PQ magazine, August 2023

WHY AREN’T ACCOUNTANTS HAPPY BEING ACCOUNTANTS?

Just over a third (36%) of accountants are considering leaving the profession in the next five years, including 30% of under 25s, new data from cloud platform Dext has revealed.

This is particularly concerning as the number of students choosing an accountancy career appears to be falling, they say.

Dext surveyed accountants and bookkeepers across the UK to determine their attitudes towards the profession, and what they needed to be happier in their roles. When looking at reasons why respondents are planning to leave the profession, the majority are planning to move to another industry or undertake a complete career change (21%).

Surprisingly, when looking at the specific demographics of those wanting to leave the profession, 24% of respondents aged 25-44 are leaving due to a lack of a healthy work/life balance. Some 22% of those with children are looking to leave for the same reason. For the over 55s, while the majority (67%) are leaving due to retirement, a third (33%) are planning to leave the accounting sector to join a new industry.

Although the majority of respondents enjoy their role (90%), some 56% feel they spend too much time completing manual tasks. With 26-50% of tasks currently automated, respondents believe that this will increase to up to 75% in 10 years. When asked

said: “Accountants are vital for supporting entrepreneurs and businesses of all sizes, yet many are leaving because of work/life balance issues. Unfortunately, too much of an accountant’s role is still completed manually, meaning that they cannot optimise their time as much as they need to.

“Although it is positive that automation is likely to increase in the next 10 years, that will be too late for many accountants who are planning to leave the industry long before then. It’s also concerning that many leaving for work/life balance reasons are parents, as a lack of optimised tasks is pushing this demographic from the accounting profession. It simply doesn’t need to be this way.”

TIME FOR BETTER PAY FOR JUNIORS

The Big 4 firms need to up the pay of junior auditors if they want to make the sector more attractive to graduates, says the chair of the UK accountancy watchdog, Sir Jan du Plessis.

There is growing concern that criticism of the Big 4 from both politicians and regulators is making it more difficult to recruit and retain auditors. The rising number of highprofile fines for poor work could also be adding to the problem.

In an exclusive interview with the Financial Times, the chair of the Financial Reporting Council denied the regulator was making

the accountancy profession less appealing.

Du Plessis pointed to the increased profitability at the audit firms. At two of the four big firms average partner pay has gone above £1m. He stressed: “They have the resources available to increase the pay levels of more junior people that they want to attract into their firm and it’s up to them whether they want to do so.”

One of Big 4 offered starting salaries of £32,000 last year, but this is half of what City law firms are paying their trainees.

Du Plessis told the FT that if a young person was looking to join a

profession, they would have wanted to join one that sets high standards.

The FRC has a ‘name and shame’ policy and he was questioned on this approach. He felt it was important to keep this, although he said the FRC would try to avoid naming junior auditors accused of misconduct in future.

The regulator recently faced a backlash after naming a KPMG junior in a case and even threatened him with a £50,000 fine. The trainee was eventually cleared of dishonesty and was not fined. They were, however, found guilty of lacking integrity.

This problem is not a uniquely UK

one, either. IFAC recently highlighted the talent attraction challenges in the Danish auditing profession. It is experiencing a workforce exodus and is struggling to attract graduates. With companies losing employees this means those remaining have to work harder. This is having a significant impact on employees’ work-life balance, creating even more turnover of staff. It has been suggested that the education programme is too lengthy, and there is a feeling that statutory auditors in Denmark are being ‘overeducated’ compared with their needs in future careers.

what the accountants of the future would value most, the majority believe it is the better adoption of technology.

Sabby Gill, Dext CEO (pictured),

A note from the Editor

Another busy month in PQ world

As we went to press we got the news through that the ICAEW has appointed Will Holt as its new MD of education and training. We last bumped into Will when he was Dean of Pearson Business School a few years back. A graduate of PwC, he also worked for Kaplan for three-and-a-half years, so looks like a great choice.

He joins the ICAEW when there seems to be a growing worry about attracting people into the profession. Our front cover stories look at the lack of a work/life balance and poor pay as two of the key drivers here. I loved the fact that the chair of the FRC, Sir Jan du Plessis, tells partners in the Big 4 that if they can pay themselves over £1m each then they can pay their junior staff better!

The magazine has always given a voice to ‘alternative views’, although we often don’t see them as such. It seems difficult to argue against Richard Murphy’s calls to nationalise the water industry (p22), or the NAO’s report of the ‘out of control’ MTD project (p34).

The ACCA Study Hub has now landed too, as have the first two sustainability standards.

Finally, we want to say a big goodbye to fellow accountancy journalist John Stokdyk, who recently passed away.

Graham

Hambly, Editor and Publisher, PQ magazine

IN THIS ISSUE To subscribe for FREE go to

nothing wrong with shedding a tear. Plus our social media round-up

17 Sustainability standards

Ten things you need to know about the ISSB’s first two standards

18 AAT AQ2016

Time is running out for the old syllabus – so now’s the time to box clever

21 CIMA spotlight

Why practical application of your knowledge is key to exam success

22 Water, water everywhere… Professor Richard Murphy argues that nationalisation is the only way to save the ‘environmentally bankrupt’ water industry

24 Wellbeing How to bounce back from the bad times you have as you seek to become qualified

25 Easy as ABC

All you need to know – and must know – about activity based costing

27 ACCA SBL exam

This exam is changing in September – and we point out what you should look out for

29 A question for Tom Tom Clendon explains the concept of investor focus, which is particularly important for SBR sitters

30 Careers report What will the world of work look

like in the future? The World Economic Forum has some ideas

33 AAT spotlight

Some top tips on passing AAT assessments – from someone who’s been there, done that

34 The true cost of MTD Tax authority’s digitalisation programme is massively over budget – and we explain why

p22

36 ACCA spotlight

Accountants must be in the forefront of the drive to social equity

38 Viewpoint

Why there’s so much more to ethics than another exam to pass

39 Careers

Church shuns fossil fuels; tackling your career issues; and our Book Club review

40 Fun

The lighter side of life – and accountancy

The columnists

Lisa Nelson Knowledge overload, and how to deal with it 4

Robert Bruce A tribute to the saviour of New York City 6

Prem Sikka The water debacle must end now 8

Anna Kate Phelan Do you need training to make the most of AI? 10 David Rothera Go green – and get Gen Z on side 12

deal with it

First sustainability standards are here

The International Sustainability Standards Board (ISSB) has issued its inaugural standards – IFRS

S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS

S2 Climate-related Disclosures

– ushering in a new era of sustainability-related disclosures in capital markets worldwide.

The Standards will, says the ISSB, help to improve trust and confidence in company disclosures about sustainability to inform investment decisions.

And, for the first time, the Standards create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects.

ISSB said it is looking forward to working with jurisdictions and companies to support adoption and

implementation.

At the launch of the standards ISSB chair Emmanuel Faber explained: “Today represents the outcome of more than 18 months of intense work to deliver an inaugural set of sustainability disclosure standards for the global capital

markets. The ISSB Standards have been designed to help companies tell their sustainability story in a robust, comparable, and verifiable manner.”

You can find out more about the two new standards at https://lnkd. in/eu9zjxMf

Pay frozen for some juniors at PwC

PwC’s UK staff have been told to expect smaller pay rises and bonuses this year, according to reports in the Financial Times.

Despite the cost-of-living crisis, which saw big hikes in salaries last year, salary bands have been frozen for some junior auditors

because of “challenging” market conditions.

The FT said the firm’s junior auditors were told on a webcast in late June that pay bands would be frozen for one set of employees, while many others would only get increase of 3-6%, which is in effect

World’s fastest accountant

Eugene Amo-Dadzie, a senior management accountant at a property company, always knew he could run quickly. Now everyone knows the self-styled ‘world’s fastest accountant’ can too, as he broke the 10-second barrier in Graz, Austria recently.

His time of 9.93 makes him the fifth-fastest UK 100 metre runner of all time – behind the likes of

It’s an amazing story, as Amo-

a pay cut in real-terms.

One junior auditor told the FT they were shocked by the freeze in pay, and there was talk of quitting. Currently, most junior auditors are paid between £26,000 and £34,000 a year, depending on location.

Dadzie didn’t start competing until he was 26, by which time he had qualified as a chartered accountant. He is now 31.

So, is this Rainham boy a sprinter who happens to be an accountant or an accountant who can run? He told the BBC: “I very much enjoy that I have a different story. I still refer to myself as an accountant that happens to operate in the world of track and field.”

Nationalisation is the only answer for water

There is only one answer for the problems of the UK water industry and that is nationalisation, says accountant Professor Richard Murphy. He claims Thames Water can never be profitable and deliver clean water.

Murphy is suggesting that nationalisation should be without any compensation to shareholders. “That is because their businesses are environmentally insolvent,” he said. His idea is to issue water bonds via

ISAs to the public to help the industry raise the funds it needs. Murphy wondered: “Wouldn’t you want to save in a way that ensures we all get clean water in the future?”

Read the full article on page 22

KPMG to cut 2,000 jobs in US KPMG is planning to cut around 5% of its US posts as demand slows for its consulting services. The Big 4 firm’s US CEO, Paul Knopp, said the cuts will address the significant mismatch between the workforce and the reduced demand for its

services because of global economic uncertainty.

This marks the second set of layoffs at the firm. In February, some 700 jobs were lost in the advisory business. The announcement follows EY telling its staff that it was cutting 3,000 US jobs after the failed breakup of the firm. Deloitte reportedly have plans to lay off just over 1,000 of its US workforce.

AQ2016 ends in September

AAT students sitting the old AQ2016 need to plan for the switch

to AQ2022, says FI’s Nick Craggs.

The last chance to sit the synoptic exams are early in September, so students need to plan for this.

The Level 3 transition is the most complicated, he explained. Advanced Bookkeeping and Final Accounts Preparation have been merged and you need to pass both units to get the exemption for the new AQ2022 paper.

There is also no equivalent unit for the Advanced Synoptic on AQ2022 so it doesn’t carry over into Q22.

See page 16 for more.

Linford Christie (9.87) and Zharnel Hughes (9.91).

Is MTD ‘out of control’?

HMRC’s Making Tax Digital project has so far cost over 400% more than originally estimated, according a National Audit Office report.

Original cost estimates in 2016 for introducing MTD for VAT, Income Tax and Corporation Tax was £226m. Today, the cost

of MTD just for income tax currently stands at £1.3bn.

And when HMRC asked the government for more funding last year and in March this year, their cost-benefit analysis forgot to include the £1.5bn plus cost of transitioning

for VAT and Self Assessment business taxpayers with income over £10,000.

The NAO report also points out MTD has been delayed four times since 2015 and is eight years behind schedule.

The CIOT and ATT believe MTD is ‘out of control’, and while supporting the digitalisation of the tax payment system believes the NAO report backs its claims that HMRC vastly underestimated the cost to taxpayers and overestimated the benefits to the Exchequer!

Read more on page 34

John Stokdyk: in memoriam

It is with great sadness that we report the sudden death of top accountancy journalist John Stokdyk. He has been a stalwart of accountancy journalism since 1997, working both at Accountancy Age and then AccountingWEB, lately as ‘editor at large’.

There aren’t many real accountancy journalists around these days, and along

ACCA Study Hub is here!

The all-new singing and dancing ACCA Study Hub opened for business on 5 July. It gives ACCA students free online access to study materials and will help them to be better prepared and less stressed for their exams.

It brings your revision to life with:

• Study chapters to increase students’ understanding.

with our editor Graham Hambly, John was often the only other journalist in the room!

A truly larger-then-life character, John lived in Brighton and hailed originally from California. As he once said: “Every story has an accountancy angle, you have just got to find it.” He will be missed.

• End of chapter quizzes to put students’ knowledge to the test.

• Flashcards to test students’ knowledge of key definitions.

• Practice questions to help students better prepare for exams.

Study Hub is available on the web and mobile devices. It has been available as a pilot and some 79% of students who have used it said the Study Hub made them more confident. And it’s proven to increase exam pass rates.

ROBERT BRUCE

Hail the saviour of New York

When many years ago I made my first visit to New York it was a scary place. I was a very young journalist and the city was teetering on the brink of financial disaster.

Transport, particularly the Subway, was on the edge of lawlessness and social collapse.

When you arrived at JFK and took the Subway into town you travelled in a sealed carriage with an armed cop at either end. Depending on your viewpoint it was exhilarating, terrifying or a simple sign of the apocalypse to come.

You were warned by journalist friends to never catch anyone’s eye, to huddle with others at the centre of the platforms while waiting for a train and not to worry about the filthy state of the carriages. It was far from being a beacon of civilisation or social coherence.

Interestingly, it took an un-elected and strictly nonpolitician to sort it out. The man who, extraordinarily, played the key role in sorting out the bankruptcy of New York and the rescuing of the Subway has just died. His name was Richard Ravitch. We don’t need to go into the detail of how he achieved his great feats. In fact, we only need to understand one thing. As his obituary in the New York Times put it: “He was uniquely qualified: A rarity among public officials, he was a regular Subway rider.” So he knew the detail and had the experience. A lesson to us all.

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

PwC Australia fires eight partners over ongoing tax leaking scandal

PwC Australia has fired eight more partners, including its former CEO, following its investigation into the handling of confidential Treasury information, and past failures in professional, ethical or leadership responsibilities.

When it came to failures of leadership and governance, PwC said failures at the top enabled poor behaviours to persist with no accountability. The firm said: “These behaviours are not, and never have been, acceptable under PwC’s standards.”

The firm now hopes that this latest move will draw a line under the breaches, and help to reshape the firm’s culture and re-earn trust

with its stakeholders.

The eight ‘departures’ are in addition to the four former partners who were previously named as being involved in confidentiality breaches.

Acting CEO Kristin Stubbins said: “Accountability is crucial to improving our culture and based on our investigation to date, it is clear the conduct of a number of partners fell short of what was

Don’t copy your course work!

A whole group of CIPFA students have been found guilty of cheating in their online exams. The problem was that their scripts were an identical match to the course work material and workbooks. All five students came before the disciplinary hearing on the same day.

CIPFA student Nathaniel Coker

RSM UK has again sponsored a prize recognising the best academic performance for students in Financial Accounting Stage 2 on the BA (Hons) Accounting & Finance degree programme at Robert Gordon University. This year’s recipient was Monica Gray, from Westhill. She is pictured here with RMS’s Andrew Forsyth (left) and course leader Martyn Gordon (right).

has been suspended from the institute for a period of nine months after it was found he cheated in his SPF exam. Coker had used a desk with drawers for his online exam, in which he stored his course material, and he accessed this material throughout his exam. The committee also imposed a cost order against him.

expected of them. They are now being held accountable for their misconduct.”

A few days before announcing the firings, PwC said it was divesting all its federal and state government business to Allegro Funds for $1. This will create two independent firms, while ensuring that there will be no disruption in the services to public sector clients. It is hoped this will help protect the jobs of some 1,750 people in PwC’s government business.

That means PwC Australia will exit from all government advisory work, at both state and federal levels. That represents around 20% of the firm’s revenue.

Student Farah Said, whose script matched that of the course work and some accountancy websites, claimed he had memorised whole chunks of the material. But the committee did not believe him and he was expelled from the institute. Students Ifrah Adam Omer and Farah Ibrahim were also expelled, while Paul Gitau was suspended from the institute for eight months.

The

AIA

and Kule Geofrey from Uganda.

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PREM SIKKA

Water companies are the unacceptable face of capitalism. In 1989, the government sold off water in England and Wales for £6.1bn. The Water Services Regulation Authority (Ofwat) became its regulator.

Since then, water charges have increased by 40% in real terms.

Companies have paid £72bn in dividends; financed by debts of £60bn. About 20% of income is used to service debt. Water companies lose around 2.4bn litres of water to leaks a day and tons of raw sewage is dumped in rivers.

About 70% of the water industry is owned by foreign shareholders who seem to treat the industry as a cash cow. About two-thirds of water company executives are former Ofwat executives, heightening concerns about regulatory capture.

Thames Water is England’s biggest water company. Since privatisation it has paid £7.2bn in dividends. It has £14.3bn of debt, a leverage ratio of around 80%, well above the 60% limit suggested by Ofwat. The regulator does not seem to have taken any action to address concerns about high debt and leverage. The company has always received an unqualified audit report from its auditors PwC and no red flags have been raised about the company’s ability to remain a going concern.

Now with rising interest rates, Thames is struggling to meet its debt and investment obligations. It is looking for help from shareholders, lenders and the government. Financial restructuring might stabilise Thames, but water company practices are unsustainable and will fuel calls for renationalisation.

AAT pass rates are in

Pass rates for the AQ2016 Advanced Diploma Synoptic Assessment (ADSY) have slipped below 50% to 48.2%, according to AAT stats for 2022.

Two sets of pass rates ago the pass rate for ADSY was 54.6%.

The Personal Tax assessment pass rates also remain at 62.8%, when they were 70%.

On the good news side, the Professional Diploma Synoptic Assessment pass rate went up slightly to 56.9%. The pass rates for Cash and Treasury Management (74%) and External Auditing (73.7%) are also on the rise.

When it comes to distinctions these are becoming harder to get for sitters. Just 2% of those completing the Professional Diploma in Accounting achieved a distinction, with merits also down to 43%. Just 8% of those finishing their Foundation Diploma in Accounting and Business were awarded a distinction, but some 68% did receive a merit.

Overall CBA worldwide pass rates for the professional stage was 65.1%. This rises to 72.5% for the Advanced level and 80.2% for Foundation.

See next month’s issue for the pass rates in full.

New CIMA president elected

In another first for CIMA, Sarah Ghosh becomes the second successive women to become President and Co-chair of the Association, following on from Melanie J Kanaka. Ghosh became a CIMA member in 1995 and fellow in 2013. She current works for the UK Civil Service, with a focus on sustainability and technology. Earlier this year Ghosh was named among the 2023 Top 50 Women in

Which June 2023 ACCA exam was the hardest?

So, which ACCA exam was the hardest this June? The answer is clearly SBR, according to the Open Tuition Instant Poll! Other papers on the naughty list were APM, FM and PM.

The next PQ magazine will have top exam tips for the September sitting. Read our feature on SBL changes on page 27

Labour taking staff from Big 4 again

The Labour Party has been criticised for using more than £230,000 worth of free staff from the Big 4 firms PwC and EY since Keir Starmer took over the leadership in 2020.

The story from openDemocracy points out that Shadow Chancellor Rachel Reeves recommended the accounting giants be broken up and a new independent regulator be established. openDemocracy said: “The government notionally accepted the suggestions but neither was acted on.” In the past Labour has used PwC extensively,

but the tie was broken in 2015 after the chair of the Public Accounts Committee, Margaret Hodge, said the firm had been “selling tax avoidance on an industrial scale”.

Large firms continue to ‘improve’ audit quality

The FRC has published its annual inspection and supervision results of the largest audit firms (BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars and PwC).

Overall, 77% of audits inspected were deemed good or required limited improvement. This, says the FRC, reflects a year-on-year improvement spanning four years, with a 10 percentage points increase compared with the

Accounting.

She said: “I will be using my term to promote sustainability, innovation, and inclusion within the profession. I firmly believe that now is the time to seize the future and make progress in these areas. By doing so, we will make a real difference today, and secure a brighter future for ourselves, for those who count on us and those that follow us.”

67% recorded in 2020.That still leaves nearly one in four (23%) of inspected audits that require significant improvement.

Sanctions for PwC and KPMG

PwC has been fined just under £2m by the FRC and received a severe reprimand for its audit of Eddie Stobart plc for the financial year ended 30 November 2018. Audit engaged partner Philip Storer was fined £51,000 and received a severe reprimand.

KPMG has also been sanctioned for its earlier audit (for the financial year ended 30 November 2017) of the same company. KPMG was fined £877,500, with the Big 4 firm’s poor disciplinary record noted as an aggravating factor.

Water debacle has to end now

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

Sarah Ghosh

Time to update the ICAEW exam software?

ICAEW exam sitters want to know why they can’t open the word processing and spreadsheet areas side-by-side.

Currently, it splits on the right hand side of the screen, with the word processing area on top and spreadsheet on the bottom. It means exam sitters waste time scrolling up and down between the cells and resizing windows to view information to provide the necessary commentary.

“It’s not very much like work at all, as they claim,” ventured

one part qualified accountant.

As fellow students pointed out, the system has been the same since the software was first released. “When are they going to update it?” some asked.

ICAEW case study sitters have been surprised by the lack of functionality. As one PQ said: “Just baffling. The one thing accountants need are spreadsheets, not Microsoft blooming Word.”

Another student explained: “You can zoom out on the

Social equity is something accountants must measure!

Accountancy and finance professionals must be at the forefront of a just transition to a sustainable future, according to the latest research by ACCA. Its new report, Accounting for Social Values, says all organisations need to transition to a sustainable future that embraces the economic, environmental and social aspects in combination.

ACCA explained that society faces long-term challenges from social injustice, with stakeholders and regulators increasingly focusing on the social implications of the actions of organisations. That is why defining and measuring the return to society by an organisation’s activities is becoming as important as the financial objectives themselves.

spreadsheet to 70-80% and still see fine, as well as hide the ribbon. Likewise, you can reduce the font size in the word section and it doesn’t affect the export, or just size up before you submit.”

Sitters can also free up more space by hiding the tiles next to the resources on the left-hand side of the screen, while they are not using them.

There also seem persistent problems with copying formulae in the spreadsheet.

IFA announces new partnership with Initor Global UK

The Institute of Financial Accountants (IFA) has launched a new partnership to support accountancy practices throughout the UK with a range of outsourced services.

The professional accountancy membership body has joined forces with Initor Global UK, a leading global accounting specialist, to enable members to expand their capacity. Initor Global UK provide finance and accounting (F&A) outsourcing services including accounting, bookkeeping, personal and business tax and payroll, which will now be available to all IFA members nationwide.

IFA CEO John Edwards explained: “The rapid onset of digitisation is providing significant opportunities in the accounting sector. In the fullness of time it will free accountants from day-to-day tasks and redirect existing resource into business adviser activities.

The accountancy and finance profession needs to see this as an opportunity to define its future role and put the social agenda at the core of the profession.

• See page 36 for more.

“This means that accountants will be able to further support clients with value-add services such as budgeting and costing, forecasting, strategic planning, investment appraisal and cashflow management. Providing such a significant scope for differentiation benefits organisations, including SMEs, by helping to drive their business growth.”

ANNA KATE PHELAN

Do you need training in AI?

Gang sentenced over Northern Ireland’s biggest tax fraud

The ringleaders of a gang who triggered Northern Ireland’s biggest-ever tax probe have been jailed thanks to secretly recorded conversations in a bugged accountant’s office.

The decade-long investigation into the £5 million tax fraud ended recently with prison sentences issued to the gang leaders, 58-year-old Francis Devlin and 56-year-old Paul McStravick, for a combined total of eight years.

HMRC mounted its biggest-ever operation in Northern Ireland to bring the 27-strong gang to justice.

The case was based on more than 260 hours of secretly recorded footage of gang members plotting the fraud from the Belfast accountancy firm Allen Tully & Co, where Devlin was a partner and the wider gang used as a base.

In one clip they were caught

describing the office as an “Aladdin’s cave” for fraud investigators, while suggesting they would “go down in history” if they were ever caught.

Devlin and McStravick were jailed for four years each. Another 25 accomplices, most of whom knowingly allowed their personal details to be used as part of the

Tax gap holds steady at 4.8%

The amount of unpaid UK tax has remained at an all-time low of 4.8%, HMRC has revealed.

The annual Measuring Tax Gaps publication estimates the difference between the total amount of tax expected to be paid and the total amount of tax actually paid, which

intended approach as a few weeks ago Rishi Sunak stated he wanted the UK to be the home of AI safety regulation. It will be interesting to see how regulators, companies, and individuals navigate the new challenges associated with AI over the coming months.

Anna Kate Phelan is Head of Product at Eintech

Taxwatch

Creating a last-minute rush

A three-month closure of HMRC’s Self-Assessment helpline will hamper taxpayers accessing help and advice, discourage people filing tax returns early and lead to greater pressure on both taxpayers and HMRC nearer the January deadline, the Association of Taxation Technicians (ATT) is warning.

HMRC has announced that the phonelines helping taxpayers with Self-Assessment enquiries will be closed from 12 June until 4 September, freeing up advisers to

fraud, were handed suspended prison sentences.

The gang created a false audit trail that enabled clients to operate in the construction industry without paying tax or VAT.

They created 16 bogus companies and used 56 associated bank accounts to commit the fraud.

2006 to 4.8% in 2021 to 2022.

has remained the same as last year’s revised estimate of 4.8%.

The reports, published annually, show a long-term reduction in the tax gap. Errors, a lack of sufficient care, evasion and criminal attacks all contribute to the tax gap, which has fallen from 7.5% in 2005 to

HMRC needs a rethink on penalties

Some 180,000 workers have been fined by HMRC, even though they don’t owe any tax!

It has been revealed that the UK tax office has dished out thousands of penalties to those earning below the income tax threshold.

take urgent calls on other lines and answer customer correspondence. The news came just weeks after HMRC launched a campaign encouraging people to file their tax returns earlier this year.

Alcohol Duty system changes

The biggest Alcohol Duty reforms in 140 years come into effect on 1 August 2023.

From that date, the system will become much simpler, taxing all alcoholic drinks based on their alcohol by volume (ABV). This

In all, some 184,000 workers were fined for failing to file a tax return last year. This is even though they do not earn enough to pay income tax (£12,570).

Tax Policy Associates said many of those affected are in severe financial difficulties and have

In monetary terms, the most recent figures put the difference at £36 billion for the 2021 to 2022 tax year. This has increased from £31 billion in 2020 to 2021.

The tax gap has remained at 4.8% because estimated tax liabilities rose from £643 billion in 2020 to 2021 to £739 billion in 2021 to 2022.

been subject to extra fines and interest after not totally ‘getting’ what was going on. In some cases, the fines amount to thousands of pounds, which will take years to pay back.

TPA’s Dan Neidle said: “We believe the law and HMRC practice should be changed. Nobody filing late should be required to pay a penalty that exceeds the tax they owe.”

replaces the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.

HMRC said as well as making the system fairer the new system would allow it to be more responsive to new products entering the market as consumer tastes evolve.

Smaller producers, including pubs and restaurants, will benefit from reduced rates on qualifying products, such as draught beer and cider.

HMRC issues £3.2m money laundering penalties

Hundreds of businesses who have been fined a total of £3.2 million for breaching anti-money laundering rules have been named by HMRC. Some 240 supervised businesses, named in early June, were fined between 1 July and 31 December 2022.

In addition to the named businesses, another 179 companies received smaller fines totally more than £200,000 for rule breaches.

DAVID ROTHERA Go green – and get Gen Z on board

Generation Z has officially hit the employment market and all the evidence suggests that they want to work for companies with strong sustainability and ethical commitments.

A recent survey from KPMG found that, when it comes to looking for a new role, one in three 18-24 year olds had turned down a job because the company’s ESG commitments were not in line with their values.

This means that businesses that set net zero targets and take climate action now will have a resource advantage over their competitors!

By adopting net zero practices, businesses demonstrate their commitment to reducing their environmental impact and safeguarding the planet. Aligning company values with those of Gen Z enhances employer attractiveness and establishes a sense of shared purpose, increasing the likelihood of attracting and retaining talented individuals from this generation.

Embracing sustainability opens doors to innovation and creativity within an organization. Gen Z, often thought of as a tech-savvy and forward-thinking generation, want to contribute their ideas and make a positive impact. By implementing sustainable practices, businesses create an environment that encourages problem-solving and fosters new ideas.

In an era where sustainability is a top priority for the Gen Z workforce, adopting net zero practices not only benefits the environment but also helps accountancy practices to become more resilient by creating a workplace fit for the next generation.

Go to www.netzeronow.org/ accountants to find out more about The Net Zero Accountancy Initiative.

Robots are good investors too!

Robots can be excellent investors, according to a new study from the University of Oxford.

The new research found a robot can select the best private equity (PE) funds just by reading fundraising prospectuses. The machine used within the study was able to select funds that generate returns that are 5% higher each year compared with average funds.

The research paper, Limited Partners versus Unlimited Machines: Artificial Intelligence and the Performance of Private Equity Funds, was compiled by a team of researchers led by

information that

investors pay significant attention to during their due diligence process, such as the PE firm’s reputation and past performance, is ultimately unrelated to PE fund performance. In contrast, investors do not seem to react to the qualitative information in fund prospectuses, but that information can be used by a robot to predict returns.

Phalippou said: “Technical documents are written exclusively for highly specialised and large institutional investors, and the robot beat most of these large professional investors. That’s a world premiere.”

Productivity boost from AI worth £31bn

The adoption of Generative Artificial Intelligence (AI) could add 1.2% to the level of UK productivity, says a new KPMG report. In terms of the 2022 level of GDP, that’s £31 billion additional output in the UK every year.

KPMG’s analysis shows a relatively small but significant overall effect of the technology, which could impact around 2.5% of tasks performed across the UK, allowing workers to be redeployed

to other tasks and activities.

The report found that the impact across different occupations is relatively varied; while 10% of jobs may be facing the most significant impact, with more than 5% of their tasks affected, another 60% of jobs could face little to no direct

We still need the humans

There is a new focus on staff wellbeing as part of the decisionmaking process when adopting new technology, research from ICAEW’s technology faculty on mid-tier accountancy firms has found. This highlights a shift away from putting clients’ needs first, says the institute.

With mobile app and digital skills among features that ranked highly during interviews, the findings suggested that it was

important for mid-tier accountancy firms and the profession to “think digitally”, possibly motivated by a challenging recruitment market and skills shortages in the profession, as well as the need for firms to ensure staff are fulfilled at work.

ICAEW head of data analytics and tech, Ian Pay, said: “Giving staff the opportunity to voice concerns, share improvements and develop new skills is key, and

effect from Generative AI. For example, the report claimed 7% of auditors’ jobs would be automated, compared with 43% for authors, writers and translators.

The wider implications that Generative AI may have on the economy and society are highly uncertain, said KPMG.

will accelerate tech adoption in mid-tier accountancy firms. We’ll continue to support firms and the profession as they make the move to even greater use of technology.”

Please

ChatGPT

OpenAI, the company behind ChatGPT, has chosen London to open its first office outside the US. It said that England’s capital was an obvious choice because of its “vibrant technology ecosystem” and “exceptional talent”. It already has some staff

Those

The new rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto. Those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.

Ludovic Phalippou, Professor of Financial Economics at Oxford Saïd. The researchers found that the quantitative

pic credit By Ludo81 – own work

Study Hub a big hit

Thank you ACCA. I have just taken a look at the new Study Hub and it certainly lived up to the hype!

However, with a full study texts available from ACCA – which will save me some money and might justify the exam fee increase – I am not sure why anyone else would be publishing textbooks!

Reading comments on social media, I saw many people were shocked about the free study texts. I am not sure ACCA has sold this in the launch. One thing I would say is that a lot of people seem to think what is on the Study Hub will be enough to get them a pass, without purchasing any other material or going on a course. If you want to

get qualified you do still to get the help of the expert tutors, too.

I do have one concern here

too, as competition often leads to innovation and new products. With ACCA publishing the texts we might not get that anymore. But hey, the study texts are free!

Name and email address supplied

The Editor says: Students' reaction to the Study Hub has been very positive. As one PQ said: “It’s absolutely amazing!” Another just said: “Amazing”. And those who have drilled down into the quizzes, flashcards and practice questions have been blown away. And, there are even comics, another PQ exclaimed. I think ACCA has created a fantastic new resource, which other bodies should be benchmarking themselves against.

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

What scrutiny?

I was interested to see that the FRC will be putting the accountancy profession under greater scrutiny in the future. Does that mean no one was looking at them before? And does it mean that if I have a problem with the exams I can I contact this Professional Body Supervision (PBS) team as a sort of court of appeal? I would be really interested to discover exactly how much ‘scrutiny’ they will actually do.

The FRC recent said it couldn’t find any systemic issues relating to cheating by some of the Big 4 staff, and those cases seemed to have been quietly forgotten. We must ensure real independent scrutiny moving forward.

Name and email address supplied

Let it all out

It was good to read ‘The crying game’ story about the ACCA exams last month. That SBR June test was tough, and admitting that emotions got the better of you is a brave thing to do. It really helped me too, as I sat alone in shock after sitting my exam at home alone. I did wonder what the examiner and ACCA thought of your story. Are they expecting more resilience from us students,

or do they have some feelings about what they are putting student through?

Name and email address supplied

Setting ‘too hard’ exams

So AAT is setting exams that are too hard? I have never heard of

If you have any problems with delivery, or if you want to change

anything more bizarre. Surely the AUDT and INAC assessments were tested before they went live. Wouldn’t issues about the right level of testing have come up then? If these assessments are too hard, what is to say that other assessments aren’t too hard, too? Name and email address supplied

How you become an AAT has changed. In fact, it changed last November. However, PQ magazine picked up that many students seemed confused by the new rules. We got in contact with AAT HQ and they provided us with a feature, which we ran last month.

We also pushed out what was happening on social media.

Basically, AAT has introduced a quicker and hopefully easier route to membership, once you finish your final Level 4 assessment. A prescriptive CPD programme now replaces the need to show you have obtained suitable work experience.

All those who have passed the Level 4 exam and completed their fit and proper checks can pay the fee and become a member.

During the first nine months of membership, AATs will now need to undertake CPD modules in ethics, sustainability, and leadership. There are eight modules in all to complete.

AAT believes this move aligns with its desire to create open access to accountancy careers. You will, however, need to complete the CPD pathway to remain a member, and there is no final test at the end of the modules.

One AAT said on Facebook: “I’m really glad to hear this! I think I’II get off the fence and apply. After all, when I bought a frame for my L4 certificate I could only get them in packs of two, so now I have a spare frame…”

Someone else said: “Is it essential [CPD] now with all the software? As employers seem more interested in who can use their software than have AAT.”

Yet another AAT was not so keen: “This is a bad idea.”

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ISSB issues first standards

The new IFRS S1 and IFRS S2 have landed from the International Sustainability Standards Board. So, what do you need to know? Here are 10 things…

This summer saw the inaugural IFRS Sustainability Disclosure Standards, designed to provide a global baseline of sustainability-related disclosures for the capital markets.

As the ISSB explained better information leads to better economic decisions. IFRS S1 requires companies to communicate the sustainabilityrisks and opportunities they face over the short, medium, and long term. The requirements are designed to ensure that companies provide investors information relevant to decisionmaking. IFRS S2 sets out specific climaterelated disclosures and is designed to be used with IFRS S1. Both Standards are based on recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD). Here are 10 things ISSB says you need to know about the new standards:

1. Global disclosure standards

ISSB Standards allow companies and investors to standardise on a single, global baseline of sustainability disclosures for the capital markets, with any additional jurisdictional requirements being built on top of this global baseline.

2. International support

The ISSB’s work has received strong support from investors, companies, policy makers, market regulators and others from around the world, including the International Organization of Securities Commissions (IOSCO), the Financial Stability Board, the G20 and the G7 Leaders.

3. Disclosure of decision-useful, material information

Focusing exclusively on capital markets means that ISSB Standards only require information that is material, proportionate and decisionuseful to investors. Moreover, by beginning with climate, companies can phase-in their sustainability disclosures.

4. Building on and consolidating existing initiatives

IFRS S1 and IFRS S2 are built on and consolidate the TCFD recommendations, SASB Standards, CDSB Framework, Integrated Reporting Framework and World Economic Forum metrics to streamline sustainability disclosures. Consolidation will help companies

to benefit from their investments they’ve already made in sustainability disclosures while reducing the ‘alphabet soup’ of sustainability disclosures.

5. Reducing duplicative reporting

The baseline approach provides a way to achieve global comparability for financial markets, and allow jurisdictions to further develop additional requirements if needed to meet public policy or broader stakeholder needs. This approach helps to reduce duplicative reporting for companies subject to multiple jurisdictional requirements.

6. Helping companies communicate worldwide cost-effectively

ISSB Standards have been designed to provide reliable information to investors; helping companies to communicate how they identify and manage the sustainability-related risks and opportunities they face over the short, medium and longer term.

7. Connections with financial statements

The information required by the ISSB Standards is designed to be provided alongside financial statements as part of the same reporting package. ISSB Standards have been developed to work with any accounting requirements, but they are built on the concepts underpinning IFRS Accounting Standards, already required for use by more than 140 jurisdictions.

8. Developed through rigorous consultation ISSB Standards have been developed using the same inclusive, transparent due process used to develop IFRS Accounting Standards –with more than 1,400 responses to the ISSB’s proposals. All ISSB papers, feedback and technical decision-making are available to view online.

9. Interoperability with broader sustainability reporting

The ISSB’s partnership with the Global Reporting Initiative enables the ISSB to build its requirements to be interoperable with GRI standards, helping to reduce the disclosure burden for companies using both ISSB and GRI Standards for reporting.

10. A partnership for capacity building

The ISSB’s responsibilities do not stop at standard setting. At COP27, the ISSB announced plans for a capacity building partnership programme, helping to establish the necessary resources for high quality, consistent reporting across developed and emerging economies.

Together, the ISSB believes these inaugural standards together with its capacity building programme will help build trust, confidence and much-needed global comparability to the sustainability disclosure landscape.

Time for a reset?

AQ2016 ends at the end of September. Nick Craggs gives some sound advice on what you need to do if you are studying the old syllabus

Without trying to be morbid, ultimately everyone’s time comes to an end at some point. But if you are still on AAT’s AQ2016 qualification your time is rapidly coming to an end as AQ2016 finishes on 30 September 2023. You need to decide on a plan as to what you are going to do, and the sooner you do it, the more options are available to you.

So what are your options?

If you have time, you can complete on AQ2016. This is the most straightforward option as you don’t need to worry about new material or getting a new membership. You may need to renew your AQ2016 membership, but there is a three-month grace period where you can still sit exams if your membership has lapsed. Be aware, however, if you sit an exam where there is a six-week wait for your results and you are not successful, you will not be given a second chance after 30 September. Also note that the last windows for sitting the synoptic exams are early in September, so be sure to plan for this.

If you want to complete on AQ2016, there is

still time left but the clock is ticking. Therefore, you need to put a plan in place NOW as there is only a few months left, and you will want to avoid losing any of your previous passes. What you need to consider varies at each level.

At level 2, the Bookkeeping Transactions, Bookkeeping Controls and Elements of Costing units will give you exemptions from their equivalent units on AQ2022. However, the Synoptic and Using Accounting Software exams do not have any equivalent units on AQ2022. If you have passed the Bookkeeping Transactions, Bookkeeping Controls and Elements of Costing but not Foundation Synoptic and Using Accounting Software, you need to ask yourself whether you are more than confident that you will pass BOTH Foundation Synoptic and Using Accounting Software units by September. If you just pass Foundation Synoptic but not Using Accounting Software, you will lose your pass in Foundation Synoptic and will have wasted your time and money. Unless you are 100% sure you will pass both exams, then to be safe I would move over now on AQ2022 so there is no risk

of losing any passes, and you would just sit the new Business Environment unit instead.

Level 3 is the most complicated. Advanced Bookkeeping and Final Accounts Preparation have been merged into the Financial Accounting: Preparing Financial Statements unit. Therefore, you need to have passed both units to get the exemption on AQ2022. If you have passed only one and have to move over onto AQ2022, you will lose that pass and you will need to sit the large Financial Accounting: Preparing Financial Statements unit on AQ2022. So if you have passed one, do all you can to pass the other, or if you have yet to pass either of these, really consider if you have time to pass both or not before you start.

The costing unit now contains Spreadsheets in a unit called Management Accounting Techniques. To get this exemption you need to have passed both Management Accounting Costing and Spreadsheets. If you have only passed Costing but not Spreadsheets, for example, you will lose your pass in Costing, and vice versa. Therefore, do all you can to pass both units to obtain the exemption on AQ2022, or don’t start either of them.

There is no equivalent unit for Advanced Synoptic on AQ2022 so it doesn’t carry over onto Q22. Unless you complete all the units on AQ2016 before the end of September, you will need to move over onto AQ2022 and you will lose your pass in Advanced Synoptic and have to sit the Business Awareness unit as well as the other units you didn’t complete.

Level 4

Level 4 is very straightforward, every unit will achieve an exemption for the corresponding unit on AQ2022, including the Synoptic. The only issue is that you need to have passed both Budgeting and Decision and Control to gain the exemption from the Applied Management Accounting unit.

If you have only passed one unit out of Budgeting and Decision and Control and you move over onto AQ2022, then you will lose this pass and you will need to sit the large Applied Management Accounting exam. Therefore, ensure you have passed both units before the end of September. If you have yet to pass either of them I would advise not to start to study them as you are going to run out of time to pass both.

Be aware that if you have any units on the level you are currently on that were passed on AQ2013 will not carry over onto Q2022 and you will lose them. You need to finish that level by the end of September or accept that you are going to lose the units passed on AQ2013.

Any completed levels on AQ2013 or AQ2016 are safe, it is only your current level that you need to consider.

The key message I want to stress is for you to not panic! However, time is running out and a plan needs to be put in place now. Everyone’s circumstances are different so if you are not sure what to do next, please contact your tutor. We do not want you to create any extra work for yourself by losing any previous passes and above all, we want you to have a smooth transition onto the new syllabus.

• Nick Craggs, AAT distance learning director, First Intuition

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Practical application promotes exam success

Demonstrating good application skills is about what you can do, not just what you know

You know that exam success requires you to put in the hard yards in revision time to acquire expert knowledge. But how do you use that knowledge to give yourself the best chance to pass – and pass well?

Success means demonstrating practical application skills that highlight your awareness, familiarity and understanding of facts and skills presented to you.

A combination of good technical understanding and practical use of knowledge are pivotal to the Case Study exams. A high passing score (level 3) in CGMA Case Study exams also requires clear, detailed discussion and, often, an explanation or justification for your recommendations or arguments.

In short, demonstrating good application skills is about what you can do, not just what you know.

Pre-seen materials – know them inside out

It’s essential to become extremely familiar with the pre-seen document before exam day. This includes fully understanding the content and interpreting the facts provided.

When I worked towards my Case Study exams

I made notes from the pre-seen of key facts. I then thought about how these facts could affect the current situation, as well as thinking about some ‘what if’ scenarios.

Taking notes and self-questioning helped recreate a scenario I would possibly face at work. This practical process enabled me to clearly understand the scenario presented in the exam question, giving me the best chance to pass.

Case Study exams – immerse yourself in the scenario

The Case Study exam is a ‘role simulation’ that reflects real-world scenarios in business. The simulations require a CGMA candidate to think like a financial professional at work. Explore the information provided and how the details, facts, and figures affect you and the task you’ve been set.

Imagine that you’re the person in the Case Study and think critically through the requirements to report back to stakeholders.

Thinking through requirements in detail helps you to consider everything and avoid missing key information. The process also enables you to effectively assess your recommendations.

Application skills – use knowledge practically

Good exam application is about understanding the concepts and theories and then putting these to effective use. Practical application of concepts isn’t always easy, especially if your current job role doesn’t require a hands-on approach.

I recommend making a list of key areas from

the pre-seen. Then, determine how each topic, within the subjects at the level you are studying, might relate to the pre-seen. Not every topic will relate, but writing them down and thinking through them at the specific case-study level means you can consider the points integral to success.

Evaluation – thinking through the theory from a practical perspective – is a strong start to developing good application skills.

High pass scores – advance your skill set

Taking good technical understanding and applying your knowledge practically is the best way to achieve a high exam score. By adding explanations, justifications, and balanced arguments, as well as raising valid questions, you can demonstrate proficiency and a deep understanding of both the Case Study and the work-based task.

Additional tips and tricks for success

• Mention name: Appropriately naming the organisation, your line manager, colleagues, stakeholders, product, project, etc., demonstrates familiarity with the scenario information.

• Write in the first person: Because the CGMA Case Study exams are business simulations of real-life jobs tasks, question responses can be conversational. For instance, you could be asked to respond to an email from your manager asking you to perform tasks. Respond as if you are in the role described in

the exam. If your role is a finance officer, for example, respond to you manager’s request as a finance officer.

• Paraphrase scenario information: Don’t just repeat the scenario information. Instead, paraphrase it and draw on relevant information to support your points.

• Be conscious of the exam requirements: Understanding the purpose of the information required and what channel of communication is expected (e.g., email, report, briefing note, etc.) will help you stay focused and demonstrate your application skills when using evidence from the pre-seen or unseen information.

• Contextualise the theory: Context matters. Contextualising the theory gives your answers greater meaning and demonstrates your ability to put knowledge to practical use. Ensure that you put the general technical knowledge into the specific context set by the pre-seen and unseen.

AICPA & CIMA provide a wide range of support materials, including tips from examiners to support you in your studies. You’ll find plenty of examples from all three levels of the CGMA syllabus – together with level-specific study materials.

For further resources, explore the CGMA Study Hub and view a relevant exam session.

• Nasheen Wuisman, Senior Manager of Global Academic Progression at AICPA & CIMA, together as the Association of International Certified Professional Accountants

England’s water industry is ‘environmentally insolvent’

Accountant Richard Murphy’s tweets on the water industry recently had 4.4 million views, so what did he say? Here is the thread all in one place

There has been much discussion about the likely failure of Thames Water in recent weeks. I’ve been looking at the accounts of England’s water companies for the last 20 years. My conclusion is that they are all environmentally insolvent.

There are nine companies in England that take away sewage. There are more that supply water alone. But the crisis that the English water companies face largely relates to sewage, so my work has looked at the ones that take our waste away.

Thames Water is one of those sewage companies. The others are Anglian Water, Northumbrian Water, Severn Trent, South West Water, Southern Water, United Utilities, Wessex Water and Yorkshire Water.

It’s important to say that although I used the accounts of each of these companies in my work, the results I am talking about here are for the industry as a whole. To get a proper picture of the water and sewage industry I combined their accounts into one single set.

Doing so produced some quite astonishing data. This is what the profit and loss accounts of the combined water and sewage companies of the UK looks like for 2022 in isolation, for 2003 to 2022 in total, and on average over that period:

the fact that the English consumer has had no choice as to who to buy water from as a means to extract profit from them.

Things are if anything worse if I look at the balance sheets. Now I know these scare most people, so I will talk through the detail. This is a very summarised balance sheet for the industry in 2022:

There is a lot of data there. There are, however, some straightforward facts to concentrate on.

Firstly, the operating profit margin in this industry is 35%. That is staggeringly high, and it goes up to 38% when other income is taken into account. So, 38p in every pound you pay for water is operating profit –that’s profit before the cost of borrowing.

Second, note the cost of borrowing. I have generously offset interest received against interest paid. That still leaves interest costs representing an average 20% of income – 20p in every pound paid to these companies, on average, goes on interest.

That still leaves them profitable though. And they do pay tax. The average tax rate is 19%, but that is way below the expected tax rate for this period when the tax rate was as high as 30% for some of it. And much of that tax has not been paid: more than £8bn has been deferred.

Finally, of the almost £25 billion they have made in profit over the years they have paid out every penny, and more, in dividends. In other words, the shareholders have taken 15p in every pound paid for water. There was nothing left for reinvestment at all.

No wonder the water industry is in trouble. The income statement shows that the public is being fleeced by these companies who are simply treating

The industry has £77 billion invested in equipment. The rest of its assets are some financial investments, a bit of cash and sums owing to it from customers. So far, so good.

What is scary is what the industry owes. The £77 billion of equipment is financed, in the main by borrowings of almost £55 billion, or more. It’s also funded by the tax not yet due of more than £8.5 billion, which brings

down the cash-paid tax rate of the industry considerably.

Even the pension funds of those working for the industry are contributing to the funding, and there is more borrowing of various sorts in the other sums owing totalling more than £10.7 billion.

What this means is that of the total near enough £91 billion invested in the sector more than £78 billion is funded by borrowing or sums owing of some sort and only just over £13 billion is funded by the shareholders.

What that also means is that the shareholders provide less than 15% of the overall funding for this industry. So much for the idea that private capital would fund water after privatisation. The reality is that borrowing is doing so.

When I began to look at the data in more depth things only began to get worse. What I was really interested in knowing was how much the water companies had invested in equipment over the 20 years reviewed.

The answer was, in my best estimate, that sum was £89.8 billion. Of course, some of that has now worn out and has long gone from the accounts. Assets like vans and computers do not last that long in use.

Then I worked out how that investment was funded. There were just two ways. One was out of operating income. For the technically minded this is possible using what is called the depreciation charge in the accounts. This sum amounted to £38.9 billion. Customers provide this money.

The rest of the funding came from the increase in borrowing over the period. That amounted to £40.5 billion. Other long-term liabilities, which are again mainly borrowing or pension fund liabilities, increased over the same period by £10.4 billion.

The net result is that of the £89.8bn invested, customers or borrowing of various sorts provided £89.8bn of the funding meaning the shareholders effectively made no investment in the assets of these businesses, at all.

This matters for one very good reason. As we all know these businesses are now routinely polluting England’s rivers and beaches with sewage. That sewage comes from what are called storm overflows, although that’s a misnomer now, as many release sewage even after modest rainfall.

That pollution cannot persist. Unless it is stopped we will end up without reliable clean water in England. The estimated costs of ending this pollution do, however, vary considerably.

The industry has offered to invest £10 billion over seven years, or £1.4 billion a year. The government has decided that £56 billion is required over 27 years, or just over £2 billion a year. The trouble is neither sum will come close to getting rid of the crap in England’s water.

The House of Lords looked at this issue based on independent analysis and concluded that the most likely estimate of the cost of getting rid of all the pollution in our water was £260 billion. And that needs to be done as soon as possible. I suggest 10 years.

If that investment of £260 billion was made, we might have clean water in 10 years.

What the industry is offering is something quite different. Even if they meet the government’s demand of them, at best I estimate that based on officially published data they might cut the crap in water by two-thirds, at best, by 2050.

Why has the government set such a low investment target that still leaves us with polluted water? The only possible answer is that they wanted to make sure that the private water companies would not go bust by having to spend too much.

Let me put that another way. The government thinks that saving the private water companies is more important than them polluting our water, rivers and beaches with all the costs that will create.

The government has made the wrong decision. But if the required £260 billion was spent (with more required to become net zero compliant) then the water companies would go bust. What that means is that they are environmentally insolvent.

The concept of environmental insolvency applies to any business that cannot adapt to make its business environmentally friendly – as climate change and ending pollution requires –and still make a profit. What it means is that its business model is bankrupt.

That is where the English water industry is now. Thames Water might be facing environmental bankruptcy, but this industry as a whole is in my opinion incapable of funding the investment required to deliver clean water and be profitable.

The government might be making noises about taking Thames Water into temporary public ownership, but that is meaningless when Thames Water can never be profitable and deliver clean water. There is only one answer for this industry now, and that is nationalisation.

I would suggest that this nationalisation should be without any compensation to shareholders. That is because their businesses are environmentally insolvent. Providers of loans might also have to take a hit too: they made a bad decision lending to these companies.

The government will then have to support the industry using borrowed funds. I suggest it should issue water bonds via ISAs to the public to do this. Wouldn’t you want to save in a way that ensures we all get clean water in the future? I would.

And the way in which water is charged for might have to change. The idea that we all pay the same price per unit irrespective of the amount of water used seems absurd now and might need reconsideration.

But my essential point is that the water industry has to now be nationalised because it is not only failing us already but on the basis of current plans will probably do so forever, and that is not only not good enough, but is really dangerous to our wellbeing.

Our politicians have to now say it is time to end the shit in our water and take control of this industry to make sure that we get clean water. After all, if they cannot guarantee clean water – an absolute essential for life – what are they for?

Technical stuff

Finally, a few technical notes. First, this analysis is based on the activities of the companies actually supplying both water and sewage services in England. It is not based on the groups of which they are members.

Second, the conclusions are based on aggregate data. They cannot be applied to any one company.

Third, the data used is extracted from databases but is correct to the best of my belief based on that limitation.

And, if you want to see the report on which this thread is based it is here You can (and should) follow Richard Murphy @RichardJMurphy – don’t forget the ‘j’.

• Richard Murphy is a Professor of Accounting Practice at Sheffield University Management School and heads up Tax Research LLP. Also check out www.taxresearch.org.uk/Blog/

Richard Murphy

Building resilience

I’m taking a slightly different approach this month to the usual accounting articles that I write. Why you may ask? Every week, I hear from students finding the whole study process difficult – trying to juggle work, family and exams, and feeling stressed by the whole situation.

So, what is resilience all about? Resilience includes recovering quickly from difficulties you have or may be experiencing.

Let’s consider some examples.

In March 2020, you will remember the closure of schools and colleges due to the Covid-19 outbreak. At this time I had an onsite group of Level 4 students who were halfway through their studies. Students who wanted to be onsite learning rather than online. After the initial panic regarding how this may impact on their studies, they pulled together as a group and moved to online studies, for one of the hardest units of Level 4, and gave it their all (yes, if you were the class of 2020, I am still very proud of you).

So, why do I class this group as resilient? It is all about overcoming whatever challenges life throws at you and not allowing these challenges to stop you achieving what you have set out to achieve. It would be far too easy to use the situation as an excuse to stop studying and give up. Ironically, this group achieved the highest Level 4 results and completion rate to date.

Currently, I think we are all aware of the AAT exam issues that have been ongoing since Q2022 launched in September 2022. The

impact this has had on students, especially students who have written content as part of their exams, has been significant. We have had to cancel exams, then back up with other units, to get students through. It has been the students’ resilience with coping with the difficulties faced that has got them through their exams. Students have gone into their exams expecting difficulties (and facing them), but have developed coping strategies to overcome the issues faced to ensure exam success.

Other students I speak to are often trying to juggle family, work, moving house, divorce, loss of a family member, studies and other responsibilities and find it overwhelming, and very stressful.

This article is aimed to hopefully help you identify any difficulties that you may experience, or already have, and still achieve your end study goal. So, what should you do?

• Organise your time. This is crucial. Be realistic about what you can achieve and when. I always advise students to aim for small amounts of studying and often, not block out eight hours on a Sunday for studying.

• Ask yourself when your concentration levels are at their best in the day. Ideally, target this as study time.

• Do a ‘to-do’ list. Set yourself small achievable targets and again, be realistic.

• Be firm with others (this includes family as well as work colleagues). If you need to revise for an exam, do not let others stop you or

make you feel guilty for doing this.

• Take breaks and relax. It is important to reward yourself for a good study session. This could include going to the gym, going for a walk, or doing any hobby or interest, so something to look forward to at the end of your study.

• Ensure you get sufficient sleep, exercise, and have a good diet as these will all help you feel better in yourself.

All the above will help reduce stress levels and make you more resilient to any challenges faced. I still laugh when I think back to my study days and lying on the storeroom floor at Kaplan, as I had to do back exercises on a regular basis due to prolapsed discs. Funnier still, was the look on a staff member’s face when they walked in to get some books and found me there on the floor! Also, the time when I took an ACCA exam whilst on serious pain relief so I couldn’t drive (thanks Dad for playing taxi!), and again, had to lie on the floor in the back of the hall to stretch, mid exam. For those of you who have taken ACCA exams, you will understand, we do not have time to be lying around on the floor. Luckily, I passed, so it was worth it. All of this has built my own resilience and if I can do it, then so can you.

If you are feeling stressed, or would like to read further guidance notes on this topic, this link may help you: https://tinyurl.com/ wphh3yh3

• Karen Groves is an AAT tutor and Faculty Director of Accounting at e-Careers

Karen Groves has some sage advice on how you can bounce back from adversity as you look to get that all-important qualification

All you need to know about activity based costing

Our AAT guru Teresa Clarke explains all, with the help of an example

Activity based costing uses activities to absorb costs. It groups costs into cost pools and absorbs these by the activities that cause the costs.

For example, the costs associated with setting up machinery to produce a product would be driven by how many set-ups were needed. Or the costs associated with processing orders would be driven by how many orders need to be processed.

With activity costing we group together the costs into activities and then identify what drives or causes that cost. By dividing the cost by the driver, it will give us the cost driver rate for the absorption of the cost. The cost driver rate is the term used for the overhead absorption rate with activitybased costing.

Once we have the cost driver rate, we use this in the same way as the traditional machine hours and labours hours methods.

The steps for this are just about the same as the traditional methods:

1. Calculate the budgeted cost driver rate for the activity-based costing using the budgeted costs/budgeted number of drivers or activity.

2. After production has finished, calculate the overheads actually absorbed. Actual activity x cost driver rate (just like the traditional method of actual activity x OAR).

3. Calculate the over or under-absorption of overheads. Actual overheads less overheads actually absorbed equals over or under-absorption.

Example

Our factory produces toy trains. The overheads associated with the manufacture of the toy trains have been grouped together by activity: Cost pool (activity)Budgeted overheadsCost driver (cause of cost) Budgeted number of drivers

Machinery set up costs £3,000Number of set ups200

Invoicing costs £28,000Number of sales invoices issued 800

Machinery set up costs

Overheads £3,000 divided by the number of cost drivers, the set-ups, 200. 3,000 / 200 = 15 per set up.

Cost driver rate = £15 per set up.

Invoicing costs

£28,000 divided by the number of cost drivers, sales invoices issued, 800. 28,000 / 800 = 35

Cost driver rate = £35 per invoice issued.

After production has finished, we are given the following actual costs and driver numbers:

Cost pool (activity)Actual overheadsCost driver (cause of cost) Actual number of drivers

Machinery set up costs

£3,200Number of set ups180

Invoicing costs £27,000Number of sales invoices issued 820

From this we can calculate whether we have over or under absorbed the overheads. Note that this is sometimes referred to as over or under recovery of overheads.

Overheads Actual overheads Overheads absorbed Over/under absorption of overheads

Machine set-up costs £3,200[180 hours x OAR £15] £2,700

[£3,200 - £2,700] £500 under-absorbed

Invoicing costs£27,000[820 x OAR £35] £28,700 [£27,000 - £28,700] £1,700 over-absorbed

The machine set-up costs were under absorbed because we absorbed less than the actual overheads.

The invoicing costs were over absorbed because we absorbed more than the actual overheads.

If you like my way of explaining things, you might like my workbooks, which are all available from Amazon in both paperback and as eBooks. The links to all my workbooks can be found at https://www.teresaclarke.co.uk/

• Teresa Clarke FMAAT

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Should I be worried about changes to SBL in September?

The new ACCA SBL exam launches in September 2023. Here, ACCA SBL expert tutor Sean Purcell explains how it’s different to the old one

From September 2023 the format of ACCA SBL will be changing. If you studied for SBL a while ago and are coming back to it, or fear you might have to retake after the June 2023 exam, should you be worried about the changes?

The short answer is no, and let me explain the main changes to you clearly.

Essentially, the ACCA, being a professional organisation, wants its exams to be as relevant as possible and they do that by taking on board lots

of feedback from industry and from the profession and constant internal review. The result of this review and feedback is that they believe that the SBL exam could be brought closer to a real-life workplace experience through the introduction of a pre-seen element.

The old form of SBL gave you a four-hour exam. Within those four hours you were provided with detailed information about a fictitious organisation and then had to develop strategic advice and applied recommendations straight

away. In a real-life workplace you would normally have more time to familiarise yourself with an organisation before your first meeting and before any advice is given. So, the SBL exam has been adapted, should we say, to better reflect real-life by giving you pre-seen information to familiarise yourself with before the exam. This familiarity should make it easier for you to work through the new information that will be provided in the exhibits on exam day.

This change will help students that are not familiar with the industry in which the fictitious organisation operates as well as those students that have English as a second language.

The new pre-seen element

Changes from September 2023 mean that you will get some pre-seen information, which is going to be released two weeks prior to the exam taking place. So, because you now get pre-seen material to familiarise yourself with before the exam, there will be fewer exhibits in the exam day case study exam. Because of this the exam length is being reduced from four hours to three hours 15 minutes, which is the same time length as the other strategic professional papers.

But it is important to remember that the preseen material is not designed to provide hints as to what the potential questions will be in the case study exam. It’s purely there to enable you to absorb and understand all the information about the fictional organisation that will feature in your exam and the industry in which it operates.

Three separate response sections

The other change relates to the structure of the exam in the CBE environment. In the past you answered all of your questions (or tasks) to SBL in one response section. Going forward, there will be three separate response sections, in which you will answer each of the three tasks.

But that is the only change; you’ll still be required to answer tasks using word processing, using spreadsheets and slides as you would have done in the old format, and the areas of knowledge required by the updated SBL exam are the same as they were for previous SBL exams as there have not been any large syllabus changes. You can practice the new format on the ACCA Practice Platform using the SBL Specimen Exams. So that’s it, nothing to worry about. It's purely an improvement to better reflect real life and facilitate more reflection and understanding before the exam starts.

In my opinion it is a really positive change to what is already a fantastic exam.

• Sean Purcell is a former PQ Lecturer of the Year, as well as a PQ ‘tutor in your pocket’. He works as the ACCA expert tutor for SBL

AI is your friend

It’s time to embrace AI if you want to survive, says new research

Artificial Intelligence (AI) will not only play a key role in helping accountants to be a more effective strategic business partner to their clients, but also in keeping small businesses afloat, according to new research from Intuit QuickBooks.

Almost nine in 10 (86%) accountants said that within the next five years, AI will play a crucial role in their business. The most cited benefit of AI is the time saved through automation will leave more opportunity for broader business advice (39% of those surveyed agreed), followed by being able to reduce the burden on human resource (33%) and an improved ability to spot data trends (33%).

With accountants now relying on AI to elevate their role from that of bookkeeper to strategic business partner, AI is a popular area of investment for 2023. Separate research from QuickBooks shows a huge 95% of accountants will invest in new technologies in 2023, to the tune of an average £10,000 - £24,999 , and AI is the most likely area of investment (45%).

Those who don’t adopt AI are at risk of

being left behind. More than two in five (43%) accountants agree that firms who do not adopt AI in the next five years will face a lack of business growth due to the burden of admin on capacity. Others believe firms will lose clients, either due to less time available to cultivate relationships (39%) or competitors using AI being able to offer richer insights and faster turnaround times (36%).

In the UK, 62% of small businesses fail within the first five years. But 76% of accountants agree that small businesses partnered with an accountant using AI are more likely to survive than working with one who does not. When asked why, 44% pointed to the fact that richer insights from AI mean accountants can offer better quality advice, and forecast clients’ cashflow more accurately.

Nicola Savill, a director at Moore Kingston Smith said: “We see AI as an opportunity to create capacity in our teams, enabling them to work more closely with clients on areas such as interpretation of their financial results, cashflow management and helping them achieve their goals. Automation brings clear client benefits;

for example, AI has the ability to follow a set of rules consistently and never has an off day or forgets! It can also highlight areas of risk for exploration and interrogation without needing to spend hours reviewing multiple data sets. This leaves more time for accounting professionals to focus on more valuable human experiences and relationships with clients, underpinned with richer insights.”

A question for Tom

property prices decline, then annual profits will be lower. Measuring investing properties at fair value means that profitability becomes less predictable.

Cash flow

Investors can also want information regarding dividends. Dividends are paid in cash. Investors may want to know why profit and cash are two very different figures. In which case we would have to explain that.

Capital value

Investors are also naturally interested in the value of the business. It may be necessary to explain to an investor why the carrying value of the net assets as reported on the statement of financial position is not the same as the market capitalisation. In some cases, this can be partly explained as monies spent on creating valuable brands have to expensed. IAS 38 Intangible Assets prohibits the recognition of a business’s own brand.

Key performance indicators

Tom Clendon tackles a concept that’s particularly important for Strategic Business Reporting sitters

Question

What is meant by investor focus?

Answer

How relevant to SBR! This is because, going forward, the ACCA SBR examining team will be continuing to ask exam questions with an ‘investor focus’ rather than on current issues. This means that in the exam (and maybe in our jobs) we have to put ourselves in the shoes of investors and explain the impact of various accounting issues. Investor focus is not about calculating ratios but is a more rounded and applied form of interpretation with an explanation at its heart.

Introduction

The existing shareholders are the investors and owners of the business. They have a natural right to know what has happened – stewardship. The directors of the business are accountable to the investors as how they have managed

the resources and what return has been made. Investors will also be interested in the future profitability of the business.

Investors, however, should not be pigeonholed as just greedy capitalists only interested in short term profit. As a group they will have diverse information needs. For example, some will be more interested in sustainability reporting than others.

Profitability

This is the natural place to start. It may be necessary to explain to an investor how choosing a particular accounting policy will impact on the reported profits. For example, IAS 40 Investment Properties allows such assets to either be accounted for at historical cost or the fair value model. Companies that use the fair value model report changes in value directly in the statement of profit or loss. This means if property values are rising, reported profits will be higher. Though, if in subsequent years

Many companies publish additional bespoke information to help users better understand the business. Key performance indicators. For example, a measure of underlying profitability such as EBITDA. It may be necessary to explain to an investor whether the particular key performance indicator is credible.

Decision making

Remember that investors have decisions to make. Do they sell their shareholding? Do they buy more shares e.g., by subscribing to a rights issue? They will also have to decide how to vote at general meetings, for example who is appointed as directors of the company.

Conclusion

The information needs of investors are complex and diverse. They will want to know about the future and yet are presented with information that is basically historic. Companies that publish integrated reports help address this reporting gap.

• Tom Clendon is an online ACCA SBR lecturer – see www.tomclendon.co.uk. He loves using WhatsApp (07725 350793) to communicate directly with his students

The future of jobs

The World Economic Forum’s report on the future of the job market is out. So what is it predicting?

Almost a quarter of jobs (23%) are expected to change in the next five years, says the latest report from World Economic Forum. According to the estimates of the 803 companies surveyed for The Future of Jobs Report 2023, employers anticipate 69 million new jobs to be created and 83 million eliminated (among the 673 million jobs registered), a net decrease of 14 million jobs, or 2% of current employment.

Macrotrends, including the green transition, ESG standards and localisation of supply chains, are the leading drivers of job growth, with economic challenges including high inflation, slower economic growth and supply shortages posing the greatest threat. Advancing technology adoption and increasing digitisation will cause significant labour market churn, with an overall net positive in job creation.

“For people around the world, the past three years have been filled with upheaval and uncertainty for their lives and livelihoods, with Covid-19, geopolitical and economic shifts, and the rapid advancement of AI and other technologies now risks adding more uncertainty,” said Saadia Zahidi, Managing Director, World Economic Forum. “The good news is that there is a clear way forward to ensure resilience. Governments and businesses must invest in supporting the shift to the jobs of the future through the education, reskilling and social support structures that can ensure individuals are at the heart of the future of work.”

From ‘robot revolution’ to algorithm Armageddon?

While technology continues to pose both challenges and opportunities to labour markets, employers expect most technologies to contribute positively to job creation.

The fastest-growing roles are being driven by technology and digitalisation. Big data ranks at the top among technologies seen to create jobs, with 65% of survey respondents expecting job growth in related roles. The employment of data analysts and scientists, big data specialists, AI

machine learning specialists and cybersecurity professionals is expected to grow on average by 30% by 2027. Training workers to utilize AI and big data will be prioritised by 42% of surveyed companies in the next five years, ranking behind analytical thinking (48%) and creative thinking (43%) in importance. Digital commerce will lead to the largest absolute gains in jobs: about two million new digitally enabled roles are expected, such as e-commerce specialists, digital transformation specialists, and digital marketing and strategy specialists.

At the same time, the fastest-declining roles are also being driven by technology and digitalisation, with clerical or secretarial roles including bank tellers, cashiers and data entry clerks expected to decline fastest.

The Future of Jobs Report 2023 suggests that tasks are seen as no more automated now than they were three years ago when the report was last published. About a third of tasks (34%) are currently automated, just 1% above the 2020 figure. Surveyed companies also revised down their expectations for further automation, to 42%

of tasks by 2027, compared with 2020 estimates of 47% of tasks by 2025.

But while expectations of the displacement of physical and manual work by machines has decreased, reasoning, communicating, and coordinating – all traits with a comparative advantage for humans – are expected to be more automatable in the future.

Artificial intelligence, a key driver of potential algorithmic displacement, is expected to be adopted by nearly 75% of surveyed companies and is expected to lead to high churn – with 50% of organisations expecting it to create job growth and 25% expecting it to create job losses.

Rise of green, education and agriculture jobs

Investment in the green transition and climatechange mitigation, as well as increasing consumer awareness of sustainability issues, are driving industry transformation and opening new opportunities in the labour market. The strongest net job-creation effects are expected to be driven by investments that facilitate the green transition of businesses, with more than half of respondents expecting it. As countries seek more renewable energy sources, roles including renewable energy engineers and solar energy installation and systems engineers will be in high demand.

Investment will also drive growth in more generalist sustainability roles, such as sustainability specialists and environmental protection professionals, which are expected to grow by 33% and 34% respectively, translating to growth of around one million jobs.

However, the largest absolute gains in jobs will come from education and agriculture. The report finds that jobs in the education industry are expected to grow by about 10%, leading to three million additional jobs for vocational education teachers and university and higher education teachers. Jobs for agricultural professionals, especially agricultural equipment operators, graders and sorters, are expected to see a 15% –30% increase, leading to an additional four million jobs.

Leading recruitment company Indeed (part of the Recruit Holding company) found that while demand for social jobs such as those in health and education have grown faster during the pandemic, these job openings are harder to fill than others.

“At Recruit, we believe we must continue to embrace AI and technology to help job seekers and employers as we navigate near-term macroeconomic headwinds and long-term labour market challenges,” said Hisayuki Idekoba, President and CEO of Recruit Holdings. “We expect a labour shortage to remain for many years ahead, across many sectors and particularly as the population ages. Therefore, it is essential that we identify new ways to simplify the hiring process to support a thriving economy and society where everyone can prosper together.”

Increasing urgency for reskilling

Companies report that the skills gaps and an

inability to attract talent are the key barriers to transformation, showing a clear need for training and reskilling across industries. Six in 10 workers will require training before 2027, but only half of employees are seen to have access to adequate training opportunities today. At the same time, the report estimates that, on average, 44% of an individual worker’s skills will need to be updated.

The gap between workers’ skills and future business needs puts the onus on companies and governments to enable learning and reskilling opportunities. Government funding for skills training would help connect talent to employment, according to 45% of businesses surveyed.

For example, while there is continued growth in green jobs in the past four years, as indicated by additional research conducted by LinkedIn for this year’s report, reskilling and upskilling towards green skills is not keeping pace.

“The sustained growth of green jobs is really great news, particularly for job seekers who are facing upheaval in the labour market,” said Sue Duke, Head of Global Public Policy at LinkedIn. “But LinkedIn’s data is clear that while there’s strong demand for talent with green skills, people are not developing green skills at anywhere near a fast enough rate to meet climate targets. There is an opportunity for everyone to help turn this around. Governments must champion the green skills agenda and businesses can and must do more to equip their employees with the

skills needed to deliver genuine environmental change.”

In response to the cost-of-living crisis, 36% of companies recognise that offering higher wages could help them attract talent. Yet, companies are planning to mix both investment and displacement to make their workforces more productive and cost-effective. Four in five surveyed companies plan to invest in learning and training on the job as well as automating processes in the next five years. Two-thirds of companies expect to see a return on investment on skills training within a year of the investment, whether in the form of enhanced cross-role mobility, increased worker satisfaction or improved worker productivity.

Strong cognitive skills are increasingly valued by employers, reflecting the growing importance of complex problem-solving in the workplace. The most important skills for workers in 2023 are seen to be analytical thinking and creative thinking, and this is expected to remain so in the next five years. Technological literacy, and AI and big data specifically, will become more important and company’s skills strategies will focus on this in the next five years.

Faster reskilling is necessary – and possible. “Our research found that individuals without degrees can acquire critical skills in a comparable timeframe to those with degrees, highlighting the potential for innovative approaches such as industry micro-credentials and skills-based hiring to tackle skills gaps and talent shortages,” said

Jeff Maggioncalda, CEO, Coursera. “However, it will require collective action from public and private sectors to provide the affordable, flexible reskilling pathways at scale that displaced workers need to transition into jobs of the future.”

“The latest findings in the Future of Jobs Report renew calls for action from all labour market stakeholders,” said Sander van ‘t Noordende, CEO, Randstad. “Acceleration in digitalisation, AI and automation are creating tremendous opportunities for the global workforce, but employers, governments and other organisations need to be ready for the disruptions ahead. By collectively offering greater skilling resources, more efficiently connecting talent to jobs and advocating for a well-regulated labour market, we can protect and prepare workers for a more specialized and equitable future of work.”

The Future of Jobs Report

The Future of Jobs Report maps the jobs and skills of the future, tracking the pace of change. This is the fourth edition of the report, which was first launched in 2016. It aims to analyse how macrotrends as well as technology adoption are likely to reconfigure labour markets and shape the demand for jobs and skills in the 2023-2027 timeframe.

The Future of Jobs Survey brings together the perspective of 803 companies – collectively employing more than 11.3 million workers – in 27 industry clusters and 45 economies from all world regions.

Top tips for passing AAT assessments

AAT student Rachel Spence is nearing the end of her AAT journey. She has some great tips on how to pass those AAT assessments – five in fact

As I approach the end of my AAT apprenticeship journey with just one exam left to sit, I can certainly say that it has been an exciting rollercoaster with certainly more ups than downs! Although at times it has not been easy, I have achieved all first time passes across my AAT exams from level two to level four and I am now going to share with you my five top tips as to how you can also achieve this.

Tip 1 – Practice makes perfect!

Sitting reading a textbook, watching a video, or listening to a podcast may bring about some benefits when it comes down to the initial learning process. However, if you want to achieve those high marks in the assessment it is vital that you take a proactive approach to your studies. The best way for you to do this is by attempting

practice questions that are like those in your exam. Mock exams are a vital tool for not only familiarising yourself with the layout and the style of questions, but they will also allow you to plan your time accordingly. The more you practice, the greater the chances you have of passing the assessment – they may take time, but it is time well spent.

Tip 2 – Remember to take time out

Admittedly, something I wasn’t (and still not) too good at. It is important to remember to take breaks in between your studies in the lead up to your exams. Whether this is spending time with family and friends or going on a short walk, it will re-energise you, allowing you to get the most out of your study sessions and giving you the best chances of achieving those higher grades in the assessment.

Tip 3 – Use the examiners’ reports to your advantage

AAT publish examiners’ reports on their learning portal and they are certainly an important tool to help you to succeed. The reports will help you to identify the tasks where students drop the most marks, which should allow you to focus your revision on weaker areas. By reading through the examiners’ reports you are setting yourself up for success; they provide a detailed breakdown of strengths and weaknesses in each task in the assessment, giving clues as to what may crop up in your assessment.

Tip 4 – Help one another!

Motivation is sometimes hard to come by for students (I’ve had this!), especially more so if you are self-studying. However, if you have the option of studying with someone on the same course as you then you may find that working together can act as a good motivator, and you can help each other if you get stuck. If you do not have this option there are a myriad of AAT study groups on social media you can join, and I would strongly encourage you to do so – even if you do have a study buddy there is a wealth of information available through these groups that will support you in your journey to passing your assessment.

Tip 5 – The night before

Contrary to popular opinion, I would never pick up any of my resources the night before an assessment. If you don’t know it by this stage, you won’t know it in the exam – you haven’t prepared well enough, and this will just make you panic. It’s not worth the stress of forgetting what you do know for the sake of trying to learn new information. Instead, take the opportunity to relax and get prepared for the assessment. Make sure you eat a proper meal and ensure that you get an adequate amount of sleep. But, most importantly, gather all your equipment together that you will need for your exam – especially your calculator! By doing so the morning of the exam will be far less stressful.

Ultimately, AAT assessments are not a walk in the park; they require you to put both time and effort in especially if you are aiming for those higher marks. However, the greater your dedication to your studies, the more confident you will feel on the assessment day, and you will get the result that you sought.

Rachel Spence

The true cost of making MTD work

With an unrealistic timeframe and far from robust business case, has HMRC delivered on Making Tax Digital? The National Audit Office needs more convincing

HMRC’s flagship tax transformation programme is now expected to cost five times the original forecast made in 2016 (in real terms) following repeated delays.

A new report by the National Audit Office (NAO) says HMRC omitted significant costs to customers from some key business case documents seeking approval for further funding.

The report, Progress with Making Tax Digital, focuses on HMRC’s £1.3 billion programme to digitalise the tax system, which is currently expected to cost around £1 billion more than its 2016 budget of £226 million. The programme was designed to modernise HMRC’s systems for three business taxes – VAT, Income Tax Self

Assessment and Corporation Tax – and requires business taxpayers to keep and submit quarterly digital tax records. HMRC also intended to move its tax systems and records onto a modern tax management platform by 2020.

What exactly are the true costs?

In its May 2022 business case, HMRC forecast total net ongoing costs to taxpayers of around £900 million over five years to comply with Making Tax Digital (MTD). However, the NAO found that while HMRC had details in an annex, it excluded significant upfront costs of £1.5 billion to VAT and Self Assessment taxpayers from the business case’s cost-benefit analysis.

These costs related to businesses updating their own systems and obtaining tax advice. This would have shown that the combined cost to the government and to businesses of proceeding with MTD for Self Assessment would have exceeded the forecast additional tax revenue. Its March 2023 business case omitted upfront costs to businesses entirely. HMRC does not believe these omissions would have resulted in different decisions being taken. In 2021 it published policy papers which estimated upfront costs to Self Assessment taxpayers, and it has been able to show evidence that decision-makers were sighted on the upfront costs ahead of some key decisions.

Original plan unrealistic

The report also found that HMRC’s original 2016 plan to introduce MTD by 2020 – for VAT, Self-Assessment and Corporation Tax – was unrealistic, with the Department failing to assess the scale of work required from the outset.

In 2017, HMRC recognised that it could not meet its timetable given the complexities of MTD for Self Assessment, which will require some taxpayers to change their behaviour by using digital transactions, electronic record-keeping

and quarterly filing. It pushed back changes to Self Assessment to focus instead on VAT.

By March 2023, 3.2 million VAT taxpayer records had been migrated to HMRC’s modern IT systems. HMRC introduced MTD for VAT for larger traders, accounting for 99% of VAT collected on time in 2019. It introduced MTD for smaller traders in 2022, three years later than planned. In December 2022, on the advice of HMRC, the government pushed back the timetable for Self Assessment for the fourth time, further delaying benefits and increasing costs. MTD for Self Assessment is now at least eight years behind the original timetable. This is due to delays in delivering MTD for VAT, which reduced HMRC’s capacity to build its Self-Assessment system and support the development of commercial software, as well as the impact of Britain’s exit from the EU and the Covid-19 pandemic.

In addition, the NAO found that HMRC carried out very little testing for how MTD would work for Self Assessment. The pilot had limitations that restricted participants’ eligibility. HMRC had forecast more than 15,500 business taxpayers would join the pilot. Around 1,000 taxpayers wanted to sign up for the pilot but most were ineligible, leaving only 15 participants when the pilot was closed to new entrants. HMRC has not yet resolved some design issues, including how to allow for multiple agents to represent taxpayers; handle jointly owned property; and deal with changes in taxpayers’ circumstances.

Of the 17 million tax records that had to be moved from its costly legacy systems, HMRC has only moved three million so far and only set dates for moving 1.6 million others.

HMRC estimates MTD for VAT cost it around £295 million, £70 million more than it had originally expected the programme would cost for all three business taxes (VAT, Self Assessment and Corporation Tax). However, HMRC research indicates it is likely that MTD has contributed to generating additional VAT and estimated that this equated to £185 million to £195 million in 2019-20.

MTD ‘will bring in more taxes’

HMRC’s latest estimates indicate the programme could raise £3.9 billion in additional tax from reducing taxpayer errors. The NAO’s analysis of HMRC’s figures indicates the programme could achieve a return of around 2:1 when compared with costs to HMRC and businesses.

A further £1.6 billion of tax might be generated from those with Self Assessment business incomes of £10,000 to £30,000, if the government decides to extend MTD to these

MTD ‘out of control’

What do the tax professionals think about the NAO's latest report? Let’s just say they aren’t happy!

Making Tax Digital (MTD)

is ‘out of control’, with HMRC vastly underestimating development and implementation costs and overestimating the benefits to the exchequer of its flagship scheme, says the Chartered Institute of Tax (CIOT) and the Association of Taxation Technicians (ATT) following a report from the National Audit Office.

The two bodies contributed to the report and have repeated their calls to review the business case for MTD, after the report suggested the scheme is now expected to cost around five time its original 2016 budget, and excluded upfront costs of £1.5 billion to VAT and SelfAssessment taxpayers from its business case.

Chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, Alison Kerrey (pictured), said: “HMRC and government’s execution of this major change to the tax system feels like it is out of control, with spiralling costs, unrealistic timescales and questionable benefits.

“While we support digitalisation, the report backs up our concerns that HMRC’s estimates

groups. The costs to these entities if they had to comply with MTD for Self Assessment could amount to £1.2 billion, an average of £460 each, and almost £1,000 for some self-employed businesses. HMRC has not assessed how many businesses will face different amounts of upfront costs.

HMRC’s ability to secure value for money from the remaining spend on MTD – forecast at £620 million at March 2023 – now depends on it developing a more robust business case exploring the options for reducing costs; resolving questions about design and costs to customers; and rigorously managing delivery risks.

The NAO recommends that HMRC should prepare a separate business case for MTD for Self Assessment so that decision-makers can understand the costs, benefits and delivery risks for the full range of options. This should include greater clarity on how different groups of business taxpayers are affected.

have vastly underestimated costs to taxpayers and overestimated benefits to the exchequer – it is time to pause and take stock.”

The report indicated that MTD was announced before any business case had been prepared for it, with later cases in May 2022 and March 2023 seeking additional funding omitting the significant upfront costs for taxpayers.

It also noted that during 2022-23, moving VAT records onto its new system initially lead to VAT liabilities being overstated by around £5 billion. HMRC will only move one year’s taxpayer data for Self Assessment.

Kerrey continued: “We have repeatedly questioned whether the business case for MTD stacks up and fully agree with the NAO that a fresh, complete business case needs preparing. Even the latest estimates of a 2:1 return on investment still seems marginal, based on experiences to date with spiralling costs, speculative revenue benefits, and the need to operate two systems for the foreseeable future.”

It also recommends the HMRC works collaboratively with stakeholders on how best to create the new system and resolves questions around software.

Gareth Davies, the head of the NAO, said: “The repeated delays and re-phasing of Making Tax Digital have undermined the programme’s credibility and increased its costs. They put at risk the support of taxpayers and delivery partners, including those who are essential to the programme succeeding.

“Our audit identified the omission of significant costs from some business cases. It is obviously important that business cases for major programmes such as this contain all the relevant information to support decision-making.

“HMRC’s plan to digitalise the tax system has the potential to improve the system’s efficiency and effectiveness. It has made some recent progress on VAT but it has not yet tackled the most complex elements of the programme and significant delivery risks remain.”

Driving the journey towards social equity

The future of our organisations depends on sustainability and a just transition – and you’re at the forefront says Clive Webb

What does the phrase ‘a sustainable organisation’ mean to you?

ACCA defines it as one that balances the three components of economic, environmental and social action to deliver a longterm future.

Organisations are facing up to the possibility that their future will be unsustainable – and their stakeholders are asking finance professionals and the accountancy profession for increasing amounts of information on how key risks are being addressed.

It’s important to measure performance in a wider sense than purely financial terms

A new report from ACCA, called Accounting for society’s values, explores these questions and more in depth, arguing that organisations need to transition to a sustainable future that embraces economic, environmental and social aspects in combination.

Our research has revealed that accountancy and finance professionals are at the forefront of the transition to a sustainable future. The report places an emphasis on what it calls ‘the social agenda’ – a transition to sustainability that balances social equity with environmental action. Now, as a profession, we need to see this as an opportunity to define our future role and put the social agenda at our core.

The three domains of sustainability – the triple bottom line Society faces longterm challenges from social injustice, with stakeholders and regulators increasingly focusing on the social implications of the actions of organisations. That’s why defining and measuring the return to society by an organisation’s activities is becoming as important as the financial objectives themselves.

The model of the social agenda developed as the report came to life. It was then used as a basis for roundtable discussions with a wide selection of finance professionals. This is no one-size-fits-all, the model will apply differently to individual organisations depending on their location and culture, but each component, says the report, ‘requires a focus and a strategy’.

Model of the social agenda

We all know that finance professionals are at the forefront of budgeting and costing decisions that impact all the elements of the social agenda model. But finance professionals are set to have a crucial role in measuring performance in a wider sense than just purely financial. And for that we may have to up our game.

But while us finance professionals are, of course, comfortable with discussing economic viability and are becoming more comfortable with environmental protection, the report argues that social equity is yet to be fully embedded into the culture of organisations, supply chains and society as a whole.

For organisations, the report identifies three priorities in moving towards the social agenda:

• Developing strategy in a way that embraces the social objectives, while keeping in mind the requirements of various reporting regimes.

• Ensuring that organisational performance is measured in a way that reflects the transition. This means exploring non-traditional data sources that may be more subjective in nature. And when using those sources

applying the appropriate level of control to encourage stakeholder trust.

• Meeting external reporting requirements, not just within the organisation’s four walls, but also along the value chain.

The profession, stresses the report, has the opportunity to take a leading role in driving through the necessary change – and this can benefit the profession as much as it benefits organisations and society.

The final word comes from ACCA chief executive, Helen Brand: “The social agenda is a broad one and requires organisations to act now. Without the valued and proactive input of the accountancy and finance profession, the goal of reaching sustainability for all organisations will be unattainable.

“The profession has an opportunity to play its full part in enabling the just transition, not least the social aspect – one that it cannot afford to shirk.”

To find out more read the full report here

• Clive Webb is senior insights manager at ACCA

Sustainability standards – video explainers - https://www.accaglobal.com/ gb/en/member/sectors/sustainable-business/sustainability-standardsvideos.html

Green finance skills: the guide - https://www.accaglobal.com/gb/en/ professional-insights/global-profession/green-finance-skills-the-guide.html

Climate Finance course in collaboration with CFA - https://www.accaglobal. com/gb/en/member/discover/events/global/e-learning/sustainability/ climate-finance.html

Is ethics just about getting caught?

Robert Sowerby explains why there’s so much more to ethics than it being just another exam to pass

being at the very least economical with the truth, but it is hardly a model upon which you can build enduring business relationships. In simple terms the answer is no.

Professional ethics can be reduced into two aspects, the first of which is simply based on trust. So wrap integrity and objectivity with a healthy sprinkling of competence into how you work and you are a long way towards ensuring that in business you are able to build longterm, mutually beneficial relationships with all stakeholders.

Be straightforward and act without side and the honesty you portray is reflected in the trustworthiness reflected back upon yourself. This is the easy part, or at least the part that you can do without compromising your own being.

Iremember first hearing about ethics as an academic subject to study many years ago when Harvard caused a stir by introducing it on their curriculum. At the time the reportage seemed to be that if you really needed to be educated in ethics there was something fundamentally wrong with you, probably linked to the being born on the wrong side of the tracks or going to the wrong school.

If nothing else, recent history has taught us that your social status appears to have no correlation to your willingness to do right or wrong. It is clear that, in this case at least, Harvard were the harbingers of the future, as the study of ethics has become a central pillar of the professions and many other parts of business education. Not only do we learn what we should be doing, we learn how to resist temptation and how to resolve the inevitable

dilemma.

I have been teaching ethics for over 20 years, but I am surprised and dismayed about the perspective of a significant minority of students that is solely about not getting caught.

It’s very simple – we should have no excuse for wrongdoing and that is that. Although it isn’t. We can all recite the five principles of professional behaviour without difficulty, but at the same time a lot of us are aware of morally dubious practices that while not illegal are, at the very least, taking advantage. Is this simply a matter of being in business and doing what you have to do, a ‘dog eat dog’ approach to the world? Should we simply accept that that is the way the world works? Does the narrow approach of business suggested by being devoid of moral practice work in the real world? Yes, you may generate immediate sales by

The slight problem is that it doesn’t end there and this is where a lot of us have more concern. A less discussed issue is that of the need to act in the public interest, when and when not to keep a secret. The idea that you have a higher responsibility than just working for your or your organisation’s goals. If you identify a situation where there is wrongdoing you stand to lose out by acting ethically. There are far too many examples of the whistleblower suffering as a result of their actions.

So do ethical principles assist in good professional behaviour? The answer must be yes, at the very least they ensure that wrongdoers are aware of the breaches that they have made. At best they may be used consciously to determine what the best course of action is.

The slight problem is that too many are willing to study ethics as an abstract academic subject without considering why they are needed, almost as something to circumvent rather than embrace. So studying ethics is not a panacea, it won’t make someone honest when they are determined to break the rules. It may, however, encourage the majority to act more ethically for the good of all.

• Robert Sowerby is an education consultant and expert tutor

Dear Karen

Ask PQ’s very own agony aunt Karen Young when you need advice from a real expert. Email your dilemma to graham@ pqmagazine.com, and he will pass on the best ones to Karen

THE DILEMMA

I’m starting to doubt my ability to make a good accountant but I’m still passionate about following this career path. How can I build my confidence?

Thou shall not invest in fossil fuel Church of England pulls investment out of fossil fuel companies

The Church Commissioners for England, which manages the Church of England’s £10.3bn endowment fund, has decided to exclude all remaining oil and gas majors from its portfolio. It will exclude all companies primarily engaged in the exploration, production and refining of oil or gas, unless they are in genuine alignment with a 1.5°C pathway, by the end of 2023.

In 2021, the Church Commissioners excluded 20 oil and gas majors from its investment portfolio. It is now also excluding BP, Ecopetrol,

In brief

Hybrid working crackdown

Eni, Equinor, ExxonMobil, Occidental Petroleum, Pemex, Repsol, Sasol, Shell and Total, after concluding that none are aligned with the goals of the Paris Climate Agreement.

“The decision to disinvest was not taken lightly,” said Alan Smith, First Church Estates Commissioner. “Soberingly, the energy majors have not listened to significant voices in the societies and markets they serve and are not

moving quickly enough on the transition.”

Archbishop of Canterbury Justin Welby, said: “The climate crisis threatens the planet we live on, and people around the world who Jesus Christ calls us to love as our neighbours. It is our duty to protect God’s creation, and energy companies have a special responsibility to help us achieve the just transition to the low carbon economy we need.”

KAREN’S RESPONSE

You’re bound to question your abilities from time to time, but it’s important to overcome your inner critic to tap into your potential, and ultimately achieve a successful, fulfilling career.

Recognise any negative narratives that are knocking your self-worth. Don’t let a negative belief such as “I’ll never be good enough to get that job” hold you back from pursuing your passions. Consider the attributes you have that will make you an indispensable asset to an organisation, envision yourself thriving in the given role and apply regardless of your self-doubt. Focusing on your strengths will help you to grow in confidence and feel more optimistic about your career prospects. Hone in on these strengths which you can build upon and utilise throughout your career. It’s also important to address your limitations and have a willingness to learn and upskill accordingly. When uncertainty creeps in, have coping mechanisms at the ready to get you back on track. Speak to a career coach, recruitment expert or someone you see as a role model to get advice and support.

There’s no shame in experiencing a lack of confidence every so often, but if you dedicate the time to empower and believe in yourself, you will inevitably see the long-term benefits within your career and beyond.

• Karen Young is a director at Hays. She is passionate about helping people to find the right job and companies the right person

Google has reportedly started to crack down on those working from home. The tech giant is now tracking its employees’ office attendance and using this as part of their performance reviews.

Google’s people officer, Fiona Cicconi, has emailed staff explaining that working from home was “no substitute for coming together in person”. She explained that its offices are “where you’ll be most connected to Google’s community”.

Google now wants staff in for a minimum of three days a week and has started to send reminders to

staff who don’t adhere to the new policy.

We need to go nuclear Europe will not be able to reach its target of net zero carbon emission by 2050 unless it builds more nuclear power stations, according to Rolls-Royce CEO Tufan Erginbilgic. It just so happens that his company is developing new small reactors which could play a key role in decarbonising electricity grids across the continent.

Eringbilgic is pushing the UK government to place an order for his small modular reactors (SMR), which are far cheaper than existing

large-scale generators. However, the government is running a competitive tender to find the best SMR design and an update on this is expected in October.

Connecting with shareholders

M&S has partnered with interactive investor, the UK’s second-largest investment platform for private investors, to launch a first-of-its-kind pilot project that will connect the company directly with thousands of nominee shareholders, encouraging them to participate and vote at its AGM.

The PQ Book Club: books you should read

Innovating for Diversity: Lessons from Top Companies Achieving Business Success through Inclusivity by Bertina Ceccarelli and Susanne Tedrick (Wiley, £26.99)

This great book is dedicated to ‘anyone who has ever had the courage to challenge the rules when they weren’t fair’. It’s also fair to say that both authors are on a mission to advance racial and gender equity in places where it’s not evident, and disrupt the status quo to build an inclusive workplace.

Ceccarelli and Tedrick say that practices for recruiting, on-boarding, developing, retaining, evaluating and promoting talent are often deep rooted. They are embedded in a company’s way of doing business, organised in playbooks and shared as best practice. These processes are further codified through HR

systems, including software tech and training, that will take years and significant resources to change, especially at scale.

So, the first big challenge is to change these ‘Fixed Practices’. Then, there are our ‘Settled Ways’, or fixed attitudes. The pandemic also had a big impact – in the US racial minorities and low-income Americans lost substantial financial ground from 2020 to 2022. This further widened wealth, income and opportunity gaps.

They believe companies now need to create a virtuous cycle of innovation and diversity, which can drive growth: “Diversity leads to great

innovation; and innovation drives improved diversity.”

Apprenticeships are looked at too, and the role they can play, creating a ‘trickle-up’ effect.

Mentoring is another key area. It is good for employers too – it increases employee satisfaction, helps identify emerging talent and helps to improve an organisation’s culture.

PQ rating: Although the examples are American, they work equally well no matter where you are. The authors say companies may need to be fearless to engender change, but the arguments are clear –diversity will be good for the bottom line!

The Greek Kafka

PQ magazine was recently on its hols and took with it

‘The Shortest History of Greece’ by James Heneage. We thought it might be good to take a break from accountancy, tax and all that stuff. But we quickly discovered that tax is everywhere, and plays a big part in Greece’s recent history. Heneage explains in his fab book: “At the end of 2010 the Greeks had owed some €39bn in unpaid taxes, by 2013 it was €62bn. However, when the EU Task Force for Greece offered help in fixing the system, the Union of Tax Official’s refused to even meet them.”

As Yannis Palaiologos said: “If Kafka had been Greek, his masterpiece would have been entitled The Tax Office.”

What’s the answer?

When the English Grammar School put up this equation recently on Facebook to solve it was liked 289k times, had 15k shares and 1.6m comments!

Here it is:

1 + 4 = 5

2 + 5 = 12

3 + 6 = 21

8 + 11 = ?

As one respondent said there are at least three different answers here, and as far as he was concerned, they should all get a mark!

Rajad said the correct answer was simple, 96. Here’s how he worked it out: 1 x 4 + 1 = 5; 2 x 5 + 2 = 12; 3 x 6 + 3 = 21; so it’s, 8 x 11 + 8 = 96.

Others insisted the correct answer was 40, with the final sequence being 21 + 8 + 11 = 40. Where were the instructions to include multiplication, asked those who said it was 40. They told the ‘96ers’ that by using the formula sequence you get to 40, otherwise for simple math it is 19!

So, what is your answer?

’

Apple’s first spatial computer

Apple has unveiled

Apple Vision Pro, it’s revolutionary spatial computer that seamlessly blends digital content with the physical world. Well, that’s what the news release says, anyway!

Vision Pro, which introduces a fully three-dimensional user interface into an ‘augmental reality’, is Apple’s first major hardware launch for nearly 10 years (the last being the Apple Watch device in 2015).

Technology experts said the Apple headsets are more like ski googles than the traditional virtual reality headset designs

The headset will be available from early next year on apple. com and at stores in the US first. More countries will come online later in 2024. Oh, and the price starts at a cool $3,499 (£2,849). This compares with Mat’s Quest 3, which come in at $499.

For that money you only get a two-hour battery life via a separate battery pack.

I am having a fag!

It is what we already suspected, but research has now confirmed that cigarette breaks give smokers an extra week of holiday a year!

The research by the Office of National Statistics (ONS) found that 52% of smokers said they leave their desks multiple times a day for a cigarette or to vape.

A third of smokers admitted they spent 20 minutes of their working day smoking outside, with the average time between five and 10 minutes.

Added together that means the average smoker spends around 39 hours a year on cigarette breaks. That is some six days’ worth of leave.

Researchers found that workers in Belfast and Southampton are most likely to be caught outside ‘having a fag’. However, smokers in Edinburgh and Norwich claimed they never leave their desks at all for a cheeky cigarette!

Time to end VAT on sunscreen?

VAT needs to be scrapped on sunscreen to make it more affordable, according to several UK cancer charities.

As sunscreen is classified as a cosmetic product it carries a 20% tax, which adds around £1.50 to the price of each bottle.

Charities want the government to exempt high-factor protective creams because cases of sun related skin cancers are on the rise in the UK.

Scottish National Party MP Amy Callaghan is leading the campaign for change. She was diagnosed with melanoma when she was 19. She said if people can’t afford to turn on their heating, they aren’t going to buy expensive items such as sunscreen. Callaghan explained: “That’s why we must make sunscreen more affordable, by removing VAT.”

Interestingly, high factor sunscreen is on the NHS prescription list in certain cases and can be provided VAT free when dispensed by pharmacists to these patients

WE V E G O T T H E L O T

The Thursday Murder Club

Welcome to the latest edition of the Thursday Murder Club. This is Richard Osman’s third book in the series, and this one is called The Bullet That Missed. We are told that trouble is never far away where the Thursday Murder Club is concerned and a decade-old case leads them to a local news legend and a murder with no body and no answers. Then a new foe pays Elizabeth a visit. Her mission? Kill… or be killed.

We are giving away three copies of this one. To be in with a chance of winning a copy of this book email us at giveaways@pqmagazine.com with your name and address, and we will put you in the draw. Head up your email ‘The Thursday Murder Club’.

Book of Sudoku

We have something you can throw into your suitcase to take away with on your hols – The i Book of Sudoku. It features 200 brand new puzzles and has been specially curated by the team that bring you the i newspaper puzzle pages. It includes the usual range of easy, medium and hard, plus Idoku. The selection is aimed at challenging even the most dedicated solver. But don’t worry, the solutions are in the back of the book.

To win one of the three books we are giving way this month just send us an email headed ‘Book of Sudoku’ to giveaways@pqmagazine.com, along with your name and address.

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 18 August 2023. The main draw will take place on Monday 21 August 2023.