MEMBERS IN PRACTICE
NEWS November 2012
Chairman’s note Things have been moving forward at a heady pace since I wrote to you last. On 20 September we held a meeting in CIMA head office with 14 new volunteers and succeeded in populating our new working groups with enthusiastic MiPs from all over the country. Their task is to arrange the development and delivery of relevant CPD using methods like area meetings, webinars and video training clips. The area meeting group under Tony Boffey is working hard to ensure that events take place in the West Midlands, the East Midlands and London before the year end. This will complement existing activity in Scotland, the North West and the South West. Please support any events in your area. These events are a great opportunity to communicate with other MiPs. You will have received a subscription request for the MiP fee which is £118 this year following a £45 adjustment over three years. There is a note in this newsletter explaining this fee and the June 2011 MiP News contains more details from Gail Stirling, CIMA’s Director of Professional Standards and Conduct. I am pleased to note that a number of CIMA committees now have members serving on them who are also MiPs, namely Council, the Professional Standards Committee, the Members Network Panel and the UK Board. This will hopefully provide more opportunities to discuss issues that affect you. However it should be pointed out that, apart from the Members Network Panel, the members on these committees serve and/or were elected by virtue of their CIMA membership, rather than their MiP status. I know that some of you have called CIMA in the past seeking technical advice. In order to assist you the Professional Standards Department is piloting a business information service. The web-based service covers many typical business and legal issues affecting members both running businesses and employed in business and is provided by Law Express, in partnership with CIMA. 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. Acronyms, Acronyms – they slip off the tongue easily enough – you can say ADR, MLR, AML and RDR in less than a second but behind them is a plethora of legislation and regulation. We are including four short pieces this issue from the Professional Standards Department covering money laundering, referrals to financial advisers and alternative dispute resolution. These contain updates on legislation, a free online course and details about the free dispute resolution service provided for MiPs by CIMA. Ray Baxter Chairman, MiP Panel
Current affairs
MiP renewal and fees 2013
Updated CIMA logo
Member in practice annual renewal process for 2013 is open and can be accessed through your My CIMA account.
You may have noticed that the CIMA logo changed earlier this year, which also means your Practising Certificate Holder logo has been updated. The reason behind the update is to improve the visibility of the logo; the white letters on the pink background is clearer and easier to read from a distance, and it is therefore more instantly recognisable.
The fee for 2013 is £118. It may be of interest to see how CIMA’s 2013 fee compares with £393 (ACCA), £281 (ICAEW), £245 (CIPFA), £110 for each business premises owned (HMRC) and £74 for each business premises owned (OFT). CIMA strives to carry as much of the cost centrally as is feasible, so that in fact only a nominal amount is passed on to the regulated group. Details of how member in practice fees are calculated can be found in CIMA’s FAQs. As a CIMA MiP, we provide you with the following benefits to help you promote your professionalism, source clients, network and seek advice and guidance. • A CIMA practising certificate as a mark of competency • A reputation built upon professional and ethical standards
When you register or renew your MiP status, you will receive a confirmation email from the Professional Standards Department, which will also include a link to the Practising Certificate Holder logo. You can access the logo via your My CIMA account: https://secure.cimaglobal.com/en-gb/My-Cima/ Members-In-Practice/Members-in-Practice-Logo
Better business conversations Meetings are indispensable when you don’t want to do anything John Kenneth Galbraith
• Use of CIMA’s practising certificate holder logo • Entry onto CIMA’s online searchable database of registered practising accountants • Support from CIMA’s MiP Panel • Regional events • Monitoring for anti-money laundering compliance (HMRC £110) • An independent Dispute Resolution Service (ADR) • Advice and business lines www.cimaglobal.com/helplines The Members’ Handbook has more information on the rules governing CIMA MiPs, annual renewal and the benefits of being in practice.
In every client relationship, there are key moments. Most of these will take the form of conversations, and yes, of meetings – whether by phone or face to face. For most busy professionals, meetings are an unwelcome interruption to getting real work done. Yet these interactions with the client – or potential client – are more likely to determine the future than anything they do today to get through their to do list. We rebel at this notion. It does not seem right. Surely getting the job done is more important than anything, more significant that how we talk to our clients? In reality, both dimensions are important. Accountants are usually painfully aware of their to do lists, yet less aware of how they are coming across to clients. In this series of articles, we aim to raise awareness of the ‘dialogue dimension’ in client relationships.
MiP News 2
Current affairs
Changing nature of business dialogue Business conversations are changing. Because it’s happening slowly, we may not see this clearly. For example, do you recognise any of the following?
• P itch the conversation as ‘lessons to be learned from our collaboration to date’ and talk about how and where that will be useful to them in the future. • Focus on what is valuable, not how valuable you are.
• Less tolerance for long, structured meetings. • More interruption: client or prospect is more likely to be messaging during our meeting with them, particularly younger managers. • I mpatience with process: many business decision makers expect every 15 minutes to have value. • L ess tolerance for being sold to: clients now expect to define their own requirements, and expect you to simply deliver. The review meeting Let’s look at one key moment that’s certainly changing: the review meeting. For at least a decade, it has been regular practice to have a quarterly/six monthly/ annual review of services. This discussion would usually be quite structured: exploring strengths, areas for improvement, opportunities etc. Of course, not all professionals have the courage to initiate these meetings. This is usually disguised as ‘conveniently forgetting’, ‘being too busy’ or ‘don’t believe in all that stuff’. We call that ‘sophisticated procrastination’. Even if you have been conducting these conversations, however, you may have noticed a new factor: clients have less and less time for this discussion. More and more of these meetings get cancelled at the last minute.
• Explore where else in the organisation (or beyond) you could be helpful, i.e. where else is there need. If you have been genuinely client-focused up until now, as opposed to talking about you and your expertise, this will not come across as ‘shameless selling’. • B e willing to have this conversation frequently, not just once a year. Don’t • Ignore the need to have the conversation. The value of your work is not self-evident. In fact, the more you remove the client’s problems, the more invisible you become. • A ssume that clients don’t want to have this dialogue. They do. But they are busy, so they want to talk about themselves, not you! • Turn this into an assessment of you. This is a fundamental mistake made by professionals every day, and it weakens your position as an adviser or expert. Remember you are there to assess them, not the other way around! The focus of the discussion is therefore what we are learning together, not an appraisal of you. It takes courage to have these conversations. It’s easy to forget or to allow them to be brushed aside. Yet these are key moments in business conversations, so let’s use them.
The simple fact that is clients have less tolerance and time for dialogue that is not directly related to their requirements. Even social lunches – the basic atom of business development – are featuring less in the diaries of busy decision makers. So if you want to have a review meeting, what do you do?
John Niland www.vco-global.com
Do
The next article in this series by John Niland will be available in MiP News – February 2013.
• Plan the discussion while still in client delivery, not afterwards. Depending on the relationship, doing it informally (e.g. in the pub) is fine; certainly better than not doing it at all.
‘The Courage to Ask’ will be published in December 2012 and will be available on Amazon. To pre-order, please email info@vco-global.com
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Current affairs
What inspires you? At a recent networking meeting, someone asked what inspires us. He had been particularly inspired by the Paralympics and the fantastic achievements of the elite athletes there. They concentrated on what they could do rather than focusing on what their disabilities prevented them from doing. I think we can all do with inspiration. When times are tough it is very easy to start focussing on the negative and to get bogged down with what things are not going to plan. A far more positive approach is to move past those obstacles and focus on what you can do to move forward. Concentrate on those things you can change rather than on those things you can’t. At the end of the day, we live in a pretty prosperous country and have terrific opportunities residents of the developing world could only dream of. Coming back to a story which inspires me – my father (an author/historian) was in the process of researching for a book and met a very wealthy German entrepreneur. He had been a fighter pilot in the Luftwaffe and my father had brought him together with the American pilot he had been in a dog fight with – they both tried their best to kill the other. Now they are the best of friends. Whilst a great story, that is not the inspiring bit for me. This ex-fighter pilot had found himself on the wrong side of the Berlin wall when the East Germans started building it. He left his home and fled to the west with his family and only what they could carry. By the 1970s when we went to stay with them near Frankfurt
he was a very successful businessman. He lived in a large house with an indoor swimming pool (complete with wave machine!) and had five colour televisions. We stayed in their adjacent three bedroomed guest house. You can imagine the impression this made on a 10 year old whose family had only a couple of years earlier aspired to one colour television! The thought that in just over a decade someone could achieve so much whilst starting with so little is very inspiring. People do extraordinary things. These people are usually extraordinary individuals, but if we can take inspiration from their example we can become, if not extraordinary ourselves, certainly more positive and motivated. As 2013 conference chairs, Kim and I, along with the rest of the MiP Panel and conference team, are hoping to provide inspiration and motivation. With the central theme of ‘how to stand out from the crowd’, we are already putting together a group of excellent speakers. For example, we have just booked Geoff Ramm who received excellent feedback at the 2011 conference. He will not only share his secrets for standing out from the crowd in his closing keynote speech on day one, but will also answer your specific questions in a Q&A on day two. So, come and be inspired! Fiona Bevan Member, MiP Panel
Alternative Dispute Resolution CIMA offers an independent Alternative Dispute Resolution (ADR) service for members of the public with service related issues involving a CIMA member in practice in the UK. Service issues usually involve a dispute over contracts and/or levels of service provided by an accountant on issues like unreasonable delay, supplying inaccurate or incomplete information, failure to respond to telephone calls or correspondence, or not carrying out instructions. If the dispute does not refer to a service issue, it may be more appropriate to make a complaint.
The ADR service offers two processes for resolving concerns: conciliation first, followed by arbitration if conciliation is unsuccessful. The arbitration scheme is designed to allow parties to present their case without the need for legal representation. A third party scheme which will involve the bringing together of the MiP and their client will take into account the terms of engagement and the practitioner’s own internal complaints handling procedures. Example Terms of Engagement that provide a guide to the recommended minimum standard can be found in the Members’ Handbook.
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Current affairs
IFAC update IFAC’s Small to Medium Practice Committee (SMPC) has produced an article looking at ways to cope with the pressure to lower fees by some clients. To access the full article please go to www.ifac.org/sites/ default/files/news/files/IFAC-SMPC-FEE-PressureArticle-to-MBs.pdf CIMA is a member of IFAC and is committed to passing on the information, guidance and support from the SMPC to CIMA MiPs. The article has been produced as a result of the comments made in the most recent quick poll for SMPs. Thanks to all the MiPs that contributed their thoughts. For more information on IFAC’s small practice activities visit www.ifac.org/SMP
Relaxation of the requirements for small business exemption from audit Previously, businesses must have satisfied three criteria to be exempt from the requirement of an audit. These were:
An audit is seen by the government as necessary in some instances but a financial and administrative burden in others. The legislation enables small businesses to make a commercial decision about whether or not to have an audit. The government estimates that this has given 36,000 more companies the chance to be audit exempt. The government has also exempted most subsidiary companies from mandatory audit, as long as their parent company guarantees their liabilities. A further 83,000 subsidiary companies will benefit. In addition, another 67,000 dormant subsidiaries no longer need to prepare and file annual accounts, provided they receive a similar guarantee. CIMA MiPs are qualified and regulated individuals that provide accountancy services directly to the public. They play a vital part in providing accountancy services and business development advice to small and medium sized businesses. They typically provide references for business mortgages and report on the accounts of a wide range of businesses including property management, retail, gambling businesses, high street businesses, community groups and charities.
• an annual turnover of not more than £6.5 million • a balance sheet total of not more than £3.26 million • the company qualifies as a small company in relation to a particular financial year (currently 50 employees or less). Source: The Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008. Full current guidance from BIS can be found here. As of 1 October 2012 new legislation allows more small businesses to be exempt from a statutory audit. As part of its commitment to reduce the regulatory burden on UK businesses BIS consulted on audit exemptions and change of accounting framework. The changes to regulations will align mandatory audit thresholds with accounting thresholds. This means small and medium sized businesses will be able to obtain an exemption if they meet two out of the three criteria relating to balance sheet total, turnover and number of employees (rather than having to meet all three was previously the case).
• CIMA members are not auditors but are qualified to provide an external or reporting accountants report for those businesses not required to have a statutory audit. • There is legislation pertaining to some industries that specifically prohibits audit exemption (for example the Estate Agents’ Act). • There may be sector specific guidance from parent organisations. • Businesses can still choose to have an audit if they wish and some overarching organisations and trade associations are still recommending this approach to their members.
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Current affairs
Business advice information The link to the business advice information was not live in last quarter’s newsletter – please go to the new business and personal legal information webpage in the practice management section of the CIMA members’ handbook for further details, terms and conditions and contact information.
Trading for Good – showcase your social responsibility Trading for Good is a newly launched digital service promoting the good work of SMEs in their local communities. It is a social media platform and hopes to help facilitate the sharing of their social responsibility and gather some good PR in the process.
describe themselves in January 2013 and satisfying yourself that you have done your due diligence before making any more referrals. It would also be helpful to be able to communicate with your client and ensure that they have the right expectations when they are referred to a financial adviser. It may also be advisable to advise your client of the type of questions they should be asking – for example is the financial adviser a member of a professional or industry association?
Their main areas of focus are:
The Retail Distribution Review (RDR) is a key part of the Financial Services Authority’s consumer protection strategy. The FSA is working to establish a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning.
• supporting charities and communities • helping young people into work • improving environmental impact • working better with your suppliers • making life better for employees
From 31 December 2012, financial advisers that provide ‘independent’ advice will be able to consider all types of investment products that might be suitable for their clients. They can also consider products from all firms across the market.
For more information, please visit www.tradingforgood.co.uk
Some advisers will have chosen to offer ‘restricted’ advice where they can only consider certain products, product providers or both. For example, they may specialise in certain areas, such as pensions. The adviser will have to clearly explain whether they are offering ‘independent’ or ‘restricted’ advice and what they can advise their client on.
Making referrals to financial advisers As a CIMA qualified member in practice you may occasionally refer your clients in need of financial advice to an independent financial adviser. Under the FSA’s Retail Distribution Review, from January 2013 advisory firms will be required to define themselves as either ‘independent’ or ‘restricted’. It will also be illegal to pay a commission to anyone making a referral. From 2013, it will be the responsibility of the financial adviser to explain to potential clients the range of services that they are competent and entitled to offer, but the management accountant in practice can assist the process by providing information to help their clients to make informed choices. There is relatively little that that you need to do if you do make referrals to financial advisers. If you have a local informal arrangement with an independent financial adviser, it will definitely be worth checking how they intend to
Financial advisers will no longer receive commission from financial services companies. Instead they will set their own fees, based on the services they offer, and agree those fees with the client before providing any services. These changes apply to the sale of regulated retail investment products. Regulated retail investment products include stock market based investments (eg unit trusts and other funds), life policies, annuities and pensions. The new rules don’t apply to the sale of cash savings products, general insurance, protection products (term life insurance, critical illness cover, income protection insurance etc) or mortgages – unless they are sold at the same time as a regulated investment product.
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Current affairs
HM Treasury Review of MLR Regulations 2007 The Money Laundering Regulations 2007 were reviewed by HM Treasury in 2009/10 and a consultation on proposed changes was issued in 2011. CIMA contributed a response to this consultation and the Government made a public response prior to the revision of the regulations which came into force on 1st October 2012, becoming The Money Laundering (Amendment) Regulations 2012. The main issues affecting professional management accountants in practice and CIMA as a supervisor are: Removal of tiers in Schedule 3 of the Regulations Originally the recognised supervisory authorities for relevant persons who are regulated by them were divided into categories under Part 3. CIMA appeared in Part 2 – a list of bodies that HMT had less experience of working with. Now that the MLR 2007 regulations have been in effect for some time it was felt by HMT that this rather arbitrary list could now be combined. Safe Custody Services There will be a new explanation for Safe Custody – originally introduced primarily to cover safe deposit boxes. A list of exclusions will be included for clarity. CIMA supported this revision in the interests of proportionality although this is unlikely to affect accountancy pratices significantly. The FSA will be updating its information page on safe custody and MiPs will be able to direct their clients there. Public perception of the relationship between supervisors and supervised population Some concern had been expressed by HMRC that some individuals and businesses might be implying a wider legitimacy to their business (i.e. endorsement by their professional body) than simply being supervised for anti-money laundering. HMRC called for prescription and the establishment of a new offence but CIMA did not perceive this as a problem and felt that if anything, guidance would be preferable to prescription. The HMRC will use the current approach to “neutralise misrepresenting language” and monitor this for the time being.
Improving the wording of beneficial owners The beneficial owner of an asset is the person for whose benefit it is being held. The difficulties involved in tracing ultimate beneficial owners can make it more difficult to enforce anti-money laundering regulations. Clarification will be given in relation to CDD on the need to include, where applicable, identification of the beneficial owner. CIMA will amend its guidance in due course. Very small businesses will not be exempt Whilst CIMA supported a de-minimis exclusion for businesses with a very low annual turnover in the context of the low risk associated with accountancy practices, generally there is no correlation between size of business and risk of targeting by money launderers. This approach is of little effect to CIMA’s supervised population, as the cost of supervision the continued protection provided by supervision is to be welcomed and complex administrative procedures to exempt based on annual turnover will not be necessary. An information ‘gateway’ This was welcomed by CIMA because this portal will allow the monitoring of individuals that move between supervisors therefore providing public protection
Anti Money Laundering online course Money laundering is an area of risk for CIMA members in practice 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. CIMA is piloting a free online course for members in practice on anti-money laundering. The course has been developed by the CIMA Professional Standards Department and a third party provider. It has been reviewed by members of the MiP Panel. This course is not compulsory but if you feel you need to increase or reinforce your knowledge, it should be a valuable addition to your CPD activities in this important legislative area. Please go to the Members’ Handbook to find out more and access the course.
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Useful links
Keep up-to-date on ethics and sustainability with Ethical Lens Ethical Lens brings you CIMA’s most recent reports, articles and events, as well as a brief account of what is happening in the world of ethics on a global scale. The newsletter is a convenient way for members to keep up with the latest news and developments in ethics and business, and what is required from you as a management accountant. This edition highlights the recent Fact or Fiction: Global and Acting Under Pressure reports. It also links to a CGMA panel discussion produced in cooperation with the Accountant magazine, based on the Managing Responsible Business report. Read about RIO +20 and paragraph 47 regarding corporate reporting, learn how to approach sustainability issues with an article from Accounting for Sustainability (A4S), and be inspired by the UK car manufacturing industry. Ethical Lens also brings you the most recent updates from IFAC, the UN’s Business and Human Rights Framework and whistleblowing updates from around the world. Read Ethical Lens here. For more information about CIMA’s ethics support, resources and your professional code, take a look at www.cimaglobal.com/ethics
MiP events Members in practice annual conference How to stand out from the crowd Date: Friday 21 and Saturday 22 June 2013 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
Congratulations Congratulations go to Mint Accounting, winners of the national 2020 awards as Overall Firm of the Year! Mint Accounting’s Managing Director is Allison Walker FCMA, CGMA, who we’re proud to say is a CIMA MiP. Allison set up the business in November 2010, so although still very new, she already has a team of nine and has been very successful. A great inspiration and example of the success CIMA MiPs achieve. You can see some local PR the business has gained: www.allmediascotland.com/media-releases/40538/scottishaccountancy-firm-scoops-top-uk-award
Elected Members Mark Allen Fiona Bevan Tony Boffey Harry Hornby Kim Swarbrick Click here for MiP Panel contact details Hayley Dove Event Co-ordinator T. +44 (0)20 8849 2406 E. hayley.dove@cimaglobal.com
MiP News 9