PQ magazine, December 2021

CA E AC AM ID EX INS PS

December 2021

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Tomorrow’s World – a brighter future for accountants?

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December 2021

IN THIS ISSUE A note from the Editor We have another jammed-packed edition for you this month. The big news, apart from the fact that accountants may actually be trying to save the planet, is that we launch the PQ magazine awards! Plans are well under way for a live face-to-face event next March, and we want you to be there. But as we always say, you have to enter to be there. So get nominating – check out page 18 for more details.

And there’s still time to sign up to our free online conference ‘Tomorrow’s World – a brighter world for accountants?’. As we explain on page 4, the question mark is there for a reason! We think the future is bright, but we will leave it to the experts to tell us why. Sign up for a place at https://tinyurl.com/3ztjcpuk.

If you are feeling like getting out about then you should check out Accounting Web’s Live Expo in Coventry on 1-2 December. One keynote event really caught my eye – Creating Frankenstein’s accountant! Sign up at https://tinyurl.com/3ksdxp5j. I will be there on the Wednesday, so do stop me to say hello.

Finally, and back to this issue, we have six pages of fantastic ‘help’ on the ACCA December exams, kicking off on page 32. Enjoy!

Graham Hambly, Editor and Publisher, PQ magazine

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21 Audit How to score top marks in questions about audit reports 22 Global tax Multinationals face across-the-board tax rates as countires agree to new regime

p33 11 Recruiter convicted Director of online recruiment agency advertising fake jobs is convicted for fraud

p22

23 Cash flow Sarah Ardiles and Tom Clendon discuss what’s more useful – cash flow or profit 24 Tax Neil Da Costa keeps it simple when explaining gift relief

and tips on how to pass your exam

27 CIMA case study #1 We asked a real-life Case Study examiner the questions that you want answered

38 CIMA case study #2 Time to put on your gaming hat

31 Mental health Premier Training links up with Mental Health Foundation to provide PQs with help and guidance

06 Wellbeing Accountants feeling ‘emotionally’ challenged and under pressure, says CABA

10 ACCA September results Students still struggling with final optional papers

20 CIPFA spotlight CIPFA’s Anna Howard explains what’s different about its updated qualification

29 Green accounting Chancellor sets out new standards to tackle ‘greenwashing’

05 Ofsted says yes HTFT Partnership first to get get ‘good’ rating for apprentice training

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18 PQ Awards 2022 We launch the best and brightest awards in accountancy. Make sure you enter this year and join the party

28 A question for Tom Our man answers a question on contracts and revenue recognition

News 04 The environment Setting standards to save the planet

08 EY recruiting Big 4 firm takes on 1,000-plus new starters

Responsibility and Triple Bottom Line reporting

32 ACCA study advice Good exam technique equals exam success – simples!

33 ACCA exam tips We’ve got five pages of fantastic advice

41 Careers Life at Zzoomm plc; Agony Aunt Karen Young’s sage advice; and our book review 42 Fun The lighter side of life; and more great PQ giveaways The columnists Lisa Nelson Harnessing the precious gift of confidence

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Robert Bruce Why the numbers will save the world 6 Prem Sikka KPMG audit raises more questions than answers 8 Anna Kate Phelan Cut down your energy use and save a few quid 10 Vikki Bean Acountancy sector shows its resilience 12

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12 Tech news Cryptocurrency fraud on the rise, says Action Fraud Features, etc 14 Have your say Why I have moved to enhance my green credentials; and anger at corporations making huge profits out of ‘woke’. Plus our social media round-up 17 AAT studies We explain the concepts of Corporate Social

To subscribe go to www.pqmagazine.com

PQ Magazine December 2021

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LISA NELSON Competence breeds confidence

It could be a riddle: ‘although you can’t see me, I am always there, hard to find and easily lost, but find too much and it will dearly cost. What am I? Confidence.’

This highlights how difficult to define confidence is, yet there is little doubt that being confident will help you achieve more in both your career and the exam room.

Confidence is a feeling of self-assurance arising from an appreciation of your own abilities or qualities. A type of inner trust that you will succeed, although it doesn’t mean you will. It’s heavily influenced by your environment and the people around you. If you’re confident you will be more resilient, able to cope with failure, try more things and so learn, move forward, and become less anxious. The list is endless.

But how do you become more confident? Here are a few tips: • Fake it until you make it – the clue here is, you will make it, so play the game until you do.

• Change your inner dialogue – ‘I can’t’ becomes ‘I can’t yet’.

• Be proud of what you have achieved and forgive yourself more often.

• Treat failure as a lesson – ask what should I do differently next time?

• Work hard – my personal favourite, you become confident through competence.

A final word of warning: beware arrogance and overconfidence.

The first will lose you friends, the second can be dangerous!

Lisa Nelson is Director of Learning at Kaplan

Creating standards to save the planet A new accountancy standard setting body to improve sustainability standards has been created by the IFRS Foundation – the International Sustainability Standards Board (ISSB).

The ISSB is tasked with issuing global standards for corporate disclosures around sustainability, and many believe this will help bring accountants to the forefront of combatting climate change and global warming. The creation of the ISSB, a sister body to the IASB, should also help put sustainability reporting on an equal footing to financial reporting.

ACCA said the formation of the new board was ‘a historic and vital next step in clarity for corporate reporting’. CEO Helen Brand said: “This development means we now have a once in a lifetime opportunity to help shape global reporting standards for the benefit of investors,

economies and the public good.”

CIMA felt the move will enable the necessary evolution for corporate reporting standards to take place and ensure corporate reporting remains fit for purpose in the post pandemic world.

Meanwhile, ICAS CEO Bruce Cartwright warned: “Global threats require global solutions. The International Sustainability Standards Board must hit the ground running

Tomorrow’s world today There’s still time to book your place on our online one-day conference, entitled ‘Tomorrow’s World – a bright future for accountants?’

Please note the question mark in the title – we want to discover if the

future really is bright!

Our fifth conference with London Business School University takes place on Wednesday 24 November, and you can sign up for your free place at https://tinyurl.com/3ztjcpuk You can dip in and out of the

and deliver the high-quality standards that will serve the public interest.”

Cartwright stressed: “Whilst its initial primary focus must be to look to achieve greater international consistency in relation to reporting on the impact of climate change, it must also look to set consistent requirements in other key areas of sustainability including biodiversity and nature loss.” day, which covers everything from technology, sustainability, the NHS – and much more.

ACCA’s Clare Bennison will be talking about the outcomes from COP26, and CIMA’s Martin Farrar will explain how businesses can future-proof themselves.

We would love to see you there.

Advanced exams run smoothly ICAEW November Advanced level sitters who booked remote exams were told just two weeks before their exam that if they wanted to guarantee smooth running they needed to switch to an exam hall.

The exam team had been working hard to fix the problems experienced by

July sitters, but they were not able to completely resolve the software lagging for exams sat by remote invigilation.

ICAEW’s Hazel Garvey (left) told PQ magazine: “We are pleased to confirm that the vast majority of exams, both in centre and remotely ran as expected.

Thanks to those students who made the last-minute switch to exam centres, which enabled us to fully support those remotely invigilated students who were unable to move.

“We continue to work hard behind the scenes to fully resolve the technical issues experienced by some students in the remotely invigilated exams earlier in the year, as well as make improvements to our end-to-end processes.”

In brief Pap Recaps for ATX and AAA ACCA students have been reminded that self-check modules are available for a range of Applied Skills and Strategic Professional exams. ACCA also has knowledge recap e-learning modules on the Student Virtual Learning Centre, and these are now available for APM, ATX and AAA. Students complete the relevant self-check quiz to discover any areas where they need to strengthen, before going on to the relevant e-learning module to top up their knowledge.

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Pap ICAEW trainee sanctioned An ICAEW PQ has been caught submitting an exam transcript that deleted his exam failures in order to secure employment with another firm.

The ICAEW disciplinary committee said Alam Chowdhury’s conduct was dishonest “because he knew he had failed the deleted exams and intended to conceal his exam fails.” The complaints were found proved on Chowdhury’s own admission and the tribunal declared him unfit to become

a member and/or foundation qualification holder, and he was ordered to pay costs of £6,685.

Pap AAT revises qualification launch date AAT has confirmed that the new launch date for its new qualification – Q2022 – will be September 2022. AAT explained that rescheduled from February 2022, the new launch date will enable a thorough end-to-end testing of the whole system via a new controlled pilot.

AAT director of education and development, Suzie Webb, said: “AAT project teams have been working incredibly hard to develop our new qualifications and assessment platform. Whilst the new qualifications and assessments are now ready to be deployed, we’re extending our testing time to ensure a smooth launch. Our intention is now to run a controlled pilot from early 2022 with selected training providers, prior to a full launch in September.”

PQ Magazine December 2021

news

Where are the net zero targets?

Just one in seven organisations around the world have set targets to be net zero compliant by 2050, according to the 3,000 accountants and finance professionals who took part in ACCA’s latest global survey.

And some three-quarters of those surveyed believe their team should be supporting their organisation to tackle climate change, but 54% admit they are being held back because people don’t think climate action is the responsibility of the finance team.

Another worry is just 38% of respondents believe their organisation is willing to invest any more in addressing climate change over the next three to five years.

ACCA CEO Helen Brand OBE said: “There’s a critical need for leaders, whether in governments, the private or public sectors, to grasp the scale of this challenge and to respond to it. The accountancy profession has a critical role to play in this, both to lead long-term value creation in sustainable economies, and to champion responsible practices for the public good.”

HTFT Partnership is good to go HTFT Partnership’s hard work seems to have paid off, and its apprenticeship provision was recently rated ‘Good’ by Ofsted.

HTFT is the first independent learning provider delivering accountancy apprenticeships up to Level 7 to have its full Ofsted

report published since Ofsted took over the inspection of degree apprenticeships in April 2021.

Ofsted praised HTFT’s ‘wellthought-out teaching model’, ‘well-planned teaching sessions’, and noted that ‘teaching and mentoring staff are well

CIMA Student of the Year This year’s CIMA Student of the Year is Gimasha Chandradasa (right), who was nominated by Chinthaka Wijayaratne of Wisdom Business Academy, Sri Lanka.

At just 19 years old, Gimasha has already completed all her CIMA examinations. She was selected from a shortlist of 12 very strong contenders, as CIMA Global Student of the Year on the basis of her academic performance and activities in support of CIMA and her fellow

qualified and highly experienced professionals’.

Vicky Taylor (left), founding partner, said: “We are extremely proud of what we have achieved since 2013, and this report is a validation of the great work we, our apprentices and our employers do. I would like to thank our students, who strive to reach their potential and be the best they can be.”

CIMA students. CIMA explained that Gimasha “represents exactly the kind of role model we seek to find through the awards”.

This is the second consecutive year that Wisdom Business Academy has tutored the CIMA Student of the Year.

Gimasha was announced as the winner in a virtual celebration last month, which concluded the 2021 Student Support Forum organised by the study support team at CIMA. She will be presented with her trophy, her prize and certificate at an event organised by CIMA Sri Lanka later this year.

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PQ Magazine December 2021

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ROBERT BRUCE Why the numbers will drive climate change initiatives Just over 100 years ago the posters said: “What did you do in the Great War, Daddy?” It was an attempt to shame men into military service during the First World War. In 100 years’ time, I suspect that a similar question will be asked about what people did to slow climate change. By that time the answer will be obvious. Either we succeeded and our environment is flourishing, or we failed and life became a miserable time of strife and environmental disasters.

The focus at the Glasgow COP26 jamboree was on carbon, flying, fossil fuels and heating, and deforestation. And on which nations are pulling their weight, and even that great red herring, farting cows and methane. It all tends towards the abstract when it comes to tackling the issues. Good in principle, woefully short on action. But I suspect, looking back from the future, that accountants will come out of it better than most. Figures, after all, are what force actions – the most influential of information. But they remain unfashionable.

The motivation of activists who glue themselves to airport runways, motorways or the HQ of fossil fuel companies is not because they want more financial disclosure.

But the work of creating and forcing through climate-related financial disclosures has done more to genuinely combat climate change than all the politicians and activists put together.

Robert Bruce is an award-winning writer on accountancy for The Times

Feeling emotionally challenged?

Are you feeling too emotionally drained to work or study? Well, you are not alone, as new research has found that two in five (41%) accountants feel as though their energy levels are so low that they are unable to carry out their work effectively.

And more than half (56%) of respondents said that they felt ‘emotionally challenged’.

The research by CABA, the wellbeing charity, shows that many accountants are feeling isolated, unable to speak about their feelings and despairing about the future. One in three (30%) of those surveyed admitted

that had recently felt isolated.

When asked the cause of this distress, 33% cited either work, career or studies, while 18% put

it down to the pandemic. Another 14% said the reason for feeling drained was simply down to feeling constantly under pressure.

Paul Day, Support Officer at CABA, stressed: “We all have different ways of coping with stress and anxiety. However, there are also times when we find ourselves not coping as well as we might like. Some individuals may be put off from seeking help due to the perception of stigma, time barriers or simply not knowing where to look or how to find help. Whatever it is you’re struggling with, it’s vital you get some kind of support.”

we hope to announce the venue very soon.

Among the 2021 winners were Emma Mellor, our first-ever

Accountancy Graduate of the Year. Demel Johnson picked up the Distance Learning Student of the Year award, and AAT trainee Simon Cordell was our PQ of the Year.

CIMA’s Jason Nye won Best Use of Social Media and Accountancy Body of the Year went to ICB. The deadline for entries is Friday 18 February 2022. But please don’t leave it to the last minute! You can download the nomination on the website at https://tinyurl.com/detrxhmx

Your time to shine The search is on to find who will own the next batch of PQ magazine awards trophies!

Yes, we are launching the PQ magazine awards for 2022 this month.

Our 2021 awards were beamed live from Shoreditch in London. The 2022 awards will be held in March next year and

ICAS action plan for Black Talent ICAS has published an action plan to identify and reduce the barriers faced by black chartered accountants.

The plans form part of ICAS’ commitment as a signatory of the Charter for Black Talent in Finance and the Professions, which it signed up to earlier this year. ICAS is pledging to create an environment where black CAs and CA students can access support

and guidance, develop to their full potential, and benefit from mentoring from other black CAs. ICAS CEO Bruce Cartwright said: “It is vital we are open and transparent about the experiences of our black members, students and staff.

Understanding their personal experiences and outcomes will help us develop strategies to support their continued

professional development and ensure they are able to reach their potential.”

In brief Pap First Intuition and iCount Training merge First Intuition and iCount Training have agreed a merger. Manchesterbased iCount will formally become part of the FI ‘family’ in December 2021. FI CEO Martin Taylor said: “We’ve been looking at the Manchester market for a number of years now. Recent national client wins have accelerated this, and we’re thrilled to be able to work even more closely with the team in Manchester to help them grow. We’re committed to regional 6

autonomous study centres that can offer their markets the local service, relationships and programmes that they need and this merger offers all of that.”

Pap Timeliness an issue for local audits Some 30% of local government audits performed by six of the largest audit firms required improvements, according to the latest FRC inspection findings into the quality of major local body audits.

This is a big improvement on last year’s results, where 60% of audits inspected required either improvements or significant improvements.

FRC said that it was encouraging that the firms have taken action in response to previous findings, although it stressed that the timeliness of auditor reporting was still disappointing. In fact, the FRC had to replace half of the local government audits initially selected for inspection because the audits had not been finalised and signed off.

Pap Grant Thornton sanctioned over Interserve Grant Thornton and audit partner Simon Lowe have both received a severe reprimand from the FRC over the auditing of Interserve plc between 2015 and 2017. Grant Thornton was fined £718,250, and is now required to report to the FRC on its monitoring programme of the quality of audit work on loss-making contracts. Lowe was fined £38,675. The financial sanctions were discounted because of the “exceptional cooperation” provided by the respondents.

PQ Magazine December 2021

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PQ news

EY recruits over 1,000 starters

PREM SIKKA KPMG audit raises more questions than answers The FRC’s admonishment of KPMG and its insolvency partner for mishandling administration of Silentnight could prompt the House of Commons Work and Pensions Committee to examine regulation of insolvency and its impact on occupational pensions.

The FRC investigated the administration of Silentnight, and its report said KPMG and its insolvency partner pushed it into insolvency so that private equity firm HIG, a client coveted by KPMG, could buy it out of administration at a lower price by abandoning pension obligations to employees. Around 1,200 workers lost some of their pension rights.

The insolvency partner was found to be “untruthful”. KPMG and the partner were fined £13m and £500,000 respectively, and ordered to pay costs of £2.8m.

The fines will go to the ICAEW, the body that authorised and supervised the “untruthful” insolvency practitioner. Many are wondering whether that is ethical.

KPMG profited from administration of the company. The ICAEW collected fines and recouped the cost of disciplinary hearings but Silentnight employees, the innocent victims of the debacle, have lost some of their pension rights.

When asked whether there will be criminal charges against KPMG’s insolvency partner, the government said it “is considering the facts of the case”. Whatever the outcome, Silentnight raises more questions about the conduct of the big firms.

Prem Sikka is Emeritus Professor of Accounting at the University of Essex

EY recently opened its doors to 1,088 new starters, reinforcing its commitment to nurture and invest in new talent.

Some 46% of this cohort of 909 graduates and 179 apprentices will be based outside of London in EY’s offices. The Big 4 firm said Bristol, Birmingham, Leeds, Manchester, Newcastle and Reading have seen a particularly strong intake as the firm continues to invest in its regional business.

Of the new joiners, 46% are women, 38% are from an ethnic minority and 4% are black.

EY has adapted its student

IFRS in your pocket If you are looking for a great free resource for your IFRS revision, then there’s no better source than Deloitte’s ‘IFRS in your Pocket’.

This 145-page booklet is a comprehensive summary of the current IFRS standards and

recruitment programmes over the past 18 months to ensure that graduates and apprentices were still able to receive meaningful client experiences and study for their professional qualifications interpretations.

Deloitte’s Global IFRS leader, Veronica Poole, explained that in terms of new accounting requirements for annual periods beginning on or after 1 January 2021 it is a relatively quiet year, compared with previous ones.

However, she

while working virtually. With restrictions now easing, students will complete their induction training virtually before adopting a hybrid working arrangement from mid-Autumn onwards.

To ensure students receive the right level of support, EY has introduced more one-to-one touchpoints for students with their line managers and coaches and will be arming students with tools and tips on working in a virtual world. There will also be both virtual and in-person networking sessions and more peer support groups. explained: “Nonetheless, there are some important changes coming to financial instrument accounting with the adoption of Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).”

Find booklet at https://www. iasplus.com/en/publications/ global/ifrs-in-your-pocket/2021

ACA professional level results The ICAEW September professional level exam results saw a record seven sitters share the Spicer and Pegler prize for the Financial Accounting & Reporting paper.

The joint winners were Gabrielle Anderson, London (Civil Service Finance Fast Stream); Charlotte Bodger, Warrington (Grant Thornton UK LLP); Shannon Goodwin, Benfleet (Haysmacintyre LLP); Samuel Orbell, Norwich (BDO LLP); Matthew Potter, Telford (KPMG LLP); Jacob Routley, Hove (Grant Thornton UK LLP); and

anonymous, London (PwC LLP).

Some 4,482 students sat the September papers. The Business

Strategy & Technology pass rate dropped from 92.5% in June to 86.4% this time around. The Financial Management pass rate also slipped, from 81.6% in June to 77.9% in September. However, both the Audit & Assurance and Tax Compliance pass rates were higher than the summer sitting.

ICAEW SEPTEMBER 2021 PROFESSIONAL LEVEL PASS RATES: AA: 74.2%; BPB: 66%; BPI: 79.2%; BPT: 73.2%: BST: 86.4%; FAR-IFRS: 80.9%; FAR-UKGAAP: 57.1%; FM:77.9%; TC: 88.4%.

Taxwatch Pap Self-employed tax reform Reforms to tax calculations for the self-employed, announced by the Chancellor in his Budget, will result in a significant acceleration of tax payments by businesses affected by the change, says the Chartered Institute of Taxation.

The £1.7 billion raised by the measure over the next five years also makes it the biggest taxraising measure confirmed in the Autumn Budget and Spending

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Review 2021.

The government explained it plans to reform the ‘basis period’ rules that determine how trading income for unincorporated businesses (that is, self-employed sole traders and partnerships) is allocated to tax years. The proposal is to change the allocation so that it will be based on the profits or losses arising in the actual tax year, rather than (as now) in accordance with the accounting

period ending in the tax year.

The new ‘tax year basis’ will apply from the tax year 202425, in anticipation of the start of Making Tax Digital for income tax self-assessment in April 2024, with a transition to the new regime in the tax year 202324. The measure will only affect businesses Pap Taxing times Since Boris Johnson came to power the UK’s tax burden has

increased by £3,000 per household a year, says the Resolution Foundation.

The think tank said in his latest Budget Chancellor Rishi Sunak had boosted incomes by 2.8% for the poorest fifth of households. However, middle income households have taken a 2% hit.

The Resolution Foundation’s £3,000 figure includes business taxes, which it says are regularly passed on to consumers.

PQ Magazine December 2021

Tomorrow’s World – a brighter future for accountants?

Join LSBU Business School and PQ magazine as we host our annual conference on Wednesday 24 November 2021.

Following on from the theme of our last conference, we’ll be looking forward and exploring what the future looks like for accounting professionals with another boldly titled event covering a broad range of timely & relevant topics: Tomorrow’s World – a brighter future for accountants?

We’ll also be celebrating the conference being in it’s 5th year and we’ll be joined by a host of special guest experts including...

• Professor Christine Helliar • LSBU’s very own Joe Adomako • GAAPweb’s Andrew Robertson • Associate Professor Gavin Brown • Richard Simms of FA Simms • AAT President David Frederick ... with many more to be confirmed!

During the conference, we’ll explore...

• The rise and rise of FinTech • Report on COP26 and its implications for accountants • Explore the current state of the jobs market for PQ and NQ accountants • Take a look at IFRSs and the impact of COVID-19 Due to the success of our last event, the conference will be delivered virtually and we hope you’ll join us from wherever you are in the world as we continue to shine a spotlight on the profession & the impact we have. We’ll update this page in the coming months as more speakers and sessions are confirmed so do stay tuned!

Register here: https://lsbu-pq-brighter-future-for-accountants.eventbrite.co.uk

PQ news

ANNA KATE PHELAN Cut down energy use – and pocket a few quid, too As the winter nights draw in and we all become firmly ensconced in our homes, attention may be turning to how to keep those pesky energy bills from racking up. The Energy Saving Trust (EST), whose mission is to address the climate emergency on a household, corporate and governmental scale, has provided a number of handy tips intended to help the planet, as well as your pocket, this year.

The most straightforward and effective of these suggestions is to simply reduce your thermostat from 19 to 18 degrees. This will result in your energy consumption being reduced by 13% (about 1,530kWh), with a tidy saving of at least £50 a year. Additionally, you can utilise technology to manage your energy expenditure. Smart controls, heating controls where you can time when the heating comes on or control appliance energy expenditure via an app on your phone, could save you up to £120 a year if you combine it with turning down the thermostat.

Be wary of the myth that keeping your heating on constantly at a low temperature is more energy efficient than putting it on when you’re at home. The advice is that it is key to turn off radiators in rooms you don’t use and only heat the rooms you do use. Finally, EST advises you can make a saving of £8 a year by doing one less wash a week.

Might be worth keeping in mind as you may not fancy venturing outside anyway and studying in your dressing gown with a nice cuppa may be preferable!

Anna Kate Phelan is Senior Product Manager at Eintech

ACCAs are still struggling with final optional papers Just over a third of students sitting the Strategic Professional optional papers managed to scrape through in September, according to the latest exam pass rates.

The Advanced Performance Management pass rate slipped to a worrying 30%, with the Advanced Taxation pass rate falling to just 36% (it was 44% in March 2021).

The Advanced Audit Assurance pass rate has always been low, and at 34% for September this continued the trend.

Meanwhile, the ‘best’ pass rate this time around at the Strategic Professional level was Advanced Financial Management at 37%, which again is well below the

PQ JOB OF THE MONTH: Become an Accountancy Skills Coach

Training Link walked off with the award for Large Training Provider of the Year at the recent ICB LUCA awards. This is an astonishing tenth win in a row for the college. ICB’s 25th Anniversary Dinner and LUCA Awards recently took place at London’s super-boutique hotel, The Londoner in Leicester Square.

Pandemic lifts EY partner pay EY’s UK partners took home nigh on £750,000 last year as the Big 4 firm reported a jump in profits. UK revenues grew by 7.3% for the financial year ended 2 July, while UK fee income grew to £2.75 billion from £2.57 billion the previous year. EY reported strong growth across all its service lines – revenues in strategy and transitions grew by 12.1%, consulting grew 9.5%, assurance 5.8% and tax 4%.

It all added up to an average distributable profit per partner of £749,000, up from £667,000 in FY20.

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December 2020 success rate of 42%.

Performance Management stands out at the Applied Skills level. The pass rate for September was 37%, five percentage points down on the June sitting.

It appears the performance

management papers have now replaced the audit ones as the new ‘difficult’ papers.

ACCA’s executive director – content, quality and innovation, Alan Hatfield (left), said globally over 99.9% of students sat CBEs this sitting. He explained that ACCA is launching a Strategic Professional webinar for resources and techniques for success, as well as Ethics and Professional Skills module (EPSM) support videos available on demand.

ACCA SEPTEMBER 2021 EXAM RESULTS: BT 83%; FA 70%; MA 66%; LW 85%; TX 52%; FR 48%; PM 37%; FM 52%; AA 39%; SBL 51%; SBR 48%; AAA 34% AFM 37%; APM 30%; ATX 36%

New initiative to help charities close digital divide Deloitte is launching a new programme to help charities close the digital divide. ‘Deloitte Digital Connect’ will be delivered in collaboration with CAST, a charity helping organisations use digital for social good. The programme will bring together up to 50 charities, including Deloitte’s 5 Million Futures existing charity partners, and connect them with expertise, advice and a network to support their digital development.

Richard Houston, senior partner and chief executive of Deloitte UK, said: “New technologies are rapidly changing how charities need to operate and there’s a growing digital skills gap that threatens their future. The pandemic has

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inflicted huge disruption to fundraising and volunteering and through our 5 Million Futures strategy we want to share our knowledge and resources to ensure that no charity is left behind.”

UK leads G7 Net Zero Readiness Index The UK has been ranked as the leading G7 nation in KPMG’s first-ever Net Zero Readiness Index (NZRI). Only Norway is judged to be better prepared by the report, which compares the progress of a selection of countries in reducing the greenhouse gas emissions that cause climate change and assesses their preparedness and ability to achieve Net Zero by 2050.

PQ Magazine December 2021

news PQ

Accountancy firm boss sentenced for advertising non-existent jobs The director of a London-based company that offered jobs via an online recruitment website has been given a suspended sentence for his part in a fraud that saw job applicants apply for positions that didn’t exist.

Wemba Akobola was sentenced to 18 months’ imprisonment, suspended for 18 months, at the Central Criminal Court (Old Bailey) on 24 September. He was also ordered to carry out 200 hours of unpaid work and banned from being a director for five years.

The court was told that Akobola was responsible for advertising the fake jobs and conducting interviews with applicants. During 2018 and 2019, job applicants were invited for interview at prestigious locations in the City and at Canary Wharf, with most of them being offered positions, but having to pay a training fee of between £500 and £1,200 before being accepted.

The court heard that the training was unstructured and

of poor quality and salaries of £25,000 offered to applicants at interview failed to materialise; in fact, successful job applicants had to find their own clients before they would be paid any money.

Tshovo Accountancy Services Limited was prosecuted by the City of London Corporation’s Trading Standards Service and subsequently convicted of fraudulent trading following a fourweek trial at Southwark Crown Court.

Tshovo Accountancy Services Limited was also convicted of fraudulent trading offences and will be sentenced later this year.

In addition to the offences of fraudulent trading under Section 993 of the Companies Act 2006, the rarely used Business Protection From Misleading Marketing Regulations 2008 were included on the indictment, to reflect the false statements made by the company on its website to businesses.

Helping accountants prepare for 2022 There’s still time to join the UK’s largest accounting community in person at AccountingWEB Live Expo, where you’ll hear expert advice and meet ground-breaking suppliers across two days, to ensure you are ready for 2022 and beyond.

The event is hosted by the UK’s leading website for accounting and finance professionals, AccountingWeb. It is a free to attend, live event bringing professionals together to meet faceto-face, share experiences and gain

direct access to unique content and practical advice to help navigate current challenges and improve business.

The programme has been put together by the AccountingWEB team. You’ll hear from 60+ top industry experts, who will give you the tools and tips to tackle your current challenges, and it is CPD accredited. From inspiring keynotes, practical workshops and Q&A’s, the experts will give you insights and practical tips to take away and apply to your business.

You’ll have the opportunity to meet with 80+ innovative suppliers, see hands-on tech demos plus hear first-hand about the latest developments causing noise in our industry. Discover the latest product releases in accounting software, as well as the latest fintech and open banking innovations to simplify and automate your processes.

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11

tech news

VIKKI BEAN

Crypto-fraud on the rise Accounting firms show their resilience

As we move into the next phase of recovery there are still many challenges ahead for businesses.

But one thing is certain – the strength of the UK’s accountancy and bookkeeping sector is continuing to play a critical role in rebuilding the economy. This is demonstrated by our recent Accounting and Bookkeeping Industry Performance Report. It shows that the sector is not only resilient but is thriving.

Over half (51%) of UK firms are growing their customer base at a faster, or a similar pace, to pre-pandemic levels. On average, firms added 10 business clients and six other clients in the past year – with growth being seen among all sizes of practice. This isn’t surprising. Behind almost all resilient small business there’s a diligent accountant. And our research shows that many firms have adopted new ways of working to support clients during the pandemic – and have prospered as a result.

One area that has been critical is the role of technology. It’s had a huge impact on the sector: 43% of respondents said it is helping them to prepare for MTD, and firms with 75% of business clients using online accounting software have the highest average revenue per client.

Many firms also told us they want to go further by hiring new staff in the next year. It’s great to see accountants feeling positive about the future, as they will be the ‘key workers’ helping small businesses navigate what’s ahead.

Vikki Bean is Director of Global Education and Delivery at Xero

Over £146 million has been lost to cryptocurrency fraud since the start of 2021, according to data analysis from Action Fraud, the national reporting centre for fraud and cyber crime.

This, says Action Fraud, is almost a third more (30%) than was lost in the whole of 2020.

Since the start of this year, Action Fraud has received 7,118 reports of cryptocurrency fraud, with an average loss per victim of just over £20,500.

It said 18- to 25-year-olds accounted for the highest

percentage of reports (11%) and over half (52%) of victims were aged 18 to 45 years old.

One common tactic used to defraud victims is the use of celebrity endorsements. Criminals will present professional and

credible looking online adverts, send emails and create websites to advertise fake investment opportunities, including cryptocurrency. Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate. Between April 2020 and March 2021, Action Fraud received 558 investment fraud reports that made reference to a bogus celebrity endorsement – with over three-quarters (79%) of reports mentioning cryptocurrency as the commodity they invested in.

LinkedIn and Yahoo shutdown in China Microsoft said it is shutting down its LinkedIn social network in China, saying having to comply with the Chinese state has become “increasingly challenging”.

The news comes after the careernetworking site faced questions for blocking the profiles of some journalists.

LinkedIn will launch a jobs-only version of the site, called InJobs, later this year. But this will not include a social feed or the ability to share or post articles.

In a statement LinkedIn said: “While we are going to sunset the localised version of LinkedIn in China later this year, we will continue to have a strong presence in China to drive our new strategy and are excited to launch the new InJobs app later this year.”

Yahoo has joined the trend, saying it is ending its presence in mainland China as tougher regulations are imposed there.

Yahoo users in China are now greeted with a message that

explains the site is no longer accessible. In a statement Yahoo said its decision was due to an “increasingly challenging business and legal environment” in the country.

CMA fines Facebook £50 million Facebook has been fined £50.5 million for breaching an order imposed by the Competition and Markets Authority (CMA) during its investigation into the tech giant’s purchase of Giphy.

It is standard practice for the CMA to issue an initial enforcement order (IEO) at the start of an investigation into a completed acquisition. This ensures that companies continue to compete with each other as

they would have without the merger, and prevents the companies involved from integrating further while a merger investigation is ongoing. The CMA imposed this type of order on Facebook in June 2020 in relation to its purchase of Giphy.

Facebook was required, as part of the process, to provide the

CMA with regular updates outlining its compliance with the IEO. However, it was deemed that Facebook significantly limited the scope of those updates, despite repeated warnings from the CMA. The CMA considered that Facebook’s failure to comply was deliberate, so issued a fine of £50 million for this ‘major breach’.

Tech briefs Pap Turning off facial recognition Facebook has said it will be shutting down its facial recognition system and faceprints will be deleted for over one billion people. The tech giant has decided to remove the technology that automatically identifies users in pictures and videos. Facebook’s Jerome Pesenti said: “This change will represent one of the largest shifts in facial recognition usage in 12

the technologies history.

There are many concerns about the place of facial recognition technology in society, and regulators are still in the process of providing a clear set of rules governing its use.”

Pap Digital money pilot The UK will be piloting a digital version of the pound within a few years to cut the cost of money transfers, according to the chairman of NatWest, Sir Howard

Davies. He emphasised that many central banks across the world are currently studying the effects of launching a digital version of their currency, with the aim of keeping up to speed with changes in payment systems.

Sir Howard said: “I suspect that in three to five years we will see that operating in the UK on a sort of pilot basis to start with.”

Pap Computer emissions Global computer usage is emitting twice the amount of

greenhouse gases as air travel, say new estimates. Scientists have said that previous estimates of the damage caused by computers has been significantly underestimated, and in fact it could account for almost 4% of all greenhouse gases. Aviation accounts for 2%.

Earlier estimates had not taken into account the entire lifecycle of many computer devices, such as phones, laptops and games consoles. The worry is that emission will continue to rise significantly unless action is taken.

PQ Magazine December 2021

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Count your carbon I read with interest November’s edition of PQ magazine because of its emphasis on climate change. The regulations, and the reasons why investors are interested in sustainability reporting, is a current issue that is examined by ACCA and is why I recently teamed up with the audit guru Ben Wilson to record a podcast on this area covering both the accounting and audit issues (find it at https:// tinyurl.com/twa98k5t) As an online lecturer I always knew that my courses have a very small carbon footprint. My students don’t travel to

study, I have no offices to heat and it’s all about pdf notes rather than printed manuals.

But I wanted you to know that last month’s PQ magazine was the

catalyst that I needed to prompt me into action to get my business certified as carbon neutral by Carbon Neutral Britain, and to pay for 30 trees to be planted every month (see https:// carbonneutralbritain.org/) I can only hope that others in our industry will be similarly inspired to take similar action.

Tom Clendon, ACCA SBR online lecturer and podcaster. For more information go to www. tomclendon.co.uk The Editor says: Thanks for your letter Tom, and well done for your efforts around sustainability. Anyone else doing the same? We’d love to share your stories!

Our star letter writer wins a fantastic ‘I love PQ’ mug!

Not so woke I really liked the book you chose in November’s issue. Vivek Ramaswamy is saying something that it hard to disagree with in his book ‘Woke Inc – Inside the Social Justice Scam’. There are huge double standards being played out by the big corporations, using ‘woke’ capitalism to increase their profits. Take a look at what’s happening at COP26. Suddenly the huge polluters are jumping on the bandwagon claiming how green they are, while maximising the money they make from oil and mining. They call it ‘greenwashing’, and just like money laundering it has to stop. I really do believe accountants can play a big role in cleaning this whole area up. Proper action is needed and there needs to be proper stringent regulation.

Amanda Perry, Sunderland The Editor says: Amanda, your prayers have been answered. The IFRC Foundation has just created the International Sustainability Standards Board (ISSB), which will help provide clarity when it comes to corporate reporting on sustainability. We all saw how the big corporations jumped on Black Lives Matter, and I too am a bit cynical about the ulterior motives.

Time for change I agree with the Office of Tax Simplification, we need to change the end of the tax year. It was good to discover the history behind the change in your piece ‘Time to change the tax year?’, but I think

we have to go for the calendar year.

All I would say is that we wait until everything goes digital, then we can let the computer take the strain.

Creating quarterly reporting would also help this process.

James Ward, Bristol

PQ magazine’s Back to Basics video series has been a big hit with readers. Tom Clendon’s eightminute video on double entry bookkeeping has, for example, now been downloaded over 1,700 times! You can check it out at https://lnkd.in/dyNSqeg. Tom explains exactly when to debit and credit, and we think his video is vital if you are just starting out, but equally as important if you are looking for a refresher.

When we highlighted the series on LinkedIn and Facebook everyone loved the picture we used to go with the story, and wanted to know where they could get the baby grow! We went in search of it on Google by typing in ‘accountancy baby grows’, and wouldn’t advise anyone of doing the same! That is a word hole you may never escape from.

There are lots of other great short videos, on assets, trial balance and VAT calculations.

Check out what is on offer at www.pqmagazine.com.

While you are there you can also click on our test bank series, where Professor Phil Dunn tests your knowledge on a diverse range of subjects that include the accounting standards, ABC and limiting factor analysis (to name but a few).

It was also Halloween recently, and ACCA tutor Ben Wilson showed how to put his homegrown allotment pumpkins to good use! Scary stuff indeed Ben. Let’s hope he turned them all into pumpkin pie shortly after!

PQ Magazine PO Box 75983, London E11 9GS | Phone: 07765 386489 | Email: graham@pqmagazine.com Website: www.pqmagazine.com | Editor/publisher: Graham Hambly graham@pqmagazine.com | Associate editor: Adam Riches | Art editor: Tim Parker Contributors: Robert Bruce, Prem Sikka, Lisa Nelson, Anna Kate Phelan, Tony Kelly, Phil Gammon, Edward Netherton | Subscriptions: subscriptions@pqmagazine.com | Origination services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email admin@pqmagazine.com

Published by PQ Publishing Ltd © PQ Publishing 2021

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Developed by

AAT studies PQ operations.

3. The bottom line of the Profit and loss account. The traditional measure of profit.

The aim of TBL is to measure the financial, social and environmental performance of a company over a period of time.

The framework has been developed to help companies demonstrate they are behaving in a sustainable manner.

Companies that adopt the TBL approach are working towards reducing their ecological footprint by managing their resources, energy usage and minimising environmental damage, both now and in the future.

Measuring performance Considering the three P’s – People, Planet and Profit – the following examples could be used in the workplace: People • Jobs created and diversity of employees.

• Pay levels for staff.

• Accident rates in the workplace.

• Length of employee service.

Corporate Social Responsibility Karen Groves explains Corporate Social Responsibility and Triple Bottom Line reporting

E

thics is assessed throughout your AAT studies, and part of your studies will include Corporate Social Responsibility (CSR) and the Triple Bottom Line (TBL) reporting.

What is CSR/TBL reporting?

CSR is an approach that contributes to sustainable development, by delivering economic, social and environmental benefits for all stakeholders (not just shareholders).

A lot of companies already commit to CSR which involves setting environmental targets, for example, carbon emissions, producing reports and taking responsibility for the companies’ impact on the environment and social wellbeing. CSR usually involves companies going above and beyond what is required by regulators. An example of this could be

implementing new ‘greener’ operations.

TBL reporting is used to expand the traditional company reporting of financial performance, considering both environmental and social performance. TBL is also referred to as ‘integrated’ reporting. TBL consists of three Ps – People, Planet and Profit.

The triple bottom line approach was created

by John Elkington in 1994. His argument was that companies should be preparing three different, and quite separate, bottom lines as follows: 1. The bottom line of a company's People account, a measure of how socially responsible a company has been throughout its operations.

2. The bottom line of the company's Planet account, a measure of how environmentally responsible it has been throughout its

ADVANCE YOUR CAREER IN ACCOUNTING www.e-careers.com (accounting) PQ Magazine December 2021

Planet • Gas and electricity usage.

• Resources recycled.

• Any pollutants produced.

• Any greenhouse gases produced.

Profit • Profit of an individual company.

• Profit of a division or department.

• Profit of a chain.

• Taxes paid.

Question Identify ways an office could reduce its carbon footprint.

Answer • Switch off lights when leaving at night to reduce electricity consumption.

• Limiting printing of documents to reduce waste paper.

• Switch off computers when not in use to reduce electricity consumption.

• Turn down heating, switch off air conditioning when leaving the building at night.

• Use energy saving light bulbs.

• Ensure there are plenty of recycling bins around, to encourage staff to recycle items.

• Hold online meetings where possible to reduce travelling.

• Karen Groves is an AAT tutor and AAT Course Director at e-Careers

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PQ awards 2022

TIME TO

SHINE

It’s time to nominate for the PQ magazine awards 2022. You really can make your CV shine with an awards shortlisting!

I

f you want to stand out from the crowd then we have a sure-fire way of helping you achieve that – yes, the annual PQ magazine awards are open for your nominations.

Now in their 19th year, we have added a new category to the awards night to celebrate. For the first time you can nominate for the Graduate/Apprentice Training Programme of the Year. All the usual categories are, of course, still there, from PQ of the Year to Accountancy Body of the Year.

In all there will be 19 shiny PQ awards up for grabs, plus a couple from the editor, giving you lots of chances of picking up a coverted trophy.

All things being well, we are hoping to hold the awards ‘in person’ in late March next year, and we will use the night to celebrate both the 2022 and 2021 winners. We will also be beaming the awards live too, for those who can’t make it. Last year’s live online event was watched by some 900 people on the night, and has been viewed by over 2,000 people since. You can check it out at https://tinyurl. com/26bv9tb6.

THE AWARD CATEGORIES PQ OF THE YEAR  NQ OF THE YEAR  DISTANCE LEARNING 

STUDENT OF THE YEAR

ACCOUNTANCY 

GRADUATE OF THE YEAR

APPRENTICE OF THE  YEAR

STUDENT BODY OF THE  YEAR

ACCOUNTANCY BODY  ACCOUNTANCY COLLEGE  – PUBLIC SECTOR

ACCOUNTANCY COLLEGE  – PRIVATE SECTOR

ONLINE COLLEGE OF  THE YEAR

LECTURER – PUBLIC  SECTOR

But that was last year – we need you to get nominating for this year! All you need to do is download the nomination form from our website.

Just go to www.pqmagazine.com and click on the ‘PQ awards’ bar at the top of the home page.

Alternatively, you can just send us your entry direct, making it crystal clear which category you are entering. We also need all your details too, because you may get shortlisted and that means you get to come to the coolest accountancy awards around!

So, how can you win one of our awards? Well, our advice is to keep your entries short and sweet – all we need is 250 words on why you or your nominee should win. If you want to provide supporting material just attach it to the nomination. And please don’t be shy about nominating yourself, we know that not everyone is appreciated for all the hard work they do.

Once you have everything together send it to awards@pqmagazine.com or post it to: The Editor, PQ magazine, PO Box 75983, London E11 9GS. All entries will be looked at by our independent judges, who then create the shortlist for each category.

Deadline for all nominations is Friday 18 February 2022 – but don’t leave it last-minute.com!

LECTURER – PRIVATE  SECTOR

STUDY RESOURCE OF  THE YEAR

INNOVATION IN  ACCOUNTANCY

BEST USE OF SOCIAL  MEDIA

TRAINING MANAGER/  MENTOR

ACCOUNTANCY TEAM  ACCOUNTANCY  PERSONALITY

EDITOR’S SPECIAL  AWARD

GRADUATE/APPRENTICE  TRAINING PROGRAMME OF THE YEAR*

(*New category)

OUR SPONSORS

18

PQ Magazine December 2021

awards 2022 PQ

OUR PQs OF THE YEAR…

2021 – Simon Cordell After leaving school at 15 and going straight into the military, Simon’s life has certainly been a colourful one. The pandemic caused Simon to re-evaluate his career, after being deployed back to the UK in March 2020. He decided to give AAT a go and has never looked back. He completed his level 2 exams in just six months, and moving onto Level 3 he had completed the indirect tax unit with a score of 96%. Simon has certainly come a long way in a very short time.

2020 – Bethany Duffy Grant Thornton’s Bethany has a boundless infectious enthusiasm and does everything to an amazing high standard and always with a smile.

She completed all her AAT Level 3 and 4 exams through distance learning, including five Level 4 exams between August 2019 and January 2020, achieving marks of 96%, 95%, 92% and 91% (she was waiting on one result). A valuable member of the Carlisle Public Sector Audit (PSA) team, she became the software champion for Inflo and took on piloting data analytics within PSA North.

2019 – Rebecca Dixon Rebecca has worked for the NHS for the past 11 years. An AAT studier, she initiated the setting up of a new finance twitter page, regularly posting updates of the achievements and events in the department. She would have had to tweet her own award-winning news after becoming our PQ of the Year! Rebecca also helped set up a quarterly finance newsletter and promoted training sessions for the whole team.

This hardworking, respected team member was always looking at innovative ideas to bring her community together.

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19

PQ CIPFA spotlight

Ringing in the new What’s different about CIPFA’s new Professional Accountancy Qualification? CIPFA’s Anna Howard explains all

L

ater this year, CIPFA will be introducing an updated syllabus and a new name for our professional qualification: the Professional Accountancy Qualification (PAQ).

The new name will be the same wherever you are studying, showing that CIPFA is moving to become a truly international organisation.

Course content has also been updated to reflect the needs of both UK and international students and now includes a renewed focus on International Financial Reporting Standards (IFRSs).

To better align with the changing world of public finance, the qualification’s new syllabus has been expanded to include modules on sustainability, ethics and the use of technology.

It also has a revived focus on students’ practical application of their learning and real-world skills to prepare them for the modern workplace.

This year’s COP26 climate change conference is a reminder of the urgent need for climate action across the public sector. To make sure future accountants are prepared to lead this change, sustainability, green finance, environmental reporting, performance measures

and coverage of the United Nation’s Sustainable Development Goals (SDGs) all now appear throughout the syllabus.

An increased reliance on technology in the public services is also reflected in the updated curriculum. And so there is a

consideration across all new units of big data, data analytics and the use of technologies like cloud computing, artificial intelligence and cryptocurrencies as well as cyber security issues. CIPFA is committed to future-proofing the accounting profession to ensure the accountants of the future have the skills they need.

As part of this new approach to the education and training experience, CIPFA will also be introducing an e-assessment tool and virtual learning environment for PAQ students.

These new platforms are designed with better flexibility of study in mind and aim to improve the quality of learning. The digital platform will also permit the use of Excel spreadsheets and Word documents during examinations, a feature that works as part of the qualification’s general objective to better develop students’ technical competencies.

A second part of CIPFA’s revised approach to learning is an increase in wellbeing support.

CIPFA has expanded the welfare tools and resources available to students to include access to trained mental health first aiders and an online mental health and wellbeing hub.

By addressing some of the most pressing issues facing the public sector today, this new qualification embodies the CIPFA’s future plans and aspirations as a training provider for the next generation of public finance professionals.

• Anna Howard is head of qualifications and membership at CIPFA

PROFESSIONAL ACCOUNTANTS AT THE HEART OF SUSTAINABLE ORGANISATIONS

Now and in the decade ahead the professional accountant as the sustainable business and finance professional in any role is the trusted professional working at the heart of sustainable business.

Discover our latest research, visit https://bit.ly/3BhtKxU

20

PQ Magazine December 2021

audit PQ

Five steps to audit report success Erin Morton has some top advice on scoring maximum marks in questions about the audit report

A

re you preparing for AA by practising OTQs? Working on audit risk, controls and audit procedure questions? Bravo!

But what about the final stage of the audit process, the audit report? It’s a regular in your exam worth up to five marks. Know how to grab them.

As always, start with the requirement. An examiner’s favourite is ‘Discuss the issue and describe the impact it has on the audit report’. Analyse the scenario carefully: it has everything you need. Then grab each mark, step by step.

Mark 1 – State the issue: Maybe the financial statements are missing information? Or not following accounting standards?

Tell the examiner, even if it’s obvious.

Mark 2 – Calculate and comment on materiality: If the case has numbers, use them.

Use your materiality benchmarks: Profit (5-10%), Revenue (½-1%) and Total assets (1-2%). Which benchmark you use depends on the numbers you’re given. Then state if the calculation is material.

Calculations alone score only ½ mark, so a conclusion is key.

Mark 3, 4 and 5 – What happens to the audit report?

Choose from these three approaches: A: Disclosed correctly in the financial statements: • Perhaps the client has disclosed the issue correctly.

Tell the marker you know, and that no modified audit opinion is needed.

• BUT, if the issue is big and there’s uncertainty OR it’s related to going concern issues, an additional audit report paragraph is added.

That’s a modification of the audit report, but not of the audit opinion.

• This paragraph needs a title

(e.g. ‘Emphasis of Matter’ or ‘Material Uncertainty Related to Going Concern’) and goes below the opinion. It draws attention to the issue.

B: Material misstatement: • Is the issue material and not correctly disclosed in the financial statements?

If so, we have a material misstatement! But is it material or material and pervasive? Pervasive means the financial statements are really misleading. The mark is earned by your justification, not just your conclusion. But you must have a conclusion.

• State there will be a modified opinion. Explain the TYPE of modified opinion: qualified (except for) or an adverse opinion. A pervasive misstatement requires an adverse opinion.

C: Lack of sufficient, appropriate evidence: • Or there’s a lack of sufficient appropriate evidence. Again, conclude why it’s material or material and pervasive. State the consequences: qualified (except for) or disclaimer.

Phew… you’re nearly finished!

The concluding mark: If you have B or C – a modified opinion – state the ‘basis of opinion’ paragraph heading changes to ‘Basis for Qualified Opinion’, ‘Basis for Adverse Opinion’ or ‘Basis for Disclaimer of Opinion’.

This adapted paragraph explains the detail behind the modification.

Boom, you’ve nailed it! Good luck!

• Erin Morton is an ACCA AA online tutor with FMELearnOnline, and an ACCA expert tutor. See www. erinmorton.co.uk

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Enrol today at www.fmelearnonline.com/pq PQ Magazine December 2021

21

PQ global tax

One tax to rule them all

The global community has struck a ground-breaking tax deal for the digital age – so what’s been agreed?

M

ajor reform of the international tax system, finalised by the OECD, will ensure that multinational enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.

The OECD said that the landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than $125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.

With Ireland, Estonia, and Hungary all agreeing to join the party late it means the deal is now supported by all OECD and G20 countries. Four countries – Kenya, Nigeria, Pakistan and Sri Lanka – have not yet joined the agreement.

The OECD stressed that the global minimum tax agreement does not seek to eliminate tax competition, but puts multilaterally agreed limitations on it, and will see countries collect around $150 billion in new revenues annually.

Pillar One will ensure a fairer distribution of profits and taxing rights among countries with respect to the largest and most profitable multinational enterprises. It will re-allocate

some taxing rights over MNEs from their home countries to the markets where they have business activities and earn profits, regardless of whether firms have a physical presence there.

Specifically, multinational enterprises with global sales above €20 billion and profitability above 10% – that can be considered as the winners of globalisation – will be covered by the new rules, with 25% of profit above the 10% threshold to be reallocated to market jurisdictions.

Under Pillar One, taxing rights on more than $125 billion of profit are expected to be reallocated to market jurisdictions each year.

Developing country revenue gains are expected to be greater than those in more advanced economies, as a proportion of existing revenues.

Pillar Two introduces a global minimum corporate tax rate set at 15%. The new minimum tax rate will apply to companies with revenue above €750 million and is estimated to generate around $150 billion in additional global tax revenues annually. Further benefits will also arise from the stabilisation of the international tax system and the increased tax certainty for taxpayers and tax administrations.

OECD Secretary-General Mathias Cormann said: “This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement that ensures our international tax system is fit for purpose in a digitalised and globalised world economy. We must now work swiftly and diligently to ensure the effective implementation of this major reform.”

Countries are aiming to sign a multilateral convention during 2022, with effective implementation in 2023. The convention is already under development and will be the vehicle for implementation of the newly agreed taxing right under Pillar One, as well as for the standstill and removal provisions in relation to all existing Digital Service Taxes and other similar relevant unilateral measures. This will bring more certainty and help ease trade tensions. The OECD will develop model rules for bringing Pillar Two into domestic legislation during 2022, to be effective in 2023.

DISCOVER THE FUTURE WITH ACCA’S CAREER NAVIGATOR Wherever you are on your journey, our navigator guides your route – acquire new skills, explore career destinations and opportunities and grow your talent.

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22

PQ Magazine December 2021

cash flow PQ

Profits or cash flow?

Sarah Ardiles and Tom Clendon discuss the much-debated topic of what’s more useful – profit or cash flow? In this, the first of a two-part series, they investigate the benefits of cash flow

Sarah sets the scene I was teaching cashflow statements the other day and, as an introduction, I found myself singing the praises of this often-overlooked part of the financial statements. A student asked the very reasonable question: ‘If a statement of cash flows is so useful, what’s the point of publishing a profit and loss account too?’ It certainly got me thinking!

Tom speaks up for cash flow statements Like you Sarah, I find it very easy to ‘sell’ cash flow statements to my students; I love their simplicity. Ultimately, it’s all about money in minus money out and I think everyone can relate to this (I mean we all have bank statements, don’t we?).

The layout is a bit more elaborate than a bank statement – we classify the receipts and payments into various types of business activity: operating, investing, and financing. Also, what I like about the cash flow statement is it takes an annual view: it shows how much cash was received in the 12 months prior to a reporting date and how much was paid in that period to give a net cash inflow or outflow figure. So yes, the simplicity of this lovely statement certainly makes it very useful in that it is easy to understand.

Sarah investigates the word ‘useful’ I completely agree with you, Tom. Intuitively, a cash flow statement seems to me the easiest of all of the financial statements to make sense of.

Actually, the Conceptual Framework states that financial statements are more useful if they can be easily understood. But, more fundamentally, the Framework points out that to be useful the financial statements must be relevant. Relevance, in the world of financial reporting, means being capable of making a difference in the decisions made by users of the financial statements.

Tom links the word ‘relevance’ to cash flow The beauty of cash flow statements is that they are undeniably relevant, not least because they can help us make predictions about a company’s capacity to generate future cash and its ability to meet its obligations.

Arguably, cash flows are a better indicator of a company’s financial health than profit is. It is perfectly possible for a company to report profits but still go out of business. Quite simply, sales don’t equate to cash received.

If your customers are not paying you on time or if you are offering them unaffordably attractive credit terms, you may find you do not have the cash on hand to operate in the meantime. To be successful, it is paramount that PQ Magazine December 2021

a company pays special attention to its cash cycle: the number of days between the outlay of cash for its purchases and the subsequent cash received from its customers. In other words, a business must be able to cover the cash gap between receivables and payables. And, of course, a cash flow statement will best highlight any shortfall.

Sarah talks about being able to adapt Sadly, as we have seen over the past 18 months, many businesses have been put under huge strain as a result of the Covid-19 pandemic. Having sufficient cash reserves has made all the difference to those businesses who were able to adapt to this unprecedented event. Many businesses had to find a new business model, for example selling online, while others had to invest in new technology, and a great many faced the urgent task of retraining their staff to use new equipment and processes. All of this involved cash. Cash that was readily available. And it is not as simple as just raising loan finance when you need it; lenders will look at a company’s current and projected cash flows to determine whether the company can afford the additional debt. And if you are able to secure finance, it will be accompanied by additional cash obligations, most pertinently compulsory interest payments.

Tom has the last word about cash flow Sarah, we have clearly espoused the virtues of cash flow! The phrase ‘Cash is King’ has for good reason made its way into common parlance. And as an SBR tutor who teaches ethics, I can’t help but point out that (yet) another benefit of cash flow is that it is far harder to manipulate cash flow than it is profit so that has to be a good thing!

Sarah sums up Reporting on cash flow is clearly extremely useful; it’s easy to understand, it helps investors make predictions about a business, and it can reveal a business’s potential to adapt to changing economic environments. Cash is ultimately the lifeblood of a business and is therefore an invaluable component of financial reporting.

I can’t wait to catch up with you next month Tom to hear what you have to say about profit and dare I say ‘matching’ – a term I absolutely love and, like you, spend much of my time discussing and explaining.

• Next month they Sarah and Tom turn their attention to profit.

• Tom Clendon is an online ACCA SBR lecturer – see www.tomclendon.co.uk • Sarah Ardiles is an ACCA FR and SBR freelance lecturer 23

PQ tax is £100,000. The benefit for Sanjay is he can use up his annual exemption and claim BADR. Sanjay has owned the sole business for at least two years, so the gain is eligible for BADR and taxed at just 10%.

Sanjay’s CGT liability is (£100,000 - £12,300) = £87,700 x 10% = £8,770.

Gift relief for shares GR can be claimed on any trading company unquoted shares. With regard to quoted shares, the individual must own at least 5% OSC. GR is not available on investments so if the company owns investments, the GR is restricted to chargeable business assets/ chargeable assets.

Simple example: Lorraine and Shane Lorraine has been a director of an unquoted technology company for many years and her 20% shareholding is worth £1m.

Only 70% of the company’s chargeable assets are business assets.

Lorraine decides to gift the shares to her nephew Shane, who is a manager in the same company. The gain on the shares is £800,000.

Lorraine and Shane make a joint election to postpone the gain under gift relief.

Gift relief simplified!

In this month’s ‘Keep It Simple’ article, Neil Da Costa tackles a popular topic that features regularly in tax exams and perplexes students: gift relief

W

hen a business is gifted from one individual to another, the disposal takes place at market value. This creates a large CGT liability for the donor.

To avoid this, HMRC have introduced s165 TCGA 1992 Gift Relief. This allows the donor and donee to make a joint election within four years from the end of the tax year of disposal to postpone the donor’s gain until the donee eventually sells the business in the future.

Gift relief (GR) can be claimed on both unincorporated businesses and shares in a personal trading company. The main condition that must be satisfied is that the asset must be used in the business trade.

Assets like rental buildings are investments and are specifically excluded from GR. Gift relief for sole traders The majority of a sole trader’s assets such as current assets, machinery and cars are exempt assets, and the only chargeable assets are likely to be buildings and goodwill.

The donee might chose to pay some consideration for the business to allow the donor to claim BADR and use up the annual exemption.

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Simple example: Sanjay and Priya Sanjay has been running his pharmacist business for many years. Assume the business only has chargeable assets. He bought the business for £100,000 and it is now worth £500,000. He decides to sell the business to his daughter Priya for a discounted price of £200,000.

Sanjay and Priya make a joint election to postpone the gain under gift relief.

Solution to Sanjay and Priya The first step is to compute the gain using market value as deemed sale proceeds (£500,000 - £100,000) = £400,000 gain.

As Priya has paid £200,000 for the business, we now compute the gain due to cash which cannot be postponed under gift relief (£200,000 - £100,000) = £100,000.

The gift relief is computed as a balancing figure (£400,000 - £100,000) = £300,000.

This is postponed by deducting it from Priya’s deemed cost of £500,000.

Priya’s base cost which will be used in the future disposal is (£500,000 - £300,000) = £200,000.

Sanjay’s gain that crystallises immediately

Solution to Lorraine and Shane The gift relief will be restricted to the 70% chargeable business assets as the company owns investments. (£800,000 x 70% = £560,000).

The remaining 30% of the gain will crystallise immediately on Lorraine. (800,000 x 30%) = £240,000.

This gain will be eligible for BADR as Lorraine is employed by the company and has owned the shares for at least two years.

Lorraine’s CGT liability is (£240,000 £12,300) = £227,700 x 10% = £22,770.

Shane’s base cost will be (£1m - £560,000) = £440,000 and will be used in future disposals.

Emigration of the donee In order to claim gift relief, the donee must be UK resident at the time of the gift. Non resident individuals can escape paying CGT on some UK assets. As a result, if the donee emigrates within six years from the end of the tax year of disposal, then the postponed gain crystallises on the donee on the day before emigration.

Simple example: Lorraine and Shane Five years later, Shane gets a lucrative offer from a technology company in Silicon Valley and decides to emigrate to the US. Explain what happens to the deferred gain of £560,000.

Solution to Lorraine and Shane The deferred gain of £560,000 will crystallise for Shane on the day before he emigrates.

Shane has been employed by the company and has owned the shares for at least two years, so his gain is eligible for BADR. Shane’s CGT liability is (£560,000 - £12,300) = £547,700 x 10% = £54,770.

• 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 December 2021

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CIMA Q&A PQ you are ready to sit your exam. Do not worry if your answer is very different from ours, there are many, many ways to answer the questions. All good answers get good marks.

Q: How important are the answer format and structure?

A: We help you by starting off with the format for an email if that is what is required. Do not worry too much about format, just concentrate on answering the question as best as you can. Have a structure with headings and paragraphs – that makes it much easier for us to see what you are doing, and it makes the answer clearer to read. Well-developed answers will achieve more marks. Once again, it is less about quantity but more about quality, so where possible expand on any bullet points to ensure you provide a complete answer to the question.

Case Study examiner spills the beans…

Clancy Peiris had a chat with a Case Study examiner, asking her the questions that you’d like to ask

W

hen we organise events, CIMA students often ask us exam-related questions. But what if you had the chance to meet your Case Study examiner? What questions would you ask? We decided to sit down with a CIMA Case Study examiner to ask them some of your most burning questions – we hope you will find their guidance as useful as we did.

Q: How vital are the pre-seen materials and how should you use them?

A: The pre-seen materials give context to the exam variants and you can find evidence to support your answers in the pre-seen. Therefore, when you analyse the pre-seen materials, you should really immerse yourself into the pre-seen, familiarise yourself with the company and the business environment it operates in. You should also remember to think about the industry and make sure you truly understand it.

Q: What can I do to demonstrate my application skills?

A: The Case Study exams are designed to test what you can in fact ‘do’ as a management accountant. More specifically, you are expected to accomplish tasks through a simulated job scenario for your exam level. So, while technical knowledge is important, Case Study exams are more about putting this knowledge into practice.

Therefore, to demonstrate your application skills, it is important to be familiar with the pre-seen materials, including your persona and role. You should spend enough time thinking and planning before writing your answer to ensure you can support your argument and answer accurately.

PQ Magazine December 2021

Q: How can I ensure that I answer the question examiner has set?

A: Read the question and exhibits carefully, then think about how it relates to information in the pre-seen, make sure that you answer what is asked, not what you wish had been asked. Remember, it is about applying your knowledge to the question in front of you.

Also, let me remind you that the length of your answer is not as important as the quality of the answer.

Q: What is your advice on answer planning?

A: Planning your answer is important but do not spend too much time on it. It is good to write a short list of key points (but not an elaborate plan of everything you want to say). You may then develop each point into a comprehensive paragraph with appropriate discussion. Make sure that you take the time to carefully consider what is being asked so that you can provide the best possible answer. Have a look at the examiner’s answer, published after the exam, to get an idea of what a very good answer that could be written in the time given in the exam looks like.

Q: Do you see any value in past exam resources?

A: Past exam resources are vital to develop your exam skills so I would not advise that you turn up to sit a Case Study exam without having practiced writing answers for at least two previous Case Study exams. Don’t just read the variant and think about the answers, you need to write them down in the time allowed. It is a good practice and will give you confidence that

Q: Will marks be awarded for valid points, even if they are not in the marking scheme?

A: We mark the whole answer not each sentence and that’s why you should provide depth and fully explain your answer. The marking guide is designed to allow for a range of suitable responses rather than a specific set of words.

All answers are marked on their merits and do not have to be exactly like ours. There are many different approaches you can take, all will be awarded marks if they answer the question.

So, write what you think is right – that is what your company or line manager should do or should not do but make sure you support your claim, advice or recommendation with evidence included in the scenario.

Q: Will we lose marks for poor spelling and grammar?

A: The Case Study exam is not an English test, so as long as we can understand what you wrote, your answer will be marked on its merits.

Marks will not be deducted for poor spelling and grammar, but it’s good practice to proofread your answer. Do your best to write as best as you can, giving answers that are as clear and as full as possible.

Q: What should students avoid doing before and during the exam?

A: You will not pass if (a) you are ill prepared and do not understand the business, so read the pre-seen carefully; (b) you only memorise parts of the textbook with no understanding; (c) you answer a question you thought might come up in the exam instead of what has been asked; and (d) you have missed out large parts of the syllabus when you are studying.

So, the top key takeaways are (a) answer what is asked by the examiner; (b) make sure your syllabus knowledge is complete and up to date; (c) analyse the pre-seen materials comprehensively and be familiar with the organisation and its environment: and (d) think thoroughly and plan your answer before writing it down.

Watch the full interview here on the CIMA Planner.

• Clancy Peiris, Senior Learning Development Manager, Association of International Certified Professional Accountants, representing AICPA and CIMA 27

PQ revenue recognition

A question for Tom This month Tom Clendon answers a question about contracts and revenue recognition

A student’s question How is it possible to enter into a sales contract but the business not to recognise any revenue?

Tom’s reply It is indeed possible to sell something but not to record the transaction as a sale. This is because it is necessary to faithfully represent the economic reality of transactions and to report substance over form. In short, we should be reporting the truth.

Let me take you through an example with a sales contract but where it would be wrong to report any revenue.

Example A timber merchant has inventory that takes one year to mature before it can be used.

The inventory cost $100,000 and is sold for $150,000. The buyer is a bank. As part of the sale agreement the timber merchant has agreed to repurchase the inventory in 12 months’ time for $165,000. In the meantime, the timber merchant continues to be responsible for the timber’s storage.

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The wrong answer Dr Cash $150,000 Cr Revenue $150,000 If the timber merchant records the receipt of $150,000 as revenue (and therefore reports a profit of $50,000 on the transaction) then that is just plain wrong.

Whilst legally there has been a passage of title, in reality, the timber merchant has not sold

the inventory – after all the bank never takes delivery of the timber and the timber merchant has an obligation to pay the money back (with interest!).

To record the transaction this way would be unethical and it would overstate profit and understate liabilities.

The correct answer Dr Cash $150,000 Cr Loan (liability) $150,000 Where there are two linked transactions, it raises suspicions that there might be a conflict between the legal contract and the economic reality. It is necessary to consider the two transactions in the round to arrive at the truth.

The timber merchant should reflect that the receipt of $150,000 from a bank is really a loan secured on the asset: as under the arrangement $150,000 cash comes in and then 12 months’ later goes out again with an extra 10%.

The timber merchant is under no performance obligation to deliver any timber to the bank. The bank does not want the timber as such and does not carry any risk or reward associated with owning the timber. The bank merely has legal title as a form of security in the event the timber merchant defaults on the loan.

This type of transaction is known as a sale and repurchase arrangement.

• Tom Clendon is an online ACCA SBR lecturer and former PQ Lecturer of the Year. Go to www.tomclendon.co.uk

PQ Magazine December 2021

green accounting PQ

Putting an end to greenwashing UK Chancellor Rishi Sunak sets out new standards for environmental reporting

T

he UK government has unveiled new environmental reporting standards to weed out companies who are simply ‘greenwashing’ and support the transition to a greener financial system.

The new requirements, which will also apply to pension schemes, investment products and asset managers and owners, are part of the government’s landmark reforms to create a greener financial system.

The government says that around 70% of the UK public want their money to go towards making a positive difference to people or planet. But the lack of common definitions around environmental sustainability means it is leading to greenwashing, misleading investors and consumers about how green a product really is.

The new Sustainability Disclosure Requirements (SDR) will ensure investors have the information they need to make informed decisions about where to put their money.

Sunak said: “We are already a world leader in green finance, and the roadmap will give us the opportunity to set new global standards for sustainability that will boost the economy, protect the planet and support our net zero goals.

“We want sustainability to be a key component

PQ Magazine December 2021

of investment decisions, and our plans will arm investors with the right information to make more environmentally-led decisions.”

The report, entitled Greening Finance: A Roadmap to Sustainable Investing, was published ahead of the UK hosting COP26 and is part of the Chancellor’s plan for the UK to lead the world in green finance and sustainable investing.

The roadmap outlines the legislative and regulatory changes that will be made across the economy to arm investors and consumers with the right information by setting world-leading standards on environmental sustainability

reporting.

The new integrated regime will bring together and streamline existing climate reporting requirements – such as the UK’s commitment to implement mandatory reporting aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) – and go further.

This will ensure consumers and investors have all the information they need to make investment decisions that drive a positive environmental impact. It includes requiring every investment product to set out – for the first time – the environmental impact of the activities it finances and justify clearly any sustainability claims it makes. Asset managers will also need to set out how they incorporate sustainability into their investment strategy to allow consumers to make informed judgements about the kind of firms they want to invest in.

SDR will set out expectations for certain firms around the publication of transition plans in the context of the UK’s net zero commitment.

The roadmap also sets out more details on a new green finance rulebook – the UK Green Taxonomy – which will create a shared understanding of which economic activities count as green.

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mental health PQ

Talking about mental health Premier Training has linked-up with Mental Health Foundation to provide AAT PQs with help and guidance

it. Despite the common view of students as sociable and well-connected people, students are actually among the least likely to reach out for help for a mental health problem. Our advice is please talk about your mental health and make space for your friends to talk about theirs’ too.

Perfectionism and brain fog: We would like to ask students to go online and look up these two things. Both are common symptoms and experiences of people experiencing stress. When we think of perfectionism, we usually think of someone with extremely high standards who gets everything done to a perfect level, but actually anyone who suffers from procrastination is likely to be experiencing perfectionism. It's when you're so overwhelmed by thoughts of not being good enough that you struggle to complete anything or to use your time effectively. You might procrastinate or put off starting a task because you're worried about not being able to do it well. Reading up on these experiences can help you to recognise that they're happening - it's a sign that you need to step back, give yourself a break and think about a new way to tackle the task at hand.

Get out into nature: The theme of Mental Health Awareness Week this year was nature because spending time around nature has hugely positive effects on our mental health. This could be as simple as sitting on your doorstep listening to birdsong or caring for a houseplant indoors. If you can, try to go for a walk every day and just pay attention to the nature around you.

Consider mindfulness: Tip four is to consider mindfulness. It's the practice of clearing your head by focusing only on the current moment. Some people find it really helpful in stressful situations, so why not try it now?

Focus on Your Sleep: Your sleeping environment is critical in terms of the quality of sleep you get, so try switching off your devices an hour before bed. Do something relaxing before you go to sleep and try not to look at any screens whether that's a TV or a phone or a tablet. Getting good quality sleep regularly has a huge impact on our mental health.

• Premier Training would like to thank the Mental Health Foundation for their fantastic advice and support for AAT distance learning students.

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3

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he pandemic has had a negative impact on the mental health of many people across the UK – not least distance learning students.

Premier Training has recognised the need for helpful mental health advice for those studying from home who may be experiencing job uncertainty or extended periods of remote working.

To support those students, the AAT distance learning specialist has teamed up with the Mental Health Foundation to offer students a series of videos containing mental health guidance.

Building on a Facebook Live Special session with the charity earlier this year, the videos form another part of the popular Connect@ Premier initiative, which aims to support all AAT students, regardless of their training provider.

Topics covered in the video series so far include: 1. Talking about mental health 2. Perfectionism and brain fog 3. Get out into nature 4. Consider mindfulness 5. Focus on your sleep Videos can be viewed through the Premier Training website and Facebook page, and listed below are the tips from the series so far: Talking about mental health: Tip one is to please seek help, and talk about and ask about mental health. Something we talk about a lot at the Mental Health Foundation is how likely someone is to seek help for a mental health problem when one arises. It's important not just to look at how people are feeling in themselves but also to look at how confident they feel with seeking help when they need

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Award-winning AAT courses and apprenticeships Flexible learning to suit your lifestyle mindful-education.co.uk/students PQ Magazine December 2021

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PQ ACCA exams

Good exam technique = exam success Jacky Bateman, Head of ACCA Qualifications, and Lisa Gilmore Head of ACCA Content and Development, explain how technique is all…

of three or four sentences for a 14-mark requirement which will not be sufficient to score a pass. Students should look at the mark allocation and think carefully about how many points they should be making for the marks and about their time allocation to ensure they allocate sufficient time per the mark allocation.

• Many students are not developing their points or applying their points to the question scenario. This is essential for APM as performance management is context driven. The examining team are looking for students to say what their point is, then say why that is relevant to that company and if required, so what is the impact of that. This approach of developing points, using evidence from the scenario, is what scores marks in APM. Many students are simply providing the ‘what’ i.e., the knowledge element but with no application or justification.

O

ur recent exam session in September was successful, with almost 94,000 students sitting exams and 3,222 completing their final examinations and becoming ACCA affiliates.

Two exams really stood out in September, as we saw lower than usual pass rates for both Performance Management and Advanced Performance Management.

We want to share advice with our students directly from the examining teams on important exam technique for these exams and encourage students to make effective use of the many ACCA resources available.

Performance Management • Ensure that the fundamental management accounting techniques are thoroughly prepared and understood, as some students, whilst able to tackle small parts of a technique to answer the objective test questions, are not showing the depth of understanding to apply techniques to constructed response questions. Be prepared to apply these techniques to different contexts and remember that the principles of a technique do not change regardless of the context, so students should rely on their technical knowledge of a technique and apply it.

• Focus on adding more depth to narrative answers. For example, in performance management questions where students are asked to compare performance over two years, it’s not enough to say performance is better or worse; this has to be supported with relevant reasons as to why performance has changed. Students should use the information provided in the scenario to provide the evidence for their analysis.

• For some questions the examining team 32

have provided response templates for students to use. These templates are provided to help students with the answer and help them keep their focus. But some students are spending time re-formatting these templates or ignoring them altogether.

Make proper use of the response templates when they are provided in the exam.

Advanced Performance Management • Be able to bring forward the management accounting techniques learned from previous studies. This assumed knowledge is essential for APM, and the examining team expect students to be able to understand cost structures, perform costing calculations using techniques like activity-based costing, do variance analysis, produce a budget and so on. Students are more likely not to perform well on APM questions which rely on some of this brought-forward knowledge and yet at Strategic Professional these should be considered straightforward marks.

• Read the requirements carefully and focus answers on what’s being asked. Often APM questions will ask about specific parts of a performance management model or technique, but it has become a common problem where students write about the whole model rather than just focus on the part asked for. This has a doubly adverse impact as the answers to the part required are too brief and lack depth and it’s wasting precious time, leading to students feeling pressured for time.

• Ensure that answers are sufficiently detailed to reflect the number of marks available for the requirement. Worryingly at APM, many students’ answers are too brief, and the examining team have commented that they are frequently seeing short answers

Key resources to help We urge all students to read the examiner reports for their exam. These should be used in conjunction with the published sample exams as they contain detailed and practical advice on exam technique, how to break down and tackle requirements and how to practically construct answers using the CBE tools. We really cannot stress enough how valuable they are and how they will make a real difference to your understanding.

The practice platform is also essential preparation for exams. Students should become familiar with the layout of exams, practice how to manage the exhibits, and practice questions using the CBE tools and functionality. Practicing this in advance will give students more time to think and demonstrate their analysis, evaluation, and justification skills in the exam.

Students who use the practice platform perform better than those who don’t. On average, the pass rates across Applied Skills and Strategic Professional in September were over 12% higher for students who engaged with the platform.

Other resources include technical articles and exam technique articles and videos. You can also use self-check quizzes to check brought forward knowledge; and for APM complete the Knowledge Recap e-learning modules to address any potentially weak areas.

It’s also important to complete the Ethics and Professional Skills Module in advance of attempting the Strategic Professional exams.

Students who do so are statistically proven to significantly increase their chances of passing these exams.

A final word of advice to students is to recognise that studying smartly is the only way to qualify as an ethical and professional accountant. There are no short-cuts, and we protect the integrity of the ACCA Qualification.

Good Luck in your future exams!

PQ Magazine December 2021

ACCA December exam tips PQ

We know what you want and need – our ACCA exam tips for the December 2021, courtesy of BPP Performance Management PM As any syllabus area can be tested in sections A&B the best advice is to study all areas of the syllabus. But you knew that already!

In section C expected to be tested on: budgetary systems, planning and operational variances, mix and yield variances, and evaluation of the company performance (either as a whole, or on a divisional basis).

This is a performance management paper, so you are advised to be prepared to evaluate some performance.

General advice: Plan your answers to section C questions before starting to type and make sure you make reference to the scenario in your answer.

The examining team have said that they expect students to study broadly for all of the syllabus areas, meaning that question spotting is not a good idea – instead students should expect the unexpected.

The exam will be approximately 40% calculation and 60% discussion, meaning that it is not sufficient to be able to perform all of the calculations to pass. Interpretation and application are crucial, especially in section C. Taxation TX (UK) In section A there will be a wide range of topics tested as there are 15 OTQs. Tutors expect at least a couple of these to be devoted to the administration of income tax and corporation tax. So, candidates should ensure they are PQ Magazine December 2021

comfortable with the following: • Due dates for the payment of income tax (including payments on account).

• Due dates for the payment of corporation tax (including instalments for large companies).

• Filing dates for the income tax and corporation tax returns.

• Penalties and interest for late payments and returns.

Other topic areas likely to be tested in section A of the exam are: • VAT rules on registration, impairment loss (bad debt) relief, and the SME schemes relating to cash accounting, annual accounting and flat‐rate schemes.

• Inheritance tax due on lifetime transfers both in the donor’s life and on death.

• Statutory residence tests for individuals.

• Identification of groups of companies for corporation tax loss reliefs and gains.

• Trading loss reliefs for both companies and sole traders.

It is important to remember that section A offers the TX exam team an opportunity to test the whole syllabus, so practising all kinds of questions from the practice and revision kit will help build on and complement your existing knowledge.

In section B of the exam the questions will be similar to those of section A, but there will be a longer scenario to deal with. This means a slightly different exam skill is necessary as you have more information to work through and

each OTQ will require you to find the relevant information or data in that scenario. It is not a difficult skill, but we would hope you have had time to practise an extensive range of section B questions from the practice and revision kit before attempting the real exam.

In section C you will face the longer, constructive response questions with scenarios and much more open requirements. Your answers will need not just sound technical knowledge, but also the application of that knowledge to the question you have been asked.

At least 50% of your revision time should be spent answering the section C questions in the practice and revision kit to build confidence and speed in a way that will also maximise marks.

1. Remember to learn your income tax and corporation tax pro formas.

2. Calculations which require no more than two or three entries into your calculator can be included on the face of your pro formas (e.g. time apportioning a salary). Calculations which are more complex (e.g. company car benefits) need separate workings which are properly referenced (W1, W2 etc) and have a heading. Use the cell formulae to link the workings answer into your pro forma – then if you change the working the main body will be automatically update.

3. Actually attempt the narrative parts of the requirement – aim for as many sentences as there are marks with each sentence containing something technical. Keep your paragraphs to no more than 3 sentences long.

4. Your exam will be in the CBE software and the spreadsheets have some differences to the software you may be accustomed to so it is crucial you practice using the CBE software, especially for section C type questions.

5. Remember you cannot insert rows into the CBE spreadsheets. So, leave plenty of space on the page (especially when setting up proformas). You may need to add something in and you can always go back and move workings up the page. Show workings down the page, rather than across the page as it makes them easier to mark. Well‐spaced answers are also easier to mark – and you always want to keep the marker happy.

We know that the two longest questions will focus on income tax and corporation tax. These are likely to include the following: • Employment benefits.

• Property income.

• Relief for pension contributions.

• Adjustments to profit to arrive at trading income for both companies and sole traders – in past sittings we have seen a number of questions whereby you have to correct errors in computations included in the scenario.

• Capital allowance computations.

Finally, remember the pass mark is 50% so you don’t need to be perfect. If you don’t know something have a guess and move on.

Sometimes you have to do that in order to get follow through marks in section C questions. If you make a mistake, but then use that incorrect figure later in a subsequent calculation, then Continued on page 34 33

PQ ACCA December exam tips that’s fine – you can only lose the mark once.

In sections A and B never leave an OTQ unanswered – have a guess if you don’t know the answer. It might be right!

PPE, intragroup trading and balances, goods/ cash in transit.

• A single entity question could be preparation from a trial balance or restatement of given financial statements with the usual adjustments for depreciation, revaluation and current/deferred tax (including deferred tax on revaluations) plus a mixture of adjustments on other syllabus areas, e.g. leases, substance over form issues, financial instruments (change in fair value or amortised cost), share issues, government grants, inventory valuation, revenue recognition or construction contracts.

Financial Reporting FR Section A: • Fifteen 2-mark OTQs on a wide range of topics including several on consolidation and interpretation of financial statements.

• Expect a few questions on non-core areas (e.g. inflation, specialised entities).

Section B (Case questions): • Three separate scenarios with five OTQs on each scenario; each question is worth 2 marks.

• Each scenario could be a mix of topic areas or focused on one topic and will usually consist of two/three calculations and two/ three narratives.

• Questions are not dependant on each other and can be answered in any order.

Section C (Constructed response questions): • Two 20-mark questions, one covering interpretations and the other preparation of financial statements.

• One question is likely to be in the context of a single company and one in the context of a group, so you could have a single company interpretation and a groups preparation or vice versa.

• Accounts preparation questions may include extracts or standalone calculations or full statements of profit or loss and other comprehensive income and/or statement of financial position.

• Both questions will cover the accounting for items from other areas of the syllabus.

• May include a short separate part, e.g. with a statement of changes in equity, statement of cash flows extract, earnings per share calculation or linked written topic.

• A consolidation question would include one subsidiary and often an associate, with adjustments, e.g. fair values, deferred/ contingent consideration, PUP on inventories/

Audit & Assurance AA All three questions in section B will be broken down into sub requirements and be scenario based. The majority of marks in each question will test syllabus areas B, C and/or D. Areas expected to be tested in questions 16 to 18 include: • Audit planning.

• Audit risk (identification and explanation of audit risks from a scenario and explanation of the auditor’s response to each risk).

• Internal audit.

• Internal controls (identification and explanation of deficiencies in internal control and the recommendation of suitable internal controls or description of tests of controls).

• Audit procedures (both substantive procedures and tests of controls).

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PQ Magazine December 2021

ACCA December exam tips PQ General advice: Where questions are based on a scenario it is essential that you use the information in the scenario to score the identification marks and then develop this to score the explanation marks.

The exam often provides a table for you to complete your answer. For example, audit risk questions will have a table with two columns, one for ‘audit risk’ and one for ‘auditor’s response’ with each properly explained point being worth one mark. Using this tabular approach encourages you to answer both parts pf the question, therefore maximising your marks.

Pay attention to the verbs used in question requirements as these indicate the number of marks available. For example, the verb “explain” requires a sentence and will score one mark if properly explained whereas the verb “list” simply requires you to list out information with no further explanation and this will score 0.5 mark per point.

Finally, it is essential you read the Examiner’s Reports which are issued twice a year after the June and December exam sittings. These are an invaluable source of advice and provide a sample Section A OTQ case style question as well as three constructed response questions from the March/June and September/December sittings. Not only do they provide the example questions but these are accompanied by a commentary from the Examining Team which gives guidance on interpreting the question requirements and common mistakes/areas of weakness noted during the marking process.

These reports can be found on the ACCA website: https://www.accaglobal.com/uk/en/ student/exam-support-resources/fundamentalsexams-study-resources/f8/examiners-reports1. htm.

Please read the examining team’s comments relating to past exams which are on the ACCA website: http://www.accaglobal.com/uk/en/ student/exam-supportresources/fundamentalsexams-study-resources/f8/examiners-reports. html.

Financial Management FM Questions in section A will often be knowledge based (testing your knowledge of key technical terms), and will balance out the questions in section B and C of the exam to make sure that all aspects of the syllabus are examined.

It is therefore likely that a good number of these questions will test your understanding of financial management and objectives (ratio analysis, the concept of shareholder wealth) as well as the economic environment and financial institutions topics (financial intermediation, fiscal and monetary policies). The efficient market hypothesis is likely to be tested here too.

Each section B case-study will be broken down into five separate 2-mark MCQs (so 15 questions in total). Areas expected to be commonly tested in this section are working capital management (e.g. the operating cycle, the impact of a change in credit period or accepting a factor’s offer), business or security valuations (e.g. methods of valuation), and financial risk management (currency risk and interest rate risk).

PQ Magazine December 2021

these are asked for. A recent examiner's report stated that some candidates are not attempting the required calculations and therefore struggling to gain a pass mark on this question.

• To score well, you need to do the calculations and, where asked explain the principles underlying the calculations you have performed. If a question simply asks for a calculation, you do not need to provide an explanation, unless this is specifically indicated in the requirement.

• Time-keeping is key to passing this question.

A recent examiner report identified that students were spending too long writing detailed answers to the first parts of question 1 and then not attempting the later parts.

The marker cannot award more than the allocated number of marks for each part of the question, so to maximise your marks, you must make sure you attempt each part of the question. Make sure you work out the time you have available for each question, and for each part of the question and then stick to it.

Section C’s two 20-mark questions will be broken down into sub requirements and be scenario based. These two questions will focus mainly on syllabus sections C, D and E. Section C is working capital management, section D is investment appraisal and section E is business finance. Whichever of these three topics does not feature in section C is likely to appear in section B of the exam.

Questions from section D (investment appraisal) are likely to feature NPV with inflation and tax. Section E (business finance) questions often either feature an evaluation of financing options (interest coverage and gearing ratios are likely to be important here) or calculation and analysis of a company's cost of capital.

Keep checking the ACCA website for articles in the lead up to the exam, any articles written by the examining team are often tested and are important to read.

Strategic Business Reporting SBR It is vital that you read the examiner's approach article on the ACCA website. ACCA has also published several exam technique and technical articles that you should read as part of your exam preparation. These are available in the exam technique section of the SBR exam support resources section of the ACCA website www.accaglobal.com.

The exam section A will be 2 questions, worth 50 marks in total.

Question 1 - 30 marks: • Q1 will be based on group accounting. Be aware that this question may test any aspect of group accounting, including consolidated statements of cash flows, overseas subsidiaries and associates and JVs. • Make sure you provide calculations if

Question 2 - 20 marks, including two professional marks for application of ethical principles: • Q2 will cover the reporting and ethical implications in a given scenario. Make sure you consider any threats to the fundamental principles of ACCA's Code of Ethics and Conduct in your answer.

• Two professional marks are available in this question and going forward the examiner has stated that the question will make it clear what these marks will be awarded for.

Section B will be two questions, worth 25 marks each: • Section B can deal with any area of the syllabus and may be based on a short scenario, a case study with several parts, or an essay.

• Section B will always include a question or part-question involving the analysis or appraisal of information from the perspective of a stakeholder. Make sure you have a go at answering this question. There is no 'right' answer at this level – marks will be awarded for sensible points that have been applied to the scenario.

• There are two professional marks available for the question that covers the stakeholder's perspective. To gain these marks, you must discuss the issue from the perspective of the stakeholder – e.g. if asked for the investor's perspective, you must answer from the investor's perspective.

• Current issues are usually examined in section B as a part of a question (not a full question). However, current issues could be examined in either section A or section B of the exam. A question on current issues may require the application of existing accounting standards to a current accounting issue - for example, accounting for cryptocurrency, accounting for the effects of a natural disaster.

General advice: Make sure you plan your time at the beginning of the exam (and stick to Continued on page 36 35

PQ ACCA December exam tips it) to ensure you don't over-run on a particular question – it is 1.95 minutes per mark (or 1.8 minutes per mark if you allocate 15 minutes to reading the paper).

Strategic Business Leader SBL As with all other ACCA exams SBL is examined as a closed book examination. Unlike the other Strategic Professional level exams which are 3 hours and 15 minutes in duration, the SBL exam ‘lasts’ 4 hours. The exam builds upon the knowledge that you gained at the ‘Applied Knowledge’ and ‘Applied Skills’ levels. However, it does also have its own distinct syllabus content.

You will not be issued with any pre-seen information in advance of sitting your exam as everything you will require will be made available to you within the examination itself. The SBL exam will focus on one main organisation, and all of the question requirements will relate to this organisation. You may have to take on a variety of roles which may require you to adopt an internal or external perspective when answering questions. You will also be required to respond to a variety of people within the organisation. All of the questions in the exam are compulsory.

Every SBL exam will consist of 80 technical marks and 20 Professional Skills marks.

Question requirements in the exam will assess and link several subject areas from across the syllabus, and these will test your ability to construct appropriate responses and to carry out numerical analysis.

General advice: While 4 hours (240 minutes) can sound like a lot of time in which to attempt the exam, it is crucial not to become complacent in how you use this time.

ACCA recommend spending around 40 minutes reading, planning and interpreting the requirements and the information/exhibits provided. Based on this estimation when planning the amount of time you will spend on each requirement you should look to allocate 2.5 minutes per mark on offer. This time allocation is based on the fact that the exam is 240 minutes in duration, once the 40 minutes reading time is deducted this gives 200 minutes to write up your answer in order to earn the 100 marks on offer. You can earn the 20 Professional Skills marks by virtue of attempting the 80 technical marks on offer, so we can divide the 200 minutes remaining over the 80 technical marks to give 2.5 minutes per mark.

It is important to note that you can spend longer than the recommended 40 minutes reading and planning your answer. If you do choose to spend longer on this task then you will need to bear this in mind when you come to writing your answers. Alternatively, you may prefer to work on the basis of 2 minutes per mark (being 200 minutes divided by 100 marks).

Reading question requirements: The SBL exam will contain all of the information that you will require to answer the question requirements set. This information will be presented in a series of exhibits. To help you locate the exhibits most relevant to answering a specific question it is therefore important 36

that you take the time to read the question requirements set carefully as this should help to direct you. Furthermore, reading the question requirements carefully is important as this will indicate the role and the perspective from which you are expected to answer the question.

Identifying this early on is important as it will drive how you construct your answer.

Planning your answer: Clearly, if you have gone to the trouble of preparing an answer plan it is important that you use it when writing up your answer. To get the most from your answer plan it is therefore important that you include as much detail as you think will be helpful when the time comes to write up your answer.

When planning your work it is important to bear in mind the ACCA’s guide of using 40 minutes for reading and planning. As mentioned earlier you need to remember that some question requirements may require you to conduct some numerical analysis. For example, you may be asked to analyse the performance of the organisation featured in the exam. It is important that you plan the numerical analysis that you intend to perform to ensure that you only focus on performing those calculations that are going to support your answer and provide you with something to talk about.

Producing lots and lots of unnecessary calculations for the sake of it will only serve to waste your time in the exam.

Understanding the syllabus and the appropriate use of theoretical models in the exam: To stand the best chance of passing the SBL exam, you will need to have a good understanding of the entire syllabus.

However, it is important to remember that unlike other exams that you may have sat in the past, questions in the SBL exam will not ask you to simply regurgitate your knowledge of a particular topic or theoretical model.

Requirements will test your ability to apply your understanding of the subjects covered in the SBL syllabus in the context of the question scenario. Furthermore, requirements will not specifically ask you to use a particular model in answering the question. Whether to use a theoretical model when constructing your answer will be a matter of judgement that you will need to weigh up in light of the information presented to you in the exam. Attempting plenty of questions in the lead up to your exam is the most effective way of developing your judgement in this area.

Understanding the difference between technical marks and Professional Skill marks: Technical marks relate to the knowledge (which we discussed in the previous section), there are 80 technical marks on offer in the exam. By contrast the 20 Professional Skills marks are awarded for displaying the following skills and behaviours: • Communication.

• Commercial acumen.

• Analysis.

• Scepticism.

• Evaluation.

Every Professional Skill will be tested in every SBL exam sitting. The Professional Skill being tested will be specified under each question requirement. As you prepare to attempt the exam it is crucial that you take the time to

attempt as many practice questions as you can.

To increase your chances of exam success you need to ensure that you take sufficient time to develop your understanding of the Professional Skills.

Advanced Performance Management APM Q1 section A: Q1 of the APM exam will focus on a range of issues from syllabus section A (strategic planning and control), section C (performance measurement systems and design) and section D (strategic performance measurement).

Section A (50 marks) contains one compulsory question. In recent exams Q1 has often required linking a business’s mission to its performance objectives using the concept of CSFs and KPIs. You may well also have to critique and recommend improvements to performance reports and the balanced scorecard and/or information systems could well be tested in this context. The assessment of performance is also likely to be tested and this could easily include benchmarking as a theme.

Financial performance measures (ROCE/ RI/EVA etc) are also likely to be commonly examined in Q1 but don't neglect non-financial issues from syllabus section D such as quality management and reward systems.

Q2-3 section B: ACCA have said that one of the section B questions will come from syllabus section E (performance evaluation and corporate failure).

In section B, commonly tested areas include quality management, information reporting (e.g. big data, lean information), HR frameworks (e.g. reward & appraisal systems), risk management and environmental management accounting.

Keep checking the ACCA website for articles in the lead up to the exam, any articles written by the examining team are often tested and are very important to read. The article on the examiner’s approach to APM is especially worth reading and analysing.

Advanced Taxation ATX (UK) The exam will comprise of two compulsory questions within section A which will both be of a case study style. The first question will be 35-marks in length and the second will be for 25-marks.

One of these questions will focus on personal tax issues and the other will focus on corporate tax issues. In Q1 there will be four professional skills marks, and in section A there will be five marks on ethics.

Section B will comprise of two compulsory 20-mark questions. These will be in a more succinct, note form style.

The whole syllabus is examinable throughout the exam.

The exam will examine candidates’ ability to analyse and evaluate the tax implications of various situations, numerical calculations will only be required to assist in producing an answer and no purely numerical questions will be set.

Remember any tax breaks available due to Covid 19 are not examinable.

PQ Magazine December 2021

ACCA December exam tips PQ Topics/scenarios we would expect to see are: • Personal income tax scenarios which could involve: investing in a pension; investing in EIS, SEIS or VCTs, share schemes; employment income possibly with termination payments; a personal service company; property income or a takeover.

• Unincorporated business – particularly including loss reliefs, partnerships or basis period rules.

• A question focussing on overseas issues – this could be income tax, capital gains tax, inheritance tax or a corporate scenario.

• Capital gains tax versus inheritance tax including availability of reliefs.

• Corporate scenarios – likely to focus in more depth on intangibles; research and development; losses; corporate groups or consortia.

• Special corporate scenarios such as liquidation; purchase of own shares; close or investment companies.

• A business transformation scenario question such as selling a sole trade business, incorporation, or, in a corporate context, the sale of shares versus the sale of trade and assets.

• Other common types of question/calculation to expect are: • Reviewing a pre-prepared computation to spot, explain and correct errors.

• Calculations such as “tax saved through an action”, “after-tax proceeds”, “the value of a post-tax inheritance”, “net spendable income” or the “net of tax cost of something”.

Don’t forget that across the scenarios you can expect to see VAT marks available. Partial exemption, land & buildings, transfer of going concern, capital goods scheme, overseas VAT and registration/group registration tend to be frequently examined.

There will also likely be a couple of marks for stamp duty points if you remember to think about it in your planning!

Finally, don’t forget your basic administration points are also likely to be examined – when do we need to pay tax, when do we file a return and what if either of those are late?

Advanced Audit & Assurance AAA The most recent AAA exams have contained no real surprises, although you should be prepared for the look and feel of the embedded email and supporting exhibits.

Section A will comprise a case study, worth 50 marks, set at the planning stage of the audit, for a single company, a group of companies or potentially several audit clients.

PQ Magazine December 2021

on current issues is unlikely to form the basis of a question on its own, but instead will be incorporated into the Case Study or either of the section B questions depending on question content and the topical issues affecting the profession at the time of sitting the exam (for topical issues, see technical articles below).

General advice: This subject often tests topical issues which have been covered by the examining team’s technical articles (for example, the impact of data analytics in September/ December 2020). There are also five exam technique articles that you must read covering ethics, risk, accounting issues, audit procedures and reporting.

Candidates will be provided with detailed information, which will vary between examinations, but is likely to include extracts of financial information, strategic, operational and other relevant information for a client, as well as extracts from audit working papers, which could include the results of analytical procedures. The date will be set as 1 July 20X5.

Candidates will be required to address a range of requirements, from syllabus sections A, B, C and D thereby tackling a real-world situation where candidates may have to address a range of issues simultaneously in relation to planning, risk assessment, evidence gathering and ethical and professional considerations.

Four professional marks will be available in section A and will be awarded based on the level of professionalism with which a candidate’s answer is presented, including the structure, layout and clarity of the answer provided.

Section B will contain two compulsory 25 mark questions, with each being predominately based around a short scenario. There are no optional questions in AAA. One question will always test syllabus section E, and candidates should therefore always be prepared to answer a question relating to completion, review and reporting. There are a number of formats this question could adopt, including, but not limited to, matters to be considered and evidence expected to be on file, a going concern assessment, the impact of subsequent events, evaluating identified misstatements and any corresponding effects on the auditor’s report. Candidates may also be asked to critique an auditor’s report or a report which is to be provided to management or those charged with governance.

The second section B question can be drawn from any other part of the syllabus, including sections A, B, C, D and F. Syllabus section G

Advanced Financial Management AFM All AFM exams will have questions which have a focus on section B of the syllabus (advanced investment appraisal) and section E (treasury and advanced risk management techniques).

These syllabus areas are therefore high priority areas for your revision.

Q1 section A: You can expect section A questions to cover at least two different syllabus areas. This emphasises the importance of having a good broad knowledge of the syllabus (so you are strongly advised NOT to target your revision on a small number of syllabus areas). Section A questions are often based on core syllabus areas such as: project appraisal (domestic or overseas), business valuations and business/ financial reorganisations; these areas often include cost of capital calculations.

Risk management may also feature in a number of different ways e.g. value at risk, real options, interest rate or current hedging, and risk management (e.g. mapping).

Q2-3 section B: • Risk management (currency or interest rate).

• Dividend policy and general financing issues.

• Real options.

Business reorganisation.

General advice: The examining team have stressed that exams are designed to make question spotting extremely difficult for this paper, so it is important to have a broad understanding of the key aspects of each syllabus area. Don't over-emphasise numerical analysis in your final revision – remember that this paper is not a maths exam and, in all exam questions the examiner is interested in your ability to communicate well and to give good management advice that relates to the scenario in the question.

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PQ CIMA Case Study

Time to get your head around the CIMA pre-seens There are three new case study pre-seens to read for the November and February exams. Happy reading… requires online registration, and online cash purchases are encouraged throughout the game. Is this the future for Pixlwizz?

Check it out at: https://cima-plannerproduction.s3.eu-west-1.amazonaws.com/ SCS_Pre_seen_November_2021_2022_ February_c21920cba7.pdf

Time to put on your gaming hat For the latest Strategic Case Study you take on the role of a senior finance manager at Pixlwizz, a company that creates and sells video games.

The 30-page pre-seen goes straight into the video game industry, where we discover 55% of gamers are male and the average age of players is 34.

Pixlwizz offers games for all major hardware types, has 5,100 employees, half of whom are based at the Head Office. The remainder work at the company’s three overseas offices.

It seems to use its overseas offices well, reflecting local tastes and preferences.

We are reminded that a games popularity and longevity is hard to predict. That means that developers often modify and enhance popular games with additional features, rather than create completely new games.

Pixlwizz’s top selling game is Jakob Plunge and in its many guises contributes 19% of its revenues.

Interestingly the company still sells games on physical media such as DVD ROM for PCs and cartridges for consoles.

You then get to look at Prantain Group’s accounts, are we expecting a takeover?

The pre-seen has a lots of news cuttings.

We particularly took note of the Westland Daily News story of the problems with the server company that went down. The other was a game review of Pixlwizz’s new game Kepple Kwest. This is ‘free’ but

Time to get smart with MCS For the MCS you work for Frinta, a quoted company that manufacturers controls for central heating systems and electronic devices that form the basis for smart homes.

The company invests heavily on product design and its products have lots of heat saving features. New technology is a key to its designs – replacing mechanical thermostats with electronic sensors. A major area of change has been online control. Most of Frinta’s devices then are now ‘smart’. It even has an app!

Its products are sold via building suppliers and directly to large housebuilders. That means it advertises to tradespeople. Selling direct to customers could be a new avenue for the company.

The leading supplier, it has several major competitors.

We then move on to Frinta’s smart speakers and rival Ypburn. Frinta has always focussed on quality and ease of use in the design and manufacture of its products. This is true of both its heating and ventilation controllers and its smart speakers. Frinta was founded by a plumber who believed

COVID-19 Statement The pre-seen and the case study in general (while aiming to reflect real life), are set in a context where the COVID-19 pandemic has not had an impact.

Remember, marks in the exam will be awarded for valid arguments that are relevant to the question asked. Answers that make relevant references to the pandemic or social distancing will, of course, be marked on their merits. In most cases, however, candidates may find it helpful to assume that there are no restrictions to the movement of people, goods or services in place.

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that the company’s initial success was attributable to continuing innovation and improvement.

Looking at the accounts you will see that the revenues and profits are changing.

More revenue comes from smart speakers in 2020, and the profit from this side of the business is also going up.

Readers then get to look at rival Ypburn’s accounts. In the news there is a big review of Ypburn’s home alarm – a new area for Frinta?

Check it out at: https://cima-plannerproduction.s3.eu-west-1.amazonaws.com/ MCS_2021_November_February_2022_ Pre_seen_a781c8630e.pdf Are you in the running for the OCS?

The CIMA OCS hones in on an ethical athletic shoe designer, TreadCushy.

So, what do we learn? The owners are passionate about the environment, sustainability and using natural materials.

They left a worldwide brand leader because they had become ‘frustrated’ with its lack of focus on the environment.

Selling through their own website they have kept the production in-house to they can control the craftmanship and sustainability of the manufacturing process.

The vast majority of athletic shoes are manufactured in Asia to keep cost down.

The small players, however have proved manufacturing in-house can be profitable.

They have opened retail outlets too – and have eight at home and six abroad.

Interestingly there seems to be a season for buying TreadCushy shoes!

One area that may come up in the case is TreadCushy’s conservative approach to the management of finished goods inventory at the Distribution Centre.

From selling 25,000 pairs of shoes in its first year it now sells 700,000, has a revenue of K$68 million and profit of K$6 million. Its prices are slightly above the market average for similar products If you read the directors profiles you will see FD Emily Queda believes that the business is on a sound financial footing and that now is the time to invest in new products and markets. Your immediate boss is finance manager Ben Numa.

All-in-all a case for you to run with: https://cima-planner-production. s3.eu-west-1.amazonaws.com/OCS_ Nov_21_and_Feb_22_Pre_seen_for_ Students_5fd43291ea.pdf PQ Magazine December 2021

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.

Sorted, thanks to pqjobs.co.uk

PQ jobs pqjobs.co.uk

careers PQ

Dear Karen Ask PQ’s agony aunt Karen Young when you need expert advice. Email your dilemma to graham@pqmagazine.com, and he will pass on the best ones to Karen THE QUESTION I like my manager, but I feel increasingly stressed about not being able to meet their high expectations. The pressure of getting everything perfect is draining – any tips on how to tackle this?

Life at Zzoomm plc As we launch the PQ Awards 2022 we thought we’d speak to Simon Cordell, our current PQ of the Year. He is a build supervisor at the broadband company,and is studying for the AAT Advanced Diploma What time does your alarm go off? 4.30am.

What is on your desk? Laptop and lots of notepaper How long is your commute to that desk? One hour.

Do you have a favourite lunch? A bacon sandwich What can you see when you sit at your desk? Our breakout area and coffee machine.

What are your favourite websites? Anything motorcycle related.

How many hours a week do you spend in online meeting rooms?

About 14.

Are you spending more time working now than normal? Yes.

How do you relax? Going for a ride on the bike.

What is your favourite tipple? JD and coke.

What’s your favourite TV show?

Columbo.

What is the best film you have watched recently? Hacksaw Ridge.

Summer or winter? Summer.

Pubs or clubs? Pubs.

Do you have a hero? No. What is the first thing you are going to do when lockdown is fully over? Take a road trip.

If you had a time machine where would you go? Back to the 1960s.

In brief

KAREN’S RESPONSE Wanting to impress your manager is natural. However, you need to make sure you are aligned with your manager’s expectations. You need to know what your tasks are, and what processes will be followed to complete them.

Understanding that your manager’s expectations are also a part of their deliverables can help clarify whether it’s unrealistic or not.

Ask around the office and see if any of your co-workers can provide insight or expertise on handling the workload or handling your boss.

Even if your workload is something that only you can do, your colleagues, especially those with a bit more experience or expertise, may have some great advice. If you’re feeling frustrated with your boss’ expectations, chances are other people have been there too.

Try to make sure that your time management and organisational skills are finely tuned, to give yourself the best opportunity to get the tasks required completed to a high standard and in a timely manner. Be a problem solver, not a problem maker, as managers tend to promote employees who are rewarding to work with.

• 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 December 2021

Pap A world first The UK will be world’s first net zero financial centre, says Chancellor Rishi Sunak.

Speaking at COP26 the Chancellor said over $130 trillion – 40% of the world’s financial assets – will now be aligned with the climate goals in the Paris Agreement, thanks to climate change commitments from financial services firms. Under the proposals, there will be new requirements for UK financial institutions and listed companies to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050. Sunak said these commitments will help create a huge pool of cash that

could fund the transition to net zero, including the move away from coal, the shift to electric cars and planting of more trees.

Pap A trusted profession Research from Chartered Accountants Worldwide and Edelman Data and Intelligence has revealed that trust in the accountancy profession remains strong following the pandemic. In total, 1,450 business decision makers considered chartered accountants to be among the most trusted professionals, behind doctors, engineers, nurses and teachers and ahead of legal professionals and politicians. Some 70% of respondents see chartered accountants as credible

spokespeople on societal issues, such as sustainability, diversity, equity and inclusion. But they also expect accountants to follow through by driving sustainable environmental practices within businesses, and doing more to foster diversity, equity and inclusion practices. Key findings from the research include: • 84% believe chartered accountants have the skills and expertise to make businesses thrive today.

• 81% are confident in the ability of chartered accountants to navigate a new operating environment in the future.

• 85% think it’s important that chartered accountants demonstrate a track record of helping businesses thrive.

The PQ Book Club: books you should read Move Your Mind: How to build a healthy mindset for life, by Nick Bracks (Wiley £15.50) From the get-go the author is upfront about his own battle with depression and anxiety, and he wrote this book to try to provide practical and guidance help for those struggling to cope with the world.

He splits the book into four parts. First he looks at the big picture; in part two he breaks down mental health symptoms and conditions. Part three introduces you to his practical pathways, and he brings it all together in part four.

Bracks explains that facing

fear is an essential part of life if you want to grow and prosper.

Failure and rejection can be scary, but he believes we have to change the dynamic and reframe our thinking. He wants you to look at failure and rejection as either giving you the desired result or helping you learn something – which both have positive outcomes!

Bracks believes meditation, mindfulness and sleep are three key ingredients when it comes to mental health and wellbeing.

They are today’s buzzwords, and you can be sure there’s a thousand apps for them. But have you tried them? They

aren’t just for hippies!

His hope is that in future we don’t have to re-educate people about mental health. It should, he said, be part of our daily learnings, taught to us through our parents, schools and in organisations. Bracks wants it to be part of the daily conversation, seen in the same way that we see physical issues.

PQ rating: 4/5 Bracks provides simple strategies and practical tools to help your mental wellbeing.

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PQ got a story, funny or serious, you want to share? Email graham@pqmagazine.com

Welcome to the metaverse!

Facebook will now be known as ‘Meta’, as the tech giant tries to shift the focus away from its controversial social media platform and onto ‘future technologies’.

CEO Mark Zuckerberg explained the company’s move into the ‘metaverse’ would help it combine social media, video calls, gaming, entertaining and working from home into an immersive virtual reality world. He said: “From now on we are going to be metaverse-first, not Facebook first… we believe the metaverse will be the successor to the mobile internet.”

The new Meta logo has raised a few eyebrows. It looks very similar to the infinity symbol, and some have even likened it to a thigh exerciser. Another worry might be that in Hebrew ‘Meta’ means ‘dead’! This in turn led to #FacebookDead going viral.

Who wants to be a trillionaire? Musk does Analysts at Morgan Stanley are predicting that the founder of Tesla, Elon Musk, will become the world’s first trillionaire.

Tesla’s results have hit new records with revenues jumping 57% to just under $14 billion. Operating income hit $2 billion and the automotive gross margin was 30%. Shares doubled on the news.

The company said: “The third quarter of 2021 was a record quarter in many respects.

We achieved our best-ever net income, operating profit and gross profit.” Immediately following its result announcement, Tesla received its biggest-ever order for electric cars from Hertz. The car rental giant said it was buying 100,000 vehicles at the cost of $4 billion.

Business parks in space Amazon founder Jeff Bezos has announced new plans to launch a “mixeduse business park” with a twist – it will be in space! Blue Origin, his space tourism company, has unveiled plans for a commercial space station. It is being marketed as a business park in space, hosting up to 10 guests at a time. The 32,000 sq ft station, called Orbital Reef, would be ideal for conducting cutting-edge research and even includes a space hotel.

To coincide with COP26, Scottish business simulation games specialist GingerTech has launched a new sustainability-focused game, called Go Green.

Played in teams of between five and 15, the Go Green game focuses on decisions that affect emissions in areas such as supply chain, procurement, business travel, buying patterns and investment. Its main marketplace will be the enterprise sector, but the game is applicable across public, charitable, and commercial sectors, including SMEs. The aim of the game is to bring environmental and social impact decisionmaking into every level of the business and drive development of practical solutions to emissions reduction. Tim Dew, Chief Executive of GingrTech, said: “Many people are already committed to the need for environmental change in their personal lives and it is time to give them the opportunity to make a positive difference in their workplaces as well.”

Time to get the ‘polluter elites’

Take your socks off Indian police recently issued an edict that students wanting to sit the exams for coveted government teaching jobs could not wear flip flops, shoes or even socks into the exam hall. Over 1.5 million people sit the exams at 4,000 centres in Rajasthan.

Up for grabs are 31,000 jobs, offering security and rising salaries. To prevent cheating the internet was switched off in half of the state for around 12 hours.

Despite these new restrictions, five candidates still manged to get inside one of the exam halls with mobile phones or a bluetooth ear device.

’ WEV E

New sustainability business game launched

Climate experts have said that luxury yachts, private jets and other carbon-intensive goods used by the ‘polluter elite’ need to be banned or massively taxed. The new report from the Hot or Cool Institute think tank found that the richest 10% of the world’s population was responsible for 50% of manmade greenhouse gasses (between 1990 and 2015). The richest 1% accounted for 15% of emissions. The scientist say these polluter elites cannot carry on what they are doing expecting everyone else to pay the environmental price.

Just so you know, in 2019 each person in the UK produced 8.5 tonnes of carbon dioxide. This needs to drop to 0.7 tonnes by 2050 to fall in line with the Paris Agreement of limiting global warming to 1.5C.

GOT THE L OT

The richest man in Babylon

Happiness journal

There are seven lesson you can take from the book we are giving away this month, among them is ‘pay yourself first’ and ‘save 10% of everything you earn’. You will have to read ‘The Richest Man in Babylon’ to find out the other five! This book by George S. Clason is described as a timeless classic and a bit outside our comfort zone. However, there are some timeless lessons in there. Check out a great YouTube review of the book at https://tinyurl.com/d486m9u9 To win one of the three books on offer email your name and address details to giveaways@pqmagazine.com. Head up this email ‘Babylon’ and you will be entered for this month’s prize draw.

We are told expressing gratitude for the things that make you happy has been proven to make you feel more positive, so you will thank us if you win this ‘Happiness Journal’.

The journal provides creative activities to bring joy to your day, so what’s not to like!

To win this great prize just send us an email with your name and address to giveaways@ pqmagazine.com. Head up that email ‘Happiness’ and we will do the rest.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be received by Friday 17 December. The main draw will take place on Monday 20 December 2021.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM 42

PQ Magazine December 2021