MiP newsletter April 2013

MEMBERS IN PRACTICE

NEWS April 2013

Chairman’s note I am pleased to let you know that I was appointed in early 2013 to the FEE SMP Forum. My appointment is a formal CIMA appointment managed by the Professional Standards Department and approved by the Appointments Committee. Let me tell you a little about what this new role means.

CIMA is a member of the Fédération des Experts Comptables Européens (FEE), the representative organisation for the accountancy profession in Europe. It exists to promote and advance the interests of the European accountancy profession in the broadest sense, recognising the public interest in the work of the profession and to work towards the enhancement, harmonisation and liberalisation of the practice and regulation of accountancy, statutory audit and financial reporting in Europe.

FEE has a commitment to small businesses, recognising their contribution to the wider economy and to this end has decided to set up a SMP Forum. FEE’s emphasis is currently very audit focused and it is important that the wider accounting community is represented on its working parties and groups to ensure that the science of management accounting features in its deliverables as well as its stated objectives.

The Forum will meet once or twice a year to discuss specific matters of importance to SMPs to share information and best practices and indentify issues and projects on which FEE should consider undertaking specific work in line with its overall strategy and contribute the SMP perspective to the various working parties.

It will also be used to advance FEE engagement with external stakeholders on relevant matters.

On a different, yet important, note: don’t forget to book your place at the MiP conference on 21-22 June 2013.

It’s sure to be a great event and I look forward to meeting new MiPs as well as seeing the regulars!

Ray Baxter Chairman, MiP Panel

Current affairs

Better conversations – exploring potential Our lives are defined by opportunities, even the ones we miss F. Scott Fitzgerald In the previous article of this series, we looked at a key moment in business relationships: the review meeting with a client. As with all conversations in the current economy, we saw how this needs to be focused on the client – and what they find useful – as opposed to conducting a self-centred appraisal of our services. In the current marketplace, there just isn’t time for self-preoccupation.

In this article, we look at another key moment: exploring a potential extension of our services. When this conversation is handled with tact and sensitivity, everybody benefits. As a contributing professional, you are not simply exploring potential for your own benefit, you are doing so with genuine interest in the client and their challenges.

Spotting opportunity It’s so easy to miss the opportunity. Which of the following starting points could be the start of a new engagement?

• ‘We are having a problem with…’

• ‘Just before we finish, what do you know about…’

• ‘Are you busy these days?’

• ‘If we were to ask you to co-ordinate efforts to deal with this (issue/problem/opportunity), how would you tackle it?

Beware the ego If you are thinking that any of these could be the start of a new assignment or project, you may well be right.

Equally, the answer might be ‘none’: the client may simply be picking our brains without any intention of hiring us. So we have to steer a careful course.

There is however another risk, often overlooked: the professional can easily talk themselves out of a job.

The desire to show off, particularly when combined with excitement about the project, can be an intoxicating cocktail that has one blundering in like a drunk to a party.

At the other extreme, there is the wary professional whose preoccupation is all about ‘giving nothing away for free’. They won’t even talk about the project until the meter is running.

Between a rock and a hard place So what can we do? Give away too much… or give away too little?

There is a good option: explore the context of the problem, rather than the content of the solution.

Perhaps explaining why it’s important to do so, as in the following example: • In answer to: ‘We are having a problem with… ’you might say ‘In order not to waste time, what have you/they tried to date?’

• If asked: ‘What do you know about X’ you might say ‘In what context? For some this means A, for others B, still others C; how are you coming at this?’

• In response to ‘If we were to ask you to co-ordinate efforts to deal with this (issue/problem/ opportunity), how would you tackle it?’ you might answer ‘Probably the first thing to do would be to understand the ultimate objective; what makes this project important right now?’

In all three cases, the professional is asking relevant context questions, as opposed to diving into the content of his or her favourite solution. In doing so, s/he is demonstrating interest in the client’s affairs and gaining essential contextual information before having to make any offer or recommendation.

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Current affairs

Reframing requirements The ultimate success lies in getting the client to think differently about their problem or issue. If you can do this, you are halfway towards winning the business.

Many of my clients report that the added advantage of this approach is that it disqualifies the competition by changing the game. The majority of advisers make the mistake of quoting/offering based on expressed needs. They dive into solutions (content) before they have the essential context.

All conversation is an art as well as a science, so we do not claim there is one universal formula for all situations. That said, a good context conversation – with relevant questions – usually gets the client to volunteer more information. It’s in their own interest, after all, otherwise why would they be talking to you?

John Niland www.success121.com

UK HMRC Agent Strategy update Her Majesty’s Revenue and Customs (HMRC) is the department of the UK Government responsible for the collection of taxes, and is currently implementing a Tax Agent Strategy – a programme which aims to transform the relationship between HMRC and agents.

At present, HMRC recognises the role agents play in helping to administer the tax system in a few online tools and processes.

Tax Agent Strategy aims to expand on this offering, allowing agents to step into the driving seat on behalf of their clients.

The Tax Agent Strategy will create:

Jenny Cowles, deputy director and head of Agent Strategy at HMRC says that giving agents access to a wider range of online tools will save time for both agents and HMRC. To achieve this, HMRC will need to put extra processes in place to identify agent firms and their client lists accurately. Agents can start to get ready for these changes by checking their client lists and making sure that they are up to date.

Cowles adds that HMRC will be asking agents to supply some information about their firm and to apply for a Unique Agent Reference (UAR).

‘The UAR will replace the current registration processes and will be all that agents will need to deal with HMRC on a range of taxes,’ Cowles explains.

HMRC will work closely with agents’ representative bodies on the implementation of any changes and CIMA is participating in the new Tax Agent Strategy Consultative Group. Additional advice from the MiP Panel will represent member needs as the plans develop.

More information on the Tax Agent Strategy and HMRC’s response to the 2011 consultation can be found on HMRC’s website. The Joint Tax Agent Strategy Group’s (JTASSG) minutes also contain updates on how the project is progressing.

A particular point to note is that HMRC have reviewed their powers, deterrents and safeguards. Part of which will be tackling agents who act dishonestly with the view to penalising them. As a result new legislation around dishonest conduct will be included in the Finance Bill and will come into effect on or after 1 April 2013.

• the secure enrolment of tax agents • the ability for agents to self serve basic transactions • an ‘agent view’ to bring together information about agents and their clients • improved standards for the minority of agents whose performance falls short of what might reasonably be expected

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Current affairs

Practicing Certificate applications The video guidance on how to apply for a Practising Certificate has been updated to ensure it remains current with ongoing improvements to CIMA’s processes. The video is a simple way of helping members through their Practising Certificate application and usage remains high.

The video can be found here.

MiP conference Hopefully you have already booked your place at the MiP conference this year, but if you need some more information to convince you that conference is for you, please read on.

This is the best opportunity you will have this year to meet with like-minded peers from all over the country who are facing the same issues as you are.

They are looking for the same solutions for how to be the expert on all things financial, as well as an expert in sales, marketing and business problem solving. Most importantly, MiPs are happy to support you, to share their experiences and to help you be the best you can be.

We have some fantastic speakers lined up for you this year, including: • Geoff Ramm, a multi-award winning marketing speaker • (the other) Michael Jackson, one of the best B2B speakers on change management • T revor Lever, an expert on sales effectiveness, who will share his secrets with us • Paul McGee, the SUMO guy, who will help us increase personal effectiveness and impact.

This conference will give you access to experts in the broad scope of business aspects you need to do your job effectively, and of course the all important tax and compliance updates.

For more information please go to www.cimaglobal.com/mipevents Kim Swarbrick and Fiona Bevan Joint MiP conference chairs 2013

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Current affairs

IFAC poll of small practices According to the recent IFAC poll of small practices, on the whole we have a fairly optimistic profession globally.

When asked, most respondents ranked the perception of the accountancy profession in their countries/ jurisdictions between five and eight (where one was ‘very poor’ and ten signified ‘very good’). The quick poll was answered by 3,776 respondents in total, representing SMPs across six global regions. Hope for the future ranked highly as well with about 20% reporting that their practice had performed worse in the preceding year and only 20% of respondents feeling that the coming year would be worse for their practices [NB: these may not be the same respondents].

The biggest threats to the profession globally continue to be perceived as external. The burden of regulation was seen as the biggest challenge faced by SME clients, even more than economic uncertainty. The three most significant issues facing the profession in 2013 were felt to be reputation and credibility, followed by concern about increased regulation and thirdly the difficult economic climate. Overall the main threat to perception of accountancy was felt to be financial uncertainty but there are regional variations to all the answers.

For example Africa and South America were most concerned about fraud and money laundering and (perhaps unsurprisingly) for North America the biggest threat was felt to be liability lawsuits. Inability to adapt to changing client needs was a concern and ranked as number three overall.

Long term, only 15% of respondents felt that the perception of the accountancy profession in their countries / jurisdictions would change for the worse by 2025 and the most overwhelming long term threat to the profession (to 2025) was felt to be financial and economic instability just ahead of fraud, money-laundering, and corruption.

When asked ‘What is the biggest challenge your practice is facing right now?’ more than a quarter felt that it was keeping up with new regulations and standards and just over a fifth felt that it was attracting and retaining clients. Pressure to reduce fees was cited as the biggest challenge by just under a fifth. The biggest barrier to fully adhering to the IESBA Code of Ethics for Professional Accountants (where used) was felt to be the understanding of its requirements closely followed by the requirements themselves.

Although this was a poll primarily asking questions about perception and speculation it is still important because are the things that people react to and base their decisions on. One piece of hard evidence is however worth pointing out – a third of respondents cited accounting, compilation, and other non-assurance services as the fastest growing source of revenue for their practice – typically an area of expertise for CIMA members. While 60% of respondents cited revenue from new and existing clients as their main driver for growth, 13% cited revenue from new services.

Many of the concerns to small practitioners (largely the MiP community), for example regulation and compliance with ethical requirements are issues that the Professional Standards Department has identified and addressed in its strategy to 2020. The full survey and analysis (including regional variations) is available on the IFAC website. Approximately 60% of the responses came from sole practitioners or practices with two to five professional staff.

For more information, please visit www.ifac.org/sites/ default/files/publications/files/IFAC-SMP-QuickPoll-2012-Round-Up.pdf

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Current affairs

New Suspicious Activity Reporting (SARs) guidance issued in the UK

Preparing to operate PAYE in real time (RTI)

The UK Financial Intelligence Unit (UKFIU), which sits within the Serious Organised Crime Agency (SOCA) has issued the following two new publications around Suspicious Activity Reporting (SARs):

From 6 April 2013 employers will have to start reporting PAYE information to HMRC in real time. You may see this referred to as Real Time Information (RTI). This means that employers (or their accountant, bookkeeper or payroll bureau) will have to:

• Submitting a SAR • Obtaining consent from SOCA. SARs are used by a wide variety of law enforcement bodies to help investigate all levels and types of criminal activity such as money laundering and terrorist financing. Taking part in money laundering activities, even unwittingly, is a crime. As a CIMA MiP you have a responsibility to report any suspicious activity. CIMA members – both in practice and in business – are able to identify activities associated with money laundering such as the placing of funds from unknown or unspecified sources and unusual client activity.

See the UKFIU publications section of SOCA’s website to download the documents and CIMA’s Members’ Handbook for more information around anti-money laundering supervision and compliance.

Accountex The National Accountancy Exhibition and Conference (Accountex) will be held at Excel on 6-7 June 2013.

Following the success of the 2012 event, the organisers are planning a bigger and better event for 2013 and CIMA is currently working with Prysm group in order to agree CIMA’s involvement and maximise our exposure.

The event is predominantly aimed at MiPs but will be widening its remit to attract accountants in business.

The 2012 event was attended by 362 CIMA members, 13% of the total event attendees.

• send details to HMRC every time they pay an employee, at the time they pay them • use payroll software to send this information electronically as part of their routine payroll process.

Visit HMRC’s website for more information and for information on the relaxation of reporting arrangements for small businesses.

There have also been a number of articles in industry magazines that may also be of interest: • Accounting Web – 28 February 2013 • Accounting Web – 8 March 2013

MiPs and audit requirements The CIMA qualification does not include audit but CIMA members can act as ‘reporting accountants’ or ‘external accountants’ for clients with businesses that are exempt from the legal requirement of an audit. Exemption thresholds vary country to country so MiPs should ensure that they know the local regulations under which they practice.

Some companies or the organisations they are affiliated to insist on either: • an audit, or • a financial statement prepared by someone qualified to do audit even when it is not required by legislation.

MiPs have been asked to let the Professional Standards Department know if they encounter problems as information can be provided on the current legislative situation and a statement on the suitability of MiPs to provide financial reports.

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Current affairs

CIMA profile raising – EU level and beyond CIMA was asked to chair the latest Anti-Money Laundering Europe (AME) meeting in Brussels in December 2012. Attendees, including members of the European Parliament and EU Commission, met to discuss measures to combat financial corruption, the changing face of the banking industry and the upcoming fourth level EU Money Laundering Directive.

CIMA is designated as a Supervisory Authority in the Money laundering Regulations 2007 and has responsibility for supervising its members and registered students operating as external accountants.

As a professional body and Supervisory Authority, CIMA has a public interest obligation to educate and provide guidance to our members to enable them to protect themselves and the public from financial corruption.

Legislation emanating from Brussels does not simply appear from nowhere; the policy drafters need and ask for expert opinion from and discussion with groups such as AME. CIMA’s chairing of such meetings enables it to not only raise the profile of Chartered Management Accountants in Europe and beyond but to influence the direction of future iterations to legislation and rules that impact CIMA’s membership.

The meeting enables CIMA to influence how its members may be affected by the new round of EU direction in regard to anti-money laundering regulation. More information is available in the Members’ Handbook anti-money laundering section.

IFAC update The third edition of the Guide to Practice Management for Small- and Medium-Sized Practices has been issued by The International Federation of Accountants (IFAC).

in a broad variety of areas: from strategic planning and risk management to succession planning and information technology.

Comprised of eight stand-alone modules, this guide includes a number of practical features, including an extended case study, sample office procedures manual, numerous checklists and worksheets, extensive references and further reading.

FRC simplifies reporting for unlisted companies On 14 March, the Financial Reporting Council issued FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland.

The FRS will be effective from 1 January 2015 and provides succinct accounting and reporting standards for unlisted entities. However, it may be adopted early for accounting periods ending on or after 31 December 2012.

Roger Marshall, FRC Board member and Chairman of its Accounting Council says: ‘FRS 102 modernises and simplifies financial reporting for unlisted companies and subsidiaries of listed companies as well as public benefit entities such as charities. The standard updates UK accounting to take account of evolving business practices. It is succinct, easy to digest and use.

Developed with considerable consultation, FRS 102 brings a distinctly British flavour to the international standard for small and medium sized businesses.

At around 350 pages the standard replaces close to 3,000 pages of UK GAAP.’ The full interview with Roger Marshall and more information on the new FRS can be found here.

It includes updated references and readings and enhanced guidance on areas such as business advisory, practice development, pricing and marketing using social media. The guide is intended to help improve practice management by providing guidance

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Useful links

Tax resources

HMRC tax legislation

Members may find the following resources useful when offering tax services:

For UK members wishing to keep abreast of tax legislation, there is a HMRC legislation tracker page available here: www.hmrc.gov.uk/drafts/index.htm

• HMRC toolkit to help reduce errors • IFAC good practice checklist for small business • www.gov.uk – the UK Government’s online resource for small businesses.

This page lists current and recent legislation including proposed legislation available for comment. There is also a central listing for HMRC legislation published on other government websites: www.hmrc.gov.uk/ legislation/othergov.htm

Additionally there are a range of Mastercourses available in tax subjects as well as series of products via CIMA on demand. CIMA also has an agreement with BPP for discounted access to the Association of Taxation Technicians (ATT) training materials.

For members experiencing difficulties in relation to tax issues, we also offer referral – via CIMA – to Law Express for either legal or business support advice.

CIMA also keeps the MiP Panel apprised of any relevant tax news so that the information can be distributed to MiPs as they feel appropriate

MiP events MiP West Midlands area meeting

HMRC update – latest developments

Date: Saturday 27 April

Date: Thursday 9 May

Venue: St. James’s Place House, Blythe Valley Park, Solihull B90 8AR

Venue: West Ham Utd, Boleyn Ground, London E13 9AZ

Time: 9.30 for 10.00am – 3.00pm

Time: 6.45 for 7.15pm

Ethics in a downturn economy

Members in practice annual conference

Date: Thursday 30 May Venue: The Midland Hotel, Peter Street, Manchester M60 2DS Time: 9.00 for 9.30am

How to stand out from the crowd Date: Friday 21 and Saturday 22 June Venue: Heythrop Park Crowne Plaza, Enstone, Chipping Norton OX7 5UF

For full listings of upcoming CIMA MiP events, please visit www.cimaglobal.com/mipevents

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And finally...

MiP Panel Ray Baxter Chairman Antony Holdsworth Vice Chairman Stephen Milne Vice Chairman Alan Scott Secretary Mike Houldershaw Treasurer Elected Members Mark Allen Fiona Bevan Tony Boffey Kim Swarbrick

Free Anti-Money Laundering online course Money Laundering is an area of risk for CIMA MiPs as there are a number of criminal offences you could be charged with so it is important to be vigilant. As a CIMA MiP you are automatically supervised and you need to be well aware of the risks to accountants in practice and your responsibilities.

Access the course here.

Business information service for MiPs CIMA, in partnership with Law Express, is piloting a free business information service for UK members. It covers many typical business and legal issues affecting members both running businesses and employed in business. There is also a limited free telephone helpline service on referral from the CIMA Professional Standards Department for members unable to find solutions from the web information. Should you want to find out more please go to the Members’ Handbook.

Click here for MiP Panel contact details Hayley Dove Event Co-ordinator T. +44 (0)20 8849 2406 E. hayley.dove@cimaglobal.com

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