PQ magazine February 2019
www.pqmagazine.com / www.pqjobs.co.uk
How do you tax cryptoassets such as bitcoin? New guidance on the tax treatment of cryptoassets has been unveiled by HMRC. The taxman confirmed that it expects the buying and selling of crypoassets by individuals to normally fall within the scope of an ‘investment activity’, and subject to capital gains tax. HMRC felt it would be rare for individuals to be transacting with sufficient scale and organisation for it to be considered as trading. The ATT’s Jon Stride pointed out that in the new guidance HMRC’s position on whether or not some transactions in
cryptoassets could amount to gambling has changed. He explained: “Previous guidance suggested that highly speculative transactions might be considered gambling, which is effectively outside the scope of tax. In their latest guidance, HMRC has confirmed that they do not consider that the buying and selling of cryptoassets will be the same as gambling.”
HMRC also looked at the tax position when individuals receive income from related activities such as ‘mining’ or ‘airdrops’, where the individual has carried out some work or activity to be eligible for the allocation. Provided that the individual is not trading, such income will be taxable as miscellaneous income. If receipts are less than £1,000 in the tax year they may well be covered by the new trading allowance.
LIFE IS SWEET FOR PART QUALIFIEDS
We live in turbulent times, but it appears there is no let-up in demand for PQ and NQ accountants, says Hays Accountancy & Financeʼs Karen Young. In fact, it appears PQs have never been happier with their lot! Some 60% of respondents to the Hays UK Salary & Recruiting Trend 2019 guide said they were ‘satisfied’ with their salary. This compares with just 42% in the survey a year ago. Some 58% of PQs also rated their work-life balance as good or very good, similar to the results seen last year. They were also planning to use 2019 to rejig their working hours and reduce commuting times. Employers who want to get ahead of the game should be looking to offer flexi working here. The survey found the average UK salary for a trainee PQ now stands at £21,000. That’s a jump of 2.9% year-on-year. PQs at semi-senior level are, on average, taking home £27,635 (up 2.5%) and finalist £32,198, which is a yearly increase of 2.1%. However, there are marked differences when it comes to PQs’ pay packets around the UK
Hays’ Karen Young
regions. The top salary went to CIMA finalists in London, who are on average being paid £43,000. This was closely followed by ACCA finalists in the capital – who on average receive £42,000. Many will be surprised to see that ACA
studiers in London are paid £38,000 at the final stage of qualification. Some of the lowest PQ salaries can be found in Northern Ireland and the North East of England, where the costs of living are lower. For example, an ACA trainee can expect a starting salary of £17,000 in the North East. In Northern Ireland CIPFA trainees’ average pay is £17,000. Young stressed that PQs need to be aware of the demand for shifting skills sets. And that doesn’t just mean IT. She said candidates need to be developing the ability to interpret, provide insight and analysis of data. Creative and critical thinking skills are also key to future success. Employers need to be aware of what attracts PQs when considering a new role, too. Top of the list (at 61%) is more than 28 days’ annual leave. Next is financial support for professional studies (52%), followed by health insurance or private medical cover (51%), pension provision above the legal minimum (50%), and training/professional certification support (41%). • Go to page 20 for the Hays salary survey and more insight into the data.
Keep it going December sitting results are out this month – time to start planning the rest of your studies. Sit an extra paper in March, or book onto a course for the June exam sitting. Study with Kaplan and benefit from: Flexible start dates across all 4 sittings Extended tutor support Up to 100% Pass Rates*
Find out more about our ACCA courses
0333 009 5194 *
kaplanfinancial.co.uk/acca
Based on ACCA F5–F9, P1–P3, P6 and P7 papers for part time classroom students across 14 Kaplan centres at the June 2017 sitting.
comment PQ
CONTENTS
News 06ACCA exams Why CBE sitters
February 2019 26CIPFA spotlight Austerity and the decimation of UK libraries
need to book their place early
27Collaborative working The
firm fires ‘offensive’ partners 10Kingman report Financial Reporting Council ‘must go’ Features, etc 04Mind your Ps&Qs In support of the Kingman audit review; tackling gender inequality; and the best of PQ’s social media 13The workplace Inappropriate and offensive behaviour should not – and will not – be tolerated 14Your career Why failure can be the best thing that ever happened to you
28Workplace skills Emotional
08Workplace behaviour Big 4
15AAT exams Tackling the feared Decision and Control paper
16ICAEW spotlight Meet an
ACA ambassador who’s going places; and planning for a pass
18ACCA APM exam Focus on the compulsory questions
19UK auditing The CMA explains how – and why – it wants the audit market to change
20Salary checker Are you being
paid what you should be? We’ve got the numbers that matter
22Profile Meet an award-winning bookkeeper set for big things
24ACCA SBL exam Five top tips on how to pass the Strategic Business Leader paper
importance pulling together
intelligence is an asset that will help you in your career
29Careers Life at Avado; crystal
ball gazing; and our book review
30Fun stuff – and our giveaways The columnists Robert Bruce Public expectations make life difficult for auditors 6 Prem Sikka Kingman’s rearranging the regulatory deckchairs 8 Zoe Robinson Predictions about jobs don’t tell whole story 10 Subscribe to PQ magazine It’s FREE – see page 18 or go to www.pqmagazine.com FEBRUARY 2019 ISSUE Total Distribution
30,566
Publisher’s statement: we send both a paper and digital issue to a controlled database each month. The above figure is the combined total of issues sent out this month. Free to subscribers who fulfil our terms of control Annual subscription: £35 (£50 overseas)
Start the year with a bang… Wow, there was a lot to cover in this issue! We could be witnessing the demise of the FRC and a radical shake-up of the audit profession, all in one go. Sir John Kingman has surely put the final nail in the FRC’s coffin. Meanwhile, the Competition and Markets Authority is pushing for a two-firm audit approach, and a split up of Big 4 businesses. It is all radical stuff. But we will have to wait a bit longer to see if this ultimately does lead to something more progressive. Then there was the news about Deloitte sacking 20 partners in the past four years for ‘inappropriate behaviour’ (see page 8). I can’t work out if that’s a lot or too few. Elaine Clark, of Women in Accountancy, helps us get to the nub of the issues on page 13. With the help of Hays we also show you what you are worth. Some may be surprised to read that ACCA and CIMA finalists in London, for example, can now command better salaries than ACA PQs. What is good to read is that PQs in the UK seem much happier with their salaries. Some 60% told Hays they were ‘satisfied’ with their pay packet. If you’re a reader in Wales we haven’t forgotten you – we’ll be doing a round-up of your salary levels in the next issue. And we haven’t forgotten about crypoassets, either. Bitcoin, I hear you say. How do you tax this area? Well, HMRC has some advice. Oh, and if you love tax then why not enter our ‘I love tax’ t-shirt giveaway (page 30)? Who would have thought there was so much to write about? Conference call Finally, don’t forget there is still time to sign up for our Careers in Accountancy conference. Check out page 10 for details or go straight to https://careers-in-accountancy.eventbrite.co.uk. We have a great line up, which includes Claire Benison, head of ACCA UK, and our PQ of the Year Tyson Nsimbe, who will be on hand to tell delegates what he does in his day job. Look forward to seeing you there! Graham Hambly, PQ magazine editor (graham@pqaccountant.com)
Gain vital insights to give your students their best chance at exam time Learning platform built for accountancy Powerful analytics used by awarding bodies Compare classes, partners, and client firms Live statistics Identify weak subject areas Flag common mistakes Improve grades and test times Track student demographics
Mention PQ Magazine for a FREE TRIAL
Call +44 (0) 203 151 1331 or visit getrogo.com
PQ email graham@pqaccountant.com
HAVE YOUR SAY All change in audit? As you predicted in your last issue, the Financial Reporting Council (FRC) certainly does appear to be ‘living on borrowed time’. No sooner had I read your headline than the Competition & Markets Authority (CMA) proposed reforms to improve competition in the audit market and Sir John Kingman’s independent review of the FRC were published. Both on the same day – 18 December. The CMA is asking for some radical changes, not least the idea of the two-firm audit, which I’ve been told works really well on the
continent. The CMA says that legislation is needed to separate audit from consulting, too. Sir John shocked many with his
straight talk: “It is time to build a new house.” It would seem the very foundations of accountancy have been put into question. He wants to create a new body that “is respected by those who depend on its work and where necessary feared by those whom it regulates”. My only worry is that both announcements were pushed out just before Christmas, and would have been missed by many PQs. I hope PQ will be covering both these reports in its usual manner! An accounting academic, by email The editor says: Don’t worry, we are on it. Check out this issue for our take on the news, and we’ve a special feature on page 19.
Our star letter writer wins a fantastic PQ mug! Well done, Sir John Three cheers for Sir John Kingman, who pulled no punches with his report into the audit market. The Financial Reporting Council proved itself time and time again to be either toothless or incompetent. A new authority will hopefully break the audit market wide open, allowing mid-tier firms like the one I work for to get some prestigious audit work. But experience tells me not to get my hopes up just yet. After all, in the UK it does seem that ‘the more things change, the more they stay the same’… Name and address supplied
I need pqjobs.co.uk
What to believe? After years of being told that staring at a screen for hours on end is bad for us, suddenly a new study says it isn’t (‘Screen break’, PQ, January 2019). No doubt next month we’ll be reading that looking at a mobile phone too much will take 10 years off our lives! Perhaps someone will do a study on how the stress of studying for accountancy qualifications is detrimental to our health, and pass it on to the accountancy bodies. Name and address supplied
Gender balance Thanks, PQ, for giving Professor
Karen Johnston a full page in your magazine for her article on gender inequality in public administration, especially at the senior level (PQ, January 2019). I believe things are slowly changing, and that articles like yours, drawing attention to the
issues, will help. And as a woman working in local government in Scotland I was particularly pleased that we Scots seem to be leading the way here (well done Nicola Sturgeon). It’s certainly progress and long may it continue. Name and address supplied
social media ROUND-UP We loved the recent facebook post by Astranti’s Thomas Broadley on the CIMA Strategic Study Group, on looking after your eyes. He outlines how you can help to avoid eyestrain, and the headaches that often follow. His main tips are: • The 20/20 rule. Every 20 minutes look away from your screen at something 20 feet away for 20 seconds. • Adjust lighting. Make sure the lighting is right for reading your screen and study manuals. • Blink. The more you blink, the more you will re-moisten your eyes. • Keep your eyes warm! If you rub your hands until they are warm and place them on your closed eyes it will help soothe any strained muscles. • Cucumber slices. Placing these on your eyeslids can help relax the muscles and refresh your eyes. He also suggests you eat plenty of parsley. In our tweets from @pqmagazine we homed in on the news that Netflix, the US digital streaming outfit, has admitted its UK accounts are ‘under examination’. The company has nine million subscribers in the UK who generate over £71m a month. Its British division, however, books revenues of €26.9m and profits of €1.27m. We also tweeted that Google moved some €19.9bn to a Bermuda subsidiary in 2017, as part of its contentious ‘double Irish Dutch sandwich’ tax avoidance moves. That means in effect it paid 6% corporation tax on its foreign earnings when the US headline rate at the time was 35%. It’s no wonder that most young people I talk to say if they could change one tax rule in 2019 it would be for these tech companies to pay their fair share.
PQ Magazine Unit 3a, Kingfisher Heights, 2 Bramwell Way, Royal Docks, London E16 2GQ | Phone: 020 7216 6444 | Email: graham@pqaccountant.com Website: www.pqmagazine.com | Editor/publisher: Graham Hambly graham@pqaccountant.com | Associate editor: Adam Riches | Art editor: Tim Parker | | Subscriptions: dom@pqaccountant.com | Contributors: Robert Bruce, Prem Sikka, Zoe Robinson, Tony Kelly, Phil Gammon, Edward Netherton | Origination and print services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email dom@pqaccountant.com
Published by PQ Publishing © PQ Publishing 2019
We are The Times and Sunday Times University of the Year for Graduate Employment 2019
GOOD UNIVERSITY GUIDE 2019 UNIVERSITY OF THE YEAR FOR GRADUATE EMPLOYMENT
Apply now to start your course in January Join an international award-winning university business school with a reputation for a holistic approach to your personal development and career ambitions. January starts for undergraduate and postgraduate courses ACCA exam revision sessions in February and March Gain maximum professional body exemptions while earning your degree
Advanced entry on to year 2 of BA (Hons) Accounting and Finance (with optional placement) with ACCA F1-F3 or AAT level 4 Working in partnership to develop you as a whole person
lsbu.ac.uk Accountancy college of the year
Accountancy college of the year
GOOD UNIVERSITY GUIDE 2019 UNIVERSITY OF THE YEAR FOR GRADUATE EMPLOYMENT
PQ news
ROBERT BRUCE Auditors and the public’s expectations
There are times when a profession has to remake itself. For accountancy that time is probably now. Accountants and the general public believe two very different things. The audit profession understands that its role is to look at the figures produced by the directors of a company and, on behalf of the shareholders, and reporting to them, come up with a one-off view as to whether these figures represent ‘a true and fair view’ of the financial state of the company. The general public’s view, as represented by journalists, MPs, politicians and a wide diaspora of lobbying groups, is very different. They portray auditors as responsible for the health of the company, for the honesty, or otherwise, of the directors and its staff, and for the economic success or failure of the company. These stances are very different. The first is about assurance. The second is about the active running of a company. This is what used to be called the expectation gap. It used to be characterised by the cliché of whether auditors are watchdogs or bloodhounds. They are very different roles. One is what the law requires. The other goes far beyond what auditors are legally expected to do. And this is where the disparity of the contrary views lies. The problem, for the profession, is that they have lost the argument. If the public has come to believe auditors ought to be running companies then perhaps that is what they ought to do. Certainly they need to come up with a business model that more effectively represents what their critics want. Robert Bruce is an award-winning writer on accountancy for The Times
ACCA PQs are being advised to book early if they want to get into an exam centre close to home. PQ magazine has been alerted to the plight of students trying to book the Oxford centre for the Applied Skills CBEs. In December, students booking for the March sittings were told there were no places on offer and that they had to book for the Reading or London exam centres instead. However, Reading was soon full, nearly three weeks before the closing date for the standard exam entry deadline. A leading tutor told PQ: “This is a real problem for students in a large county not being able to sit exams in their locality. Many are talking of deferring their studies until June, which makes a mockery of the flexibility of the four exam sittings.”
ACCA CBE sitters need to book early
Another PQ who tried to book Reading on 7 January confirmed there was ‘no availability’ for March. A Swindon PQ revealed that it is not just Oxford and Reading that are proving popular centres. “I tried
to book back in December for March, the closest I could get to Swindon was Coventry! I am half tempted to go for Coventry as I want to get the exam out of the way!” And CCSC Tuition told us that they had Stoke-on-Trent students having to travel as far as Leicester for the December sitting, with both Birmingham, and Manchester centres full.
Completion rates sought for AQ2016 AAT colleges are pushing the AAT to disclose the completion rates for its AQ2016 suite of qualifications. Fear is mounting that without such information many colleges may be forced to abandon the AAT in favour of other qualifications. PQ magazine was told that some college are under increasing pressure to justify their AAT completion rates – the expected rates for other courses being around 90%. And although the AAT publish success rates for each unit,
not all learners pass all the assessments, so the successful completion of the qualification (eg Foundation, Advanced or Diploma) can paint a very different picture. One tutor believed the AAT must have this information for Ofqual. He
Don’t sit on the fence CIMA PQs were told to stop sitting on the fence by the operational case study examiner. In a blog following the November case they said: “If you are asked for a recommendation, make one! Don’t sit on the fence and say it could be this, or could be that.”
just wants it to be made public. PQ understands that the AAT might have to change the way it gathers information if completion rates are to be properly compiled. Students enter the AAT suite of qualifications at different levels/ stages and AAT has no idea when they start or expect to finish. When a student who registers for one paper, for example, AAT does not know if they plan just to take that paper or go on and complete the whole level.
The examiner wants you to have the courage of your convictions and make a recommendation. “If it is appropriately justified you will score marks,” PQs were told. OCS sitters were also told to make sure their P1 and F1 technical knowledge is firmly
embedded in their brain before sitting the case. You can’t blag it based on what you remember from sitting the OTQ exams. Student will need to take this advice into the Trigg Adventure February case study, when they take on the role of a finance officer, who’s principal responsibility is preparing accounting information, although they are often asked to perform tasks in other areas.
has been working with HTFT since 2017, and brings a wealth of experience to the tutor. A fellow of the ICAEW, Evans (pictured centre) has been working in accountancy education for over 25 years and is the author of Kaplan’s ‘A student’s guide to Corporate Finance & Financial Management’ (think ACCA P4 and F9 and CIMA F3).
Councils at risk Over a third of local councils are at risk of financial failure in the next 10 years, claims Grant Thornton. Its research discovered that 36% of English councils run the risk of financial failure within the decade, and one in five (17%) could fail as early as 2021. Using its new Financial Foresight tool, Grant Thornton looked at councils’ long-term baseline financial forecasts, labelling them ‘at risk’ if their reserve levels are (or lower than) 5% of the total expenditure.
In brief New syllabus launch CIMA will be unveiling its new-look professional qualification on Thursday 31 January at the Future of Finance festival. PQ magazine expects the changes to be evolutionary rather than revolutionary. It will, however, reflect the skill sets needed by management accountants in a changing world. #CIMA100 As part of its 100th birthday celebrations CIMA is putting on a 6
Centenary ball at the National Maritime Museum in London on 6 June. Tickets for this black tie event start at £100 per person, and will include entertainment throughout the evening. A celebratory drinks reception will be followed by a banquet for a 100th anniversary celebration. New director at HTFT The HTFT Partnership leadership team is growing, with David Evans joining the senior leadership team this month. He
PQ Magazine February 2019
Want to pass your Strategic Professional papers? Study with a provider that’s better than the ACCA global average. Our pass rates for the first sitting of the Strategic Business Leader and Strategic Businesses Reporting papers were 28% and 20% higher than the ACCA Global average. And when you book a taught, revision and exam practice course with us, you’ll qualify for our Lifetime Pass Assurance. So you can resist your exams for free, until you succeed.*
Book your course today. Visit *
www.bpp.com/acca
T&C’s apply: bpp.com/terms-and-conditions/
PQ news
PREM SIKKA Rearranging the regulatory deck chairs Sir John Kingman’s review has recommended that the Financial Reporting Council (FRC) is unfit for purpose and needs to be replaced. This is in line with the conclusion of the report that I and my colleagues have submitted to the Labour Party. However, there are major differences. The Kingman review argues that the FRC failed because it did not have the requisite independence from big audit firms or corporations. But he does not apply the same ‘independence’ principle to the Recognised Supervisory Bodies (RSBs) – these are the ICAEW, ACCA, CAI and ICAS. The Kingman schema will still leave five overlapping and wasteful regulators for the auditing sector. The opportunities for obfuscation and buck-passing would not be checked. Sir John notes that the FRC had poor public accountability. That applies even more to the four RSBs. For example, despite acting as statutory regulators, the four RSBs are excluded from the application of the Freedom of Information laws. The Kingman review rearranges the regulatory deckchairs and does not offer durable or principled reforms. Our report makes is clear that all statutory powers of the RSBs need to be transferred to a newly constituted Companies Commission, which will be responsible for oversight of all aspects of company law, including accounting and auditing. It also calls for Parliament itself to set accounting principles. Kingman won’t be the last word on institutional reforms. Prem Sikka is Emeritus Professor of Accounting at the University of Essex
Deloitte purges 20 partners for ‘inappropriate behaviour’ Deloitte has fired 20 UK partners over the past four years for inappropriate behaviour, including bullying and sexual harassment, according to CEO David Sproul. In an interview with the Financial Times he explained: “We will fire people for any inappropriate behavior. No one is protected.” The Big 4 firm is the first to disclose the extent of any dismissals for bad behavior in its senior ranks. Sproul told the FT that the firm has now ‘reinforced’ existing guidance on appropriate conduct in response to the #MeToo movement, such as rules on
socialising with colleagues after work. Sproul went on: “You can’t meet someone more junior to you in a bar on a Friday evening after work
and assume she or he is attracted to you [and is seeking] a one-night stand. You just can’t do it.” Deloitte also applies a zerotolerance policy on clients who behave inappropriately, which is rumoured to be a widespread problem. In response to Deloitte’s transparency on the issue the other Big 4 firms have also released data. KPMG said seven partners had been dismissed since 2014 for contravening its “anti-harassment, victimisation and bully policy”. PwC said five partners were sacked and EY the same.
LSBF launches bundling initiative LSBF has launched a new global bundling initiative, where students can combine their ACCA qualification with top academic degrees and MScs. The programme, which started in November 2018, is a collaboration with The University of Law (providing an MSc in Global
Accounting), Toronto School of Management, LSBF Singapore, the Berlin School of Business & Innovation, and Concordia University, Chicago. Each institution has paired at least one of its existing business qualifications with LSBF’s ACCA courses. The programmes will be delivered on campus by all
Team players not wanted Employers believe the accountant of the future will need greater data and analysis skills and become a business’s strategic thinkers, says a new AAT poll. Being fearless, innovative, and opinionated will become the important characteristics that tomorrow’s employers want to see. That means listening skills,
teamwork and motivation will become less important as employers look for more flexible working solutions over the next 15 years! AAT CEO Mark Farrar said that if decision-makers’ predictions become the norm then employees will need those better data analysis skills to charm future employers.
institutions, as well as being available online through LSBF’s e-learning platform, InterActive Pro. This means there will be intakes in December, March and June. LSBF’s director of professional courses, Rob Sowerby (pictured), said: “LSBF is committed to providing programmes that prepare students with the skills and insights necessary to succeed in the finance and accountancy industry.” He felt the rise in importance of skills such as being a consultant and strategic thinking should not come as a huge surprise when we look at recent office evolution. Farrar said that automation will remove more mundane manual tasks, freeing up accountants to concentrate on the more interesting and added value areas of accountancy, such as the production of management information and trend analysis.
In brief UK salaries jump by 3.2% Average salaries for accounting roles in the UK rose by 3.2% in 2018, giving the sector’s average salary at £33,910. That’s according to the latest job market data from CV-Library. This increase in salaries is a direct result of the ongoing struggles that UK businesses are currently facing. Economic uncertainty, coupled with the growing skills gap, is making it difficult to entice candidates away from their current positions, the survey said. 8
Apprenticeships doubts It is in fact still young people who need to be convinced that apprenticeships are the best route to a good job, says a new poll from YouGov. Older people surveyed were much more likely to regard apprenticeships as the best chance for school leavers to find a rewarding career. Among 18 to 24 year-olds, some 34% said going to university would still be the best way to ensure a good job in the future, compared with 20% who said apprenticeships would offer
the better start. Those percentages were reversed when YouGov asked the same question of older people. Big in China RSM has unveiled the first stage of its plan to become one of the top 10 audit, tax and consulting providers in the Chinese market – it has admitted Huapu Tianjian Certified Public Accountants LLP to its global network. Headquartered in Bejing, the new member firm has 1,733 staff and 54 partners located in 10
offices and seven provinces in mainland China. RSM said it will now supplement strong organic growth with a robust merger policy. Bitcoin ‘is legitimate’ Ohio has become the first state in the US to allow business to pay their taxes in Bitcoin. If successful, the scheme could be rolled out to individuals. State Treasurer Josh Mandel said: “I see Bitcoin as a legitimate form of currency.” A number of other US states are considering the idea. PQ Magazine February 2019
NEW YEAR, NEW YOU PROFESSIONALLY QUALIFIED! Make 2019 the year you achieve great things in your Accounting career! Get a head start on your accounting qualification, with savings up to 23% off AAT courses and 10% off ACCA courses this month.
Training Provider
AWARDS 2018 Winner
To get more information or to sign-up call today on 020 3911 3370 www.avadolearning.com/pq
PQ news
ZOE ROBINSON Predictions about jobs don’t tell the whole story
The World Economic Forum recently released its Future of Jobs report 2018, which looks ahead to 2022 and offers insight about how the labour market might change. The report identifies four big technological advances: high-speed mobile internet, artificial intelligence, big data analytics and cloud technology. However, it makes grim reading on the impact these will have on employment. It predicts the following roles will go into decline: auditors, accountants, bookkeepers, payroll clerks and financial analysts. However, there is danger of throwing the accountant out with the bathwater. The logic for the above is that it makes relatively broad judgements around the skills used in each job. It is true that where a role involves high degrees of data manipulation which can easily be automated demand will fall. But by way of contrast, the report identifies the top skills for employability. 1. Analytical thinking and innovation. 2. Active learning/learning strategies. 3. Creativity, originality and initiative. 4. Technology design and programming. 5. Critical thinking and analysis. To pass any accounting exam you will have to demonstrate analytical thinking, analysis and, to some degree, initiative. Which means all is not lost, because many of the skills learned under the banner of accounting are transferable, and although the job title might change it looks like accountants will be around for a little while yet. Zoe Robinson is Learning and Programmes Director at Kaplan Financial
Kingman: ‘FRC should go’ The Financial Reporting Council should be replaced as soon as possible with a new independent regulator with clear statutory powers, says the much-awaited Kingman Report. Sir John Kingman (pictured) appears to have put the final nail in the FRC’s coffin. His ‘Independent Review of the Financial Reporting Council’ says the FRC must be replaced with an Audit, Reporting and Governance Authority (ARGA), accountable to Parliament. He wants the new board’s members to be public appointments, with some limited continuity with the existing board. It should, however, be significantly smaller than the FRC’s current setup. Among the appointments must also be “representatives of stakeholder interests”.
Revenues fall at Grant Thornton
A year of continued transition is how Grant Thornton UK unveiled its latest financial performance. It was reported that a series of one-off portfolio disposals meant revenues were down by 1.8% to £491m. This means that post-tax profits were £70m, down £5m on 2017. The average distributable profit per partner was £373,000. That’s a pay cut year-on-year of 8%. Partners at nearest rival BDO received average pay of £531,000, a 17% rise. Dave Dunckley took up the role of CEO of Grant Thornton UK at the tail end of last year, replacing Sacha Romanovitch. Dunckley said the Grant Thornton name had never been stronger – in fact, it saw a 55% increase in brand strength in 2017/18.
Drone audit first PwC UK has undertaken a stock count audit using a drone for the first time. This is all part of PwC’s wider drive to harness emerging technologies to enhance audit quality and efficiency. The drone, which was manufactured and operated by QuestUAV captured over 300 images of the coal reserves at one the UK’s last remaining coal-fired power stations, Aberthaw in South Wales. The images from the drone were 10
Sir John’s report stressed the new ARGA chair and CEO need to be subject to a pre-approval hearing with the BEIS Select Committee, and would have to appear annually in front of the Select Committee. In the near future, Kingman wants the new body to publish individual audit quality inspection reports, including gradings, in full. He felt the regulator’s corporate reporting work should also be extended from its current limited
scope to cover the entire annual report. To this end, it should be given stronger powers to require documents and other relevant information in order to conduct that review. The new regulator should not be funded on a voluntary basis, says the report. Instead, the BEIS should put in place a statutory levy. Sir John emphasised that, for the foreseeable future, the new regulator should not allow staff, or board or committee members, ever to work on any regulatory functions relating to a past employer. Business Secretary Greg Clark said: “The government will take forward the recommendations set out in the Review to replace the FRC with a new independent statutory regulator with stronger powers.”
Careers in accountancy
PQ magazine has joined forces with the AAT, ACCA and LSBF to offer a unique insight into the working world of a part qualified accountant. This halfday FREE conference will lift the lid off what a day in the life of a PQ looks like. We will also be looking at the rise and rise of apprenticeships and the current state of the marketplace with experts from Hays and Pro-recruitment.
When: Wednesday 23 January 2019 Time: 9.30am to 2pm Where: LSBF, 2 Bunhill Row, London EC1Y 8HQ (5-10 minutes from Liverpool Street station/Moorgate Underground station/Old Street Underground station) . To book your place go to https://careers-in-accountancy.eventbrite.co.uk
used to create a point cloud ‘digital twin’ of the coal pile in order to measure its volume, The value of the coal was then calculated to within 99+% accuracy based on that volume measurement. Fines for late timesheets KPMG is threatening to introduce £100 fines for staff who continually file their timesheets late. The firm has explained the fines will become ‘active’ when someone is late submitting their forms more than four times in a financial year. All monies are deducted from bonuses. A KPMG spokesperson said: “We are aiming for a 100% on time completion rate and have informed all colleagues why timesheets are important.”
Time for a rethink? EY says the CMA market study and Kingman review of the audit market “provide a valuable opportunity to examine the role of audit in the UK and to reinforce the focus of auditors and company directors on audit quality”. EY said the evolution of the audit product is vital to achieve effectiveness and suitable reform of the corporate reporting environment. It also welcomes the announcement of the new independent review by Donald Brydon into what the future standards and requirements should be for audits in the UK. PQ Magazine February 2019
82% Merits or Distinctions
Award-winning AAT courses and apprenticeships “Doing my studies online and then coming to college and practicing what I’ve learned and getting my questions answered works perfectly for me.” Kat, AAT Level 2 Student
To learn more call 0203 6060 365 or visit us at mindful-education.co.uk
$IPPTF :PVS 5VUPS 0OMJOF 5PQ 1BTT 3BUFT
:PVS TVDDFTT JT UIFJS CVTJOFTT
6XQLO
30+ years experience
$&&$ $)0 3 )0 ) &,0$ )
“The biggest differentiation between you and other tutors is the support you’re willing to give. You go above and beyond on providing help to students rather than calling it “done” once all material/knowledge has been passed. You also provide examples on how to answer questions, using exam technique and within exam time; that is absolutely invaluable to students. Also, when I had doubts and concerns, you answered my questions via the WhatsApp group, even at 5.00 am !” Carol Lau: Platinum Tuition, Video Exam Kit & Mock Exam Service – March 2018 www.sunilbhandari.com | sunil@sunilbhandari.com
%KDQGDUL
0XVWDID 0XFKKDOD
20+ years experience
$&&$ $30 3 30 )
Blended Learning (Taught & Revision) Online course 1-2-1 Tuition and marking, Mock Exam Marking & debrief. All part of my Platinum Package. FREE initial assessment
www.fmelearnonline.com/mustafa | mustafa@fmetraining.com
$VKLP .XPDU
25+ years experience
$&&$ 6%/
ACCA SBL Platinum Package ACCA SBL Platinum Tuition / Revision ACCA SBL Mock Exam Service + Exam tips
www.fmelearnonline.com/ashim | ashim@aka-lead.com
Book via: www.fmelearnonline.com
Good Luck for your .BSDI exam sitting Need additional support for your exams? Prepare to pass with the ACCA Exam Club and receive downloadable resources, information about tuition providers and practical advice from ACCA members and students. Register now at: bit.ly/ExamClub
equality PQ
The unprofessionals Elaine Clark deplores inappropriate behaviour in any form in the workplace and urges a rethink in attitudes
A
great many emotions passed through me as I read, in December, about the various sackings of staff demonstrating inappropriate behaviour in the top flight accountancy firms; not least that of where professional behaviour has gone to in the profession. Putting my personal feelings and opinions aside, what is very important from this awful news is that people are suffering at the hands of those who ought to know better. That is wrong and the profession, not least the accountancy bodies, ought to be stepping in and not only setting high moral standards but making sure they are followed. Cultural change Behaviours need to change and fast; starting at the very top, with the promotion across the board of cultural intolerance to inappropriate behaviour of any kind. As we know, culture changes take a while to filter through and while we will push for change, those who are suffering need help in the meantime. Don’t get me wrong; I am not condemning a little bit of banter in the workplace. We spend a lot of time there. So having a bit of a laugh and a joke should be OK. However there is a line between acceptable banter and inappropriate behaviour. The problem seems to be that, for some, knowing where the line is appears to be difficult. The line has moved over the years and some of the ‘old school’ accountants may have failed to keep up. Just because it may have been ‘acceptable’ (was it ever acceptable?) in the past doesn’t make it right now. It is incumbent upon the accountancy profession as a whole to make sure that behaviours at all levels are aligned, and re-aligned where necessary, to what is acceptable. What to do if you fall victim? The first thing to remember is that it is not your fault. You didn’t do anything
wrong to be the recipient of such behaviour. Inappropriate behaviour is a form of bullying and, like any other bully, the issue is with the perpetrator of the behaviour. Not with you. Practical steps That said, the fact is that inappropriate behaviour in the workplace is very hard to handle because of the perceived impact on your career. You’ll likely feel that if you speak up the job that you’ve worked very hard for could be at risk. There is practical advice on how to handle such behaviour on the websites of ACAS (go to https://tinyurl.com/ yd4evzkt) and CABA (https://tinyurl.com/ ya3kfmrw). My tips for handling this would be: • As soon as you experience inappropriate behaviour very calmly tell the person that you do not find what they have said or done to be appropriate, explain that it makes you feel uncomfortable and ask them to stop this in future. • Keep a diary record of the behaviour. Record the time and date it occurred,
where it took place, what happened and what was said. Was it witnessed by anyone? How did the behaviour make you feel? • If there is an internal process or helpline for such behaviour make sure you log your concerns and ask what will happen next. • Find a buddy to share the occurrences with, not least to provide moral support during this trying time. Call to action If you see, witness or experience inappropriate behaviour in the accountancy profession, or anywhere else in life, call it out. Yes, it will be tough to do that, but much tougher still to let this go unchecked. Inappropriate behaviour of whatever kind in the accountancy profession should not be tolerated. Let’s make 2019 the year when it comes to an end! PQ • Elaine Clark is Managing director of digital accountancy practice cheapaccounting.co.uk and a founder of Women in Accountancy – see http://womeninaccountancy.com/
8VH YRXFKHU FRGH 34 IRU DQ DGGLWLRQDO RII DQ\ DFFUHGLWHG $$7 RU ,&% FRXUVH
2XWVWDQGLQJ VW WLPH SDVV UDWHV PQ Magazine February 2019
<285 68&&(66 ,6 285 68&&(66 ,&% V /DUJH 7UDLQLQJ 3URYLGHU RI WKH <HDU
$$7 V 3DXOLQH 6SDUNHV DZDUG ZLQQHU 13
PQ just a word
Don’t be afraid of failure James Taylor explains why if we are to succeed then we need to fail
F
ailure is a word that strikes fear into people. We have been brought up thinking that “failure is not an option” (attributed to former NASA Flight Director Gene Krantz, who successfully led the agency’s operation to save the crew of the ill-fated Apollo 13 space mission) and that failure is bad thing. I disagree, and listening to a huge number of successful people I’m not alone. The quote that strikes a chord with me is one from basketball legend Michael Jordan: “I've missed more than 9,000 shots in my career. I've lost almost 300 games. Twenty-six times I've been trusted to take the game winning shot and missed. I’ve
From failure to glorious success • JK Rowling – Divorced, depressed, penniless, writing in coffee shops while raising a child, Rowling was rejected by 12 publishers before landing a deal that made ‘Harry Potter’ the $15bn brand it is today. • Howard Schultz – 217 out of 242 investors turned down the idea of coffee shop franchise. But Schultz’s resilience eventually brought 25,085 Starbucks coffee shops into our lives. • Sir Richard Branson – Branson’s first business failure came in 1968 with his publication ‘Student Magazine’. He once famously said he has failed more times than he succeeded in his career. His net worth? Over $5.1bn. • Harland Sanders – It is hard to believe that Col. Sander’s recipe for Kentucky Fried Chicken was rejected by 1,009 restaurants. Today there are more than 20,000 KFC outlets worldwide.
failed over and over and over again in my life. And that is why I succeed.” Jordan is arguably the greatest basketball player to have ever played the game, and despite this he often talks of how his failures made him stronger and helped him succeed. Over the years I have talked to a lot of students who put off sitting their mock exams or hold back on attempting that set of questions or a test – and the underlying reason is that they don’t want to fail. I feel this is the wrong approach, and actually failure can be your best teacher. Henry Ford once said that “the only real mistake is the one from which we learn nothing” and I completely agree with him. You need to attempt questions to learn what you know and what you don’t know, and then use this information to tailor your study. I am sure you have heard me say that ‘practice makes permanent’, and that the more you do of something (with time to reflect and adjust) the more embedded it becomes in your memory – well, you have to start somewhere, and that should be with questions. You shouldn’t be afraid of failure, you should embrace it. Failure refocuses what you are doing ensures that your efforts are spent on activities that are going to help you succeed. PQ • James Taylor, Commercial Director, HTFT Partnership
Introducing the Strategic Business Leader Our new innovative case study exam, Strategic Business Leader, will enable you to demonstrate the right blend of technical, ethical and professional skills employers want. Registration now open for all students
Find out more: accaglobal.com/sbl
14
PQ Magazine February 2019
AAT exams PQ
A
Don’t get stuck
fter so much controversy surrounding the dreaded AAT Level 4 Management Accounting: Decision and Control exam, pass rates are still low. A concerning number of students are on their fourth and fifth attempts at this exam. The exam was suspended in January 2017 with immediate effect after complaints from students and training providers that it was not in line with the syllabus. Students were described as ‘shell shocked’ when leaving the exam room and AAT took down the exam for review. It was evident that there were still problems, and the exam was suspended again in February 2018, with further new assessments made live in March 2018. AAT stated that the content had not changed, but it was restructured and shortened to eight tasks instead of 10. Since changing the exam in March pass rates have risen fractionally, from 50.7% to 54.3% in October 2018. Due to the amount of apprehension and scare mongering on social media sites about this exam students were left feeling anxious and fearful of this exam before they even attempted it. Be under no illusion: this exam is tough. But if you are prepared it is possible to pass. Many students do pass first time, and some actually preferred this exam in comparison to financial statements of limited companies. So there is light at the end of the tunnel. In this article I intend to give students some insight on how to prepare for and tackle this exam tactically to achieve a pass. Preparation is the key and students must remember the saying ‘fail to prepare, prepare to fail’. The exam looks for students to understand the concepts and techniques of planning, decision-making processes and analysis of the results for the control aspect. Students are also expected to have a good understanding of the key performance indicators to aid performance monitoring and assess changes. Key areas to focus on: • Variances: Variance analysis, backwards variances and the causes of the variances are all covered in Task 2 and Task 5 of this exam, and students need to ensure they are confident with them. Task 5 is an extended written task and is PQ Magazine February 2019
Subject expert Jennifer Nyland explains why students should not be running scared of the infamous Decision and Control paper likely to contain written answers based on the standards and/or the possible causes of the variances stated or calculated. These two tasks carry a total of 33 marks out of the 120 available, meaning that these two questions are worth 27.5% of the total exam. So if a student fails these questions then they would have to answer almost all of the other tasks close to perfectly in order to achieve a pass. So it is imperative to have a full understanding of variances and their causes to make a pass achievable. • Written tasks: Many students struggle with the written tasks. There are written elements also included in Task 7 and 8, meaning if a student does not do particularly well on the variance tasks and then does not achieve good marks on the other written elements in Task 7 and 8, then a pass is now out of reach, regardless of how well they answer the other tasks. Practice is of the utmost importance to the written elements and students need to practise these as much as they practise the short computations. Students should also refer to the question as much as possible to gain the full marks available. Examiners do not like generic answers because they do not show the students’ ability to understand, interpret and explain the key management topics. Students should be comfortable with explaining their calculations and the concepts of limiting factors, target profit, product lifecycle and costing and the advantages and disadvantages of ABC. • Limiting factors: Many students struggle with calculating the contribution per limiting factor, and to understand that this calculation is needed to be able to rank. The question may not have answer boxes to rank the products to calculate the optimum production plan, but if the student understood the concept then they would know this should still be done. Students also struggle with the written part of this task and fail to make recommendations and explain
their workings. • Key performance indicators: These appear throughout Level 4 studies and they do need to be memorised. Make flash cards, create them on the Quizlet app; do whatever is necessary to get these firmly in your mind. In Task 6 students will be expected to have a full understanding of KPIs, in so far that they can calculate them backwards to arrive at other figures to then calculate a profit or loss account. Another weak area is calculating RONA. RONA = Net income or profit from operations / net assets x 100%. Net income will be the same as net profit in the statement of profit or loss (income statement). • Break even, margin of safety, contribution, absorption and marginal costing: All of these were covered in Level 3, yet students are still struggling to calculate these, explain what they mean and fail to value closing inventory at the marginal or absorption cost. • Double check your workings and read the question carefully: Students constantly lose out on easy marks by not double checking their workings. Students are also making easily avoidable mistakes by not reading the question and stating their answer based on total costs and not ‘per unit’ by simply not reading the question. This can also include not answering the question to the specified decimal places and things as simple as not identifying whether the answer is required in £000s or £s. Read the question carefully There is a lot of material to remember for this exam, so my advice is to take your time and do not attempt the exam until you feel ready. Remember that it aims to build on concepts and techniques already introduced at Level 3. Identify your weak areas and plan your approach to the exam to gain the maximum marks you can. Practice, practice, practice and ensure you understand the key concepts and their meanings, not just how to do the calculations. Read the question carefully and do not lose valuable marks for the silly mistakes noted above. Those few marks could be the difference between a pass or a fail. PQ • Jennifer Nyland is an AAT Level 4 tutor at the Training Link 15
PQ ICAEW spotlight
The boss of the future O
ne Young World is a unique platform that brings together young global leaders to discuss and devise innovative solutions to some of the world’s most pressing challenges. More than 190 countries are represented and every person there has been identified as a leader of today or tomorrow. It creates relationships so that we can collaborate to make a positive impact. My role is a global ambassador for ICAEW. I was selected by a judging panel from a short video on how we can build trust and leadership in business and finance. There are more than 1.7 million of us who sit under the Chartered Accountants Worldwide umbrella, representing our own respective membership bodies from all over the world. These events are important because, given the complex and uncertain global climate we live in, they empower young people across the world who have the potential to make a difference. We need to implement positive change now in order to reap the benefits in the future. The world is not in a good place at the moment, from many perspectives – economically, socially, wars being fought, pervasive education and healthcare problems – so how do we build a better, more inclusive world? The accountancy profession is fundamental to the economy and essentially the world. You need chartered accountants for business. Without finance, there is no economy. The economy
PQ revision planning
L
et’s face it. After a long day at work the last thing anyone wants to do is sit back down and begin on the evening revision session. We are told that this is a rite of passage: long days at work, all free time consumed by studying, and a very distinct lack of work/life balance. It’s the inevitable pain that comes with becoming qualified. Is this the case? Is it really the only way to do well at work and pass your exams? Finding balance between work, study and life is the difference between tolerating and enjoying the journey to qualification. You shouldn’t feel guilty about having downtime, you just need to learn how to find your balance: • Plan out your time: Planning out your time is the best way to stay on track with your revision and get some ‘me time’. Block out your calendar with when you are going to study (including what you are going to cover in each session) and when you are going to have some down time (for example, go to the gym, see friends) and stick to this. Treat revision as you treat your job. This will make it easier to separate revision from time for yourself, so you won’t feel the guilt of not spending every free second revising. • Ask for help: If you are stuck on a topic or struggling to get enough revision
16
Ali Qasim, a banker at Rothschild & Co and ICAEW ambassador for One Young World, explains why social change is vital for the planet’s future
Qasim: ‘it’s important to keep a holistic and long-term perspective’
underpins society, employment, education and how people live. We have an important role, as we’re in key decision-making positions – many CEOs and CFOs as well as FTSE 100 board members are chartered accountants. The young
chartered accountants of today will get to these positions in the future. We want to encourage the mindset from the beginning that they can make the world a better place, not just make profits but consider the impact on people, the environment and society. When it comes to the future, I have learned it’s important to keep a holistic and long-term perspective. It’s easy to become comfortable in our daily lives, but there is a bigger world out there and not everyone is as fortunate as us. But we can all make a difference. This starts with having self-awareness. In terms of tangible changes, I can ensure that my organisation becomes even more proactive in community investment and social change. It’s our moral and civic duty to help those not as privileged as us, so I aim to give up my free time to mentor disadvantaged kids and give free advice. I’ve also accepted offers to join the advisory boards of a few charities. No one expects us to change the world straight away, but changing the world could start with changing one person’s world. If you are interested in getting involved in the 2019 One Young World summit check for information at icaew.com/charteredstar PQ Reproduced with the permission of ICAEW, this article was first published in Vital (December 2018)
Plan your success done, ask for help. A tutor may be able to explain that tricky tax law in five minutes, saving you hours of going in circles during your revision. A colleague may be able to help you balance work commitments with revision. A friend may give you that boost you need to believe in yourself. Talking something out will immediately make you feel more on top of your worries and help you regain focus. • Learn to say no: Learning to prioritise
Pip Harland on how you can achieve that elusive work/life balance
and say no is not always easy when you are trying to impress in a new job, but vital for success in both your exams and long-term career. While friends will always understand if you can’t make all social events, it can be harder to say no at work. If this is the case, speak to your manager and explain the situation. Offer a number of options, for example coming in early so that you can leave on time. Your team will be impressed that you have raised your concerns early and tried to offer practical solutions – remember, they all want you to do well! • Enjoy the journey: While there will be highs and lows on any journey, you will learn so much about yourself and your own capabilities during your route to becoming qualified. Enjoy the process and make sure that you block in time to celebrate each goal you achieve en route! PQ • Pip Harland, Accountancy Answered. If you are studying the ACA check out the revision guides and blog at www.accountancyanswered.com PQ Magazine February 2019
CAREERS IN ACCOUNTANCY YOUR CAREER, YOUR FUTURE Join the LSBF conference, brought to you in association with PQ magazine
Discover how to have a successful career in accountancy from ‘real’ part and newly qualified accountants. When: Wednesday 23 January 2019 Time: 9.30am to 2pm
Get a unique insight to what a day in the life of an AAT and ACCA accountant is really like!
Where: London School of Business and Finance 2 Bunhill Row, London EC1Y 8HQ 5-10 minutes from Liverpool Street Station
Booking:
Information:
https://careers-in-accountancy.eventbrite.co.uk
+44 (0)207 823 2303 professional@lsbf.org.uk
PQ ACCA APM exam
From à la carte to a set menu
Mustafa Muchhala has some top advice on how to focus your study for the compulsory questions in Advanced Performance Management exam
O
rdering from a menu at a restaurant when hungry while also exchanging pleasantries with other dining friends is not always easy. One keeps flipping between à la carte, today’s specials, the set menus and side dishes. Do I want a comforting treat or a healthy option? What’s cheap? Will I end up ordering what my friends order? While all this is going through your mind you see that the waiter is coming over – it is so difficult to decide! Perhaps this sort of dilemma was faced by students sitting the strategic professional exams prior to September 2018 when they had to choose questions to answer from Section B of the exam. However, from September 2018 the ACCA changed the assessment format for all strategic professional option papers – all questions are now compulsory, akin to a set menu, overcoming the dilemma of choosing the section B questions. So how should you prepare to enjoy this set menu – and get a pass – when attempting the Advanced Performance Management (APM) exam? Obviously, it is essential to have a very good overall knowledge of the syllabus (about 25% of marks) and you must be able to apply this knowledge (about 75% of the marks) to the
18
organisation in the scenario in the question. To help you decide on a set menu and focus your study, the examiner has indicated that the section A 50-mark question in the exam will be from syllabus areas A, C and D, which cover the following topics: A (Strategic Planning & Control) – Porter’s Five Forces, benchmarking, BCG matrix, integrated reporting, role of management accountant, mission, critical success factors and KPIs, budget systems and variances, business integration models such as value chain, McKinsey’s 7S model and Porter’s Generic Strategies, environmental management accounting. C (Performance Measurement Systems and Design) – Management information systems such as ERPS, EIS, DSS, lean information, evaluating the design of a report or dashboard, Big Data. D (Strategic Performance Measurement) – Financial performance measures such as NPV, IRR, MIRR, ratios; Divisional performance measures such as ROI, RI, ROE; transfer pricing; non-financial performance measures and performance measures in not-for-profit organisations; total quality management and
6 Sigma model; reward systems and management styles. One of the section B 25-mark question will come from section E of the syllabus and the other section B 25-mark question can come from any other syllabus area. E (Performance Evaluation and Corporate Failure) – Lynch & Cross Performance Pyramid; Fitzgerald & Moon’s Building Blocks model; Kaplan & Norton’s Balanced Scorecard; Activity Based Management (ABM); Value Based Management (VBM); Corporate failure models; A-score and Z-score. B (External influences on Organisational performance) – PEST analysis, risk and uncertainty. ACCA have published both the September and December 2018 APM exams on their website, which should be reviewed in the light of this new assessment style. Once you have worked on the knowledge you need to shift focus to applying that knowledge by practising past exam questions. This does not mean that you just read the question, ponder over it for a while and just read the answer, and end up highlighting everything you have read. This is definitely poor revision technique. Your approach should be to plan your answer in detail even if you don’t write it out before reviewing the solution. Use the PEAR approach (make the POINT, EXPLAIN it and RELATE it to the scenario). You could score up to three marks per point if you follow this approach. You should also write out some of the answers in full and get them marked by your tutor or use a marking service provider so you can get some constructive feedback on how to improve your answers. Nearer the exam attempt a mock exam to time, spending no more than the three hours 15 minutes available in the exam and get it marked as well. The feedback should help you identify any further knowledge and application gaps in your answers and help you to improve your exam technique and time management. This final mock exam is a vital rehearsal before the real exam. To conclude, the above breakdown of topics should help you focus on the key syllabus areas and where they will get tested, and how you approach the APM exam. But it still leaves you exposed to what the examiner will throw at you, so be well prepared when you go to that exam hall. Then it won’t matter if the set menu is to your liking or not! PQ • Mustafa Muchhala is a freelance professional tutor and writer at FME LearnOnline.com
PQ Magazine February 2019
audit PQ
Audit sector ‘broken’ The Competition & Markets Authority has outlined how it wants the audit sector in the UK to change
C
ompanies in the UK have forgotten what an audit is for, and have too limited a choice. On top of this, the Big 4’s focus on quality has been diluted. These are the key reasons why the Competition & Markets Authority (CMA) believes that audit sector currently isn’t working. Outlining its reforms to improve competition in the sector, it said UK companies choose auditors for ‘cultural fit’ and ‘chemistry’ rather than those who offer the toughest scrutiny. The CMA felt choice was too limited, with the Big 4 conducting 97% of the audits of the biggest companies. And the fact that at least 75% of the revenue of the Big 4 comes from other services like consulting also meant auditors’ focus on quality appears diluted. To address these concerns, the CMA wants to see legislation that separates audit from consulting services; the introduction of measures to substantially increase the accountability of those chairing audit committees; and the imposition of a ‘joint audit’ regime, giving firms outside the Big 4 a role in auditing the UK’s biggest companies. CMA chair Andrew Tyrie said: “Addressing the deep-seated problems in the audit market is now long overdue. Most people will never read an auditor’s opinion on a company’s accounts. But tens of millions of people depend on robust and high-quality audits. If a company’s books aren’t properly examined people’s jobs, pensions or savings can be at risk.” CMA is now consulting on what it believes are robust reforms, but it admitted that these intractable problems
may take some years to sort out. Tyrie stressed that if it turns out that the proposals are not far-reaching enough then the CMA will persist until the problems are addressed. The reforms proposed by CMA are: • A split between audit and advisory businesses: To get better quality, auditors should focus exclusively on audit – not on selling consulting services. One way of achieving this could be a structural break-up. But the international networks these firms belong to and the extent to which audit firms draw on expertise of those advising businesses would make this protracted and complex. A more immediate solution would be for audit and non-audit businesses to be split into separate operating entities. • Regulatory scrutiny of auditor appointment and management: Audits are a legal requirement, to ensure that companies act in the interests of their owners rather than their managers. Given the relative lack of engagement by investors and owners of some of Britain’s largest companies, these companies should not be left to appoint their own auditors alone. The CMA proposes close
scrutiny of audit appointment and management to make sure those appointing auditors are held to account and independent enough to choose the most challenging audit firms, rather than – for example – the cheapest. • Encouraging more choice: At present many of the UK’s largest companies have little choice, given that one or more of the Big 4 may be conflicted. Competition is weak. The CMA proposes that audits of the FTSE350 should be carried out by at least two firms, at least one of which would be from outside the Big 4. This will give mid-tier firms access to the largest clients, allowing them to develop their experience and credibility, while also ensuring a cross-check on quality. A possible alternative is a market share cap – ensuring that some major audit contracts only go to non-Big 4 firms. The CMA admits that its proposals only address some of the concerns about the audit sector. Sir John Kingman’s independent review addresses another – the shortcomings of the current audit regulator. CMA has given interested parties until 21 January 2019 to make their views known. PQ
IFRS for SMEs PQ
International standards for smaller firms
T
he IFRS Foundation has developed new resources for learners to help them understand the International Financial Reporting Standards (IFRS) for SME standards. It has now produced stand-alone modules for each section of the 2015 version of the IFRS for SMEs standard. These modules are designed to provide support to anyone learning about, applying, or reading financial statements prepared using, the IFRS for SMEs standard. Each module includes the following:
PQ Magazine February 2019
• Requirements – the full text of the section of the IFRS for SMEs standard reproduced with added notes and examples. The notes and examples are designed to explain and illustrated the requirements. • Significant estimates and other judgments – a discussion of the significant estimates and other judgments likely to be made in accounting for transactions and events when applying the section of the IFRS for SMEs. • Comparison with full IFRS standards – a
summary of the main differences between the section of the IFRS for SMEs standard and the corresponding standard from full IFRS standards. • Test your knowledge – MCQs, with answers, designed to test knowledge of the requirement of the IFRS for SMEs standard. • Apply your knowledge – case studies, with solutions, to help develop the skills needed to account for transactions in accordance with the IFRS for SME standard. PQ 19
PQ salary survey
What are you worth? Karen Young, director of Hays Accountancy & Finance, gives an insight into the salary and recruitment trends for 2019
S
teady business activity levels across employers of accountancy and finance professionals is leading to increased hiring plans, and skills shortages persist, particularly for part and newly qualified accountants. As a result, hiring intentions are high for PQs and NQs and professionals should expect a good outlook if they are looking to change jobs this year, of which 48% tell us that they plan to do so. The demand for the skillsets of PQs and NQs is felt across the sector, as 30% of employers who hire PQs say they lack the talent needed to achieve their current business objectives. It is these skills shortages which have seen the overall salary increase for PQs reach 2.5%, compared with 1.6% last year. Because of continued salary increases PQs are reporting much higher levels of salary satisfaction, and 60% say they are satisfied with their salary compared with just 42% in the previous year. Employers are expected to continue to keep salaries above market rate to attract talented PQ professionals – 73% tell us they plan on increasing salaries again this year. Findings from the Hays UK Salary & Recruiting Trends 2019 guide • As salaries have increased steadily over the past few years and PQs remain very much in demand, salary satisfaction has improved markedly. Only 40% say they are not happy with their salary compared with 58% last year and the prior year. • 63% say their salary has increased in the past 12 months, with over a quarter (26%) saying it has increased by over 5%. Salary pressure is set to continue for employers as over two-thirds (67%) of PQs expect their salary to increase again this year. • Over half of PQs (52%) feel positive about their career prospects this year, although 38% are still feeling uncertain. • 71% say they are currently satisfied in their role and only 43% say they believe there isn’t scope for career progression within their current organisation, lower than the 53% witnessed last year. • 34% of PQs say they moved jobs in the past 12 months, and 44% considered moving roles, pointing to a large proportion of talent who could be tempted by the right offer. • 48% of PQs plan to move jobs in the next 12 months, slightly lower than the 52% seen last year, suggesting employers will need to work harder to find the talent they need. The top reason for wanting to leave their role is salary and benefits package (28%), followed by a lack of future opportunities (26%). Additionally, close to half (46%) of PQs say a better salary and benefits package would tempt them to move roles. • The top benefits for PQs when considering a new role are: over 28 days annual leave (61%), financial support for professional studies (52%), health insurance or private medical cover (51%), pension provision above the legal minimum (50%) and training/professional certification support (41%). • 88% say they are aware of the flexible working options available to them and 58% say flexi-time is the most important flexible working option when considering a new role. ABOUT HAYS UK SALARY & RECRUITING TRENDS 2019 In early summer 2018 Hays surveyed 422 part-qualified accountants and 3,484 accountancy and finance employers. Salary data has been compiled using information gathered during 2018 from Hays offices across the UK, it is based on job listings, job offers and candidate registrations. For further information visit www.hays.co.uk/salary-guide PQ
20
Scotland Typical £22,000 £28,000 £33,000 £29,000 £34,000 £23,000 £30,000 £26,000 £28,500
AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
North West Typical £21,500 £28,000 £32,000 £28,000 £32,000 £25,000 £29,000 £24,000 £28,000
AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
West Midlands Typical £22,000 £28,000 £35,000 £29,000 £35,000 £25,500 £29,000 £27,000 £30,000
AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
South West AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £24,000 £30,000 £35,000 £30,000 £35,000 £26,000 £30,000 £28,500 £31,000
PQ Magazine February 2019
salary survey PQ
North East
Northern Ireland
Typical £18,500 £26,000 £32,000 £28,000 £30,000 £24,000 £31,000 £26,000 £30,000
AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £24,000 £27,000 £29,000 £27,000 £29,000 £22,000 £26,000 £22,000 £28,000
AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Yorkshire & the Humber AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £18,000 £26,000 £32,000 £26,000 £31,000 £24,500 £29,000 £24,500 £28,000
East Midlands AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £22,000 £28,000 £33,000 £28,000 £33,000 £25,500 £28,000 £27,000 £30,000
East of England AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £22,000 £29,000 £36,000 £29,000 £36,000 £28,500 £33,500 £29,000 £33,000
London AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist
Typical £25,000 £36,000 £42,000 £36,000 £43,000 £28,500 £33,500 £34,000 £38,000
South East AAT Studier ACCA PQ ACCA Finalist CIMA PQ CIMA Finalist CIPFA PQ CIPFA Finalist ACA PQ ACA Finalist PQ Magazine February 2019
Typical £25,000 £35,000 £40,000 £36,000 £43,000 £28,000 £33,000 £30,000 £33,000 21
PQ profile
Doing it by the books How does it feel to be named Small Practice of the Year and win a Luca Award? I was over the moon to win the award. I started But the Books two years ago, so I was very proud that my hard work had been recognised at such a high level, competition was high within the category and I certainly didn't go the awards expecting to win. Why did you decide to set up your business? A combination of things. Before I started the business I’d been mentoring young entrepreneurs through the Prince’s Trust, specifically helping them with their business plans and accounts. My experience of this made it very clear that business finance just isn’t taught at school. Then while I was on maternity leave and getting questions from many friends and family about their tax returns it felt like the right time to formalise things and I started But the Books as a side project. I took the business full time in August 2018 and I’ve just appointed our fourth team member. What does being your own boss enable you to do? I’m in control of my workload, the clients I choose to work with and how and when I work. There’s no doubt that running your own business gives you a lot of responsibility, but it also gives you a lot of freedom, and I feel much more creative now than when I worked for somebody else. What advice would you give to others just starting out? Speak to other bookkeepers and find out how they did it. It’s easy to feel like you’re the only person in the world starting a business, but there are plenty of us who have already been on that journey and are happy and willing to share our tips and advice. Is it possible to ‘have it all’? I think you can have most things if you prioritise what’s important to you and plan well to achieve the balance. As a business owner and mum of a busy toddler there’s no denying there are days when it seems like there are just too many balls in the air, so I just try to be realistic about expectations for myself. How many clients do you have and how many could you have? Since starting out in 2017 we’ve worked with over 40 small businesses. This year we’re focusing on taking on slightly larger clients we can work with on a regular basis. The team is growing, and we can 22
Meet Zoe Whitman MCIB of But the Books, winner of the ICB’s Luca Award for small practices grow more if we take on more clients, but at the same time I want to ensure that the quality of our work remains high. So we’ll always be looking to achieve a balance of growth with continuing to provide a personalised service. What does the future hold for your practice? We’ve spent the past year understanding what our customers really need from us and this year we’ve launched some new advisory services. We’ll be focused on this in the first quarter. What further training/CPD needs do you have? We need to be prepared for Brexit and potential changes to the VAT regime and there will always be technical updates to stay abreast of, but I’m also aware of where my soft skills fall short. Personal development is very important to me and I’ve identified strategy and leadership as two development important development areas this year. What do you most enjoy about your work? I love working with other business owners, talking to them about their businesses and understanding the challenges facing them. Taking on staff and wanting to make sure my team work in the way that I work has made me think hard about our values at But the Books and one of those is definitely active listening. Having those ‘discovery’ conversations with our clients every time helps us develop strong relationships and
means we can really get to the route of what they need to provide a service that is exceptional. How much of your day-to-day is actually bookkeeping? I’m moving further and further away from the bookkeeping, and as a business owner that makes sense. I’m building a team to do that part of the job, so I can focus on our business strategy, make sure we have the right people and build a great business delivering a great service to our clients. How easy is it for you to retain clients? We don’t have any issues retaining clients, the main challenge for us is converting the very small, one-off jobs into regular clients, so we’ve developed entry level services which are aimed at filling that gap. As you were already ACCA qualified, why did you decide to become an ICB member? When I started But the Books I was working in financial services. I have an industry and local government background and until that point in my career had never thought I'd have reason to apply for an ACCA practising certificate so I hadn't kept a PCTR. Since the work I wanted to do when I started the business was clearly at a bookkeeping level, it was more straightforward to apply to the ICB for a practising certificate at that point. The ICB are also able to oversee my antimoney laundering which, of course, is a legal requirement. PQ PQ Magazine February 2019
PQ with AAT, ACCA or CIMA? Why wait? Join ICB today! Fast track your career by using your existing qualifications to join the world’s largest bookkeeping organisation. As a Certified ICB Bookkeeper you’ll benefit from:
Professional status and recognition Free legal and technical advice-line Local and national events Resources, webinars, templates and help sheets Accounting news, emails and updates Discounts with 100s of retailers including Sainsbury’s, Tesco, ASOS, and Curry’s And being part of a community that really cares
For more information and to receive 15% off your ICB Exemption application, call ICB HQ on 0203
405 4000 and quote ICBPQ
Email us at exemptions@bookkeepers.org.uk
www.bookkeepers.org.uk/PQ
The Institute of Certified Bookkeepers
Sign up for NQ magazine –it’s free! NQ magazine is written specifcally for newly qualified finance professionals. You can sign up for this e-magazine via PQmagazine.com
Go to issuu.com for back issues. Search for NQ magazine –they’re all there!
The new issue of NQ magazine is out now –go to our website for all the details
PQ ACCA exams
How to survive SBL Sean Purcell has five top tips to help you pass the Strategic Business Leader exam
T
he new ACCA Strategic Business Leader exam has been designed to ensure that accountants of the future have all the skills needed to ensure they remain relevant in the workplace. It is based on very practical and workbased scenarios and students will need to synthesise their technical knowledge with the practical issues presented in the case to develop pass standard answers. In order for you to ensure a good pass it is essential you focus on the following areas:
Professional skills marks When examiners produce the SBL exam they will set exam requirements that will examine the technical skills of candidates, but will also discriminate between candidates on the basis of their overall ‘professionalism’ in writing their exam answers by awarding professional skills marks. In every Strategic Business Leader exam 20% of the exam marks are professional skills marks, and rather than being mutually exclusive to the technical marks they actually complement them. There are five areas for which professional skills marks are awarded. They are: commercial acumen; scepticism; evaluation; analysis; and communication. I would recommend that you read the article and videos on professional skills marks on the ACCA website for more detailed guidance (see https://tinyurl.com/ybx5m3j5 and https://tinyurl.com/yb2ty4ft). My tip would be that when you are reviewing a task you check what the professional skills are being awarded for, and to use these as the lens through which you plan your answer. For example, if the professional skills are being awarded for scepticism I would use the guidance from the above ACCA article and ensure my focus was one that was questioning, challenging and probing. Such an approach will not only gain all the professional skills marks, but will enable the technical marks to more easily slot in to place. Ethics and Professional Skills module Although not a prerequisite for the Strategic Business Leader exam, I would insist that you complete this before attempting to study for Strategic Business Leader. ACCA have invested heavily in 24
updating and creating a really useful interactive module which is web based and can be attempted at a speed convenient to you. The reason I would insist on you taking it is that it will make studying for Strategic Business Leader much easier, as it includes many practical scenarios for you to consider. These are perfect preparation, and the modules also focus on skills such as communication, scepticism, analysis, evaluation and commercial awareness. Time management You have four hours available to complete Strategic Business Leader and although this sometimes seems daunting to students I would recommend you see the exam as a three-hour exam for which you have four hours to complete. However, in order to secure a pass it is essential that you treat the process as a project that requires managing. I tend to view exams as a project management exercise in mark acquisition. If we have four hours – 240 minutes – available I would suggest that you spend about 40 of those minutes reading and digesting the task requirements in the context of the case information. This
contains various exhibits such as press releases, notes from board meetings, extracts from accounts, etc. You then have 200 minutes to acquire the 80 technical marks. Remember that if you have taken my advice on the professional skills marks above you will realise that no extra time is taken in gaining the 20 professional skills marks. Therefore, in allocating our time we divide up the minutes by 80 and not 100. This will leave us with 2.5 minutes per mark and we should use this metric to manage our time. In most exams the first 50% of the answer is normally easier to acquire than the second 50%, so it is essential that you give yourself the appropriate time to do this for every task. Practise questions to time Think back to when you took your driving test. Did you spend most of your preparation time reading books on how to pass your test or going online and reading articles on top tips to pass? Of course not – I imagine you spent most of your time learning in a car making mistakes, and then ensuring they do not happen again. I would recommend the same practical approach to Strategic Business Leader – do some questions to time and get them marked. Use the SBL information that’s online ACCA have invested heavily in providing students with lots of useful resources to help them prepare for this exam and please make time to review them rather than waste time on some random opinions on YouTube as all of the ACCA resources have been produced with input from the examining team. PQ • Sean Purcell has been involved in marking at the professional level for over 20 years. He also helped produce and deliver the ACCA ‘train the trainer’ programme for SBL tutors PQ Magazine February 2019
PQ magazine About you Title......................................................
Theeasiest easiestway wayto toget get your your free monthly copy The copy isis to togo goonline onlineatat www.pqmagazine.co.uk,ororyou youcan canfill fillinin the the form form below and send www.pqmagazine.com, send itit to: to: Magazine, 4th Floor, Central2 House, 142Way, Central Street, London, EC1V PQ,PQUnit 3a, Kingfisher Heights, Bramwell Royal Docks, London E168AR 2GQ Study please tick a box in 1A or 1B 1A Please indicate accountancy body you belong to and tick the box of the next set of exams you are hoping to sit Applied ▫ Knowledge F1-3
Applied ▫ Skills F4-F9
ACCA
▫ CAT
CIMA
▫ Certificate
Surname ..............................................
CIPFA
▫ Certificate
ICAEW
▫ CFAB
▫ Professional
▫ Advanced
Company name ..................................
ICAS
▫ TC
▫ TPS
▫ TPE
Tax
▫ ATT
▫ CTA
AAT
dip ▫ Level 2/Found 2
3/Adv dip ▫ Level 3
First name............................................
............................................................ Department.......................................... Full postal address
Home
▫
Work
▫ Operations
▫ Management
▫ Diploma
Strategic ▫ Professional P Papers
▫ Strategic
▫ T4
▫ Strategic
1B Studying for an accountancy degree/MBA/MSc
dip ▫ Level Level 4/Prof 4 ▫ Year 1
▫ Year 2
▫ Member ▫ Year 3
▫
Do you work in accountancy and finance
............................................................
▫ Yes
▫ No
If yes, what is your job title? ..........................................................................................................
............................................................
* How do you want to receive your PQ magazine?
............................................................
Please tick your preferred mode of delivery for your free monthly magazine.
Postcode ............................................
▫ Online (please supply email address)
Sign below
▫ By post (UK only)
to receive your monthly
PQ magazine totally
free
Phone .................................................. * Email ................................................ ............................................................
Sign here ............................................................................Date........................................................... ▫ Please tick here if you do not wish to receive direct marketing promotions from other companies.
PQ magazine reserves the right to refuse a free copy of the magazine if the applicant does not comply with the terms and conditions of circulation.We will use your details to send you a copy of the magazine and any further information we feel would be of use.
PQ CIPFA spotlight
Rob Whiteman explains how data from British libraries illuminates our changing public services
By the
book
A
ccording to CIPFAâ&#x20AC;&#x2122;s annual library survey in Great Britain, the number of public library branches and paid staff continues to drop, as stretched councils reduce their spending on the service. During 2017/18, total expenditure on councilrun libraries fell by ÂŁ30m, with the service losing 712 full-time employees (FTEs), as well as a net loss of 127 service points. This follows a trend quarter, or just under 10,000 volunteers. that has seen the number of public libraries and Reading between the lines, this growth in paid staff fall every year since 2010, with volunteerism makes it clear that communities spending reduced by 12% in Britain in the last deem libraries to be an important and valuable four years. service that they will work hard While CIPFAâ&#x20AC;&#x2122;s survey projects the sheer themselves to save. Public outcry brunt of austerity that libraries and other has often followed many statutory services are facing it also closures. brings about the transformation of Libraries provide an local government. The way these important service, in terms services are being funded, staffed and of education, and provide a kept going is now reliant on the place for communities to citizens and communities. Where gather, or for some government can get people to pay individuals to connect to the Rob Whiteman directly for services, it is often doing so. internet, for some to seek For some services, such as collecting garden employment, or others to complete waste, new charges have been introduced. In homework. In disadvantaged areas itâ&#x20AC;&#x2122;s libraries there has been a rise in voluntarism, arguable that libraries are incredibly important and a decline in paid staff. for these purposes, beyond issuing books. CIPFAâ&#x20AC;&#x2122;s survey showed 51,394 volunteers The latest edition of CIPFA and the Institute of putting in 1,780,843 hours in 2017/18. Over the Governmentâ&#x20AC;&#x2122;s (IfG) Performance Tracker, which past four years, this was an increase of almost a analyses the performance of public services,
demonstrates how the survival of many vital services that communities depend upon are now in doubt. Public sector leaders and the Government all have a duty to make clear to the public that the quantum of services currently available is not sustainable and that we, as a country, face a clear choice: we can either contribute more to fund services or expect public bodies to deliver less. Recently, we have been calling strongly for a review of statutory services, which should lay bare some of the pressures on local government. This would seem timely, with the permanent secretary of MHCLG recently giving evidence to Parliament that councilsâ&#x20AC;&#x2122; financial sustainability and resilience is defined by the provision of statutory services. While libraries are statutory, some services which are technically described as non-statutory like youth and cultural services, play an important role in the fabric of local communities. While the transformation of these services is inevitable, in some areas of local government, such as neighbourhood services, a lack of data makes these shifts difficult to track. However, the libraries survey provides an informed base for discussion, as the statistics reveals both change, and the creative means councils are using to maintain services. This is an incisive example of what is happening in local government, highlighting the need for honest conversations about the direction of travel of our councils, and the future shape of our public services. PQ â&#x20AC;˘ Rob Whiteman is CEO of CIPFA
6WDUW \RXU 1HZ <HDU ZLWK DQ DZDUG ZLQQLQJ FHQWUH
$&$
$&&$
5HYLVLRQ 6HVVLRQ RQ 2ä&#x2C6;ąHU
)5(( $335(17,&(6+,36 $FFRXQWLQJ $$7
$$7
%XVLQHVV $GPLQLVWUDWLRQ
&XVWRPHU 6HUYLFH
&HUWLILFDWH /HYHO 3URIHVVLRQDO /HYHO $GYDQFHG /HYHO
/HYHOV $YDLODEOH
6$785'$< &/$66(6 :25. 3/$&(0(176 $9$,/$%/( )25 $// &2856(6 ',67$1&( /($51,1* $9$,/$%/( )RU PRUH LQIRUPDWLRQ &DOO (PDLO DGPLQ#WKHWUDLQLQJSODFH RUJ $GGUHVV &DUOWRQ &RWWDJHV #7UDLQLQJB3ODFH 1HZ &URVV 5RDG /RQGRQ 6( %( 26
RI ([FHOOHQFH ZKHUH TXDOLW\ WUDLQLQJV SUDFWLFDO ZRUN SODFHPHQWV WDNH SODFH
PQ Magazine February 2019
collaborative working PQ
Is anyone out there? D
oes this sound familiar? You’re at work and have a knotty problem that’s driving you mad. Round and round it goes in your head. Eventually, you give up and seek out a trusted colleague for help. “Mind if I bother you a sec?” “Of course,” comes the reply. “What can I do for you?” “Well…”, and off you go on a rambling explanation of your issue. Your colleague sits there patiently listening, and then without them uttering a word in response you suddenly break off mid-sentence in a moment of revelation. “Ah! I’ve got it! Sorted! Thanks so much!” “Any time”, they smile. “Glad to have been of help.” What does ‘working together’ mean? So what happened there? In that sort of situation the very act of articulating your problem opens your mind up to possible solutions. It generates mental connections that would otherwise have stayed closed. And this is the nub of why working in collaboration with other people is so positive and fruitful. Collaboration adds an extra dimension that is all but impossible to achieve when you work alone. Or, more pertinently here, when a student studies in isolation. If you’ve ever been in a workshop or a classroom and the presenter sets the students off on a task you’ll recognise the hum of voices that means the act of learning has started. The sound of interaction and co-operation, question and response, suggestion and feedback. This is how we learn. From each other. If you’ve ever watched a group of very young children you’ll notice that they rarely ‘learn’ in silence. Why does it work? Working with other people is effective in a number of ways: • It often requires you to explain your problem, and as we’ve seen, the very act of doing so may begin to solve it. • It may need you to evaluate others’ contributions – evaluation is a very high-level skill worth developing. • It may require you to justify your position, thereby analysing your own thinking – another opportunity to practise a vital workplace skill. • It allows you to learn from your mistakes. Collaborative working gives a mutually supportive
Tony Frascina explains why collaborative working is so important, especially in the digital age space in which to do that. • And if you’re not sure about something, your colleagues probably aren’t either, reassuring you that you are on a par with your peer group. I could go on, but you get the point. Is it possible in the online world? It is now. We know collaborative learning works in the classroom – we’ve been doing it since we were children. But in the modern workplace, online learning had grown up as an essentially solitary activity. Whether it’s a computer, tablet or mobile it’s the same relationship. You’re alone with the material you’re trying to learn – essentially isolated, at the mercy of the quality of the material in front of you. But as we’ve seen, this isn’t how it’s meant to be. As social animals we learn best in a group, something skilled teachers exploit to great effect. The benefits of collaborative working are well researched and documented. And indeed, the explosion of social media tools now makes it easy to integrate working together into online learning. Therefore, collaboration should be the norm in your online learning experience. Here’s where learning design comes in. Tutors
and leaning designers need to give students meaningful, purposeful, well-structured tasks to engage in that crucially they can’t complete alone and where mutual dependency is built in. How do we collaborate? People need a reason to engage others in the online space. It’s like at a party where you don’t know anyone. Even though you know it’s better to mix, inertia can make it easier to sit alone in the corner. Interesting, effective and meaningful activities means collaboration becomes a selfreinforcing behaviour. All those benefits just start to pour in. Of course, the tutor has to keep an eye on it – it’s a rare group that hits it off 100% first time – but that supervision and support will ensure all those participating improve from the learning experience. All that means is that wherever you choose to study you can enjoy a thriving, buzzing classroom and it doesn’t matter if it’s the online world or a traditional classroom. There is simply no excuse any more for learners to be isolated and solitary. You are not alone. PQ • Tony Frascina is an Instructional Designer who has worked on AVADO’s ACCA courses
Free Notes, Lectures, Tests & Tutor support for
ACCA & CIMA Exams Visit OpenTuition.com to benefit PQ Magazine February 2019
27
PQ workplace skills
Show some emotion Narayanan Vaidyanathan explains why emotional intelligence is a human quality that will stand you in good stead in your career
B
y now, many of you would have heard that the biggest event in the accounting calendar took place in November – the World Congress of Accountants. Also known as the ‘Olympics’ of the industry – since it takes place every four years – this event offered a chance for ACCA to shine a light on its latest research and insights which aim to shape the future of the profession. Our report, ‘Emotional quotient in a digital age’, was launched at the convention, where delegates heard how this quotient is developing the accountancy profession needed for a fastevolving digital age. To the casual observer, emotions and accountancy seem like unrelated concepts. However, to succeed in an era of increasing digitisation, today’s accountants need to recognise the importance of this human quality that’s notably difficult for machines to replicate.
So what is emotional quotient (EQ)? EQ is a measure of emotional intelligence. And emotional intelligence is the ability to identify your own emotions and those of others, harness and apply them to tasks, and regulate and manage them. Ultimately, accountants need a rounded set of skills that go beyond the technical knowledge expected of them. In 2016, our groundbreaking research ‘Professional accountants – the future: drivers of change and future skills’, identified that finance professionals would need a wide blend of capabilities to succeed. Intellect, creativity, emotional intelligence, vision, experience, mastery of the digital world, technical skills and a strong ethical compass are the seven sought after skills employers are seeking today and will be in the decade ahead. Collectively, these seven distinctive attributes come together to create the optimum blend of technical knowledge, skills and abilities. Many people have an intuitive sense of EQ, often expressed as something to do with emotions and interacting effectively with people. But it is important to go beyond this and critically reflect on the value embedded in emotions in today’s digital age. Developing one’s EQ requires working on a range of competencies including a growth mindset, self-knowledge, perspective taking, empathy and influence. The growth mindset emerged as a key enabler for the development of EQ. It is about feeling comfortable in one’s ability to overcome obstacles and challenge one’s own identity, and to extend oneself into new areas. It’s also a point of high leverage – in other words, improvements here can help with those needed across all emotional competencies. 28
Experience can be an enabler for improving EQ with higher scores for many competencies being correlated with the level of exposure to situations needing that competency. An implication of this is that EQ can be learned – it is not a magic trick, and like most other skills it can be developed and improved over time. The more one focuses on it, the better it becomes. There’s a strong case and real opportunity for those in the accountancy profession to embrace their emotional intelligence and build their EQ competencies. In doing so, they’re strengthening their competitive advantage in the face of growing automation in the digital age. In order to succeed, professionals should be aware of their own EQ quotient and strive to sharpen it. Digital impact ACCA’s research identified six areas where the impact of digital could highlight the need for EQ in professional accountants. Some examples for each area include: • Change readiness – empathy is needed to deal with technology related job losses and a growth mindset helps overcome fear of change. • Increased diversity – understanding the viewpoints of a wider pool of stakeholders. • Ethics and beliefs – these influence advocating an ethical approach to technology and selfknowledge helps to set boundaries. • Cognition and learning – a growth mindset helps to challenge tribalism and self-knowledge influences prioritising. • Human-machine interaction – EQ helps to prevent loss of control and growth mindset helps to gather insight from interactions. • Shifting power – softer forms of influencing are
needed in a less hierarchical digital workplace and a growth mindset enables new ways of working that could challenge normal practice. All emotional competencies are required in a balanced way to deal with these impact areas, though the growth mindset featured prominently in many instances. Tomorrow’s leaders ACCA is committed to developing the accountancy profession the world needs, both now and in the future. Our in-depth analysis of the emotional quotient represents one step in our long-term commitment to providing the finance leaders and strategic professionals who will create the accountancy profession the world needs. Throughout our qualification journey students are exposed to real-world business scenarios. They need to assume a given role, respond to different stakeholders and use their emotional intelligence to address issues, work within different business cultures and demonstrate leadership. To complement the research we have created a unique diagnostic tool, launched alongside the report for people to self-assess their level of EQ against a credible global benchmark specific to the accountancy profession. The tool provides guidance on how to improve effectiveness in this competency. It’s important to critically reflect on the value embedded in emotions as we look ahead in a digital age. In a sense, it is the elephant in the room, the potential of which is often not recognised. PQ • Narayanan Vaidyanathan is ACCA’s Head of Business Insights PQ Magazine February 2019
careers PQ
Predictions
for 2019
CABA’s Kelly Feehan does a bit of crystal ball gazing on what the major workplace wellbeing trends for 2019 will be, and why employers should think about them seriously. 1. Evolution of the working week: Most people work 9am–5pm, five days a week, but is this going to change? Increasingly we are hearing calls for a shift to a four-day week, to allow employees more time to relax and recharge as the pressures and strains of work become more intense. In New Zealand, a trial was carried out to test whether employees reacted better to working a shorter week. The results? Work was completed, and both teamwork and engagement increased. 2. ‘Hidden’ diseases being properly addressed: Over the past five years, employers have become increasingly aware of the threat of ‘hidden’ diseases, such as mental ill health. Following business leaders’ calls for better mental health training and the government’s commitment to mental health first aiders, we fully expect businesses to soon be able to support mental health as comfortably as they do physical health. However, the next challenge is getting employees to speak openly about these problems. 3. The rise of the robots: In 2018, the conversation around Artificial Intelligence (AI) ramped up. As firms become more used to automation they are starting to see how technology such as AI or machine learning can work to complement their workforce. For example, Commerzbank has started trialling AI to write analyst reports to save employees’ time. In the legal sector, firms are using machine learning to help code and sort previous cases, freeing up legal teams to add value in other places, and allowing them to take on more interesting, career advancing work. 4. Microchipping: Another workplace trend we’re seeing is employee monitoring. More specifically, microchipping. Biohax, a Swedish company has already microchipped 4,000 employees internationally and is coming to the UK following increased demand. Ease of access to buildings, alongside making travel easier, are the benefits cited, which for many timepoor employees could be appealing. It may take a while to take off and won’t sit comfortably with everyone, but it’s already making waves and we won’t be surprised if we see more about this trend next year. • Kelly Feehan, Service Director, CABA PQ Magazine February 2019
Life at AVADO Caron Betts is an ACCA tutor, splitting her time between home in Suffolk and head office in White City, London. She has been there for two-and-a-half years. A qualified ACCA/ACA, Caron won the PQ for Best Use of Social Media at our 2018 awards What time does your alarm clock go off on a work day? 7.30am. It used to be 6.30, but now I don’t have a daily commute I can be at my desk at 7.31! What’s the first thing you do when you get to your desk? Check emails to clear students’ queries. What’s on your desk? Laptop plus camera and microphone to do recordings for the Virtual Learning Campus. What’s the best thing about where you work? Working with inspirational people who challenge me to deliver innovative learning. Where’s your favourite place to go for lunch? Fish and chips on Southwold beach. What (or who) can you see when you sit at your desk? My garden (pictured).
Which websites are your favourites and why? The BBC for a news updates. Which websites do you use for work? ACCA, for the latest from the examiners and useful info for students. How many hours a week do you spend in meetings? Virtual meetings – about four hours. When I am in the office I am usually in meetings all day. What time do you leave the office? My standard working day finishes at 5pm, but I teach live classes a couple of evenings a week, and they invariably have
lots of student queries, meaning I finish at 7.15–7.30pm. How do you relax? I do martial arts and volunteer at a youth club for children with disabilities. What’s your favourite tipple? A G&T or Prosecco. What is your favourite TV show? Bodyguard and In the Line of Duty. Summer or winter? Summer. I can’t bear the cold. Pub or club? Pub. Who is your hero? Amelia Earhart. Her passion and drive meant she constantly pushed the boundaries of aviation. If you had a time machine, where would you go? November 22, 1963 Dallas, Texas. I am intrigued by the mystery that is the assassination of JFK.
to show you have the necessary skills for the job, said KPMG’s head of student recruitment, Charlotte Carter, recently. That means doing your research and adding any experience you possess that might be relevant to the position you are applying for. She explained that being the captain of your university sports team may not seem relevant, but effective communication, leadership and great teamwork skills are all in high demand from employers. Also any retail work means you will able to deal with difficult customers!
Paying its dues New stats from the CCAB show the accountancy profession contributed £59bn to GDP in 2017 – of which £21bn was generated by the activities of the accounting industry. A further £38bn is estimated to have been contributed by ‘in-house’ accountants embedded within other industries throughout the economy. This is equivalent to 3.2% of all economic activity in the UK during that year. The report also showed that there were around 613,000 individuals employed in accounting roles.
In brief Job of the month Rendall and Ritter are looking for a Service Charge Accountant at their head office in Aldgate, London. You will be responsible for maintaining the accuracy and integrity of the accounting records of a designated portfolio of properties. The successful candidate will receive a competitive salary, as well as 25 days’ holiday plus eight bank holidays. Apply online at https://tinyurl.com/ybc382n6 Does your CV do the job? Your CV has only one job –
The PQ Book Club: books you should read How to Present to Absolutely Anyone by Mark Rhodes (Capstone, £10.99) Does the thought of making a presentation fill you with terror? Are you losing sleep over having to present to a potential new prestigious client? Well, you’re not alone. In fact, author Mark Rhodes once pretended to have crashed his car to avoid giving a presentation. But it’s a fact of life that, as you develop your career, you will be expected to give presentations. So why not develop a coping strategy now? This book is a very good starting
point in helping you to build your confidence in this area. It’s packed with tips and advice on how to do it successfully, with sections on reducing fear, how to prepare, dealing with mistakes and creating great content among others. One of the most important lessons to be learned is the importance of crafting an engaging and informative presentation. The harder you work on your presentation before the event, the easier – and better – it will be come the big day.
Rhodes is a great believer that success breeds success, and also that practice makes perfect. You should treat your presentations as a sports star treat their training regime, he argues. This book is well presented and easy to read, so there’s really no excuse for you not to pick up a copy. PQ rating 5/5 Buy this book and improve on a very valuable skill. 29
PQ got a story, funny or serious, you want to share? Email graham@pqaccountant.com
ONLY IN FRANCE?
QUOTE OF THE MONTH
“Klopp’s punishment wasn’t so much a fine for misconduct, it was a tax on being human.” Sam Quek, Olympic Hockey Gold medallist and Liverpool supporter. She was unhappy with the £8,000 fine imposed on Liverpool manager Jürgen Klopp after he ran onto the pitch and hugged his goalkeeper after a late winner against Everton.
A BLINKERED
APPROACH Forget working with headphones to cut out the office chatter, all you need to be productive in the workplace is a set of blinkers! Panasonic has announced a new workplace gadget called the Wear Space. It’s essentially a set of horse blinkers masquerading as high-end tech. The Wear Space wraps around the user’s head, obstructing peripheral vision and cutting out noise. Fashion designer Kunihiko Morinaga, Panasonic’s collaborator on the project, stated that the devices ‘instantly creates a boundary with the surroundings’ and indicates to co-workers and bosses that you are busy and not to be disturbed. Although the whole thing seems bizarre (not to mention expensive, with an RRP of £200), it’s surprising to see that 90% of respondents to a US survey stated they were ‘sympathetic’ to the product.
’ WEV E
I love tax!
TAX RETURNS AND TURKEY
So, how did you spend Christmas Day? Well, 2,616 people used their time for filing self assessment returns! Even more did it on Boxing Day. Some 8,465 filed their returns on 26 December, with the peak hour being between 1pm and 2pm. HMRC’s Angela MacDonald said: “Whether you fit it in while cooking the Christmas turkey, once the kids have gone to bed, or after the Queen’s Speech, our online service is available for you to file your tax return, at a time that suits you.” Deadline for 2017/18 returns is 31 January 2019.
The ‘gilets jaunes’ protests seem to be a regular Saturday fixture (for now), and during the unrest tax offices in a dozen French towns have been attacked by the yellow-vested demonstrators. The tax office in Rion was set on fire, another tax office was petrol bombed, and 200 workers in Poiters had to be given a police escort, with a crowd shouting “fascist collaborators” at them. The tax offices became a target because from 1 January France switched to a pay-as-you-earn system, that it was claimed will reduce everyone’s monthly take home pay. Under the current system in France taxpayers receive their pay gross of tax and pay income tax the next year after filing an annual return.
FLY ME TO FREEDOM
A £1m VAT scam-artist thought he had escaped HMRC recently when he persuaded his flying instructor to take a detour to France! Jamie Colwell, who had had his passport confiscated and was on bail, then went on the run with his father Brian in an effort to evade justice. However, they couldn’t live without their furniture and later arranged for it to be delivered to them in a rented van. HMRC put a tracker on the van, which led them to Spain and the arrest of the hapless pair. Jamie Colwell was sentenced to five years and three months in jail, and his father two years and eight months.
CHOCOLATE COATED TAX
Chocolate and crisps must be taxed and the money raised should be used to subsidise the cost of vegetables, says the UK’s chief medical officer, Professor Dame Sally Davies. She felt that food companies’ voluntary efforts to cut sugar and salt were not good enough, and has called for laws to force them to make healthier products. She claimed: “We have a situation at the moment where people are benefiting from selling unhealthy food and they are not paying for the harm that is doing to people as individuals to us as a society and the costs to the NHS.”
SWEET MUSIC New research has found that listening to music on the way to work gets us motivated! About two-thirds (64%) of commuters say they feel more productive after streaming some solid sounds. And it appears certain professions prefer different styles. Some 20% of management consultants go for classical/ opera, IT workers listen to hip hop, and charity workers go for rock music.
GOT THE L OT
Back by popular demand, here’s your chance to win one of our ‘I Love Tax’ t-shirts! We have two sizes available – medium and large. It’s the t-shirt we once sent to the Queen to wear on Christmas Day! We even got a nice letter back from Buckingham Palace’s senior correspondent officer, Sonia Bonici. We are giving three t-shirts away this month. To be in with a chance of being sent this great giveaway send your name, address and t-shirt size to graham@pqaccountant.com. Head up your email “I love tax’.
Pick and mix
Yuval Noah Harari’s seminal book ‘21 lessons for the 21st Century’ is just one of our PQ Book Club review books up for grabs this month. We also have ‘Why Social Media is Ruining Your Life’, ‘How to Present to Absolutely Anyone’, ‘UK Taxation – A simplified guide for students’, and ‘Leading with Emotional Courage’. Send us your name and postal address to be entered for our lucky dip. There will be five lucky winners for this giveaway. Head up your email ‘pick and mix’ and send it to graham@pqaccountant.com
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 8 February. The main draw will take place on Monday 11 February 2019.
TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM 30
PQ Magazine February 2019
Your jobs board I need to find pqjobs.co.uk now!
PQ jobs pqjobs.co.uk
SPECIAL OFFER: Receive up to
15% off any online or campus class Offer ends 4 February 2019*. Book now to receive this offer!
LEARN THE RIGHT WAY AND BOOK NOW FOR YOUR MARCH EXAMS WITH LSBF! Study in a way that suits you by booking classes either online or in our Central London campus • • •
Free revision for AB (F1) – LW (F4) papers Pass First Time Guarantee™** Gold approved learning partner
• • •
Award-winning tutors Extensive exam paper practice Flexible study options
Study at Moorgate Bunhill Row, London EC1Y 8HQ Book online at: professional@lsbf.org.uk +44 (0)207 823 2303 *T&C apply **LSBF Pass 1st Time Guarantee ™ ensures that if you do not successfully pass your paper on the first sitting, you will be able to attend a free resit course. The nature of the free resit depends on the preferred study mode.