PQ news
PREM SIKKA Banks continue to facilitate epic corruption Despite the fines, banks continue to misbehave. The latest evidence comes from leaks relating to 2,100 suspicious activity reports filed by banks with the US government’s Financial Crimes Enforcement Network (FinCEN). They show that $2 trillion of potentially corrupt transactions passed through accounts at global banks including JPMorgan Chase, HSBC, Barclays, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon. All have previously been fined for failures over money laundering. The money passed through shell companies, often registered in secretive offshore tax havens. Banks are required to apply the ‘know your customer’ (KYC) rules before opening accounts. The leak shows that they regularly processed transactions for companies registered in secretive tax havens and did so without knowing the ultimate owner of the account. The FinCEN leaks refer to the UK as a ‘higher risk jurisdiction’. Over 3,000 UK-registered firms are named in the reports, more than any other country. Governments rarely prosecute bank directors for facilitating illicit cash flows or close rogue banks, so they have little incentive to behave honourably. Illicit profits boost share price, dividends and executive pay. Auditors rarely flag illicit practices. If banks fall on hard times, governments bail them out, and shareholders collect returns. Limited liability laws ensure directors don’t bear the cost of misdemeanours. It is a win-win situation for them. Social irresponsibility reigns supreme. Prem Sikka is Professor of Accounting at the University of Sheffield
Imitating good behaviour Junior accountants are much more likely to imitate a senior accountant’s behaviour if they feel that they have a say on their Kristof Stouthuysen
CIMA has ‘standardised’ entry into its professional qualification. There will now be two entry points at each level – at the start of a level before all the OTs or before the Case Study exam. The changes should mean students enter the right level of the qualification. It said: “Simple and clear entry routes to CIMA means that students do not need to wait to have their exemptions confirmed and you will be able to start taking CIMA exams immediately.” University students who register with CIMA will be awarded their exemptions right away, allowing
promotion, according to a new study from Vlerick Business School and the Foundation for Auditing Research. However, the research also showed that junior accountants only imitate their seniors when they perceive them as having a professional and critical working style. And if these seniors were perceived to be unprofessional and less critical in their work, then junior accountants tendered to ignore their guidance, even if it could affect their promotion chances. Professor Kristof Stouthuysen
said the study shows that junior accountants have a healthy dose of professional scepticism, and demonstrate their own professional and critical attitude. His colleague Professor Olof Bik said: “This study clearly shows that the quality of the audit is also determined by very human factors such as social interaction. Senior accountants and managing partners need to be aware that they play an exemplary role in the training of juniors. If the partner doesn’t have the courage to ask a client critical questions, you can’t expect a junior to do so.”
CIMA update on exemptions
them to start taking CIMA exams prior to graduation. You may qualify for exemptions if you: • Are a graduate with a qualification listed in the database of CIMA accredited programmes. • Are a graduate on a degree
programme that is related to the CIMA syllabus. • Are an of AAT student/member. • Have a MBA or a Master’s in Accounting. • Are a member or passed finalist of ICWAI or ICMAB, or a member of ICMAP. • Are studying or have completed a relevant qualification with another professional body. Go to the CIMA website to check how to apply for exemptions – https://tinyurl.com/yyft58gu
ICAEW ACA advanced level results published Just over 5,000 ICAEW advanced level students sat 8,147 exams in August (that’s 1.6 papers per student). The pass rates for all candidates was: Case Study 76.7%; Corporate Reporting 85.1%; and Strategic Business Management 87.6%. The results, the first since March, follow a ‘small number of students’ resitting the Corporate Reporting exams following technical problems. Despite the good results, the pass rate for those sitting Corporate Reporting on its own was just 67%, with 33% (153) of candidates having to resit next time.
Some 654 candidates opted to sit all three final level papers, and 64% of these passed all three, with another 28% passing two out of three. There were 12 students who failed all three. ICAEW’s executive director, learning and professional development, Mark Protherough, said: “These were the first exams we offered with remote invigilation and we are grateful for students’ patience during these unprecedented times. Their ability to study for and sit exams in challenging circumstances showed real determination and resilience.”
Taxwatch When bread is not bread… The rolls sold by Subway are so full of sugar that they can’t be considered to be bread, with zero VAT to pay, says Ireland’s Supreme Court. An Irish franchisee had claimed that there should be no VAT payable on rolls it used in heated sandwiches. However, the court has rules that the rolls cannot be taxed as bread, which would be classed as a ‘staple product’. Following the ruling the rolls are now subject to tax at 13.5%. Under Irish laws (VAT Act, 1972) 8
ingredients in bread such as sugar and fat can only make up 2% of the weight of flour in the dough. Subway’s dough, in both white and wholegrain rolls, contains about 10% sugar. PapTax relief on hair! We may never discover the truth about US President’s Donald Trump’s tax affairs. The ‘fake news’ that appeared in The New York Times says he paid no income tax in 10 of the previous 15 years, and in 2016 when he became
president paid just $750. This compares with the £1.8 million his predecessor in the White House, Barack Obama, paid in federal taxes in his first year in office. His rival for the presidency, Joe Biden, and his wife Jill, paid $3.7 million in federal taxes in 2017. One of the more interesting facts to come out of the story was the amount Trump spent on his hair during The Apprentice and written off as a business expense. That was a cool $70,000. Money well spent, we say. PQ Magazine November 2020
