PQ magazine, May 2020 by PQ magazine

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PQ magazine May 2020

52 B -P U AG M E PER IS SU www.pqmagazine.com / www.pqjobs.co.ukE ! INCORPORATING NQ MAGAZINE

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WIN A CIMA CASE STUDY REVISION KIT We’ve three great kits to give away, thanks to the wonderful folks at HTFT Partnership P18

ACCA EXAMS

We want doors to open for you – see inside for more

CONFERENCE CALLING P26 We roadtest the VOIP software to find out which one works best for you

ALL THE LATEST AAT RESULTS P22 WORKING AT HOME: SOME TOP TIPS P28 & 39

THE COVID-19 PANDEMIC

REMOTE CIMA

Institute pulls out all the stops to enable PQs to sit P20 exams at home P6

All the latest news from the accountancy bodies, plus PQ’s exclusive diary of events

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contents PQ

IN THIS ISSUE News 06CIMA exams Institute pulls out all the stops to get exams done; and a message from the Editor 08ACCA exams Sitters struggle with performance and audit papers 10CIPFA initiative Treasury says no to institute’s proposal to simplify accounts 11Covid-19: audit guidance FRC issues fresh advice to firms struggling to fulfil audit obligations 12CIMA disciplinaries Latest cases from the investigations committee 14Tech news It’s time to abandon those spreadsheets, says a new report from ACCA Features, etc 04Mind your Ps&Qs Sympathy for the ACCA in this current crisis; a plea over exam fees – and for better exam conditions; and the best of PQ’s social media 17CIPFA spotlight Alison Sweeting explains why it is embracing virtual learning 18WIN A CIMA EXAM KIT! Smash those pre-seens with a great HTFT case study exam kit. We’ve three to give away 19Ethics Stephen Flatman explains why ethical behaviour is not a choice for the modern accountant

May 2020 useful information to users of the accounts? Tom Clendon answers the question for you.

33ACCA exams Brigita Petrova

explains why you should welcome the move to CBE exams and how you can make the most of the advantages it will bring

p28 20Diary of a pandemic We

detail how the Covid-19 crisis emerged, and how the accountancy bodies and others in the industry responded 22AAT pass rates The latest figures examined 26Getting connected Video conferencing has allowed companies to keep in touch with staff and clients, but which is the best software for your firm? 28ICAEW spotlight Andrew Mower explains how you can study at home effectively 29Distance learning Paul Kirkwood considers the digital and online learning options for ACCA students 30CIMA pre-seen We take a look at the pre-seens for the May and August exams – so start finding out about Runnabout, Alpaca Hotel Group, and ChargeIT 32Cash flow statements How do cash flow statements provide

34On the box Staying in tonight? Well here’s our recommendations when it comes to the best on TV – all accountancy related, of course

36Covid-19 and AGMs What

happens to company AGMs now we are in lockdown? The FRC and Chartered Governance Institute has issued new guidance – with the help of the lawyers, of course

39The lockdown Cath Littler

offers some sage advice on how you can make the best of working – and studying – under lockdown conditions

40ACCA AFM exam Joel

Romaner runs the rule over March’s sitting of this tough paper – and finds it put a smile back on his face

42Investment and tax Zahid

Ahmed explains all you need to know about the Enterprise Investment Scheme, the Seed Enterprise Investment Scheme and venture capital trusts

44AAT exams Sam Hannigan

explains how you can pass accounting software exams using Sage’s products

46ACCA SBL exam Worried

about sitting the SBL computerbased exam? Ashim Kumar’s advice will put your mind at rest

47The troubleshooter Phil Dunn explains all you need to know about the balanced scorecard

48Insolvency Our guide gives

you an introduction to the ins and outs of the insolvency process

50Careers Life at Grant Thornton with our PQ of the Year; how you can improve the quality of your sleep; and our Book Club Review

51Fun stuff – and our giveaways The columnists Robert Bruce Accountants can

help make sense of the coronavirus chaos 8 Prem Sikka Pandemic should encourage a radical rethink about the way our society works 10 Zoe Robinson Keeping your studies on track in these difficult and unsettling times 12 Mike Day How Hugo is maintaining my sanity during the lockdown 14 Subscribe to PQ magazine It’s FREE – see page 30 or go to www.pqmagazine.com

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PQ email graham@pqaccountant.com

HAVE YOUR SAY The right decision I have to admit I have some sympathy with the ACCA and its response to the pandemic, which is a rare thing for me. Even rarer is for me to write to a magazine – sorry PQ, I do like the mag, just seem to have a bit more time on my hands than usual. ACCA is different from the other accountancy bodies. It is truly global and with its success comes massive logistical problems. The full extent of the lockdown due to the coronavirus has only become apparent in recent weeks, and ACCA rightly wanted to ensure its hard-working students would get the best chance to sit the June exams. Students in China, Hong

Kong and Macau had their March exams cancelled, so maybe with hindsight we all should have known what was coming. But even I thought we might get

away with it, and I would be sitting my final two papers in June. This thing is even bigger than ACCA, and hopefully in a couple of months we will be moving out of lockdown and the exam centres will reopen. I am happy, too, with four sittings a year and am not one of those pushing for exams on demand. Lots of colleagues keep telling me I am ‘lucky’ because they had only two sittings a year. So, even with a cancelled June we still have three sittings this year, plenty to move the journey to qualification forward. Keep safe fellow ACCAs, and I will see you at an exam centre in early September! Name and address supplied

Our star letter writer wins one of our fantastic ‘I love tax’ t-shirts! Hold that price rise I have been reading about the September ACCA exam price rises and wanted to throw in my opinion, for what it is worth. I believe the ACCA should keep the exam fees the same for the rest of year. If you are right you are saying that the SBL standard exam fee will ‘break the £200’ barrier for the first time, a rise of £23. That’s over 10%. Even before the coronavirus pandemic that was a rise that would be hard to justify! If the exams were on-demand and you could sit them at home then the rise might be justified! Name and address supplied

I need pqjobs.co.uk

social media ROUND-UP Well, that was a busy month! It obviously all went a bit bonkers, but PQ magazine was there pushing the news out – good and bad. For many ACCA PQs it is a matter of looking ahead to September. David Malthouse was on Facebook with some ‘hot press news’. And who doesn’t love a bit of hot news. He had just hosted an employer webinar with ACCA and they had confirmed that none of the September exam centres are full – maybe because of the difficulty students had booking them! He also said there are several exam centres that have not yet confirmed their availability to the ACCA. Malthouse explains that many venues are closed because of the pandemic and staff are not available to confirm the ACCA bookings. ACCA came under immense pressure when it said on 29 March that the June exams will take place where it is deemed ‘safe’ to do so. We left it to a PQ who contacted us on Facebook: “I am an employee of an NHS Trust, part home schooling mum, and currently studying for a June 2020 sitting. The not knowing whether this exam will go ahead is an unnecessary added stress. ACCA please just make a decision.” Well that decision came, and now students are getting ready for September.

My ACCA nightmare I am writing to complain about the last ACCA exam sitting. I don’t want people to forget what happened, and for it all go pear-shaped again come September. The one thing ACCA has is lots of time to ensure its systems are up to the job. I want to tell my story. I got to the exam venue in plenty of time and the man asked me to sit outside in reception. It was now past 9am, but I wasn’t called in for my exam. I went to the exam room to ask what was happening, but the invigilator said if I didn’t sit outside he would refuse my entry to the

exam. He also said I might have to wait two hours before I could sit the exam. So I called ACCA – why do you have to press so many options before getting through? Eventually I started the exam, very late, and I passed. But ACCA and the exam venue gave me a horrible time. I

don’t want students to suffer like me next time, so please help PQ. Name and address supplied The editor says: I think the ACCA is going to have to introduce proper protocols for delays in the online exams process, if exams are more than an hour late.

CIMA’s announcement that it was going ahead with home exams from May, got lots of positive comments. Samantha Louis said: “So proud to work for such an organisation.”

PQ Magazine Unit 3a, Kingfisher Heights, 2 Bramwell Way, Royal Docks, London E16 2GQ | Phone: 020 7216 6444 | Email: graham@pqmagazine.com Website: www.pqmagazine.com | Editor/publisher: Graham Hambly graham@pqmagazine.com | Associate editor: Adam Riches | Art editor: Tim Parker | Contributors: Robert Bruce, Prem Sikka, Zoe Robinson, Mike Day, Tony Kelly, Phil Gammon, Edward Netherton | Subscriptions: subscriptions@pqmagazine.com | Origination and print services by Classified Central Media If you have any problems with delivery, or if you want to change your delivery address, please email admin@pqmagazine.com

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PQ news

GRAHAM HAMBLY Living in interesting times

Welcome to our all singing, all dancing e-magazine. It’s the first time we have gone total e-magazine, and I want to say a big thank you to all our supporters, who have come together to provide a bigger and we honestly believe a better PQ magazine. I want to welcome all you NQ magazine readers too, to this month’s issue. I’d also like to thank the accountancy bodies, who have worked hard to keep us, and you, upto-date about what they are doing to help. The news hasn’t always been what you wanted to hear, but these are unprecedented times and they are trying to make it better. Obviously, some of the bodies are ahead of the curve when it comes to offering exams at home, but this current crisis could see a sea-change in how exams and tuition is offered. When we come out of the other end we could be looking at a very different landscape. We thought you might need cheering up, and so we now have the PQ awards ‘winners’ cut’ for you to watch. As we say, our awards were probably the last time accountants were allowed to stand within two meters of each other! But not everyone could make it and we have spent the last month trying to get our wonderful PQ trophies to their rightful owners. One such winner was Sunil Bhandari, who is currently home alone. All we got was this selfie, but that’s fine – congratulations again Sunil. Our awards are a real fun event and hopefully it will cheer you up – see https://vimeo.com/405515088 Graham Hambly is Editor and Publisher of PQ magazine and NQ magazine

CIMA setting up remote exams CIMA pulled out all the stops to ensure its students would be able to sit exams during the pandemic. In late March it announced that exams would take place in May, be that at sitters’ homes rather than Pearson Vue exam centres. Stephen Flatman and his team at CIMA are working long hours to ensure ‘it happens’, and he praised partner Pearson Vue, who had helped them ensure a solution in 10 short days. All CIMA OTs will start in the week commencing Monday 4 May. Bookings for these exams will open

on 22 April, and CIMA has asked PQs to “not try to schedule your exams before that date”. CIMA explained that the exams will remain the same but the presentation is very slightly

Bodies furlough staff Some UK-based accountancy bodies have joined other firms and placed staff on furlough leave. AAT confirmed that “some 15% of its employees have been furloughed at this time”. That’s around 40 staff. CIPFA said: “As of last week [10 April], CIPFA has taken the decision to place 22 individuals on furlough leave for the duration of the coronavirus job retention scheme. This represents about 10% of our workforce.” ICAEW revealed that it took the difficult decision to place a small number of colleagues on furlough

from 6 April. These 44 individuals (5.6% of the workforce) are unable to perform their regular day-to-day duties, and remain on full pay. ACCA hasn’t taken this action so far, other than a few roles supporting its offices, and it explained “the position remains under review”. ICAS said it had been keeping matters under review, but told us it was not making staff take leave at this time, nor does it have plans to do so. A spokesman for CIMA confirmed “nobody has been furloughed at the Association/ CIMA”.

ACCA cancels ‘some’ of its June exams and puts fee rise on hold As it cancelled large swaves of its exams around the world, ACCA decided to cancel the proposed exam fee hikes due for September. The cancellations came in two big announcements. The first, on 26 March, cancelled the summer exams in the UK, Ireland, Western Europe and the Americas. That list

got bigger five days later when ASEAN, ANZ, India, Bangladesh, Pakistan, Sri Lanka, Middle East, Central Europe, CIS and Central Asia were added to the cancellation list. Currently (and you need to go online to check) exam sittings in China and Africa generally do not

AAT assessment update AAT assessments have been suspended since 22 March due to the Covid-19 crisis. However, all marking, results releases and certification for assessment taken prior to this date are being completed to published timescales. It is now awaiting government restrictions to be lifted and promises to make assessments available “as soon as possible”. AAT are, we know, also looking at proctored or remote invigilated exams.

AGMs behind closed doors HSBC has told shareholders that they will not be able to attend

different. Use the practice tests! The May case studies pre-seens are all out now too. These exams will ‘happen’ as advertised! That means the exams kick off with the OCS’s on 13 May. The exam results for these sittings will be issued 6-8 weeks after the exam window. Candidates will be using the Pearson OnVue system and CIMA has uploaded a short video to help explain how it will be invigilated. • See page 30 for much more on the pre-seens – and you could win a great HTFT case study exam kit by turning to page 18.

Problems booking September exam? If you had problems recently booking for the ACCA September exams you were not alone! ACCA has confirmed that ‘some students’ had been having difficulty. PQ magazine had heard from students particularly waiting for their March exam results who were having problems with the system. This is because of the three-sitting rule. Even on the Saturday before the release of the March results some PQs were struggling to book a September sitting. appear to be affected. PQ magazine had also been talking to ACCA about the impending price hikes for exams. ACCA rightly runs different price bands, and the rises, for instance at the standard fee in the UK were due to rise by £10 for the Applied Skills papers in Sepetember. These have now been put on hold. What we don’t know right now is if the rise will now apply for the December exams.

In brief CIPFA June exams ‘on’ CIPFA’s June exams will continue as planned, said the institute in its latest update. All face-to-face learning has been moved online, and it revealed that by the end of May it will have delivered a total of 186 additional online classes for its PQs. All trainers and associates have also received safeguarding training and been advised about how to recognise the signs in students that might indicate wellbeing or other problems. 6

the annual investors meeting. The FTSE 100 bank explained that social distancing measures and the essential travel only measures meant the event on 24 April will now be held in the lender’s HQ in Canary Wharf. Usual venue the Southbank Centre is closed. Other companies also holding their AGMs behind closed doors include Pearson and Bunzl. • You can check out the FRC and Chartered Governance Institute’s advice on AGMs and Covid-19 on page 36. PQ Magazine May 2020

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PQ news

ROBERT BRUCE Accountants can make sense of the chaos These are, as people keep repeating, strange times. The other day I bumped into a musician neighbour outside our house. Not actually bumped, of course. We shouted at each other from a sensible, non-infectious distance. Nothing we can do in this extraordinary situation, we agreed. Simply accept the strange times and their new rules and work within them. That way would lead to calm and something approaching happiness. The same applies to accountants, in all their many roles. The world has been turned upside down. We have to make sense of it, complicated though that may be. And, of course, it comes at the worst time. It is the peak period for finalising corporate reports; a time when finance chiefs and auditors have a frenzied dance to produce figures, forecasts and analysis that will keep everyone in the regulatory chain happy. But none of that has any certainty anymore. What is a going concern in a world where everything has come to a halt? What constitutes preliminary results? Shouldn’t the chaos be reflected in a qualified audit report? But wouldn’t that breach covenants and result in banks pulling the rug out from beneath companies? It is going to be a scramble to put anything together. This is where the accountants come in: to bring sense, judgment and openness to the process. It is going to be an extraordinary few months. The only comfort is that everyone is finding it a baffling and chaotic time. And out of that may come understanding, even if it doesn’t resemble an accurate, even a true and fair, view of anything. Robert Bruce is an award-winning writer on accountancy for The Times

ACCA sitters struggle to perform in performance and auditing papers It was the familiar story of exam sitters struggling with the performance management and auditing papers in March. The Advanced Performance Management optional paper has the dubious distinction of the lowest paper pass rate this Spring – at 32%. PM, at the Applied Skills level, also slumped to 35%, well below any of the 2019 pass rates. The March Audit & Assurance paper, at 36%, was not a great pass rate, either. In June 2019 the success rate was 39%. The advanced paper (AAA) was up slightly (33%) on December, but that wasn’t too hard as that pass rate was 30%! With just 33% of AFM sitters

passing too, the ACCA MARCH 2020 PASS RATES Advanced Taxation paper June Sept Dec Mar 20 stood out for all the right AB 85% 80% 82% 82% reasons. At 44% this MA 66% 63% 64% 65% pass rate was the highest FA 72% 69% 71% 73% in over five sittings. LW 84% 85% 83% 83% Turning to the other PM 38% 41% 38% 35% Applied Skilled papers, TX 52% 51% 49% 46% FR was also down, at FR 50% 46% 46% 44% 44% this time around. AA 39% 36% 38% 36% Historically, the pass rate FM 50% 46% 43% 44% here has been more like SBL 51% 49% 46% 47% 46%. SBR 48% 52% 48% 51% However, there was AAA 31% 36% 30% 33% some good news. The AFM 38% 36% 33% 33% Strategic Professional – APM 33% 31% 33% 32% Essentials paper pass ATX 43% 36% 35% 44% rates looked good. SBR had a pass rate of 51%, and SBL December 2019 results – if only 47%. Both were up on the slightly.

Partner pay takes a hammering Partners at the UK’s biggest accountancy firms will see their pay dive by hundreds of thousands of pounds as the professional services sector revenues take a battering. KPMG and BDO are among just some of the firms to propose a cut in pay to save cash. Big 4 firm KPMG’s 620 UK partners were told

to expect a 25% cut in their pay packets for the rest of 2020. Last year they received £629,000, but senior management in a memo said that partners will have to feel a greater impact. The rest of the workforce might need to forget those bonuses, or settle for much smaller ones.

PwC said it will be cutting partner pay by 20% from this month. It has frozen promotions and bonuses until the end of June. At BDO partners agreed pay cuts of up to 25% to protect jobs and cash. Managing partner Paul Eagland said: “Our partners recognise that they need to help protect our business and jobs.” Last year’s the average partner profit was £602,000.

ICAEW announces qualification update The ICAEW has temporarily suspended the ACA assessment regulation that requires all other ACA exams to have been passed (or attempted) before the case study can be tackled. It has also released the date of its new Advanced Level exams – 24 to 26 August. Students can book these from Monday 15 June, with results being released in early October.

The case study advanced information will be released on Tuesday 9 June. The institute has also agreed with Pearson Vue to run Certificate level exams via remote invigilation. Expect more details on this at the end of April. The next Professional Level exams are due on 7-9 September.

In brief Win a free CIMA exam kit! PQ magazine has joined forces with award-winning HTFT Partnership to offer three CIMA studiers the chance to win access to one of its case study exam kits. The kits have over 50 pre-seen related tasks and suggested solutions, all based on the current pre-seen. See page 18 for more details. AAT pass rates published The latest AAT pass rates are out and one paper that hasn’t seen 8

a rise is the Advanced Diploma Synoptic Assessment, which slipped to 57.8% this time around. It was 61.6% last time. The pass rate for PLTX also slipped back to 62.9%. Generally, though, the rates are looking much better. You can check them out – and your chances of getting a distinction – on page 22. Pub quiz giveaway Desperately need some home entertainment? Well, don’t forget to enter our great giveaways on

page 50. We have three copies of the Collins Pub Quiz book up for grabs. With 500 quizzes in three categories it will help to keep your grey matter ticking over. There are over 10,000 new questions too, to sink your quizzical chops into. There also a chance to win the excellent and informative book, GDPR for Dummies, which we review in this issue. Graduates lose job offers Some two-thirds of graduate students applying for their first job

after university have seen their applications withdrawn or put on hold due to the pandemic, says a new survey from Bright Network. Confidence among graduates has plummeted, and 80% of final year students are concerned about the impact of the current crisis on both their grades and job prospects. There also appears to be a shift in looking for jobs in London, with only a third of graduates saying they are most likely to apply for a job in the capital, compared with nearly two-thirds last year. PQ Magazine May 2020

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PQ news

PREM SIKKA Pandemic should encourage a radical rethink For years, neoliberals have sought a minimalist state and deregulation. They argued that everything should be left to markets and the private sector and resented investment in public services. Since 2010, a much lower proportion of our GDP went to the National Health Service. Thousands of nursing vacancies remained unfilled. The government imposed wage freezes on public sector workers to give tax cuts to corporations and the rich. Some became rich while others struggled to make ends meet. The public purse continued to be depleted by tax avoidance schemes peddled by accountancy firms. To control the spread of coronavirus and its destructive economic effects, the government imposed a lockdown and most business activity came to a halt. Markets, tax havens and the rich did not bail out people. Only the state provided support for employees, the self-employed and businesses. Many billionaires are urging the state to bail out their empires. The much-derided state now stands between neoliberals and economic oblivion. The rich may be able to enjoy some luxury during the crisis, but the daily risks for providing essential services are being borne by some of the comparatively poorly paid people. These include nurses, paramedics, midwives, radiographers, care assistants, shop workers, refuse workers, delivery drivers and postmen. A good society can’t be built by returning to an era that neglected public services and welfare of people taking high risks to protect society. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

Treasury says no to simplified accounts The Treasury has thrown out the CIPFA/LASAAC move to replace the 2019/20 Accounting Code with a simplified version. CIPFA’s CEO Rob Whiteman explained it was felt radical proposals to streamline the accounts was needed in an effort to alleviate the pressure on budget holders and finance teams that had been diverted from their normal duties.

After extensive discussion it became clear the proposal was not

acceptable to regulators and auditors. Whiteman (pictured) revealed that HM Treasury separately advised them that some CIPFA proposals “might arguably not provide the information still necessary for the whole of government accounts (WGA)”. His worry now is that there is a risk that 2019/20 reporting deferrals will impinge on 2021/22 budgeting this autumn. Whiteman pointed out that councils and their finance teams will be grappling with reduced income, higher service costs, and planned savings proposals, that all have to be reappraised.

Meet the Magnificent Seven (well six of them!): Accountant’s JF Hornby and Co recently hailed a landmark in its growth. The firm now has more trainees than at any time in its history. The seven currently working towards chartered status through a mix of apprenticeship and the graduate programmes are: Alex Yare, Catherine Steur, Rebecca Cronin, Esther Klijn, Abi-Gayle Aguirre, and Luke Turner. Paula Poplawska was unavailable for the shoot. E-careers, along with eToro, are offering PQ magazine readers the chance to sign up to a fully funded financial trading course. This unique, free e-learning course has webinars, mentoring from eToro experts and, when the time is right (post-pandemic), the chance for one-to-one workshops at eToro’s London HQ. Check it out by turning to page 24.

Chartered trainee numbers fall Trainee numbers are down at the top 75 firms, according to a survey from Accountancy Daily. Despite rising fee income the number of new recruits signed up in 2019 dropped by 1% to 19,700. The largest Big 4 trainer is now KPMG, while PwC has seriously pulled back on its trainee scheme in the last year, cutting numbers by

25%. Accountancy Daily also collected apprenticeship data for the first time. It found apprenticeship numbers have now hit 7,000. Deloitte’s Simon Stephens said: “While graduates still make up the lions share of new recruits, that does not mean we cannot change the diversity of our trainees.”

practitioners, tax advisers, law firms and financial institutions. Consultation on it has begun, and the government could be looking to raise £100m from the levy.

returns online, and there has been a 110% increase in customers registering to communicate digitally. Taxpayers will still be able to file a paper return if they choose. Anyone who has filed on paper in the past will now receive a letter to file. If they still wish to submit on paper they can download a blank version of the return, or call HMRC to request one.

HMRC’s setting up of an online ‘whistle-blower’ service for workers to use to report employers who abuse the system. LITRG head Victoria Todd said: “Reports we are receiving from workers indicate to us that there are a number of employers out there who are asking their staff to carry on working, even though they have been placed on ‘furlough’. More worryingly, it seems there are some employers who intend to claim the grant but who then have no intention of paying it over to their employers.”

Taxwatch New crime levy planned One Budget measure that might have escaped many was the government’s plans to hit firms in the accounting, financial and legal sectors with a new tax (levy) to pay for tackling economic crime. The chancellor, Rishi Sunak, explained in his budget notes that all businesses subject to money laundering regulations will be taxed in future to deliver pledges in the government’s economic crime plan. The regulations will apply to accountants, auditors, insolvency 10

Paper to stop HMRC has announced that self assessment customers will no longer automatically receive paper returns. This is part of efforts to encourage customers to move online, and cut unnecessary paper use, it claims. Last year, 94% of HMRC’s ‘customers’ filed their

New whistleblower service The Low Incomes Tax Reform Group (LITRG) has welcomed

PQ Magazine May 2020

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Covid-19 news PQ

Extension available for filing accounts

Companies House has said businesses affected by Covid-19 will be able to request an extension to file their accounts, reports and confirmation statements. The maximum extension is three months, but Companies House said stringent conditions will apply. What you must do is to lodge your appeal before the company’s filing deadline. If companies do not apply for an extension and their accounts have been filed late, an automatically penalty will be issued. The registrar has very limited discretion not to collect a penalty. Companies House also promised each appeal will be treated on a case-by-case basis.

FRC offers audit guidance The Financial Reporting Council has issued guidance for auditors facing real practical difficulties in carrying out audits as a result of Covid-19 pandemic. Uncertainty about the immediate outlook for many companies has increased sharply. This has consequences for those proposing to report results in the coming months, and for their auditors. Some companies and auditors are also facing practical difficulties in preparing accounts and carrying out audits. Given restrictions on travel, meetings and access to company premises, audit firms

need to consider developing alternative audit procedures to gather sufficient, appropriate audit evidence. The FRC is concerned that the current situation should not undermine the delivery of highquality audits. “Audits should continue to comply fully with required standards, it stressed. In

the current circumstances FRC feels additional time may be required to complete audits and it is important that this is taken, even at the risk of delaying company reporting. FRC’s David Rule said: “Given the growing impact of coronavirus on the global economy and the high degree of uncertainty, highquality audits are vital to ensure users of financial statements are properly informed.” The FRC is currently holding weekly calls with the largest UK audit firms and is monitoring the situation carefully.

Audit reforms put on hold The overhaul of the regulation of the accounting and audit profession in the UK is set to be delayed because of the chaos facing financial markets. Any changes will now happen in the third quarter of the year, at the earliest, according to reports in The Times. The Department for Business

Energy and Industrial Strategy was close to publishing a new consultation based on the reforms recommended by Sir John Kingman (pictured), and recommendations from the Competition and Markets Authority. But instead of breaking up the audit and consultancy functions, the government is minded to

support the resilience of the accountancy sector during what looks increasingly like a prolonged period of economic uncertainty.

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PQ news

ZOE ROBINSON Staying on track

Following the changes made by many of the professional bodies to the exam schedules as part of the COVID-19 restrictions, students have been left in the difficult situation of not knowing what to do. What if you had intended to sit an exam in June and this has now been cancelled? In addition, many training providers are no longer offering face-to-face courses. Your future has become uncertain. Uncertainty increases cognitive load, giving the brain too much information to process resulting in confusion and a feeling of being out of control. One useful technique is to introduce a degree of certainty based on sensible assumptions. It is also a good idea to consider worst and bestcase scenarios. Worst scenario is that you waste this time doing nothing, hoping that a decision will be made. Best, that new exam dates are confirmed soon. Both incidentally are beyond your control. By setting your own preliminary exam date – say August – you remove the uncertainty and give yourself a three to four-month window in which to do something. This is enough time to study another subject or improve your understanding of an existing one. As to how you study, fortunately there are now so many more ways to do this remotely, ask your training provider for details. This means that when information confirming new exams dates becomes available – some decisions are coming through at the time of writing – you will have continued learning, remained active, and you will be back on track. Zoe Robinson is Learning and Programmes Director at Kaplan Financial

CIMA member behaving badly CIMA member Gareth Turner, from Manchester, recently got into hot water with the institute after his conviction for a public order offence of assaulting one individual ‘by beating’, and using threatening behaviour to another individual. The CIMA investigation committee said Turner had pleaded guilty to these offences and met with the victim to express remorse. He then referred himself to CIMA within 30 days, as required.

Power of art

Do you remember a time when you were allowed to stand less than two meters from someone? Well, the PQ Awards 2020 in late February may be the last time this happened! Can you spot anyone you know? Or maybe you want to check out who our College of the Year is (it’s HTFT Partnership). The 17th PQ awards were a smash hit, and here’s the full winner’s cut as proof. Check out https://vimeo.com/405515088

Doodling in class is often frowned on but no more, if the latest research is to be believed. In fact, academics say doodling can boost memory and should be routinely used for revision. The UK study found pupils’ power of recall doubled in some cases when they used art to help their memory. In an experiment, one group was asked to memorise a list of items after seeing each word for 30 seconds by writing them down. The other group was asked to draw a picture of the item (a pear or a car). Several hours later the first group remembered on average 6.5 words, versus the nine for the doodlers.

HMRC is the preferred creditor – again The UK government has confirmed that it plans to reinstate Crown Preference from December 2020. This effectively means HMRC regains its preferential treatment in business recovery and insolvency procedures, leapfrogging nonpreferential and floating charge holders, often banks. This is a cause for concern, particularly for small businesses who are more

PwC coughs up £8m PwC has made an £8m settlement to end a US lawsuit over claims the firm discriminates against older workers, and has agreed a number of recruitment policy changes, too. The lawsuit asserted that the number of workers 40 years and older in entry-level and lower to mid-level posts at PwC in the US was “stunningly low”. By paying the settlement PwC admits to no liability here. EY quits as Finablr auditor Travelex’s owner’s turmoil recently got worse when its auditor, EY, resigned. The Big 4 firm explained that Finablr had failed to clear out its 12

The committee gave Turner a reprimand, a fine of £500 and he was also ordered to pay costs of £456. In another case, AAT member Nirvana Dutt was disciplined for using offensive language on a social media platform. His Fellow membership was removed for a period of three years, he was reprimanded (to stay on his record for three years), and he was warned over his future conduct.

likely to be squeezed out of a key source of funding due to lack of support. Under current insolvency legislation, HMRC is classified as an ordinary unsecured creditor, meaning it is at the very bottom of the pile, below preferential creditors and floating charges. The new legislation flips the hierarchy. Smith Cooper’s, Dean Nelson, said: “Not

board sufficiently, and that there were concerns over the company’s corporate governance, related party transactions, and offbalance sheet debt. KPMG hit with £455k FRC fine The FRC has fined KPMG and former senior partner for Manchester, Nicola Quayle, over the audit of a company’s financial statements for 2015/16. KPMG received a financial sanction of £700,000 (discounted for admission and early disposal to £455,000), and was given a reprimand. The firm is also required to undertake a quality performance review of three statutory audits for which Quayle is the statutory auditor. Quayle was fined just under £30,000, was given a reprimand and was

only is Crown Preference unfair on unsecured creditors, there are concerns it will deter business rescue procedures. “The uncertainty that Crown Preference introduces is likely to have an impact on both access to and the cost of finance, possibly deterring business growth, which in the long term could mean less tax income for HMRC.”

ordered to undertake training agreed with the FRC. The problems were around the reporting of two distinct categories of complex supplier arrangements – ‘promotional income’ and ‘overrider income’. The name of the company concerned is redacted from the report. New (male) boss for EY EY has chosen audit boss Hywel Ball to run the UK business. The news will disappoint many commentators who were predicting that the Big 4 firm would be appointing its first female managing partner. Both Lynn Rattigan and Alison Kay had been shortlisted for the top job. Ball will take over from incumbent Steve Varley on 1 July. None of KPMG, Deloitte, PwC or EY have ever been run by a woman in the UK. PQ Magazine May 2020

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PQ tech news

MIKE DAY Yes. it’s a column about remote working!

A company like Xero UK gets the instruction to work from home on Monday and on Tuesday that’s exactly what happened. Our ‘communications hub’, called Slack, went crazy for a while, but then everyone was aware of the why and how. And an app called OKTA pulls all the cloud apps we use into one place on my Mac, my home laptop and my phone. It all just works, which is vital in these circumstances. We expect everything to be available anytime, anywhere, anyplace on any device – and so it has proven. But remote working is actually my norm, and so when faced with working from home for anything longer than a day the main thing to chat about isn’t the tech, it’s actually the human factor. It’s not easy and you shouldn’t be surprised when it’s not. (There are many articles and eLearning modules out there, including some good stuff on LinkedIn if you search for ‘New to Working Remotely?’.) The simple formula for success for me is, firstly, to make sure there is contact with colleagues, customers and suppliers every day, without fail. Ideally on chat, calls and webinars, and definitely not only emails. And, secondly, to get out of the house into somewhere green. Without fail, every day. And that’s where Hugo comes in and makes my remote working work. Because Hugo is a two-year-old Springer Spaniel and demands that I do just that! Mike Day, Director, UK Education Sector, Xero

Ditch those spreadsheets Accountants must leave their spreadsheet ‘comfort zone’ if they are to rise to the opportunities and challenges of the new digital world, says a new ACCA report. ‘The Digital Accountant’ found that while accountants were masters of the spreadsheet (81% said they were at an expert ability level), just 20% of accountants surveyed believed they had expertise in emerging technologies such as blockchain, AI and machine learning. ACCA’s Clive Webb, the author of the report, said that accountants

needed to have ‘greater ambition’ in understanding the digital challenges they face. He explained: “Being able to predict where market disruption is coming from is imperative.” Webb is worried that the profession is too comfortable with older digital technology, such as spreadsheets and enterprise resource planning. However, today’s successful accountants need to be responding instead to the digital challenges of blockchain and the use of coding. He said that by investing as little

as three minutes a day in continuous learning and identifying future opportunities could make a difference.

Tech winners in a crisis New tools from Xero

Video-conferencing firm Zoom has seen a spectacular growth since the start of the Covid-19 pandemic. It is being used for British cabinet meetings, work webinars, drinks parties and quizzes. It all means that its users a day have shot up from 10 million in December to 200 million in March. Market valuations now mean that Zoom is worth more than the three biggest US airlines combined. The number of companies using workplace messaging app Slack

The dramatic increase in the use of automated tools for audit is helping to improve audit quality, says a new report from the Financial Reporting Council. It says there has been a step change in the use of technology in the past three years, as firms have invested considerably in the infrastructure required to efficiently capture, collate and organise data. The one fly in the ointment for

auditors is that they are dependent on whether companies have a robust IT infrastructure that allows data to be extracted in a useable form to challenge management. The FRC found emerging technologies such as machine learning and predictive analysis, although in their infancy, can help better identify unusual transactions or challenge judgements around going concern or impairment.

Xero has unveiled two major new tools to help accountancy and bookkeeping firms save time and run their clients’ businesses in smarter ways. It has launched Xero Tax, which gives users an innovative cloudbased solution for accounts and tax filing. Xero Tax will allow corporation tax and accounts production. Its features include fixed asset integration, Xero hotlinks, multi-user review, and E-signing. In addition, Xero is offering Hubdoc, previously only offered as a standalone add-on, as part of its business edition plan. Hubdoc captures information from bills and receipts, eliminating manual data entry, and ensures bank reconciliation is easy within Xero. MD Gary Turner said: “Xero Tax and Hubdoc will make life easier, and give much-needed time back to accountants, bookkeepers and small business owners.”

Networks in space Vodaphone has invested £20m in its new space-based broadband network, designed to provide a mobile phone signal to devices anywhere on the planet. The Space Mobile project is now developing the first satellite system to broadcast mobile broadband from space. Vodaphone explained that, when launched, mobile users in remote locations on land or at sea, or during natural disasters, will have a signal. It is expected that the new service will initially be

deployed for Vodaphone customers in African markets.

after recently buying £6 million of stocks.

Sage puts buyback on hold Sage has suspended its £250 million share buyback programme and has warned shareholders that it will now miss revenue targets. The accountancy services group explained that it has a ‘resilient’ balance sheet and has decided to conserve cash (it said it has £1.3bn of cash and available liquidity at the end of March), and was putting a stop to the buyback,

Apple fined – again Apple has been hit with a £1 billion fine for breaking competition laws in France. The record penalty was issued by the anti-trust authority for Apple’s abuse of powers in preventing resellers discounting its products. Apple colluded with two wholesalers to ensure that retailers did not undercut the US tech giant in its own shops and its website.

has also jumped. Some 9,000 new companies started paying to use it between the start of February and mid-March. It had added 10,000 users in the previous six months.

Big rise in data-led audit

Tech briefs Google pays less corp tax The average Google employee earned a cool £234,000 last year as it paid just £44 million in corporation tax. MPs and tax campaigners believe the figures show Google are “writing their own rules”. The tax take fell from £66m in 2018, after Google UK reported a fall in profits due to hiring an extra 800 extra staff. Former chair of the Public Accounts Committee Dame Margaret Hodge said: “It’s a joke and shows that they are not paying a fair share.” 14

PQ Magazine May 2020

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CIPFA spotlight PQ

A classroom revolution CIPFA’s Alison Sweeting explains how and why the institute is transitioning to virtual learning he Covid-19 crisis has created drastic change across all sectors, with some of the biggest changes being felt in education. Schools have had to radically shift from traditional, in-person teaching methods, to using technology that in some cases may be completely new to them, all the while maintaining the same quality of instruction to students. Fortunately, CIPFA’s Education and Training Centre made the decision to focus on virtual learning some time ago. In autumn 2017, we shifted a large portion of our courses online to make them more accessible to students around the globe. Since that date, all of our UK and international students have been able to study for every module online. The decision to provide online tuition across all our modules was made because we have always strived to be at the forefront of technological change. We saw the benefits of making our courses readily available to those who don’t live or work near one of our training locations. The transition to this new way of teaching and learning took some time. Trainers had to master new software and develop innovative teaching methods that made use of online tools. When changing to online courses, there is also a significant shift in classroom management needed to keep unseen students focused and ensure they are actively learning. But with practice and time, we’ve been successful in keeping students engaged in the remote learning process. In addition to getting accustomed to new teaching methods, students also had

PQ Magazine May 2020

to become accustomed to a different way of learning. Some found it challenging to remain active and participate fully in their online classes. For others, a collaborative learning environment was essential – something that is often difficult to simulate in an online classroom. But we made it through, and have continued to improve with each term. We’ve worked hard over the years to overcome the perception that online learning is somehow less effective or less enjoyable than face-to-face instruction. We now have a substantial number of students who choose to study wholly online, or through a blend of online and face-to-face. Because we made the transition back in 2017, converting all of our scheduled face-to-face courses to live web classes amid the coronavirus crisis has been relatively simple. In fact, the move has been remarkably smooth considering the scale of the operation. Nearly three years of experience delivering online has equipped our trainers to make the full transition. We’ve also upskilled our associates to ensure they have the tools they need to deliver high quality instruction virtually. For CETC, it really has been business as usual. The administrative process of setting up the online sessions was swift and smooth, so our students have had an almost seamless transition from face-toface to online. So far, it seems that our students appreciate that have moved

quickly to ensure no break in teaching and no diminution of quality. Students still have the same resources available as they did when they attended face-to-face courses. We continue to provide support to our students through their discussion forum on their CIPFA Learning account, where they can raise questions with their trainer between their live classes. Work Based Learning Coaches have also been hosting coaching sessions online with apprentices to ensure they are continually supported. Over the next few weeks, we expect to see more students engaging and contributing to discussions during the sessions as they become more used to online learning. We will also gather useful information about student experience and perception to help us develop our online delivery in the future. We’ll also see more and more of our other training and events joining us in digital delivery, giving a really wide range of choice for people whatever stage of their career they’re at. By the end of May, we will have delivered an additional 186 classes online, over and above our existing scheduled web classes. We’re constantly working to improve the experience for our students and are looking into new methods of making e-learning even more convenient and accessible. We’re pleased to say that, despite the present difficulties, the future for our students is looking as bright as ever. • Alison Sweeting is CIPFA’s Training Delivery Manager

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WIN A FREE CIMA EXAM KIT! PQ magazine has joined forces with award-winning HTFT Partnership to offer three CIMA studiers the chance to win access to one of its case study exam kits. The kits have more than 50 pre-seen related tasks and suggested solutions, all based on the current preseen. These exam-style triggers, tasks and suggested solutions are available in downloadable pdf format. For this May-August we have ChargeIT for OCS, the Alpaca Hotel Group for MCS and, finally, Runnabout for SCS. The exam kits are part of HTFT play, HTFT Partnership’s latest innovation for CIMA students. To win this great prize just send your name and address to giveaways@pqmagazine.com. Head up your email ‘HTFT exam kit’ and you will be entered for the free draw. You must tell us which exam kit you want! Closing date for entries is 28 April 2020. The SCS kit will be available on 5 May and we will send the winner their prize as soon as it is available. *PQ magazine’s usual terms & conditions apply.

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PQ Magazine May 2020

019_PQ 0520.qxp_Layout 1 16/04/2020 17:16 Page 2

ethics PQ

Doing the right thing

Steve Flatman explains why having – and observing – a code of ethics is important for finance professionals ere’s a situation familiar to all of us. You have an exam bearing down on you but feel like you haven’t done nearly as much work as you should have. Have you ever been tempted to cheat, even if you didn’t actually do it? You are not alone. As you move into the professional world and build your reputation, you are likely to face much more critical dilemmas than that. Along with your qualification, don’t forget to take your ethical awareness with you into the world of work. These standards should be a constant throughout your career. As an organisation, CIMA is passionately committed to upholding the

PQ Magazine May 2020

highest levels of ethical behaviour. In October 2019, CIMA ran an ethics campaign to encourage members to test what they think they know about ethics and to introduce them to ethics questions in growing areas such as AI. In addition, we updated our Code of Ethics in January 2020. The new CIMA Code is easier to understand and easier to use than previous versions. It also provides greater transparency for members about when CIMA will take action to enforce breaches. We offer an ethics helpline to members who may be facing difficult choices at work as well as plenty of online resources to guide you. The foundations of ethical accounting practice — the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behaviour — are still the cornerstone of CIMA’s Code of Ethics. The changes which came into effect, clarified and strengthened the Code. For example,

there is a new explicit prohibition on exercising discretion when preparing or presenting material with an intention to mislead or inappropriately influence contractual or regulatory outcomes. There is also new material to help professional accountants better understand what to consider in exercising professional judgement. That said, let’s not be coy: good ethics is good for business. Though it should not be the main reason that you behave ethically in your professional work, you will know from your training how much the reputation of a business contributes to its value. The 2018 Reputation Dividend report on this estimated that reputation accounts for around 38% of a business’s market capitalisation. An ethical business means a stronger business, brings stability, and builds bonds of trust among the leadership team. It shows a commitment to investment in the long term. If you want to know the repercussions when ethics wobble and reputations take a hit, just look at what happened to Volkswagen. In 2015 it was discovered that millions of their cars had so-called ‘defeat devices’ fitted. These could trick emissions testing equipment to help vehicles pass strict pollution tests. The value of VW shares dived by a third as a result. More importantly, the company had a fight on its hands to rebuild trust with its customers. As this all shows, judgement about what is the right thing to do is an ongoing conversation. Not least because developments in technology mean we need to keep testing our moral compass. Becoming known from the outset as an ethical finance professional will make these conversations routine and should be the goal of every one of us. In terms of value, that really is priceless. PQ • Stephen Flatman, Vice President, Examinations, Management Accounting, The Association of International Certified Professional Accountants

PQ coronavirus

A PQ diary of Covid-19 PQ magazine was busy pushing out the exam news as it happened. So, how did the new world all take shape? 11 March

• AAT annual lunch (always a great event) is postponed.

12 March

• Accountex rescheduled. The mid-May two-day exhibition for accountants is being moved to 18/19 November. • ACCA creates a new Covid-19 online hub. There is a section there on for planning exam sittings and support. • ICAEW’s prize-giving ceremony scheduled for 30 April is postponed. A ‘new’ ceremony will take place on Tuesday 22 September.

13 March

• BT’s Philip Jansen claims the dubious distinction of being the first FTSE 100 CEO to test positive for Covid-19. He went immediately into self-isolation. • CIPFA announces that all teaching sessions will be conducted digitally from 23 March until 31 March. It said this change only affects students who currently study faceto-face at CIPFA training venues in the UK. Web classes will be delivered using Go To Training.

16 March

• The FRC issues updated guidance for auditors who may be facing difficulties in carrying out audits as a result of the Covid19 pandemic. It also issued a separate guidance on audit issues arising from the crisis. • AAT cancelled both the Training Providers and Future Finance conferences. All faceto-face AAT events are also cancelled through to the end of June 2020.

was remaining watchful and vigilant of the latest advice from governments around the world.

19 March

• Kaplan Financial suspend UK classroom courses and computer-based exams. Most face-to-face teaching is being replaced by Live Online recordings, which can be accessed via MyKaplan. These were uploaded throughout the day – Kaplan asked students to be patient while it loaded these. From Wednesday 18 March a special timetable of Live Online classes and digital resources replaces all courses. • AAT says it is currently planning to continue with the published examination schedule until further notice. Should this change AAT said it will issue communications as soon as possible. It’s coming…

• Some 87% of all profit warnings, issued by UK listed companies in the last 3 weeks cited Covid-19, according to the latest analysis from EY (figures recorded up until 5pm on 18 March 2020). • ICAEW said it had taken the difficult decision to cancel the June sitting for the Professional Level exams, and will be postponing the July Advanced Level exams. For future Professional Level exams, it is currently exploring options which will help it accommodate larger sittings such as larger exams venues. ICAEW is moving the Advanced Level sittings from July to the end of August. It said it was working to finalise plans as a priority and dates will be confirmed to all students as soon as possible. ICAEW was advised that Pearson Vue owned exam centres would be closed in the UK from Friday 20 March until further notice. In response it is looking at how it can deliver Certificate Level exams remotely as a potential solution.

18 March

20 March

17 March

• ACCA’s current position is that it is still planning and preparing for a June exam session. Obviously, it stressed that the situation was changing on a daily basis, so 20

• ACCA says again for June 2020 it is proposing the same approach it took to March 2020.That means it will run exams where it is safe to do so, and postpone

exams where it cannot run them. ACCA said it will ‘aim’ to give students as much notice as possible about its plans. Exam fee credits for exams cancelled will be issued, it said. Not all students were happy with the idea of ‘safe to do so’. • AAT said it was suspending all assessments from Sunday 22 March. It rightly concluded that given the crisis and the increasingly wide restrictions being placed on schools, colleges and public gatherings, the most responsible course of action was to suspend all assessment. AAT explained it would void any assessment that had already been scheduled for any date after 22 March.

23 March

• All BPP buildings, including library facilities will be closed to students on Friday (27 March). All teaching from today will be delivered online, and will continue this way until at least 27 April 2020. All exams will also be cancelled during this period.

25 March

• Companies House has said businesses affected by Covid-19 will be able to request an extension to file their accounts, reports and confirmation statements. The maximum extension is three months, but Companies House said stringent conditions will apply. What you must do is to lodge your appeal before the company’s filing deadline. If you do not apply for an extension and PQ Magazine May 2020

coronavirus PQ your accounts have been filed late, an automatically penalty will be issued. The registrar has very limited discretion not to collect a penalty. Companies House also promised each appeal will be treated on a case-by-case basis.

26 March

• The Financial Conduct Authority (FCA), FRC and Prudential Regulation Authority (PRA) announce a series of actions to ensure that information continues to flow to investors and to support the continual functioning of the UK’s capital markets. • ACCA has announced it has cancelled June exams in the UK, Ireland, Western Europe and the Americas. ACCA’s Alan Hatfield said: “We are urgently reviewing the viability of running exam sittings elsewhere on a countryby-country basis, and we will let you know as soon as possible where we need to cancel.”

27 March

• Some good news at last. CIMA has said its students will be able to take their exams remotely for the first time. This came after its test centres were forced to close, preventing the delivery of CIMA OTs and case study exams to students around the world. CIMA has been working closely with its testing partners to come up with a testing solution since the beginning of the pandemic. Steve Flatman is hoping this move will mean there will be ‘minimal disruption’ to OTs and case study. • The FRC and the Chartered Governance Institute publish an updated guidance about company AGMs and the impact of Covid-19. The guidance provides advice on how listed companies might implement contingency plans in light of the compulsory ‘Stay at Home Measures’. Read the full report in this issue – see page 36. • The CIPFA/LASAAC Local Authority Code Board agreed to seek to replace the 2019/20 Accounting Code with a simplified version in order to ease the burden on practitioners as they respond to the emergency. This was later rejected as HM Treasury said the proposals would not provide the information still necessary for whole of government accounts (WGA).

30 March

• If you had problems booking for the ACCA September exams you were not alone! ACCA has confirmed that ‘some students’ have been having difficulty. Its systems are now being updated and you should be able to book your next exam within the next 48 hours… PQ magazine had heard from students waiting for the March exam results were particularly having problems with the system. This is because of the three-sitting rule. ACCA thanked everyone for their patience.

31 March

• ACCA has added more countries to the June exam cancellation list. Regions and countries where June exams are now cancelled include ASEAN, ANZ, India, Bangladesh, Pakistan, Sri Lanka, Middle East, Central PQ Magazine May 2020

Europe, CIS and Central Asia. These venues now join the UK, Ireland, Western Europe, and the Americas which are already on the list. Currently, China and Africa do not appear to be on any of the cancellation lists. ACCA’s Alan Hatfield explained: “With so many exam centres closed, for what appears to be some time, ACCA is urgently pursuing options that will enable it to offer some on-demand exams.” Hatfield added: “We are looking primarily at an option that utilises software which replicates exam centre controls and conditions in the home.” He is hoping that ACCA will have this solution available in the coming months.

1 April

• Grant Thornton becomes the first big firm to be reportedly offering its thousands of staff to agree a 40% pay cut or a voluntary sabbatical to reduce costs during the pandemic. UK workers were asked to take a pay cut with a similar reduction in hours, until the end of May, or a sabbatical, under which they would be paid 30% of their standard pay until June. The firm employs about 4,500 people in the UK, and gave staff until the Friday (2nd) to volunteer for either of the options.

3 April

• ACCA has made the decision not to increase its exam fees for the September 2020 session, unveiled in February. If any student has already booked a September exam at the previously state higher price, they will now receive a credit to their account with the difference. ACCA is also reminding students that those committed to continuing their studies completing the Ethics and Professional Skills Module might be a good use of time.

7 April

• In a new update CIPFA said that ‘at this stage’ it is hoping that the June exams will continue as planned. If that changes it has promised to let students and employers know as soon as possible. CIPFA said it recognised the need to reassure students and provide ‘business as usual’ training delivery leading to its June exam siting. Face-to-face classes have been moved to live web classes. PQs are also able to download recordings of live web classes if enrolled in either face-to-face or web classes. • CIMA has confirmed that the Professional Qualification and Certificate of Business Accounting OTs will commerce remotely on Monday 4 May 2020. The dates for the case study exams will be sent next week, as will the UK apprenticeship L4 and L7 EPA1 exam dates. PQs will be able to schedule their online exams through MyCIMA via the Pearson Vue platform. YOU CANNOT SCHEDULE ANY EXAM NOW. CIMA expects it will be at least two weeks before the first exam. Next update due on 15 April.

9 April

• ICAEW have agreed with Pearson Vue to

temporarily run Certificate Level exams via remote invigilation. Students will be notified via the Covid-19 hub about what is planned by the end of April. The ICAEW June Professional exam session is still cancelled! The September and December 2020 exam sessions will run as planned on 7, 8 and 9 September and 7, 8, 9 December. ICAEW will update students immediately if there are any changes to this. ACA Advanced Level exams have been moved to 24, 25 and 26 August. Students will be able to book exams from Monday 15 June until Friday 17 July, via their online training file or at my.icaew. com/examsonline. Results will be released on Friday 2 October at 12.00GMT. ICAEW stressed there will be no change to the Case Study advanced information release date and this will be available on Tuesday 9 June.It has temporarily suspended the ACA assessment regulation requiring all other ACA exams to have been passed or attempted before the Case Study exam can be attempted. • AAT assessments have now been suspended since 22 March 2020. However, AAT said all marking, result releases, and certification for assessments taken prior to this date, are being completed to its published timescales. AAT explained that as soon as the current government restrictions are lifted it intends to make all its assessments available as soon as possible. With the exception of two synoptic assessments (level 3 & Level 4), all the assessments are available on-demand. Once the current restrictions on educational institutions are lifted, AAT will review the synoptic windows and inform training providers of any changes and additional windows.

13 April

• Partners at the UK’s biggest accountancy firms will see their pay dive by hundreds of thousands of pounds as the professional services sector revenues take a battering. KPMG and BDO are among just some of the firms to propose a cut in pay to save cash. Big 4 firm KPMG’s 620 UK partners were told to expect a 25% cut in their pay packets for the rest of 2020. PwC said it will be cutting partner pay by 20% from this month. It has also frozen promotions and bonuses until the end of June. Over at BDO partners agreed pay cuts of up to 25% to protect jobs and cash.

15 April

• The dates for the case study exam are to ‘stay the same’, confirms CIMA. That means the Operation Case Study exams will take place between 13-15 May, Management between 20-22 May, and Strategic 27-29 May. The exam results for these sittings will be issued 6-8 weeks after the exam window. CIMA also said that its PQs can schedule OTs from home, from 22 April. Candidates will be using the Pearson OnVue system and CIMA has uploaded a short video to help explain how it will be invigilated. 21

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PQ AAT assessments

PASS RATES AAT has released its annual pass rates for the year ending 31 December 2019. So what do they look like? Assessments only CBA pass rate

Access 92.8%

Foundation 82.8%

Advanced 72.9%

Professional 62.9%

AAT has four graded qualifications. The table below shows a summary of the grades awarded for each qualification between 1 March 2019 and 29 February 2020. Qualifications and grades awarded

Pass

Merit

Distinction

Foundation Certificate in Accounting

44%

50%

Foundation Diploma in Accounting and Business

12%

70%

18%

Advanced Diploma in Accounting

25%

54%

21%

Professional Diploma in Accounting

54%

44%

The latest AAT pass rates are out and they are looking much better – in most cases. The IBLW Foundation paper jumped 4% on the annual pass rate six months ago, to 58%, and AVBK was up to 67.4%. At the Professional level, pass rates for BSTX (74.9%), ETAU (63.1%) and FSLC (59.4%) all saw healthy rises in the pass rates on those published in June last year. One paper that hasn’t seen a rise is the Advanced Diploma Synoptic Assessment, which slipped to 57.8% this time. It was 61.6% last time around. The pass rate for PLTX also slipped back to 62.9%. The assessment with the lowest pass rate remains MDCL. There was a slight rise to 53.9%, but this exam remains the one to pass! Overall, pass rates are looking better in general too, with the Professional CBA pass rate now standing at 62.8%, and Advanced level at 72.9%. PQ

Level Access Access Access Foundation Foundation Foundation Foundation Foundation Foundation Foundation Foundation Advanced Advanced Advanced Advanced Advanced Professional Professional Professional Professional Professional

Assessment name Access to Accounting Software Access to Business Skills Access to Bookkeeping Bookkeeping Controls Business Communications, Personal and Learning Skills

Short Code AASW ABSK ATBK BKCL

Bookkeeping Transactions Elements of Costing Foundation Synoptic Assessment Introduction to Business and Company Law Introduction to Payroll Using Accounting Software Advanced Bookkeeping Advanced Diploma Synoptic Assessment Final Accounts Preparation Indirect Tax Management Accounting: Costing Business Tax Credit Management Cash and Treasury Management External Auditing Financial Statements of Limited Companies

Worldwide 84.8% 94.4% 96.0 71.5%

BPLS

94.9%

BTRN ELCO FSYA

87.4% 86.3% 87.1%

IBLW

58.3%

INPY UACS AVBK AVSY FAPR IDRX MMAC BSTX CDMT CTRM ETAU

89.7% 86.6% 67.4% 57.8% 76.9% 80.2% 85.2% 74.9% 59.2% 605% 63.1%

FSLC

59.4

Professional Management Accounting: Budgeting Professional Management Accounting: Decision and Control

MABU

76.1%

MDCL

53.9%

Professional Professional Diploma Synoptic Assessment

PDSY

58.9%

Professional Personal Tax

PLTX

62.3%

PQ profile

From scholarship to The Apprentice Meet Apprentice star and accountant Lubna Farhan elieve it or not, if it wasn’t for the Beds, Bucks and Herts Chartered Accountants’ District Society then Apprentice star Lubna Farhan may never have become an ACA. She told the ‘Your Future in Accountancy’ conference recently that the society gave her a much-appreciated scholarship to support her at university on her accounting and management information systems degree. The girl from Luton admits it was only then that she discovered the world of accountancy acronyms – we are talking ACCA, CIMA and ICAEW here. From university she joined Grant Thornton’s graduate programme, and said she was “a bit of a shy geek with a first-class degree” when she started. Farhan stressed that you don’t need to be the finished article as a graduate – it’s the professional accountancy training that provides you with the softer skills as well as that chartered qualification. From Grant Thornton she moved on to TK Maxx, where she was promoted to a senior financial accountant. She then

moved into a commercial finance manager role. Farhan was on the move again soon after and joined Costa just after she had had her second child. It was while she was on maternity leave that she applied for the BBC show The Apprentice. In her promotional spiel for the show she explained that she lacked good role models, so decided to become her own! As she enjoyed studying, she explained

she focused on educating herself first, which gave her the confidence to pursue her dreams and aspirations. She told the producers she believed she was now “the full package, book smart and street smart”, and described herself as “a dark horse”. As she explained: “I came form the council estate… I have made myself into something good and I’m on my way to becoming something great.” Talking about her time on the show, Farhan says that she may have left early, but she felt she was always very professional and didn’t let accountancy down. She is also pleased she didn’t get sucked into the back-biting and badmouthing. “It was a roller-coaster and I found it tough physically, mentally and emotionally.” After her brief brush with fame it was back to the day job, now as finance manager, group reporting FP&A at Tesco. She has also started a public speaking business called Business Decoded, so her journey in accountancy continues… • Some 130 people turned out for the LSBF/PQ magazine ‘Your Future in Accountancy’ conference, with another 2,200 delegates joining us online during the morning. PQ PQ Magazine May 2020

STUDY RESOURCE OF THE YEAR WINNER

PQ MAGAZINE AWARDS 2020 ‘Inspired by our students’ Developed entirely in house by Premier Training, the MyPTA Mobile App (Premier Pal) is an innovation in distance learning, reinventing the methods in which students can learn AAT accountancy and bookkeeping courses effectively and efficiently. Premier Pal is like having a personal tutor, a library and a classroom in your pocket. It enables you to access learning at any time and in any location whenever you need to study.

2020 ONLINE COLLEGEOF OFTHE THEYEAR YEAR STUDY RESOURCE OF THE YEAR& STUDY RESOURCE STUDY RESOURCE OF THE YEAR

App Features • Read and download study manuals for offline access • Play accountancy and bookkeeping games • Watch all course videos – Premflix • Access quick quizzes for all course units • Find your nearest exam centre

WOULD YOU LIKE TO JOIN OUR AWARD-WINNING TEAM? Premier Training have a rare vacancy for an AAT Distance Learning Tutor Salary: Negotiable dependent on experience Location: South Killingholme, North Lincolnshire (must be able to work from our main office) Main duties and responsibilities will include: Providing expert advice and guidance to students who are studying their AAT and ICB qualifications. This will involve supporting a team of tutors, marking assignments and providing quality tutor feedback in a timely and professional manner, and providing email and telephone teaching support to students. Essential skills: No prior teaching experience is necessary, but applicants must hold a recognised accountancy qualification (minimum AAT level 4 / Professional Diploma level) To apply: Email a CV and cover letter to Sam Hannigan at sam.h@premiertraining.co.uk For the full job specification visit the ‘Work for us’ page on our website.

Call us to discuss your needs 01469 515444

023_PQ 0520.indd 1

Go online and live chat premiertraining.co.uk

Email us

info@premiertraining.co.uk

15/04/2020 08:32

Get a step ahead with Xero Advisor Certification Having a sound knowledge of cloud accounting software is invaluable in a competitive job market. Get the Xero Advisor Certificate and stand out from the crowd. To get started, speak to one of the education providers or accounting bodies â&#x20AC;&#x201C; ACCA, ICAEW, AAT, ICB, IAB, Kaplan, Avado, Premier Training, First Intuition, The Career Academy or Reed.

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15/04/2020 08:35

sponsored content PQ

ADVERTORIAL

e-Careers bridges the gap between having

qualifications and being job ready As of early April, the ACCA listed over 20,800 available jobs in Europe, across the Accounting, Bookkeeping and Finance sectors.

ver half of these job roles were in roles aimed at those who are part qualified or looking for junior job roles. Search terms included: • Part Qualified Jobs – 6,609 • Junior Jobs – 2,338 • Entry Level Jobs – 572 • AAT Level 3 Jobs – 539 • AAT Level 2 Jobs – 411 For many students, gaining employment is the hardest part of the whole career journey. Sometimes, qualifications alone are not enough. Organisations, especially Blue Chips, often require their successful applicants to already have relevant industry experience. For this reason, e-Careers has developed an AAT Qualification & Job Guarantee Programme, to help Partly Qualified graduates undertake additional training, work experience and ultimately, gain employment. Whether you have studied the AAT, CIMA or ACCA qualification route, we can help you get a job in Accountancy. About our AAT Qualification & Job Guarantee Programme Our exclusive Job Guarantee Programme is the best way to fast-track your career in Accounting and help fill the skills shortage in the industry. AAT award 90% of all the vocational Accounting and Finance qualifications in the UK and e-Careers are a leading AAT training provider. We have developed this unique programme, which offers you the opportunity to gain additional AAT qualifications (where required), obtain practical experience, and most importantly, help you gain employment in this industry. We have a vast network of Accountancy firms and employers, who are seeking well-equipped individuals, enabling us to be able to guarantee a job to graduates of this Programme. The Process • We start with a Telephone Consultation • Then you’ll go through our Onboarding Process • If required, study your AAT Qualifications online • Undergo Practical Training at our London or Birmingham Centres • Participate in our Work Experience

Stage 1 - Training and Certification Depending on your level of knowledge, experience and career goals our Course Consultant will discuss the most appropriate qualification for you. If you already have AAT qualifications up to level 3, you can skip this part of the programme, and start at the Practical Training and Work Experience stage.

Programme • Join our Recruitment Workshops and Interview Preparation • Prepare for and attend your Job Placement Course Details This AAT Qualification Programme with Job Guarantee will provide you with the knowledge, certifications and work experience required to build a successful career in Accountancy or Bookkeeping, with the added benefit of a Guaranteed Job upon completion of your course. This extensive programme has been crafted by our team of experts, who will equip you to be job-ready in the shortest possible time. Upon successful completion, you will be guaranteed employment. Course duration is anywhere from 6-18 months depending on your current qualifications, and the remaining qualifications you wish to undertake, as well as the amount of time you can dedicate to this programme. How it works We have made the whole process as simple as possible and your journey will be broken down into 3 stages:

What a past student said “e-Careers helped me pursue my passion in Accounting. They were helpful in all aspects right the way from training to helping me start a new career. I could not recommend them highly enough.” Sarah (previously a waitress) PQ Magazine May 2020

Stage 2 - Practical Training and Work Experience Here, you will join our team and other likeminded individuals in our classes (held in London or Birmingham), and embark on a journey to gain the skills which are desperately sought-after throughout the Accounting industry. Stage 2 will be executed as follows: • 3-Day Accounting Fast-Track (3 consecutive weekdays) – Not required for those with AAT Leve 2 or above. • 6-Day Practical Training (Either Saturday or Sunday over 6 consecutive weekends) – The bridge between someone who has academic knowledge and someone who is ready to enter the industry and hit the ground running. • 6-Day Work Experience (Either Saturday or Sunday over 6 consecutive weekends) – Under supervised conditions, you will be working on real client data and the projects will cover all the elements that you have studied throughout your programme. • Internal Assessment – Equipped with the qualifications and work experience, your knowledge will be put to the test with an internal assessment. Stage 3 - Interviews and Job Placement In the final stage of your journey, we will get you prepared for work, through the following processes: • CV Preparation • Mock Interview • Job Guarantee Our recruitment team will work closely with you and arrange interviews through our network of employers. You will then start to receive invitations to interviews and prepare to start your new career. They will remain by your side until you are employed. • To qualify for this Job Guarantee you must attend our classes, pass your exam(s), internal assessments and attend our recruitment events. Contact us to start your journey by either calling 020 3198 7700, or visiting rd.ecareers.com/pq-job-guarantee 25

PQ Remote the working

The new meeting place Self-isolation doesn’t mean you have to stop meeting people! PQ magazine’s Edward Netherton takes a critical look at what is out there in the way of video calling services he use of Voice over Internet Protocol (VoIP) services, or video/voice calling to us laymen, has become an amazingly popular means of talking to colleagues and classmates without having to venture outside. From listening to lectures or presentations, to entire companies holding conference calls via a video stream, the usefulness of these services is becoming ever-more vital to those having to continue working and studying at home during the lockdown. The problem, though, is that there are a lot of different services to choose from, and they all claim to have long lists of different features and gimmicks to use and enjoy. So, which one should you pick? We have done the hard work for you, and trialled some of the biggest and most popular video and voice calling services available. Here’s our reviews:

26 26

Zoom has been getting a lot of press during the Coronavirus outbreak. It seems that it is fast becoming the go-to choice for people working remotely. With Zoom you get voice-call, video-call, and even screen share, all through a pleasingly minimal menu with clear and simple icons for each function. The call quality is ‘nice’, with video in full HD, and sound levels crisp and clear. The free version of Zoom is pretty generous. You can have unlimited meetings with other users; the only restriction is that group meetings with multiple people are capped at 40 minutes in duration. There are three payable upgrades, giving you access to things such as webinars, storage, schedules, and customisable profiles. It’s a shame such features as schedules are locked behind a minimum $14.99 monthly cost, but when you consider that you can still get unlimited HD video streaming for free, it isn’t a deal-breaker. Unfortunately, the rising popularity has led to some unnerving discoveries. Despite claiming to have end-to-end encryption, Zoom is able to collect and access all video and audio streamed over its service. Strangers have been reportedly able to try and call one another, as the app mistakenly grouped various email addresses together under the assumption that they were co-workers. On top of this, Zoom is currently being taken to court for sharing its customers’ data with Facebook, despite not having obtained permission to do so. Ease of use 8/10 Service quality 6/10 Value for money 7/10

What started as a talking service for gamers has grown into one of the most popular VoIP services in the world. Discord has over 250 million unique users, and there’s a reason for it. For a start, the app is free, and is available on PC, Mac and mobile devices. Working as a digital forum, Discord allows you to talk, video-chat, share images, links and files, all through an easily navigable interface.

PQ Magazine May 2020 PQ Magazine May 2020

the PQ Remote working You can create channels and servers, making it easy to separate forums and compartmentalise, and have different teams or groups in separate chats. Additionally, Discord also allows users to stream their screen to others, meaning things like presentations are extremely simple to share with one another. All you have to do is click the share screen button, and you’re suddenly streaming your machine to anyone in your group. A nice bonus is that Discord has announced that during the Coronavirus lockdown it is upping the live-stream limit from 10 people per stream to 50. The voice, video and stream quality are all superb; the data is encrypted for privacy and security and its menu and interface is amazingly simple and easy to grasp. All in all, what was created primarily as a chat system for computer gamers has become an incredibly multifaceted communications tool. Ease of use 8/10 Service quality 8/10 Value for money 10/10

Houseparty is not like most other video and voice calling services. For a start, it is primarily recreational, and has no intention of being anything else. More casual than the other businesscentric services, Houseparty earns its name by helping people recreate house parties and gathering remotely. Houseparty has surged in popularity over the past few weeks, becoming the number 1 App on Apple’s store in 17 different countries. The way this laidback video service works is that you join your friends on the call and can enter various different ‘rooms’, where other people will be talking to one another. Attempting to emulate the different rooms in a real house party, this gimmick can be fun, as you can hop between different groups of friends and family. This fun and novel idea can sometimes be a hindrance, however, as there have been reports of audio dropping out and screens freezing mid call. On the whole, though, it seems to work fine. Like Zoom, Houseparty has its issues with privacy. Anyone in your contacts list can see that you are online, and can join in on a call with you. You could end up with your very own cyber-gatecrasher! This can be avoided if you take the time to review and change the privacy settings within Houseparty. Overall, although it may not be ideal for work or study, and the gimmick of pretending you’re at a real house gathering may wear off; PQ Magazine May 2020

Houseparty is ideal for letting off some steam with your friends from afar. Ease of use 7/10 Service quality 6/10 Value for money 8/10

Google Hangouts replaced Google’s previous service, Google Talk. The service allows you to talk to contacts, either through a video chat or a good old-fashioned audio call. With a messaging system and HD Video streaming available both online and on your device, this is a great and effective app to use when confined to your home. Hangouts’ menu is nice and simple, like many other Google services, and takes no time at all to start using effectively. The video calling really shines when used on a mobile device, as Hangouts allows you to switch between front and rear cameras with the touch of a button. However, this doesn’t mean the service isn’t also useful on a laptop or computer, as you can just as easily log in through the internet and start calling. Hangouts is free to use, all that is required is to make a Google account. There is a premium version available as part of Google’s G Suite service. The free version allows video calling and messaging, and also permits up to 30 people to participate in online conferences. If you have G Suite, depending on which level you pay for, you can up this number to between 100 and 250 people. Google Hangouts is ideal for those of you who use Google+ for a lot of things, such as file storage and calendars, as you can easily integrate Hangouts with the rest of Google’s services. Ease of use 8/10 Service quality 7/10 Value for money 7/10

Microsoft Teams is the messaging App in the Microsoft Office family. Aimed at businesses, the service allows users to video and voice call, stream their screen to others, and allows you to access the service across all of your devices. The interface is compartmentalised, putting every feature into nice separate fields. If you are an Office veteran, using Teams is just the same as other services like Word and OneDrive, but it can be rather daunting to the inexperienced. For example, accessing a specific conversation thread is hidden down four tabs of sub-menus. Again, if you’re used to the way the Office family of apps works, then it won’t

take you long to figure it all out. Microsoft Teams comes bundled in the Microsoft Office 365 Business Premium package, which costs £9.40 a month. Although it may sound pricey, this includes all the other apps that come with Office: Word, Excel, Powerpoint, Outlook. If you’re already paying for Microsoft Office 365, then the upgrade to include Teams as well as SharePoint, OneDrive and Exchange is only £3.80. Microsoft Teams really shines if you, or your work or business, uses other Microsoft apps extensively. It’s incredibly useful to have your communications service fully integrated with documents and spreadsheets if the bulk of your work relies on them. If you are part of a larger business or network of colleagues, Microsoft Teams may be the app for you, as it is dedicated to professional workers and can easily complement your other work tools like Word, PowerPoint, etc; but if you’re in a small team, or just want to chat with one other person, then maybe this service isn’t ideal. Ease of use 6/10 Service quality 7/10 Value for money 6/10

The grandfather of popular VoIP services, Skype has been around for a while. Initially released in 2003 (a whopping 16 years ago), it was many people’s first foray into the world of video-calling. Despite facing many competitors, the app is still moving with the times, with dedicated mobile versions for both Android and Apple phones. However, when compared with some of the newer VoIP services, Skype begins to look a little restricted. With many alternatives offering far more than just voice and video calling. Although, if that is all you are looking for, then Skype does it extremely well. The menu is clean and very nice to use, and the lack of gimmicks and tricks means you won’t be getting lost in a maze of features and extras. Skype is free, so long as you are using it to call another person using Skype. The service can also be used to call mobiles and even landlines. However, doing so comes at a charge. If users would like to use Skype to call non-Skype users they need to purchase a premium upgrade. Most packages range between £2-£6 a month. Popular, easy to find and use and with good quality streaming, Skype has been a giant in the VoIP market for so long for good reason: because it works. Ease of use 7/10 Service quality 8/10 Value for money 7/10 27

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PQ home study

Home sweet home? Andrew Mower explains how you can study at home effectively during these difficult, problematic times iven the vast numbers of PQ readers now studying from home, here are some suggestions as to how to make sure you are making the most of your time.

Prepare a timetable Without the discipline of the classroom you will need something to help manage your time. You should be preparing a timetable using your study guides, which detail which topics/chapters you should be covering on each day of the course. You need to build in time to cover allimportant learning activities and tests that need completing. Don’t underestimate how long something will take – learning is not an exact science, so don’t forget to build in a buffer. Also make sure you include breaks and non-study time. Create a learning space Most students prepare a quiet place to study. Contrary to popular student culture, multitasking doesn’t work. What you are in fact doing is swapping attention between two or three competing activities, which from a learning perspective is tiring and reduces concentration. The easiest thing to do is avoid distractions – and that means putting your mobile phone away. Also turn off any alerts, the noise is enough to create a ‘dopamine bump’ – a short pleasurable sensation making it almost impossible not to check your messages. Spread out the learning Don’t study for too long or cram too much – cramming can work, but it effectively overloads short-term memory, resulting in you forgetting something that was only learned the day before. Little and often is the secret to effective study. Get others involved One of the best ways of checking your understanding of a topic is to explain it to someone else. If you have other people (or animals!) with you at home, take a few minutes to talk them through a tricky concept. By talking through it out loud you will see how well you know it - if you find yourself struggling to explain, go back through it and try again later. It doesn’t matter if the recipient of your homeschooling is accountancy-minded or not – just the process of talking through it is a really powerful learning tool. Question your understanding/approach Here are some examples as to how you might do this: • Talk to yourself. Ask questions at each stage: 28

“Does this make sense? I have read it several times. Maybe I should try writing it down.” • Ask whether you’ve set yourself sensible and realistic goals? Don’t set yourself up to fail. • Shake things up and try a different approach, for example mind mapping. But remember to reflect on how effective it was (or wasn’t). • Do you need help from anyone? This could be a fellow student, your Online Learning Platform (e.g. MyKaplan) or a tutor. Question practice is key Although attempting questions can seem a little disheartening, especially if you get something wrong, it is one of the most effective methods of learning. The process of answering a question involves what we call ‘retrieval practice’, forcing the brain to think back over what has previously been learned and in so doing transferring knowledge into long term memory. Develop a positive mind-set Working alone can result in moments of selfdoubt which can turn to worry and/or stress. The important point is that both of these are perfectly natural reactions to a challenging situation. There is a view that worry is simply the way in which the brain moves something up in your list of priorities. To help ease this, simply write down

what you are worried about and turn it into an action. A certain amount of stress can also be good, it is continual long-term stress that can cause problems. Stay active Ensure you schedule some time for exercise throughout the day. A nice walk or jog out in the fresh air is a great time to reflect about what you’ve been learning, and think about what you’ll be doing later in the day. ‘Thinking about learning’ is part of a process called metacognition, another powerful learning tool. Eat and drink Regularly drinking water is really important – not just the caffeine-filled drinks that students tend to choose around study time. Some great snacks while studying include: • Blueberries help with oxygen flow to the brain and so increase focus, concentration and performance. • Dark chocolate stimulates neural activity in areas of the brain associated with pleasure and reward, which in turn decreases stress and improves your mood. • Apples slices with peanut butter are a great blend of vitamins and protein. PQ • Andrew Mower is National ICAEW Product Manager at Kaplan Financial PQ Magazine May 2020

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distance learning PQ

Paul Kirkwood considers the digital and online learning options for ACCA students

Online learning:

t the time of writing, the impact of Covid-19 around the world is in full effect. I truly hope all PQ readers have been coping well in these extraordinary times. Many countries are in lockdown to halt the spread of the virus, and this has meant we’re all having to change how we work and live. Like many organisations running exams, we’ve had to cancel some of ours, most recently our June 2020 sittings across countries where the virus has taken a firm hold. The health and safety of our students, ACCA employees, and the wider ACCA community has been and always will be our priority. Our message to students has been, where possible, to carry on studying. We know this is a challenge, especially when motivation may have slipped. We recognise that, and so we’ll continue to expand the range of online learning support for students who are restricted to their homes in impacted countries. Also in these extraordinary times, classroom-based, face-to-face courses may not be possible as you prepare for your next ACCA exams. So how can we all manage the fact that exam plans are now less certain than ever before? My first piece of advice is, where appropriate, to contact your current Approved Learning Partner (ALP) to discuss what online options they offer to help you study and revise. Before joining ACCA in May 2019, I was a tutor with several ACCA ALPs. I started teaching face-to-face in a classroom and moved on to teach students online in virtual classrooms, alongside creating other online teaching resources. I recall the first time I ran an online class. I was very nervous as I had never done it before. But I soon realised that, whether in an online classroom, through recorded video or other online resources, the basics of learning are the same. For ACCA exams, the tutor’s role is to build the knowledge, application skills, confidence and exam technique capability to enable students to achieve exam success. The fundamental aim of ACCA students is the same whether learning in a classroom or online – to achieve exam success. While I’m sure that you will feel nervous about trying online learning for the first time, I’d encourage you to explore the different options available. There are three questions I’m asked most about online learning: 1. Is digital learning and online learning the same thing? Digital learning is any type of learning that utilises digital

the pros and cons

PQ Magazine May 2020

technology; for example, when I taught in the classroom, if I asked my students to research a topic on their phones, this would be an example of digital learning. Online learning uses the internet to access content and so online learning is simply one example of digital learning. 2. What types of online learning exist for ACCA? There are many different types of online learning available from ALPs. Here’s some of the features that may be used as part of an online course, and remember that many online courses will use multiple types of online learning within their programmes. Online classrooms: This is where a tutor runs a course in a similar way to how a face-to-face classroom operates. The tutor may have a webcam so students can see the tutor, who will be able to present slides or annotate on a whiteboard as part of the teaching process. Students can ask the tutor questions and get answers through a chat panel. Online classes are often recorded and are available to watch at a later date. Recorded video content: This is prerecorded video content that often focuses on a specific topic. There are many different styles of recorded content – including animations, a tutor talking over presentation slides or talking while writing on a whiteboard, or simply taking to a camera. These can be used as part of

the learning phase of a course, to build knowledge, or the revision phase, for example as exam standard question debriefs. E-learning content: Some online learning uses e-learning platforms that include text-based learning material as well as quizzes and other activities to build and test your knowledge and application skills. Our ACCA-X courses use this style of learning within its programme. 3. How will I know which type of learning works best for me? There really is only one way to find out and that’s to have a go, or at least start to explore what online learning is available to you. As I suggested at the start of the article the first step, where possible, is to understand what online learning options are available with your current ALP. Many will offer free trials that you can use to test out their online learning programmes. If you are currently studying for your strategic professional exams, then ACCA’s Ethics and Professional Skills Module will both introduce you to online learning as well as help prepare you for future exam success. And, finally, don’t forget the range of online exam specific study resources available on the student study resources section of the ACCA website. PQ • Paul Kirkwood is ACCA’s Head of Learner Experience 29

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PQ CIMA pre-seens

Crack the case studies We take a look at the pre-seens for the May-August exams – Runnabout, Alpaca Hotel Group, and ChargeIT Alpaca Hotel Group – the MCS CIMA PQs for May’s management case study are working for the Alpaca Hotel Group as the financial manager. Alpaca is a quoted company that owns and operates 50 luxury hotels. Procurement is an interesting area to look at, and it might be of interest to the examiner. Pricing and guest booking options also affect the bottom line. But does 20% sound like a high commission for travel agents, for example? The pre-seen goes through the hotel industry early in the 27 pages, where we discover skilled staff are often well paid and valued.

How the hotel group uses data ‘better’ could also be something looked at come May. Occupancy rates range from 79% to 85%, and you need to check out the operating profit margins. It’s all on page 18. In the news is a rival’s redesigning of its fitness centres to attract guest and non-guests. While it is difficult to think beyond the current bleak economic outlook, another news story explains recent economic stability has meant businesses are happy to spend a bit more of their hard-earned cash on the nicer things. Alpaca’s Mayburgh Principal Hotel’s 3.8 average rating on Visitadvisor isn’t great either, with cleanliness and quality of service not being marked well.

Runnabout – the SCS Welcome to the SCS pre-seen, where you are a senior manager in the finance function at Runnabout, the parent company of the Runnabout Group. The quoted company operates pay-as-you-go ‘hoverboard’ vehicles for use in major cities (if only, what a way to get to work!). But, just to be clear, these hoverboards do not actually ‘hover’, they are two-wheeled vehicles that are driven by electric motors and powered by rechargeable batteries. What we are talking about here is an upgraded Boris bike! Runnabout was created to rent bicycles in what appears to be a flat, windy country. It’s move into hoverboards was an immediate success with both commuters and tourist alike. The one fly in the ointment is that fact that the cities where the company operate its scheme are looking at the effects the hoverboards have on pedestrians and traffic. Check out the Geeland Daily News report on ankle injuries here. Interestingly, its data capture information is highly sought after. With 30,270,000 registered users protection data is key, too – it holds credit card and validation numbers of all these people. We are given the average revenue per journey of G$5.80 and cost to Runnabout of G$2.19. The pre-seen also includes extracts from the annual report, with the principal risks. There is also the P&L from Dokbyke Group, a major competitor and a news story to go with it at the bottom of the pre-seen. ChargeIT – the OCS CIMA’s 22-page OCS pre-seen was the first to hit the streets, ready for those May exams. We say watch out for ChargeIT’s FD here. Ben Da Silva is known as a ‘techie’ and wants to improve digital technology to help processes become more efficient. He’s also got a bit of a reputation as being tight with money. The finance teams role hasn’t changed since the company was formed in 2001, and the day-to-day transaction processes take up much of the small team’s time. I would expect that to change. Sitters take on the mantle of the finance officer, whose main role is to support Sophie Jacobs, the FM. Your tasks include annual budget prep, producing monthly management accounts and other information when required. You also assist with the financial statements and deal with any queries regarding financial reporting. You are working for ChargeIT, which develops cordless domestic electrical products, and the company is a leading light in battery technology. It’s a husband-and-wife firm – they own the equity. One interesting move back in 2016 was to bring manufacturing home (to Eastland) from South-East Asia. Lithium-ion battery power and robotic cleaners are the news stories at the tail end of the case, so watch out for something on this. Check out the profit margins on those robotic hoovers, too! Remember that this case study covers the May and August Operational case study exams.

PQ Magazine May 2020

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PQ cash flow statements No estimates The income statement measures profit. This involves making a series of judgments and estimates to match costs and benefits. For example, the depreciation charge depends on an estimate of the useful life of the asset. In contrast cash flow statements have no obvious judgments or estimates. Cash has either been received and paid or it has not. This is simple and therefore understandable. Cash flow statements are reliable and verifiable in a way that income statements are not. No accounting policies When preparing the income statement, a series of accounting policy decisions are made. For example, whether inventory should be accounted for on a first in first out basis or average cost basis. But to prepare a cash flow statement does not involve formulating any accounting policies. This makes cash flow statements simpler and therefore understandable.

How do cash flow statements provide useful information to users of the accounts? Tom Clendon answers the question for you his is a big question. Let us break it down. So what is meant by useful information? ‘Useful’ is a key word in the conceptual framework for financial reporting. Information will only be useful if it is both relevant and faithfully represented. These two characteristics are fundamental to information being useful. If information is not relevant or not faithfully represented, then it is useless! Information is relevant if it is capable of making a difference to the decisions made by users. Financial information is capable of making a difference in decisions if it has predictive or confirmatory value. Faithful representation means that information must faithfully represent the substance of what it purports to represent. A faithful representation is complete, neutral and free from error. There are also four attributes that enhance the usefulness of information but are not fundamental. These are the characteristics of understandability; comparability; verifiability; and timeliness. As you read the rest of the article look out for key words, particularly those associated with the two fundamental characteristics of relevant and faithful representation.

Who are the users of the accounts? The primary users of the financial statements are the providers of capital, namely shareholders and lenders (both current and prospective). These users are looking at the financial statements in order to make decisions. Buy or sell the shares. Sack the board or vote to reappointment them. Make a further advance or call in the existing loan. Additional information Cash flow statements provide additional information that is not found in the income statement. Only the cash flow statement shows how the business has generated and used cash in the accounting period. This means that users have a more complete understanding of the business’ performance. For example, the income statement may show profits even if the company is suffering severe cash flow problems. Whereas a cash flow statement enables users of the financial statements to assess the liquidity, solvency and financial adaptability of a business. This is relevant as users will be interested in the going concern of the business. In addition, cash flow statements can give an indication of the relationship between profitability and cash generating ability, and thus of the quality of the profit earned. A business that year on year reports a profit but never generates cash is said to have low quality profits – i.e. reported profits may have been generated through the manipulation of estimates and policies.

No measurement issues Assets and liabilities are sometimes measured at cost and other times at value. These decisions have a direct impact on the measurement of profit, for example if property plant and equipment is revalued then there will be more depreciation charged as it will be based on the revalued amount. However, in a cash flow statement there are no arguments over whether to use cost or value. $100 cash is $100 cash. There is no way to revalue cash! This absence of measurement issues means that cash flow statements are still comparable between businesses even if they measure assets and liabilities differently or have different accounting policies. Business valuation Investors are interested in the capital value of their investments. They try to use the financial statements to assess their value. Investors often develop models to assess the future cash flow of entities, which they then discount back to a present value. Using cash flow statements to value businesses is predictive. Dividends and interest payments Investors are also interested in the ability of the business to pay dividends and interest. These represent the return on the investments. Dividends and interest are paid by the reporting entity in cash. The cash flow statement therefore provides relevant information for these users to predict the likelihood that such payments will be made in the future. Conclusion The purpose of financial statements is to provide financial information that is useful to users in making decisions relating to providing resources to the entity. I hope that you now understand that cash flow statements are very useful to users because they represent a faithful representation of the cash inflows and outflows of a business, and that is relevant. PQ • Tom Clendon is the ACCA SBR lecturer at FME Learn Online PQ Magazine May 2020

Strategic Professional CBE PQ

Change is coming Brigita Petrova explains why you should welcome the move to CBE exams and how you can make the most of the advantages it will bring opefully, all ACCA students have heard about the introduction of computer-based exams (CBE) for the Strategic Professional Level subjects. Although piloted in a handful of locations for the March 2020 sitting, many students know very little and fear the global change coming in due course. And while it is quite normal to fear the unknown, the many benefits of the new exam type make it a positive move, allowing more effective reallife preparation and better exam performance.

â&#x20AC;˘

What has NOT changed

What has changed

Time available: still three hours 15 minutes (except SBL being four hours)

No more answer booklet details to fill in

Exam structure: still two sections (except SBL) with all questions being compulsory

Answer only within the computer â&#x20AC;&#x2DC;workspaceâ&#x20AC;&#x2122;

Question difficulty and syllabus coverage

Use the word processor for discursive parts and spreadsheet for calculations

How to use the new format in your favour? Make sure you take advantage of all tools ACCA has provided you with, such as: â&#x20AC;˘ Strikethrough and highlighter â&#x20AC;&#x201C; for anything you want to stick out in a question. â&#x20AC;˘ Calculator â&#x20AC;&#x201C; although you can use the spreadsheet for the same purpose. â&#x20AC;˘ Formula sheet â&#x20AC;&#x201C; for anything that you donâ&#x20AC;&#x2122;t need to memorise. â&#x20AC;˘ Scratch pad â&#x20AC;&#x201C; for workings which you can copy and paste into your answer. Best thing is that your

â&#x20AC;˘

â&#x20AC;˘ â&#x20AC;˘

workings get saved in the scratch pad and are available during exam. â&#x20AC;˘ $ symbol â&#x20AC;&#x201C; for currencies where you need to switch from one to another. Why is the new format so much better for you? â&#x20AC;˘ Better presentation: no more squashed or crossed out illegible

and unprofessional handwriting that makes it harder for you to score marks. Copy and paste function: less chance of human error when taking bits from the question or scratch pad. Better focus: you can open a few windows (remits) at a time, move around and resize them so you are looking at only the information needed and type up at the same time. Easy navigation between questions and question parts via the Navigator tool. Quicker: in addition to the above features, typing is easier than handwriting. Less time to write: more time to think and make sure the points in your answer are relevant. More effective planning: you are more efficient overall. Real life experience: the new exam type mimics a real-life work simulation equipping you with professional skills you can utilise at your workplace.

So what should you do to make it a success? Play with the resources provided by ACCA as much as you can in advance: â&#x20AC;˘ Read the CBE guidance as well as the exam instructions carefully (as some features look different in the real exam). â&#x20AC;˘ Practise the CBE specimen and three practice tests. â&#x20AC;˘ Explore the functionality of the spreadsheet. â&#x20AC;˘ Say goodbye to pen and paper: ensure you type up any questions you practise. CBE is introduced in the UK from September 2020, for any other locations it is done on a gradual basis. Go to https://www.accaglobal. com/vn/en/student/exam-entry-andadministration/computer-basedexams/strategic-professional-cbes. html to find out when you get to benefit from it. â&#x20AC;˘ Brigita Petrova is a tutor at the London School of Business & Finance

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PQ Magazine May 2020

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PQ Watch with PQ

Pass the remote Being trapped in your own home, you will undoubtedly be turning to Netflix, Amazon Prime and the others, for some much-needed escapism and entertainment. Here are PQ’s recommendations f you’re feeling guilty about spending too much time watching TV shows and films, you may want to try out some of these accountancy-themed programmes. Hey, you can pretend it’s part of your revision! Maybe they can even can be counted as CPD, or at least you can pretend they are. We have chosen our favourites here:

1: Ozark This Netflix crime series could be described as a how-to guide to money laundering. Think Breaking Bad, if Walter White had spent the majority of his time explaining the ins and outs of receipts and fraudulent cashflow, instead of the chemistry behind his crystal meth. The series follows Marty Byrde, played by Jason Bateman, a Chicago-based financial adviser who discovers his business partner has made an ill-fated deal with a drug cartel. Fleeing to rural Missouri, specifically the Lake of the Ozarks, Marty discovers that the cartel knows exactly where he is, and that he has no chance of escape. Marty manages to bargain with the criminals: in return for his family’s lives, he will launder $8 million in under three months for the cartel, claiming that doing this in the quiet countryside will be far less suspicious and much more lucrative. This tense, beautifully filmed and well-acted series is full of knuckle-wrenching anxiety as we follow an increasingly desperate Marty on his quest to pump as much money as he can through shady businesses and fronts. 34

2: The Office: The Accountants Most people have watched the American version of The Office, some would argue it surpasses the Ricky Gervais original. Some, however, may not be aware that there is a spin-off. The Office: The Accountants is a webseries available on YouTube, comprising 10 episodes, roughly three minutes in length. The first episode The Books Don’t Balance opens with the accountants Kevin, Oscar and Angela, discovering that the company books don’t balance, and $3,000 is missing. What follows is a parody of a detective serial, all in classic The Office style, as the accountants go from colleague to colleague, trying to piece together which one of their friends is the culprit. Hijinks, hilarity and outright bizarre, The Office: The Accountants has it all, and you can watch the entire series in less than half-an-hour!

3: The Tick This Amazon Prime show is in its second series; and follows unassuming accountant Arthur Everest (played by Griffin Newman), as he lives in a world where superheroes have existed for some time. Everest discovers that the city he lives in is secretly owned by a presumed-dead super villain. After discovering this, Everest is soon befriended by an amusing, if not a little strange, superhero – The Tick (played excellently by Peter Serafinowicz). The Tick convinces Everest that they must work together to save their city.

This comedy series is an excellent lampoon of the behemoth superhero films that dominate the cinema box-office and current pop-culture. Full to the brim with wackiness, tongue-incheek humour and surprisingly likeable and heartfelt characters, The Tick is a great choice for the superhero fanatic and casual viewer alike. 4: The Accountant This 2016 action flick is currently available on Netflix, and stars Ben Affleck as the titular accountant, Christian Wolff. Our man is autistic, struggles with social interaction, but is an incredible mathematician. That’s not the only skill he has. Wolff is also highly trained in combat and handling firearms, which comes in handy when his audit of a large tech company leads him to discover a sinister conspiracy. The interesting part of The Accountant is its blend of genres. On one hand, it’s a drama about a man struggling with autism and his inability to leave behind a traumatic past and adjust to normal life. On the other, it’s a loud and action-packed thriller. Although the film doesn’t always manage to blend the two concepts, it’s refreshing to see a film where the main character is on the spectrum, but isn’t the sole focus of the plot. There’s no reason an action hero can’t be autistic, and The Accountant knows this. PQ readers may find that some of the cliched plot-twists aren’t the silliest part of the film; the depiction of forensic accounting as an exciting process of scribbling numbers on walls like a frantic genius may give you a chuckle. Overall, the film is entertaining, if a little unbalanced. Still, how many action films do you know that centre on an accountant and his trade? • Here are some other famous productions with accountants that are worth a look: The Producers (the original, of course), The Untouchables, Midnight Run, The Royal Tennenbaums, Stranger than Fiction, and the Room at the Top. PQ Magazine May 2020

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PQ financial reporting

AGMs and Covid What happens to company AGMs now we are in lockdown? The Financial Reporting Council and Chartered Governance Institute has issued new guidance – with the help of the lawyers, of course pdated guidance about company AGMs and the impact of Covid-19 has been released and updated (at least once already) by the Financial Reporting Council and Chartered Governance Institute. The guidance provides advice on how listed companies might implement contingency plans in light of the compulsory ‘Stay at Home Measures’. It says companies effectively have five options, which are: • Adapt the basis on which you hold the AGM. • Delay convening the AGM, if notice has not yet been issued. • Postpone the AGM, if permitted under the articles of association (Articles). • Adjourn the AGM. • Conduct a hybrid AGM, if permitted under the Articles. Although, it is understood that as the situation continues to evolve, companies may ultimately have to use more than one of these options. If holding the AGM, companies should consider the following measures: • Arranging supplemental venues in addition to the main venue. The Articles may permit the use of supplemental nearby venues linked by satellite or some other means. There is also authority enabling this where the Articles are silent. Consider this as a way of restricting numbers in any one particular location, to take account of emerging limits on the size of meetings. If notice has already been issued without referring to supplementary venues, use appropriate announcements and website updates to inform shareholders. • Establish a dedicated area on the company website. This area would include the details of arrangements for the meeting and can be updated to reflect changes in the situation, including attending the AGM. Where appropriate, updates can also be given by announcement.

• Encourage proxy voting. Include specific provisions in the notice of meeting encouraging shareholders to vote by proxy. Facilitate online voting to pre-empt any disruption to postal services. Supplement this with appropriate announcements and website updates. • Establish an online shareholder Q&A for the AGM. Shareholders can post questions related to the business of the AGM. To the extent practicable, this should be kept up-to-date with answers up to the deadline for proxy voting. Questions can also be answered at the AGM, in particular if the AGM is being streamed live. • Consider announcing a shareholder event to be held later in the year. Although this will not be the AGM, companies may wish to offer shareholders, particularly retail investors, the opportunity to engage with directors later in the year. • Ensure the AGM will be quorate. Generally, this is likely to require a small number of attendees (2-5) and relevant provisions will be in the Articles. Restrict the number of non-shareholder attendees. • Pre-register attendees. If not already part of the AGM process, establish pre-registration to attend the AGM, so as to assess the number of attendees. • Live stream the AGM. Where technology possible, a live stream of the event and/or a phone link could be set up. These options will not constitute formal attendance at the meeting. • Introducing appropriate safety measures. The Articles will likely contain provisions permitting directors to introduce arrangements before and during an AGM to ensure the safety of attendees. Companies could rely on these provisions to take appropriate safety measures, including restricting the number of attendees and requiring temperature checks and selfcertifications. Details of the proposed arrangements can be included on the website

and an appropriate announcement can also be made. • Dispense with the provision of refreshments and any other complimentary offerings before and after the meeting. Announcing this in advance is likely to reduce the number of attendees. • Attendance of directors. It is good practice for as many of the directors as possible to attend the AGM, but this is not a legal requirement and it therefore does not invalidate the meeting if some (or all) are unable to do so. If directors do not attend in person, they could be available for questioning via video link.

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PQ Magazine May 2020

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financial reporting PQ

d-19: what now? • Update the market. If the time and date of the AGM have been publicised, an update announcement should be made. • Annual authorities. Check the dates on which standing authorities approved at the previous AGM expire. Generally, authorities will be expressed to expire at the earlier of the date of the following AGM and 15 months after the AGM at which they are granted. • Remuneration policy. Companies required to approve a new remuneration policy at their 2020 AGM have until the end of their current financial year to approve the new policy. • Dividend payments. Delaying the AGM may mean that the company’s final dividend is not paid on the expected date. If the timing is considered important, the payment of an interim dividend in lieu could be considered. • Implications for Listing Rule and DTR disclosures. If listing rules and DTR statements have been included in the report and accounts, these will need updating if the notice of meeting is issued more than one month after the report and accounts. • Consider contract with venue provider. It may be possible to avoid paying the costs for a booked venue if force majeure can be claimed.

Delay convening the AGM A company which has not issued its notice can delay its despatch and potentially change the location of the AGM. The latest date to hold an AGM is six months after the financial year end and so companies with a 31 December year end will have relatively little leeway. Institutions are unlikely in the circumstances to object to the AGM being convened on less than 20 days’ notice, and so generally, companies can convene the AGM on 21 clear days’ notice absent of any longer period in the Articles. If adopting this approach companies need to consider the following:

Postponing the AGM If a company has issued an AGM notice, it can postpone its AGM if its Articles permit it to do so. Companies with the ability to postpone their AGM can opt for the flexibility of issuing their AGM notice as originally planned and relying on the ability to postpone the AGM based on the situation at the relevant time. The Articles will govern the process to follow when postponing the AGM. Assuming the Articles do not provide otherwise, there is no statutory minimum notice period for rearranging meetings. As a matter of good practice, the company should try to provide 21 clear days’ notice but it may be reasonable in the circumstances to have a shorter notice period. The postponed meeting must be held within six months of the company’s financial year end and so companies with a 31 December year end have little scope here. Similar considerations to those under ‘Delay convening the AGM’ apply to companies which decide to postpone their AGM.

Adjourning the AGM A company should only consider adjournment if it has issued its AGM notice and does not have postponement provisions in its Articles. Generally, a quorate meeting is required to be held in order to enable an adjournment. However, the Articles will often permit greater flexibility allowing, for example, for adjournment for lack of quorum. The adjourned meeting must be held within six months of the end of the company’s financial year end. If it is known in advance of the meeting that it will be opened with the intention of adjourning it, an announcement to this effect should be released and the company’s website should also be updated. If it is not possible to hold the meeting at the relevant venue because of closure, companies should make an announcement of the adjournment and also arrange for representatives to be present outside the venue at the time of the meeting to inform shareholders of the adjournment. Although there is no authority for this course of action, it was followed for meetings convened at the site of the 1992 bomb attack in the City. Again, similar considerations to those under ‘Delay convening the AGM’ apply to companies which decide to adjourn their AGM. Conducting a hybrid AGM Virtually-only meetings are not viable given they may not constitute valid meetings. However, if the Articles allow this, companies can conduct a hybrid AGM (a combination of a physical and electronic meeting). If a company has already issued its AGM notice for a physical-only meeting but its articles allow a hybrid AGM, it can change to a hybrid AGM. An announcement should be made to reflect this decision and the website should be updated. Companies conducting a hybrid AGM should make shareholders aware that they can participate fully in the AGM electronically. Holding a hybrid meeting in itself will not preclude the ability of shareholders to attend in person and therefore the measures under preclude the ability of shareholders to attend in person and therefore the measures under ‘Adapt the basis on which you hold the AGM’ should also be considered. PQ

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and technologies that are changing the way we do business – from governance, risk and control to FinTech and more. Throughout, you’ll use real-world case studies that will harness your strategic thinking skills and put theory directly into relevant practice. Study your way while building a global network It can be tricky to fit studying and working around other commitments such as family life. To help you with this, the MSc Finance and Strategy Global online course at Manchester Metropolitan University has flexibility at its heart, giving you the freedom to balance study with your busy work or family life while you grow your global network. This course has multiple intakes throughout the year in January, March, May, July, September and November. To find out more, visit Manchester Metropolitan’s website PQ Magazine May 2020

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home working PQ

Cath Littler offers some sage advice on how you can make the best of working – and studying – under lockdown conditions hanks to the recent Covid-19 outbreak, many PQ readers will be working – and studying – from home, perhaps for the first time. It can be a considerable adjustment to make, especially if you are sharing your space with family or housemates, so here are some of the tips that we have shared with our Online and On Campus students to help you get the most out of your new working environment. 1. Get dressed: While you may have no need to change out of your PJs, staying in clothes that you usually associate with sleep and rest won’t help you get into a work mindset. Putting daytime clothes on will help you be more productive, and you’ll thank yourself when your boss requests a video meeting on short notice! 2. Establish a routine: While it may be tempting to roll straight out of bed to your desk, try to stick to your usual routine as if you were going into the office. Start and finish work at the same time, and take breaks when you normally would. Humans are creatures of habit, so keeping the same times as you would in the office is one less thing your brain will have to adapt to. 3. Have a workplace: Find your spot in the house that is your workplace and work there. Leave it behind or clear it up when you have finished for the day. Don’t do non-work there, for example internet browsing. 4. Communicate your expectations: One of the most difficult aspects of working from home is managing expectations with the people you live with. If other members of your household are also working from home, you may find it easier to work in separate rooms and to co-ordinate lunch hours so you can take a break together without becoming a distraction. 5. Get some fresh air: Working from home, particularly with the current restrictions on movement, means you risk going days without stepping outside, so make the effort to get outside every day if you can. Even a quick walk round

PQ Magazine May 2020

Keeping calm and carrying on

the block provides a welcome change from looking at your screen and helps you to be more productive. 6. Set boundaries and switch off: The act of leaving the office and making the journey home lets your brain make a clear distinction between work and nonwork time, but in the absence of a commute try to find something else that

will encourage you to switch off. Exercise, gardening or playing with the kids is a great option for this. Make sure you switch off your computer and clear away your work items as best you can, so you’re not tempted to go back into work mode. PQ • Cath Littler is the Head of L&D (Accounting) at Mindful Education

PQ ACCA exams

Accentuating

the positive Joel Romaner reviews March’s AFM exam, which helped put a smile back on his face n the current climate, as we grasp to cling onto the positive, my day has just been brightened by the sight of the March 2020 AFM exam. It was sat only a few weeks ago, but for many of us that feels like a lifetime. As a tutor I have always insisted my students start in section B, so to stay true to my preachings I did the same. I began with Q2, a classic foreign exchange risk requirement, which incorporated the hedging techniques of forward exchange contracts, foreign exchange futures and options. A slight twist to the question came in the form of the derivative contracts being quoted in euros, while the exchange rate base currency was in dollars. This was a deliberate attempt to cause confusion, though one which could have been easily side stepped by reversing the exchange rate to ensure euros became the base currency. I also tend to encourage students to pick up the straightforward discursive marks before becoming heavily embroiled in the computations. Hopefully, many would have recognised

the simplicity of part A, and collected marks from a discussion about the rationale behind the firm hedging, and the benefits to shareholder value if the policy is effectively communicated. The requirement then asked which hedging technique should be recommended, in which a generous 11 marks could have been obtained from undertaking the computations and drawing a rational conclusion designed to maximise the dollar receipt. The final requirement was to calculate and discuss the margin payments required on a day-to-day basis. Due to the infrequency of this task I would understand if some were unsure, though simple marks were possible to collect. I next moved on to Q3, which on the surface was a standard investment appraisal requirement. Upon closer inspection, though, this was perhaps the most unusual question of the entire paper, and one which incorporated the technical article on conditional probability that was released in late 2019. Comfort could be taken, however, from the rather pleasant NPV, which

would have boosted confidence and put six marks on the board, prior to the additional considerations planted in the scenario. Candidates had to recognise the probability of a recession and the impact this would have on the initial NPV, and then take into consideration an alternative investment, prior to deciding whether it was worth abandoning the opportunity today by selling to a competitor, or waiting a year to discover if the regulatory approval would be granted. This complex aspect was counterbalanced by the final requirement in the shape of a discussion around the rationale for a monitoring system and undertaking a post-completion audit. Candidates then had to apply this to two earlier projects and identify the benefit that could have been derived for the company. I then turned my attention to section A, which was based upon the retail sector. A large out-of-town firm, Westparley, was seeking to diversify its product offering via the acquisition of an indirect competitor, Matravers. I would have encouraged my students to be efficient and collect marks from the more digestible tasks set in parts A and C. The inclusion of the word ‘factors’ is a blessing and gives the candidate scope to be creative, thus making the ability to collect marks much more achievable. This was present in both the discussion of behavioural factors and financing methods. Once past this point the inevitable report was required, containing a huge 36 marks. There were some altogether pleasant computations, incorporating the frequently examined PE ratio, WACC of combined entities and the free cash flow to equity, in order to establish the value to be derived from the proposed acquisition. Once the computations had been completed, the candidate then had to take stock and engage in a discussion about the strategic and financial value of the acquisition, including a comment on the estimations and assumptions incorporated into the numbers. The picture emerging from the computations suggested that there was value to be attained, though concern should be raised at the decision to dispose of the tech division, which while overvalued, may increase footfall and complement the other items sold by the firm. With approximately 45 computational marks and some rather straightforward discussion tasks, I remain hopeful that this is a paper that will bring cheer to many in our global time of need, and push the pass rate back above the magical 40% barrier. • Joel Romaner is a senior tutor at LSBF specialising in FM and AFM PQ Magazine May 2020

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PQ investment and tax

It needn’t b Zahid Ahmed explains all you need to know about the Enterprise Investment Scheme, the Seed Enterprise Investment Scheme, and venture capital trusts

ne of the areas examined at the Advanced Taxation level is the interaction of taxes & the impact of them in various situations. Many students tend to forget how an investment will impact multiple taxes. The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) were introduced to encourage direct investments in unquoted start-up companies. SEIS companies are similar to EIS ones, but normally they tend to be smaller and at an earlier stage of their trading cycle, and as such they bear more risk, which means more relief across CGT and IT. Venture capital trusts (VCTs), on the other hand, were introduced on the back of EIS and SEIS to encourage indirect investments in such

companies. In short, a venture capital trust will do the ground research for you – like a fund manager. Now let’s consider a scenario where an individual has made a chargeable disposal and would like to invest in either an EIS, SEIS or VCT, but is unsure of the benefits/drawbacks of each scheme. This article will consider the impact of capital gains tax, income tax and inheritance tax in such scenarios. As you can see an investment in an EIS, SEIS or VCT will impact multiple taxes, and students should bear the above in mind when answering questions on this. • Zahid Ahmed is a tutor at LSBF

The Enterprise Investment Scheme Qualifying investor

Qualifying company – ‘MUSTAFF250’

1. Must be at least 18 years old and must subscribe newly Max capital raised in the last 12months £5million issued shares (lifetime of £12m) 2. Must not own any shares in the company before this investment

Unquoted trading company

3. Cannot purchase more than 30% of the shares

Sound ound financial health (EIS company)

4. The investor must not be an employee prior to investment

Trading rading from a permanent UK establishment Assets before issue must be ) £15m and after )£16m Funds raised by the company must be used to grow the business Funds unds must be raised during the first 7 years of trading 250 – max number of employees

Interaction of taxes should an individual invest in an EIS CGT

IHT

Relief

If an individual disposes of any chargeable asset and reinvests in a qualifying EIS, then it is possible to defer some/ all of the gain arising on the asset

Should an investor subscribe for shares he/she can claim relief in the form of a tax reducer

Should an individual make a lifetime/death gift of EIS they can qualify for Business property relief

Operation of Relief

Deferral relief which is lower of: 1. Capital Gain 2. Cost of EIS shares 3. Some smaller amount – should investor want to preserve AE

1. Dividends received from the EIS company are subject to Dividend income tax rates 2. Relief is given at a rate of 30% of the original cost of investment (upper limit of investment £1,000,000) 3. The investor can elect to claim whole/part of the subscription treated as if it was made in the previous year

The shares must be held for a minimum period of 2 years

Conditions & implications

To claim the relief: 1. Individual must be UK resident at time of investment 2. The reinvestment must be made within a qualifying period (12 months before & 36 months after the gain arises) 3. Reinvestment must be wholly for cash in new shares. If shares are held and sold with 3 years CGT arises

If the shares are sold within 3 years then the EIS relief must be repaid to HMRC

PQ Magazine May 2020

investment and tax PQ

be taxing… Venture capital trusts

SEIS (smaller earlier start-up companies) Qualifying investor

Qualifying company – ‘MUSST25’

Qualifying investor

Qualifying company – ‘QORMS’

Quoted on the UK stock exchange

1. Must be at least 18 years old and must subscribe newly issued shares

Max capital raised £150,000 in the last 3 years

2. Must not own any shares in the company before this investment

Unquoted trading company

Operates from a permanent establishment

3. Cannot purchase more than 30% of the shares

Sound financial health (SEIS company)

4. The investor must not be an employee prior to investment (can become a paid employee post investment)

Start up company

Raised a maximum of £5m in the last 12 months and no more than £12m over lifetime

Mainly invests in unquoted trading companies like EIS & SEIS

Trading from a permanent UK establishment

Sound financial health

25 – max number of full-time employees

Interaction of taxes should an individual invest in a SEIS CGT

IHT

Relief

If an individual disposes of any chargeable asset & reinvests in a qualifying EIS, then it is possible to fully exempt some/ all of the gain arising on the asset

Should an investor subscribe for shares he/she can claim relief in the form of a tax reducer

Should an individual make a lifetime/death gift of SEIS they can qualify for Business property relief

Operation of Relief

1. Dividends received from the SEIS company are subject to Relief is lower of: Dividend income tax rates 1. 50% x Capital Gain 2. 50% x Cost of EIS shares (upper limit on the cost of shares 2. Relief is given at a rate of 50% of the original cost of is £100,000) investment (with an upper limit of £100,000) 3. The investor can elect to claim whole/part of the 3. Some smaller amount – should investor want to preserve AE subscription treated as if it was made in the previous year

Conditions & implications

To claim the relief: 1. Individual must be UK resident at time of investment 2. The reinvestment must be made in the same tax year as the disposal 3. Reinvestment must be wholly for cash in new shares

The shares must be held for a minimum period of 2 years

Upon disposal of Shares: If the shares are sold within 3 years, then the investor must repay 50% of the proceeds of the shares

Any gain exempted becomes chargeable if : 1. The shares are sold within 3 years 2. The investor becomes non–resident within 3 years of share issue 3. The company ceases to be a qualifying company

Interaction of taxes should an individual invest in a VCT

Relief

CGT

IHT

No relief as Shares in VCT are an exempt asset i.e no CGT implications

Should an investor subscribe for shares he/she can claim relief in the form of a tax reducer.

No relief as shares do not qualify for Business property relief

Operation of Relief

1. Dividends received from VCT are exempt to income tax as long as shares cost <£200,000 2. Relief is given at a rate of 30% of the original cost of investment in the same tax year of investment

Conditions & implications

Upon disposal of shares: If the shares are sold within 5 years, then the investor must repay the relief back to HMRC (30% of original investment)

PQ Magazine May 2020

PQ AAT accounting software exams

Some Sage advice… Sam Hannigan explains how you can pass accounting software exams using Sage’s products How to pass the Using Accounting Software Unit on Sage Business Cloud Accounting Who would have thought that the Using Accounting Software Unit would be so challenging? With the different accounting software packages available on the market students are able to complete this assessment on whatever software they chose. Sage Cloud Accounting and Sage 50 have been the most commonly used accounting software for this unit. However, some students are experiencing difficulties when they arrive at their test centre as they are faced with a version of the software they are not familiar with. For students who are self-studying or studying via distance learning it is essential you let the exam centre know which software you wish to use before the exam. Many centres will assume Sage 50 will be used if they are not told otherwise. Many centres are also struggling to understand who is responsible for the setting up of the cloud-based software, advising students that they will need to use their own log-on details. However, this is not an option – the student would be completing a live exam using their own software and this could potentially lead to malpractice as the student will have access to live data after the completion of the exam. To reduce the risk of data being taken from the exam it is essential that centres ask students to create a NEW Sage Account using the 30-day free trial option, and choose the cloud based software they are familiar with. Setting up the software is part of the exam and therefore MUST be completed by the student and NOT the centre. When the software has been set up and the exam has finished the centre must change the password so the student can not gain access after they have left the centre. To complete the UACS exam sitters are allowed just two hours, and

this includes uploading the reports to Secure Assess. Many students are finding that two hours is not enough, with some failing due to not uploading any or all of the reports. Without the reports the exam is an instant fail and if a detailed Audit Trail is not uploaded students will lose valuable marks which, in turn, may mean they will fail as most of the marks are generated from the Audit Trail. From April 2020 exam papers are NOT allowed to be printed off. This is due to the increase in malpractice and maladministration cases that have been reported. Centres have been informed that they can provided TWO screens in order to make the exam easier to follow, which should help with time constraints. Tips on how to Pass the UACS exam using Sage Business Cloud Software When you have downloaded the Sage Business Cloud Accounting software it is advisable to check that the first page has the following tabs as shown below:

The Getting Started tab is essential to ensure the opening balances are recorded correctly and efficiently. Remember, the exam is only two hours long, so you need to save as much time as possible when data entering. One area that students struggle with is entering the Opening Balances after they have created their Customer and Supplier Accounts, especially when there is more than one opening balance to enter. As this is cloudbased software, the software will not allow for the opening balance to be entered as the first day of the financial year. Therefore, you will either enter the transaction as the last day of the previous financial year or if you have numerous transactions you would use the date stated on the invoice or credit note.

PQ Magazine May 2020

AAT accounting software exams PQ Entering Opening Balances These instructions work for entering Opening Balances for both Customers and Suppliers. We will use entering customer opening balances as an example. Go to Summary tab:

until ALL transactions are entered. The final tip is to make sure when you print the Audit Trail report it is a DETAILED report that is created and you enter in the opening balances. Therefore, choose Custom and entering in the dates required.

Click on 2 Enter money customers owe to you. Then click on

choose your customer from the drop-down list. The date will automatically set the last day of the previous financial year. If you are entering a single amount leave the date as this. However, if you have multiple transactions to enter then enter the date as shown on the invoice/credit note. The reference will be the invoice/credit note number if more than one transaction is entered, or it can be opening balance (for example) if there is just one amount to enter.

Click Click PDF

Your report will be saved in the file shown at the top of the page.

When you have entered the details Click SAVE. If you have another transaction to enter follow the same instructions

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PQ Magazine May 2020

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046_PQ 0520.qxp_Layout 1 16/04/2020 18:19 Page 2

PQ the SBL exam

A disciplined approach will pay dividends trategic Business Leader (SBL) CBEs are set to be rolled out worldwide on a staged basis. Although many students have experience of CBEs on the Applied Skills papers, SBL is different in many ways and demands a particular approach. As a first step, please review the following excellent ACCA resources: CBE Guidance: http://tinyurl.com/qs5odjb Workspace Demo: http://tinyurl.com/v4d9zh2 My recommended approach is designed to avoid continually switching between windows by gathering all relevant data in the Response Options first. This is important; under exam stress, it is easy to be overwhelmed by too much data on-screen, which can lead to a confused answer. I suggest you follow this approach and then adjust to suit your style, if necessary.

Stage 1 – Task Analysis 1. Go quickly through the instruction screens; you should be familiar with these already and not need to use the full 10 minutes available for this exercise. You can start the exam before this time is up and gain a few extra minutes. 2. Familiarise yourself with the number of Tasks and Exhibits. 3. Head-up your Response Word Processor (RWP) with the word ‘PLAN’ 4. Copy/paste the Overview (Exhibit 1) into your RWP. 5. Copy the first task into the RWP. You will lose the formatting when you do this, so be careful to separate out each part of the task (a), (b), etc. 6. Bold key words in each requirement, e.g. ‘Memo’, ‘Board of Directors’, ‘and’, etc. You do not currently have the option to use colour highlighting in your Response Options, but this may change. 7. Under each sub-task (e.g. part a, part b, etc.), type: a. Time available or better still time to stop (remember to include PS marks to calculate this). Alternatively, write this on the paper provided in the exam. 46

b. Number of points to be made at (usually) two marks each. c. Presentation, if relevant, e.g. table/slide, etc. d. First thoughts on your answer e.g. PESTEL, 5-Forces, 6 Capitals, etc. These should NOT be detailed, they are simply reminders: you have not read the Exhibits yet, so you don’t know what is relevant. e. Reference to the relevant Exhibit/s; it is often reasonably easy to marry up the Task to the relevant Exhibit. If this is not immediately obvious, leave this step for when you read the Exhibits. It is also possible that more than one Exhibit is useful for a particular Task; but often, most of the relevant data for each question is contained in one Exhibit. 8. Repeat 5-7 above, for the remaining Tasks. 9. This whole process should take no longer than 15 minutes. You’re now ready to read the Exhibits. This process should be automatic by the time you attempt the paper. It is an effective way to de-stress before starting

Worried about sitting the SBL computerbased exam (CBE)? Ashim Kumar has some advice to put your mind at rest

the thinking process. And it helps ensures that your answer proper demonstrates professionalism (a key expectation in the exam). Stage 2 – Data gathering 1. Start with Q1(a). Open and read the relevant Exhibit(s) and copy/paste key information to the RWP, underneath the task or sub-task to which it applies. 2. These may be multiple sentences, or even short paragraphs. Do not waste time on selecting precise words/phrases. 3. Continue this for all questions, until you run out of time; that is after 60 minutes. 4. You may not have analysed all the Tasks at the end of 60 minutes, but that doesn’t matter. You MUST start answering the questions at the end of your preparation time. 5. You now have all relevant data in your RWP, and an answer plan. Close all other windows. Notes on the Scratchpad and physical paper are not marked, so I recommend not using the Scratchpad, and use paper only to note finish times for each answer, as described above. Stage 3 – Earning your marks 1. Write the heading ‘Answer’ under each plan. You can add lines later. 2. Number your answers; 1(a) 2(b), etc. There’s nothing more frustrating than trying to guess which question a candidate is answering. 3. Please remember that PS and Professionalism marks are critical to passing the SBL paper, CBE or not! 4. Copy/paste text to be used as subheadings (key phrases from the Tasks, Exhibits and Frameworks) freely from your plan as relevant. 5. Do NOT simply repeat facts from the paper; this adds no value and will earn no marks. 6. Use the state/explain/apply approach to earn your two marks for each point. State the principle/Explain the principle/Apply the principle to the question. You have 3.6 minutes (1.8 marks x 2 minutes) in which to write a two-mark answer; a great deal can and should be said in that time. 7. Make as many points as the question demands, e.g. a 10-mark question requires five points to be made. 8. State the most important points first (your notes from Stage 1 above, will help you identify these). 9. Stop on time and move to the next task! ACCA students can access my webinar, delivered to SBL Trainers, here: http://tinyurl.com/rp337gd PQ • Ashim Kumar offers SBL training with FME Learn Online – for more go to http://tinyurl.com/t8hrbgz. A 10% discount is available to PQ readers using the discount code PQ10%! during the registration process. PQ Magazine May 2020

047_PQ 0520.qxp_Layout 1 16/04/2020 18:20 Page 2

the troubleshooter PQ

Phil Dunn explains all you need to know about the balanced scorecard erformance measurement has been defined as: “A process of assessing progress towards achieving pre-determined goals, including information, the efficiencies with which resources are transformed into goods and services (outputs), the quality of those outputs (how well they are delivered to clients and the extent to which clients are satisfied) and outcomes (the results of a progress activity compared with its intended purpose).” Performance measurement underpins performance management, which simply uses the information in the form of performance indicators (PIs) to effect positive change across the organisation so that management achieve their corporate objectives. There is a need for a structured methodology to aid the setting of managers’ objectives. Many organisations use the balanced scorecard framework. The concept was developed by (R Kaplan and D Norton, 1993) at Harvard. It is a device for planning which uses a balanced rather than a skewed approach, so enabling managers to set a range of targets with appropriate objectives. The framework translates an organisation’s strategy to set performance indicators across four perspectives: financial, customer, internal business process and growth.

Balanced scorecard Strategic perspectives

Know the score

Financial perspective: This focuses on satisfying shareholder value added, and measures would include return on capital employed (ROCE) and the percentage profit margin. Customer perspective: This is an attempt to measure customers’ views of the organisation by measuring customer satisfaction. Examples would include customer satisfaction with timeliness and customer loyalty. Internal perspective: This aims to measure the organisation’s output in terms of technical excellence and consumer needs. Indicators would include unit costs and total quality measurement. Innovation and learning perspective: This focuses on the need for continual improvement of existing products and developing new ones to meet customers changing needs. A measure would include percentage of turnover attributable to new products. The following is an Extract from the Financial Statements of Coverdrive Ltd together with additional notes for Year Ended X19 Coverdrive Ltd Turnover Cost of sales Gross profit Admin and dist cost Profit before taxation

£m 3.20 2.40 0.80 0.20 0.60

Additional notes: Total assets less current liabilities £3.1m Turnover: existing products £2.24, new products £0.96 of which £2.10m is to

existing customers. Included in the total costs are those relating to: Research and development £0.26, training £0.31, quality assurance £0.12 and customer support £0.08. From this summary we can develop a series of key performance indicators (KPIs), relevant to the four perspectives focused in the balanced scorecard: • Financial perspective. Return on capital employed. % net profit to turnover (based on profit before taxation). • Customer perspective. Customer support as a % of turnover. % of business to existing customers. • Internal perspective. Quality assurance as a % of turnover. Admin and dist cost as a % of turnover. • Innovation and learning perspective. Training costs as a % of total cost. % of turnover attributable to new products. An analysis of the Coverdrive Financial Statements extract shows: • Financial perspective: return on capital employed 19.4%, % net profit to turnover 18.8%. • Customer perspective: customer support as a % of turnover 2.5%, % of business to existing customers 65.6%. • Internal perspective: quality assurance as a % of turnover 3.8%, admin and dist cost as a % of turnover 6.3%. • Innovation and learning perspective: training costs as a % of total cost 11.9%, % of turnover attributable to new products 30%. Coverdrive should include such KPIs in its budgetary process and compare budget with actual performance on a rolling basis. It will also use such an analysis on a year-on-year basis. It would have been most useful to have included in this short introduction to this topic Financial Statements, say for a three-year period, but unfortunately this was not possible due to lack of space. PQ • Dr Philip E Dunn is a freelance author and assessor, Kaplan Distance Learning

Registered Tuition Provider

PQ Magazine May 2020

PQ insolvency

Going for Insolvency has taken on a whole new meaning in the Covid-19 world we are living in. But, what are the rules as we knew them... Training Link’s Jennifer Nyland takes a look for us company is insolvent when it can’t pay its debts. This could mean either it can’t pay bills when they fall due or it has more liabilities than assets on its balance sheet. A company may also be forced into an insolvent procedure either by the Court because it is just and equitable, it hasn’t traded for over a year since incorporation, or the process may be forced by a creditor. We learn throughout our studies about company formation and the statutory requirements of preparing accounts, but what about when the life of that company comes to an end and it runs out of money? Ending a business is a traumatic but often a necessary procedure if the business is under performing, has creditor pressure, or has had customers fold on them. It is important to note that anyone dealing with formal Insolvency Proceedings and taking ‘appointments’ must be licenced by a governing body, they are known as Licenced Insolvency Practitioners (IP). The Official Receiver (OR) is an exception to this rule as they are civil servants working on behalf of the Insolvency Service, and they are an officer of the Court. Insolvency proceedings are dealt with under their own law, by way of an Act and Rules with accompanying schedules. It is known as the Insolvency Act 1986 (IA1986). Insolvency is very technical and complex area, but in this article I intend to give a very simple outline and the specific terminology used in the different processes of: 1. Individual/personal insolvency procedures. 2. Corporate insolvency proceedings. 3. The order of distribution to the creditors.

1. Personal insolvency/sole trader This type of insolvency will only relate to an individual (a sole trader or as part of a partnership, or be working under PAYE). Bankruptcy: This is the oldest form of insolvency, dating back to 1572 when the first piece of legislation appeared in England (it was called the Statute of Bankrupts 1542). Bankrupts were then seen as crafty individuals that would obtain others good and flee to places unknown. This Act gave the Lord Chancellor the power to imprison 48

these people, take their assets and sell them for true satisfaction and payment of the creditors. The Insolvent Debtors (England) Act 1813 gave rise to the possibility that debtors could request release from jail after 14 days by taking an oath that their assets didn’t exceed £20, and the Bankrupts (England) Act 1825 allowed people to start processing their own bankruptcies. While the general principle remains the same, the stigma surrounding bankruptcy has changed, you can no longer be sent to prison and you’re no longer seen as a crafty crook. Bankruptcies are now looked at by a person from the Insolvency Service, known as an ‘adjudicator’, who will then decide if you should be made bankrupt. A creditor may also petition for your Bankruptcy at the Court. Initially, it is dealt with by the OR, who will be appointed as the Trustee. ALL assets belonging to the individual and/ or has an interest in, will vest in the Trustee, meaning they are available for the Trustee to sell. This includes their cars, homes, watches and jewellery, etc. Tools of the trade and basic living essentials are not included, but if you have a Rembrandt hanging on the wall, be prepared to lose it! Individual Voluntary Arrangement (IVA): This is a procedure that is dealt with only by an IP. It is essentially a deal that is done to pay the creditors so many pence in the £ over a period of around four to five years. The debtor will approach an IP and request they become their Nominee to deal with the arrangement. A proposal is drafted and sent to all known creditors. If approved, the Nominee then becomes the Supervisor of the arrangement. In short, the debtor will pay a monthly amount that is collected and then paid to the creditors (generally they are around 40p in the £). However, the interest in any home, buildings or land will have to be dealt with in year 4, which could mean the re-mortgage or the sale of the equity. 2. Corporate insolvency The most ‘exciting’ insolvency processes happen in the corporate world, they encapsulate huge buyouts, trading administrations and major deal making. However; most newspapers and other media PQ Magazine May 2020

insolvency PQ

r broke…? giants fail to recognise the proper terminology and function of the IP. These following processes can only take place over Limited Companies and LLP’s. Compulsory Liquidation (Winding Up): Initially dealt with by the OR, this type of insolvency will have been processed by the Court by issue of a Statutory Demand. Then, upon failure to pay, compound or satisfy, a Winding Up Petition will be served upon the debtor by a creditor. This is then be passed to the OR who will act as the Liquidator, providing certain conditions are met. If the case is too big an IP can be appointed who will then act as Liquidator. All the company assets will be under the control of the liquidator and it is his/her duty to realise these for the benefit of the creditors and investigate the director’s conduct for the entire period they have been a director. They will also look at shadow directorships and the reasons for the failure. Creditors’ Voluntary Liquidation (Winding Up): This type of liquidation is as it reads, it is voluntary. The Director of the company with agreement of the members (shareholders) resolve to place the company into liquidation as the company is unable to pay its debts. This process is undertaken by the IP and does not require a Court hearing. Creditors are informed a meeting that will take place in the future to place the company into liquidation. Once this has happened the IP is then the Liquidator of the company, and as above, has a duty to realise the assets for the benefit of the creditors and investigate the Directors conduct for the entire period they have been a director, they will also look at shadow directorships and the reasons for the failure. Company Voluntary Arrangement (CVA): This procedure is the same as the IVA but for a company. The company can continue trading during the CVA and afterwards. A CVA can be proposed by the company’s directors, but not by its shareholders or creditors. Administration: This is the most versatile process, but certain conditions must be met in order to place the company into Administration. The process is done always via an application to Court and can be done by the Company, its Directors, Company creditor(s) or the holder of a floating charge. The OR does not have any function in this type of process. Administration has to achieve one or more of the following objectives: a. Rescuing the Company as a going concern, or

PQ Magazine May 2020

b. Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or c. Realising property in order to make a distribution to one or more secured or preferential creditors. Once appointed, the Administrator will take over the running of the company and work for the benefit of the company creditors and realise a better result. Directors will lose their powers and the Administrator (IP) can replace and appoint new directors. The Administrator will work to establish subsidiaries, raise or borrow money and grant security over property or bring and defend any legal action. Administration is very powerful, but is only commonly seen with large businesses that have a trading value or a value to be sold. 3. The order of distribution to creditors When the assets have been realised (this can take years on large cases) they will be distributed to the creditors in the following order of preference. • Secured creditors with a fixed charge. • Trustee/liquidator fees. • Preferential creditors – employees and HMRC. • Secured creditors with a floating charge. • Unsecured creditors – trade creditors and suppliers. • Unsecured creditors connected to the business (director wages, family members). • Shareholders/bankruptee (if there is any surplus remaining). Insolvency is a minefield of options and what ifs; professional advice should be sought immediately if a client is experiencing financial difficulty. It is important to note that as the accountant you will most likely be the second person to know the company is in financial difficulty (I say second, because one would think the director or individual would know first). There are, however, certain warning signs that may alert you: 1. Payment demand letters arriving at the registered office. 2. A Statutory Demand (SD1) being served at the registered office. 3. Rushed requests for management accounts for the purposes of loans. 4. Delayed responses to furnish you with information. 5. Extending financial year ends. • Jennifer Nyland, Training Link 49

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PQ careers

It’s time to sleep on it We are, it is often reported, a nation of insomniacs. And that was before Covid19 entered our lives! Nearly a third of us say we have difficulty getting to sleep, and this can have big implications for our health. There are some good practices that have been proven to help you sleep – having a dark place to sleep is key. You need to tell your brain and body it’s time for bed, so that means avoiding bright lights in the evening. You have heard this a thousand times before too, but you must put away the tech before bedtime. It’s best to leave a good hour between switching them all off and trying to get your head down. A good policy is no TVs or tech in the bedroom – but is that a step too far? Exercise is good, but not at night. It also has to be regular. You can’t just

Life at Grant Thornton Bethany Duffy, 20, is a Public Sector Audit Associate based in Carlisle. She has worked there for 18 months, joining the School Leaver programme after completing A-Levels. An AAT studier, she was recently crowned our PQ of the Year What time does your alarm clock go off on a work day? It can vary, based on whether I am travelling to a client, in the office or working from home (or if I decide to go for a swim). So I would say on average 6:30am. What’s the first thing you do when you get to your desk? Switch on my laptop, catch-up with colleagues, make a cup of tea, and write a to-do list. What’s on your desk? I have a tidy desk with a Henry desk hoover, water bottle and two small teddy bears. What’s the best thing about where you work? The people I work with are the best! Where’s your favourite place to go for lunch? I love The Good Sister in Carlisle – the falafel box and Reese’s peanut butter traybake are my favourites. What (or who) can you see when you sit at your desk? We

are on the seventh floor of the tallest building in Carlisle and so have great views of the city and the Lake District – on a clear day you can see for miles. Which websites are your favourites and why? Parkrun.org.uk. I love it and everything it stands for. I’ve now done over 250 of them. Which websites do you use for work? NHS, council, police and national parks’ websites. How many hours a week do you spend in meetings? No more than a couple of hours, but can be more during busy season. What time do you leave the office? Usually at 5pm but I do work extra evenings and weekends when needed. How do you relax? I love sport so I relax through running and swimming. I also have a Shih Tzu called Lola, so playing with her is

a stress reliever. What’s your favourite tipple? Rhubarb and ginger gin and tonic. How often do you take work home? I take my laptop home, although there is no expectation to work evenings and weekends. What is your favourite TV show? Wanted Down Under and The Apprentice. Summer or winter? Summer – I don’t like the cold! Pub or club? Probably pub but I am more of a restaurant and cocktail type of girl. Who is your hero? My mum – she’s the reason I am the person I am today. If you had a time machine, where would you go? Back to the start of my recent holiday to Australia and do it all over again. If you hadn’t chosen accountancy, where might you be now? In physiotherapy, marketing or teaching.

reprimanded from 24 months to 36 months, which all stays live on their file for that time.

need for ‘mentoring’ may have gone to a new high.

In brief

decide to go for a run in the hope of making you feel tired. It’s the regularity of the exercise that helps. Having a routine, maybe a bath or some simple meditation, will tell your body it’s bedtime. Some people say just the act of putting on your PJs can do it. Getting the temperature of your bedroom right is another plus. The optimum is supposed to be 18-18.5C, and you may need to leave a bedroom window open, too. This helps reduce the carbon dioxide levels. Researchers have also found that diets with high sugar and fat have been linked to lighter sleepers. We all need more fibre in our diet! Caffeine is also a no-no for many. Again, scientists have found that a quarter of the caffeine from your lunch time coffee is still swilling around your brain at midnight – and that’s not good. And what if you can’t sleep? Experts suggest that once you have been lying there for 20 minutes it’s time to get up, sit in a dimly lit room and do something else. Time to say goodnight… 50

You can’t do that! AAT is still picking up lots of members who are providing selfemployed accountancy or related services to the public while not registered, licensed or approved to provide such services. Many are also not registered with a supervisory authority for the purpose of anti-money laundering. This is a breach of the AAT’s code of professional ethics. In the last month or so members have been fined between £361 and £2,737, and

Young need to mentor Younger tech-savvy workers need to do more mentoring of their ‘Luddite’ managers, says a survey by YouGov. More than a third of junior employees said their bosses struggled with technology and that this disrupts productivity. With many professionals using video conferencing for the first time the

AI to create millions of jobs Millions more jobs will be created than lost with the advance of AI, says Sir Michael Brady. He predicts innovations in machine learning would rival the invention of the car in transforming productivity. Sir Michael, who heads up a new university in Abu Dhabi dedicated to the subject, first wrote a paper on AI 45 years ago.

The PQ Book Club: books you should read GDPR For Dummies by Suzanne Dibble (£23.99, Wiley Books) If you only buy one book to help you navigate the vast and mindbending waters of GDPR, then this should be it. Data protection lawyer Suzanne Dibble swaps her usual legalese for simpler prose, allowing any reader to access and understand GDPR, regardless of prior knowledge. As Dibble states, the 99 articles of ‘complex regulations’ within the GDPR “might not be something you care to read”. So

she has done the hard work for us, and replaced all the complicated jargon and terms with plain, readable English. My personal favourite bit is the ‘Foolish Assumptions’ section at the start of the book, debunking some of the misconceptions surrounding GDPR and those who think they can ignore the legislation. The book also covers issues such as types of data, from written documents to emails and websites; and even such things as social media

marketing; and how to deal with them in order to comply with GDPR rules. Dibble explains the differences between types of organisations, like charities or businesses; and even how to deal with the data of children. PQ rating: 4/5 An in-depth but not too daunting explanation of everything you will ever need to do to comply with GDPR. PQ Magazine May 2020

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

AGM in your front room How do you hold an AGM in a pandemic? With difficulty, is the answer. We have what the FRC and Chartered Governance Institute have to say on this very matter in this issue. But even they couldn’t predict what FSTE 100 Hikma Pharmaceuticals would do to make its AGM go ahead. It swapped a five-star grade II-listed hotel in London’s St James’s for a residential address in Surbiton with a pebble-dash front and a fence reportedly ‘in need of a lick of preservative’. It is the home of the company secretary.

NHS workers targeted

Adjusting to home working is not always easy. So the government has acted and has said MPs can claim £10,000 for additional office costs incurred as a result of the coronavirus. The money can be used to buy new laptops and printers for staff having to work from home. This comes on top of the £26,000 MPs can already claim to cover office costs. To help struggling MPs the authorities are suspending the 90-day limit for claiming costs and relaxing the requirements on producing evidence of money spent. The monthly credit limit on MPs’ payment cards has also been doubled to £10,000, and the single transaction limit has been increased to £5,000. Remember, we are all in it together.

Those wonderful tax avoidance promoters found a new target recently – workers returning to the NHS to help respond to the current crisis. You couldn’t make it up! HMRC issued a warning to anyone rejoining the NHS to turn their back on these unscrupulous schemes. Those being offered all have some common features (including using an umbrella company), although they may be described differently. Usually, the wages will consist of two payments. The first payment is declared as earnings often at around the National Minimum Wage levels. The second payment, that is claimed to be not taxable, is often described as a loan, annuity, shares, a capital advance involving mutual, joint or co-ownership, or a payment derived from a revolving line of credit facility.

US gets its taxes A new study from TaxWatch shows that large technology companies have historically paid four times more tax on their US profits than on profits made elsewhere. The study looked at pre-tax profits reported by major multinational companies in the technology sector – we are talking Microsoft, Apple, Alphabet, Facebook, Cisco Systems, Adobe, Intel and Nvidia here. The study found that over the past five years the firms have faced a tax rate of just 9.6% on profits generated outside the US. By contrast, they have seen a tax liability of 45% on profits generated in the US. Check out https://www.taxwatchuk.org

’ WEV E

Here’s another £10,000…

In need of beancounters?

Painting goes home An 18th century portrait that hung in an accountant’s office has been returned to its original setting. The picture in question is ‘Charles Strickland with a Fishing Rod’, painted in the 1760s. It has now been returned to Sizergh Castle in Cumbria, owned by the National Trust. Interestingly, when the accountant died, he stipulated in his will that the castle should have the first chance to buy the work. He didn’t donate it! An accountant, even in death…

Luckin Coffee, China’s biggest independent coffee company, has had to apologise after its Chief Operating Officer, Juan Liu, may have faked £250m of sales last year. The COO, along with some of his staff, has been suspended pending an internal investigation. Luckin is Starbucks biggest rival in China, and is a leadingedge company when it comes to using technology, using an app-based purchasing model with mobile coupons.

GOT THE L OT

GDPR for Dummies The General Data Protection Regulation is a complex set of rules you need to follow. GDPR for Dummies, by lawyer Suzanne Dibble, explains the simple steps to compliance and the consequences of not complying with GDPR rules. We are sure you have always wanted to discover what special category data is! Dibble also explains how to deal with a data breach – see our full review opposite. To get the chance to win this great book email ‘GDPR for Dummies’ to giveaways@pqmagazine.com. Remember, we need your name and address so we know where to send the prize.

The Pub Quiz Put on your game face, we have three copies of the Collins Pub Quiz to give away this month. There are over 10,000 brand new questions to sink your teeth into and 500 quizzes with three categories to test your brain power – easy, medium and hard. How about running an online quiz for your friends or family? We are sure you see yourself with the combined hosting talent of Alexander Armstrong and Sandi Toksvig! We have three copies of this fantastic book up for grabs. Email giveaways@pqmagazine.com, heading it ‘Pub Quiz’, and we will get the prize to the winners.

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 -AY. The main draw will take place on Monday 1 -AY 2020.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM PQ Magazine May 2020

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