PQ magazine, July 2019

PQ magazine July 2019

www.pqmagazine.com / www.pqjobs.co.uk

WIN A FREE ACCA SBL COURSE We are giving one lucky ACCA reader the chance to win an online SBL course with award-winning See page 9 for details

21 YEARS

Celebrating 21 Years of StudentsÕ Success

Celebrating Success

Large Training Provider of the year “In this category is the award for Large Training Provider of the year. This recognises the excellence of providers with more than 300 current AAT students.

The range of shortlisted entries, from FE, private, Distance Learning and International providers shows just how good the entries for this category were. It’s fair to say all those shortlisted deserved to win, but there could only be one winner. Their application was outstanding, demonstrating a commitment to Cloud accounting, with all their staff achieving Xero Adviser certification status, and the line ‘We must ensure that our students of today are properly prepared to be 21st Century accountants,” helped to nudge them into first place.

The winner of Large Training Provider of the year goes to: Premier Training” - Vernon Anderson, AAT President

Training Provider

AWARDS 2019

Winner Large Training Provider of the year

Lifetime Achievement Award “The Lifetime Achievement Award gives us the opportunity to say a very special thank you to a tutor who has given more than 20 years commitment to the AAT. Tonight we get the chance to recognise this outstanding achievement made by Jeff Grimston, MAAT, Premier Training.

Compassionate, caring and empathetic are just three words regularly used to describe Jeff.

Jeff has a passion for helping his students and as the submission details “he always seems able to put complex accounting techniques or difficult concepts into a format that every student can understand.”

He is a true AAT advocate; he still proudly carries the MAAT letters, and has been a member for over 20 years.

Training Provider

AWARDS 2019

Winner

Lifetime Achievement Award

So, without further ado, please join with me in congratulating the winner of the AAT’s Lifetime Achievement award, Jeff Grimston, Premier Training.” – Awarded by Vernon Anderson, AAT President

@

info@premiertraining.co.uk

01469 515444

premiertraining.co.uk

comment PQ

CONTENTS

July 2019

News 06ACCA exam feedback June

26ICAEW Advanced level How

08AAT new syllabus Tutors: the

28Working in practice The joys

papers are a struggle for many

association wants your help 10New survey Better sleep is the key to passing your exams 12Tech news An update on the digital world Features, etc 04Mind your Ps&Qs AAA is really not a bore; KPMG’s approach to mental wellbeing; and the best of PQ’s social media 14Exam technique Studying accountancy and marathon running have many similarities

15Your career Some tips on how to become an effective leader

16Profile Meet Coral-Ann Mills, a bookkeeper with a story to tell

17International standards Getting to know IFRS 3

18Your mental health What are the bodies doing to help your wellbeing? We want you to take part in our new survey

20Variances Top advice on getting your head around this difficult but important topic

22AAT spotlight Running the rule over the AAT standards

24ACCA conference Reports from the association’s virtual conference on what the examiners have to say

to tackle this crucial hurdle on the road to becoming an ACA – and advantages – of working for a small firm

29Careers Life at Manchester Met uni; why your future is digital; and our book review

30Fun stuff – and our giveaways The columnists Robert Bruce Lauding one of nature’s charming rogues 6 Prem Sikka Private equity firms are devouring UK businesses 8 Zoe Robinson Why trust is the bedrock of a strong profession 10 Mike Day Big Data will lead us into a new era of computing 12 Subscribe to PQ magazine It’s FREE – see page 23 or go to www.pqmagazine.com JULY 2019 ISSUE Total Distribution

30,463 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)

How are you feeling?

It was interesting to see how the accountancy bodies reacted when we told them we planned to take an in-depth look at what they do to support the mental wellbeing of their students. We want them to go beyond their regulatory obligations and ensure students know what help is available and where to get proper support when they need it. We believe they can be part of the solution along with employers and tuition providers.

In truth, the ACCA’s Judith Bennett was quick to commend us for raising the issue. She rightly stressed that the more we all talk about mental health and wellbeing and share coping strategies, the better. The Big 4 accountancy firms do seem to be ahead of the curve here.

KPMG’s head of learning, Ceri Hughes, provides an insight on the great work the firm is doing in this area on our letters page (page 4). And they have to be praised for leading the way.

But we want to know how you are feeling. So we need you to take our survey at https://www.surveymonkey.co.uk/r/V7KXHVY. We are offering an incentive too (not that you need it). All replies will be treated in strictest confidence, but you will be able to leave an email address to be entered into a free draw for an Huawei Band 2 Pro Fitness Wristband Activity Checker. After all, we all know about the connection between good wellbeing and physical exercise!

This issue isn’t going to go away for the accountancy bodies, either. I recently read that rates of self harm among women is rising in England, with a fifth of young women (16-24) self harming as a means of coping with stress. The CEO of YoungMinds, Emma Thomas, was alarmed at the high rate (19.7%) for young women and is worried it was “too difficult for children and young people to get mental health support before they reach crisis point”. Keep an eye on future issues of PQ for more on this important issue.

Graham Hambly, PQ magazine editor (graham@pqaccountant.com)

PQ email graham@pqaccountant.com

HAVE YOUR SAY Support is out there It was a positive step to see you draw attention to Mental Health Awareness Week on the front page of PQ Magazine (June 2019), and I wanted to highlight the extensive efforts being made by many firms – including KPMG – to support students on our programmes who are working towards a professional qualification.

At KPMG we offer a range of support including face-to-face counselling, a confidential telephone advice line, online guides and training on identifying and managing stress. Anyone can access the counselling, without the need to inform their GP. There is still undoubtedly stigma around mental health, so we try to strike a balance between encouraging people to talk openly about their concerns or experiences, but also reassuring people that our services our 100% confidential.

Not everyone favours a formal approach and it is essential that people are able to speak to their managers and colleagues if they need support. This is why we train all of our managers on how to support staff with wellbeing and mental health concerns and make sure everyone is familiar with the support on offer.

We recognise that our work in this area is never done as our industry is often high pressured and demanding. This is why supporting our students is a priority and we are striving to put in the place the right offer and support from day one with our firm.

Ceri Hughes, Director, Head of Learning, KPMG LLP The editor says: Thanks Ceri. We are exploring this most important subject in more depth in this issue of PQ magazine, having asked the accountancy bodies about what they are doing for their students when it comes to their mental health. You can find their answers on pages 18-19.

Women on top I noticed that there’s been no press coverage of the Women in Finance Awards, which has been described

AAA isn’t boring!

I can’t sleep. Can you give me one of your AAA lectures?

Having read the article headlined ‘AAA – one long bore’ (PQ magazine, June 2019), I feel like ‘outraged of Tunbridge Wells’ – although I live in Croydon.

I’ve taught this subject for more than 30 years, and I’ve never met a student who told me the lecture was boring.

Advanced Accounting and Assurance (AAA) is the most exciting subject in the ACCA syllabus by a thousand miles – if you want a couple of articles to

liven up your readers’ day then I’m your man!

Stephen Widberg, freelance tutor, by email The editor says: We got a very interesting piece on AAA in this issue – see page 25!

Our star letter writer wins a fantastic PQ mug!

social media ROUND-UP There was little doubt about the PQ magazine post that got you going the most this month – ‘ACCA unveils £35.2m deficit’. You can read the full story on page 10 of this issue. But it has already reached some 35,000 people on Facebook, and got lots of reactions and emojis! One negative comment was all about the continually increasing exam and subscription fees, which don’t consider the earning capacity of students. Others questioned the membership fee and what they were getting for it.

We also loved the reaction to our tweet: “Useless fact of the day: Bees can count. Scientists have discovered that bees can perform basic arithmetic and understand the concept of zero!

While good with numbers it appears that they can only count to 4…” mdeb32 replied: “Useless indeed. Logs off twitter and goes back to studying for SBR.”

I need pqjobs.co.uk

as “Europe’s largest diversity initiative”. There is an Accountant of the Year short list – see https://tinyurl.com/y3vvxt47 This list includes four accountants: one from HSBC, one from LV, one from RSM and one from Whirlpool.

The employer of the year also

includes two accountancy firms, PwC and AAT. May be of interest?

Ted Cordener, by email The editor says: Thanks Ted – we’ll keep an eye on what happens – the event takes place on 26 June in London.

In another story we honed in on the #KuToo movement. Japanese women are calling on their government to ban employers from forcing them to wear high heels! A petition signed by over 20,000 people is asking for the practice of forcing women to wear heels to be outlawed as sexual discrimination and/or harassment.

Our ACCA June exams feedback also got lots of reaction. Although not perhaps all of the right sort!

PQ magazine doesn’t want to come across all prudish, but one PQ said our AA comments were “fucking true. fuck mcq :( may pass be with me.”

There’s always lots of great articles on our website (www.pqmagazine.com) that don’t get into the mag – check it out.

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 | Contributors: Robert Bruce, Prem Sikka, Mike Day, Tony Kelly, Phil Gammon, Edward Netherton, Lily Hambly | Subscriptions: dom@pqaccountant.com | 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

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PQ news

ROBERT BRUCE Hats off to one of nature’s charming rogues We live in an era where charmers and fraudsters find it easier to get the upper hand. So it is a delight to be reminded that all this has happened before.

Chris Swinson, one-time president of the ICAEW and, somewhat improbably, father of a Scottish rugby international, has recently spent his time researching and writing books about the financial scandals of the Wall Street Crash years. The latest focuses on Clarence Hatry, one of the most, as we journalists like to say, colourful of that era’s charmers and fraudsters. Swinson’s biography of Hatry is a page-turner of amazing events. One example. Hatry was jailed for fraud, but happily kept the family finances afloat by providing his wife with share tips from the inside.

Once out he was strolling down Piccadilly and ended up in Hatchards, then, as now, one of the greatest of London’s bookstores. Chatting to the staff, he found that it was teetering on the verge of collapse. Its customers all felt themselves so grand that they ran up huge bills, but never paid them.

Hatry said he would buy the shop. His wife lent him the cash to put down half of the purchase price. How to get the rest of the cash he required? Simple.

He wrote to all those arrogant customers and said that in a week’s time he would clear books out of the shop window and put their names and the amount they owed in the window.

Instantly most of them paid off their debts and Hatry paid off the rest of the purchase price. Fraud and charm. It’s a fine line.

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

ACCA PQs struggle with June’s exams “There should be a cold place in hell for whoever created Q3b,” was perhaps the most entertaining comment from the feedback for the June APM exam.

Another PQ just said: “Q3 Wtf I’ll definitely be resitting in September.” And many candidates admitted they had to use a lot of ‘BS’ to get through the question.

“Nasty” and “impossible” is how some candidates described this

summer’s AAA sitting. As one sitter said: “Time management is just impossible in this exam”. Another agreed that time pressure “was a real nightmare”. Again, sitters admitted to spending too long on Q1. “I was left with one hour to do Q2 and Q3,” said one PQ. Time management was also a big issue for many PM sitters. As one candidate said: “Time management was indeed a problem. But I guess

it’s a normal thing in most ACCA exams.”

SBL was described as “strange”, “weird” and “odd”, but pretty much all common sense. Others thought there was nothing extreme about the paper, and thought the ethics question seemed ‘too easy’. The strangeness of the paper was summed up by one student: “If I’d had the study text and course notes open in front of me they would have been no help whatsoever.” The worry for some is they waffled too much.

• You can read all the comments in full at www.pqmagazine.com – go to the ACCA Study Zone section

Innocent punished

There is at least one PQ accountant playing at this year’s Women’s World Cup – England’s Leah Williamson. She might be one of the younger members of the Lioness squad, at 22, but Leah goes to the competition as a Super League winner with Arsenal

What will you be worth?

Pay in the accountancy sector jumped by 2.8% year-on-year, according to latest figures compiled

by CV-Library. It has even worked out the current average salary for jobs you could be promoted to soon. Here they are: • Finance director £72,247 • Financial controller £51,188 • Finance business partner £48,397

• • • • • • •

Credit analyst £48,039 Auditor £47,716 Finance manager £42,387 Management accountant £41,827 Financial analyst £41,418 Payroll manager £40,804 Accountant £40,203 After analysing over 175,000 jobs posted in April 2019 the jobs board worked out the average pay in accountancy is at £35,166.

Overseas students may have been wrongly accused of cheating in English language tests, and in some cases unfairly removed from the UK, says the National Audit Office.

Its investigation found evidence of extensive fraud in the student visa system prior to 2014. However, the NAO said that the Home Office failed to protect those who were not involved in the cheating.

The investigation discovered 11,000 students who sat the test left Britain after the fraud was discovered. However, 4,100 whose tests were considered invalid were given leave to stay and 500 have now become UK citizens.

NAO chief Amyas Morse, said: “When the Home Office acted vigorously to exclude individuals and shut down colleges involved in the English language test cheating scandal, we think they should have taken an equally vigorous approach to protecting those who did not cheat but who were still caught up in the process… This did not happen.”

In brief Avado launches SBL course This month sees the launch of Avado’s newest ACCA course – SBL. It’s the latest paper to receive the signature Avado treatment: online learning that combines flexibility with a weekly structure that keeps learners on track.

Avado’s head of learning, Ben Wilson, said: “SBL lends itself perfectly to Avado’s approach of e-learning, live classes and interactive activities.” To celebrate the launch of the new SBL course it is giving away a free place to one 6

lucky PQ reader! See page 9 for details of how to enter.

Wellbeing survey We don’t ask for it often, but we need your help! We’d like you to complete our mental wellbeing survey so we can get a better picture of the ‘state of accountancy’. PQ wants to know just how stressed you are. As an added incentive three lucky readers will win a Huawei Pro Fitness Wristband

Activity Checker. Go to https://www.surveymonkey.co.uk/r/ V7KXHVY to take part.

CIMA’s calculator advice CIMA has reminded students online that all non-programmable calculators will be allowed into the exams. These include the Casio FX-83GT Plus and FX-85GT Plus, which will be accepted by all Pearson Vue exam centres. CIMA explained they are not on the current list because it cannot include

every single non-programmable calculator on the market! An onscreen calculator will also always be available in the exam.

UK the preferred destination Chinese students are shunning US universities in favour of UK institutions as the trade war between Beijing and Washington escalates. EIC Education found that the UK is now the most soughtafter destination for Chinese students, with 20% of respondents picking the UK as their first choice.

PQ Magazine July 2019

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PQ news

PREM SIKKA Private equity is devouring business

The collapse of British Steel is another example of the curse of private equity.

It extracts high returns through financial engineering and avoiding tax, then sells assets and dumps liabilities.

This business model has enriched a few, but brought misery to many as shown by the collapse of Maplin, Monarch Airlines, Comet, Bernard Matthews, Toys R Us and many more.

In 2016 Greybull Capital, a private equity concern, bought British Steel for £1. The company has since been loaded with debt, especially intragroup debt. One example is the £154m secured loan from its Jersey-based parent Olympus Steel 2 Limited.

Olympus charged interest at 9% plus LIBOR. British Steel’s statements for 2017 and 2018 show interest charge of £17m. It has been rolled-over to increase intragroup debt. The interest charge will reduce UK corporate tax liability, but is tax free income in Jersey. Greybull charged a management fee of £3m a year.

The company’s cash dwindled from £35m to £5.1m. Its 2017 pre-tax profit of £92m became a loss of £29m in 2018. On 12 July 2018, auditors Deloitte issued an unqualified report and were satisfied that British Steel is a going concern. Then the whole edifice crashed. Some 25,000 jobs may be lost. Olympus is a secured creditor and is likely to recover all that is due to it. Unsecured creditors owed £331m are unlikely to recover anything substantial.

Governments and regulators need to take a closer look at the operations of private equity.

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

AAT wants input from tutors A call to arms has come from the AAT for any tutors who want to ‘get involved’ in the new syllabus.

Director of education Suzie Webb (pictured) told PQ magazine at the recent Training Providers conference that the first teaching of the new syllabus will take place in September 2021.

That means the new specifics will have to be published in September 2020 – leaving 16 months to get it right. Webb said she wants more people involved and to widen the pool to current tutors “because they know our students best”, she said.

Webb said both she and the AAT

were cogitative of the fact that life and technology have moved on and they must find a way to incorporate that into the new qualification. “It all needs to go into the pot,” she stressed.

Some tutors felt that 2021 may be too late to change the qualification, when so much has changed already. One said the computerised accounting syllabus needed to include all the relevant software. “We are talking Sage, Xero and Quickbooks,” he said.

It was also suggested that instead of two costing units at level 4 there should be one cost unit and a business unit, looking at issues such as cyber security.

There was a real worry among delegates that students may all need a laptop, too. Many FE colleges admit they would not be able to provide this service.

Kenyan tax officials arrested for corruption Kenyan law enforcement officers have arrested 75 of its own tax agency staff on suspicion of abetting tax evasion and bribery, in a new effort to fight corruption.

The Kenya Revenue Authority said: “Investigations into the rackets have been in progress for the last four months, with covert assistance provided by national law enforcement agencies to help in trailing money and communications.”

The staff involved work for the domestic tax department and

customs and border control, and are being accused of helping to fraudulently clear cargo and change tax returns to help people evade tax.

Since May 2018, dozens of

Cheating CIMA PQs punished A London CIMA student has paid a heavy price for lying about being fully qualified!

Agnet Masuku had told her employer, Safestore Limited, way back in 2012 that she had “completed CIMA”, and this lie went on for more than five years. In fact, although she had passed the Certificate in Business Accounting in 2010, she had since failed to

pass any more professional exams.

Masuku had been a CIMA student since 2006, and resigned from Safestore during an internal investigation into her claims of being qualified.

At a CIMA disciplinary panel Masuku was found guilty of misconduct and her student registration cancelled. She was also ordered to pay costs of £8,000.

while income also fell from £4.46m to £4.1m.

Reporting and Governance Authority is still a little unclear (so watch this space for more news).

Kenyan government officials and business people have been charged with the theft of hundreds of millions of shillings from public coffers in a new drive to tackle widespread corruption.

Meanwhile, in another case two cheating students have also had their student registrations cancelled.

Aayushi Gondaliya and Jeesha Pancal were found guilty of collusion in an Operational case study exam.

The CIMA panel said their exam answers were too similar ‘by chance’, and they were found guilty of cheating and acting dishonestly.

On top of being thrown out of CIMA they were fined £1,000 each in costs.

In brief CIPFA releases annual report CIPFA’s latest annual report and accounts show it returned to an operating profit for the first time since 2013, of £890,000 for 2018.

Student numbers were also up by 11%. Total students stand at 5,052, with 4,749 of these PQs. Spending on educating and training student members dropped year-on-year, however, from £6.9m to £5.5m, 8

ARGA CEO salary revealed The head of the new audit regulator will be paid a cool £330,000 – more than twice the salary of the UK’s prime minister. However, this package is £60,000 less than the wages paid to outgoing FRC CEO, Stephen Haddrill, last year. The exact date of when the FRC will be replaced by a new Audit,

Struggling with AAA? ACCA AAA students struggle with evaluating risks of material misstatements, according to a poll of tutors at the Global Learning Providers Conference. Over half of tutors (56%) said this was the area their students find most difficult.

This surprised the examiner, who thought the answer was going to be auditor reports. See page 24 for

lots more surprises from the online conference.

Giveaway heaven We have lots of great giveaways this month. There is the chance to win an SBL course courtesy of Avado (page 9) and we have 10 Kaplan video bank prizes up for grabs (page 10). On top of that you can win a ‘Looking for America’ book and an ‘I love tax’ tshirt (page 30). Where else can you win such fantastic prizes?

Nowhere, we hear you shout!

PQ Magazine July 2019

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PQ news

ZOE ROBINSON Trust me, I’m an accountant

The role of the finance professional has changed significantly over the past 20 years. It’s amazing to think that Google was only launched in 1998 and arguably, until then, opinion was sought for both knowledge and advice. Now information is everywhere; if you want to know what the latest tax rates are you can simply go online to find out; being sufficiently interested is of course another matter.

No longer is knowledge power; far more important if you are to be trusted are core ethical principles such as integrity, objectivity and due care.

Accountants have for a long time portrayed themselves as trusted advisors, but in the eyes of the public this image has been damaged by such high-profile cases as Carillion and Patisserie Valerie. Researchers Ipsos MORI’s latest report highlighted the five most trusted professions: they are nurses, doctors, teachers, engineers and professors. Although accountants were not specifically referred to in the report, where would we be? Between judges at seven and the ordinary man/woman in the street at 12?

Hopefully we would not be at the bottom, with politicians and advertising executives. But should we not aim to be in the top five?

Trust is the bedrock of a strong profession; it is hard earned but easily lost. It's vital for the future of our profession that trainee accountants see our ethical codes as much more than a few easy marks in an exam, and understand the ways in which they will live the principles every day, as they build a successful career.

Zoe Robinson is Learning and Programmes Director at Kaplan Financial

Sleep is key to success Instead of putting in an all-nighter with the help of energy drinks, new research suggests that if you want to pass those exams then prioritising a good night’s sleep will get you the better grades.

Students who were given an incentive to sleep at least eight hours a night in the run-up to their final exams achieved better academic results than their peers, US scientists have discovered.

Baylor University’s (Texas) Michael Sculluon said: “Better sleep helped rather than harmed final exam

ACCA’s £35.2m deficit ACCA has unveiled a £35.2m deficit for the year ended 31 March 2019, well above the £14.8m planned deficit for 2018-19.

In a strategic performance update for members, CEO Helen Brand stressed that ACCA’s balance sheet remains healthy and she expects the association to return to a pre-tax surplus for 2019-20.

Three factors helped push up the deficit: • A one-off accounting adjustment relating to ACCA’s defined benefit pension scheme amounting to

£12.5m.

• Timing of investment in IT infrastructure and digital transformation, amounting to £6.1m.

• A combination of smaller items, including the adoption of IFRS 15 revenue from contracts with customers.

The ACCA also reported a membership growth of 5% to 219,031. PQ numbers were also up 4.8% to 527,331. Member, affiliate and student overall satisfaction rates remain high at 79.1%.

Eurovision votes blunder Ernst & Young has become embroiled in a Eurovision Song contest marking blunder. It all stems from the dismissal of the Belarusian jury following the reveal of their votes from the first semi-final.

The European Broadcasting Union (EBU), with the help of voting monitor Digame, and approved by Ernst & Young, provided substitute scores for the night. A standard review, however, found that the aggregate results were used, due to human error. Although it had no impact on the winner the UK’s entry, ‘Bigger Than Us’, had five marks taken off its total. Sp poor Michael Rice got just 11 marks in the end, the UK’s fourth lowest total in recent Eurovision history.

Women on the rise Deloitte recently promoted 78 employees to its UK partnership, an increase of more than 40% on the previous year. Of these, 32 (41%) were women, up from 11 in 2018. That brings the total number of female partners in the UK to 223, 21% of the partnership. New chief Richard Houston said: “I fully accept that we have more to do, but I’m particularly pleased to see such a significant increase in female partner promotions in the UK.” Councils face £50bn black hole A rising demand for services and rising costs, driven in part by inflation, means English 10

performance, which is contrary to most college students’ perceptions that they have to sacrifice either studying or sleep.”

The students were offered a deal – if they averaged at least eight hours sleep for five nights before

their final exams their grades would be boosted by one percentage point. Previous research indicated fewer than one in 10 students slept at least seven hours of sleep a night as exams approach.

In the experiment, those who achieved at least eight hours nightly achieved four percentage points higher than those who failed to meet that sleep target, and that’s not including the 1% incentive!

As one rested student said: “It was the first time my brain worked while taking an exam.”

councils need an additional £51.8bn of funding over the next six years just to stand still. The analysis from PwC for the County Councils Network (CNN) says plugging the gap could mean annual council tax rises, new charges for services and a fresh round of draconian cuts.

The funding shortfall for this current year alone stands at £4.8bn. Chairman of the County Councils Network, Paul Carter, said: “If the government does not provide additional funding for councils over the medium term, many local authorities will resort to providing the bare minimum, with many vital services all but disappearing, particularly preventative services. Even these draconian cuts won’t be enough for many well-run councils to balance the books and it will leave our finances in

CIPFA unveils new director of education CIPFA has a new director of education after the sudden departure of Lindie Engelbretcht earlier this year. Chris Glennie has joined from the Institute of Risk Management, where he was chief operating officer. As well as working for the ICSA, he was also interim head of product development and e-learning at the AAT in 2012.

The University of Oxford modern languages graduate has published a book, too. His ‘Looking for America’ recounts his drive across the US – from New Hampshire to California.

You can read our review on page 29 of this issue.

disarray, with many of us struggling to deliver even the basic level of local services.”

KPMG fights record fine KPMG is facing a record £12.5m misconduct fine for its audit work for the Bank of New York Mellon. At a recent tribunal hearing the FRC requested the record penalty, accusing the firm of ‘misinforming’ City regulators over the bank’s compliance with safeguarding £1trn of clients assets between 2007 and 2011. KPMG admitted to unintentional misconduct and is arguing the fine is ‘extravagant’ and should only be £1.4m. The proposed fine is almost double the current record – the £6.5m fine issued to PwC for its audits of BHS, the collapsed department store chain.

PQ Magazine July 2019

PQ tech news

MIKE DAY Feel the power of Big Data

In the last issue of PQ we touched on 5G. This time it’s the turn of Big Data.

First off, Big Data is nothing new.

What is new is how accessible and affordable it is for any business to take advantage of it, even at the SME level – and 99.9% of all UK private sector businesses are SMEs. Big Data is a combination of things.

It’s large amounts of data; this used to be an IT issue for only the largest of business, as only they had large amounts of data. But not anymore, as cloud computing has also led to more and more data being pooled into fewer and fewer databases.

If you can access the data from anytime, anyplace, anywhere and on any device, then it stands to reason that the data can be in one place.

Take Xero, for example. The financial records of a Xero subscriber, an architect, is sitting on Amazon Web Services’ servers – along with 1.8 million other subscribers.

And so the power of that is a Big Data topic. Not only can the architect get business insights about their own business, they can also get cash flow, debtor days, employment and trading overseas analysis across all 1.8 million subscribers. You can see where that can and will lead us. I can see not only my own gross profit margin, but also that of other architects. Very powerful and only achievable when all of the data can be included.

We really are heading into a new period of computing where the power of being able to interpret data – large amounts of it – from anywhere is just around the corner.

Mike Day, Director, UK Education Sector, Xero

Big 4 top cyber recruiters The Big 4 accountants are the UK’s top four cyber security employers, according to jobs website Indeed.

KPMG and PwC are now comfortably the biggest recruiters.

At KPMG, one in every 17 (6%) of its new recruits is a cyber security specialist. At PwC the figure is one in 20 (5%) new hires. For the other two members of the Big 4, EY and Deloitte, cyber roles make up 2% and 1.5% respectively.

Telecoms giant Vodaphone ranks fifth in Indeed’s table, and Hastings Direct is in sixth place.

The most sought-after cyber roles can be well paid.

Facebook is finalising plans to launch ‘GoldCoin’, its own cryptocurrency, in 2020.

The social media giant’s plan is to set up a digital payments system in around 10 to 12 countries by the first quarter of next year. Testing its crypto-currency will begin in late 2019 and it is being reported that Facebook has spoken to Bank of England Governor Mark Carney.

The social media giant has already talked with officials at the US Treasury, and founder Mark Zuckerberg met Carney in April to discuss the risks and opportunities of launching a crypto-currency.

This is not the first time that Facebook has ventured into digital

IT auditor roles come with an average pay package of £58,328, and an information security analyst can expect a salary of around £40,000.

Indeed’s Bill Richards said: “It’s telling that many large organisations now talk of ‘critical’ infrastructure rather than ‘IT’ infrastructure. Every aspect of a modern company relies on its IT, and the growing threat of cyber attack and tightening of privacy laws means demand is rising fast for professionals who are able to protect companies’ most precious information.”

Facebook to venture into crypto currency currencies. Some 10 years ago it created Facebook Credits, a virtual currency that enabled people to purchase items in apps on its site.

However, the project was mothballed after just two years after it failed to gain any traction.

Finance and IT key to the top roles The proportion of FTSE 100 CEOs with a background in technology has increased by 27%, according to new data from Robert Half.

The results of the annual Robert Half FTSE 100 CEO

Tracker found that 14% of CEOs now have a background in IT. However, financial experience has seen resurgence among the UK’s FTSE leaders. The number of bosses with financial backgrounds has increased from 40% in 2018 to 52% in 2019.

Finance then remains the most common route to the top.

The Tracker found diversity among CEOs remains mostly unchanged. The average age for a FTSE CEO is 55; 18% are Oxbridge educated; and the number of female CEOs is 6%. Some 46% of CEOs were also promoted internally, that’s up from 40% in 2018.

Tech briefs Bosses are top target Senior executives with access to the most sensitive corporate information are now the biggest targets for cyber criminals. A new report by Verizon showed top bosses are 12 times more likely to be targeted by social engineering attacks, which trick users into giving away data or access to a hacker. The research showed timestarved bosses often rapidly review and click on emails, meaning phishing attacks are more likely to get through.

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Fake accounts closed Facebook says that it removed a record 2.2bn (that’s billion, not million) fake accounts in the first three months of 2019. The use of artificial intelligence meant that most of the accounts were removed within just minutes of appearing. Facebook also blocked many suspicious accounts before they were created. It explained that the rise in fake accounts was caused by spammers trying to create millions of accounts simultaneously by automated

methods. It has been estimated that about 5% of monthly active users are fake.

Apple’s battery pledge Apple has vowed to be more clear and upfront about the power and performance of its iPhone batteries, following intervention from the UK Competition and Markets Authority. The CMA raised consumer law concerns with the tech firm last year after finding people were not being warned clearly that their phone’s

performance could be slow following a 2017 software update designed to manage demands on the battery.

IoT devices under attack Cyberattacks targeted at Internet of Things (IoT) devices could be costing the UK more than £1bn a year, says a new report from Iredeto. The Dutch software firm revealed that IoT devices are now considered ‘low-hanging fruit’ by the criminals, who know they can take advantage of lax security.

PQ Magazine July 2019

tech news PQ

Get involved in security ‘UK needs a super shield’ The UK may need to copy the US by building a ‘super shield’ against crippling cyber attacks or major IT failures that could bring the finance industry to a standstill, a senior Bank of England official, Nick Strange, has said.

He said individual firms may not be able to meet minimum requirements for restoring services like payments with the timescales to be set and tested by the Bank.

In the US, a private sector initiative, called ‘Sheltered Harbor’, has been set up to protect customers, financial institutions and public confidence in the financial system, in the event of a catastrophic event like a critical systems cyber attack.

Finance professionals can’t leave cyber risks to the IT department, says a new joint report ‘Cyber and the CFO’.

The survey, undertaken by the ACCA and Chartered Accountants Australia & New Zealand, found that cyber security is not being managed as a risk to business, and too often is left to IT specialists to handle.

Worryingly, a third of respondents did not know whether their organisations had been the subject of a cyber attack.

More than 20% of finance professionals admitted they had no involvement whatsoever in cyber

security within their company. And some 10% of respondents did not know who in the business was responsible for the day-to-day running of cyber security!

ACCA’s Clive Webb said: “The

finance community cannot stand by and leave cyber security to others in the business to manage. It is very complex, but it is essential for finance leaders to familiarise themselves with the issue.”

Bigger budgets needed, say Econocom A worrying one in five businesses have failed to launch a digital transformation project, with many companies seemingly unable to get to grips with new technology.

Figures from Econocom show there has been a sharp increase in the number of businesses launching digital transformation programmes, but

points out that 20% of these are doomed to fail.

Improved productivity, better customer service and cost savings are sited as the key drivers for digital revamps.

The accountants have a key role to play here, too. While a lack of skills was a major stressor, so was a lack of budget for the project.

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PQ Magazine July 2019

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PQ exam technique

A marathon, not a sprint Top lecturer Brigita Petrova recently ran the London Marathon. Here she shares some thoughts on the similarities between studying for exams and running

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CCA exams and marathon running: what do they have in common? The answer: a lot!

• They are tough. Not many people in the world can complete them!

• They are do-able, if you do the right things (preparation wise and on the day).

• You know they are coming way in advance and have months to prepare for them.

• The less you prepare the more you will

struggle on the day. Failing an exam/ ending up in an ambulance are far too common outcomes.

• You can do them either on your own, doing random stuff in preparation and hoping for the best, or get support from people with experience and boost your chances of a positive experience.

• With marathons you must ensure you can run the distance first, then you work on your speed. Same with exams: you

Over the line: Brigita finishes the London Marathon and shows off her wellearned medal.

Above right, with another gong – her PQ Award

must learn to answer correctly before trying to get fast.

• Both require long hours of hard work, both learning what to do and practising what you have learned.

• The actual marathon/exam day effort is only three to four hours, nothing compared with the long hours of preparation.

• You should never do anything on the day that you haven’t tried in training.

• What others normally see in them is only the tip of the iceberg: your final effort and result (medal/pass).

• The more of these you complete, the more your confidence grows.

• The challenge is huge, and so is the appreciation of your achievement.

So keep on going. If I was able to complete both, then so can you! PQ • Brigita Petrova is the current PQ Lecturer of the Year (private sector).

She teaches at LSBF

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“I chose ACCA because it’s the largest and most global professional body, and I believe it can take my career much further than other qualifications.”

Joanne McCourt, Commercial Insight Manager, New Look

PQ Magazine July 2019

career development PQ

Leadership matters ACCA’s Alan Hatfield (right) shares some thoughts on leadership

to the team and advising on whether the decisions and behaviour adopted were appropriate at each stage.

eadership skills are among those most sought after by employers in the accountancy and finance sectors, even for entry-level positions.

EY, for example, wants “people with the courage to lead, people who inspire and motivate others, and provide clear direction and encouragement in times of both prosperity and challenge”. Deloitte, too, seeks people who want to develop leadership abilities early in their career, while PwC expects all of its people at all grades and in all areas of their business to be leaders.

Knowing that employers want ‘leadership potential’ means ACCA has weaved leadership skills into every aspect of the ACCA Qualification.

We’re creating the leaders of today and tomorrow with a cutting-edge qualification that helps PQs to flourish and achieve their own leadership goals, whatever they may be.

L

Redefining leadership Leadership can and does take place at many levels in an organisation, and as a leader myself I think we should celebrate that.

Leo Lee, ACCA's past president, has defined leadership as “taking people with you as you strive to do the right thing and make a positive impact on the world around you”. Clearly articulating an idea, getting others to be genuinely excited about it, bringing them on a journey and supporting them along the way are the hallmarks of a true leader.

In a modern business, such leaders are needed at every level, so trainees and newly qualified accountants must be prepared. The ACCA qualification’s design creates the business leaders of today and tomorrow, individuals who are able to lead the change and define the opportunities ahead. So for ACCA, there are massive opportunities for PQ readers to learn how to lead, and continue to hone their leadership skills when they become ACCA members through CPD. Learning to lead Our competency framework is a great place to look for where leadership and management skills are weaved into the exams and experience needed to become a qualified ACCA. For example, Strategic Business Leader (SBL) covers a number of leadership and management competencies, such as how to use leadership strategies to effectively deliver business objectives; how to lead, motivate and manage people to optimise performance and effectiveness. SBL also covers the competencies of collaboration, the need to support and work with others to achieve the objectives of an organisation, harnessing appropriate digital technologies to do so.

Our practical experience component requires PQ Magazine July 2019

you to demonstrate a broad range of competencies in a workplace environment, with PO5 being the specific leadership and management objective alongside ethics and professionalism, stakeholder relationship management, strategy and innovation, and governance, risk and control.

With PO5 and the associated exams, you’ll be able to prove that you “can manage yourself and your resources effectively and responsibly”, and that you “contribute to the leadership and management of your organisation – delivering what’s needed by stakeholders and the business.”

The ethical leader We believe that ethical and professional values should provide a framework and a moral compass for the accountant to guide behaviours.

That’s why the syllabus for our ground breaking ethics and professional skills module (EPSM) covers leadership and management as a core skill.

Unit 5: Leadership and team working looks at leadership approaches and traits which can be used at any level in an organisation, from the nature of leadership, to leadership in action and situational leadership. It also covers leadership styles and motivation, while also focussing on the vital aspects of accountability, responsibility and authority. For this unit, you learn how a leader would manage a diverse group of people to achieve a task within a team. You must identify the type of manager you are and the style you are adopting and the potential issues with your approach to achieving the task. The tasks will involve tracking your progress as a leader in making and communicating decisions

The evolving leader The role of the leader is changing. Our digital world means that finance leaders have to deal even more with the unexpected, to use technology to evidence and support decisionmaking. As an accountant, you need to be able to interpret and use financial information to optimise business performance, and evaluate risk and reward constructively.

You’ll also be expected to be a skilled stakeholder and relationship manager, well versed in social and emotional intelligence. This is the ability to manage one’s emotions, and to handle relationships with empathy and good judgement.

Our report, ‘Emotional quotient in a digital age’, looked at leadership and interactions with technology, asserting that leaders need to be able to deal more empathetically to “human beings’ reactions to the machines or to the information they produce”.

EQ (emotional quotient) is one of our seven skills for success – our professional quotients – that we’ve talked about here in PQ before.

Leadership also demands accountability, integrity, and communication and presentation skills throughout your professional life, all skills which are developed initially in the EPSM. Effective leadership Effective leadership is essentially about helping colleagues feel positive - or at least mitigating the negative - about following a course of action.

Effective leaders are those who are able to persuade colleagues they ‘get’ them as people and are listening to them and their concerns.

Leaders can bring optimism and personality, they can be very at ease with people and comfortable in their own skin, able to think on their feet and adapt to changing circumstances.

Above all a leader is someone who can put across their vision and message in their own unique language and authentic voice.

First and foremost, leaders are those who’ve become skilled and experienced in building relationships and bringing people with them, taking their concerns on board and trying to move forward together.

Keep an open mind Starting to lead can often seem daunting, but in my experience, leadership and direction brings great rewards. Stepping up to leadership – of people, departments or whole organisations – is a career choice, one that should be planned and nurtured. That’s why we are here to support you on your leadership journey, through the Qualification, through our practical experience and with advice and guidance online. PQ • Alan Hatfield is ACCA’s executive director strategy and development 15

PQ profile

Being bionic PQ met up with Coral-Ann Mills of Mills Accounting and Bookkeeping Services, who has overcome personal trauma to succeed in business

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wo or three prospective new clients call me each week. Once we’ve spoken on the phone we’ll meet up, and that’s when they notice my disability for the first time. I can feel them questioning my ability over my disability and I feel I need to win them over,” Coral-Ann Mills (pictured) told PQ. After suffering a stroke at the young age of 26 Coral-Ann Mills, who runs her own bookkeeping and accountancy business in Bedfordshire, now has what she calls her bionic leg. “Some clients are intrigued by it and I have to say, ‘alright I’ll give you a demo, but then we really need to talk about your accounts!’ Others, you can tell they want to ask questions but don’t. People have a perception of how a disability affects your work and I’m always second-guessing what people expect of me.”

When Coral-Ann had her son Sebastian four years ago she made sure all of her client’s tax returns were submitted first, and that didn’t lose any clients. A series of modifications, elaborate work-arounds and a steep learning curve enabled Coral-Ann to care for her son.

“Sebastian’s baby grows all had my teeth marks

in them because that’s how I’d pick him up. He quickly learnt to be still for me but he’d always wriggle around with his dad.”

Coral-Ann says she ‘does everything’ for her

clients except for the final step of submitting CT600s, which she passes on to an accountant.

She says she’s thinking about taking ICB’s standalone Corporation Tax and FRS Modules when her son goes to school in September.

“I used to work through the night to build the foundations of my business. I wanted to grow it, to focus on myself and what I wanted to be.

Now I’m in a position where I can support myself and my son financially if, God forbid, anything happened to his dad. I learnt the hard way what it’s like to literally not be able to stand on my own two feet and I came out fighting on the other side.

“You’ve got to be a fighter. There’s always someone worse off than you and you can’t give up. Don’t believe anyone else’s opinions of you; the only person you can control is yourself.

Some days I just want to stay in bed because I’m in pain. But I know it’s not going to achieve anything.”

Coral-Ann credits social media with raising awareness of disabilities and mental health issues. “There used to be this idea that you might struggle one day with how you’re feeling, but the next day you’d wake up and be fine. But people are speaking out about these issues now.

“After I had my stroke I didn’t even know my name. I couldn’t sit up or feed myself and, to be honest, if I didn’t have my partner and others around me practically supporting my every move, I probably wouldn’t be here. I had to find myself again, and bookkeeping helped me do that, by giving me a sense of purpose and that you truly get out of life what you put in.” PQ

Get a qualification that keeps you ahead of the curve accaglobal.com/PQ

Go further.

16

PQ Magazine July 2019

international standards PQ

Get to know IFRS 3 A

ccounting standards are not perfect and at the final level of your accounting examinations it is necessary to be able to discuss their limitations and analyse their inconsistencies.

Is goodwill really an asset?

Not if it is inherent goodwill! This is nonpurchased goodwill which is never recognised as an asset as, after all, there is no underpinning transaction, no reliable measure and, arguably, no control. This is not controversial; after all the purpose of the statement of financial position is one of stewardship and being accountable to the users of the financial statements and is NOT an attempt to value the business.

Yes if it purchased goodwill. The standard requires that the purchased goodwill on a business combination (the premium arising on consolidation) be recognised as an intangible asset in the group accounts. This was not always the case. For example, when I was a student (many years ago!) purchased goodwill was not accounted for as an asset, rather it was immediately written off against group reserves.

Some still argue that purchased goodwill is not an asset at all, given that an asset by its definition per the IASB’s conceptual framework is a resource that is controlled. But how can a business control goodwill, its own reputation? It is also a strange asset that cannot be separately sold.

Nevertheless, the standard is adamant that purchased goodwill is to be accounted for as an intangible asset, arguing that it represents a bridge between the parent’s investment in the subsidiary and the consolidation of the subsidiary’s net assets in group accounts.

A consequence of one type of goodwill being recognised and another not is that financial statements of companies that grow by acquisition (reporting purchased goodwill as an asset) and companies that grow organically (with no goodwill reported) are just not comparable.

This is confusing for the users of accounts.

So should purchased goodwill be subject to an impairment review? The standard requires that purchased goodwill is subject to an annual impairment review. But is it right to subject goodwill to an annual impairment review?

Perhaps instead it should be systematically amortised.

It can be argued that where, year after year, the purchased goodwill is impairment tested and not found to have suffered a loss, that what is really happening is that the original goodwill (reputation, staff & customer loyalty) is actually being dissipated and is really being gradually replaced by newly created (inherent) goodwill.

After all, if you measure the amount of water in a pond every year you could conclude that the water level never falls, but surely after ten years the original water there has evaporated and been replaced by new different water!

The original water in the pond is like the PQ Magazine July 2019

Tom Clendon shares some of his conceptual criticisms of the standard core to preparing group accounts: IFRS3 Business Combinations

original goodwill at acquisition, it does dissipate over time as staff leave and new customers are attracted. It can be argued on this basis that the original goodwill should be systematically amortised. The current impairment review process ignores this dissipation and in effect allows inherent goodwill to be recognised as an asset through the back door.

Another unfortunate consequence of the impairment review process for goodwill is that it can mean in certain years reported profits fall off a cliff. This makes predicting future profit trends harder and so alternatively users might prefer to see purchased goodwill systematically written off.

Why is negative goodwill a profit in the statement of profit or loss? It is unusual that, in a business combination, the aggregate of the controlling interest (what the parent paid for its investment) and the non-controlling interest is less than the fair value of the subsidiary’s net assets acquired.

In this case the net assets of the subsidiary are said to have been purchased at a discount (rather than at the normal premium we call positive goodwill). The discount – or bargain purchase – gives rise to the so-called negative goodwill, and this is required by the standard to be accounted for in the group statement of profit or loss as a profit.

But why? It can be argued that as this is an unrealised, non-recurring & non-operating gain it should be accounted for in statement of Other Comprehensive Income (OCI) – which is after all often the home, the dustbin if you like, for all sorts of odds & ends of profits and losses which also seem to have those characteristics.

I cannot help also observing that on a step

acquisition, the gain on the revaluation of the first investment also is required by the standard to be recognised in the statement of profit or loss. But again why? This is another gain that is unrealised, non-recurring & non-operating gain and perhaps a more natural fit for being reported in OCI. What you must remember however is that this standard was written when the IASB’s conceptual framework was silent on the role of the OCI. Therefore, no principles or conceptual guidance was available at the time to the standard setters as to when to recognise gains or losses in equity and thus report in OCI and when they should be recognised in the statement of profit or loss.

Choice of NCI measurement Another gripe that I have against this standard is that it allows a choice of measurement of NCI at acquisition. This choice can be made on an acquisition by acquisition basis.

Now while in normal life choice is good; in the context of accounting standards choice creates inconsistency and a lack of comparability between reporting entities that is confusing for users. The consequences of this choice on the measurement of goodwill and impairment losses is something that I will explore in another article.

Conclusion Accounting standards are not perfect, and where the exam question wants you to discuss an accounting standard, don’t be frightened of being critical and pointing out its inconsistencies in the context of the IASB’s conceptual framework. PQ • Tom Clendon is the lead tutor for ACCA SBR at AVADO 17

PQ mental health

Safeguarding your PQ magazine believes it is time for the profession to up its game when it comes to student wellbeing. What do you think? ental health remains a taboo subject for many people. A recent poll revealed that employees are three times more likely to talk about common physical illnesses and problems with an employer than they are to discuss their mental wellbeing.

A survey by the charity Mental Health First Aid England (MHFA) found only one in 10 workers would feel confortable speaking about postnatal depression, eating disorders, psychosis or schizophrenia. So, while 40% of employees would talk to their bosses about cancer, only 12% would discuss their bipolar disorder with them.

The MHFA has now launched a ‘workplace manifesto’, which calls for company bosses to create environments where mental wellbeing can be discussed.

The AAT recently released research too, which showed one in three (33%) of employees across all industries have had time off work because they have been so stressed. One in 25 employees who have experienced extreme stress have even left a job permanently. The study found that the most stressed ‘occupation’ was those working in the charitable sector, where 94% of employees said that work could be a stressful experience. Finance/accounting wasn’t far behind, on an alarming figure of 90%.

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Examining exam stress For many PQs there is always an added stress factor – the exams! While work can be stressful enough, trying to juggle work, family, studying and exams can be overwhelming. Just one thing going out of kilter can affect the whole show!

So, who is there to help you? This got us wondering about the support you get from the private colleges and the accountancy bodies

themselves. Are they all doing enough to ensure the wellbeing of their students (you and your fellow PQs)? Do they even have any duty of care? Is it time for an ‘accountancy manifesto’?

A recent report into the deaths of 14 students from the same university who took their own lives found that eight of them had struggled to keep up with their academic work. These students had retaken exams at the University of the West of England (UWE) or filled in a form explaining why they were behind or their work may have suffered. Three had switched courses. UWE has taken the brave step of releasing the report’s findings in the hope that others will heed the warning signs. It is perhaps not surprising that half the suspected suicides occurred between January and April, when students were preparing for exams.

We have already been told there is no regulatory requirement for the bodies to support students with mental health issues.

But PQ magazine doesn’t believe that means the bodies can go on behaving the same as they always have.

When we found nothing about mental wellbeing on most of the professional accountancy bodies sites we asked them directly what support they provide for students worried about their mental wellbeing. You can see their formal responses here.

Finding help There is one accountancy body that stands out for all the right reasons – the Chartered Accountants Benevolent Association – or CABA to you or me. Its whole raison d’etre is to look after the wellbeing of ICAEW members and students. All its services are free and strictly confidential, and last year alone it supported 25,000 students and members and their families. No other body has anything like this.

It’s mental health campaign, launched in April, is linked to a dedicated microsite that anyone can view https://cabamentalwellbeing.org.uk.

The CABA website has seven simple questions on ‘How to spot signs of low mental

wellbeing’, and here they are: 1) Are you feeling under pressure – has it been prolonged or excessive?

2) Are you feeling worried or anxious – constant worrying, feeling fearful or on edge?

3) Are you feeling down – sadness, feeling hopeless, low energy and self-esteem?

4) Are you sleeping properly – difficulty sleeping, waking frequently, needing a lot of sleep, daytime sleepiness?

5) Change of appetite – eating more unhealthy food, weigh gain/loss, forgetting to eat?

6) Has your behaviour changed – irritability, burst of temper, anger even?

7) Find it hard to focus – can’t focus, forgetful and memory problems?

If you say yes to some of these then you do need to contact your GP. But we want to take it all a step further. We want to know how you feel right now, and need you to go to our survey to tell us how you are coping with it all. Go to https://www.surveymonkey.co.uk/r/V7KXHVY – and you could win a Huawei Fitness Wristband Activity Checker. PQ

Award-winning AAT courses and apprenticeships Flexible learning to suit your lifestyle mindful-education.co.uk/students 18

PQ Magazine July 2019

mental health PQ

r mental wellbeing What the bodies said…

THE AAT SAID: From a regulatory perspective we have a duty of care to ensure that our assessments are accessible to all student groups and to eliminate unnecessary barriers to assessments, both in terms of content and presentation, to the way in which assessments are delivered.

We are also required to have arrangements in place to provide reasonable adjustments and/or special consideration, to ensure that students who are disabled or who have suffered some sort of temporary illness or other disruption during or immediately before an assessment are not disadvantaged. There is no reason why this could not apply to students who have mental health issues, providing appropriate evidence of this is provided by their training provider or assessment venue. We have processes in place for this.

In terms of the students’ learning experience there is no regulatory requirement for us to support students with mental health issues during their learning programmes – the responsibility for this lies firmly with their training providers who have direct contact with the students. However, we do produce regular content to support students and members. Here are a few examples: • https://tinyurl.com/yxh8a9o5 • https://tinyurl.com/y5yw535m • https://tinyurl.com/y3exd8el ACCA SAID: PQ magazine is to be commended for raising the issue of mental health in the accountancy profession. The more we all talk about mental health and well-being and share coping strategies the better.

For our students we have raised awareness of issues relating to mental health and wellbeing. For example, we have published articles in Student Accountant magazine on how to cope with panic attacks and how to bounce back from failing exams.

It’s important not to take a one-size- fits-all approach. We look at all cases to do with physical and mental health on an individual basis. We endeavour to offer support, guidance and comfort with extra care.

When it comes to mental health, like physical health, it’s essential that professional help and assistance is sought.

So we are mindful when issues arise that we point students or members to where professional help is available.

We recognise the reluctance people may PQ Magazine July 2019

have in opening up about their mental health.

ACCA is attuned to what next steps are needed when someone discloses a health issue. We advise anyone feeling under pressure to speak to a professional – their GP, Samaritans, Sane, Mind.

For students, we also advise they call ACCA Connect if they need additional support in an exam – details can be found on line at https://tinyurl.com/y2kqt9qp.

This query from PQ magazine’s editor has got us all thinking about health and wellbeing, especially as ACCA’s own staff programme is so proactive and supportive. We look forward to hearing readers’ views and suggestions.

CIMA SAID: Every day our members deal with an incredible amount of complexity as they help organisations navigate the accelerating pace of digital disruption. It’s challenging and stressful, and it can take a toll on their mental wellbeing. That’s why CIMA has put increasing focus on mental health related topics. You can see it in our Human Intelligence Facebook Live series, which covers issues like managing stress. Our Go Beyond Disruption podcast, which just recently had an episode on ‘Wellbeing in the Workplace’. And we have, of course, our longestablished CIMA Benevolent Fund, which assists members and their families who are in difficulties including mental illness or injury.

As lifelong career partners to our members and students we are there to support their professional and personal wellbeing needs in this rapidly changing world.

CIPFA SAID: The mental wellbeing of our students and apprentices is of the upmost importance to CIPFA, and we take our responsibility to provide support to students who are struggling seriously.

We encourage students to discuss any problems with their course tutor or training delivery manager. Each is considered on a case-by-case basis so that we can identify solutions that are most suited to the individual. We also stay in regular contact with employers to enable us to champion students’ wellbeing when concerns are raised.

Some background: • Details of how to contact training delivery managers are given to all students at the start of their studies with us and are detailed in the student manual. At the start of every module students are reminded of the role of

tutors and TDMs in assisting with issues throughout their studies.

• Where students contact their tutor of TDM the solutions explored could include recommending they defer exams, reduce the number of modules they take at any sitting or take a break from study altogether.

• All out trainers, associates and support staff with regular contact with our students undergo an online training course in safeguarding, helping us identify vulnerable students and providing a process for referral.

• The regional CIPFA Student Network is another source of support for students and CIPFA works closely with their representatives to make sure that their concerns and suggestions, including those that might affect student welfare, are responded to.

ICAEW SAID: When students register with us they receive information on CABA within a series of welcome emails that we send, information is also included with the ACA training guide and student inductions. There is also information on CABA within the ACA student section of our website.

During inductions we also describe our access arrangements and special consideration process. If a student feels that their exam performance may be hindered due to a health condition, disability or specific learning difficulty we may be able to put access arrangements in place to support them during their exam(s).

Our student societies and CABA also work closely together. The student societies will hold events with CABA in their area, for example on topics such as resilience and how to cope with successes and failures, taking charge of your career and the importance of sleep. CABA has held these events in the UK and Cyprus. CABA will attend each ICAEW Student Council meeting; in January they held a very informative nutrition session.

Within our meetings with employers and tutors, we will remind them of the support available from us and CABA to support them and their students.

ICAEW’s dedicated student support team is also there to help students whenever they need help, including if they are finding it challenging to cope with balancing everything. The team will talk through the access arrangement and special consideration process, talk students though the resources they have available to them and guide them to CABA, for example.

19

PQ variances

Variances explained Top tutor Jeff Grimston offer a plain English guide to variances, a subject much feared by many an exam sitter

W

e can do this the easy way or the hard way… That might sound like a rather dramatic way to introduce a talk about variances, but one recurring theme I’ve seen over the years is that students approach the section on variances with about as much enthusiasm as a visit to the dentist!

It doesn’t help that almost the first thing we are faced with is a big table of not exactly friendly formulae: AQ times, AP minus, AQ times, SP, and so on. Already we’re counting the minutes to coffee break – and hoping this won’t come up in the exam.

Fortunately, there is a much easier way that demands a lot less ‘learning’ at the cost of a bit more ‘thinking’ at the start.

Rather than painstakingly trying to rote learn all those formulae I find a better approach is to look past the detail and focus on what we are trying to achieve. We could say we are concentrating on the ‘why’ rather than the ‘how’. The trick in fact is to learn not the formulae but the simple plain English questions that underpin them.

This point is most easily illustrated by use of an example, and I find the more familiar the context the easier it is to form a clear mental picture of what it’s all about. Let’s therefore take a moment to think about cakes (mmm, cakes)… or rather the process of making them.

Simple examples are always the best to start with, so let’s say we make just one type of cake and our budget for the current month is to produce 12,000 cakes. The budget also tells us that we expect to use 6,000 kilos of cake mix and 1,200 hours of productive labour at a total cost of £24,000 for materials and £10,800 for labour.

We will also be given information about actual costs and quantities, but we’ll not worry about that for now as we have come already to the first of the questions we need to ask, which is: “What should the costs be to make one cake?” In other words, our first step in tackling a typical variances exercise should be to draw up a standard cost card.

Looking at the data, one cake should require: Material 6,000 kilos / 12,000 cakes = 0.5 kilos Labour 1,200 hours / 12,000 cakes = 0.1 hours We also need to know the cost of each of these elements: Material £24,000 / 6,000 kilos = Labour £10,800 / 1,200 hours =

£4.00 per kilo £9.00 per hour

0.5 x £4.00 = 0.1 x £9.00 =

£ 2.00 0.90 2.90

Now we have a starting point against which we can measure, it’s time to look at the actual results, which are as follows: Cakes produced 13,200 Material used 6,700 kilos at a total cost of £25,460 Labour used 1,380 hours at a total cost of £12,696 We’ll start by calculating the material price variance and the next question we ask is: “How much should this amount of material have cost?”

From our cost card 6,700 kilos x £4.00 = £26,800 Compare with actual cost £25,460 Lower cost is good news therefore the variance is favourable £1,340 20

The labour rate variance is similar to the material price variance: “How much should this many hours cost?”

From our cost card 1,380 hours x £9.00 = £12,420 Actual cost £12,696 More than standard therefore adverse £276 Finally the labour efficiency variance which is very similar to the material usage variance: “How long should this many cakes take to make?”

From our cost card 13,200 cakes x 0.1 hours = 1,320 hours Actual time 1,380 hours More than standard is again bad news therefore adverse 60 hours Multiply by standard rate as we’ve dealt with the rate variance already: 60 x £9.00 = £540 adverse As a precaution we should always check that our variances reconcile whether the questions asks for it or not:

One cake should therefore cost: Material Labour Total

Next the material usage variance for which we ask: “How much material should we use for this many cakes?”

From our cost card 13,200 cakes x 0.5 kilos = 6,600 kilos Actual usage 6,700 kilos More than standard is bad news therefore adverse 100 kilos Multiply by standard price as we’ve dealt with the price variance already: 100 kilos x £4.00 = £400 adverse

13,200 cakes should cost 13,200 x £2.90 = Less favourable material price variance Plus adverse material usage variance Plus adverse labour rate variance Plus adverse labour efficiency variance = Actual cost Sure enough actual cost is £25,460 + £12,696 =

£ 38,280 (1,340) 400 276 540 38,156 38,156

Note that adverse variances are added because they represent an increase over the standard cost whilst favourable variances are deducted. Note also that all budgeted figures are ‘flexed’ in line with the amount produced, not the budgeted level of output. One final thought: keep it simple and let your common sense guide you – and don’t forget to eat before the exam! PQ • Premier lecturer Jeff Grimston was recently awarded the Lifetime Achievement Award at the AAT Training Providers Awards PQ Magazine July 2019

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PQ AAT standards

Pay attention

W

e are three years into the current AAT standards so why talk about them now?

Well, primarily because they are updated regularly, so we should be monitoring changes, especially as pass rates for some units are still challenging.

Students should look at the standards to ensure that they know what is included in each unit as, reading the examiners’ reports, some of the areas where students are failing are where level two or three skills are also included at the next level up (for example break-even analysis in MDCL). Tutors understandably focus on new skills, assuming that students retained knowledge and skills from earlier studies.

Secondly, the standards do not simply focus on unit content, but include a range of information about the qualification and AAT in general. In my role as an EQA for AAT I visit many colleges and speak to a range of tutors and students. I am constantly surprised by questions or comments like ‘I didn’t expect to have to do accountancy in the spreadsheets section of the synoptic’.

Perhaps that student had not been paying too much attention to his studies, but I am also asked about the type of jobs that can be done with the different levels of the qualification, how the overall grade is determined, what mark is

needed for a distinction, whether anyone checks the marks given by the markers, and whether students can resit to get a higher mark even if they passed the exam (yes they can, and the highest mark achieved will be the one that counts towards the overall grade). The answers to all these questions are in the standards which are designed to be a one-stop-shop for information about the qualification.

Students use the practice assessments to help them study, as they should.

Perhaps if the student who didn’t expect to find accountancy in his synoptic assessment had paid more attention to the practice assessments he wouldn’t have been so surprised.

However, it is dangerous to focus too much on them. The current incarnation of the AAT qualification does not have to test the whole syllabus in each assessment so, especially at level three and four, not everything that can be asked is included in the practice assessment.

If the examiners write 10 versions of task one of an assessment, each version may cover a slightly different element of the standards. Tasks that require the posting of a book of prime entry are fairly repetitive, but questions about accruals and prepayments or standard costing can vary considerably.

Catherine Littler runs the rule over the AAT standards, which have now been in place for three years

Students should not fall into the trap of learning to complete the practice assessments rather than learning the syllabus. They should remember that everything in the syllabus is covered by at least one question in the bank of assessment questions and simply use the practice assessments to identify weak areas for further study.

Now let’s consider the information about the units that make up the qualifications.

The specification identifies the guided learning hours, details the syllabus content, outlines the test specification, and identifies the weighting given in the assessment to each learning outcome of the unit. Most people look at this section of the document in detail; however, the unit introductions are often overlooked.

Establishing the level for the unit, they give context and set expectations. For example, ELCO expects students use the costing system under supervision. MMAC expects students to develop understanding of the fundamental principles that underpin management accounting, and MDCL expects students to work with minimal supervision as a member of a management accounting team. The progression is clear.

Each unit details the learning outcomes using the words ‘students need to know’ or ‘be able to’. These differentiate between knowledge and skills. As accountants become business advisors, knowledge and the skill of communication increase their importance so, to get high marks in assessments, communicating the knowledge elements of the standards is vital.

Where there may be controversy the standards are very precise, for example listing all the journals required at level two or all the ratios to be calculated in each level four unit. This is a great resource for tutors and students who want to be sure that they are using the preferred version of a given ratio.

So, three years into the qualification, with fresh students every year, we should continue to focus on the standards as the primary source of information about the qualification.

They keep us up-to-date, but more importantly, answer the many questions that students continue to ask. PQ • Catherine Littler is an External Quality Assurer for AAT

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PQ magazine About you Title......................................................

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PQ Global Learning Providers Conference

Straight from the ho PQ magazine attended the ACCA first-ever online GLPC. Here’s some great insight straight from the examiner and their teams…

APM Students will be pleased to hear that there are no major changes planned for the APM syllabus moving forward.

The examiner explained that section A of the exam is now more restricted in what it will examine. It will take its subject matter purely from parts A, C and D. Section B will have one question mainly focused on part E of the syllabus, and one question that can come from any other part.

There has been a slight change in writing style too, and sub-headings have been introduced in the scenarios to make information more accessible. The examiner, however, has issued a warning here. He is concerned that students will concentrate on the sub-heading and avoid reading the rest of scenario. Don’t do that – candidates need to read all the scenario, requirements and appendices before answering the question.

The examiner stressed that ‘knowledge’ will usually only score 2030% of the marks that you need to pass this paper. Yet without knowledge the question will not be understood. It’s all about the application of that knowledge, in the context of the scenario. You have to engage with the material and provide real evaluation.

Students must be wary of talking about something in terms of good or bad.

Providing a proper argument or evidence is how you score marks.

So, what are the areas where students do well? Here the examiner talked about performance reporting systems (notably improved in last few diets), EVA, quality systems, especially JIT, the balanced scorecard and information systems.

However, the exam team is still seeing lots of problems with candidates not bringing forward their assumed knowledge. And the one area that is causing the examiner most concern is the return on capital employed. Too many students don’t know its definition and cannot calculate it. In particular, they don’t know which profit to use in the calculation.

Another problem area is risk and uncertainty in decision-making.

Candidates must learn the whole of the model, not just the components. Other 24

specific areas where there have been weaknesses are operational gearing, and fixed and variable costs. This should be a bread-and-butter subject for the management accountant, he said. Some other areas to look at are activity based management, transfer pricing, and value for money analysis. All these are areas you need to work on.

The standard of basic maths is also surprisingly poor, he said. Rounding is a prime example here – 12.6 rounds to 12.

“Don’t be sloppy with these points,” he stressed.

Finally, the examiner stresses that question practice is essential. This will help you get to a pass in APM. AFM The AFM examiner said that, in every exam syllabus, areas B (advanced investment appraisal) and E (treasury and advanced risk management) will be tested. That could be section A or B of the exam, or both. You should also expect two syllabus areas to be tested in Q1. He also stressed the importance bringing forward your knowledge from FM and other ACCA exams.

The examiner felt that candidates relying on a short or revision-only course to pass here would probably find they hadn’t learnt enough to pass this test.

Students often perceive there is a time management problem with this paper.

But the examiner says that if you take an organised and systematic approach then there is definitely enough time to finish the paper. So it’s you!

It was revealed that students are struggling more with interest rate hedging than with foreign exchange hedging, and ACCA wants students to adjust their revision time accordingly.

Finally, the examiner says you must have a strategy for study, and that means sustained study. Not having a strategy

will affect your chances of passing this paper, he said.

ATX The ATX examiner wants candidates to think more in the exam, and focus their efforts on answering the question.

Thinking students are dear to his heart, and he wants you to follow his mantra of “think more and write less”.

He stressed: “Candidates need to consider the scenario given before they start writing their answer and not simply state general tax rules. Each client has their particular set of circumstances, which the tax rules must be applied to.

Once again, candidates would benefit from taking some thinking time to consider the scenario before they put pen to paper.” Candidates then need to “think, think, think”, he said. That means slowing down and ensure you understand what you have been asked to do. Make notes of your initial thoughts and plan your answer properly.

In the exam room the requirements are everything, he explained, and PQs must keep referring to them when answering the question. You need to ask yourself: “Is what you are about to write or calculate required.” When it comes to managing time you need to be time aware throughout the exam, he said. That means allocating time evenly, according to the mark allocation. Don’t write your way to the answer, either.

Candidates who do not know enough will not pass the exam, he said, knowing that he was stating the obvious.

Area for improvements include knowledge from TX, sole traders, CGT and IHT reliefs, and PQs need to practise explaining the rules in writing.

Additions to tax rates and allowances provided in the exam • Adjusted net income amount at which PQ Magazine July 2019

Global Learning Providers Conference PQ

orse’s mouth personal allowance reduced to zero.

• Standard penalties for errors.

Technical changes • Deemed domicile changes for personal taxes (IT, CGT and IHT).

• Changes to corporate loss relief.

• Income tax implications of lump sum payments.

• Changes to SSE conditions.

Syllabus points removed • Details of what constitutes remittance.

• Overseas aspects of income from employment including travelling and subsistence expenses.

• Tax treatment of overseas travelling expenses for self-employed individuals.

• The accrued income scheme.

• Married couples age allowance.

• Child benefit tax charge.

• The conditions a company must meet in order to qualify as an EIS/SEIS/VCT company.

• The CGT implications of conditional contracts.

• Payments by instalments for CGT. • Immediate post death interest trust.

• Associated operations.

• Knowledge that instalment payments may carry interest and the criteria to be met for instalment payments to be

The examiner is really worried about the auditor’s report is just not well understood. Better knowledge of ISA requirements and IFRS/basic accounting are other areas that students need to get a grip of.

interest-bearing.

• Responsibility of senior accounting officers in relation to accounting systems.

• Profits attributable to patents.

• Calculation of indexation factors.

• The relief for trading losses incurred by an overseas subsidiary.

• Disincorporation relief.

• Stamp taxes for residential property.

• The system by which stamp taxes are administered.

AAA AAA students struggle with evaluating risks of material misstatements, according to a poll of tutors at the Global Learning Providers Conference.

Over half of tutors (56%) said this was the area their students find ‘most difficult’. This surprised the examiner, who thought they would say auditor reports! That subject did, however, come in second on 33%. Just 11% of lecturers said students struggle with quality control, and none (zero) said ethics was a problem area.

The examiner said if students want to do well in the exam then they need to fully develop their answer points.

Candidates also need to allocate time between questions according to mark allocation.

Syllabus update 2018/19 • Syllabus reorganised in previous year and data analytics included as a current issue (a light touch).

• No significant additions.

• Amended a few verbs in specific learning outcomes, eg design audit procedures, evaluate business risk, audit risks of material misstatement.

• Verbs amended to better reflect expected depth of understanding and application needed in AAA.

• See next month’s PQ for more Global Learning Providers Conference reports – and check out our website

Syllabus update 2019/20 • No significant additions or deletions in 2019/20.

• One new learning outcome in syllabus area E: ‘Evaluate as part of the final review the matters (eg materiality, risk, relevant accounting standards) and evidence to confirm if sufficient and appropriate evidence has been obtained.’

• Additional point of clarification on quality control and ethics: “The auditor’s assessment of effective quality control procedures and consideration of ethical issues are fundamental to all stages of the audit and therefore these concepts could be examined in any section of the exam.”

• From September 2019 all exam questions will be set at 1 July 20X5. PQ

PQ useful apps

Apps that help you work, rest and play Accountant Calc Universal Lite The Accountant Universal Calculator is ranked in the top 10 ‘Financial’ apps on the Apple store. It does exactly what it says on the tin, and it does it very well. Accounting Calculator consists of a 10 key scientific calculators built specifically for those in the accounting profession. The app lets you make calculations, edit and reenter data in real-time, add notes to the calculations with voice dictation, and even lets you export the finished file to a number of platforms including Dropbox and iBooks.

This calculator also lets you save your files to a local disk if you don’t wish to export them. It’s highly customisable, allowing you to change where your keyboard is, and providing different presentations of the calculator, letting you find a display that’s perfect for your work-style. The fact that this app is so well put together makes it a great choice for any PQ. Being able to go back and correct your work, as well as the malleable saving and exporting system, makes it a must for any accountant.

PQ Magazine July 2019

ACCA Insights

GAAPweb

ACCA Insights is one of many apps provided by the accountancy body.

Insights is by far the best and most fun app the ACCA offers. Essentially, it is a library of resources for members and students of the body.

Nothing too ground-breaking, but it’s the way in which the app does it that makes it stand out. It features an abundance of material, from studies and surveys conducted by the ACCA to quizzes and module notes, in-house magazines, and even podcasts. Insights has a back catalogue of material going back to 2016 – that’s a lot of stuff! You could quite easily get overwhelmed with the abundance of sources and services available on the app, but that’s where Insights triumphs again. It is incredibly easy to use, simple and visually engaging. Much like entertainment apps, such as Netflix and Amazon Prime, ACCA Insights lets you scroll through the different materials with ease and fluidity. ACCA Insights is available on iOS, Android, Amazon Kindle and via the ACCA’s website.

GAAP is a household name for accountants.

After all, it is the UK’s number-one jobs site for accounting and finance professionals. But did you know they had an app? Well, they do. The app serves as an extension of GAAP’s website, comprising of their entire databse of job listings but on a more mobile-friendly platform. The app lets you look through all of the jobs available at GAAP, then it lets you shortlist the ones you are interested in, or set up a criteria so you see only the jobs relevant to you. Once you’ve made your short list, and found the role that’s perfect for you, GAAPweb then lets upload your CV to the app via your preferred platform. These include amnong others iCloud, Google Drive and Dropbox.

GAAPweb is incredibly easy to use, very well laid out, and has constant support from the developer should you so need it. A great app for people who want to constantly be looking out for their next opportunity in the accounting world.

• Complied by Edward Netherton 25

PQ ICAEW spotlight

David Halford explains how you can best tackle this crucial level rogressing to the Advanced Level of the ACA means using your skills at a higher and more senior level. At the Professional Level, you will have developed your technical knowledge in real-life scenarios. Now at the Advanced Level, there is greater complexity and wider implications than presented within the Professional Level exams.

Here you will be tested on all the knowledge, skills and experience you have gained throughout your training. ICAEW examiners have given their insight to help you progress to the final exams of the ACA.

P

Preparing fo Advanced

Examiner insights The Corporate Reporting and Strategic Business Management exams test your understanding and strategic decision making at a senior level.

They present real-life scenarios, with increased complexity and wider implications than the Professional.

Corporate Reporting Your approach for a successful Corporate Reporting exam should focus on your progression in the following areas: • Building on your brought forward knowledge and technical progression: The International Financial Reporting Standards (IFRS) you studied for the Financial Accounting and Reporting exam are studied at a greater depth here in the Corporate Reporting exam. Groups remain important and, in addition to the basic techniques of consolidation, the Corporate Reporting exam requires you to consolidate acquisitions and disposals that ‘cross the control boundaries’. You must also progress your technical knowledge by studying IFRS that are assessed only at Corporate Reporting.

• Integration of financial accounting and reporting and audit and assurance: Financial accounting and reporting and audit and assurance are integrated within the Corporate Reporting exam. The audit issue can arise from the financial reporting issue and vice versa.

Identifying the financial reporting issue and explaining the audit implications and procedures required is a key skill.

• Financial statement analysis: Financial statement analysis can be examined in different ways. You may be asked to: • analyse and evaluate performance, financial position and cashflow (see the November 2018 exam, Q2 Chelle).

• appraise the nature and validity of items in financial statements and reports – identify incorrect financial reporting treatments (shown in the July 2018 exam, Q3 MRL).

• interpret in the context of assurance, for example, corporate governance arrangements, sustainability reports (for example Q1 Konext in the July 2017 exam).

• analyse comparative performances related to accounting policy choices of two different entities (Q1 Larousse at the November 2015 exam).

Also, in an audit and assurance context, financial statement analysis is a gateway into 26

higher level marks. You may be asked for analytical procedures at various stages of an audit (to identify audit, business and financial risk, for example at the November 2016 exam, Q1 Zego).

• Skills and ethics – your role in the scenario may be the ‘reviewer’ of a junior’s work; it is important to appreciate who you are in the scenario and the roles of the other characters too. An increase in professional scepticism and the ability to challenge the information in the scenario are key to success.

Strategic Business Management • Integration of knowledge and understanding: The knowledge acquired at the Professional Level is brought forward to the Advanced Level Strategic Business Management exam and extended by more advanced topics and tested with a greater degree of subject integration. For example, Strategic Business Management enables the integration of financial strategy and business strategy, which is not possible at the Professional Level where these subjects are studied separately (view this in the November 2018 exam with Ketch).

In addition, financial reporting and assurance are also tested within this exam. These will stem from, and be integrated with, business and

financing problems arising in the scenario. For example, hedging currencies, interest rates or commodity prices is a finance issue, but the financial reporting consequences of the selection of the financial strategy can also be addressed (see Analytics Business Services in the July 2018 exam). A further example is the business and financial reporting aspects of acquisitions and disposals (the November 2018 exam with Zeta and the July 2018 exam with Analytics Business Services show this).

Advanced Level skills One major change in the transition from Professional to Advanced Level is greater application of higher skills. These skills will be required to solve problems using unstructured information in more complex scenarios in order to provide reasoned and realistic advice. Such advice requires higher skills of judgement to discern the selection of the most favourable decision in the circumstances.

Advice provided will need to be justified and supported by reasoned argument and evidence, frequently involving analysis of data provided from different sources, across multiple exhibits.

Multiple stakeholder perspectives may also be required (which is shown in the following past exams, Ketch, November 2018; Gemstone PQ Magazine July 2019

ICAEW spotlight PQ

or the level

Jewellery, November 2017, and Moonbeam Marine Yachts, July 2017).

At the Strategic Business Management exam, you will always be placed in a role within the scenario. This will require you to apply professional scepticism and therefore, where appropriate, to challenge the information and arguments presented to you in the scenario.

Ethics Ethics requirements in this exam are likely to present ethical dilemmas that have greater layers of complexity than at Professional Level.

This may include key issues embedded within the scenario that you need to identify. There may also be multiple parties in the scenario each of which has different interests and ethical issues that may conflict (see Ketch, November 2018).

In resolving such conflicts, only some of the parties may be bound by professional codes of conduct.

Moreover, professional scepticism is often required where there are claims and counterclaims being made by different parties and establishing the facts may be a prerequisite to offering ethical suggestions and actions. In many cases there will be no clear or correct solution and the justification will be as important as the specific conclusion.

PQ Magazine July 2019

Case Study The Case Study presents a complex business issue that challenges your ability to solve problems, identify ethical implications and provide effective solutions. It is designed to test the knowledge, skills and experience you have gained throughout your training. You will attempt the Case Study in the final year of your training agreement, once you have taken, or received credit for, all other exams. The Case Study differs from the other ACA exams in two important ways: • it is a highly practical and entirely skills-based assessment. It tests your understanding of complex business issues and ability to analyse data, apply judgement and develop conclusions and recommendations; and • it is based on a ‘real-life’ scenario – the Advance Information (AI), is available a month before the exam.

You must be fully familiar with the AI (around 15,000 words) when you enter the exam centre.

The exam is an extension of the AI. In four hours, you must produce a report answering three requirements (each with several components), plus a short executive summary.

This involves financial analysis (but not the detailed computations needed for other ACA exams) and evaluation of current commercial, ethical and business trust issues.

Your preparation should be based on the Case Study learning materials. However, class time with a tutor, even when supplemented by extensive home study, is not enough. You must be able to: • integrate technical knowledge and professional skills from all the previous ACA exams; and • display the advisory, judgemental and communication skills acquired through practical work experience undertaken during your training agreement.

To thrive in the Case Study exam, you must demonstrate: • mastery of the AI, so that you can integrate it seamlessly into the exam scenario.

• disciplined planning and strict time management to ensure that you answer the whole exam (every part of each requirement, including a succinct executive summary that covers the main issues).

• quality financial analysis that ‘makes the numbers talk’ to the audience.

• professional scepticism and the ability to challenge assumptions and to identify and discuss ethical issues wherever they occur.

• aptitude with the computer-based exam software and full awareness of its functionality.

The Case Study is the final exam in the final year of your training agreement and should be approached with necessary importance and professionalism.

Preparing for the Case Study From July 2019, the Case Study exam will be computer-based. You must practise with the exam software in advance of your exam, to ensure you are familiar with the functionality and formatting of the exam software.

Access the exam guide, which provides an overview of the Case Study exam software, listen to on-demand webinars, practise using the blank practise software or software with sample

exams. Explore more at icaew.com/casestudy Live webinar Join the ICAEW on 19 June at 10am (UK-time) for the Case Study computer-based exam webinar, where we will provide an overview of the Case Study exam software, talk you through the exam experience, give top tips and answer your questions. Email your questions in advance to acamarketing@icaew.com and register your place at bit.ly/CaseStudyOverview Tutor tips The most striking difference between the Professional and Advanced Level exams is the depth and breadth of the scenarios provided. In the Strategic Business Management and Corporate Reporting exams, questions are accompanied by scenarios that stretch over five or more pages, consisting of complex financial and non-financial data. In the Case Study exam the AI will be between 40-50 pages long; with a further 15 pages in the exam. The increased volume of information places a greater emphasis on: Preparation – you must be familiar with key techniques (eg, net present value), recent developments (eg, International Financial Reporting Standards) and specific issues affecting your client, especially in the Case Study exam.

Application – your advice must be practical and relevant to the scenario/client.

Analysis – you will not always be told explicitly what the problems are; so you will need to discern these from multiple information sources – a key exam technique.

Advice – you will need to justify the professional advice you give. In essence, at the Advanced Level you are expected to simulate the role of a newly qualified chartered accountant providing advice to a client, therefore, you must assume the mentality and role of a business adviser.

Remember, the client is paying for your advice, therefore it must be accurate; relevant; professionally presented; and impactful.

To prepare for the Advanced Level question, practise is more vital than ever, and you must ensure you practise using the computer-based exam software so you are familiar with the layout and functionality.

The examining teams expect you to have attempted past exam questions to time as part of your preparation. You must attempt past questions/cases in full, within the software, sticking to time: don’t just read the answer.

Question practise will expose you to the technical demands of the exams, as well as the application, analysis and professional communication skills needed to pass.

Key reminders The Advanced Level exams are open book, allowing the resources you need to be at your fingertips. To help you prepare for the Advanced Level you can access past exams, webinars and more at icaew.com/examresources PQ • David Halford is a Courseware subject matter expert and tutor at BPP Professional Education Reproduced with the permission of ICAEW, this article was first published in Vital (June 2019) 27

PQ working in practice

Time to think small Gloria Murray, an accountant working in practice, has some advice for those wanting to work in the sector f you really want to work in an accountancy practice don’t wait until you finish your course before you start applying for jobs. You could be missing out on years of valuable experience that will see you walk straight into a great job once you’ve finished college or university.

Even if your sights are set for one of the large accountancy practices, gaining understanding and knowledge in a local practice will see you jump ahead much faster than others starting off at the same time as you.

I’ve run my own practice for over 22 years and in that time I’ve taken on trainees from different walks of life. The best ones have worked in some sort of financial function before and have not had a degree at the time I’ve taken them on. I want to give you some insight into what many small accountancy practices look for. So I’m not talking for the top 10 firms here who have different resources and priorities from me.

Becoming a fully qualified accountant is hard work and when you finish your course you still have years ahead of study in order to get your qualification.

By its very nature this has to be done while working, so you may as well get used to that now.

The work will also give you greater insight into your course work and you will understand in a practical manner what it all means. Let me give you an example.

One of my trainees was struggling to understand how to interpret ratios and write a report for a scenario where she was the accountant writing to explain this to a business. I got her to benchmark one of our clients with software we use for that purpose and which produces a report. Once she read that she could see clearly how this could be of use to a

I

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business and found it much easier to do the report.

By the time she had finished university she already had three years of experience behind her and could do a myriad of tasks in the practice. She was incredibly useful so I offered her a fulltime job on a much better salary and paid for her to sit her professional exams.

I would no longer take on someone coming straight from a degree in accountancy unless they had already worked part-time in another accountancy practice. Why is that? They have higher expectations of salary but can do no more than a trainee with no experience. I have to train them from the very start (including debits and credits!) so why should I pay them more than someone with no degree? I’m being honest so you gain an insight into what your potential employer is looking for!

Here are my top tips: 1. Look for a part-time job as soon as you apply for your accountancy course.

2. You will need to work at least two days a week to learn enough and become useful.

3. Don’t wait until you see a job advertised. Have a look around. Practices close to where you live that you would like to work for and send them your CV. 4. Look out for ones that have awards, or

who are proactive on social media.

They’re much more likely to be technology driven, giving you a good education in software.

5. Find out what software they use for bookkeeping and do some training on it before you go for interview.

6. Find out as much about the practice before the interview and show that you chose them for a reason.

7. Be keen. If you struggle to get a job, ask if you can come and work for a week for no pay. Prove yourself and you’re likely to be kept on. But if they just don’t need someone you just have to widen your search for work experience.

Don’t use the excuse that you’re too busy learning to get a job. In the accountancy world you have to show you can study and work at the same time. It can be fantastic working in a small practice as your much more likely to get to work on a wide range of clients and do everything from bookkeeping to accounts production to management accounts to company secretarial.

It’s much more varied and gives you the opportunity to find out what you really enjoy if you decide you’d like to specialise later on. PQ • Gloria Murray is an accountant at award-winning firm Murray and Associates

PQ Magazine July 2019

careers PQ

Your future is

DIGITAL A strong finance and accounting background is no longer sufficient to become the value-add business partners of the future, according to Stathis Gould, a deputy director at The International Federation of Accountants. He stressed that tomorrow’s management accountants need to be competent in data science, analysis and visualisation.

Gould explained: “As the Economist aptly put it in 2017, the world’s most valuable resource is no longer oil but data.”

To this end, IFAC said that futureready accountants will need enhanced competence and skills in: • Statistics, to discover the patterns and insights provided by data.

• Data applications covering a range of areas, such as data governance, data architecture, data creation and storage, data transformation (extraction and transformation), data manipulation and modelling, and technology skills – including machine learning and algorithms.

• Business domain and applications combining an in-depth understanding of the business to identify problems and opportunities, and developing insights and intelligent solutions, including using tools for better visualisation and workflow integration.

Business and leadership competence will continue to be paramount to enable effective communication, interpretation of results and relevant recommendations for decision-making.

There is a real need to filter hype from reality, said Gould. Data need not be ‘big’ to be relevant and useful.

Technology is not usually a constraint if you focus on quality of data, process, people and regulatory issues, he pointed out.

As accountants you will need to learn to prioritise analytics based on feasibility and impact, by identifying the top use cases that can create the greatest value quickly. Think about successes in terms of weeks not months, he said.

PQ Magazine July 2019

Life at Manchester Metropolitan University Yasar Zahid, 36, has been a senior lecturer at MMU for six years. He has a degree from the university, where he also completed the ACCA qualification. Yasar is studying for a masters in Islamic Finance and is our current Tutor of the Year (public sector) What time does your alarm clock go off on a work day?

I’m a late sleeper, so I’m up around 7.30am.

What’s the first thing you do when you get to your desk?

Check my emails and plan a brew break, which never seems to materialise in the morning.

What’s on your desk? Screen cleaning fluid, stationery, lecture and tutorial hand-out notes and my darling mug.

What’s the best thing about where you work? The staff, the students and the feeling of being part of a really good team.

Where’s your favourite place to go for lunch? I generally eat at my desk or go to the canteen for something light. I am neither a big or fussy eater.

What can you see from your desk? The Mancunian Way and

Manchester city centre.

Which websites are your favourites and why? The BBC news website is a must; if I get time I will also visit property and car auction sites to find a bargain.

Which websites do you use for work? Has to be the BBC, FT.com and ACCA. How many hours a week do you spend in meetings? On average two to three hours – I spend most my time teaching.

What time do you leave the office? I usually leave for 5.30pm unless I have late night lectures, which can finish at 9pm.

How do you relax? Generally with family – if I’m at home then it’s a fruity shisha and Netflix.

What’s your favourite tipple?

I don’t drink alcohol so has to be a cup of chai, which I can’t live without.

How often do you take work home with you? Frequently, but I try my best to spend my time planning for the upcoming teaching sessions and meetings.

What is your favourite TV show? The Fresh Prince of BelAir and 8 Out Of 10 Cats Does Countdown.

Summer or winter? Summer.

Pub or club? Neither. Café or at a family member’s house.

Who is your hero? I have a few – Nelson Mandela, Will Smith and my dad.

If you had a time machine, where would you go? To the Battle of Bannockburn, in 1314.

If you hadn’t chosen accountancy, where might you be right now? A property developer but I would still need a second job to save the capital needed to invest.

Fancy a cuppa?

How do you know you are moving up the career ladder? It’s when no one expects you to make everyone in the office a cup of tea. A new study says not having to stand by the kettle on a regular basis is one of the 50 markers of success. You can add to that flying first class on business trips and having someone buy your lunch for you. The poll also discovered that if your salary is more than £78,431 and you have 34 days’ annual leave then you are at the top!

Beware the narcissists Job interviews should be scrapped to ensure narcissists don’t get appointed to senior positions, says Tomas ChamorroPremuzic in a new book. The professor of business psychology believes interviews encourage bosses to hire in their own image rather than on merit. He says people with an inflated sense of their own worth, rather than those who would be better bosses, often climb the ladder.

The book is called ‘Why Do So Many Incompetent Men Become Leaders (and How to Fix it)’.

In brief Did you blink first?

Workers who spend hours staring at a computer screen could suffer eye damage because of a lack of blinking. Experts say that we naturally blink 20 times a minute, but this drops to between one and three while on a computer. Do you have any of the symptoms – blurred vision, dry eyes and headaches? With the typical worker spending five-and-a-half hours a day at the computer the scientists are increasingly worried.

The PQ Book Club: books you should read Looking for America by Chris Glennie (Lumax Books, £14.99) At this time of year we at PQ are always on the look-out for summer holiday reading we can recommend to our readers. So it was great that this book, by CIPFA’s new education chief Chris Glennie, landed in our postbox at exactly the right time The subtitle ‘personal travels in US history’ sums up this book perfectly. It traces the author’s travels across the country, from New England where the Pilgrim Fathers first landed to the great metropolis

of New York via the ‘Wild West’ and dozens of other spots inbetween.

Glennie obviously has a deep interest in American history, and all the major events that make US lore are featured in these pages. This includes the landing of the Mayflower, the War of Independence, the Civil War, the Great Depression, Pearl Harbor, the plight of the Native American clans, the civil rights movement and 9/11 – and much, much more.

The author’s prose style makes this a very easy read, and

it’s a great book to dip in and out of – in short, ideal holiday reading. If you are really lucky and holidaying in the US this year this book would make a great companion.

PQ rating 5/5 A fascinating read that’s bound to make you want to visit this remarkable, complex and often bewildering country.

• We have three copies of this book to give away – see page 30 for details.

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

TAX FREEDOM Taxpayers worked 149 days for HMRC this year, with 30 May 2019 the day on which they started working for themselves, says the Adam Smith Institute. The Tax Freedom Day this year is the latest it’s been since 1995. It has been worked out that UK taxpayers will fork out £734.1bn to the Treasury this year, 41% of net national income. Tax Freedom Day in the UK is now well over a month later than in the USA, where this year it fell on 16 April.

WHAT PRICE MELTING ICE?

Lucky dip: Students at one Scottish university are prepared to go to extreme lengths to ensure exam success. By tradition, students at St Andrews University take a dip in the North Sea in search of luck!

THAT’S RICH

BUG ART A laptop infested with six of the world’s most notorious computer viruses has been sold for £1m as a work of art in an online auction. ‘The Persistence of Chaos’ was created by Gus O Dong and cyber security firm Deep Instinct.

The bugs on the computer include WannaCry, ILOVEYOU and DarkTequila. The artist said the work was intended to give abstract threats a physical meaning, serving as ‘a kind of bestiary’. The new owner has had to make one promise – not to connect the computer to any network!

RUN FOR SUCCESS A Chinese university is forcing its students to take regular runs in order to earn credits towards their degrees! Zhejiang University in Hangzhou has introduced a phone app that requires male students to run 104 miles and female students 74 miles over a five-month period. They even have to take selfies to prove that their exertions are genuine. All Chinese students are expected to earn credits through physical education and sport regardless of what degree they are taking.

’ WEV E Looking for America CIPFA’s new education chief, Chris Glennie, has written a highly-acclaimed book, called ‘Looking for America’. We have three copies to give away this month. Journey with him as he takes a trans-continental road trip providing the reader with the real stories behind the major events in US history.

To enter send your name and address to graham@pqaccountant.com. Put ‘Looking for America’ in the heading and you could be one of our three winners.

The latest Sunday Times Rich List 2019 reveals that there are more billionaires living in London (95) than any other city in the world. PQ magazine has never been comfortable with the whole Rich List concept [Editor – it’s all a bit vulgar], but we are interested in the ‘rules of engagement’ – how it was all worked out!

Here we discover the actual size of people’s fortunes may be much larger than the figures suggest. Remember, the compilers have no access to bank accounts and don’t know what is in their private collections (art and other investments). But we did discovered the value put on agricultural land. An acre (poor) in the Scottish Highlands is put at £600, compared with £15,000 for a good acre in the south-east England.

An international team of researchers have calculated the economic impact of the melting permafrost of the Arctic. The group also took into account the reduced ‘albedo’ – the reflection of light hitting the Earth’s surface without being absorbed – which is caused by melting ice, leading to higher solar absorption and hence even more warming. The cost of tackling environmental destruction, adaptation and emission reduction has been put at £54 trillion between now and 2030 – the equivalent of almost the entire current global GDP.

GAME ON! If you are suffering Game of Thrones withdrawal symptoms we have something that might cheer you up. AAT’s Distance Learning Provider of the Year, Accountancy Learning, recently posted a promotional video for all you fans out there. It also offered £65 off all their accountancy courses, too! OK, it was full of naff puns, like “stop dragon your heels”, and “Arya you ready to start studying for your AAT qualification?” But we love it. Check it out at https://goo.gl/posts/NZ5x9

GOT THE L OT Fall in love with Yes, you are right, we did buy another box of ‘I love tax’ t-shirts! But that’s good, we now have lots to give away – and this month we have three great t-shirts to up for grabs. Who wouldn’t want to be seen in the coolest “I love tax’ t-shirts around?

To be in with a chance of winning this great giveaway just send your name, address and t-shirt size to graham@pqaccountant.com. Head up your email ‘I love tax’ and we’ll do the rest.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be received by Friday 12 July. The main draw will take place on Monday 15 July 2019.

TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM 30

PQ Magazine July 2019

Accountants will save the planet!

Thursday 21 November 2019 The Business School, London South Bank University Following the success of our previous accounting conferences, we are hosting a packed day conference looking at green accounting issues. Hear from renowned experts and industry leaders on current and future aspects of green accounting. Network with other professionals and join the discussion.

If you’re interest e green ac d in counting issues, t his is to be mis not sed!

• What are the practice implications of carbon taxes?

• How do we account for corporate social responsibility?

• What are the developments in green financial reporting?

• How can we maximise non-renewable resources as accountants?

• Rather than accounting for profit or loss, how can we best look at the effect on the environment?

Booking will open in Autumn

Winner of Innovation in Accountancy PQ Awards 2019

304-1819-MAR-BUS-PQ CONFERENCE AD_270x210_V2.indd 1

03/06/2019 16:37

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