10 Aug

Three former members of AssetCo management excluded from the accountancy profession​

The FRC has announced exclusions from the accountancy profession for three former executives of AssetCo plc, after a Disciplinary Tribunal found they had committed Misconduct in relation to the preparation and approval of the company’s financial statements for the financial years ended 31 March 2009 and 31 March 2010. Please see FRC AssetCo report here.

John Shannon (former Chief Executive Officer) has been excluded for 16 years, Raymond “Frank” Flynn (former Chief Financial Officer) for 14 years and Matthew Boyle (former Financial Controller) for 12 years. Additionally, fines of £250,000, £150,000 and £100,000 respectively have been imposed.

Former members of AssetCo excluded from the profession​

AssetCo was an AIM-listed fire and rescue services business that provided fire engines to the London Fire Brigade. As a result of the Misconduct, AssetCo substantially restated its financial statements in 2011 (£146m reduction in assets, £25m reduction in profit) and significant loss was caused by the collapse in share price from 60p to 1.75p.

The dishonest conduct of management was concealed. The FRC opened its investigation in late 2014.

The FRC’s Executive Counsel brought a total of 27 allegations of Misconduct against Mr Shannon, Mr Flynn and Mr Boyle before the tribunal. The tribunal, chaired by Sir Bernard Eder, made findings of misconduct in relation to all of them. These included findings of dishonesty and failing to act in accordance with core standards of integrity, objectivity and competence, which related to dealing with company funds, the preparation of financial statements, and the recognition of fictitious assets and revenue. The tribunal also found that they had each misled the auditors, Grant Thornton UK LLP.

Claudia Mortimore, interim Executive Counsel at the FRC, said,

The misconduct of the three accountants in this case is the most serious the FRC has put before a Tribunal. In addition to the financial harm caused to the company and to many investors, the actions of these individuals have damaged public confidence in the profession. The Tribunal has recognised this and it is reflected in the imposition of lengthy periods of exclusion (being the longest ordered to date), as well as substantial financial penalties. These sanctions should send a clear message that the manipulation of financial statements, and in particular dishonesty, will be dealt with robustly

10 Aug

ICAEW: make investing less complicated so people can save their fair share

New savings and investment products that are easy to understand and available to everyone are urgently needed, according to a new report by ICAEW.

In Audit Insights: Investment Management, the accountancy and finance body warns that indecipherable statements, high fees and a perception of exclusivity mean many feel alienated from the investment management industry when they need it most.  People find investing too complicated, or see it as just something for the wealthy, and this is contributing a savings time-bomb.

Philippa Kelly, ICAEW’s Head of Financial Services, explains:

Despite its simple business model, most people find investment management complicated and so they don’t engage with it, and even when they do they can be left feeling frustrated that they don’t have a clear picture of where their current saving or investing levels will leave them in the future.

We need easy-to-understand savings products now more than ever. Increasing life expectancy, decreasing state provision and the decline of things like defined benefit pensions mean many now face an uncertain retirement

Offering a series of case studies, the report explains how investment management can be used by everyone to help avert a potential “savings gap of £25 trillion by 2050. It highlights the need for the investment management industry to offer products that are valuable, affordable, appropriate and increasingly personalised

The paper also points out that this is an opportunity for the industry – and that technology can help.

Philippa continued:

People often think investment means wealth management for the well-off. But the investor of tomorrow is everyone. The good news is that digital platforms, robo-advice and artificial intelligence are putting investing within reach for almost everyone. At the moment the cost of individualised services means this kind of investing is just too expensive for many. But exploiting emerging technologies can help change this.

However, this means we need a change in attitude and approach from the industry. If providers of these services want to seize this opportunity for growth they must commit to providing clarity and boosting customer confidence

Philippa added:

Over half of people between 21-30 make the minimum pension contributions or have no pension at all. The growth of self-employment and the gig economy means that unless something changes this is going to get worse, not better. There is a real opportunity here for the industry to make a difference by doing what it does best. But they need to start now

26 Jul

Benefits of Having a Mentor, and How to Find One

As any young wizard, new Jedi or ring-bearing Hobbit will tell you, having a mentor can mean the difference between meeting your goal and failing miserably. Yet only 26 per cent of the workers Accountemps surveyed actually have one.

If you’re among the finance specialists who don’t think they need guidance from a more experienced professional, you may want to reconsider. Here are five reasons to make having a mentor a top career goal:

1. Executives are willing. Sixty-two per cent of the CFOs interviewed for a recent Robert Half Management Resources survey have been a mentor at some point in their career. This suggests the majority of finance execs understand the value of such a relationship and are interested in paying it forward. In other words, if you ask a veteran accountant to mentor you, chances are good they’ll agree.

2. You learn from someone in a role you aspire to. Your university degree taught you how to be a good accountant and auditor, but it didn’t tell you much about climbing the career ladder. Someone who currently has your dream job is the ideal person to mentor you. With their first-hand experience, they can tell you what accounting certifications are most valuable and which career path to take for what roles. You also get to learn from their past successes and failures, which helps you make better decisions in the early days of your career.

3. Mentors teach you the unwritten rules. Every organisation and accounting speciality has its own culture and best practices — very few of which are found in print. A mentor can show you the ropes and help you avoid pitfalls that can slow down your progress. They are also a valuable resource for industry information and insider tips.

4. Mentors are a sounding board. You have ideas and dreams, but are all of them good for your career? A professional mentor can offer an outsider’s view on everything from writing a great business email to jumpstarting a stalled career. They won’t hold your hand, though. Rather, their job is to listen, let you know whether you’re on the right track and give pointers along the way.

5. Mentors can open doors. As long-time accounting pros, mentors not only know things, but they know people. This means they can introduce you to industry leaders and enlarge your professional network. And the more people you have in your circle of contacts, the better your chances of working on high-profile projects and hearing about interesting job openings.

How to find a mentor in the accounting industry

Here are some tips for finding and working with a mentor.

Understand what a mentor is not. When compiling a list of potential candidates, leave off the names of your boss and your boss’s boss. A mentor’s role is to offer occasional guidance and advice — not directly or indirectly supervise you. The ideal person to serve in this role is someone who has more experience than you but is in a different department or company.

Weigh internal vs. external. There are pros and cons to having a mentor in the same organisation: They know who’s who, understand the corporate culture and can help you navigate internal politics. Some businesses and accounting firms, especially larger employers, also have formal mentoring programs — making the process much easier. However, you’ll have difficulty discussing a new job search with an in-house mentor, which means you could be on your own when putting together a CV or determining whether an offer is competitive.

Look for a role model. Seek out experienced professionals whose career you’d like to emulate and who share similar values, goals and personality traits. While opposites can get along, it’s much easier to learn from people who are more like you than not.

Be a good mentee. Mentors want to help you, but you need to hold up your end of the bargain by respecting their time and communicating clearly. This means initiating meetings, checking in between sessions and thanking them for their guidance. Other mentee musts: prepare for each meeting, show up on time and complete recommended tasks

Nobody makes it to the top alone. And after you’ve found your Yoda to your Luke, nurture this valuable professional relationship.

This article is provided courtesy of Robert Half, parent company of Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources. Robert Half is the world’s first and largest specialised staffing firm placing accounting and finance professionals on a temporary, full-time and project basis. For career and management advice, follow our blog at roberthalf.co.uk/blog.
26 Jul

Technology and values are essential to future business model innovation, says ACCA

In today’s ever changing world, organisations are using business model design to build unique approaches to creating value that have the potential to radically disrupt industries.

A new report published by ACCA, Business models of the future: systems, convergence and characteristics, identifies 12 characteristics behind business model design, that are being combined by organisations in different ways to create new sources of value.

Jimmy Greer, head of sustainability research and policy at ACCA and author of the report said:

New tools mean that business model innovation is easier to achieve than ever and organisations are using multiple models in different ways for value creation. But the challenges of today’s world demand a wider, more systemic view.

Organisational design disruptions do not occur in a vacuum. They play out across the complex landscape of economies and societies. While there have always been challenges throughout the course of modern economic development, as long waves of technology ebb and flow, social institutions under-perform and environmental limits are tested, today these challenges are now emerging in new spaces

This report identifies 12 characteristics that organisations are combining as they build new business models. They are:

  • Multi-layered
  • Participatory
  • Platform-ready
  • Multi-capitalist
  • Purposeful
  • Data sensible
  • Boundary-testers
  • Open
  • Potential enhancing
  • Fair players
  • Convening
  • Restorative

Greer continued:

These characteristics lie behind the models creating organisations that are ready for the future. The accountancy profession is well placed to support the growth of business models of the future that help build resilient, inclusive and prosperous societies.  The unique contribution that professional accountants can make to how a business model proposes, creates and captures value, means that they can play a meaningful, strategic role in building organisations that are ready for the future

The report attempts to answer fundamental questions; why does business model innovation matter? What is the shape of the world in which models need to operate and how do they come together to build future value? The full Business models of the future: systems, convergence and characteristics can be read here.

26 Jul

Crowe UK expands corporate offering with appointment of Christine Dobson as partner

National audit, tax, advisory and risk firm, Crowe UK has appointed Christine Dobson as an audit and advisory partner in its Corporate team.

Christine joins Crowe’s thriving Corporate sector team from a Big Four firm where she was an Audit Director. Bringing with her 25 years’ experience in in advising a range of organisations from start-ups and SMEs to owner-managed businesses and private-equity backed firms, Christine’s appointment will further expand Crowe’s offering in this area.

Christine will be based in Crowe’s Thames Valley office where the firm’s corporate offering has expanded significantly in recent years. With Thames Valley cited as one of the fastest-growing economic regions in the UK, Christine’s appointment underpins the firm’s commitment to supporting businesses to achieve their aims, both nationally and throughout the region.

Jeremy Cooper, Managing Partner of Crowe’s Thames Valley office, said:

Christine’s appointment marks the next phase of our growth in our Corporate Services in the Thames Valley. Her experience of working with private equity backed and owner managed businesses complements our existing team as we continue to build our Corporate Business offering locally

Christine Dobson, audit and advisory partner at Crowe, said:

I am delighted to be joining Crowe UK as a corporate audit partner. I am looking forward to working together with my new colleagues and bringing the breadth and depth of my experience to help my clients and new businesses achieve their ambitions

Nigel Bostock, Chief Executive of Crowe, said:

Christine’s appointment adds considerable and varied experience to our Corporate offering and will play an important role in servicing our clients’ evolving needs as their business grows and develops. We welcome her warmly to Crowe and look forward to her adding value, insight and experience to our clients and across our firm

26 Jul

Qualifications outweigh experience for finance professionals

Just 6% of CFOs believe that industry experience is more important than qualifications when recruiting finance professionals according to research from Robert Walters, totaljobs and Jobsite. Professionals are widely in agreement, with just 11% of accountants believing that industry experience will be the key factor in developing their career.

The research also revealed distinctions in how much value employers place on various qualifications. ACA/ICAS was considered valuable by the largest number of employers (53%) followed by ACCA (50%) and CIMA (41%).

By contrast, just 12% of employers felt that AAT qualifications were valuable, with professionals in agreement.

Habiba Khatoon, Associate Director, Robert Walters Birmingham, comments:

For finance professionals, formal professional qualifications have a huge impact on their ability to progress within their career and which roles are available to them.

While industry experience can still be valued by employers, formal qualifications will be essential for candidates when putting themselves forwards for a role.

Among professional qualifications, it is also clear that ACA and ICAS are held in highest regard by employers, but this is not to say that possessing certifications from other professional bodies will inhibit the ability of candidates to secure desirable roles, particularly in light of ongoing skills shortages within the sector.

MID LEVEL PROFESSIONALS THE MOST SOUGHT AFTER

Management level finance professionals are expected to be the most sought after, with 54% of employers anticipating skills shortages at this level. This contrasts with 38% who are expecting skills shortages at junior or executive level. Just 8% of employers expect to face a shortage of candidates to fill director or senior management roles.

Habiba Khatoon continues:

Skills shortages remain acute at mid management level as a long-term consequence of reduced graduate level hiring during the recession. This has created a bottleneck at management level, with a lack of finance professionals possessing the skills and experience to take on business partnering roles.

In addition to difficulties sourcing candidates with sufficient experience, many employers have also struggled to find candidates who can demonstrate soft skills in areas such as communication and the ability to manage the expectations of internal stakeholders, both of which are essential for more strategic roles

To request a full copy of the research please submit your information via the following link: www.robertwalters.co.uk/solvingtheskillsshortage

26 Jul

Consultation on revised auditing standard for estimates and related disclosures

The FRC has launched a consultation on the proposed revision of its UK standard (ISA (UK) 540) – Auditing Accounting Estimates and Related Disclosures. The FRC’s changes reflect revisions made by the International Auditing and Assurance Standards Board (IAASB), and addresses issues arising from evolving financial reporting frameworks, particularly the move to accounting for financial instruments on an expected loss basis which is of particular significance for banks. The FRC has strongly supported the IAASB’s work.

The FRC’s proposals will ensure the quality of auditing of management estimates and disclosures in the UK keeps pace with developments in financial reporting. This has evolved to be more forward looking, leading to an increase in the volume and complexity of accounting judgements and related disclosures.

The revised standard requires better risk assessment and greater work effort on the part of auditors who will also need to apply a higher benchmark in assessing the adequacy of disclosures. This will not only be important to financial services audits, when auditing expected credit losses, but also in dealing with new accounting standards for revenue recognition and insurance contracts, where applicable.

When finalised, the revised UK standard is proposed to be effective, in line with the international standard, for audits of financial statements for periods beginning on or after 15 December 2019. Early of adoption of the revised standard will be permitted and is encouraged.

In issuing the revised ISA (UK) 540 for consultation, the FRC is not proposing to add any new UK requirements, given that the IAASB has addressed concerns raised by the FRC in its comment letter[1] on the IAASB’s Exposure Draft. However, the FRC has carried over additional material added to ISA (UK) 540 in June 2016, to comply with requirements in the EU Audit Regulation and Directive.

Melanie Hind, the FRC’s Executive Director of Audit and Actuarial Regulation said:

The UK supports the development and adoption of high quality global standards for corporate reporting and audit, enabling the UK to attracting high quality global investment. Changes to accounting standards have increased the significance of estimates in financial statements. This standard provides a comprehensive and principles-based approach to delivering audits of estimates and related disclosures to a standard that meets the needs of users, and protects the public interest

The FRC is at the same time consulting on conforming amendments to other UK standards.

19 Jul

EXCHANGE RATES AND THE GREATER COMPETITION, ARE TOP RISKS BETWEEN 2018 -2019 FOR TELECOMMUNICATIONS COMPANIES

BDO’s newly released 2018 Telecommunications Risk Factor Survey reveals that telecommunications executives have relegated disruption from new technologies to third place in their risk top 5: the number one risk identified by 60 telecommunications companies surveyed right now is exchange rate volatility, according to phone companies and internet providers.

This latest edition of the BDO 2018 Telecommunications Risk Factor Survey ranks the 5 most significant risks facing telecoms companies as follows:

  1. Exchange rate/foreign currency changes
  2. Increased competition
  3. The fast arrival of new technologies
  4. Access to finance
  5. Interest rate pressures

The telecoms market is especially vulnerable to volatile exchange rates because of its growing cross-border customer base – brought about by the internet and globalisation. Global incidents including Brexit, the North Korea negotiations, regulatory agendas and Trump’s trade war are just a few of the risks that shake up exchange rates.

Telecommunications’ structural dependency requires capital to upgrade and build the infrastructure to keep up with markets’ technology expectations and this underlies 2 further risks in BDO’s top 5: namely, access to finance and interest rate pressures. Credit ratings in the industry are not at the levels they used to be, and profit per customer seems to be falling, which means that access to funding presents a significant risk. In the same vein, telecommunications executives rate profitability risks as being 3 times higher than in 2017. Risks associated with gaining market share are up by 100% in BDO’s risk survey, while risk from saturation/decline of the telecoms market is up by 80%.


The traditional companies are evolving – Telecoms mitigate risk:

A clear trend from BDO’s 2018 survey is that telecoms are generally reporting lower risks than previously: a trend that applies in particular to financial and regulatory risks. BDO’s survey found that the industry as a whole is taking an increasingly proactive approach to the risks they face and is busy diversifying their business portfolios. As traditional industry borders and silos continue to come down, telecoms companies are entering new markets especially in the technology space. This trend could be summarised as telecoms companies moving towards becoming ‘unified-coms companies’, in other words, entities that target all aspects and types of communications.

These are just a taste of the conclusions of the BDO 2018 Telecommunications Risk Factor Survey. Now in its fourth year, the report analyses risks identified by around sixty telecoms companies worldwide, covering key markets in the Americas, EMEA and Asia Pacific regions. This year’s edition of BDO’s risk survey also analyses recurring trends and ongoing developments in the telecoms space, including digital transformation, regulatory burdens, the growth of cyber warfare and macroeconomic and political volatility.

29 Jun

IASB consults on the accounting for financial instruments with characteristics of equity

The International Accounting Standards Board (Board) today has published for public comment a Discussion Paper on how companies issuing financial instruments should classify them in their financial statements.

IAS 32 Financial Instruments: Presentation currently sets out how a company that issues financial instruments should distinguish financial liabilities from equity instruments. That distinction is important because the classification of the instruments affects how a company’s financial position and performance are depicted.

IAS 32 works well for most financial instruments. However, continuing financial innovation means that some companies find it challenging to classify some complex financial instruments that combine some features of both debt—liabilities—and ordinary shares—equity instruments.

Challenges in classifying these instruments can result in diverse accounting in practice, which in turn makes it difficult for investors to assess and compare companies’ financial position and performance. In addition, investors have been calling for better information, particularly about equity instruments.

The Board has responded to feedback from investors and others and has considered previous work on the topic to propose an approach that would:

  • provide a clear rationale for why a financial instrument would be classified as either a liability or equity without fundamentally changing the existing classification outcomes of IAS 32; and
  • enhance the information provided through presentation and disclosure.

This approach would provide investors with richer and more comparable information about financial instruments issued by companies. Clearer principles will help companies accounting for financial instruments they issue both now and as financial instruments continue to evolve.

Hans Hoogervorst, Chair of the International Accounting Standards Board, said:

“Our approach aims to meet the needs of both investors and companies by providing investors with better information and companies that issue financial instruments with clearer guidance on how to account for those instruments.”

The Board is now calling for feedback on this proposed approach to help it further develop a solution.

The discussion Paper Financial Instruments with Characteristics of Equity can be accessed here. It is open for comments until 7 January 2019. A Snapshot, providing a top line summary of the document, can be found here.

28 Jun

The Pros and Cons of Job Hopping for Accountants

These days, employees see job hopping — generally defined as changing roles every one to two years — as acceptable. A recent Robert Half study reveals that of the workers surveyed, 64 per cent believe switching jobs frequently can benefit their career. The younger and more educated the respondents, the more positively they feel about job hopping.

But many employers don’t agree. Forty-four per cent of the CFOs surveyed said they avoid job applicants who can’t seem to stay put. To hop or not to hop? To help you decide, here are some pros and cons.

Benefits of job hopping

Some may be surprised that 20 per cent of the executives surveyed for the survey actually prefer candidates who have job hopped. Here are some reasons it can be a positive career move for accountants:

Broad exposure. Every time you change companies, you experience different accounting technologies and another workplace culture. This means job hoppers often have a wider perspective of their field leading to expanded skill sets.

Flexibility. Job hoppers are no strangers to change. Accounting firms and departments are eager to hire professionals who can easily adapt to new clients, processes, system software and regulatory mandates. Having flexibility is a trait that appeals to many hiring managers.

Bigger circle of contacts. By working for different companies and clients, job hoppers improve their business networking skills and gather new contacts in the process. Networking know-how can help you rise quickly in your accounting career. 

Career advancement. Rather than waiting around for a promotion, job hoppers actively go after one by seeking new roles with more responsibilities – and the commensurate higher salary.

Drawbacks of job hopping

Despite all the professional and financial benefits, changing jobs every year or so can come at a cost. Here’s why:

Negative perception. Recruiting workers and training new hires is an expensive and time-consuming business. Firms may hesitate to spend resources on candidates who are unlikely to stick around for long. A series of short stints on a CV suggests to employers you’re difficult to get along with or are a flight risk.

Breadth not depth. By constantly moving on, accountants are exposed to new systems and different practice areas – but not for very long at a time. This means that while job hoppers often have a wide range of knowledge, they might lack the expertise and proficiency to use it fully.

Superficial connections. Job hoppers don’t hang around one place long enough to develop meaningful relationships. In practical terms, your larger network may not be as effective as you think it is when you try to tap your contacts for introductions and other favours.

Make the most of your current role

Think long and hard before jumping ship. Are you eager to quit because you dislike the enterprise resource planning (ERP) system the company uses? That could be because you haven’t mastered it yet. Leaving now could be a lost opportunity to become an expert user.

Are you impatient that you haven’t moved up the ladder yet? Try asking your boss for a promotion and raise before you launch yet another job search. Your CV may look better if you can show future employers that you have staying power.

In short, explore in-house options before moving on, especially if you’ve been at the job for less than two years.

How to resign gracefully

If you believe changing jobs is the right thing to do, end on a good note. Give your employer a proper notice period and wrap up any outstanding projects — or at least get them in good enough shape to hand off to the next person. Don’t burn bridges. Not only will you need a good reference later on, but you also never know when you and former bosses will cross paths again.

A job hopper’s CV needn’t raise red flags. Demonstrate how you’ve added value to each company you’ve worked for. Provide examples of how you’ve grown professionally, taking on progressively more responsibility and bigger challenges.

The bottom line: Job hopping is both a good and bad way to advance your career. So don’t be afraid to embrace your ambitions, but think long-term before you leap.

This article is provided courtesy of Robert Half, parent company of Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources. Robert Half is the world’s first and largest specialised staffing firm placing accounting and finance professionals on a temporary, full-time and project basis. For Robert Half career and management advice, follow roberthalf.co.uk/blog.