available. Dr Ishani Chandrasekara, Senior Lecturer in Accounting and Programme Director for Flying Start Programme (pictured), said: “Everything we do is to help our students progress and achieve their goals in life, regardless of their background or what street they grew up on.”
This is a newly created position for an individual to be involved and have exposure to mergers and acquisitions, managing an existing finance team and finance business partnering across multiple UK sites. Due to the nature of the role, travel will be required only once per week.
Key responsibilities: • Management of month end process, including lead on management of the balance sheet reconciliations. • Production of monthly management reporting. • Assist with the production of the Group’s external reporting requirements. • Point of contact with external auditors for the Group’s half-year review, interim audit and year-end audit. • Assist in co-ordination and presentation of the Group’s budget. • Preparation of quarterly VAT returns. • Proactively input into the management of the financial control environment and processes. • Development and improvement of newly implemented ERP system.
• Support cash flow planning and reporting. You can expect a salary of £32,000 – £40,000. Applications close on 27 July. For more go to https://tinyurl.com/4esx6wyt
they can expect to be working from home for at least two days a week after the pandemic. The other Big 4 firms have announced very similar policies to EY, meaning Deloitte is offering its staff something different.
impact of the pandemic, 58% of those that did report before the original 5 April deadline recorded a drop in their mean pay gap, with the same proportion seeing a reduction in their bonus gap.
Gender pay gap shrinking Gender pay gaps in UK businesses are continuing to narrow, at least for companies that reported their 2020/21 data. PwC analysis shows a three-year decline among companies that disclosed their pay gaps, from an average gap of 14.3% in 2017/18 to 12.5% in 2020/21. While more than threequarters of companies have delayed reporting in line with the extension granted by the Government Equalities Office, due to the
Time to teach mental health Teaching mental health as part of the national science curriculum would positively impact future generations, according to new research by EY. The findings highlight the need for a better understanding and awareness of mental health in the UK, especially among younger generations who have been significantly impacted by the Covid-19 pandemic. Mental health is currently taught as part of PSHE but EY’s wants it on the science curriculum. PQ Magazine August 2021
London : Birmingham : Manchester : Online
email@example.com 0203 7908674
Learn Sage, Quickbooks, Xero, Payroll, Advanced Excel & More Award Winning - Practical Accounting Training under Supervision of Chartered Accountant Firm High Quality CPD Approved Training Bookkeeping & VAT Return Training Course
Bookkeeping and Payroll Training Course
Accounts Assistant Training Course
Train To Be
Train To Be
Train To Be
Sales/Purchase Ledger Clerk Accounts Payable/Receivable Bookkeeper With Average Salary of 18K to 22K Now Available Online
Sales/Purchase Ledger Clerk Payroll Administrator VAT Manager With Average Salary of 23K to 24K Now Available Online
Finance Manager Finance Assistant Bookkeeper With Average Salary of 26K to 28K Now Available Online
Management Accounting Training Course
Final Accounts Training Course
Customised Accountancy Training Course
Train To Be
Train To Be
Train To Be
Cost Accountant Finance Controller Finance Assistant With Average Salary of 32K to 35K Now Available Online
Finance Manager Assistant Accountant Accountant With Average Salary of 38K to 45K Now Available Online
Finance Controlling Finance Management Bookkeeper With Average Salary of 18K to 38K+ Now Available Online
Prepare Yourself For a GREAT Accounting Career Bridge The Experience gap between AAT Theory & Practice Now That’s an Education For your Successful Accounting Job!
AAT Qualiications With Integrated Practical Accountancy Training AAT Level 2
AAT Level 3
AAT Level 4
Foundation Certiicate in Accounting
Advanced Diploma in Accounting
Professional Diploma in Accounting
That’s so fake! The UK’s Competitive and Marketing Authority (CMA) has opened a formal probe into Amazon and Google over their fake reviews. The CMA simply believes they are not doing enough to combat dodgy reviews on their sites, and if this is the case then they may have broken consumer law “by taking insufficient action to protect shoppers from fake reviews”. CMA’s investigation will raise specific concerns, such as whether Amazon and Google have been
doing enough to: • Detect fake and misleading reviews or suspicious patterns of behaviour. For example, where the same users have reviewed the same range of products or businesses at similar times to each other and there is no connection between those products or businesses – or where the review suggests that the reviewer has received a payment or other incentive to write a positive review. • Investigate and, where necessary, promptly remove fake and
QR codes are now here to stay
Contactless limit fears
QR codes have been all the rage, from the NHS track and trace app to ordering drinks and food at your local pub. And now the UK has opened up they might be getting a whole new lease of life. The blackand-white squares can now be used as a cheap and secure way for small businesses to take payments. An app called Tomato Pay has been launched, which means customers simply scan a QR code with their phone’s camera or click a payment link. They then select their bank and confirm the payment. Customers don’t need to download the app to pay, they just need a phone. Payments are 100% secure and verified with Touch-ID or FaceID. It means businesses don’t need a card machine and there’s no long set-up process. The transactions fee paid for businesses depends on the size of payment. Anything under £100 it is 1p, up to £100 it’s 10p and above £100 it’s 0.1%. The money also arrives into the business account instantly. Check it out at https://www. tomatopay.co.uk
Fears are rising over the Financial Conduct Authority’s (FCA) move to allow the contactless card payment limit rise from £45 to £100. The banking trade body, UK Finance, says that just 20% of people it surveyed thought the current £45 single transaction limit is too low. In fact, 13% felt it needed to be reduced, and some 62% felt that the current limit was ‘about right’. The change, which is due later this year, is widely supported by
misleading reviews from their platforms. • Impose adequate sanctions on reviewers or businesses to deter them and others from posting fake or misleading reviews on their platforms – including those who have published these types of reviews many times. The CMA is also concerned that
the banks but doesn’t appear to have the same support among the public. In an 11-page submission to the FCA, UK FInance said: “There is no significant demand from consumers to increase the single value limit above £45.” In 2020, the number of contactless payments rose 12% to 9.6 billion. Contactless fraud accounts for 2.9% of the £575 million lost to card scams. Last year, some £16 million was lost,
Windows 11 here Microsoft has unveiled its next generation operating system – Windows 11. The new software
will allow Android apps to mrun on the Windows desktop. Microsoft’s Panos Panay said Windows 11 will provide smaller, faster security updates. This has been a big criticism by users. And, just like a Mac, it will let users configure multiple desktops for work, home and gaming. There are currently some 1.3 billion Windows 10 users (it was launched in 2015), and the new update will be free to existing
Amazon’s systems have been failing adequately to prevent and deter some sellers from manipulating product listings – for example, by co-opting positive reviews from other products. Andreas Coscelli, CMA’s Chief Executive (pictured), said: “Our worry is that millions of online shoppers could be misled by reading fake reviews and then spending their money based on those recommendations. Equally, it’s simply not fair if some businesses can fake five-star reviews to give their products or services the most prominence, while law-abiding businesses lose out.”
which was actually down on 2019. UK Finance said this may have been down to the fact that consumers were stuck at home a bit more last year!
users. You will need a minimum of 64 gigabytes of storage and four gigabytes of RAM. Just so you know, Windows 10 will be put out to pasture in 2025. A big change has been the moving of the ‘start button’ from the left-hand side of the screen to the bottom-centre. Windows 11 should also allow tighter integration with the tech giants communication platform Teams. Access to a game’s subscription services and the Xbox Games Pass will also be pre-installed.
Tech briefs Pap BT vs Elon Musk BT has joined forces with taxpayer-owned satellite operator OneWeb to try to solve the problem of rural broadband blackspots. This puts it in direct competition with Elon Musk’s Starlink company, which has launched more than 1,800 satellites and has been providing broadband in the UK since January. BT and OneWeb will now work together to see if satellites could be used, with the help 12
of new mobile masts, to create universal coverage. Pap Cookies ban delayed Google has delayed its plan to block third-party cookies from its Chrome Internet browser. The ban had been planned for 2022, but is now put back to 2023. Cookies have now been blocked by some of Google’s rivals such as Apple, Microsoft and Mozilla. However, Google says it now plans to replace the
system with a design it says will give better privacy, but still allow marketing. Pap Watchdog to scrutinise mobile ecosystems The UK’s competition watchdog has launched an investigation into Apple’s and Google’s mobile platforms over concerns their market power is harming users and other businesses. The Competition & Markets Authority has said it wants to look at the tech giant’s effective duopoly
over the supply of operating systems (iOS and Android), app stores (App Stores and Play Store) and web browsers (Safari and Chrome), which could be resulting in consumers losing out across a wide range of areas. The CMA is concerned the lack of competition could lead to reduced innovation across the sector, with consumers paying higher prices for devices and apps, or for other goods and services due to higher advertising prices. PQ Magazine August 2021
¨q¨}ǋÚ®Ê»ǋ¿ ¢¢¿ǋÔÅǋÊ¿ Join an international award-winning university business school with a reputation for a holistic approach to your personal developmentǋand career ambitions. Gain professional body exemptions while earning your degree bƴ»ǋ¨®ưŤǋ¨ǋ1®¨®¨ for Accounting and Finance Ƽ Êq»q¨ǋX¨Ó»¿ÅÚǋ ÊǋŤŢŤţƽ
Advanced entry on to year 2 or 3 BA (Hons) Accounting and Finance with ACCA F1-F3 or AAT level 4 ACCA tuition and revision sessions MSc International Accounting and Finance MSc International Finance
bƴ»ǋŤ¨ǋ®»ǋ}®Ê»¿ǋ¿qÅ¿q}Å®¨ǋ¨ Accounting and Financeǋ¨ǋLondon Ƽ Êq»q¨ǋX¨Ó»¿ÅÚǋ ÊǋŤŢŤţƽ Apply now: Accountancy college of the year
Accountancy college of the year
Accountancy college of the year
Let’s fix it, ACCA!
Regarding the recent technical problems with ACCA exams, there is certainly precedent here. Around 15 years ago, ACCA contacted my college to ask a favour. A van carrying about 150 scripts from the AA exam had been stolen and then torched. With the students unable to be given a mark, ACCA asked my college to put on a one-day revision booster in five separate locations in the UK that students were able to attend for free. They then sat a special one-off exam paper, rather than having to wait for the next sitting (it was a sixmonth wait back then, of course). For the record, I think my college paid for all of this, not
ACCA, but at least an effort was made to deal with it. If my memory is right, affected students also got some free exam sittings. With online teaching now
being available, tuition providers could easily make a recorded revision course from the June sitting available, and I imagine most of us would happily do a one-day live online revision workshop if ACCA could offer an earlier date for affected students to sit. So I am putting it out there – come on ACCA, let the affected students sit in July, and this audit tutor will happily provide a day’s online revision workshop for those who have suffered. It can’t be that hard to fix this! Paul Merison, London Director of ACCA, London School of Business & Finance
Lots of ACCA June sitters contacted us about problems with their UK exam centres, and we are on it! However, many also wanted to talk about the exams themselves and here’s a flavour of what PQs sent us via twitter, Facebook and LinkedIn. The first comment we saw for PM was “it wasn’t very difficult” – let’s hope the pass rate reflects that on the 19 July. “Tough FR exam, especially section C,” was another comment. One sitter admitted they had a panic attack, saying: “Worst exam I have written in my life.”
Our star letter writer wins a fantastic ‘I love PQ’ mug! 50% is not enough
I sat the ACCA remote invigilated AFM exam in June, which frankly was a disaster for many India students. Many of us were held in a massive queuing system, which meant there were huge delays checking in for exams. By the time I started I wasn’t in the right frame of mind, and I am expecting to fail. I have now received a response from ACCA, which isn’t good enough. They have admitted they had ‘some technical issues…and we are aware of the distress this caused’. ACCA has also credited myACCA account with 50% of my AFM exam fee. ACCA should have reimbursed my whole fee after providing such a poor service. The head of exam delivery, Ian Gray, says his team are investigating the software issues that caused the problem. I would like him to make that report public, too. ACCA must do better. Name and email address supplied
Where’s the justice?
Hello PQ. I am an ACCA student in Pakistan and we need your help. I sat ACCA exams in December 2020, and at the time ACCA was offering only home-based exams in Pakistan due to the lockdown.
It has now been six months since we sat and we still have not got our results. On 18 January 2021, we were contacted by ACCA’s professional exam conduct department who explained our results had been withheld due to
irregularities. What can these be? There are around 150 of us all facing the same problem. What is taking ACCA so long? Please help. Name and email address supplied The Editor says: Leave this with us – we will investigate this issue.
TX sitters found June a hard test, especially section C. Others struggled with the OTs. As one student said, you sit in a hot and stuffy room with a mask on and the internet is slow. Then the examiner throws a curve ball to trick you! Another just said: “So over ACCA.” An “OK” FM exam this time around, but AA was a bit tricky and “nothing like the mocks”. SBL was seen as a fair exam but one PQ was worried that an IT project manager could sit the exam and probably pass it. It was a very timed pressured SBR June, with not enough time to think. Sitters were worried about the ‘bizarre’ nature of some of the questions. There was too much reading for some sitting APM, and June sitters struggled to finish ATX. AFM was an exam “between easy and hard”! Time pressure was a big complaint. Many sitters also admitted they ran out of time in the AAA exam. You can read the full June feedback in the news section on www.pqmagazine.com
PQ Magazine PO Box 75983, London E11 9GS | Phone: 07765 386489 | Email: firstname.lastname@example.org Website: www.pqmagazine.com | Editor/publisher: Graham Hambly email@example.com | Associate editor: Adam Riches | Art editor: Tim Parker Contributors: Robert Bruce, Prem Sikka, Lisa Nelson, Anna Kate Phelan, Mike Day, Tony Kelly, Phil Gammon, Edward Netherton | Subscriptions: firstname.lastname@example.org | Origination services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email email@example.com
Published by PQ Publishing Ltd © PQ Publishing 2021
Deliver your learning content and assessments remotely Remote Proctoring Mobile Device Friendly Automarking Real-time Results
Click here to ﬁnd out more on getrogo.com
PQ CIMA exams
What the examiner wants When it comes to the CIMA case study exams, Clancy Peiris knows what type of answers the examiners love to see
IMA case study exams are designed to test our students’ ability to deal with tasks and solve challenges in a real-life business environment. Generally speaking, examiners love to see answers where students demonstrate good technical understanding and can apply their knowledge to the particular business scenario presented in the exam. They also love to see answers where students can showcase sound professional judgement when applying the syllabus content to their case study exam. To this effect, examiners have instructed markers to adopt a holistic approach to marking, which means that your answer to each sub-task is read in full before being assessed on its own merits. Here are top five things you should be familiar with and grasp to produce CIMA case study exam answers examiners love to see. 1 Understand your role To better understand the examiners’ expectations at each level, you should start by looking at the specific role being simulated in the CIMA exam blueprints. This includes understanding the role of finance, the job role being simulated as well as the related job tasks. The simulation will require you to demonstrate that you have acquired the knowledge, skills and mindset of the CIMA finance professional along with an appreciation of the impact of the features of the simulation such as the
context, organisational structures, environment and ecosystem within which the organisation operates. For instance, in the CIMA Operational case study exam the role simulated is that of an entry level finance professional, called ‘Finance Officer’ in the exam. The Finance Officer is responsible for planning and coordinating business operations through the preparation of budgets and financial reports based on data collected by the organisation’s information systems. At this level, you’ll be assessed on six core activities that accurately represent the most frequent and critical tasks an entry level finance professional should be able to perform. Being familiar with the role and the job tasks simulated along with the core activities and assessment outcomes for each case study exam is extremely useful for students. So don’t forget to read the CIMA examinations blueprint for your level available on the CIMA website – it’ll help you get in the right mindset, think like a finance professional and keep your answers relevant. 2 Sharpen your technical knowledge Each level of the CIMA Professional Qualification culminates in a case study exam, which integrates the knowledge, skills and techniques from across the three pillars into one synoptic capstone examination. The case study exam is a role simulation. It requires candidates to perform authentic work-based activities presented during the course of the exam, drawing together
learning from each of the three subjects to provide solutions to the issues and challenges asked – just as a CIMA qualified professional does every day, you need to draw on your knowledge and skills to support the business. To pass the case study exams, you’ll need to have solid technical knowledge and understanding of all the syllabus topics across each of the core activities. It’s not sufficient to rely on what you remember from sitting your objective tests, because chances are you won’t – so revise the technical materials! You’ll also need to strike the right balance between technical understanding and practical application to the issues and challenges raised in the scenario. Simply reproducing rote-learned answers or pure technical knowledge will score very few or no marks. If you successfully complete the core activities (or business-related tasks) for the role being simulated, you’ll be demonstrating your technical knowledge of course – but most importantly, you’ll demonstrate that you have the skills and mindset expected of a finance professional at that level. To help you prepare for this, I’d again recommend that you have a look at the CIMA exam blueprints to shed some light on what’s examinable by helping you understand the core activities, assessment outcomes and weightings for that level. 3 Check the performance descriptors For each case study exam, CIMA has developed performance descriptors to help you make sense of your exam results feedback. Don’t overlook them, here’s why. PQ Magazine August 2021
CIMA exams PQ If you have done well across the board, your performance descriptors will highlight what you should continue to do and which skills you can build on for future exams. If you haven’t reached the passing standard for one or more core activity, the performance descriptor will capture where you have fallen short, give you advice on how to meet the requirements and help you adjust your future study sessions. When preparing for your exams, use these performance descriptors in conjunction with other resources such as the exam blueprints to self-assess your performance and see what you need to do to fully be exam ready. You can access the performance descriptors and all other study resources through the CIMA Planner under the resources section. 4 Read the Examiner’s Report For each level of the CIMA professional qualification, CIMA publishes a very comprehensive Examiner’s Report, where you can get valuable hints and tips directly from the examiner. Examiner’s Reports include the main focus for each of the exam variant, the examiners’ observations and feedback for each task for all exam variants, common mistakes made by candidates, and – perhaps most importantly – their advice to future candidates. For example, one Examiner’s Report mentions that exam answers can often be improved if candidates add ‘because of…’ at the end of the sentence.
In other words, how are you supporting the statement you are making? Are you clearly explaining ‘why’ and ‘how’? Are you using the information, especially the financial information, included in the pre-seen materials? I’d highly recommend that you read the Examiner’s Reports from past exams to get further insights into the ‘do’s’ and ‘don’ts’ of the Case Study exam for your level. And of course, make sure to read my February 2021 PQ magazine column on this topic too. 5 Make the most of the pre-seen material ‘’To produce a good Case Study I want to stress that we don’t expect you exam answer, you must have analysed the pre-seen material to remember everything that’s in depth. Ensure that you are very familiar with the business, included in the preseen material, but especially the financial remembering the information, before the exam key themes is as this will help you with critical. My advice to applying your knowledge and you isn’t just to will save you time. Similarly, read, underline and an awareness of the industry that the business is in will help annotate the preyou to think of the wider issues seen material – you that might impact on decisions should ‘smart read’ it. What does that that you could be asked to comment on.’’ CIMA Examiner mean? Simply that you need to thoroughly analyse it. You may want to do this in two rounds. When you read the pre-seen for the first time, aim to
identify the strengths, weaknesses, opportunities, and threats of the organisation in the scenario. When you read it for the second time, start to consider ‘why you think’ they are strengths, weaknesses, opportunities, and threats. After reading the pre-seen smartly twice, you should now have a detailed SWOT analysis based on your own reasoning. In addition, you may prepare a list of key issues (business, ethical, financial and performance) and risks the organisation faces. Then, try to understand what your role is within the organisation and your relationship to other stakeholders. In other words, assume that you are preparing for a job interview where the exam is the job interview. Remember that the case study exam focuses on practical application rather than regurgitating technical knowledge. As one examiner points out ‘demonstrating good technical understanding is not enough on its own to pass’. To pass, you must apply this knowledge to the business scenario in front of you, not the one you wish you had, and make sure that you only incorporate relevant information from the exam and pre-seen materials in your answers. Check the CIMA Planner for detailed advice and guidance on what you should and should not do when you analyse the pre-seen. You can get more advice on this in my June 2021 PQ magazine column. • Clancy Peiris, Senior Learning Development Manager, Association of International Certified Professional Accountants (AICPA & CIMA)
Get a step ahead with Xero Advisor Certification Having a sound knowledge of cloud accounting software is invaluable in a competitive job market. Get the Xero Advisor Certificate and stand out from the crowd. To get started, speak to one of the education providers or accounting bodies – ACCA, ICAEW, AAT, ICB, IAB, Kaplan, Avado, Premier Training, First Intuition, The Career Academy or Reed.
PQ Magazine August 2021
PQ the jobs market
PQs ride the pandemic storm PQs are reporting pay rises and bonus – despite the havoc wrought by Covid-19, according to specialist finance and accountancy job board GAAPweb
continue their professional lives in a relatively normal way. Despite significant disruptions to daily routines at home and work, the majority of finance and accountancy professionals maintained a healthy work-life balance throughout 2020, with 55% reporting no change in their usual working hours. Moreover, feelings of job security have improved within the profession. In 2021, 69% of our audience say they feel secure in their current role, compared with 65% pre-pandemic. Although rewards may have temporarily diminished, respondents’ knowledge of the essential service they provide has not.
t the beginning of 2021, we asked over 1,000 finance and accountancy professionals to share the details of their working lives and how things have changed as a result of a global pandemic. Responses revealed a highly educated workforce of finance and accountancy professionals ranging from bookkeepers and management accountants to finance managers and CFOs. In this article, the GAAPweb team pulls together some highlights and key stories from the 2021 annual Audience Insight Report. For the full story, visit the GAAPweb website and download your free copy. The costs of Covid-19 In spite of their credentials and career achievements, the GAAPweb community has faced considerable challenges in the past year. With cutbacks reported across salaries, bonuses and benefits alike, employers have also been reducing rewards in response to Covid-related costs and losses. In 2020, just 32% of our audience received a salary increase, compared with 60% prepandemic. This was compounded by a drop of 16% in the number of respondents topping up basic earnings with a bonus and a 3% fall in benefits recipients. Significantly, the number of respondents with access to employer provided healthcare dropped from a pre-Covid figure of 52% to 35% in 2020, while just 3% of our audience were offered childcare support during a year when
many parents could have benefited greatly from the extra help. These cuts appear to have had a disproportionate impact on lower level and junior respondents. For example, none of our respondents in purchase ledger positions received a pay increase, and only 9% of payroll professionals reported salary growth. Similarly, no purchase ledger respondents were awarded a bonus in 2020. The perks of being a PQ However, it appears that PQs have outmanoeuvred uncertainty and succeeded in bucking this trend. Some 67% of part qualified accountants reported receiving a salary increase during 2020, making them one of the most likely groups to grow their earnings. As well as being more likely than most to receive a pay rise, 67% of PQs told us they had topped up their basic pay packets with a bonus. Despite this, the overall average PQ annual salary this year is £28,333 – down 23% from £37,023 when we surveyed our audience prior to the Coronavirus outbreak. Safe and secure Regardless of the swathes of pay and benefits cuts, the finance and accountancy professionals showcased their indispensability over the past 16 months, with the vast majority avoiding redundancy (90%) and the furlough scheme (86%). In fact, most were able to
Mind the GAAP Female representation is now higher than male in 12 of the 24 surveyed job titles – up from nine at the start of 2020. According to our report, 67% of PQ accountants are female. Some progression has been made in terms of the overall gender pay gap this year, which has closed by 3%. However, with average male salaries of £70,806 sitting 23% higher than those of their female counterparts (£54,203), gender pay discrepancies within finance and accountancy are still rife and far above the 2020 national average of 16%. For PQs, the situation is a worse one still. Male PQs reported average salaries of £35,000 this year – 29% higher than the pay packets offered to their female colleagues. Ethnicity and equality Ethnic diversity within finance and accountancy appears to have decreased in the past year. Significantly, the number of Asian and Asian Black respondents dropped year-on-year by 5%, while the number of our audience with a white background grew by 6% in the same period. Despite this, employers appear to be taking steps in the right direction in terms of pay equality. The ethnicity pay gap among our respondents has decreased from 24% at the beginning of 2020 to 8% this year. To find out more about the key trends impacting the world of finance and accountancy in 2021, download your free copy of GAAPweb’s Audience Insight Report. https://www.gaapweb.com/article/exclusiveinsights-from-the-finance-and-accountingprofession/
PQ Magazine August 2021
^ƚƵĚǇ ǁŝƚŚ ,d&d WĂƌƚŶĞƌƐŚŝƉ ǁŚǇ ǁŽƵůĚ ǇŽƵ ŐŽ ĂŶǇǁŚĞƌĞ ĞůƐĞ
Pick HTFT for AAT Start your AAT studies whenever you want with our Level 2, Level 3 and Level 4 on-demand courses. HTFT on-demand: pre-recorded syllabus videos that lead into recorded application focused Masterclasses (with expert tutors), all designed to support your mastering of knowledge – accompanied with computer based tests and mock exams For more information visit www.htftpartnership.co.uk/courses/aat/
Think ACCA, think HTFT We have a full suite of ACCA Applied Skills and Strategic Professional ‘Resit’ courses for September 2021 exams starting the week following ACCA results (19th July), where you get:
Membership of our vibrant Online Learning Community and a dedicated tutor
HTFT Partnership student notes and ACCA authorised study text, exam kit and pocket notes
Full syllabus, Topic by Topic recordings supported by recorded Tuition sessions – recorded, downloadable and playable on all devices
Scheduled ‘live online’ Revision sessions – recorded, downloadable and playable on all devices
HTFT computer based mock exams, marked, with answers and video debriefs
For more information visit www.htftpartnership.co.uk/courses/acca/
Study CIMA, choose HTFT Studying CIMA? Our HTFT live, HTFT on-demand and HTFT play resources are all here to help you prepare for, and pass, your exam. HTFT live: join our expert tutors live online for interactive Masterclasses, designed to support your application of syllabus knowledge. HTFT on-demand: drive your learning, with full flexible resources that you control HTFT play: Boxsets of topic recording and Proficiency exam-style practice assessments For more information visit: www.htftpartnership.co.uk/courses/cima
We have live E2, P2, E3 and P3 courses starting in July, visit our website for timetables and information
Online College of the Year 2017
Personality of the Year 2018
Private Sector College of the Year 2020
tŚǇ ǁŽƵůĚ ǇŽƵ ŐŽ ĂŶǇǁŚĞƌĞ ĞůƐĞ &Žƌ ŵŽƌĞ ŝŶĨŽƌŵĂƚŝŽŶ ĞŵĂŝů ŝŶĨŽΛŚƚĨƚƉĂƌƚŶĞƌƐŚŝƉ ĐŽ ƵŬ ǁǁǁ ŚƚĨƚƉĂƌƚŶĞƌƐŚŝƉ ĐŽ ƵŬ
A question for Tom Top tutor Tom Clendon answers your accounting questions – he is such a great guy! A student’s question What is the difference between OCI and OCE? Tom’s reply OCI is an abbreviation for other comprehensive income. This is an annual performance statement so is prepared for the year ended. It is presented after the profit and loss account and together they form the statement of total comprehensive income. The idea of OCI is that it will present certain gains and losses that have been recognised directly in equity during the year because accounting standards prohibit their recognition in the profit and loss account. An example of such a gain not included in the profit and loss account and thus appearing in OCI is a simple revaluation on property, plant and equipment. Other examples include group foreign exchange differences and remeasurement gains or losses on defined benefit pension schemes. By reporting such gains and losses in
OCI it ensures that users do get a faithful representation (complete) picture of all gains and losses recognised in the accounting period despite their omission from the profit and loss account. It also helps to keep the profit and
loss account relevant (predicable) because the type of gains and losses in OCI tend to be unusual, non-recurring and unrealised gains. OCE is an abbreviation for other components of equity. It is a reserve and therefore part of the equity of the company. As an equity reserve, it is a balance that is listed on the statement of financial position. Equity represents the owner’s interest in the business. Every company will have share capital and retained earnings as part of their equity. OCE simply represents the rest! OCE is therefore an umbrella term for various reserves. Its balance will include the accumulated gains and losses arising from revaluing property, plant and equipment as well as the exchange differences arising from the retranslation of overseas subsidiaries. In addition, OCE can include items that have not passed through OCI; for example the equity element of a convertible loan and the difference arising in the group accounts when the parent and NCI transact with each other without control changing. Recap OCI reports gains and losses for the year that are excluded from that year’s profit and loss account. And OCE is a generic reserve on the statement of financial position that is not retained earnings. • Tom Clendon is an online ACCA SBR tutor. See www.tomclendon.co.uk
ACCA Careers is dedicated to helping ACCA students develop their careers.
With hundreds of entry level global job opportunities and over 400 career advice articles, we’re here to help you every step of the way.
Visit jobs.accaglobal.com today
PQ Magazine August 2021
ACCA spotlight PQ
Five years in five months What will the future finance function look like? Clive Webb offers up some thoughts and makes some predictions
3. Skills and careers: New roles and new skills are needed in the finance function. There has been a growing realisation that the successful accountant of the future will have extensive interpersonal skills to complement their deep technical knowledge. The need to be able to interpret the data and tell the story are fundamental. 4. Innovation and collaboration: In the coming years, the finance function will need to focus on improving the risk, technology and analytics capability of their people – as technology begins to rapidly evolve. Finance needs to increasingly work across organisations, informing the conversation. We will need academia and industry to work effectively together to understand these future skills (agility, innovation and collaboration) needs and plan for those needs through the programmes on offer. The importance of well-being Most finance teams have seen increased workloads during the past 18 months and many have contributed to their company’s success. Many have also overcome challenges, but the unrelenting demands of the last year have placed a strain on the mental health of finance professionals globally and the report warns that they must ensure their own wellbeing if they are to remain valuable. Those interviewed in this global survey reported teams were feeling fatigued and jaded, having worked harder in the last 12 months than they have ever done before. Adapting to 100% remote working has also proved difficult and draining for many. New ways of working are beginning to emerge that increase productivity, collaboration and employee engagement.
any PQs may have heard the term ‘five years in five months’ of late. And that’s because the finance profession, as a whole, has been significantly tested and dramatically evolved, due to the pandemic, with organisations looking to their finance teams to plot a path of financial stability in challenging business conditions. So how have accountants succeeded during these challenging times? Successful organisations in the current environment have had to learn to thrive on change; to adapt to shifting environments; to embrace the opportunities offered by technological innovations – the effective use of data being at the top of the list. These organisations focus on integrating finance skills and knowledge throughout the decisionmaking process. Finance leaders also must ensure their teams are aligned closely to the purpose of the organisation. They need to create a finance function that serves the organisation better in a constantly disrupted world. There is a reality that change will come, so it is important to reflect on how prepared we are for that change and this is explored in a new report in association with PwC PQ Magazine August 2021
we launched recently called ‘Finance Functions: Seizing the Opportunity’. Our research reveals four key areas of focus which have enabled finance teams globally to succeed in these challenging times. 1. Relevance: To remain relevant, finance needs to fully embrace technology and all its possibilities. Cloud-based enterprise resource planning systems will liberate data allowing a greater level of insight to be generated, while at the same time creating capacity in finance teams. 2. Data and technology: Finance has arguably become ‘institutionalised’ around the shared services, business partnering model and dealing with short-term issues given the focus on quarterly and monthly reporting targets. Real-time information has been essential during the pandemic. Much of cyclical focus is simply a consequence of systems not being able to talk to each other – as we move to a more continuous cycle of reporting finance will increasingly be expected to look at the future rather than the past and think strategically, rather than tactically. Exploiting the data, both financial and non-financial available to us.
What’s the opportunity for the future? Finance teams have a real chance to develop a more strategic role across organisations if they capitalise upon recent successes. To ensure continued post-pandemic success, the report suggests six key recommendations for all finance professionals to consider within their roles. 1. Redefine the focus of finance to include broader performance metrics for natural and human capital. 2. Invest in technologies that can be used to create and support an enterprise-wide data model. 3. Use predictive analytics based upon this model to drive more holistic business decision making. 4. Enhance business partnering and analytical skills to ensure that finance can fulfil this new role across the organisation and continue to improve collaboration both across it and with external parties. 5. Drive for greater efficiency, productivity and standardisation across processes and common platforms. 6. Through these actions, establish finance as the central point within the organisation for achieving sustainable and responsible growth and enhancing the reputation of the organisation. • Clive Webb is ACCA’s head of business management 21
PQ AIA spotlight
In with the new The AIA has launched a new professional qualification and online learning platform. Philip Turnbull outlines what’s changed
he AIA has launched its new recognised professional qualification, designed to equip qualified accountants with specialist knowledge, skills and awareness suited to modern commercial, public enterprise and professional environments. The new qualification offers two distinct options leading to qualification as a qualified accountant or statutory auditor, delivering the knowledge, skills and experience to enjoy a successful career in either field. Alongside the professional qualification, AIA has unveiled its own online learning platform, AIA Achieve Academy, available worldwide and designed to support students with a range of effective and proven resources designed to suit individual learning preferences. What’s changed and why? Extensive research went into the development of the qualification to ensure it meets the conditions of the AIA’s Competency Framework, as well as the requirements of employers, businesses, students, and regulators. To improve accessibility, AIA made use of advances in digital technologies
to create a professional Philip Turnbull qualification that can be studied and examined online, with students now able to take exams at home, through remote invigilation. What is immediately evident is the reduction in the number of units of assessment. Primarily, this comes with the introduction of a single integrated Foundation Unit, replacing the previous structure of six separate exams and reflects developments in both the business environment and in candidates’ educational backgrounds, assessed through a single multiplechoice exam. The addition of optional papers for those on the accountancy route allows candidates to tailor their qualification towards personal preferences, and those students following the audit route continue to meet the qualification and training requirements set out in legislation to become a statutory auditor.
Another new feature is the introduction of a standalone paper called Ethics and Professional Practice. Ethical issues can arise in all settings where professional accountants work, whether in business, professional public practice, government, public services or charitable sectors. The aim of this paper is to provide tools and skills for accountants in all forms of organisation. It allows students to consider the nature of ethical challenges that can commonly arise in professional and business contexts, the approach to identifying, analysing, and resolving ethical dilemmas, and ultimately to develop key professional skills such as leadership, communication, and commercial awareness. All AIA qualifications are now assessed via computer-based exam. The outcome of the revisions is a streamlined programme for professional education with greater emphasis on linking theory to application in the context of relevant business situations and digital skills. Reflecting the competencies of the modern profession, AIA’s new professional qualification creates future ready finance professionals with high demand skills. • Philip Turnbull is CEO of the Association of International Accountants
GROUND-BREAKERS: GEN Z AND THE FUTURE OF ACCOUNTANCY This report gives a voice to the ambitions and desires of the next generation. It offers employer perspectives and an understanding of the emerging skills most valued by employers, to help Gen Zs boost their employability and career chances.
PQ Magazine August 2021
IFRS 9 PQ
Sarah Ardiles explains all you really need to know about amortisation – how it works and how to apply it
ou have probably heard of the term ‘amortised cost’ in financial reporting. But what exactly is it and what gets measured at amortised cost? Let’s answer the second question first. Most financial liabilities (think loans, bonds, debentures) are measured on this basis. Lease liabilities are effectively treated as financial liabilities and are also measured at amortised cost. The basics What is ‘amortised cost’ and how do we apply it? Well, as the name suggests, it is a cost-based measure. Let’s take a simple example: a loan. Imagine you borrowed $20,000 and you must pay interest at 3% per year (in arrears) and the loan is repaid in three years’ time. Every year, there are two things happening to the size of your loan. On the one hand, over time, interest accrues on the loan and your liability increases. On the other hand, with each cash repayment you make, your liability falls. In the first two years, the cash you pay is just the interest whereas in the third year, you pay both the interest plus the capital element of the loan (the amount you borrowed): Year
Opening Liability $
Finance cost @ 3% $
Less: Cash paid $
Liability at yearend $
As you can see, the amount borrowed was $20,000 but the amount you repay (including the interest) is $21,800. So, you pay back $1,800 more than you borrowed and this ‘finance cost’ is charged to profit or loss each year at $600 (3% of $20,000). In other words, the cost of finance is spread (or amortised) over the term of the debt. Additional finance costs Let’s consider a more complicated scenario. A company issues 100,000 4% loan notes of $1 PQ Magazine August 2021
each. They are issued at a discount of 2% and the company incurs issue costs of $826. On redemption (in three years’ time), the $100,000 loan must be repaid, plus a premium of $3,000. How many costs of finance can you spot? There are quite a few actually: $ Discount on issue (2% x 100,000) Three annual cash payments (3 x 4% x 100,000) Issue costs Premium on redemption
2,000 12,000 826 3,000
liability – both will get bigger. Thus, IFRS 9 requires that the annual finance cost be calculated by applying the loan’s effective interest rate to the outstanding liability. Any payments made are deducted from the liability. And this is all amortised cost is. The effective interest rate is a percentage which incorporates all the costs of finance: the higher the total cost of finance, the bigger this percentage will be. I have calculated that the effective interest rate for this loan is 6% (you will be given this in your exam so look out for it). Thus, over time the liability will look like this: Year
Liability b/d $
17,826 Why are the discount on issue ($2,000) and the premium on redemption ($3,000) considered costs of finance? Well, the company is borrowing $98,000 ($100,000 less 2%) and will have to repay $103,000 (par value of $100,000 plus $3,000). Therefore, it must pay back $5,000 more than it borrowed, and this expense is therefore a finance cost. The three annual payments of $4,000 are further costs the company suffers to service the debt, and the issue costs are also incurred because of raising the finance. In total, the company will incur $17,826 finance costs over three years which must be recognised in profit or loss over that period. Recognising the finance cost My next question is how do we spread that total finance cost to profit or loss? I would love to tell you that we simply divide the $17,826 into three and charge a third of it to profit each year. Unfortunately, life’s not that simple, and IFRS 9 has good reason to prohibit this method: over three years, the liability will rise from around $98,000 (in actual fact, it is $98,000 less the issue costs) to $103,000, so it’s only fair that the amount of interest charged each year should reflect the size of the outstanding
Finance Cost @6% $
Cash paid 4% x $100k $
Liability c/d $
17,826 Initially, the liability is measured at fair value less transaction costs, i.e. net proceeds received ($98,000 less the issue costs of $826). This way, rather than expensing the issue costs in full on the date of issue, they are initially debited against the liability and get expensed over the three years – remember, they make up part of the 6% finance cost rate! Over time, the liability grows so that by the end of year three, just before repayment, it is $103,000 – the par value plus the premium, being exactly what is due for repayment. In the first example, the only finance cost was the 3% interest on the loan, so 3% was the effective interest rate. Whereas in the second example, there were several finance costs which all get reflected in the 6% effective interest rate. • Sarah Ardiles is freelance lecturer specialising in FR and SBR. Email firstname.lastname@example.org 23
Be wary of audit proposals New corporate audit body would be ‘costly distraction’ and drain on talent, says the ICAEW’s Iain Wright
he Department for Business, Energy and Industrial Strategy (BEIS) consultation on restoring trust in audit and corporate governance, launched by business secretary Kwasi Kwarteng in March, set out to beef up audit and improve company reporting in the aftermath of a string of high-profile company failures, including the collapse of Carillion in 2018. Among its many proposals was the idea – previously suggested by Sir Donald Brydon – of a separate corporate audit profession which would, among other things, elevate the status of auditors and reinforce their ethical and public interest obligations. While reform to the sector is key, the future of UK audit is heavily reliant on the next generation of talented accountants coming through the ranks. We absolutely agree with the Government that reinforcing our competitive advantage in a globalised economy through reinforcing our strengths in corporate governance is key, but that is also true of attracting and nurturing the next generation of auditors and business leaders. The Government is best placed to do this by reinforcing existing strengths, rather than wrecking them. That is very true for any proposals for a standalone profession. Chartered qualifications originating in the UK, whether they are engineers or accountants, are a symbol of high quality, excellence and integrity. It takes many decades to build up such global reach and reputation. That is why a
standalone profession will not achieve what the Government might believe it will; it will be costly and may not prove to be attractive to new talent who want, at the start of their careers, to have a strong qualification that is flexible and renowned enough to take them to a variety of different experiences and employment opportunities. We are strong advocates for less complexity and red tape, but this proposes the opposite. A new institute for corporate auditors would be costly, with no clear proposal of who would pay. It would be disruptive to set up and would face
significant challenges along the way, such as duplicating work in the sector. In turn, this would compromise the competitiveness of the UK and hinder the valuable efforts currently being undertaken to level-up the country and achieve net zero. Reform is needed, but setting up a new body could take years, maybe even decades, with no guarantee of success. Splitting the audit and accountancy professions has already been trialled in other countries, such as France, where it has failed. With this in mind, and as a professional body with members around the world and with the scale, resources and the greatest share of the UK PIE and non-PIE audit market, we’d prefer to focus our efforts on creating a home for, and strengthening the identity of, auditors. This approach could include a disciplined CPD regime and a continuous review of our qualifications and the audit process in general, to ensure auditors are trained and work at the highest level. Developing and nurturing talent is key to realising the government’s vision of corporate audit and improving audit quality. By working closely with other professional services bodies in the UK, it is vital we continue focusing on attracting high-quality entrants. But in restoring trust to business and providing a strong voice and role for audit, the answer is not to wreck existing strengths and assets. • Iain Wright, Managing Director, Reputation and Influence, ICAEW
PQ remote learning
Home comforts for AAT distance learning students
ozens of distance learning students have already taken advantage of ‘a fantastic opportunity’ to sit their AAT assessments remotely. Traditionally, all exams have been conducted at AAT Approved Assessment Centres across the UK and some locations overseas. However, following successful pilot schemes in late 2020 and early 2021, the AAT have introduced remote invigilation for a range of Level 24
1, 2 and 3 qualifications. Remote assessments available include all Foundation (Level 2) Accounting units with the exception of the Using Accounting Software module. Advanced (Level 3) remote assessments are also available, with only the Advanced Synoptic unit exam unavailable. The move means AAT distance learning students can book their assessments through any
provider who offers the new, alternative option – not only their training provider. Premier Training, who played a key role in the remote assessment trial, is amongst the first providers to offer booking and scheduling for all AAT students. Rose Crockett, Operations Director at Premier Training, said: “What a fantastic opportunity for AAT students to sit selected assessments from the comfort of their own homes. “Students with any training provider, and selfstudiers, can book their remote assessments through Premier Training and keep progressing through their AAT qualifications. That’s even greater flexibility from the AAT and Premier Training!” There are some essential technical requirements that students must meet to sit their AAT assessments via remote invigilation (see below). As with the assessment centre model, exam costs vary depending on the provider or centre. Premier Training have committed to applying just a £12 fee onto the cost of the AAT assessment fee for the booking and scheduling of each exam. For more information on the assessments available, the technical requirements and how to book your assessment with Premier Training go to https://tinyurl.com/y5j5kxv2 PQ Magazine August 2021
*Attempted on the RIILFLDO ACCA CBE Practice Platform, PDUNHG and SHUVRQDO IHHGEDFN
ACCA AFM & FM 431.3* (4:78*8
('* 7J[NXNTS FSI 2THP 8JUYJRGJW RGJW ('* 5FHPFLJ HTZWXJX )JHJRGJW JW
Contact Sunil today! email@example.com +44 7593 644380
TUTOR IN YOUR POCKET Your chance to win a free course with an expert ACCA PM tutor!
o Tuffill has over 15 years’ experience in the professional finance tuition market. She has taught for BPP, Kaplan and Oxford Brookes Business School. She then started Oxfordshire’s Platinum ACCA provider Vale Financial Training in 2011 that specialised in classroom provision. Jo has moved online to offer her expertise to the global market. Up for grabs is Jo’s Platinum Package, which includes tuition, revision and a mock. The course will run for 12 weeks and would normally cost £550. Student support is the most important part of Jo’s service and you will be supported from the very start of your studies, right up to the December exam. To enter send your name and address to graham@pqmagazine. com. Head up your email ‘Tutor in your pocket’. We also need to know why you need Jo’s help and our favourite answer to that question will win this great prize. Closing date for entries is Wednesday 25 August, 2021. • PQ magazine’s usual terms and conditions apply
PQ Magazine August 2021
PQ AAT AQ2022
Quals ‘22 I
In just a few months, AAT are shaking up their qualification structure. Mark Hempinstall cuts through the misinformation to show just what’s happening with Quals ‘22
n this article I’m going to look at how the units fit together within the new AAT qualifications 2022 specification. One of the key design features of Quals ’22 is the removal of duplicate assessment. Now, and this is a really important point for us to recognise, although duplication of assessment has been removed, knowledge retention has not. Accounting is a building block subject, what a student learns on the very first day of the level 2 AAT course will be used throughout their accounting studies. Sometimes it is possible that a student could start at level 3, or even at level 4, but just as duplicate assessment is removed, providers are likely to remove duplicate delivery, too. So it is now more important than ever that students are clear and honest with themselves about the depth of knowledge that they bring with them from prior qualifications or from experience in the workplace. So let’s have a look at the structure, units, and
progression across the levels to demonstrate why it’s important to not skip on basic knowledge. There are three main levels to the AAT qualification structure: levels 2, 3 and 4. I’m also going to break this down into three learning strands: • The financial accounting strand. • The management accounting strand. • A general business units strand. In level 2 under the financial accounting strand, the first unit you are most likely to attempt will be Introduction to Bookkeeping. This gives you the basic underpinning knowledge of how an accounting system is formed along with the rules and principles for recording accounting transactions. After taking the exam for this unit you will move onto Principles of Bookkeeping Controls, which further extends the principles and processes gained in the first unit. Everything you have understood in the first unit will now form the basis for clear understanding in this second unit.
THE AAT QUALS '22 STRUCTURE
2 3 4
GENERAL BUSINESS UNITS
INTRODUCTION TO BOOKKEEPING
PRINCIPLES OF COSTING
THE BUSINESS ENVIRONMENT
MANAGEMENT ACCOUNTING TECHNIQUES
APPLIED MANAGEMENT ACCOUNTING
INTERNAL ACCOUNTING SYSTEMS AND CONTROLS
PRINCIPLES OF BOOKKEEPING CONTROLS
FINANCIAL ACCOUNTING - PREPARING FINANCIAL STATEMENTS TAX PROCESSES FOR BUSINESS
DRAFTING AND INTERPRETING FINANCIAL STATEMENTS
(there will also be two optional units at level four which must be completed)
Under the management accounting strand we have Principles of Costing. Where the bookkeeping units at this level ensured that we measure and record financial transactions accurately, this unit provides understanding of costs and cost classification, which are the basic building blocks of management accounting in the same way the bookkeeping units do for financial accounting. In the general business unit strand we have the Business Environment. This looks at economic factor, legal structures and some law that relates to owning and running a business. This unit is examined as part of the synoptic assessment at level 2. In addition to the information contained in the business environment unit, the synoptic exam will also cover some aspects of Introduction to Bookkeeping and Principles of Bookkeeping Controls. While this could be seen as repetition, these basic building blocks are so important to your future development and understanding that it is essential we ensure your knowledge is sound before moving on to higher level study. At level 3 under the financial accounting strand there are also two units. Here it’s not only important that you retain the understanding from one unit to the next within a level, the knowledge gained at level 2 now forms the basis for your studies at level 3. We have Financial Accounting – Preparing Financial Statements. As principles of bookkeeping controls takes you up to trial balance and the identification of some potential accounting adjustments, this units builds greater and deeper knowledge of accounting adjustments and moves on to preparing the financial statements. The final unit in this strand at level 3 is Tax
A CCA T UT ORS EXPERT TUTORS. PERSONAL SUPPORT.
AA - Erin Morton PM - Jo Tuffill TX - Aileen Edgar FM - Sunil Bhandari* AAA - Ben Wilson AFM - Sunil Bhandari*
APM - Geoff Cordwell APM - Mustafa Muchhala ATX - Richard Poole SBL - Ashim Kumar SBL - Sean Purcell* SBR - Tom Clendon
(QURO WRGD\ DW ZZZIPHOHDUQRQOLQHFRPST 26
PQ Magazine August 2021
AAT AQ2022 PQ
Process for Business. This is an in-depth look at VAT. Now there are some topics within this unit that are brand new and some that are probably only covered in this unit; however, the underlying principles of bookkeeping still come through from level 2 into this unit. The Management Accounting Techniques unit obviously comes under the management accounting strand. This develops from the basic building block principles of costing into more useful analytical techniques undertaken by a management/cost accountant. However, just as financial accounting can appear difficult if you can’t identify if an account is an asset, liability, income or expense from your level 2 studies, understanding the management accounting techniques at this level can be more difficult if you don’t have the skills to identify and classify costs from that level. Finally, at this level we’ve got a fourth unit,
PQ Magazine August 2021
Business Awareness. Now this does build from the Business Environment unit; however, this is a standalone assessment as we only have a synoptic exam at level 2 under the new qualification structure. On to level 4 and the financial strand follows through to Drafting and Interpreting Financial Statements. This now takes us on to drafting the statements of limited companies and the production of consolidated accounts. You will also need knowledge of the international accounting standards that govern the production of published accounting information and the skills to analyse and interpret the financial accounting statements. In the management accounting strand we’ve got Applied Management Accounting. Everything you’ve learned from the principles of costing at level 2 through the management accounting techniques at level 3 will have prepared you for this applied and in-depth look at the complex management accounting techniques used to improve the efficiency and productivity of an organisation. The final mandatory unit at this level under the general business units strand is Internal Accounting Systems and Controls. This looks at other aspects of managing the accounting function within a business and looks at ways of identifying and managing risk. At level 4 there will also be two optional units that you need to select. The available options are: • Credit and Debt Management.
• • • •
Cash and Financial Management. Audit and Assurance. Personal Tax. Business Tax. To some extent we would like to teach you the end of the accounting process, then build back from the beginning with the under-pinning knowledge needed to get you there, as this would give you a better understanding of where your earlier studies are leading. However, we do need to build up knowledge before we get to these complex topics. That being said, I hope the graphic on the opposite page will give you some idea of how all of these units do interlock. Understanding this will hopefully drive you to ensure that you take the opportunities at the lower levels to truly understand this subject. Understanding a topic will provide greater opportunity to remember and implement it. Exam technique is important but just learning to pass an exam is ultimately much harder when you consider the complexities and varieties of businesses out there! I hope this helps you decide this is the right path for you and helps you plan for your future as an accountant. • Mark Hempinstall, Training Link Training Link’s Mark Hempinstall has provided us with a fantastic video which explains AAT’s new qualification – AQ2022. Check it out at https://vimeo.com/574032702
PQ AAT Personal Tax exam
It doesn’t have to be taxing… Nick Craggs talks you through some basic income tax calculations
ormally I would never write an article on tax computations, as very quickly it is out of date and wrong. However, as AAT have announced that all AQ2016 tax exams are going to be based on the Finance Act 2020 for the next two years I thought I would make the most of it! Benjamin Franklin wrote in a letter to French scientist Jean-Baptiste Leroy on November 13, 1789: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” As you are reading PQ magazine, and not Funeral Director Monthly (yes, it does exist) I will assume it is tax which you are interested in. Tax computations are probably the most vital part of the AAT Personal Tax exam; if you struggle with these, you will struggle to pass the exam. However, I am big believer that everyone should have a working knowledge of tax, even those people who have no desire to work in
an accountancy practice. Even if you work in industry and spend your days calculating fixed overhead variances (God forbid!) you will be paid, and you will be taxed. So you need to know if you are paying the right amount of tax – whether it is too much or too little. It is not unheard of for the person running the payroll to make mistakes. Remember, you, the taxpayer, have a duty to pay the correct amount of tax. The most common type of income, in the real world, and in the exam, is employment income. This is not just your wages or salary, but would also include any benefits in kind, such as company cars, bonuses, etc., and allows a deduction for any contributions made by yourself to an occupational (company run) pension scheme. Employment income counts as ‘non-savings income’, which is basically anything which isn’t interest or dividend income. Non-savings income is taxed at three different rates: 20%, 40% and 45%, known respectively as the basic rate, higher rate and additional higher
rate (sometimes called tax bands). You will hear people talking about being a higher rate taxpayer; this does not mean that they are taxed on all of their income at 40%. Tax is incremental and so it is only the amount of tax that falls into the higher rate band which is taxable at this rate. Importantly, everyone receives a personal allowance, which for the majority of people in 2020/21 (The Finance Act 2020) is £12,500. The personal allowance is the amount the taxpayer can earn before they start to pay tax. So, for example, if you earned £30,000 for the year, £12,500 would be covered by the personal allowance and therefore would be tax free, while the remainder of £17,500 would be taxable. This is called the taxable income. I have previously mentioned tax bands; there are three tax bands and the amount of taxable pay which falls into each band is taxed at the appropriate rate. For 2020/21, the basic rate tax band is £37,500, so any non-savings taxable income which falls into this band is taxed at 20%. In our previous example, where you were paid £30,000 you would be entitled to £12,500 tax free, which leaves £17,500 to be taxed. This is all below the basic rate band of £37,500, so this is all taxed at 20%. Therefore the total tax liability will be 20% x £17,500 = £3,500. The complication comes when someone has more taxable income than is covered by the basic rate band. Let’s assume you are awarded a pay rise and so you now earn £55,000. You can still earn £12,500 tax free, which leaves taxable pay of £42,500. The basic rate band is £37,500, so you will have £5,000 which is not covered by the basic rate band, and this will fall into the higher rate band. You will be taxed at 20% on £37,500 in the basic rate band giving a tax liability of £7,500. You will also pay tax of 40% on the part of your income which falls into the higher rate bracket – £5,000. This will then be taxed at 40%, giving an additional tax liability of £2,000 (£5,000 x 40%). Therefore, the total tax liability on £55,000 is £2,000 + £7,500 = £9,500. Note that only the amount which is in excess of the personal allowance and the basic rate band is taxed at 40%. The taxpayer still receives the £12,500 personal allowance and still only pays 20% tax on the first £37,500 of their taxable income; this is the incremental nature of tax. If you follow the tax computation proforma, and ensure that you tax your non savings income first, your savings income second and your dividend income last then this will help you go a long way in passing your tax exam. • Nick Craggs is First Intuition’s AAT Distance Learning Director
Award-winning AAT courses and apprenticeships Flexible learning to suit your lifestyle mindful-education.co.uk/students 28
PQ Magazine August 2021
simplified! In the latest article in his ‘Keep It Simple’ series, Neil Da Costa tackles a popular topic that features regularly in tax exams: close companies
depend on whether the individual is employed by the company. Employees will be taxed on a loan benefit while shareholders that are not employees will be taxed on dividends. Loans to participators (notional tax implications) If the loan is outstanding nine months and one day after the accounting period ends the close company must pay notional tax based on 32.5% of the loan. HMRC will refund the notional tax to the close company if the loan is repaid or written off. The write off of the loan will result in the shareholder being taxed on a dividend. There is no notional tax payable if three conditions are satisfied. The loan should not exceed £15,000, the participator is a full-time employee of the close company and does not own more than 5% OSC. Simple example: Close Ltd Close Ltd has three shareholders, each of whom own 33.3% share capital. The shareholders are Ibrahim, Jana and Sophie. They can be assumed to be additional rate taxpayers. Ibrahim and Jana are full time directors of Close Ltd while Sophie is not employed by Close Ltd. Close Ltd gives a loan of £100,000 to each of the three shareholders and the entire amount is still outstanding when the corporation tax is due. What would happen if Close Ltd writes off the loan made to Jana?
Underlying concept Close companies are usually family-owned companies. As a result, the family could take disguised remuneration from the close company in the form of loans which are not paid back. HMRC have introduced anti-avoidance rules to prevent this. The close company must pay notional tax based on 32.5% of the loan with the corporation tax liability under s455 CTA 2010. Definition of a close company Close companies are controlled (51% ordinary share capital or voting rights) by five or less shareholders called participators. A participator and associates are treated a single person for this test. Unlike other definitions in tax, an associate here not only includes a spouse but all lineal ancestors and descendants and siblings. Simple example: Happy Ltd Happy Ltd has six large shareholders, each of whom own 9% of the share capital. The shareholders are Dexter, Oliver, Toby, Kai, Freya and Lily. The other shareholders all own less than 1% and are not related. Would Happy Ltd be a close company if the shareholders were not related? What would happen if Dexter and Freya are brother and sister? 30
Solution to Happy Ltd If none of the shareholders are related, then the maximum shareholding that five shareholders own is 5 x 9 = 45%, which is less than 51%, so Happy Ltd is not a close company. However, if Dexter and Freya are siblings then Freya becomes an associate of Dexter, and they are treated as a single person. This means that five shareholders own 54%, which is 51% or more. Happy Ltd is controlled by five or less shareholders or participators and would be treated as a close company. Loans to participators (income tax implications) When a close company makes a loan to a participator, the income tax implications will
Solution to Close Ltd Ibrahim (employed, £100,000 loan) Income tax implications – Ibrahim will have a P-11D benefit of £100,000 x 2.25% (HMRC official rate of interest) = £2,250. This will attract an income tax liability of £2,250 x 45% = £1,013. National Insurance Implications – Ibrahim does not have to pay employee Class 1 NIC on the benefit but Close Ltd would be required to pay employer’s Class 1A NIC on the benefit at 13.8%. £2,250 x 13.8% = £311. Notional tax implications – Close Ltd will pay notional tax of £100,000 x 32.5% = £32,500 with the corporation tax. Jana (employed, £100,000 loan) The income tax, NIC and notional tax implications would be identical to Ibrahim. However, when Close Ltd writes off the loan, the notional tax of £32,500 will be refunded to Close Ltd. No tax deduction is available to the company. Jana will have to pay income tax on a dividend of £100,000. The first £2,000 will be taxed at 0% while the balance of £98,000 at £38.1%, resulting in income tax of £37,338. Sophie (shareholder, £100,000 loan) Income tax implications – Sophie will be taxed on a dividend of £2,250. The first £2,000 will be taxed at 0% while the balance of £250 at £38.1%, resulting in income tax of £95. National Insurance implications – no NIC on dividends. Notional tax implications – Close Ltd will pay notional tax of £100,000 x 32.5% = £32,500 with the corporation tax. • Neil Da Costa is a Senior Tax Lecturer with Kaplan in London. He is the author of Advanced Tax Condensed, which summarises the entire syllabus using memory joggers PQ Magazine August 2021
AAT assessments PQ
Your AAT pass rates are here The newly updated AAT pass rates to December 2020 have been published. Here they are for you to peruse at your leisure!
he latest AAT worldwide pass rates for computer-based assessments (CBA) for the 12 months ending 31 December 2020 are out. But remember the pass rates are only published for assessments that have been available for at least 12 months or where there has been a minimum of 500 sittings. The pass rates shown are the rates for all assessments completed between January 2020 and December 2020. This does not include assessments that would have been completed during the period of suspension. For this reason, the pass rates should not be compared like for like with those published for the same period last year. Level
Short code Worldwide
Access to Accounting Software
Access to Business Skills
Access to Bookkeeping
Business Communications, Personal and Learning Skills
Elements of Costing
Foundation Synoptic Assessment
Introduction to Business and Company Law
Introduction to Payroll
Using Accounting Software
Advanced Diploma Synoptic Assessment
Final Accounts Preparation
Management Accounting: Costing
Cash and Treasury Management
Financial Statements of Limited Companies
Management Accounting: Budgeting
Management Accounting: Decision and Control
Access CBA pass rate*
*Please note that the information in the above table refers to the pass rates based on the CBAs only and not achievements rates for the qualification. It is not possible for AAT to provide these stats. End Point Assessments The following table shows the pass rates for the End Point Assessments for year-ending December 2020. End Point Assessments
Advance Diploma Synoptic assessment
Assistant Accountant Portfolio and Reflective
Professional Diploma Synoptic Ω
Professional Accounting Technician Portfolio and Reflective
AAT Assistant Accountant End Point Assessment
AAT Professional Accounting Technician End Point Assessment
Graded Qualifications Qualifications awarded by AAT include four graded qualifications. The table below shows a summary of the grades awarded for each qualification between 1 March 2020 and 28 February 2021. Qualifications and grades awarded
Foundation Certificate in Accounting
Foundation Diploma in Accounting and Business
Advanced Diploma in Accounting
Professional Diploma Synoptic Assessment
Professional Diploma in Accounting
The provisional date for the publication of the next set of CBA pass rates is the end of September 2021. For further information about AAT please visit: www.aat.org.uk
Get Started Today
Start your studies the same day - 24 hour online access with instant access to tutor support.
Award winning learning resources including printed books, eBooks & e-learning, videos and quizzes.
www.premiertraining.co.uk PQ Magazine August 2021
PQ CIPFA spotlight
Tackling the strategic case study exam Three newly qualified CIPFAs share their advice on what to keep in mind when preparing for the strategic case study exam
he strategic case study is one of the exams that many students find most daunting. It is part of the end point assessment for students studying through the CIPFA apprenticeship route and the final paper for all other students. It’s a three-and-a-half hour exam with two or three scenario-based questions designed to test students on all aspects of their learning – particularly the student’s ability to provide useful evaluation and analysis to inform decision makers at the strategic level of their organisation. Three former CIPFA students recently shared their experiences to help put current students at ease about attempting this exam. We spoke with Shaun Purves, Lauren Gough and Victoria Horrocks – all of whom qualified in 2020. What was your CIPFA study experience like prior to SCS? Shaun: Commencing my CIPFA studies after completing an International Business Management Degree and previously working in marketing, I was naturally stronger at the written exams and enjoyed Business Change Management and the strategic level subjects the most. Public Service Financial Reporting (PSFR) was my biggest struggle and unsurprisingly my poorest exam result. Lauren: Before studying accountancy, I had a background in economics and was quite academic. I took well to the financial accounting CIPFA modules and found them really enjoyable. I took face to face courses at CIPFA’s Education and Training Centre in London and learn best when I’m being active so I would take lots of notes and ask questions in class to cement my understanding. Victoria: Having come from completing a university degree prior to the CIPFA course, I felt like the written CIPFA modules came easier to me as they were a similar style to the exams I had sat at university. It was the more technical modules such as PSFR that I struggled with as there was a lot to learn. What can students expect who might be taking the exam for the first time? Shaun: A completely different format of
exam, where exam technique is essential. In reality it’s not as daunting as you’d expect, and you may prefer the format to previous exams – I did! Lauren: Expect to be tested in a different way, a more open way. While the Strategic Case Study exam is different to the ones you’ve taken before, the mocks you’ll take during the course prepare you really well for this so by the time you get to the main exam it won’t be as different as you might think earlier in your qualification. Victoria: When you first start the classes you will do a lot of past papers – don’t be put off if you’re not even nearly at the pass mark! It is a completely different kind of exam from others in the CIPFA course and requires different exam techniques which you will gain as you progress through the classes. How did you prepare, and do you have any revision tips that were particularly helpful for you? Shaun: Don’t look too far ahead when you start the course. Focus on your mocks to develop your exam technique but save yourself for some serious commitment to revision in the final month when you get your case study! When the final month comes, get involved in some study groups and take any support you’re offered from colleagues. Knowledge sharing is invaluable for this exam. Spend time learning the format of the different styles of reports that may be requested and use the mocks as a learning experience. Don’t be too concerned with your marks, especially in the first couple. Lauren: From the rest of the qualification, I knew that I liked to learn and revise by taking notes, so I kept that approach for case study. I bought a specific notebook and then filled it with my revision notes for topics that might come up, financial analysis and key points from the advanced material and then progressed to answering the questions I thought the exam might ask. I’d write lots of bullet points of ideas I could raise for questions that came up. I found this really helpful and ended up having predicted all but one question. This helped me feel more comfortable and in control during the exam. I also had a WhatsApp group with my cohort to share ideas and ask questions. Victoria: Practice papers were key for me in understanding where I could pick up the marks and where I was wasting time writing information that I either wasn’t getting any marks for or very few. This really helped with the time management struggles I had. Finally, it sounds obvious but I read through the Advanced Material A LOT! When it came to answering the questions, I knew exactly where in the advanced material I could find the information I needed which saves so much time in the exam. • Shaun Purves is a financial analyst at Scottish Borders Council; Lauren Gough is a finance business partner at Enfield Council; and Victoria Horrocks is an accountant (Treasury Management) at Blackpool Council. PQ Magazine August 2021
PQ ACCA Performance Management
Take a visual approach V
Jo Tuffill introduces a new approach to calculating variances
ariances is a tricky topic. Not only do students get confused with calculating them, they also find the interpretation aspect hard. Students say, “I just can’t get those formulae in my head” or “I don’t understand the ‘should and did’ approach.” Well, if you are one of those students for whom the tried and trusted approaches just don’t work, let me introduce you to an alternative. Variances using diagrams First of all, meet Carla and her candles. Carla’s Candles are very on-trend for millennials, who want urban themed candles at an inexpensive price. Until this year Carla has been selling through local shops and trade fairs, receiving trade price for her candles. But this year, due to Covid, she moved online. This has enabled her to sell direct to the public through her website linked to her Instagram and Facebook accounts. Materials have been more difficult to get hold of and she has sometimes had to buy in smaller quantities than she would have liked. Carla has sourced alternative materials from different suppliers to alleviate the problem. She normally has two staff members producing the candles for her once a week, but this year one member has had to shield and was not able to work. Carla was able to furlough her under a government scheme. This has meant that her other staff member has been working two longer days. Figure 1 shows Carla’s results for 2020. Carla’s original budget is based on 2019 actual sales and costs operating over a 40-week year.
Splitting the cost variances using triangles To understand the real story behind the cost variances we need to split and analyse the variances. Here in figure 3, the materials variance is split into price and usage using triangles. The total variance is represented by a rectangle and naming its top two corners with the actual quantity and price, then the bottom two corners with the standards you can visually see how the variance is split into two triangles and then calculated. Figure 3 – Materials Variance part 1
In figure 4, we allocate the numbers to the corners using the standards and actuals given. You may need to calculate the price or usage quantity from the narrative but always be aware that you are flexing the standard usage quantity for the actual volume. The original budget is ‘off limits’. Figure 4 – Materials Variance part 2
Figure 1 Flexing the budget to get meaningful comparisons for variance analysis To be able to find the underlying performance of ‘Carla’s Candles’ we need to flex the original budget for the actual volume that was made and sold. Comparing a budget of 2000 units to an actual of 2500 units will render any variances calculated, based on that budget, as meaningless. In figure 2, the flexed budget column is calculated by taking the standard per unit and multiplying it by the actual volume. The sales volume variance is the difference between the original budget and the flexed budget (for actual volume) at the standard contribution. This shows a $5,000 favourable variance and shows how much more contribution should be made at the higher volume of sales. We place a ‘cross’ over the original budget as that is now off limits! All other variances are calculated from the flexed budget compared to actual results, being sales price, total materials and total labour variances.
Figure 2 34
Using the triangles as your guide you take the difference between the vertical corners and multiply by the horizontal corner to get the variance. • Price is the difference $1.25 to $1 ($0.25) multiplied by 5,500kg used resulting in $1,375 Adverse. • Usage is the difference 5,500 kg to 5,000kg (500kg) multiplied by $1 price resulting in $500 Adverse. • Total Variance is $1,375 A + $500 A = $1,875 Adverse. Have a go at applying this to the labour variance see figure 5. Calculate the variances for yourself using the diagram. See answers at the end of the article to check if you are correct. Figure 5 – Labour Variance
What is the story of Carla’s Candles 2020 results? Exam questions don’t just require you to calculate they also require you PQ Magazine August 2021
ACCA Performance Management PQ
to interpret the variances. In order to gain the marks, you need to give relevance to your answers by using the scenario. Operating Statement
price increase. Labour Rate has increased on average by $1, this will be due to overtime hours. As the team has been halved the remaining staff member has been working a longer day over two days to fulfil the increase in demand. Carla will pay an increased rate for the overtime hours above the standard working day. Labour Efficiency shows a significant adverse variance as two production staff work more efficiently than one. Tasks were probably split between them, matching skills to different parts of the production process. Now that only one member is available there will be a learning effect as they get up to speed and loss of efficiency from no longer having an assembly line. The materials usage and labour efficiency variance are linked here too. New materials to work with will increase production time and taking on a new process will increase materials usage. Conclusions In this pandemic year Carla has seen significant change in her candles business. Being forced to move online has resulted in extending market reach and has cut out the intermediary allowing her to sell direct to the end customer at the full retail price. This has led to a significant increase in contribution of $17,500. She has had her challenges, through the sourcing of supplies and a reduction in production efficiency. These have reduced her contribution by $4,125 (the total of the materials and labour variances). However, these issues are only temporary. Next year, she will have her trade customers back, supply chain issues will be resolved, and the staff member will return. Her challenge will now be to expand production to meet demand.
Sales Volume has increased due to online presence expanding her customer base outside the local market. Sales Price to Carla has increased to $20 ($50,000/2500) from $15. She is no longer selling to trade at a 25% discount and is instead able to sell at full retail price direct to the end consumer. Materials Price has increased by 25 cents per kg. Buying in lower quantities would mean higher delivery costs due to more deliveries in the year and perhaps missing out on quantity discounts. The alternative suppliers may also have charged a higher price as Carla is a new buyer. The actual market price of materials will also be increasing as supply has been restricted during the pandemic. Materials Usage is adverse and could be due to an increase in wastage. The current standard is based on 2019 and maybe outdated. Carla has used alternative suppliers with perhaps a different grade of materials, and these may be more difficult to work with or of lower quality despite the PQ Magazine August 2021
What do you think? I hope the new approach works for you, where the usual techniques have failed. This concept can be applied to advanced variances too and for that lesson you need to join my online course. • Jo Tuffill is the PM tutor with FME Learn Online. See www.jotuffill. co.uk Answers to Figure 5 Rate is the difference ($9750/750 hours) $13 to $12 = $1 multiplied by 750 hours worked equals $750 A. Efficiency is the difference 750 hours to (2500 units x 0.25 hour) 625 hours = 125 hours multiplied by $12 standard rate equals $1500 A.
PQ AAT focus
Cash or credit? In the latest in her regular series, AAT expert Teresa Clarke looks at credit sales and cash sales
Credit sales Credit sales are sales made today and paid for later. Example: A builders’ merchant sells bricks to a bricklayer on 1 March 2021 for £500, requesting that payment is made within 30 days of the sale. The builder buys the bricks on 1 March 2021 and pays for them on 31 March 2021. The entry for this type of sale is: Dr Sales Ledger Control Account (trade receivables) £500 Cr Sales £500 The sales ledger control account is another name for the trade receivables account. This is the money owed to the business by its customers. Money owed to the business is an asset and assets are debits. We debit the SLCA because we are increasing the asset. A separate entry into the individual subsidiary ledger for the customer is made and this mirrors the entry into the SLCA. Dr Mr Bricklayer £500 Remember: The subsidiary ledger is not part of the double entry system. We credit the sales because these are a form of income and income is a credit. When payment is received from the customer this will reduce the amount owed to the business and the money is paid into the bank.
Bank £500 SLCA £500 A separate entry into the individual subsidiary ledger for the customer is made and this mirrors the entry into the SLCA. Cr Mr Bricklayer £500 We debit the bank because bank is an asset, and we are increasing the asset. We credit the SLCA because we are reducing the amount owed to us by customers. Cash sales Cash sales are sales made today and paid for straight away. Cash sales can include payments received with cash, by bank transfer, debit card, credit card or cheque. Example: A builders’ merchant sells bricks to a bricklayer on 1 March 2021 for £500 and the builder pays immediately using his business debit card. Dr Bank £500 Cr Sales £500 Note: When a cash sale is made there is no entry into the SLCA. The bank is debited because we are increasing the asset. The sales are credited because we are increasing the sales income. Credit purchases and cash purchases Credit purchases are purchases made by the business and paid for later.
Example: A sweet shop buys 50 jars of sweets from a wholesaler on 1 April 2021 for £250 and agrees to pay for the sweets within 30 days of the purchase. The sweet shop takes the sweets on 1 April 2021 and pays for them on 30 April 2021. Dr Purchases £250 Cr Purchases ledger control account (trade payables) £250 The purchase ledger control account is another name for the trade payables. This is the amount of money owed by to the business to suppliers. Money owed by the business is a liability and liabilities are credits. We credit the PLCA because we are increasing the liability. A separate entry into the individual subsidiary ledger for the supplier is made and this mirrors the entry into the PLCA. Cr Wholesaler £250 Remember: The subsidiary ledger is not part of the double entry system. We debit the purchases because these are a form of expense and expenses are debits. When payment is made to the supplier this reduces the amount the business owes to the supplier, so we debit the PLCA and credit the bank. Dr PLCA £250 Cr Bank £250 A separate entry into the individual subsidiary ledger for the supplier is made and this mirrors of the entry into the PLCA. Dr Wholesaler £250 We credit the bank because we are reducing the asset. We debit the PLCA because we are reducing what the business owes to suppliers. Cash purchases are purchases made by the business and paid for straight away with cash, by bank transfer, debit card, credit card or cheque. Example: A sweetshop buys 50 jars of sweets for £250 from the wholesaler on 1 April 2021 and pays for them immediately by credit card. Dr Purchases £250 Cr Bank £250 Note: When a cash purchase is made there is no entry into the PLCA. The bank is credited because we are reducing the asset. The purchases are debited because the purchases are increasing. • Teresa Clarke FMAAT If you wish to further your knowledge, you might like this workbook which is one of my series of workbooks devised to support your studies A Beginners Guide to Bookkeeping and Accounting is available on Amazon for £3.49 in paperback or £1.89 as an eBook. Go to https:// tinyurl.com/mt5rrw4a
ONE WEBSITE TO RULE THEM ALL! Check our new funky PQ magazine website
Go to pqmagazine.com – where nothing is fake, and all the news is real! 36
PQ Magazine August 2021
free certification PQ
Extending your Xero learning journey
Unlike other accounting software, Xero offers a mix of education opportunities that benefit PQs, training providers and, ultimately, employers. Our mission is and always has been to help you become the best you possibly can, as efficiently as you can Getting ahead with Xero Certifications and Badges, for FREE In last month’s PQ we announced that for the first time it’s now possible to take the well known Xero Advisor Certification for free. It’s the core way for accountants and bookkeepers to demonstrate their knowledge and understanding of using Xero in practice and industry. Taking around eight hours to complete, the course consists of a complete pack of self-paced e-learning modules, helping you get to grips with cloud fundamentals and it includes an introduction to the Xero platform. Of course it covers functionality such as setup, sales and purchases but
PQ Magazine August 2021
also covers modules not included in qualifications such as banking, inventory, expense claims, fixed assets and advanced reporting. Completing this certification
doesn’t just show a commitment to working in the industry, it saves employers hours in training new joiners on unfamiliar software – it’s good all round. To take advantage of this opportunity, all you need to do is to visit Xero Advisor Certification (https://tinyurl.com/2fb65ncm) and create a Xero login, then simply choose PQ magazine as the organisation and you’re ready to start your learning journey. Following on from this course, we’re also very pleased to announce that you are able to continue your learning, again for free. The next pack of e-learning takes about 10 hours and can be accessed by using this click-thru document (http://bit.ly/3rUpyA6). You will need to register for the Advisor Certification first but then you can continue on to: • Payroll Certification – learn the whole process, from setting up
an organisation to processing a pay run. • App Advisory Badges – there are 800+ apps that integrate with Xero. • Security – keeping the business safe from cyber crime. • Hubdoc – cut time spent processing documents. • Xero Tax – learn about the essentials of Xero Tax, from setting up and connecting clients, to preparing, reviewing and filing accounts and tax returns. All of this is essential knowledge for any PQ and includes real-world topics not covered in qualifications. This is all fantastic for digital skills and employability; with Xero Certifications in very high demand we have seen hundreds of students gain employment in both practice and industry since launch. As 83% of accountants in practice believe understanding technology is now as important to them as understanding accountancy, tech know-how is now a higher priority than ever before. If you are a training provider and would like to know more, please get in touch.
Creating new working norms Millennial leaders are readying themselves to fundamentally shift British working practices. Chris Biggs explains all
he landscape for business leaders and the FTSE 250 firms is on the brink of a major shift. Leaders are younger and approaching their management practices with new strategies and mindsets, many of which have been brought into our collective consciousness following Covid-19. The new norms that have dawned in the wake of the pandemic reflect the principles of the next generation of millennial leaders who have advocated for the approaches we have seen for a number of years now. Their values are rooted in diversity, empathy and flexibility within working cultures, driving them as leaders of the present and future in a truly unique manner. As such, it seems working norms of being chained to one’s desk, micro-management of workloads, and strict suit-and-tie dress codes are rapidly becoming a thing of the past. Liv Garfield is the youngest CEO in the FTSE
100 at the age of 44, signalling the start of Gen X and Millennials taking over leadership positions in some of our largest, oldest and most traditional corporate institutions. Moreover, research from EY shows that 62% of millennials are now in management positions. With the critical mass of the UK workforce coming in at under 35, this shift seeing millennials taking leadership positions is significant, fundamentally changing the nuanced approaches managers take when leading their teams. From start-up level to leading global companies, these young leaders are now in a unique position for the first time in their careers to truly disrupt the way their sectors approach business and management. At Theta Global Advisors we have been keeping an eye on how these norms have been shifting since the pandemic began, observing these changes at a time that has been fraught with new challenges that millennial leaders have taken on, in many cases seamlessly. Our research has shown that remote working, flexible
structures and increased empathetic leadership – key values of these new, millennial leaders – has resulted in 51% of Brits seeing the quality of their work and productivity increase. Newly emotive measures now define productivity in the workplace and, at its core, are the empathetic, millennial bosses of the future who respond to the very personal context to professional prowess. At the beginning of the pandemic, we saw more than a third (35%) of Brits state that returning to traditional office environments would have had a negative impact on their mental health and productivity. Now, a year later, this figure has increased to 40%, as Brits have adapted and developed, coming to the realisation that the structures millennials have been advocating for, work. Attitudes to the future of work have affirmatively evolved, and to ensure people are at their happiest and most productive flexibility is needed in both where and when they work. As we return, and this next generation of thought leadership is applied, freedom from the office must also mean freedom to go to the office to account for different experiences, priorities, and conditions. New policies will account for substantial differentiations in employees’ experience of working during Covid-19 on a case-by-case basis. Working environments are looking like they will never return to what they were in 2019, changing very much for the better under the stewardship of these empathetic, morally driven millennial leaders. As such, while current employers may instinctively want to see their staff back in the office and for work to go ‘back to normal’ as soon as possible, our next generation of leaders are confident and objectively supported in their advocating that this is not necessarily the strongest or most sensible approach. Flexible hours, working from home norms, and more empathetic approaches to leadership have been shown to work despite being labelled ‘idealistic’ for years, and bold, millennial leaders will be integral in solidifying these at the centre of our new working norms in Britain. Empathy and flexibility results in far happier, more productive workforces that deliver work of a far higher standard than before Covid-19. Employees have proved they can be effective when given flexible options or working from home, and employers need to respond to this with trust and structured flexibility approaches allowing employees to alter as necessary as the next generation of leaders take over and continue to accelerate this evolution. • Chris Biggs is a Partner at Theta Global Advisors
Registered Tuition Provider
PQ Magazine August 2021
Dear Karen Ask PQ’s agony aunt Karen Young when you need expert advice. Email your dilemma to firstname.lastname@example.org, and he will pass on the best ones to Karen THE QUESTION I’ve not been happy in my job since before the pandemic, but was hesitant to move last year. Is now a good time to start looking?
Life at Rolls-Royce Haider Ali is a trainee management accountant at the car and engine manufacturer. He is currently three exams away from being CIMA qualified and is AAT qualified. He is our current Apprentice of the Year What time does your alarm go off? 7.30am. What is on your desk? Notebook, whiteboard, keyboard, mouse and stationery. How long is your commute to that desk and is it better now? It’s 30 seconds from my bed and 100%, although my commute to work was only about 15 minutes so can’t complain either way! Do you have a favourite lunch? Jacket potato with cheese and beans. What can you see when you sit at your desk? My laptop raised on a stack of textbooks and Post-it notes with all my to-do list items.
What are your favourite websites? It would have to be Amazon for those speedy nextday purchases. Such a life saver! How many hours a week do you spend in online meetings? I’d say 20-25 hours. How do you relax? I love making art, reading books, watching Netflix series, listening to podcasts and going for walks. What is your favourite tipple? Apple & Raspberry J2O or Fanta Fruit Twist. What’s your favourite TV show? Prison Break, White Collar and How To Get Away With Murder. What is the best film you have
watched recently?A documentary film on Netflix called Coded Bias. Summer or winter? Winter – hoodies over t-shirts any day! Pubs or clubs? I do miss Friday pub lunches with my work team when I was in the office. Do you have a hero? My Mum. She’s sacrificed a lot for me to be able to be where I am today and is a huge source of motivation. What is the first thing you are going to do when lockdown is over? Have a massive get together with my friends and family. If you had a time machine where would you go? Back to 2009 to buy Bitcoin – I’d be rolling in it!
In brief KAREN’S RESPONSE Lots of professionals are on the lookout for new opportunities as employers hiring plans are on the up. In our recent survey, which closed at the beginning of June, 63% of employers tell us they are hiring, increasing from 56% in February and 43% in July last year. In essence, now is a good time to consider moving, as employers are reporting that they are struggling with skills shortages in areas including finance. Employers are looking for a mix of specialist technical skills, alongside soft skills such as good communication, adaptability, and problem-solving skills. Before you get started on your job search, make sure you take time to update your CV and think about what you want from a new employer. If a promotion is your top priority for example, would you compromise more on location? Next, have a look on the finance job boards to see what kind of vacancies are being advertised and by what employers. Consider speaking with a recruitment specialist so they can talk you through what’s going on in the market – who’s hiring and where your skills could be a good fit. Lastly – best of luck with your search! • Karen Young is a director at Hays. She is passionate about helping people to find the right job, and companies to find the right person PQ Magazine August 2021
Pap NQ lawyers cashing in US law firms with London offices have announced they will be paying their newly qualified lawyers in the City a cool £153,000. Top of the salary league is the Houston-based firm Vinson & Elkins, which has a starting salary of £153,400. Another US firm, Quinn Emanuel Urquhart & Sullivan, announced a year-on-year rise of £11,000 for its newly qualifieds, to £146,000. The Institute of Student Employers said City lawyers were now being paid even more than investment bankers. UK law firms such as Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer all pay their NQs
£100,000. Senior industry figures said that UK firms take on more trainees and spend thousands of pounds subsidising vocational courses only for them to be poached by US rivals once they are qualified. Pap Apple won’t bend A staff blacklash has not prevented Apple from insisting its staff get back to the office for three days a week. Apple told staff in June that they would be expected to work from the office on Mondays, Tuesdays and Thursdays. However, 80 staff wrote a letter directly to CEO Tim Cook calling on him to allow fully flexible working. The letter said: “Many of us feel we have to
choose between either a combination of our families, our wellbeing and being empowered to do our best work, or being part of Apple.” Apple said that it believes ‘in-person’ staff collaboration is essential for its culture and future. Pap What no PA? In the latest shake-up at Big 4 firm Deloitte more than a quarter of its secretarial staff could be made redundant, as senior members of staff take on more of their own administration. Over 500 executive jobs are at risk, according to reports in The Sunday Telegraph. It is believed that, ultimately, just 150 roles will disappear.
The PQ Book Club: books you should read Digital Body Language: How to build trust & connection no matter the distance by Erica Dhawan (Harper Collins, £14.99) The jacket tells us that humans rely on body language to connect and build trust, but with most of our communication happening from behind a screen, traditional body language signals are no longer visible – or are they? Erica Dhawan’s book will help you communicate more effectively on chats, emails, and video calls. Roughly 70% of all communication among teams is virtual. The average
person sends 30 emails daily and fields 96. The problem is, according to the Journal of Personality and Social Psychology, 50% of the time the ‘tone’ of our emails is misinterpreted. One of Dhawan’s laws of digital body language is ‘communicate carefully’. If you obey this law it will help eliminate confusion, and who doesn’t want to do that? The other laws are ‘value visibly’, ‘collaborate confidently’, and ‘trust totally’. We love the fact she says the book is for people whose bosses and colleagues drone on and on about teamwork, but never
seem to do what’s necessary to facilitate it. It’s also for anyone swamped with conference calls, emails, texts and social media platforms. Greetings and signatures can set the tone between formality and informality. We like the story of the US executive who added his formal title (VP) when he wanted a quicker response. PQ rating: 5/5 We really enjoyed this book and will be changing our email sign offs! 39
PQ got a story, funny or serious, you want to share? Email email@example.com PQ got a story, funny or serious, you want to share? Email firstname.lastname@example.org
Cryptoasset ownership booms
It has been estimated that 2.3 million UK adults now hold cryptoassets – up from 1.9 million last year. Research by the FCA also discovered some 78% of adults have now heard of cryptoassets, up from 73% in a year. Just 38% of crypto users regard them as gambling (down from 47% last year), while increasing numbers see them as either a complement or alternative to mainstream investments. Enthusiasm for cryptoassets is growing, with over half of crypto users saying they have had a positive experience so far and are likely to buy more (rising from 41% to 53%). Fewer people also regret having bought cryptocurrencies, down from 15% to 11%. The FCA, however, has reiterated that if consumers invest in these types of products, they should be prepared to lose all their money.
CIMA Garahau First, we discovered ACCA:
13-Territory Inspection Dept., Natsume Ono’s manga series. Now we have discovered anime character Cima Garahau, the leader of a fleet of Zeon marines that become pirates after the One Year War and a major character in ‘Mobile Suit Gundam 0083: Stardust Memories’. We don’t want to spoil it for you but let’s just say she comes up against superior technology and it taken out by the mega beam cannon of the GP03 (you still with us?).
McAfee found dead in prison
Making a fashion statement If you’re worried about having the right clothes for heading back to the office then we think we might have the right outfit for you! Who doesn’t love a long sock/short combo? Throw in a jazzy tie and short sleeve business shirt and you have the right look to wow your colleagues on your first day back! We particularly liked the pastural colours. Just think this whole outfit can be yours for under 20 dollars.
’ WEV E
Antivirus software entrepreneur Jon McAfee has been found dead in a Spain jail cell just hours after a court approved his extradition to the US. McAfee, 75, was wanted there on tax-related criminal charges, which could have landed him in prison for 30 years. The US Justice Department believes he had evaded the payment of millions of dollars in tax on profits from cryptocurrency trading. He believed that taxes were illegal and said he had not filed a tax return since 2010. This is said to have made him a prime target for the Internal Revenue Service. His death sparked conspiracy theories, as McAfree had said if he were ever found dead by hanging it would mean he was murdered. You can expect a Netflix mini-series soon!
The art of taxes Pressure is growing to put a tax on smartphones and tablets to help fund the arts. A levy of between 1% and 3% could bring in as much as £300 million. The idea is not new – France has had a similar scheme running for 30 years, where a levy on audio and video cassettes was handed over to an arts commission. A UK Smart Fund has been discussed by an all-party parliamentary group, and many leading lights, including Oliva Coleman and Imelda Staunton, have signed a letter supporting the concept.
You wear it well What do you get the man who has everything, who is a little bit obsessed with the AAT? Well, Nick Craggs was “absolutely loving his First Intuition dressing gown my team got me for my birthday. They know me so well.” However, we have to agree with Catherine Littler who said: “I feel it needs a black belt.” Steve Ainsworth went further: “Fantastic. It looks like the beginning of @ Nija’ Craggs tutor of the year dojo.” Vernon Anderson just said “what a poser!”
GOT THE L OT
Thursday Murder Club
It’s been the book of the moment, and if you haven’t read Time for a coffee? Well, it’s time for the Collins it then here’s a chance to sort out your reading for your Coffee Break Su Doku Book 2. Arranged in three staycation (don’t take your study texts with you)! Yes, we levels, easy, medium and difficult, these 200 have three copies of Richard Osman’s ‘The Thursday Su Doku puzzles provide a test of your powers Murder Club’ to give away this month. The premise of of logic (it has nothing to do with numbers). the book is simple – in a peaceful retirement village, The ideal way to exercise your brain cells and four unlikely friends meet up once a week to investigate de-stress away from work and exams. unsolved murders. Then something happens to change To be in the running to win one of our three their lives forever! copies you need to send your name and To win a copy of his great tome just send us an email with your name and address to email@example.com. Remember to head address to firstname.lastname@example.org. Head up that email ‘Thursday up your email ‘Coffee break’ and you will be entered for this giveaway’ and we will do the rest. month’s prize draw. Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries Terms and conditions: entry giveaway Youonmust send11your must be received by Friday One 8 May. Theper main draw willplease. take place Monday Mayname 2020.and address to be entered for the draw. All giveaway
entries must be received by Friday 10 September. The main draw will take place on Monday 13 September 2021.
TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM 40
PQ Magazine August 2021