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IN THIS ISSUE

April 2022

A note from the Editor How is the accountancy profession ‘standing with the people of Ukraine’? Read our round-up on page 5. We also have CCAB’s statement to the profession, reminding members everywhere of their obligations when it comes to sanctions (page 28). In the news we have exam feedback, look at the bursaries that are up for grabs, and reveal the worrying fact that many of you feel you are too busy to seek mental health support. And it’s last call for nominations to the PQ magazine 2022 awards. Don’t miss out on an unforgeable night come April – get your applications to us by 18 March. Check out the details on page 17. We would love to see you all at Proud Embankment. Among the subjects we focus on are the latest AAT professional synoptic, CIMA’s Case Study and sole trader trading losses. We have also added to our Back to Basics video series. Jo Tuffill explains the importance of understanding cost behaviours, and all in under eight minutes. Her accompanying feature is on page 27 of this issue. Don’t forget our fun page (page 40). Where else can you read that the US copyright office has ruled that AI will not be able to copyright any of its inventions? Check out our great giveaways while you are there. Graham Hambly, Editor and Publisher, PQ magazine News 04 ACCA exam feedback We run the rule over the March exams 05 Analysis How the accountancy profession has reacted to Russia’s invasion of Ukraine 06 Wellbeing Are you too busy to deal with any mental health issues. Lots of accountants are 08 EY going green Big 4 firm launches climate-focused consultancy 09 Saving the planet University of Birmingham incorporates

climate change into its finance and accountancy degree 10 Back to Basics videos Are you taking advantage of this great FREE resource from PQ? Well you should be! 12 Tech news Banks nervous about cryptocurrency and tax Features, etc 14 Have your say My heart breaks for Ukraine’s PQs; and why Prem is right about Companies House. Plus our social media round-up

17 PQ awards 2022 It really is the eleventh hour if you want to enter the PQ awards – so get your nominations in now!

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18 AAT exams The importance of SWOT analysis in the Professional synoptic exam 19 Ethical dilemma What should you do if you’re being asked to act unethically? 20 CIMA exams Top advice on how to master the case studies 22 CIPFA spotlight Why good financial management is key to levelling up 23 Keep it Simple Neil Da Costa explains how you deal with trading losses for a sole trader 24 AAT spotlight After 20 years in retail, Tom Sanger is looking forward to a new career as an accountant. He explains why

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36 Accounting for provision Sarah Ardiles and Tom Clendon chew the fat over a subject that can cause problems for students 38 ACCA spotlight Why we need more women in ‘green’ roles

25 FRC sanctions The watchdog bares its teeth over Conviviality audit failures

39 Careers Women are beginning to make progess into the boardroom; some more career advice from Hays’ Karen Young; and our book review

27 Back to basics It’s vital you understand cost behaviours

40 Fun The lighter side of life; and more great PQ giveaways

28 War in Ukraine Key points from the CCAB’s statement on the crisis in Europe

The columnists Lisa Nelson Learning is not supposed to be easy

31 Payroll How are net wages calculated? We explain all

Robert Bruce It’s time to think more about the actual numbers

32 AAT spotlight How to correct the errors that inevitably happen

Prem Sikka Why it’s time to end self-regulation in the profession 8

34 IR35 We examine what the National Audit Office had to say about reforms to the legislation; plus we put the spotlight on the recent Adrian Chiles tribunal

Anna Kate Phelan Why changing ‘chairman’ to ‘chair’ does matter 10 Vikki Bean The importance of apps to small businesses 12

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To subscribe go to www.pqmagazine.com

PQ Magazine April 2022

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LISA NELSON Learning shouldn’t be easy

Educators can easily fall into the trap of thinking that part of their job is to make learning easy – after all, isn’t that what students want? But how many worthwhile things in life are easy? What’s the saying at the gym: “No pain no gain”? In 1994 Professor Robert Bjork came up with the learning equivalent of “no pain, no gain”, calling it “desirable difficulty”. Desirable because the difficulty experienced improves your learning. But the type of difficulty matters; for example, studying while watching TV is difficult because it requires the continual shifting of attention. This doesn’t enhance your learning, it obstructs it. The best type of difficulty generally needs effort; it might be better to think of the difficulty in terms of the amount of effort you have to put in. One type of ‘good’ difficulty takes place when you are faced with a test. The reason for this is it forces reflection, you need to think back on what you have learned, which requires effort. Ever tried to remember something but can’t, even saying to yourself “come on I should know this, I only learned it yesterday”? But here’s the good news – that’s when learning happens, not when your tutor said the words in class or when you read them again in the notes. It’s when you have to think back and dredge them from your memory. Although that’s not easy, like running an extra mile, it will make you stronger. Lisa Nelson is Director of Learning at Kaplan

ACCA March exam feedback It was all relatively quiet on the March ACCA exam front as PQ magazine went to press. The Audit & Assurance exam was deemed ‘horrible’ and ‘weird’, and no one seemed to like the MCQs. And AAA was another time-pressured test for sitters. On day two SBL sitters called their exam ‘a nice paper’ and even ‘good’. There were mixed reactions from ATX sitters, with some saying they were pleasantly surprised that it didn’t seem as brutal as it could have been. Others found it ‘a disaster’. Those sitting the Taxation paper found it a bit tricky, too. We also picked up some complaints about the quality of the

keyboards students are given at centres. One said: “It’s genuinely the worst equipment I’ve ever used and I wasted a bit of time overall correcting my spelling errors or trying to make the backspace key work every time it got stuck.” It means many sitters are considering taking their profession exams at home, so they will be using their own laptops. There was a call from students for the ACCA to look at exams on demand for all its papers. “ACCA need to be less rigid and get with the times,” said one sitter. • For all the ACCA March exam feedback go to www.pqmagazine. com

The deadline for nominations to the PQ magazine awards is drawing close – you have until 18 March to get your entries to us!

We can reveal that the venue for this year’s awards is Proud Embankment, and the date has been set for Monday 25 April. So,

if you want to be at the awards you really do need to get nominating. There are 20 categories up for grabs, so lots of chances of winning a coveted PQ trophy. Now is not the time to go shy on us. Why not nominate you and your team mates for Accountancy Team of the Year? And if there is someone who has made a real difference in your professional life put them forward for Training Manager/Mentor of the Year. Check out all the details on page 17 of this issue, or simply download the nomination form at https:// tinyurl.com/h6dxm8am Remember, you have until Friday 18 March, so get nominating!

AAT bursaries

resit, the one-off registration fee (for AQ2016) and all training provider fees. That’s up to £5,000 per student. To be eligible you must be 16 years old or over, a UK resident, wanting to study in the UK, and you must be able to

demonstrate that you are in genuine financial need. AAT applications open from 11 March to 22 April 2022, and there are 10 bursaries up for grabs. For more details go to https://tinyurl. com/2p8pcsn8

from 25,000 sq ft to just under 11,000 sq ft there will be more collaborative space, including 13 meeting rooms with videoconferencing facilities, and openplan café-style area and reception.

(GAA), the CEOs are signing the call to action ‘Nature is Everyone’s Business’, to signal the important role the profession can play in this crisis. The group, that includes CIMA, ICAEW, ICAS and CAI, said: “We recognise that our planet is being impacted by a three-fold crisis of a climate emergency, dramatic nature loss and rising social inequality. Addressing these challenges will require integrated thinking as companies reallocate resources, reorient production and reimagine their business models.

Last chance to enter

Do you know someone who dreams of studying for an AAT qualification, but is not able to because of their financial situation? The AAT bursary could change all that. It will pay your annual student membership fee, all assessment fees including one

In brief Pap CIPFA pass rates CIPFA has updated its pass rates online, and they show the overall rate for December 2021 sitters was a healthy 64.06%. The Strategic Case Study stood out in December with a pass rate of 85.5% – the highest success rate on record for this final paper. At 72.95%, the pass rate for those sitting the Financial Accounting paper was another plus, as was the 82.69% achieved by Taxation candidates. In December 2020 the FA pass rate was just 45.2%. 4

Check out all the pass rates at https://tinyurl.com/2p8u9dfh Pap AAT moves home AAT is moving home this Spring. It is moving its 220 staff out of its Aldersgate Street offices to brand new ones at 30 Churchill Place, Canary Wharf. You will find AAT on the 10th floor of WeWork’s flexible workspace building. While AAT became carbon neutral in 2021 it hopes the move will help it achieve net zero by 2030. Although AAT is reducing its total footprint

Pap Call to reverse nature loss The CEO’s of 10 of the world’s leading accountancy institutes have joined forces in calling for a profession-wide commitment to reverse nature loss. Working together as part of the Global Accounting Alliance

PQ Magazine April 2022

news analysis PQ

Standing with the people of Ukraine How has the accountancy world reacted to the invasion of Ukraine? Here are just some of the statements ICAEW CEO Michael Izza: “The UN Secretary General has urged the president of #Russia to halt his invasion of #Ukraine and prevent ‘what could be the worst war since the start of the century’. The UK government, standing alongside the US and EU, has announced a further package of sanctions aimed at demonstrating to the Russian elite the political and financial costs of their aggression. ICAEW is confident that #charteredaccountants, whether in practice or in business, will be ready and willing to play the fullest possible role in making these measures effective, and in helping companies across the economy cope with the disruption they will bring.” CIMA: “The institute wholeheartedly stands with the people of Ukraine and supports governments in implementing economic and trade sanctions and other measures taken in response to the Russian military invasion. Representing our

PQ Magazine April 2022

696,000 members, students, and engaged accounting and finance professionals from 192 territories and countries around the world, we strongly condemn the actions taken by the Russian government. We are saddened by the appalling impact this is having on people’s lives and have put in place measures to support our members, students, and staff directly impacted. We will continue to monitor the situation and provide updates.” BDO Global: “BDO deplores the violation of international law and

military aggression in all its forms. We stand with the Ukrainian people and we wish for peace to be restored. Since the eruption of the conflict, our absolute priority has been – and remains – the safety and wellbeing of our BDO colleagues and their families on the ground. BDO’s leadership teams at global and at firm level have been working around the clock to provide support to our BDO people and to the relief effort overall. This includes assisting the evacuation process and

ongoing practical requirements, such as transportation, relocation and accommodation, as well as providing immediate financial assistance. We are in awe of the bravery and resilience shown by our colleagues in the region and we are extremely grateful for the way BDO has come together globally to support them.” KPMG: “We condemn the Russian government’s military invasion of Ukraine in violation of international law. KPMG colleagues and firms across the world are united in our support for the people of Ukraine and all of those across the region who have been affected by this senseless military action. Driven by our values, KPMG is working closely with our colleagues in Ukraine and Eastern Europe to do everything we can to help people and communities in need. KPMG around the world is also fully adhering to the sanctions introduced by various governments, which hopefully will contribute to bringing an end to this crisis.” • Check out CCAB’s statement on the war on page 28

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ROBERT BRUCE Time to think more about the actual numbers Numbers don’t just tell you the numerical or financial truth. They can also drive you mad. The government has set up an inquiry into what the economic impact would be of the Brexit notion of reverting to the imperial system that existed before we joined the EU. We would be back to the days of 16 ounces weighing a pound and 14 pounds weighing a stone; 12 inches measuring a foot and three feet measuring a yard; a pound sterling made up of 20 shillings, and so on. Simple, isn’t it? All those pesky centimetres, metres, grammes, all neatly divisible by 10, would go out the window. Quite how this all connects with the economies of the rest of the world is unexplained. But there is a serious point. Back in those pre-calculator and pre-internet days, people had to perform now unimaginable feats of mental and numerical agility just to work out the price of three cups of tea. So in their ordinary life people were used to judging the significance of figures. Now people tend to accept the primacy of the figures rather than their meaning. Over 700 postmasters were wrongly convicted of theft and false accounting in the Horizon scandal because no one questioned the sense of what the computer system was saying. The same danger lurks in financial reporting and audit. Financial truth is lost to spurious certainty. It is time to just think about it more. Robert Bruce is an award-winning writer on accountancy for The Times

Are you too busy to seek mental health support? Stress and mental health issues remain a real problem within the accountancy community. The latest poll from CABA, the charity for ICAEW members, students and their families, discovered a massive eight in 10 (79%) accountants feel the profession was becoming synonymous with stress and burnout. Accountants said the biggest day-to-day challenges are workloads (cited by 87% of respondents) and long hours (72%). The complexity of the work, with no room for error, was highlighted by 63% of those surveyed. Hardly surprising then that more

than half (56%) of accountants the researchers spoke to said they were ‘suffering’. CABA also found that despite nearly half (49%) of those surveyed acknowledging that their employers had increased the

amount of wellbeing support on offer throughout the pandemic, 86% said they hadn’t used an employer-provided counselling phone line, 63% hadn’t used apps or subscriptions for mental health tools, and 46% hadn’t taken any mental health days off. In contrast, CABA itself saw an increase of 18% in emotional wellbeing enquiries and a 25% increase in those who needed supported with counselling. When asked why they weren’t accepting their employer-funded mental health support, 36% said that they didn’t have the time, 32% that they didn’t think their condition is severe enough, and 23% said that they didn’t think it would help. But not only were these accountants not seeking help via their employer-funded route, 69% had not utilised out-of-work mental health support, either.

ACCA practice tests for free! ACCA is offering practice tests for its on-demand CBEs for free, but only for a limited time. The tests help you identify your strengths and weaknesses before you take the exam – always the best way of doing it! As well as giving you an insight into a live exam experience you will receive a personalised feedback diagram showing how

you have performed across the different areas of the syllabus. If you are sitting MA1, FA1, MA2, FA2, FBT, FMA, FFA, BT, MA, FA or LW you can now avail yourself of the free tests. You have until the end of March 2022 before you have to start paying again. For more go to https://tinyurl. com/2p9dk8e2

PwC fined over auditor exam cheating PwC has been fined $900,000 by US and Canadian watchdogs over exam cheating by 1,100 of its auditors. The regulator said the Big 4 firm had failed to stop its staff from sharing their exam answers, between 2016 and 2020. Shortcomings in internal controls and test supervision led to widescale cheating in auditing, accounting and professional independence testing.

The firm discovered the misconduct in January 2020 and reported the matter to the watchdog. The cheating mostly involved junior assurance staff, who shared their

answers online. PwC said: “We have undertaken several remediation steps including retraining, additional ethics training, financial penalties, written warnings and terminations where warranted.” It also explained: “While we are confident there has been no impact or compromise to the quality of our audits as evidence by our current inspection results, we expect more from everybody in our firm.”

In brief Pap New ACCA scholarships on offer Two new scholarships for FM and AFM students are being offered by top tutor Sunil Bhandari. They are named after his late father-in law and father – ACCA FM Kapil Dev

Joti Scholarship and ACCA AFM Om Datt Bhandari Scholarship. Each student will be given access to Sunil’s Platinum package of courses for either the June, September or December 2022 sitting. The scholarships are open to all students. To apply simply email sunil@ sunilbhandari.com. Closing date for applications is 15 March. Pap AAT study timetable Have you downloaded your AAT study timetable? AAT

suggests that before filling in the timetable you chat to friends and family. It said: “It’s important to set boundaries between study time and social time early, and make sure everyone knows your plan from the outset.” Planning where you study is key – in front of the television won’t be a good idea! AAT also says that if you work with music playing keep the volume down to background levels. Download the timetable at https://tinyurl.com/2m5stmvx

Pap Public finance live The annual CIPFA student conference will take place on day one of Public Finance Live – that’s Wednesday 13 July. Students joining for this day only are able to attend the opening and closing plenary sessions of the main conference, as well as the student focused sessions. The conference is in Liverpool this year, and is free for all students. For more details go to: https:// publicfinancelive.org/delegatepricing/ PQ Magazine April 2022

PQ news the

EY launches new climate-focused consultancy

PREM SIKKA The end of selfregulation is nigh The formal end of self-regulation for accountants, albeit in a statutory framework, is getting nearer. The accountancy bodies long ago lost control of accounting and auditing standard setting. The disciplining and monitoring of audit delivered by big firms has been taken over by the Financial Reporting Council. The world of insolvency has long been mired in scandals. In the last decade, despite 8,000 complaints, only five insolvency practitioners have lost their licenses. Accountancy bodies are part of 25 overlapping money laundering regulators. They lack independence from their members and have been criticised for not prioritising their regulatory role. Four years ago, the government created the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) to supervise them, effectively putting the accountancy bodies on notice. A recent report by the House of Commons Treasury Committee said OPBAS is still “encountering poor performance from a large proportion of the professional bodies that it supervises”. It recommended “a move away from the selfregulatory model and the creation of a new supervisory body”. In a fast-changing world, the main purpose of regulation is to promote public confidence in the system. From that perspective self-regulation and professional bodies are dispensable. They are now free to concentrate on their role as educational bodies. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

EY plans to recruit 1,300 professionals over the next three years, to help create a new climate-focused consultancy business. EY Carbon, backed by £100m of investment, will help listed businesses preparing net zero plans ahead of the looming 2023 deadline. EY also recently launched EY Carbon Hub – a net zero transformation progress tracker designed to help businesses plan, measure and execute on their transition to net zero. Leading EY Carbon is EY’s newly appointed Managing Partner for Sustainability, Rob Doepel (pictured). He said: “While we

have seen a number of large, medium and small businesses sign up to net zero targets, the new requirement for UK listed businesses to publish their plans

by 2023 is a significant shift. It is an extremely positive step in the fight against climate change but means that businesses will need to move from purpose statements and pledges, to the detailed transition plans that will lead to positive action being taken. “The new regulations also include tracking Scope 3 Emissions. In addition to the emissions a business produces from its own operations, a listed business must track indirect emissions that occur across its supply chain. Accurately tracking and recording these will present a real and significant challenge for businesses as we move towards the 2023 deadline.”

New editions of standards issued The Financial Reporting Council (FRC) has issued January 2022 editions of UK and Ireland accounting standards. These reflect the amendments made since the previous editions were issued in 2018, as well as changes in Irish company law, resulting in a single up-to-date reference point for each standard. In addition, the FRC has issued revised editions of the Foreword to Accounting Standards and

Overview of the financial reporting framework that reflect developments in accounting standards, legislation and regulation. The documents issued are: • Foreword to Accounting Standards. • Overview of the financial reporting framework. • FRS 101 Reduced Disclosure Framework. • FRS 102 The Financial

Reporting Standard applicable in the UK and Republic of Ireland. • FRS 103 Insurance Contracts. • Implementation Guidance to accompany FRS 103 Insurance Contracts. • FRS 104 Interim Financial Reporting. • FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime. A new edition of FRS100 will be issued following changes to this standard expected later this year.

ACCA to increase remote exam availability ACCA has confirmed remote exam sessions are ‘here to stay’. It stressed that much has changed over the past two years, with ‘home working’ becoming part of a new normal. With these changes, alongside digital advances, ACCA

believes that remotely invigilated exams are a more relevant proposition for today’s students. It said: “We have also conducted customer and partner research with many now telling us that they prefer the convenience and comfort of remote exams. Saving on

too quickly, as this could increase the risk of the economy going into recession.

jumped 280% since last year, when only 91 taxpayers came forward. Harrow has now taken the crown from last year’s ‘leader’, the affluent area of south west London, home to the wealthy neighbourhoods of Chelsea, South Kensington and Wimbledon. As a result of this bumper year, Harrow now has more disclosures of tax avoidance than the cities of Leicester (141), Nottingham (104) and Manchester (96) combined. Well-off neighbourhoods in London, such as Knightsbridge,

time, cost and the added stress of travelling to an exam centre.” Moving forward it said: “In some locations students may have the option of choosing between a centre-based or remote exam. In these instances, we strongly recommend students book as early as possible in order to secure their preferred method.”

Taxwatch Pap Tax the rich says IMF The International Monetary Fund (IMF) has told the UK government that it needs to bring forward tax rises on the rich to help ease inflationary pressures and support its levelling up agenda. In its annual review it called on Chancellor Rishi Sunak to act now and impose income and wealth taxes on rich households to avoid more stringent measures down the road. The IFM also warned against increasing interest rates 8

Pap Tax avoidance rife in… Harrow! The London suburb of Harrow has been revealed as the unexpected centre of tax avoidance in the UK with 346 taxpayers coming forward to admit tax avoidance last year, placing it first out of 120 areas of the UK. The number of people admitting to tax avoidance in Harrow has

Chelsea and Putney, as well as the surrounding Home Counties of Surrey and Berkshire continue to make up nine of the top 10 areas for reporting tax avoidance. Pap New taxes cost £50 billion The taxes brought in over the last 10 years have cost UK businesses more than £50 billion, with more charges coming soon! In all, eight new taxes have been introduced since 2011, among them the apprenticeship levy and sugar tax. PQ Magazine April 2022

news PQ

The PQ Climate change accountancy degree magazine Test Bank How well do you know your accountancy concepts? Well, www. pqmagazine.com has a whole test bank of subjects to help you on your way! Here’s the list of subjects compiled by Professor Phil Dunn. Test yourself to see if you are exam ready: • Accounting Standards. • Shareholders’ Interest and Risk. • Process Costing. • Marginal Cost Break-Even Analysis. • Investment Appraisal. • Year End and other adjustments. • Limiting Factor Analysis. • Activity Based Costing. • Material Control and Reporting Director Material Cost. • Disposal of Non-Current Assets. Just click on the ‘Test Bank’ bar at the top of the home page for another great free resource from PQ magazine.

The University of Birmingham has become the first UK university to mainstream climate change into an accountancy and finance degree. Led by Professor Ian Thomson (pictured), along with Dr Mayya Konovalova and Dr Madlen Sobkowiak, the new vertically integrated BSc degree syllabus was the recent winner of the Birmingham Business School Responsible Business Award. Professor Ian Thomson said: “Greta Thunberg was correct in what she said in Glasgow. It is an undisputable fact that business cannot carry on as normal if we are to effectively fight climate change and reach the

government’s target of net zero carbon emissions by 2050. This means that every student studying accountancy and finance should know how to account for climate change.” The university believes students embarking on their journey to become accountants can help to future proof their own careers, and the organisations they go to work

for thanks to the changes it has brought to its accountancy course. The integration of climate change into the course has become a major selling point for the degree programme, with prospective students hearing about the updates at offer holders days this year, the first of which was in March. For more go to https://tinyurl. com/yc3m83mu

ICAEW fine regime questioned

are going to the trade association of those involved. It’s not right.” ICAEW member and Tory MP Nigel Mills agrees, and has asked HM Treasury to act and pressure the ICAEW to use the fine to help those who have lost out. However, it is being reported that the ICAEW board has considered the matter three times and decided it should keep the cash.

Are the ICAEW benefiting unfairly from the wrongdoing of members of the accountancy profession? That was the question being asked after it banked the £13.5m fine imposed on KPMG following a pension fund scandal. Some critics asked why the

monies have not gone to the Silentnight pension fund, where it has been estimated that scheme members have been cheated out of 30% of their ‘pension promise’. Martin Jourdan, who now runs Silentnight said: “I find it bizarre if not unnatural justice that the fines

Accountancy can be simple if you know the basics! PQ magazine has gathered together the top tutors in the world to help us help you. Our Back to Basics video series will guide you through some of the fundamental topics of accountancy. Many of the videos even come with an accompanying article! The series includes: Jo Tuffill – Cost behaviour (newly uploaded)

Understanding a business’s cost structure is vital for its success. It is why cost behaviour is the first concept taught in management accounting. Her video runs for just seven-and-a half minutes and explains exactly what a cost is, looking at both variable and fixed costs. Jo has also written an accompanying feature (PQ magazine, April 2022). You can check out her video at: https://vimeo.com/680501310. Tom Clendon – double entry bookkeeping

You should be able to master the rules of double entry bookkeeping in just eight-and-a half minutes. So do you know your credits and debits? You can find Tom’s feature explaining all on page 22 of PQ magazine, July 2020. Check out the video at: https://vimeo. com/429252329. PQ Magazine April 2022

Michele Baker – trial balance

In just six short minutes Michele Baker explains how to create the trial balance and why you are doing it. Michele will let you know whether a balance is a credit or debit, and help you get to grips with ‘DEAD CLIC’. She has had over 550 views already. Check out the video at: https://vimeo. com/500074449. Sunil Bhandari – financial maths

This presentation is slanted to ACCA FM and AFM students sitting the CBE exams, but will be useful for any PQs wanting to understand financial maths that bit better. See pages 20-21 of PQ magazine, September 2020, for the accompanying article. Check out the video at: https:// vimeo.com/446780185. Check out more great Back to Basic videos at www.pqmagazine. com. Either click on the video bar at the top of the home page or scroll down to the video section

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ANNA KATE PHELAN What’s in a title? Quite a lot, actually Business groups have come out in support of changing the title ‘Chairman’ to the more gender neutral ‘Chair’. The Institute of Directors, the CBI, the British Chambers of Commerce and the manufaturers’ organisation Make UK have all signed an open letter for change, citing equality concerns. Chairman is still used by Companies House as a default term, meaning it is repeated in the articles of thousands of organisations. However, Business Secretary Kwasi Kwarteng has rejected the move as it would need to go to a vote in the House of Commons. Some may see a desire to change the vernacular as change for change’s sake, but there is the far more important issue of equality and opportunity for all to consider. A mere 8% of CEOs of FTSE 100 firms are women. Sarah Howard, Chair of the British Chambers of Commerce has highlighted that “more needs to be done to help the young girls and women of today achieve their ambitions. Language matters. Just as ‘policeman’ and ‘fireman’ have been replaced with more inclusive terms, so too should ‘chairman’ be consigned to the history books. It’s a small but very significant alteration that will help break down subconscious bias.” I am in definite agreement that subconscious bias is a blocker when it comes to equality. When we don’t make it a level playing field we run the risk of not having the best players on the pitch. As you can see, football puns are accessible to all. Anna Kate Phelan is Senior Product Manager at Eintech

Back to Basics videos – a free resource We have added a new video to the PQ magazine Back to Basics series – top ACCA PM tutor Jo Tuffill takes a look at cost behaviours for us. Understanding a business’s cost structure is vital for its success. It is why cost behaviours is the first concept taught in management accounting. Her video runs for just seven-and-a-half minutes and explains exactly what a cost is, looking at both variable and fixed costs. Tuffill has also written an accompanying feature in the April issue. You can check out her video at https://vimeo.com/680501310. The aim of the Back to Basics series is to provide short, sharp videos on some of the key topics that students struggle with. Don’t forget, we also have videos on double-entry bookkeeping, assets, and trial balance. Here’s the list in full of the videos on offer: Cost Behaviours, with Jo Tuffill https://vimeo.com/680501310 Double Entry Bookkeeping, with Tom Clendon https://vimeo.com/429252329 Financial Maths for AFM and FM students, with Sunil Bhandari https://vimeo.com/446780185

Accountex London is back Accountex London is returning after three years, with the aim of being bigger than ever. Taking place on 11-12 May, over 9,000 accountancy and finance professionals, 250 global brands and cutting-edge start-ups will be back at ExCeL London. The education programme is worth eight hours of accredited CPD, and there will be over 180

informative sessions about the tools, technology, and the ideas shaping the future of accounting. Accountex’s Caroline Hobden said: “With it being such a long time since the last Accountex London, we’re more excited than ever to bring you our best show yet.” You can apply for your free ticket at https://www.accountex.co.uk/ london/.

No third-party help allowed! The ACCA rules for remote invigilated exams are clear – no other person is allowed to be present in the room when you take the test. Failure to comply with these rules can come at a heavy cost. ACCA student Muhammad Kamil Zahid recently found this out; he has been fined £7,400 and removed from the

Rate of store closures More than 10,000 chain store branches disappeared from Great Britain’s high streets, shopping malls and retail parks in 2021. In total, 7,160 shops opened while 17,219 closed, a net decline of 10,059, according to PwC research complied by the Local Data Company. Although the net change has worsened since 2020, the number of closures per day has remained stable – 47 in 2021, compared with 48 in 2020. Consumer behaviour is continuing to drive change and the choice of shopping location is impacting the number of closures. Retail parks and standalone sites are more insulated from 10

Trial Balance, with Michele Baker https://vimeo.com/500074449 The Strategic Planning Process, with Sean Purcell https://vimeo.com/437139421 VAT Calculations, with Michele Baker https://vimeo.com/584904867 Assets, with Tom Clendon https://vimeo.com/545939340 Business Valuations, with Sunil Bhandari https://vimeo.com/584900540 Weighted Average Cost of Capital (WACC), with Sunil Bhandari https://vimeo.com/536755049

student register after he was caught receiving help with his on-demand Management Accounting exam. The disciplinary committee was shown video and audio surveillance of a person wearing spectacles, who is present alongside Zahid before the exam started. However, there were a number of passages in the video which made it clear that a

person was still in the room after the exam had begun. For example, a shadow could be seen at one point, and also a reflection in Zahid’s glasses. The video also showed Zahid apparently interacting with someone out of the camera’s vision. The soundtrack recorded whispered remarks. ACCA student Saffia Ali Haider was also found guilty of a similar offence in February 2022.

closure. In 2021, retail parks saw the smallest net change of any location (593), compared with high streets (4,287) and shopping centres (1,690).

engineers, cloud developers and technical solution architects, who deliver data and digital applications as well as bespoke software solutions.

Deloitte aquires Etain Deloitte has said it intends to buy data and digital transformation specialists Etain, creating Northern Ireland’s largest AI and data practice. This acquisition will double the size of Deloitte’s AI and data solutions practice in Belfast, and the Big 4 firm believes that takeover it will enable it to devise, deliver and run ever-more ambitious data and digital transformation programmes across the UK. Founded in 1999, with offices in Belfast, Etain has around 70 employees, including data

Creating AI tax tools KPMG and Blue J have launched the firstof-its-kind artificial intelligence tax tool in the UK. Blue J is the leading provider of predictive analysis tools for tax positions in the US, and KPMG will be its first alliance partner in Europe. The tool will enable KPMG’s tax team to use AI to predict tax scenario outcomes with 90%-plus accuracy and will dramatically reduce the time spent searching for and analysing tax legislation and case law. PQ Magazine April 2022

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Pick HTFT for AAT Starting now, we have support on-demand courses for AAT Level 2, 3 and Level 4. HTFT on-demand: pre-recorded syllabus videos that lead into application focused recorded Masterclasses (with expert tutors), all designed to support your mastering of knowledge – accompanied with computer based tests and mock exams For more information visit www.htftpartnership.co.uk/courses/aat/

Think ACCA, think HTFT We have a full suite of ACCA Applied Skills and Strategic Professional courses for June 2022 exams starting early March. ▪

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Study CIMA, choose HTFT Studying CIMA? Our HTFT live, HTFT on-demand and HTFT play resources are all here to help you prepare for, and pass, your exam. HTFT live: join our expert tutors live online for interactive Masterclasses, designed to support your application of syllabus knowledge. HTFT on-demand: drive your learning, with full flexible resources that you control HTFT play: Boxsets of topic recording and Proficiency exam-style practice assessments For more information visit: www.htftpartnership.co.uk/courses/cima

CIMA F1 live starts 23rd March, CIMA F2 live starts 24th March and CIMA F3 live starts 5th April

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PQ tech the news

VIKKI BEAN Bringing apps closer to small businesses The pandemic has accelerated digitisation in business. For many, being able to use connected tech to support their operations has been the difference between success and failure. At Xero we’re always looking for ways to bring apps closer to our accounting and small business communities, as we know the ones that use more apps are more successful. Research by Xero and Accenture showed that app usage was generally indicative of more resilient sales and jobs growth. The top 25% of app-using businesses reported annual sales uplifts (compared to non-users) of 4.4% to 8.7% (depending on the country). This effect increases significantly when using five or more apps. Organisations using five or more apps grew their sales by 4.3%, compared with a drop of 3.4% for those without any apps installed. The benefits are clear. That’s why we’ve just announced App Launcher – a new way for customers to launch and sign in to their favourite App Store apps within Xero. It allows accountants, bookkeepers and small businesses to easily launch connected apps in the Xero platform via a simple dropdown tab within the navigation of their My Xero dashboard. This makes it much easier for businesses to find their favourite apps – or explore new ones – while also making it easier to switch between your apps without closing Xero. Vikki Bean is Director of Global Education and Delivery at Xero

Banks nervous about tax and cryptocurrencies UK banks are refusing to allow crypto investors to make deposits of money made from crypto investments unless they can prove the right amount of tax has been paid, according to accountancy firm UHY Hacker Young. It said that clients have recently found that their banks have started to insist on proof that tax has been paid before accepting large deposits made from cryptocurrency trading. Banks do not require proof that tax has been paid on other types of deposit. Cryptocurrencies have attracted negative publicity for their associations with money laundering. Dealing with cryptocurrencies therefore

increases the administrative burden on the banks to ensure transactions are legitimate. Some UK banks have decided to reduce their potential legal and reputational exposure

by undertaking much more rigorous due diligence checks on any transactions related to cryptocurrency. HSBC said it would restrict the processing of transfers from digital wallets. Other banks have said they will restrict the usage of credit cards to buy and sell cryptocurrency. Clive Gawthorpe (pictured), a partner in UHY Hacker Young’s Manchester office, said: “It is highly unusual for banks to demand proof that tax has been paid before accepting a deposit. “To introduce this requirement specifically for cryptocurrencies shows how cautious UK banks are about cryptos. Some UK banks have decided that the high risk of reputational damage posed by cryptocurrencies is simply not worth it and are limiting their exposure.”

First-ever NFT seizure by HMRC HMRC has made its first-ever seizures of Non-Fungible Tokens (NFTs), according to the Daily Telegraph, as fears rise about the criminals using the boom in digital art to launder their money. As part of an investigation into an attempt to defraud the Revenue of £1.4m, three NFTs were seized along with crypto assets. Three people were arrested over the alleged VAT repayment fraud,

said the newspaper. The suspects are accused of using stolen identities, pre-paid mobiles, false

addresses and invoices, along with the pretence of being a legitimate business. HMRC is looking into 250 fake companies linked to the alleged fraud. Nick Sharp, HMRC’s deputy director for economic crime, told the Telegraph: “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

CMA designates Amazon a grocer The Competition and Markets Authority (CMA) has announced that industry rules setting out how grocery retailers should treat their suppliers will now apply to Amazon. Amazon.com Inc’s increasing activity in the UK groceries’ sector in recent years has led the Competition and Markets Authority (CMA) to

designate the company under the Groceries Market Investigation Order. As a result, Amazon and its relevant UK subsidiaries must now comply with the Groceries Supply Code of Practice (The Code). This Code, which applies to retailers with an annual turnover of more than £1 billion from grocery

sales, ensures that they treat suppliers fairly. For example, it restricts firms from making changes to supply contracts at short notice. It also requires retailers to give an appropriate period of notice if they no longer want to use a supplier and provide reasons for ending the contract.

Tech briefs Pap Data leak reveals hidden wealth in accounts A huge data leak at Credit Suisse has opened up 18,000 bank accounts to public scrutiny. A whistleblower leaked details about the accounts going back to the 1940s, holding an estimated £74 billion, to German newspaper Süddeutsche Zeitung. Claims are now being made that some of these accounts have been used by people involved in serious crimes such as money laundering and drug 12

secrecy laws into the spotlight. The whisleblower told the newspaper that this secrecy is ‘immoral’ and means Swiss banks are collaborating with tax evaders.

trafficking. Credit Suisse has hit back, rejecting accusations that its business practices and due diligence have been found wanting. The story puts Swiss banking

Pap CMA fines Meta – again! Meta has been fined £1.5m after it failed to alert the CMA in advance of key staff leaving the company, which is required by the CMA’s initial enforcement order. It is standard practice for the Competition and Markets

Authority (CMA) to issue an initial enforcement order (IEO) at the start of an investigation into a completed merger. This makes sure the companies involved continue to compete with one another as they would have before the deal took place. It also prevents the companies from integrating further while a merger review is under way. The CMA imposed this type of order on Meta, formerly known as Facebook, in June 2020 in relation to its purchase of Giphy. PQ Magazine April 2022

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Thoughts of Ukraine As I sit here revising for my March ACCA exams feeling sorry for myself, I cannot help but worry about the ACCA PQs who are in the same position in Ukraine. The war reminds us how quickly our world can change. Sitting TX and passing exams just doesn’t seem important any more. We thought it was tough dealing with the pandemic, but I can only image the terrible things happening in Ukraine now. I feel so powerless to help. As accountants we will have a key role to play in ensuring the sanctions work. We can help make these measures as effective as possible, and as Michael Izza said in your story online recently,

we can all help UK companies cope with the inevitable disruption sanctions will bring. It’s not much I know, but it is something. Name and email address supplied The Editor says: All our thoughts are with the people of Ukraine. Everyone wants the situation there to come to a peaceful end as quickly as possible. The ACCA told us that RI is available in Ukraine if

students there want to take their exams, and if what’s left of the infrastructure allows them to. It is, of course, keeping this under careful review, and said it totally understands if students wanted to withdraw. It told PQ magazine its thoughts are with its ACCA members, students and their families caught up in this war. It said: “We oppose violence and we want to see this come to a peaceful conclusion.”

Our star letter writer wins a fantastic ‘I love PQ’ mug! Being inclusive It was great to read your cover story (PQ magazine, March 2022) about how the ICAEW is trying to put inclusivity at the top of the agenda. But there is a problem here. Although you sign an ICAEW training contract it is your employer who has all the clout. How influential can the ICAEW be on the firms hiring policy and work practices? The long working hour culture in many Big 4 firms will put lots of people off. You are also right when you say the ICAEW doesn’t seem to attract women. On top of that, you ran a story about a KPMG junior accountant accused of pasting additional text into documents to mislead the inspectors (page 8). He said as an ethnic minority it was hard for him to challenge instructions from more senior colleagues. So lots of work still to do here. Name and address supplied

Wordle’s second best Shame on you PQ for not using ‘DEBIT’ as your first guess at Wordle. It’s a great starter and has two vowels, what’s not to like! However, I still prefer my Sudoku. No one can mess with 1-9. I see there’s lots of contention

with NY Times takeover of Wordle – about the use of Americanism, and apparently ‘BLOKE’ is too British! There is safety in the logic of numbers. Keep up the good work. James Morten, an NQ happily reading PQ

Prem is right Lord Sikka says Companies House doesn’t authenticate names of directors, a problem highlighted by the war in Ukraine. Why can’t we create an open transparent system? Name and address supplied

A PQ recently asked a quick question on one Facebook Group: “I keeping hearing/reading that passing the exam is a lot to do with ‘exam technique’ (in addition to knowledge of course). Can someone please explain what ‘exam technique’ actually means?” The answers came back thick and fast. One PQ said: “One of them is, for example, if you don’t know the answer, flag the question and move on and get marks elsewhere. If you have time, you will come back to this question, instead of wasting time thinking.” Another pointed out: “Because exams are extremely time pressured, especially the P exams, so for example 1.8 minutes per mark, knowledge of how marks are awarded and divided for specific task for example in AAA 1 Audit Risk = 3 marks.” The advice kept coming: “Structure your answers in the way examiners like to see. If the question asks for a report make sure your answer is in a report format with appropriate sub-headings, etc. Also, don’t spend too long on questions at the expense of others. Once your time is up for each question move on to the next and only go back if you have time. It’s already been mentioned above, but it’s approximately 1.8 mins per mark.” Finally, another PQ said: “For me it works knowing your strengths and weaknesses. On the part where you are strongest try to get maximum points. See the average you get and then on the weak side of exam try to get enough smart points to fill the gap to reach 50%. This way you don’t need to stress that you can’t perfect all of it. It works wonders for me.” • We got lots of great feedback on the March ACCA exam sitting. Go online to www.pqmagazine.com to discover how they went.

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

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awards 2022 the PQ

LASTORDERS Time really is running out if you want to get us your nomination for this year’s awards

he clock is ticking and you have until Friday 18 March to get us your nominations for the 2022 PQ magazine awards. Our judges are keen to get going – it is their job to pick the shortlist and the final winner for each category. The only two awards decided by the PQ magazine team are Accountancy Body of the Year and Editor’s Choice – the rest is up to our independent panel! So, all you shortlisted people, do you want to know where you are going this year? The 2022 awards are taking place at… Proud Embankment, a majestic twostorey venue on the North Bank of the river Thames. You need to put Monday 25 April in your diary if you want to be there! But before all that, there is the matter of getting your nominations to us asap! We need those 250/350 words on why you think you/your nominee should win one of our coveted prizes. You can download the nomination form from our website at https://tinyurl.com/bdeb688e Once you have your submissions ready all you need to

THE AWARD CATEGORIES

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

STUDENT OF THE YEAR

ACCOUNTANCY 

GRADUATE OF THE YEAR

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STUDENT BODY OF THE  YEAR

ACCOUNTANCY BODY  ACCOUNTANCY COLLEGE  – PUBLIC SECTOR

ACCOUNTANCY COLLEGE  – PRIVATE SECTOR

ONLINE COLLEGE OF  THE YEAR

exams in just six months and was moving through the level 3 assessments when his name was put forward for the award. But now we need to find a new PQ of the Year! Each year we get some great personal stories, but don’t forget we are also looking for Accountancy Team of the Year and Accountancy Body of the Year. In all, there are 20 ‘PQs’ up for grabs, so surely you know someone to deserves to be a winner in 2022? Remember, the new deadline for entries is Friday 18 March 2022. Get nominating now!

LECTURER – PUBLIC  SECTOR

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STUDY RESOURCE OF  THE YEAR

INNOVATION IN  ACCOUNTANCY

BEST USE OF SOCIAL  MEDIA

do is send them to awards@pqmagazine.com, or post it to The Editor, PQ magazine, PO Box 75983, London E11 9GS. You don’t have to use the form – just send us your entry in an email if that is easier. But please make sure you clearly state the category you are entering. The awards night is always a night to remember, and it could mean you end up on the cover of PQ magazine! Last year’s PQ of the Year was 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 him to re-evaluate his career after deployment back to the UK in March 2020 and he decided AAT was ‘the future’! He completed his level 2

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PQ Magazine April 2022

PQ AAT professional synoptic

The heat is on Nick Craggs explains why using SWOT analysis will help you score well in the Professional Synoptic exam

ach year AAT refresh the scenario used in the Professional Synoptic exam. This year the exam is based on a company called Horizon Hot Tubs, which is topical given that everyone other than me bought a hot tub over lockdown. If you want to sit in a lukewarm stagnant pond with your neighbours, that’s up to you. So, each year I write an analysis on what each scenario entails and what could possibly come up in the exam – emphasis on POSSIBLY. The owners of Horizon Hot Tubs are looking to sell the business in five years at a price of two times the average revenue over the five-year period. This means there is probably a real focus on driving revenue as high as possible. However, things have not gone as well as they would have liked, sales are down, and costs are up.

So much so the owner received an offer for just double the profit, rather than revenue, and they were tempted to sell. There have also been issues with cashflow recently as they have now allowed their customers to pay just 20% up front and the balance with delivery, but the lead time for delivery can be up to eight weeks. Yet Horizon Hot Tubs need to pay for the hot tubs in full within seven days of receipt. The pressure to rapidly increase sales, whilst not having cash to fund the business, means to me there could be a real danger of overtrading. To increase revenue the company has diversified into offering to service hot tubs after the sale and sell consumables like filters. The filters get a high margin, which does look promising for the future. However, they have decided to sub-contract this, which to me raises

lots of flags about control. Remember, this unit is all about internal controls, and with this being outsourced the company has much less control on quality and standards, which has led to complaints. This is further compounded by them using a specialist delivery firm who have high staff turnover. The technical nature of installation and the inexperience of the staff at the delivery firm have led to further complaints. There is a very good chance that you might be asked to complete a SWOT analysis in task 6 of this exam. One of the key points about a SWOT analysis is that the Strengths and Weaknesses should be internal factors, and Opportunities and Threats should be external factors. I would definitely put the delivery firm they use and the outsourced servicing team down as a threat. The next thing you could get asked in a SWOT analysis is then to make recommendations based on your analysis. It isn’t a leap too far to suggest that it would be a good opportunity to bring the delivery and servicing in-house. Another issue which to me looks like it could generate lots of issues about control is staff working from home. They used to work in an office, and now staff are all working from home, and morale has fallen. I am a massive fan of working from home, but Horizon Hot Tubs are clearly not doing this very well. The lack of meetings has led to a feeling of a lack of leadership and direction. This firstly looks to me like something I would mention if I was asked in task 3 to explain some possible weaknesses in the business. It is also something that perhaps might come up in a cost benefit analysis type question in task 6. Would the benefits of returning to an office outweigh the costs, in both financial and non-financial terms? Horizon Hot Tubs have recently been looking at selling hot tubs overseas, which is an interesting option. When I first started reading the scenario one of the first things I saw was that they import their hot tubs from overseas. I immediately thought that this is a threat (think SWOT again) of the pound weakening and the cost of their hot tubs rising. Selling hot tubs overseas may go some way to offset this risk, as if the pound weakens your costs will go up, but if you are selling overseas your products will be cheaper. This is a good way to offset a threat and an opportunity to increase revenue. As a disclaimer, these are only my thoughts; you might get a SWOT analysis or a cost benefit analysis in your exam, or you may not. Each synoptic window has a different exam written for it, and the question types and subjects will vary from sitting to sitting. • Nick Craggs is an AAT distance learning tutor at First Intuition

PQ Magazine April 2022

ethical dilemma PQ

Placing unreasonable expectations on a student We take a look at a CCAB ethical dilemma case study from the professional accountants in public practice series Outline of the case You are a trainee accountant in your second year of training within a small practice. A more senior trainee has been on sick leave, and you are due to go on study leave. You have been told by your manager that, before you go on leave, you must complete some complicated reconciliation work. The deadline suggested appears unrealistic, given the complexity of the work. You feel that you are not sufficiently experienced to complete the work alone. You would need additional supervision to complete it to the required standard, and your manager appears unable to offer the necessary support. If you try to complete the work within the proposed timeframe but fail to meet the expected quality, you could face repercussions on your return from study leave. You feel slightly intimidated by your manager, and also feel pressure to do what you can for the practice in what are challenging times. Questions As a professional accountant in public practice: (a) Which fundamental principles feature more prominently for safeguarding? (b) What would be your key considerations in your approach to resolving the dilemma presented? (c) What course of action would you take to resolve the dilemma? (a) Key fundamental principles Integrity: Can you be open and honest about the situation? Would it be right to attempt to complete work that is technically beyond your abilities, without proper supervision? Professional competence and due care: Is it possible to complete the work within the time available and still act diligently to achieve the required quality of output? Professional behaviour: Can you refuse to perform the work without damaging your reputation within the practice? Alternatively, could the reputation of the practice suffer if you attempt to perform the work? (b) Considerations Identify relevant facts: The practice that employs you is small and under pressure due to the sickness of a member of staff. However, the work you are being asked to perform is beyond the usual ability of a trainee at your level. Determine whether the deadline can be extended; when your colleague is expected to return from sick leave; and what other resources might be available to the practice. Consider the policies and procedures of the practice, as well as your professional body’s code of ethics. PQ Magazine April 2022

Identify affected parties: Key affected parties are you, your manager, the practice, its other employees and the client. Who should be involved in the resolution: In the first instance, you should attempt to resolve the issue with your manager, although it may be necessary to involve the person responsible for training within the practice. You might, at an appropriate stage, suggest that the client be involved, e.g., to agree a revised deadline. (c) Possible course of action You should explain to your manager that you do not have sufficient time and experience to complete the work to a satisfactory standard. However, you should demonstrate a constructive attitude, and suggest how the problem may be resolved. For example, you might suggest the use of a subcontract bookkeeper, or contacting the client to enquire if the deadline might be extended so that the work may be performed when you return from study leave or when your colleague returns from sick leave. You might also explore the possibility of assigning another member of staff to supervise your work. If you feel that your manager is being unsympathetic or simply fails to understand the

issue, you should consider how best to raise the matter with the person within the practice responsible for training. It would be diplomatic to suggest to your manager that you raise the matter together and present your respective views. This would have the added advantage of involving a third party. It would be unethical to attempt to complete the work if you doubt your competence. However, simply refusing to, or resigning from your employment, would cause significant problems for both you and the practice. You should also consider discussing with a trusted advisor, e.g., a mentor, a colleague or your professional body. If you seek advice from outside the practice (for example legal or expert advice), you should be mindful of the need for confidentiality as appropriate. You should document, in detail, the steps that you take in resolving your dilemma, in case your ethical judgement is challenged in the future. • The CCAB case studies illustrate how the codes of ethics of the CCAB bodies can be applied by professional accountants and the five sets can be found at https://tinyurl. com/4sy88cbm 19

PQ CIMA spotlight

Get on the Case Mark Foley shares four top tips on mastering the CIMA Case Study Exams

he CIMA Case Study exams are the final capstone exams of each level of the CIMA Professional Qualification, which students must pass to gain the CGMA designation. We explore four tips to help you prepare for the exams. Understand the three Case Study levels Each Case Study exam lasts three hours, with multiple tasks of equal lengths. There is a natural progression to the levels — Operational, Management and Strategic — that simulate how work as a management accountant progresses. To reach the Case Study level, you will have already passed the Objective Tests, which focus on ensuring that you have acquired the knowledge and skills for each pillar. Case Study exams are more about interpreting data and require practical answers to practical questions and simulate real-life business scenarios. Operational Case Study (OCS) Focus — The short-term role of the finance officer and the implementation of decisions. Skills you need to convey — How to work with others in the organisation and use appropriate data and technology to translate medium-term decisions into short-term actionable plans. Stats — Three-hour exam containing four tasks related to the enterprise, performance, and financial pillars; allotted 45 minutes per task, each task has two to three sub-tasks. Management Case Study (MCS) Focus — The role of the finance manager involves translating long-term decisions into medium-term plans. Skills you need to convey — How to use data and relevant technology to manage organisational and individual performance; allocate resources to implement decisions; monitor and report the implementation of decisions; prepare and interpret financial statements to show performance. Stats — Three-hour exam containing four tasks related to the enterprise, performance, and financial pillars; allotted 45 minutes per task, each task has two to three sub-tasks. Strategic Case Study (SCS) Focus —The role of the senior finance manager entails long-term strategic decision-making. Skills you need to convey — How to support organisational leaders to craft strategy and evaluate and manage risks that might prevent the successful implementation of strategy, including sourcing financial resources; value the organisations. Stats — Three-hour exam containing three tasks related to the enterprise, performance, and financial pillars; allotted one-hour per task, each task has two to three sub-tasks. Understand the Case Study exam cycle

Preseen

Exam 1

Results

Preseen

Exam 2

Results

Released seven weeks before Exam 1

Exam cycle is May and August. The same three to four exam variants are offered both months

Released seven weeks after the exam

Released seven weeks before Exam 2

Exam cycle is November and February. The same three to four exam variants are offered both months

Released seven weeks after the exam

Understand the pre-seen materials Pre-seen materials — known as ‘preseens’ — are background information about the fictitious organisation featured in the Case Study exam. This information forms the basis of the tasks you can expect to see in the exam. The preseen tells the story of the company, including the industry and context in which it operates, its financial statements, management accounts, markets and competitors. Preseens are usually 26–30 pages long. Key tips include: • Be ready — Familiarise yourself with the company, industry and current events. • Analyse — Perform an analysis such as strengths, weaknesses, opportunities and threats (SWOT) or political, economic, social and technological (PEST); review financial statements and reporting issues. The end of the preseen will contain live issues regarding what is happening in the industry. For instance, a new standard may have come out that will change reporting standards from the current year to the next and that the Case Study exam must address. • Cross-reference with the blueprint — Being able to know what you can do is critical. Can you discuss finance options, dividend policy or evaluate digital strategies? Tackling ‘I can’ from each of the core activities in each of the sections is necessary for success. For instance: • I can identify relevant costs and benefits. • I can advise on the communication process. • I can recommend a dividend policy. • I can use appropriate technologies to gather data for costing purposes, from digital and other sources. Have a broad syllabus knowledge and know your company intrinsically. PQ Magazine April 2022

CIMA spotlight PQ You become the person when you role-play the exam. Avoid prefabricated answers, as the exam will have details not included in the preseens. Your answers have to be relevant to the question. Plan your exam approach Manage your time — If you can complete a section early, that time does not get applied to the next section. We suggest spending all of your allotted time within the section. Keep your answers real and relevant — Remember, this is a role-based exam; identify one or more factors that might be relevant, then explain why that approach would be relevant. The more tangible details you provide, the higher you are likely to score. Do not offer irrelevant arguments for the sake of padding your answers. Aim for neat, discreet paragraphs. Understand the scoring — People mark the exams, and the pass rate is 60%. Even though a scale is scored 80 out of 150, 60% is the pass rate. The sub-tasks will be weighted differently. Each case will contain tasks from all five of the core activities: • Evaluate opportunities to add value. • Implement senior management decisions. • Manage performance and costs to aid value creation. • Measure performance. • Manage internal and external stakeholder. Scoring example

PQ Magazine April 2022

As the MCS Examiner said: “For a 12-mark answer, it might be possible to identify, say, four issues. A candidate who aims to write about four topics only has to score three marks for each to obtain full marks.” You have all the tools you need to do well on the CIMA Case Study exams. From all of us at the Association, we wish you the very best for your next Case Study exam. • The content of this article is based on a Case Study Masterclass webinar delivered by CIMA and BPP in November 2020.

CIMA CURRENT ADVICE Should you sit your case study exam online? Many students do have a successful experience sitting their case study exams online. However, due to the less controlled environment of the online setting and the need for a continuous and regular internet connection, there are some students who have a disrupted exam experience. Test centres offer a reliable, controlled environment in which to take a test. Where possible, if you feel comfortable travelling to a test centre and feel at ease with the safety and hygiene procedures that have been made available in test centres as a result of the COVID19 pandemic, we recommend that you take your case study in a test centre. Pearson Vue have more information on the measures that have been put in place.

PQ CIPFA spotlight

On the level CIPFA’s new infrastructure report shows how good public financial management is key in levelling up, writes Sarah Shreeves

nfrastructure is everywhere. It is the web that weaves its way around the world, connecting people and place with opportunities and growth. Submerged undersea cables carry data between continents, roads and bridges connect businesses to customers and an aerial network of cargo and passenger planes criss-crosses the sky. Infrastructure has the power to stimulate economic growth and spread opportunities and wealth. Following the release of the government’s Levelling Up White Paper, we published our major ‘Investing in Infrastructure – enabling fairer growth’ report. It looks at six international infrastructure projects that have had considerable success in improving the quality of people’s lives. With this knowledge, infrastructure policy in the UK can be better informed, more impactful and ultimately more successful. There are several key takeaways from the report. First, it finds that the financing mechanisms must be flexible and varied. By taking into account local governance structures, local funding streams and the fiscal autonomy

of a region projects can be funded in a way which brings benefit to the local authority and community. It also notes that robust measurement, monitoring and evaluation across a project's lifespan can significantly strengthen outcomes of the investment. By using this data, the project can remain targeted, course-correction can take place and lessons can be learnt for future projects. Good public financial management is central to these efforts and public finance professionals

are key. They will be responsible for identifying, securing and bidding for funding, establishing best practice, oversight and scrutiny, building relationships with private investors, working across local and national government, measuring and monitoring outcomes and making sure that value for money is being delivered. Major infrastructure projects are just one aspect of levelling up. The role of the public finance professional will be vital in delivering many other projects and strategies designed to spread opportunities and stimulate economic growth in the region’s most in need. Future public finance professionals will face many challenges in their career. Working in the public sector comes with the responsibility to improve public services to make people’s lives better. This will involve considerable funding and commitment – levelling up is not quick or easy. Improving life chances should be a priority for future governments for generations to come. Reducing regional inequalities will need committed and passionate finance professionals who can identify areas for investment, can fairly allocate often limited funding and to ensure value for money for the taxpayer. Perhaps levelling up, as well as achieving the net-zero agenda, will come to define the next decade. It will be today’s public finance students who will be key in making sure these policies are a success. • Sarah Shreeves is Head of Training Services at CIPFA

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PQ Magazine April 2022

trading losses PQ

Loss relief explained In the latest in his ‘Keep it Simple’ series Neil Da Costa focuses on sole trader trading losses

n this month’s ‘Keep it Simple’ article I am going to show you how to deal with an exam favourite – income tax trading losses. In the current challenging environment, many small businesses have trading losses. By claiming loss relief, it is possible to generate substantial tax savings to help the business continue trading. Continuing sole traders Sole traders can offset the trading loss against the total income of either the current tax year or the previous tax year. The claim is an all or nothing claim and cannot be restricted to preserve the personal allowance. The remaining loss after total income can be offset against the capital gains of the same tax year in which the loss claim is made. Alternatively, the sole trader can choose to carry the loss forward against future trading profits of the same trade. Simple example: Dexter’s Garage Dexter is self-employed and made trading profits of £70,000 in the previous year but now has a trading loss of £20,000. In the following year, Dexter expects to make a small trading profit of £10,000. Dexter also has rental profits to cover his personal allowance each year. What are Dexter’s different options for using the loss and what do you recommend he does? Solution to Dexter’s Garage The first option is to claim loss relief against the total income in the current tax year which will involve offsetting the loss against the rental income. The disadvantage is the loss of the personal allowance. The second option is to claim loss relief against the total income in the previous tax year which will involve offsetting the loss against the trading profits of £70,000. The advantage is this will result in immediate tax relief and will save income tax at PQ Magazine April 2022

40% (tax refund is 40% x £20,000 = £8,000). The third option is to carry the loss forward against future trading profits of the same trade. The tax relief available here would be restricted to the profits of £10,000 and would save income tax at 20% (tax relief is 20% x £10,000 = £2,000). The disadvantage is that tax relief would be given in the future. I recommend that Dexter claims loss relief against the income in the previous tax year to get an immediate tax savings of 40%. New sole traders In the first four tax years, opening year relief is available and the sole trader can carry the loss back against the total income of the three previous tax years on a first in first out (FIFO) basis. Simple example: Farida’s Fashions Farida was employed as a fashion designer earning £60,000 a year. She also has investment income to cover her personal allowance. She set up her own business but made a trading loss of £20,000 in the first year. What loss relief can be claimed to give Farida loss relief as soon as possible? Solution to Farida’s Fashions Farida can claim opening year relief and carry back the loss three years to the earliest year first to get back some income tax she paid on her employment income. She was earning £60,000 a year as an employee so was a higher rate taxpayer. This will generate an immediate tax refund of 40% x £20,000 = £8,000. This tax refund will assist Farida’s cash flow in her new business. Trading losses in closing years When a sole trader ceases to trade, terminal loss relief can be claimed. The loss of the

final 12 months can be carried back against available trading profits of the three previous tax years on a last in first out (LIFO) basis. The loss consists of three elements: loss from the 6 April to the date of cessation, loss for the reminder of the 12 months preceding cessation and finally the overlap profits. If any of the first two elements result in a net profit, then the loss for that element is nil. Simple example: Chaka’s Computers Chaka has always made trading profits of £50,000. For the final six-month period 6 April 2024 to 31 October 2024, Chaka made a trading loss of £100,000 and ceased trading. Chaka has £20,000 overlap profits brought forward. Compute Chaka’s terminal loss relief and explain how he can use up the loss. Solution to Chaka’s Computers The terminal loss has three elements: 1. Loss from 6 April 2024 to 31 October 2024 £100,000. 2. Balance of the loss for the remainder of the 12 months preceding cessation. This would be £50,000 profits x 6/12 = £25,000 profits so the loss for the second element is nil. 3. Overlap profits of £20,000. This means that the total terminal loss available is £120,000. The loss can be carried back against the trading profits of the three previous tax years of £150,000 on a last in first out basis to generate an income tax refund. • Neil Da Costa is a Senior Tax Lecturer with Kaplan in London. He is the author of Tax Condensed and Advanced Tax Condensed which summarises the entire syllabus using memory joggers 23

PQ student blog

Why I’m planning to make a career change into accountancy After 20 years with the same company, Tom Sanger is aiming to change careers and become an accountant. Here he explains why

aving started his AAT journey with the Level 2 Foundation Certificate in Accounting last August, Tom has already progressed onto the Advanced Diploma – and is looking to complete his AAT studies by mid-2022. Here, Tom outlines why he is taking the leap into a new career and gives his advice for other AAT students. Why now? I’ve enjoyed a successful career in retail with the John Lewis Partnership where I’ve learnt so much about working in and leading teams, the endto-end processes of running a business and how to use my financial acumen to inform decision making. However, just as Covid-19 accelerated the move to online shopping, it has done the same with my desire to work in an industry that is more aligned with the career goals and ambitions that I have today. I’m looking for a new career that will give me a new intellectual challenge, the opportunity to learn something new and a more traditional working pattern that allows me to

like a normal part of my day and I’m actually looking forward to studying the next chapter or taking my next exam. Now I appreciate not many people will feel the same about accountancy, that’s because their interests lie elsewhere, but when it feels like a hobby rather than a chore, it’s a clear indication that you’ve found a passion.

spend more time with my family. Why accountancy? I’ve always loved working with numbers and it’s one of the favourite parts of my current job where I use them on a daily basis to sense check performance and set vision and direction. At the start of this year, I began working as a bookkeeper for my wife’s events business, which inspired me to look at possible qualifications and careers in accountancy. But I’ve got to be honest, the idea of studying again really scared me! How would I fit it in? How would I manage studying again after all this time? Everything starts with day one The first step was to build my study plan onto already existing habits so that I could keep to my normal rhythm. Being organised and having a study plan was essential to get started, I would log how many hours I was studying and look at when I would study in the week ahead. I’m now six months in and my routine feels more natural,

The plan I’m halfway through the AAT programme, with an aim to complete Level 4 by June 2022, before starting the CIMA qualification in the second half of 2022. It feels ambitious yet achievable and I’m excited about what the future holds. I’m now actively applying for bookkeeper and trainee management accountant positions with an aim to make the leap into my new profession early next year. Support and opportunity A huge thank you to Waitrose & Partners for their amazing support in making this happen and to Premier Training, whose distance learning syllabus is fantastic. My advice If you’re thinking about what might have been or wondering if it’s too late to start something new. My advice is to stop thinking and start doing, it’s never too late and you’ll be surprised what you’re capable of. • Thanks to Premier Training for this article

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PQ Magazine April 2022

regulation PQ Bargain Booze: One of the retail brands of Conviviality

FRC does its job FRC sanctions KPMG and Nicola Quayle over the audit failures of Conviviality

t’s been a busy old time for KPMG. On top of the industrial tribunal into the hearing that five staff misled the Financial Reporting Council (FRC) in its inspections of audits of Regenersis and Carillion, it has now been fined just over £3m for the audit work it did for Conviviality. Conviviality was listed on the Alternative Investment Market (AIM) of the London Stock Exchange in July 2013, and between 2013 and 2017 grew rapidly through a series of acquisitions. In FY17, the company reported significant increases in the key financial reporting areas of revenue, profit and net assets. However, in early March 2018, Conviviality issued a series of trading updates that resulted in the company’s shares being suspended from trading on AIM. An attempt to raise further equity in March 2018 was unsuccessful and Conviviality entered into administration on 5 April 2018. FY17 was the second year in which KPMG had audited Conviviality. The failings admitted by the Respondents in relation to the 2017 Audit relate to a number of

PQ Magazine April 2022

areas: 1. A failure to revise, in light of information obtained during the 2017 Audit, their initial assessment of the risks of material misstatement to the financial statements, to design and perform audit procedures responsive to the risks of material misstatement due to fraud, and adequately to document their audit procedures in respect of the risk assessment and fraud risk assessment. 2. A failure to obtain sufficient appropriate audit evidence: • in relation to the recognition by Conviviality of £5.9m as accrued franchise licence revenue in FY17; • in relation to the accounting treatment adopted in respect of a third-party contract for the supply of wine; • in relation to the capitalisation of certain costs and the classification of certain items as exceptional, in accordance with the company’s accounting policy; • in relation to several items of accrued supplier

income; and • in order to gain reasonable assurance that the carrying value of the goodwill of each cashgenerating unit in the Conviviality group had not been impaired. 3. A failure to apply sufficient professional scepticism in relation to the recognition of accrued franchise licence revenue, the accounting treatment adopted in relation to the third-party wine supply contract, and in the course of performing their audit procedures in relation to goodwill impairment. 4. A failure adequately to document their audit procedures in a number of these areas. The admitted failings in the 2018 Audit concern failures to document the decision to prepare a Financial Position and Prospects Procedures report to Conviviality (non-audit services) during the period of the FY2018 Audit, which breached the FRC’s Revised Ethical Standard 2016. In its ruling the FRC said the breaches of Relevant Requirements were not intentional, dishonest, deliberate or reckless and it is acknowledged that the Respondents provided a good level of cooperation during the investigation. The Financial Reporting Council issued a £3,010,000 fine and a severe reprimand to KPMG over the audit of Conviviality in 2017 and 2018. It also fined audit engagement partner Nicola Quayle £80,850 and issued her with a severe reprimand.

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back to basics PQ

Using our understanding of cost behaviours, we can plot Clara’s revenue and costs against output in a ‘breakeven chart’. The point at which the revenue equals the total costs (variable plus fixed costs) is the breakeven point. Clara’s breakeven point is at 125 candles per month. We can calculate this by dividing the fixed costs of $1,000 by the contribution per unit of $8. As we cannot sell part of a candle, we always round up to a whole number of candles.

The price is right…? Jo Tuffill explains the importance of understanding cost behaviours

eet Clara, the founder of Clara Candles Co. Clara’s candles are very on trend for the millennials, who want urban themed candles at an inexpensive price. Clara has been selling online direct to the public through her website linked to her Instagram and Facebook accounts. She has a problem though. She wants to know if she is selling at the right price to make a profit? She wants your help. Some theory ‘Cost’ means any expense a business incurs while producing goods or services. There are two main cost types; variable and fixed. Variable costs are any expenses that change based on how much a company produces. So variable costs increase as production output rises and decrease as production output falls. Labour and raw materials are usually variable costs. Calculating total variable costs can be done by multiplying the quantity of output by the variable cost per unit of output.

For example, Clara Co produces scented candles for a variable cost of $7 per candle. If Clara Co doesn’t produce any candles it won’t have any variable costs. If Clara Co produces 50 candles its total variable cost will be $350. And if Clara PQ Magazine April 2022

Co produces 100 candles its total variable cost will rise to $700. Fixed costs are any expenses that remain the same no matter how much a company produces. These costs are independent of a company’s business activities and might include things like rent, insurance, and depreciation. Fixed costs remain the same regardless of whether goods or services are produced or not, so a company cannot avoid fixed costs.

For example, assume Clara Co pays rent on its production premises of $1,000 per month. If Clara Co does not produce any candles for the month, it still needs to pay $1,000. But even if it produces 1,000 candles a month, its fixed cost remains the same. Applying this theory So how many candles must Clara produce in a month to cover her fixed costs? We call this Clara’s breakeven point, and the process of finding this we call ‘Breakeven analysis’. Clara sells the candles for $15 and incurs a variable cost of $7 per candle, so she makes $8 every time she sells a candle. In management accounting, this is called ‘contribution’. When Clara sells a candle, she is ‘contributing’ towards paying her fixed costs of $1,000 a month. Once she has sold enough to cover her fixed costs, she will start to make a profit. This point is called the breakeven point.

Advising Clara If you sell 125 candles a month you will cover your costs. If you sell more you will make a profit. If you think that’s not achievable then you have three options: Raise your price: for example, a price rise of 10% to $16.50 now means you have to sell 19 fewer candles a month to breakeven at 106 candles.1 Reduce the variable cost per unit: a reduction of 10% to $6.30 now means you have to sell 10 fewer candles a month to breakeven at 115 candles.2 Reduce your fixed costs per month: a reduction of 10% to $900 a month, means you sell 12 fewer candles a month to breakeven at approx. 113 candles.3 A combination of all three means you would reduce your breakeven point to 89 candles4. And with this new price and cost structure, if you now sell 125 candles you will make a profit of $375 per month5. An understanding of a business’ cost structure is fundamental to its success. That’s why it is one of the first concepts taught in management accounting. • Jo Tuffill is an ACCA online tutor at FME Learn Online To check out Jo’s Back to Basics cost behaviour video go to: https://vimeo.com/680501310 1

1,000 / (16.5 – 7) => 106 1,000 / (15 – 6.30) => 115 3 900 / (15 – 7) => 113 4 900/(16.5 – 6.30) => 89 5 125 x ($16.50 – $6.30) – $900 = $375 2

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PQ Ukraine sanctions

War in Ukraine The Consultative Committee of Accountancy Bodies (CCAB) has issued a statement to the profession following the ‘recent and on-going developments in Ukraine’. Here’s some key points from the document

n a new eight-page joint statement to the profession on the war in Ukraine, the CCAB has stressed the recent sanctions are directly relevant to both accountants in business and practice, as well as to those working in the Public Sector and the charity and Not for Profit sectors. The position is fluid and fast moving and the CCAB therefore considers it timely to remind members of their professional obligations. Whether in practice or in business, it said members must comply fully with their legal and professional obligations relating to the sanctions regimes in their respective jurisdictions. CCAB pointed out that it also expects accountants will be willing to play their part in helping non-sanctioned companies across the economy cope with any consequent disruptions. All members of the accountancy profession were also reminded of their obligations under the IESBA Code of Ethics and individual Codes of the Professional Bodies to: a. Act in the public interest. b. Apply the fundamental principles, and the following in particular: i. Integrity. ii. Objectivity in the exercise of their professional or business judgement. iii. Professional Competence and Due Care, including by maintaining their professional knowledge and skills, and iv. Professional Behaviour, including the duty to comply with relevant laws and regulations and to avoid any conduct that might discredit the profession. c. Respond to non-compliance with laws and regulations in a timely manner.

CCAB explained that the principle of integrity requires members to have the strength of character to act appropriately even when confronted by dilemmas and difficult situations; and to challenge others as and when circumstances warrant (see 111.1A2). Members are reminded of their obligations to present information in a manner that is intended neither to mislead nor to influence regulatory outcomes inappropriately; not to omit anything with the intention of rendering information misleading or influencing regulatory outcomes inappropriately; and to avoid any misrepresentations due to any improper or undue influence from others (R220.4). The principle of objectivity requires accountants to exercise professional or business judgement without being compromised by bias or undue influence, and to have an inquiring mind. This includes considering the source, relevance and sufficiency of information obtained; and being open and alert to the need for further investigation and other action (R120.5 A1.) The allied concept of professional scepticism should be applied when dealing with matters which may be intended to obfuscate ownership, control or provenance of assets or funds. Maintaining professional competence requires a continuing awareness and understanding of relevant technical, professional, business and technology related developments (113.1 A2). Sanctions Members should, says CAAB, ensure that they are aware of and fully understand the scope and impact of sanctions that apply to their business, their staff and their clients; and that they remain

up to date by checking the relevant lists of sanctions and sanctioned individuals and entities published by authorities in their respective jurisdictions. Members should consider the need to obtain legal advice. Members in practice must check whether they hold any funds or economic resources for the persons set out in the current Annex to these Financial Sanctions Notices. If such funds are held, members must freeze such funds or resources and any others that are owned or controlled by persons listed in the annex to the Notice and must refrain from dealing with these assets or making them available (directly or indirectly) to persons listed unless licensed to do so by the Office of Financial Sanctions Implementation (‘OFSI’). Members in the UK must also be mindful of the current trade prohibitions issued by the Department of International Trade (DIT) in relation to Russia, including those that apply to military-related goods and technology or financial or technical assistance; energy-related services; and goods/tourism relating to Crimea. Politically Exposed Persons – PEPs Recent developments in Russia and Ukraine may also potentially impact on the classification of new and existing clients and cause them to fall within the definition of Politically Exposed Persons (‘PEP’). Members in practice in the UK are reminded of their obligation under the AML Regulations 2017, to conduct risk assessments and to perform Enhanced Due Diligence checks (‘EDD’) where required. In particular, members should ensure that they fully understand the PQ Magazine April 2022

Ukraine sanctions PQ source of funds and wealth in relation to their clients identified as high-risk. Since many of those who are subject to sanctions may also be PEPs, members are reminded of their obligation to ensure that they have adequate and up to date procedures in place to identify whether a client, or the beneficial owner of a client, is a PEP or a family member or known close associate of a PEP. A family member of a PEP includes their spouse, civil partner, children, and parents. A known close associate of a PEP means: • An individual known to have joint beneficial ownership of a legal entity or a legal arrangement or any other close business relations with a PEP. • An individual who has sole beneficial ownership of a legal entity or a legal arrangement which is known to have been set up for the benefit of a PEP. Where a potential client is identified as a PEP, members must assess the level of risk associated with that client and the extent of any EDD that should be performed on that client. As a minimum, members must: • Obtain senior management approval for the relationship; • Take adequate measures to establish the source of wealth and funds; and • Perform enhanced ongoing monitoring of the relationship. When a client ceases to be a PEP, members must continue to apply their EDD procedures

for at least 12 months (or longer if necessary to address the risk of money laundering or terrorist financing). However, if the client is a family member or known associate of a PEP, they can stop applying EDD procedures as soon as the PEP status ends. In determining whether someone is a known close associate of a PEP, obliged entities are allowed to rely only on information they already hold or that which is freely available in the public domain. PII Considerations Members are reminded that the imposition of sanctions may impact on the operation of

exclusion clauses (if any) in their Professional Indemnity arrangements. Members should ensure that they check the current position with their providers. Expert advice Given the fast-moving nature of the situation and the complexity of the various sanctions regimes, members may wish to consider obtaining specialist advice tailored to their specific circumstances and to advise their clients to do the same. You can read the full document at https:// tinyurl.com/52e7sn4m

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PQ Magazine April 2022

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payroll PQ

How are net wages calculated? Karen Groves explains how to approach a payroll exam-style question and tests your knowledge on the subject

Account name

he payroll department staff are responsible for correctly calculating the amount of pay to each employee and ensuring the employees are paid on time. After all, as employees, we want to be paid on time and receive the correct amount! The gross pay is the total amount earned by the employee and can comprise of basic pay plus other elements such as: • Overtime pay. • Bonuses. • Commission. • Holiday or sick pay. Employees rarely take home their gross pay as the government requires the employer to make certain deductions from gross pay before it is given to the employee. Income tax and national insurance contributions are the main statutory (compulsory) deductions and any student loan repayments. The net pay (take home pay for the employee) will include: Gross Wages X PAYE (Income Tax) (X) Employee’s NI (X) Employee’s Pension (X) Other deductions (X) X Income tax is a tax on an individual’s income, and the rate depends on the amount of their income. All employees are entitled to some taxfree income, which is known as the personal allowance. This is the amount that an employee can earn before paying tax. National insurance is a scheme which pays towards benefits including jobseeker’s allowance, retirement pensions and maternity allowance. Most employees who earn above a certain level must pay national insurance contributions. In addition to income tax and national insurance contributions, the employee can ask the company to make deductions from gross pay, for example for a pension scheme, to contribute to charity (payroll giving) or union subscriptions. The statutory and voluntary deductions reduce the take-home pay of the employee. The deductions are withheld by the employer and forwarded to the appropriate external agency when due. For example, income tax and national insurance contributions are forwarded to HM Revenue & Customs. Until the deductions are sent, they are liabilities that reflect what the business owes. Employers are also required to pay employer’s national insurance contributions and often contribute towards the employee’s pension. The total cost (expense) to the employer of employing a member of staff includes the gross pay plus the employer’s contributions. The payroll staff will enter the payroll costs into the bookkeeping system. A Wages Control PQ Magazine April 2022

• Gross wages plus • Employer’s NI Debit ✓

✓

Wages expense 174,462 Wages control

Credit ✓

✓

174,462

HM Revenue and Customs liability to include: • PAYE (Income Tax) plus • Employee’s National Insurance plus • Employer’s National Insurance Debit ✓

Account name

Wages control

64,805

HM Revenue and Customs

64,805

Credit ✓

✓ ✓

Net wages paid to the employees includes: • Gross pay minus PAYE (Income Tax) and Employee’s National Insurance Account name

Debit ✓

Wages control

109,657

Bank

109,657

Wages Control account Dr. Details Net Pay

Account will be used, which is a double entry account. The cash book will be used to show the net payment of wages; however, the entries are first listed in the journal. The Wages Control Account is a control account through which all the postings relating to wages are made. Once all the amounts have been posted, the balance on this account will be zero. Example Below is a summary of the totals of the wages book for the month of April 2022. Item Gross wages

£ 156,282

PAYE (Income Tax)

33,105

Employee’s NI

13,520

Employer’s NI

18,180

Net Pay

109,657

The journal entries needed in the general ledger are as follows: Wages expense to include:

Credit ✓

✓ ✓

Cr. Details

109,657 Gross pay

156,282

Employer’s NIC

18,180

PAYE

33,105

Employee’s NIC

13,520

Employer’s NIC

18,180

174,462

Question This is a summary of EC Ltd’s payroll for April 2022: £ Gross pay

168,750

Tax

37,020

Employer’s NIC

19,500

Employee’s NIC

16,594

What is the total wages expense for the month? Answer = £168,750 + £19,500 = £188,250 What is the amount owing to HM Revenue & Customs for the month of April? Answer = £37,020 + £19,500 + £16,594 = £73,114 • Karen Groves is AAT course director at e-Careers 31

PQ AAT spotlight Step 1: Identify the error. Ruby has correctly made the credit entry but has made no debit entry. Step 2: What entries should have been made. Remember to write your entries as they should have been entered. Dr Bank £400 Cr SLCA £400 Step 3: Correct the error. The credit entry that Ruby made was correct, so we do not touch that. The error is with the debit entry which was omitted or left out. REMEMBER: When we correct entries, we always make both a debit and credit entry. We can look at the entries that Ruby made: Bank Debit

Getting it right

Credit

Sales ledger control account Debit

Credit

Bank

400

Teresa Clarke focuses on how to correct the errors that inevitably happen in accountancy

n accountancy and bookkeeping errors can happen, so we need to know how to correct those errors. This topic is particularly relevant to those studying AAT Level 2 Bookkeeping Controls and AAT Level 3 Advanced Bookkeeping. Some errors are shown by the trial balance when the debits do not match the credits. Other errors are not detected in the trial balance. Here are names of errors that do not affect the trial balance with an example of each. Error of omission: A purchase invoice has not been entered into the accounting system at all. Omission means left out. Reversal of entries: A purchase invoice has been debited to the bank and credited to the purchases account. The credit and debit entries have simply been reversed or put the wrong way around. Error of original entry: A purchase invoice for £30 was received and was entered as £3 for both the debit and credit entries. Compensating error: An error in the purchases account on the debit side was £20 too much and an error in the sales account on the credit side was £20 too much. One error compensates the other or simply matches the other. Error of commission: A purchase invoice for office supplies has been entered in the motor expenses account in error. They are both the same type of account, namely expense accounts. Error of principle: A purchase of an asset has been entered as an expense in an expense account. These are different types of account. Here are names of errors that do affect the trial balance, meaning that a suspense account is created for the imbalance, with an example of 32

each. Single entry error – one sided error: A debit entry has been correctly entered, but no credit entry. Casting error: A ledger account has been incorrectly totalled. Casting means added-up, so this is an adding-up error. Transposition error: The numbers in one of the ledger balances have been transposed, so £369 has been entered as £396. Extraction error: This is when the balance b/d has been taken from the ledger, but the wrong number was extracted or taken out of the ledger. Two debits or two credits: Two debit entries have been made instead of a debit and credit entry. Error of omission: One ledger balance has been left out, such as the motor expenses. NOTE: For Level 2 studies you will need to remember the names of these, but for Level 3 studies you will just need to remember how to correct them. The suspense account is a temporary account which is created for errors in the general ledger that cause an imbalance in the initial trial balance. A suspense account remains in the trial balance until the error or errors have be found and corrected. NOTE: The suspense account can have a debit or credit balance. Example We can look at an error that involves the suspense account. Ruby has received a payment from a credit customer and has entered it into the accounting records: Cr Sales ledger control account £400 No debit entry has been made.

To correct this, we need to debit the bank account with the £400, but we must also make a credit entry somewhere. As the credit entry was already correctly made to the SLCA, we use the suspense account. Bank Debit

Suspense

400

Credit

Suspense Debit

Credit

Bank

400

This can be written as a journal entry: Bank £400 Suspense £400 This error has been corrected. If you wish to further your knowledge on this topic you might like this workbook, which is one of my series of workbooks written to support your studies: Errors and the Suspense Account, available in paperback for £3.49 or as an eBook for £1.89. https://www.amazon.co.uk/dp/B08YQCS4HN • Teresa Clarke FMAAT Dr Cr

PQ Magazine April 2022

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PQ IR35 More workers on the payroll HMRC estimates that between 2017 and 2019 at least 50,000 additional workers were on the payroll of public bodies because of the IR35 reforms. These people previously provided services through intermediaries and paid less tax. The net increase in tax revenue between 2017 and 2018 was £250 million, more than HMRC previously expected (£150 million). However, the NAO believes it is difficult to know the extent to which this is because of the reforms, or other factors. Public bodies the NAO spoke to said that difficulties finding contractors and rates increasing were partly due to the IR35 reforms, but that it was difficult to disentangle this effect from wider labour market trends affected by Covid-19 and EU Exit. Even government departments struggled with the reforms. The 2020-21 financial statements of government departments and agencies include a total of £263 million paid, owed, or expected to be owed for failing to administer IR35 reforms correctly. In all cases, HMRC found that the public body had not taken reasonable care to prevent errors, including when answering questions in CEST. The report explains lessons learned from the experience of implementing IR35 reforms in the public sector were applied to the wider roll-out in the private and third sectors in 2021. HMRC continued to improve its guidance and its work with stakeholders, and put more focus into educational activities to help raise awareness and understanding of the reforms. It also introduced further changes to address aspects of the reforms that were not working as intended.

IR35 reforms – so how is it going? The National Audit Office has investigated the implementation of IR35 reform. So what did it find?

MRC learnt some key lessons from the initial roll-out of IR35 tax reforms in the public sector, but faces new and challenging risks in implementing the regime more widely, according to a new study from the National Audit Office (NAO). Off-payroll working tax rules (known as IR35) were first introduced in 2000 to prevent tax avoidance by ‘disguised employees’ – people who do the same job in the same manner as an employee, but avoid income tax and National Insurance contributions by providing services through an intermediary. In April 2017, the government introduced reforms which made public bodies responsible for determining the employment tax status of all those it hired through intermediaries. It did this to try to tackle the high levels of non-compliance, which HMRC estimated cost the Exchequer £440 million in 2016-17. The reforms were initially introduced in the public sector, and later extended to the private and third sectors in April 2021.

A quick roll-out The NAO says that public bodies were given little time to consider HMRC’s guidance and tools before IR35 reforms were rolled-out. HMRC published guidance in February 2017, just two months before the new rules came into effect. Its key tool to help public bodies comply with the reforms, Check Employment Status for Tax (CEST), was launched in March 2017 with only one month to go. HMRC’s own research in 2018 found that nearly half of all surveyed bodies found the reforms difficult to comply with, and one of the most common reasons given was difficulties using CEST. In 2019, HMRC launched an updated CEST tool, which changed some features that users said were causing difficulty. It also made several updates to its technical guidance, and began to work more collaboratively with public bodies and other stakeholders.

The ongoing challenges According to the NAO, HMRC faces ongoing challenges implementing IR35 reforms: • Labour markets in the private and third sectors are larger, which makes monitoring noncompliance a bigger challenge. • Complex supply chains are more common in the private and third sectors. This creates a greater risk of companies making errors when determining tax status, and of the reforms resulting in workers changing careers, or business moving overseas. • There is uncertainty over HMRC’s approach to non-compliance in the private sector. Its assessments and penalties have so far only been tested on central government bodies, none of which have been challenged in court. The NAO is recommending that HMRC further develops the CEST tool and accompanying guidance to make it as easy as possible to use accurately. HMRC should also build on its improved collaboration with stakeholders to preempt further challenges. Gareth Davies, head of the NAO said: “The 2017 reforms to IR35 tax rules have achieved their primary purpose of reducing noncompliance. However, HMRC did not give public bodies sufficient time to prepare for the roll-out, and it was highly likely that mistakes would be made. “While key lessons were applied during the wider roll-out in 2021, inherent differences in labour markets create new challenges that HMRC will need to manage for the reforms to be a success.” PQ Magazine April 2022

IR35 PQ

IR35 win for Adrian Chiles When is a freelancer a freelancer? And does HMRC know? Not according to a recent high-profile tribunal case

V and radio presenter Adrian Chiles has won his seven-year battle over a £1.7m tax liability claim against HMRC. The taxman claimed that Chiles’ company, Basic Broadcasting Limited, owed £1,249,433 in income tax and £460,739 in National Insurance contributions. During this period in dispute Chiles worked as a freelancer for both the BBC and ITV, and HMRC said that all this work fell into the terms of IR35 and was in effect ‘disguised’ employment. However, at a first-tier tax tribunal Judge Canan said that the work carried out by Chiles was for services and not contracts of employment. This meant IR35 did not apply. Tax expert Penny Simmons of Pinsent Masons said that the tribunal’s decision “demonstrates how complicated the rules are to apply and adds to the growing uncertainty for business as to when contractors should be taxed as employees within IR35. “One of the difficulties with IR35 is that there is no single definition of employment status for tax purposes, rather it is necessary to look at a

number of factors together,” she said. “Historically, HMRC has focused on three factors: whether there was personal service between the individual contractor and the engaging business and whether the individual could provide a substitute, the level of control

that the business had over the individual and whether there was mutuality of obligation between the parties. Here, the tribunal decided that although there was mutuality of obligation, no right of substitution and a level of control, it was necessary to ‘stand back and look at the circumstances as a whole’.” The IR35 rules require that employment taxes be paid by people who provide services to a business through a PSC or other intermediary if that person would otherwise have been regarded as an employee for tax purposes of the engaging business. From 6 April 2021, engaging businesses became liable for determining whether the IR35 rules apply, operating PAYE and paying employers’ National Insurance contributions for contractors falling within the scope of the rules. Previously, where a private sector business engaged a contractor through a PSC, liability to decide whether IR35 applied and to pay any employment taxes rested with the PSC. Simmons said: “The decision will undoubtedly be welcomed by contractors looking to engage with businesses through PSCs. However, it adds to the complexities of determining employment status for tax purposes and will not be helpful to business trying to apply the rules and manage IR35 tax risks.”

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PQ accounting for provision

To provide or not to provide – that is the question Sarah Ardiles and Tom Clendon have a head to head on a subject that often causes confusion among students Sarah sets the scene I was helping a student the other day regarding accounting for provisions. They had been looking at the relevant standard IAS 37 Accounting for Provisions, Contingent Liabilities and Contingent Assets and they were confused. First of all, I had to clear up that the standard was not about providing for depreciation nor providing for bad debts; rather, the standard was giving guidance on when and how to provide for a liability. In this context a provision is defined as a liability of uncertain timing or amount. A good example where a provision might be recognised is where the business is being sued for damages following a breach of contract. Tom chips in The standard sets out there are three conditions that all have to be met before a provision for a liability can be recognised. An entity must recognise a provision if, and only if: • A present obligation (legal or constructive) has arisen as a result of a past event (the obligating event). • Payment is probable. • The amount can be estimated reliably. Now as you well know Sarah, students can sometimes rote learn these conditions without really understanding their meaning. How do you go about explaining what is really meant by the term “constructive obligation”? Sarah explains constructive obligation A constructive obligation is a little bit like a very serious promise! Legally you do not have to go through with it but if you don’t then there is a loss of face and credibility. Let’s consider the example of a board of directors who decided to reorganise the business and as a result, will incur costs of $10 million. Under what circumstances can these costs be provided for? In order for there to be a constructive obligation, prior to the year-end there needs to be a valid expectation that the company will go through with this reorganisation and incur these costs. This expectation could be created

by a detailed public announcement explaining that the reorganisation will take place. It is this public announcement, the past obligating event, that creates the valid expectation that the reorganisation costs will be incurred. By making public their plans to restructure, the directors have constructed an obligation which must be provided for at the reporting date in the form of a liability (a provision). But I also find Tom, that some students can struggle with the idea that for a provision to be recognised, the likelihood of payment must be considered ‘probable’. Tom explains probable Probable simply means that it is more likely than not; that there is a greater than 50% chance that it will happen. This can require judgment. For example, I think that it is probable that come the end of the football season Manchester City will be crowned Premiership football champions again! Thus, if a Manchester City player was contracted to receive a bonus in that event, then a liability should be recognised. However, if it were judged that it was only possible that such a payment would be made then no liability would be provided for and instead there would be a disclosure in the notes of this contingent liability. Sarah follows up The standard takes an “all or nothing approach”

to recognising provisions – and I think that can potentially confuse students too. Tom’s response Yes, it can do Sarah. I explain that either there is a liability to be recognised, in which case it is recognised in full, or there is not a liability - in which case – nothing is recognised. I suppose it is a bit like being pregnant – you are, or you are not! Thus, if the company is being sued for $20 million and is advised that there is an 80% chance that the monies will have to be paid, then the probability criteria is met and a provision of $20 million is recognised. We don’t provide for $16 million (80% x $20 million). After all, the obligation will not be settled at $16 million. This all or nothing approach though is at odds with the fair value approach as to how liabilities are measured on the acquisition of a subsidiary (IFRS 3 Business Combinations) or how financial instruments are measured (IFRS 9 Financial Instruments) – but I think that is for another day. Sarah concludes Indeed. This is an article so let’s keep it simple. • Tom Clendon is an ACCA SBR online lecturer and podcaster – see www.tomclendon.co.uk • Sarah Ardiles is an ACCA FR online lecture – see www.sarahardiles.com

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PQ Magazine April 2022

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PQ ACCA spotlight

Working together to deliver More women need green jobs to help tackle the climate crisis, says Emmeline Skelton

he climate agenda is redefining the world of business long-term over the coming decades and it’s important for us to understand the role women can play in this challenge. ‘Work together to deliver’ was one of the mantras to come out of COP26 last November. And this immense task needs both women and men at the helm navigating this long road to net-zero. One event I was really inspired by at COP26 was the launch of the Glasgow Women’s Leader Summit where I learned about the different opportunities women have in the net-zero transition. I am passionate about the role of women in the fight against climate change and how we can make a difference. To celebrate International Women’s Day this year, I chaired ACCA’s webinar – The climate crisis isn’t gender-neutral: why women’s voices need to be heard – where women were at the forefront of the conversation. The event is available on demand, but I share below the best answers to some of the questions I put to the panellists. But first, let’s define a green job: a role contributing to the preservation and restoration of the environment. A green job could be from the traditional industries such as construction or manufacturing or from a new emerging green sector, like renewable energy. As businesses in the UK and beyond become greener, some industries need help adapting their products and processes to reduce their carbon footprint, others focus on developing green technology, such as electric vehicles. All this is creating exciting opportunities and jobs that are green. And it’s important women aren’t left behind and are able to access to such jobs. Thoughts from the webinar What opportunities do women have in the netzero transition? Here are some thoughts:

Cristina Bortes, director, economic development and women’s economic empowerment at PwC: “80% of people displaced by climate change are estimated to be women and women are 14 times more likely to die during environmental disasters. Across the globe, women make up the majority of the workforce in sectors like agriculture, thus would be disproportionately affected by extreme weather conditions. “The transition to net-zero would be a major driver of change of the labour market over the next few decades and businesses and government must work together to address that. Sectors benefitting the most from the transition are utilities, construction and manufacturing and the issue with these sectors is there is a very low percentage of women making up the workforce. “It’s a two-pronged approach, for industries where men overwhelming make up the workforce – governments and businesses need to work together to ensure the gap doesn’t widen in terms of the ratio of men and women working. “Likewise, in sectors where women are heavily represented, we need to look at what issues they face and address them. For example, in agriculture in Africa, women grow 70% of the food, but they face huge barriers in terms of having access to information and technology.” On ensuring equal access to green jobs Dr. Mories Atoki, a chief executive officer for the African Business Coalition for Health: “It’s critical to educate women, especially because of their involvement across the value chain and the supply chain process. The less the opportunities there are for women to get involved in green jobs, the more it will slow down the entire race to net-zero. There needs to be deliberate awareness on women’s

understanding and the availability of green jobs to them. “There are more women taking up roles in strategic leadership which is essential in introducing other women to such green jobs.” How to accelerate transition Orla Collins, ACCA’s president and deputy managing director of Aberdeen Standard Investments in Ireland: “When we think of sustainability, we think about the full value chain of a business. Before banks give capital to people, they should ask the right questions relating to sustainability. And it’s a business owners’ duty to think about where they are buying their goods and services from. And in turn they should be challenging their suppliers to be thinking in a sustainable way. “Regarding managing capital ACCA is a pioneer for business change and business reporting. It’s not just about profit and loss. Accounting for the true cost of business will give investors a better sense on how business is making an impact on the planet. “ACCA members should be part of the process of harmonising sustainability standards with the accounting standards to shape the future.” Bonnie Chan, an ACCA member and financial planning and analysis manager at the Green Organic Dutchman in Canada: “Inclusion and diversity are at the top of the agenda when it comes to sustainability. Policies must be in place to ensure women have access to opportunities at all levels.” These were sobering answers, ones we can’t ignore. I hope you get a chance to tune in to the webinar as this is an important topic for the accountancy profession. • Emmeline Skelton, head of sustainability, ACCA

PQ Magazine April 2022

careers PQ

Dear Karen Ask PQ’s very own agony aunt Karen Young when you need advice from a real expert. Email your dilemma to graham@pqmagazine.com, and he will pass on the best ones to Karen THE DILEMMA I’m looking for a new job but haven’t had much luck so far. I keep hearing that LinkedIn is important when looking for new opportunities, but how true is this?

Women making waves Women hold nearly 40% of board positions at the UK’s biggest firms, well ahead of the original 33% target Women now hold four in every 10 executive roles at FTSE 100 companies, according to the latest annual FTSE Women Leaders Review. Women’s board representation stands at 39.1%, up from 36.2% at the start of 2021. The figure 10 years ago was just 12.5%! However, if you drill down the figures there were still just eight CEOs and 16 women holding the position of chair. The number of all-male

executive committees in the FTSE 350 is down this year to just 16, down from 54 in 2017. Almost half of all FTSE 350 boards now have a woman in either chair, or senior independent roles. UK business secretary Kwasi Kwarteng said rather than mandating gender parity, the government supported the idea

that neither gender should be over-represented (more than 60%) nor under-represented (less than 40%) at board and senior leadership level. KPMG’s chair, Bina Mehta (pictured), said while companies have made great progress towards creating inclusive workplaces where everyone can thrive, the job is far from complete. She explained: “Structural and cultural barriers still exist for women and other historically underrepresented groups. This will require a sharp and deliberate focus on how businesses recruit, retain and progress their people at all levels.”

In brief

KAREN’S RESPONSE It is true. LinkedIn should be a crucial part of any job search – there are millions of jobs posted on LinkedIn. Here are a couple of tips on how to take your account to the next level. Profile picture: If you haven’t already, upload a picture. It personalises your profile which, in turn, makes it more memorable. Open to work: Another quick win is to let recruiters and employers know that you’re open to new job opportunities. All you need to do is download a green photo frame which sits over your profile picture. You’re more likely to stand out to those who are actively hiring. Pitch yourself: Not enough people use the summary section on their LinkedIn, but it’s like your personal elevator pitch. It is a great place for you to summarise who you are and an opportunity to stand out from others. Skills and experience: Make good use of the experience and skills sections. Highlight your roles and what you were responsible for and include your key strengths and accomplishments. Include relevant education, side projects and volunteering experience. • 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 April 2022

Pap Stronger regs needed Intrusive worker surveillance tech and AI risks “spiralling out of control” without stronger regulation to protect workers, the TUC has warned. Left unchecked, the union body says that these technologies could lead to widespread discrimination, work intensification and unfair treatment. The warning comes as the TUC publishes new polling, conducted by Britain Thinks, which shows 60% of workers believe they have been subject to some form of surveillance and monitoring at their current or most recent job. Three in 10 (28%) agree monitoring and surveillance at work has increased since Covid

– and young workers are particularly likely to agree (36% of 18–34 year olds). Pap Women start it up A record proportion of start-ups are being created by women, say new figures from the UK government. The 2022 Rose Review found that for the growth of new female-led businesses is outstripping male-led companies for the first time. Just over 140,000 firms were founded by all-women teams in 2021, and that figure is growing by a third each year. Female-led start ups are particularly strong among those aged 16-25. The review is promising to launch new measures to support and guide

female entrepreneurs. This will include expanding networks and mentoring groups, along with a ‘women backing women’ scheme and encouragement for businesses to sign up to the Investing in Women code. Pap Only in Belgium Belgians have become the first Europeans entitled to ask for a four-day working week from their private sector employers. The only down side is that they cannot ask for reduced hours at the same time. The onus will be on Belgian employers to provide ‘solid reasons for any refusal’. Unions have not given the move their 100% backing because some of those four days will be 10 hours long.

The PQ Book Club: books you should read The Great Lockdown: Lessons learned during the pandemic from organizations around the world, by Shivaji Das, Aroop Zutshi and Janesh Janardhanan (Wiley, £21.99) Covid-19 had an unprecedented impact on businesses and daily life. In 2020 alone the equivalent of 255 million fulltime jobs were lost. Industries such as aviation and tourism saw massive declines. Countries, cities and even neighbourhoods imposed strict controls on movement. Organisations also faced unforeseen challenges as factories shut down, supply

chains were disrupted and receivables went unpaid. This book documents the fortunes of a diverse group of organisations during this tumultuous period – Bangalore International Airport (airport), beCurio (travel) and Tapsi (ridehailing). Also featured are Terumo and Abacus Pharma (healthcare) and SAP (IT). The authors conclude that organisations with a culture of transparency, openness, innovation and empowerment did much better. They communicated the financial stress to employees frequently and early; explained possible

scenarios for pay cuts, furloughs and layoffs; and obtained buy-in for such measures. The pandemic also taught the importance of rapidly achieving a level of digital maturity. This allowed staff to work remotely and effectively while interacting with their stakeholders. PQ rating: 4/5 This book proves that those with leadership, innovation and digitalization will be the ones that succeed no matter what. 39

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

Man cave demolition order

Accountants dump Trump Accountancy firm Mazars has cut ties with immediate past President Donald Trump, saying it can no longer stand by the financial statements it prepared for Trump’s businesses between 2011 and 2020. In a letter to the Trump Organisation, the firm said the statements it prepared cannot be relied upon when assessing the financial health of the company. The move comes amid ongoing criminal and civil investigations into whether Trump fraudulently inflated the value of his assets.

Accountant Graham Wildin has been ordered to demolish ‘Britain’s best man cave’ and faces a tax bill of £300,000 to boot. The 10,000 square feet complex, built in his garden, includes a bowling alley, cinema, squash courts, casino and bar! Wildin claimed the £200,000 extension would be made available to people who rented holiday accommodation, so was tax deductible. Unfortunately for him, a tax tribunal rejected his claim as they believed the complex was ‘for private enjoyment of his immediate family circle’. He now has to pay £83,382.78 in income tax, £157,460 VAT, and tax overdue penalties and surcharges of £56,787.87. That all adds up to £297,630.65.

Neil Young row could be impaired!

Credit Suisse in dirty money laundering case Credit Suisse is facing charges in Switzerland for helping a gang of Bulgarian drug traffickers clean millions of euros of dirty money. Swiss prosecutors are asking for £34million in damages from the bank. They claim weak internal controls allowed the criminal gang to wash their ill-gotten gains for four years, between 2004 and 2008. The indictment, which is more than 500 pages long, describes how gang members arrived at the bank with suitcases stuffed with cash. Credit Suisse has denied any wrongdoing and claims the case is meritless and intends to defend itself rigorously in court.

’ WEV E

STRANGER THING: City A.M. recently reported that the US copyright office has ruled that artificial intelligence (AI) should not be allowed to copyright their own work, stating that copyright laws only protect “the fruits of intellectual labour” that are “funded in the creative powers of the human mind”.

Neil Young’s row with Spotfiy led to serious accounting questions for the company who owns 50% of his back catalogue – Hipgnosis. Shareholders want to how the $150 million investment in Neil Young’s music works, and there is talk of a possible writedown. Analysts said that the singer’s request that his song are taken down from the Spotify streaming service means the Hipgnosis books needed to be impaired (a permanent reduction in the value of a company asset). It seems Young is still the master of his music, despite taking the money!

Hardest workers come from Sheffield Sheffield has been named as the city with the hardest workers in the UK. Employees in the Steel City work the longest hours, followed by Belfast and Glasgow. Research by Office Freedom found that staff in Leeds drink the most tea and coffee – four cups a day. Bristolians enjoyed the longest lunch breaks at half an hour. The study also found that staff felt they were working longer hours since the pandemic, but seven in 10 said they now enjoy their work more.

GOT THE L OT

200 hard puzzles If you are a big fan of Sudoku Puzzles, then this book will be a great prize for you! We have three copies of ‘200 Hard Sudoku puzzles’ to give away this month, and as it says on the cover there are 200 sudokus inside to keep you entertained. They come in two different levels and you get four puzzles per page. To be in with a chance of winning one of the three puzzle books this month simply email your name and address to giveways@pqmagazine.com. Head up your email ‘200’.

Big book of Su Doku This bumper collection of easy, medium and difficult Su Doku puzzles will test your mental dexterity, powers of logic and deduction. You will find 100 easy, 100 medium and 100 hard puzzles in this collection so you can gauge your progress through the levels. You will find the solutions at the back of the book. Keep your mind sharp and test your powers of deductive reasoning. Ideal for whiling away the time while travelling, holidaying or relaxing at home. We have three books to give away. To be entered into the free draw simply send your name and address to giveways@pqmagazine.com and we will do the rest. Head up your email ‘Big Book’.

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 15 April 2022. The main draw will take place on Monday 18 April 2022.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM 40

PQ Magazine April 2022

PQ magazine, April 2022

Articles inside

IR35 We examine what the National Audit Office had to say about reforms to the legislation; plus we put the spotlight on the recent Adrian Chiles tribunal

AAT spotlight How to correct the errors that inevitably happen

ACCA spotlight Why we need

Fun The lighter side of life; and more great PQ giveaways

Accounting for provision

Back to basics It’s vital you

Careers Women are beginning to make progess into the boardroom; some more career advice from Hays’ Karen Young; and our book review

FRC sanctions The watchdog

Ethical dilemma What should

AAT exams The importance of SWOT analysis in the Professional synoptic exam

Analysis How the accountancy profession has reacted to Russia’s invasion of Ukraine

Saving the planet University

AAT spotlight After 20 years in retail, Tom Sanger is looking forward to a new career as an accountant. He explains why

CIPFA spotlight Why good

CIMA exams Top advice on how to master the case studies

Keep it Simple Neil Da Costa