PQ magazine, January 2021 by PQ magazine

January 2021

PQ Magazine January 2021

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contents PQ

IN THIS ISSUE p19

News 04ACCA exams So how were the December exams? We’ve all the news on what’s going on 05PQs revolting Give us hard copies of the study manuals, ICAEW students demand 06Audit manifesto ICAEW unveils five principles for a modern audit profession 08Environmental issues Accountancy bodies must put more emphasis on cclimate change, says the FRC 09AAT pass rates All the scores on the doors, up to June 2020 10ACCA degree Tie-up with Oxford Brookes University notches up two decades of academic success 12Tech news Businesses respond to pandemic by bringing in the robots Features, etc 14Have your say Will copying our bosses make us good auditors?; ACCA didn’t ask me about Examiner Reports cuts; Women notable by their absence; and our social media round-up

January 2021

16International standards

IASB wants new requirements governing mergers and acquisitions 17Home study How to make the most of studying online 18ACCA exams Association pledges to improve the exam experience for its student sitters 19CIPFA spotlight Life is never dull for ‘heroic’ public sector accountants – especially since the Covid-19 crisis kicked off 20PQ Awards 2021 We launch the accountancy awards that matter most – so get working on those entry forms! 23Study advice Top tips on how to study effectively. Follow these and you really will improve your exam hall performance 24AAT assessments The annual pass rates are out now – so

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what do they look like?

25Financial reporting In a

special four-page feature, FC Training’s Umar Tariq looks at how the pandemic has changed financial reporting 29Money laundering How you can prevent financial crime – and fulfil your legal obligations as an accountant

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31Test bank So what do you

know about marginal costing break-even analysis? Take our test and you’ll find out! 32Ethics A moral dilemma can cause real anguish for an experienced accountant. We explain how you can deal with such a situation 33Tax competitiveness How the world’s countries compare, according to the OECD 34Wellbeing#1 The pandemic is taking its toll on accountants’ mental health, says new survey by Hays 36Tax planning Neil Da Costa keeps it simple in explaining the CGT and IHT implications of lifetime gifts 37ACCA commitment The association explains why it is committing to the UN’s Sustainable Development goals 38Personal development How to improve yourself, day by day

39Contracts We take a look at

the controversial subject of awarding public sector contracts in a pandemic

40Wellbeing #2 Exercise, diet

and sleep all play a big part in helping you keep your equilibrium

41Careers Life At Cardiff Coucil;

our Agony Aunt Karen Young has some sage advice on how to get the best from LinkedIn; and our Book Club Review

42Fun stuff – and our fantastic giveaways

The columnists Robert Bruce FRC puts focus on firms’ climate change ‘promises’ 6 Prem Sikka Staff made redundant deserve better protection 8 Zoe Robinson Accountants must stop looking backwards and instead focus on the future 10 Mike Day Resources to help your company survive and prosper 12

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PQ news

GRAHAM HAMBLY Failure is not the end

As someone who never excelled at exams I am always interested in how people view failure, and how it doesn’t necessarily stop you getting to where you want to be. Astronaut Major Tim Peake, in his new book ‘Limitless’, explains he got a C, D and E at his A-levels. But he eventually went to Portsmouth University and got his BSc in flight dynamics and evaluation – and the rest, as they say, is history. Then there’s the Sage group’s Professor Sir Jeremy Farrar. He admits he was forced to resit his exams after “hitting a brick wall” with his studies, while focusing too much on sport. On Radio 4’s Desert Island Discs he wouldn’t reveal his grades but explained: “I didn’t quite fail, but I might as well have done.” Sir Jeremy says his story is a reminder of the importance of giving people a second chance in the education system. It also shows there are late developers and people who just have bad days in the exam hall. He said: “To be able to say that you’ve failed your A-levels and things turned out OK, if that turns out to inspire a single individual listening to this, I would be thrilled.” So, if you fail an exam this winter you know what to do. Brush yourself off and do it again, only this time better. And remember, that failure won’t determine who you are or what you can become. • As you might have noticed, we’re launching the 2021 PQ Awards this month. So get your entry in early – all the details are on page 20 Graham Hambly is the Editor and Publisher of PQ magazine and NQ magazine

MyACCA suffers outages ACCA’s exam week started with an outage, meaning more than 450 remote control sitters were unable to log onto their remote invigilated exams. In fact, there were two outages on myACCA – one on Sunday 6 December, the night before the exams started, and another between 9.45am and 11.15am on the Monday morning. ACCA apologised profusely for the problems and released a formal statement in the afternoon of 7 December (which you can read in full on www.pqmagazine.

com). It explained that all affected AA students were emailed to say they could rebook for the following week (14 December). It also made slots available for AAA PQs for the Tuesday 8 December. Frozen screens were also an

Your chance to shine Do you know anyone who deserves to win a shiny new PQ magazine award? Well, there are lots of them up for grabs, as we launch the PQ

magazine awards 2021 this month. This time we plan to hold the ceremony later than we usually do – in April, rather than the usual

AAT pilots still running AAT has been running a live pilot using remote invigilation since 7 September, working with its new partners PSI. For the duration of the pilot – which is due to end on 31 December – AAT is offering remote invigilation functionality for two

of its Level 1 qualifications. A full evaluation of this pilot will then take place. AAT continues to have regular dialogue with the regulators in order to aid understanding of restrictions and risks, and told PQ magazine it is also continuing to investigate

issue going into day two of the exams. As one SBL sitter explained: “Remote exam was an absolute shambles… on three separate occasions today OnVue froze on me and the test had to be restarted.” A fellow student said: “Mine froze for five minutes in the last 15 and I missed out on my review time, but your experience is really bad.” You can read our individual paper feedback and ACCA’s full statement of what went wrong on the first day of the exams at www. pqmagazine.com.

February. We are hoping to see some of you in person, but if that is not possible then our awards will go virtual. Our 2020 awards took place just before the lockdown at London’s Café de Paris. Among the winners on the night were ACCA’s student wellbeing hub, the North West NHS students’ forum and HTFT. The Editor’s awards went to AAT learning pods and Kaplan’s single use plastic campaign. Our reigning PQ of the Year is Bethany Duffy and Apprentice of the Year is Charlie Atkins. The deadline for entries is Friday 19 March 2021. Download the nomination form at https://tinyurl. com/y5jtj8dr • See page 20 for more details possible ways in which AAT’s more complex assessments might be made available. While there is no immediate plan to roll out RI across a wider number of qualifications and assessments, AAT stressed it is “considering options and continuing to work hard to adapt to the new environment we find ourselves in”.

In brief Pap 2021 and Beyond PQ magazine has joined London South Bank University for our fourth annual accountancy conference, planned for 3 February 2021. We have already signed up the wonderful Lord Sikka, Professor Richard Murphy and the UK director of Hays Accountancy and Finance, Karen Young. It will be a virtual one-day conference this time, and totally free – but you need to sign up if you want to be there. Check out page 7 for more. Or sign up as 4

a conference GUEST at https:// tinyurl.com/yy2ka5yh Pap ICAEW’s Adobe Flash issues ICAEW December professional level PQs just about to sit remote invigilated exams had to be reminded about Adobe Flash

updates. An optional update had been released that removed Adobe Flash, which ICAEW exam software relies. If trainees uninstalled the software they couldn’t access the exam software for their remote exams. Candidates needed to restore their computer to before the update, says ICAEW. The institute also had to apologise for an unexpected email about a remote invigilation system check. This was sent in error by its supplier. Students were told to ignore the email.

Pap Islamic Finance degree first Birmingham City University has launched the first accounting and Islamic Finance undergraduate course in the UK – a niche of the finance industry set to grow exponentially in coming years. The BSc (Hons) Accounting and Islamic Finance degree will see students study Islamic economics, while developing an understanding of corporate social responsibility and sustainability. For more information go to https:// tinyurl.com/yyv32tqs. PQ Magazine January 2021

news PQ

PQs ‘want hard copies of manuals’ Use your CIMA Excel planner CIMA has been reminding students they need to ‘get the balance right’ when it comes to studying for exams. The fear is many PQs quickly run out of steam by ‘overstudying’ – yes, that can happen! CIMA says you must avoid lumping together all your study time over the weekends or right before the exams. To begin with, you need to start with what your current week looks like, without studying. Using CIMA’s Excel study planner, you then fill in all your commitments, including work (obviously). This helps you find out exactly what time you have to study. The colour coded blocks help you quickly visualise the time you have to study and when is ‘out of bounds’. Find out more and download the planner at https://tinyurl.com/ ycmrl2hb

PQ Magazine January 2021

A petition has been started to try to reverse the ICAEW’s decision to stop printing hard copy study manuals. The petition, on change.org, says: “ICAEW has changed the exam process for students sitting exams in 2021. There will no longer be the opportunity to receive and study with hard copy versions of the workbook, question bank and permitted texts. “This will, it is claimed, make an already difficult exam process that much harder, as new students will no longer have the opportunity to have a physical book to reference in both revision sessions and actual

exams. “Please sign the petition to help reverse this decision and allow students the best possible chance of passing the ICAEW ACA.” When PQ magazine last looked 49 people has signed the petition. One signatory said: “We should be

AAT reduces staff numbers AAT has reviewed its structure and how it can operate moving forward following a forecasted reduction in its income as a result of the pandemic. AAT told PQ magazine it needs to ensure that it can continue as a viable business into the future, and as such it has been working

hard since the initial lockdown in March to reduce spending across the organisation. Regrettably, it said, this included the need to cut jobs. Proposals for a re-structured organisation were subject to consultation with staff during September and the outcome of the consultation was announced

encouraging trainee accountants to study more rather than limiting their opportunities for study. I find hard copies invaluable for in-depth study.” Another PQ asked: “Please reverse it!” You can check out at the petition at https://tinyurl.com/y6rb4rev in mid-October. As a result, 41 redundancies (37 compulsory and four voluntary) were announced, representing 16% of the workforce at the outset of the process. AAT explained: “This decision has not been taken lightly and our priority is to ensure that AAT has a strong future and that we continue to offer a strong suite of qualifications and tangible benefit to our members.”

PQ news

ROBERT BRUCE FRC puts focus on climate change

It is the time of year when, in theory, CEOs, CFOs and audit committee Chairs sit up and take notice. The annual letter from the Financial Reporting Council detailing what it is looking out for in the coming reporting year has just dropped through their letterboxes. This year, of course, it will be different. In the midst of a pandemic times change. The ‘key matters that are relevant to the 2020/21 financial reporting season’ will be somewhat different in the corporate mind. The words ‘scrambling’ and ‘chaos’ will be uppermost. But the FRC knows this. It concentrates on “the disclosure of liquidity risk, going concern and viability”. This should be to a company’s advantage. This year of all years should bring a company’s ability to provide really effective narrative explanations and reassurance into play. But the FRC is also warning that it wants to see full information about the effects of climate change. The FRC wants to know how climate policies and targets have been embedded and the likely impact. Traditionally, this would prompt a paragraph of greenwash. The FRC knows this. It says it doesn’t want a “disproportionate focus on ‘good news’ stories in parts of the business that are not material”. So this year times have really changed. There is an opportunity for companies to major on this. Detail and narrative will put them in a happier place when the pandemic recedes. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

The ICAEW Audit Manifesto ICAEW has set out a new Audit Manifesto as part of its AuditFutures initiative. It has distilled its vision into five principles for building a modern audit profession. ICAEW wants serious attention to be paid to purpose, identity, community, education and mindset. High on its list is education, and a commitment to holistic professional education. This will help to increase attention to developing curiosity, scepticism and critical thinking. The manifesto also says there needs to be a rethink on the purpose of audit education and training. To be meaningful it says it needs to be built on three interwoven aspects: excellence (pursuing a ‘good’ that is internal to the practice of audit); engagement (the ability and motivation to critically engage with the purpose and function of audit); and ethicality An IT services company in Cheam (soon relocating to Chessington, Surrey) is looking for a PQ accountant. Salary is negotiable and there is study support. The finance function is currently relatively small, but is expanding to support the rapid growth of the company and

(a broad understanding of ethics that emphasises ‘being’ rather than ‘doing’). Thinking differently about audit is at the heart of the AuditFutures initiative. It says: “The profession needs to adopt ways of thinking and working that unleash people’s full creative energy and foster their motivation and commitment.”

What the ICAEW really wants is different conversations to take place. This is necessary if the profession is to avoid inward-looking ‘Groundhog Day’ discussions, and a better-informed debate of audit’s future can then take place. You can find the manifesto at https://tinyurl.com/yyvxgf9g

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Call for three-year EY goverment ban The anti-corruption group Spotlight on Corruption is calling on the UK government to ban Big 4 firm EY from public contracts for three years because of what it calls “recurring professional misconduct”. The campaigning group has now written to the Crown Procurement Service saying it needs to look deeper into EY’s conduct. In its letter Spotlight on Corruption suggested that EY was a ‘high-risk’ supplier as defined by the

government’s own Strategic Supplier Management Policy. The 17-page letter also says EY should be forced to carry out an independent assessment about why misconduct has occurred at the firm and devise a plan to ensure it does not happen again. EY has gone on record as saying it disagrees with this characterisation, and nothing is more important to it than the quality of services it provides.

In brief Pap City tackles diversity issues The City of London Corporation has set up a new taskforce dedicated to improving socio-economic diversity at senior levels in financial and professional services across the UK. The taskforce was launched after research revealed 90% of senior roles in the financial and professional services industries are held by people from high socioeconomic backgrounds. The study also found those from lower socioeconomic backgrounds also take 6

25% longer to progress, despite there being no evidence of poorer performance. Pap PQ giveaway winners Lots of readers should have received something nice through the post, reward for entering one of our giveaways. Here’s the list of the recent winners. November winners: Frida puzzle – Tyrone Francis, Crawley. Puppy Love book – David Titterington, Cardiff; Marie Bunting, Norwich; and Holly Norris, Orpington.

October winners: Soda Jerk winner – Charlene Walker, Suffolk. Marvellous Mandala – Lucia Kotaiche, Doncaster; Elinor Yates, Warrington; and Faye Tollerton, Cambridge. September winners: Puzzle book – Emma Hakes, Cwmbran; Denis Pattern, Swindon; and Bob Baker, Exeter. I Love Tax t-shirt – Wendy Lloyd, Warwick; and Amy Riley, Bicester. August winners: Huawei Band 2 Pro – R. Majithia, Leicester. Dot to dot book – Annelise Felton,

Nottingham; Tracey Cronin, Aberdeenshire and Kiran Varsani, Stanmore. Pap Sustainable goals for ACCA ACCA has committed to delivering the UN’s Sustainable Development Goals – recognising all 17 of them. It says that ACCA and its community can make the most significant contribution towards nine of them, including offering access to a quality finance and accountancy education. For more turn to page 37. PQ Magazine January 2021

2021 and Beyond: The New Normal for Accounting Around The Globe Back by popular demand, join LSBU Business School and PQ magazine as we host our 4th annual accounting conference on Wednesday 3 February 2021. Hear from experts including Lord Sikka, Professor Richard Murphy, and Hays UK Director Karen Young and leading companies including Xero, Anti Money Laundering Compliance Company – and many more. We’ll explore: • Global changes in accounting • Accounting in a post-COVID world • AI and the cloud • Future of accounting • Equipping yourself for the future job market

To find our more, visit lsbu.ac.uk/whats-on and follow LSBU Business School on LinkedIn

PQ news

Climate change tops agenda

PREM SIKKA Staff of bankrupt firms deserve better protection Arcadia, the company behind brands such as Top Shop, Miss Selfridge, Burton and Dorothy Perkins, has entered administration. Some 13,000 jobs are at stake. The company is unlikely to be rescued. Employees will lose their jobs and some pension rights. Arcadia’s employee pension schemes have a deficit of around £350m. Pension schemes are classified as unsecured creditors and will recover little from the sale of the company’s assets. The Pension Protection Fund can bailout insolvent pension schemes, but the rescue is limited to a maximum of 90% and the rules have restrictions. The upshot is that employees may lose 20-25% of their pension rights, and many will face insecurity in old age. The same has happened at BHS, Toys R Us and elsewhere. An urgent change to insolvency law is needed. All debts to employees should be treated as priority creditors, that is paid before any other creditor. Currently, banks and other lenders secure charges on company assets and as secured creditors walk away with most of the proceeds from the sale of assets of the insolvent entity. Banks hold diversified portfolios and have a greater capacity to absorb losses. In contrast, employees cannot diversify the investment of human capital and don’t have the same capacity to absorb losses. Human capital can’t be stored for later use. So from a risk-management perspective, their interests need to be prioritised. Prem Sikka is Emeritus Professor of Accounting at the University of Essex

Accountancy bodies need to do more to ensure those entering the profession understand how climate change will affect companies and societies across the globe, says the CEO of the Financial Reporting Council, Sir Jon Thompson. A new review from the FRC says it now plans to monitor the curriculum-setting functions of the bodies to ensure syllabuses reflect the growing importance of climaterelated issues. Currently, climate change is not a sperate subject in the Statutory Auditors (examinations) Instrument 2008, for which theoretical knowledge is required. However, five of the UK accountancy bodies have told the FRC that climate change is in their syllabus, either explicitly or within associated sustainability subjects.

Five also explained that future syllabus developments would be incorporating and embedding climate change into appropriate subject areas.

As a direct result of the FRC review one of the bodies recognised that more bespoke content is required for inclusion in the syllabus and has set out an immediate plan of action. It anticipated that new learning materials and relevant recommended reading about climate change would be added. Unfortunately, we are not told which body that is! The review found that the quality of support, training and resources provided to the audit practice varied considerably across firms. Moving forward the FRC said it will “assess how the accountancy bodies are incorporating climate change in education, examinations and practical experience requirements for the audit qualification”.

Peter Sawkins, the 20-year-old accountancy degree student, has become the youngest winner of the Great British Bake Off. He won the final with his “bonkers bubble cake”, and perhaps for his consistency over the weeks before. The University of Edinburgh undergraduate has been a Bake Off ‘nerd’ since he was 12 (his words). On winning he said: “I am that excited giddy kid right now”. His win is big news – it even made the front pages of many of the daily newspapers.

FME Learn Online continues to expand FME Learn Online has announced the arrival of another new tutor to the platform – Erin Morton (pictured). She will be offering online courses for ACCA AA. Speaking on behalf of FME Online, Sunil Bhandari, said: “Erin is

an experienced tutor who specialises in ACCA AA. I am really happy that she has joined the team at FME Learn Online.” The addition of Erin comes hot on the heels of Sean Purcell, the ACCA SBL guru, launching his online courses on the

platform last month. Sunil told PQ magazine: “As I promised when Sean joined, further announcements would follow as we continue to expand the tutors who provide their courses on the FME Learn Online platform. We want to add even more high-quality expert tutors to our team, so watch this space!”

Taxwatch Pap A capital idea? Changes to the tax rates on capital gains could raise billions of pounds for the Exchequer, says a new report from the Office of Tax Simplification (OTS). The government’s independent tax adviser has estimated an income rise of £14 billion could be achieved by cutting exemptions and doubling rates. Big losers in this would be second home owners and those whose assets are not shielded from tax. The chancellor, Rishi Sunak, will have 8

to take the report seriously as the OTS said the current system of CGT “can distort behaviour” as people try to reduce their tax bills, and was just “too complex”. OTS ventured that the current rate of 10% for basic rate taxpayers and 20% for higher rate taxpayers, or 18% and 28% for residential property that is not a main house, could be doubled to bring it in line with income tax rates of 20%, 40% and 45%. Currently, the first £12,300 of CGT is exempt, and it is estimated some 50,000

taxpayers narrowly avoided paying it in 2017/18. Pap Shell pays zero corporation tax in the UK Royal Dutch Shell, or just Shell to you and me, paid no corporation tax in the UK last year, according to its annual accounts. The oil giant did pay tax, amounting to $7.8bn in corporate income tax and another $5.9bn in royalties, but not in the UK. In fact, along with France, South Africa and Indonesia, the UK actually

returned money to the company. The UK government has been giving out credits to oil companies (mostly for decommissioning oil platforms) and at the same time has been charging them lower rates of tax since 2016. The reason why we know all this is the fact that Shell publishes its global breakdown of payments. It employs 6,400 people in the UK, generating revenues of $92bn. In the 99 countries where it does pay corporation tax it stressed it has an effective tax rate of 35.5%. PQ Magazine January 2021

news PQ

Latest AAT pass rates out Wellbeing is tumbling The wellbeing of accountants in lockdown has fallen dramatically, according to a new poll from Hays Accountancy and Finance. Just two in five (42%) accountants were able to rate their wellbeing positively in October. That, say researchers, is a big drop from the 66% who said they felt positive before the first national lockdown in March. It would seem that Generation Y accountants are managing better than those from Generation X. Hays also found that employers are trying to do more, with many creating new policies to address work-life balance. However, it believes even more needs to be done. â&#x20AC;˘ Read the full story on page 34.

At 54.9%, the Advanced Diploma Synoptic Assessment has the dubious honour of being the AAT assessment with the worst pass rate, according to the latest figures. The other papers where students struggle in are Management Accounting: Decision and Control on 56.9%; Credit Management on 58.7%; and, Financial Statements of Limited Companies, with a pass rate of 59.2%.

Getting a diploma also got harder for those at the Foundation Certificate level. Some 46% of candidates received a distinction

compared with 50% in the previous table of results. There was, however, a tiny jump in the number of distinctions handed out to Professional Diploma in Accounting PQs â&#x20AC;&#x201C; to 3%! The overall CBA pass rates are holding up well. The Professional CBA pass rate is now 64.3%, and the Advanced level is 73.5%. At the Foundation CBAs the pass rate was 82.5%. Check out all the AAT results on page 24.

IASB proposes amendment to leases standard The International Accounting Standards Board (IASB) is proposing to amend IFRS 16 Leases, by specifying how a company measures the lease liability in a sale and leaseback transaction. Sale and leaseback transactions are transactions for which a company sells an asset and leases that same asset back from the new owner. IFRS 16 includes requirements

for how to account for sale and leaseback transactions at the time the transaction takes place; however, it does not specify how to measure the lease liability when reporting after that date. The proposed amendment would, says the IASB, improve the sale and leaseback requirements already in IFRS 16 by providing greater clarity for the company selling and leasing back an asset both at the date of

transaction and subsequently. By doing so the amendment would help ensure the standard is applied consistently to such transactions. The proposed amendment would not change the accounting for leases other than those arising in a sale and leaseback transaction. Access the Exposure Draft at https://tinyurl.com/y4jbhs72. The deadline for comments on the Exposure Draft is 29 March 2021.

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PQ Magazine January 2021

PQ news

ZOE ROBINSON It’s time to look to the future

IFAC is the global organisation for the accounting profession and all professional bodies in the UK are founder members. Their most recent seminar explored the changing role of the accountant in the context of the digital revolution and, overall, mood was positive; the calls for change were not driven by the threat of technology but by the opportunities technology could bring. However, this positivity came with a caveat: accountants should stop looking backwards and begin to look to the future, becoming more proactive and anticipatory. It’s a powerful argument – technology has the capability to replace much of what accountants currently do, but with a different mindset and some new skills this void can easily be filled with even more valuable work. We can start developing these new skills today but, culturally, the mindset shift will be harder. Accountants are expert in looking backwards, it’s where certainty and accuracy exist. The future requires assumption, prediction and the risk you may be wrong. To be successful, anticipatory thinking must permeate education as well. Teaching ‘what next’ type skills such as strategic thinking will of course be essential, but these must be combined with creativity, vision and problem-solving to help head off problems and drive the change in focus that’s needed. At the moment having someone looking objectively at the future feels more important than ever. Zoe Robinson is Learning and Programme Director at Kaplan Financial

ACCA degree is 20 years old ACCA is celebrating 20 years of its dual qualification with Oxford Brookes University, which enables students gain a globally recognised BSc (Hons) Applied Accounting degree and the ACCA qualification together. ACCA and Oxford Brookes University jointly designed this unique programme, which can be achieved entirely remotely, to meet the requirements of a degree and a professional qualification. Marking the 20-year anniversary of the partnership ACCA chief executive Helen Brand said: “ACCA is proud of our long-standing partnership with Oxford Brookes that equips our students for brilliant careers in accounting and finance. Our partnership not only enables Karenjeet Kaur Bains, a 23-yearold powerlifter from Warwickshire, made history this summer by becoming the first Sikh women to represent Britain at the World Powerlifting Championships. She balances her training with a fulltime job at KPMG and qualified as an ACA on 2 October. It took her five years to pass the 15 exams, and admits: “It’s been a crazy demanding schedule over the last five years, balancing full time work, studying and competing at international level.”

More power to Karenjeet She was very happy about no longer having to sit revising at her desk at crazy o’clock. And how much can she lift? An astonishing 166kg – equivalent to a 26 stone man! Check her out on Instagram at https:// tinyurl.com/yx9pybrf

Croydon council issues Section 114 notice The London Borough of Croydon has issued a section 114 notice, banning any further non-essential spending as it struggles to balance its books. There have been concerns about the financial management at the council. Auditors Grant Thornton issued a ‘Report in the Public

Driving the future Millennials (24-39 year olds) are expected to lead a car ownership boom in the coming six months across the globe, representing 45% of all first-time car owners, says EY’s Mobility Consumer Index. Nearly a third (31%) of those respondents who do not currently own a car say they plan to buy one in the next six months, while one in five (20%) that already own a car say they would be open to purchasing an additional vehicle. Both groups cited the impact of the Covid-19 pandemic as one of the top reasons for their purchases.

our students to demonstrate to potential or existing employers that they possess all the relevant graduate skills, but that these have been gained from a university that has a reputation for excellence. “The impact of Covid-19 may have raised anxiety about career opportunities, but a degree and

a professional accountancy qualification remain a powerful combination, boosting employability and enhancing job prospects. Over the past two decades, this longestablished distance learning option has helped thousands of students achieve their dreams of success.” Students can apply for the degree once they have completed the Knowledge and Skills papers of the ACCA’s professional examinations, and the Ethics and Professional Skills module. Globally, over 33,500 students have graduated from the programme to date. For more information on the Oxford Brookes BSc (Hons) Applied Accounting degree visit https://tinyurl.com/y8b3c5px

Interest’ in October warning about looming financial problems. Now Croydon’s FD, Lisa Taylor, has sent a letter to councillors outlining the scale of the problem. She is predicting a potential budget shortfall of £66 million. Issuing the notice is recognition that despite all efforts to do so

New space for Deloitte Deloitte’s Manchester practice has signed a deal with WeWork to occupy 35,000 sq ft of office space in Manchester city centre. With the firm due to exit its existing office at Hardman Street, the deal will provide a flexible solution for the 800 people based in the city. Deloitte has said it plans to begin occupancy in early 2021, subject to Government national restriction guidelines. The firm will have two floors in WeWork Hanover Building in Corporation Street, near Victoria Station. £400bn needed for green agenda Up to £400 billion of investment is needed in green infrastructure over the next 10 years if the UK is to meet its ambitious net zero target,

the council cannot now balance its budgets this year, which it is required to do by law. It is now in talks with the government about the financial support necessary to keep it running. Northamptonshire County Council was forced to take the same steps two years ago.

according to a PwC report. An investment of £40 billion each year would represent a near doubling of current capital requirements. Take the stress test KPMG’s annual risk benchmarking survey, ‘Ready for change? A new era of risk’, has found that many firms have taken action to mitigate the risks, challenges and stresses caused by Covid-19. Some 65% of firms performed additional stress tests, with these leading to 30% taking management action to increase resources of both capital and liquidity. Given the impact of the pandemic it is perhaps surprising to hear that only 28% saw an increase in operational risk events and 15% an increase in size of operational risk losses. PQ Magazine January 2021

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PQ news

MIKE DAY The rocky road to business recovery

Recovery is now front of mind and the role that accountants and bookkeepers play will be vital. Xero has put together this pack of resources which I hope you find useful (tinyurl.com/y3efwkkg), whether you are working in practice or in a finance team. There is information on the Government’s Winter Economic Plan including furlough, self-employed income support scheme, grants, VAT changes and access to finance (BBL and CBILS, etc). And the double whammy of all disruptive whammies... at the time of writing Brexit is 23 days away. You should be aware of this by now but if you are in the very (very) last minute camp then there are resources available on citizenship, taxes, trade rules and cross-border interactions. If you are based in practice then content on future-proofing in this Covid-19 world, the upcoming changes to VAT submissions and value-based pricing is for you. And, finally, although we are all being asked to eat the biggest **** sandwich I have seen in my 40-year career at the moment, we are seeing many inspirational cases of both businesses pivoting and thriving and also fantastic stories of collaboration between accountants and small businesses, so there are examples of this in the resource pack too to lighten the mood. As a PQ accountant you need to be aware of all of the above, so grab a coffee or something stronger, put on some soothing music and away you go. Mike Day, Director, UK Education Sector, Xero

Rise and rise of the robots Large swaths of businesses have used the Covid-19 pandemic to ‘bring in the robots’. New research from Deloitte on robotic and intelligent automation found twothirds (68%) of business leaders worldwide used automation to respond to the impact of the pandemic. The Big 4 firm’s survey of 441 executives from 29 countries shows how the lockdown has forced many organisations to rethink how work is done. Around three in four (73%) are now using automation technologies (such as robotics, machine learning and natural language processing), up from 58% in 2019. Meanwhile, the number of organisations deploying automation ‘at scale’ has tripled in the space of two years. Some 13% of leaders say their organisation has implemented over 50 automations,

up from 8% in 2019 and 4% in 2018. Justin Watson, partner and leader of Deloitte’s robotic and cognitive automation practice, said: “Automation has been a lifeline for businesses during the pandemic – allowing for rapid increases in processing capacity, new processes

Sage adds to app range Sage has announced more partnerships that it hopes will help small businesses and their accountants stay in control of their business. As a result, five new and innovative apps will become fully integrated with Sage Accounting via its Marketplace. The new partnerdeveloped apps include:

• Tradify: An all-in-one job management solution for trade and service-based businesses that offers a smart scheduler, realtime tracking with GPS and quick quoting. • A2X: Fully automated e-commerce accounting for Shopify. A2X streamlines back-

to support the response, increasing productivity and accuracy, while also improving the experience of customers and employees. “As organisations scrambled to support home working en-masse and provide Covid-secure work sites, automation took the strain to ensure business continuity.” office processes and unlocks new opportunities in e-commerce. • Joiin: A simple and powerful app that enables the creation of consolidated financial, sales and KPI reports. • simPro: Complete field service management software designed for service, projects and maintenance. • AccountancyManager: A timesaving accountant practice management software.

New pro-competition unit established A new digital watchdog is being set up to prevent the tech giants exploiting small businesses and consumers. A Digital Markets Unit (DMU) will be established within the Competition and Markets Authority (CMA), with the aim of enforcing

a new code of conduct. The DMU will co-ordinate with regulators such as Ofcom and the Information Commissioner’s Office. The government wants tech companies to be more transparent about how they use consumer data and restrictions that make it hard to

PayPal. However, the ability to pay for goods and services via the payment provider will not be introduced until early next year.

they do no follow rules designed to prevent cyber threats. The Telecommunications Security Bill will enshrine in law the UK government’s announcement this summer that it was banning equipment made by the Chinese firm Huawei from the most sensitive parts of the telecoms network. The equipment from Huawei must be removed out of all 5G equipment by 2027.

use rival platforms. CMA’s CEO Andrea Coscelli said: “Only through a new procompetition regulatory regime can we tackle the market power of tech giants like Facebook and Google and ensure that businesses and consumers are protected.”

Tech briefs Pap PayPal approves bitcoin PayPal decision to allow bitcoin payments is being seen as a significant step towards the mainstream adoption of digital currencies. The announcement sent the price of bitcoin up 6%, to its highest level since the summer of 2019. PayPal explained that the pandemic has accelerated the migration towards digital currencies. Moving forward, customers can now buy, sell and hold bitcoin, bitcoin cash, ether and Litecoin in digital wallets on 12

Pap Huawei ban two years away Telecom companies will be barred from installing new Huawei 5G equipment as soon as 2022 under tough new laws being outlined by the government. Legislation will give Ofcom the power to issue fines of £100,000 a day or 10% of a telecom company’s turnover if

Pap China target internet giants The Chinese government

is proposing new curbs on its internet giants. Beijing seems to share European and US authorities’ growing fears about the power of these large companies. Alibaba, Ant Group, Tencent and Meituan will now come under the microscope. The new rules are set out in a 22-page draft defining anti-competitive behaviour. Among these rules is a ban on companies sharing sensitive consumer data, joining forces to squeeze rivals, or using ‘loss leading’ prices to eliminate competition. PQ Magazine January 2021

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PQ email graham@pqmagazine.com

HAVE YOUR SAY Making good auditors I was not surprised to read that junior accountants imitate senior partners they work with (PQ magazine, December, page 19). I have always said just passing exams doesn’t give you the ability to audit – it is those three years of practical experience and mentoring/coaching that will help mould the auditors of the future. Your ‘Monkey see, monkey do’ article seems to give junior auditors a clean bill of health. They have, according to the researchers, a healthy dose of professional scepticism, and demonstrate their own

professional and critical attitude. However, things aren’t all rosy in the audit garden, far from it. The FRC said that the current quality of audits is ‘unacceptable’.

Well, that’s what you said on a recent cover of PQ magazine! Name and email address supplied The editor says: The problem with audit and the expectation gaps that surround it should not all fall on auditors. Research from the FRC has, for instance, shown that the development of standards for audit committees would support a more consistent approach to promoting audit quality. Currently, these committees place greater emphasis on the audit tendering process to ensure a high-quality audit, and on challenging their auditor over how their planned audit approach will deliver quality.

Our star letter writer wins a fantastic ‘I lovePQ’ mug! I want reports back

Can anyone tell me if they were asked whether having just two Examiner Reports a year instead of four was a good idea? ACCA claims the change was in response to “feedback received from future members, tutors and learning providers, who all use the Examiners’ Reports”. Who did they talk to? I am shocked that ACCA believes less is more – I must be because I am writing to you, and I don’t normally do such things! Can you ask to see this ‘feedback’, because I simply don’t believe it exists! And if it wasn’t us students, then do we blame – tutors? Name and email address supplied The editor says: It might be that we have to blame tutors and training providers. They have been asking for better, more informative Examiner Reports. I don’t think they were asking for less information, just better information. The move means many tutors are less informed now than they used to be, and that is not good.

More women needed What is it about the ICAEW and ICAS, and the firms that sign up their students to training contracts, that means they can’t attract female recruits?

Sorted, thanks to pqjobs.co.uk

Figures show ACCA student membership is 60% female, yet just 41% of Scottish Institute student recruits are women. The ICAEW is not much better, with a 45% female intake. Moving up the pipeline we see just 29% of ICAEW members are female. It’s no

wonder the ‘Old Boys’ Club’ view of the institute and Big 4 prevails – perhaps because it is true! If firms don’t change their recruitment policies and attitudes then they are going to continue to miss out on a fantastic group of talented people. Name and email address supplied

social media ROUND-UP We were first alerted to problems with myACCA when we were contacted on Twitter on Sunday night (6 December) by concerned students. We thought it was just high volumes of students looking for some last-minute guidance, and all would be good for exam week which started the following day! Initially, ACCA UK confirmed there was an isolated IT incident on Sunday 6 December, and apologised for the inconvenience. Then the issues of logging on for the exams remotely started to surface: “@PQmagazine anyone having issues logging into my ACCA this morning?” ACCA were quick to contact us, and explained it had in fact had two separate outages to myACCA – one on Sunday 6 December, and on Monday 7 December from 9.45 to 11.15am. It explained: “We understand myACCA’s unavailability mostly impacted students sitting remote invigilation exams, including 227 sitting Audit and Assurance (AA) and 232 Advanced Audit and Assurance. We have since emailed AA students to say they can rebook for next week (14 December), and we are making AAA slots available tomorrow for those who can sit then.” Some CIMA students have also been finding CIMA’s aptitude ‘super slow’, too. One PQ explained: “I can’t even do the mock as it keeps ticking down and takes at least 20-30 seconds to load the next question.” Another confirmed: “It’s been happening to me for the past 2 days, so good to know I am not the only one. I thought it was my network but it sounds like it is CIMA’s system.”

PQ Magazine PO Box 75983, London E11 9GS | Phone: 07765 386489 | 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 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

Published by PQ Publishing Ltd © PQ Publishing 2021

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PQ international standards

Mergers and acquisitions The IASB explains why new accounting requirements for mergers and acquisitions within a group are needed

he International Accounting Standards Board (IASB) has launched a public consultation on possible new accounting requirements for mergers and acquisitions involving companies within the same group – business combinations under common control. IFRS 3 ‘Business Combinations’ set outs reporting requirements for mergers and acquisition, referred to as business combinations in IFRS standards. However, that standard does not specify how to report transactions that involve transfers of businesses between companies within the same group. Such transactions are common in many countries around the world. As a result of this gap in IFRS standards, companies report similar business combinations in different ways. In some cases, they provide fair-value information about the acquired company and in other cases, they provide book-value information. Moreover, book-value information is provided in various ways and is often insufficient. This diversity in practice makes it difficult for investors to understand the effects of such transactions on companies that

undertake them and to compare companies that undertake similar transactions. The discussion paper ‘Business Combinations under Common Control’ sets out the board’s preliminary views on how to fill this gap in IFRS standards. The IASB’s aim is to reduce diversity in practice and to improve transparency and comparability in reporting these transactions. The board’s view is that companies should provide similar information about similar business combinations when the benefits

of that information to investors outweigh the costs of providing it. Specifically, the board is suggesting that fair-value information should be provided when a business combination under common control affects shareholders outside the group. That suggestion is consistent with the existing requirements in IFRS 3 for mergers and acquisitions between unrelated companies. In all other cases, the board is suggesting that book-value information should be provided using a single approach to be specified in IFRS standards. The discussion paper seeks feedback on the board’s preliminary views on when and how each approach should be applied. Hans Hoogervorst, chair of the International Accounting Standards Board, said: “Stakeholders have been vocal about the need to establish requirements for business combinations involving companies under common control, particularly for listed companies or companies preparing for listing. Our suggested approach would give investors the information they need without imposing unnecessary costs on companies.”. Access the discussion paper at https://tinyurl. com/yxrrn533. The deadline for comments is 1 September 2021.

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PQ Magazine January 2021

home study PQ allocate a day and a timeframe in your diary for each of the tasks you need to complete by the end of the week. This is an excellent way to prioritise your study plan and stay on track. Also, it will enable you to remain motivated as you tick tasks off your list and see how much you can actually accomplish. You should: • Stick to your study plan and stay organised so that you don’t fall behind. • Review your progress at the end of every day and adjust your study plan accordingly for the rest of the week. • Ask your family members, friends and colleagues to respect your study time.

Tip#3:

Adapting to the new normal With the classroom seeming like a distant memory, Clancy Peiris explains how you can make the most of online learning

hanks to the internet you can now learn whenever, wherever and however works best for you. Would you say this made your life easier than ever? Or harder and more challenging? When you study online you tend to only interact with your computer, unlike a traditional classroom where you would collaborate with teachers and fellow students. This may lead to digital fatigue. For example, you may sometimes feel that you are not in the right mood to study and so postpone your studies to another time. Digital distractions such as getting a text or an email may also break your concentration, taking much-needed energy away from studies. Online learning is here to stay and to reap all the benefits you must be adequately prepared, self-disciplined and driven. Here are my top tips to make the most out of online learning. PQ Magazine January 2021

Tip#1:

Create your dedicated study space at home Identify one space where you can sit and study comfortably (not on your bed!) and peacefully. During your study session you should aim to mimic an actual classroom and avoid doing things that you wouldn’t usually do if you were in a classroom. You should: • Get dressed; it will help you feel better physically and mentally. • Get organised and have all essentials such as stationery, a water bottle, calculator, etc. on hand. • Log off from all social networks and turn off your phone so that you will not be interrupted or distracted.

Tip#2:

Put together a study plan (and stick to it!) Online learning needs structure, so having a study plan is critical. At the start of each week

Use the right learning techniques While listening to or watching an online lecture take notes as if you were attending a lesson in a classroom. This will help you to keep focused on the lecture, enhance your understanding and improve your memory. Keep listening or watching pre-recorded lectures without pauses so that you keep your momentum and avoid distractions. If needed, you can always go back to it later to clarify some points. You should: • Read the relevant materials beforehand and do some practice exam questions. • Ask questions if there is anything you aren’t sure about, during or after the lesson. • Step away from your laptop every hour or so to keep your mind fresh and body active.

Tip#4:

Be active within your learning community Connecting with fellow students through additional sessions will enhance your online learning experience and make sure that you don’t feel too isolated. You should: • Plan what you want to cover in the session so that the discussion remains productive. • Set up study groups with other students to discuss ideas, swap study tips and get help with certain topics. • Check your CIMA online portal for updates and other support platforms provided by your learning provider on a daily basis.

Tip#5:

Make sure to have some downtime Mental and physical wellbeing are very important, especially when you are an online learner and spend the whole day in the same space. You need to make sure that you have a clear cut-off point for studying every day and allow yourself to relax. You should: • Do something you enjoy in your downtime such as listening to music, reading or catching up on the latest Netflix series. • Stay active and get out of your home at least once a day for a daily walk, run or cycle. • Look after your mental wellbeing by spending time with your family and friends, or integrating mindfulness practices into your daily routine. Best of luck with your online studies! • Clancy Peiris, Senior Learning Development Manager, Association of International Certified Professional Accountants 17

PQ ACCA exams

Your exam improvements for December How did your December exams go? Did they live up to ACCA’s recent promises?

CCA UK recently wrote to its students to explain what improvements it had made to ensure it delivers a positive, professional experience for students sitting centre-based exams in December. This plan was put in place following lessons learnt from the September session, and taking into consideration the dynamic and uncertain circumstances in which it is operating. Here’s what ACCA said: “We have added extra check points to ensure exam readiness and will be increasing the level of technical support available to prepare our centres. For example, we are making changes to our approach in terms of testing machines and software, ensuring a full inspection of every machine which will need to be signed off as exam ready. “In addition to ensuring centres are examready, we will extend the lead time for venue set up so there is more time for any troubleshooting

to be carried out in advance of exam week. There will be improved readiness checks, with three week and one-week sign offs in place. “The health and safety of our students remains top priority for us and we are committed to delivering a positive, professional experience for students given the uncertain circumstances in which we are all operating. “We have already had to take the difficult decision to reduce capacity and, in some cases, withdraw completely from some centres where we felt we were unable to ensure arrangements were Covid secure. “All students impacted by this decision have been contacted to advise that their centre-based exam will not take place and offered the choice of taking exams at home or in a place of their choosing, using Remote Invigilation (RI) or to

defer until March 2021. “We will be increasing our staff numbers dealing with logistics and venue-readiness as well as technical resource to help with troubleshooting. There will also be a strong focus on continuity, so we are making use of experienced staff who know the venue well and are familiar with the local set up. We are working closely with our delivery partners, so we are in a better place to respond at pace if something unexpected happens on the day. “If there are long delays to exam sessions, we will provide water and snacks at each affected centre. “Site specific plans will be included in the readiness checks and will cover arrangements for queue management, candidate flow, waiting areas and sourcing of refreshments in the event of a delay.”

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PQ Magazine January 2021

CIPFA spotlight PQ

Make a difference Now is the time to choose a career in the public sector, says Rob Whiteman – and here he explains why

here has never been a timelier moment to embark on a career in the public sector. The Covid-19 pandemic took us all by surprise and sent shockwaves through the sector like nothing we had seen in our lifetimes. Local businesses and communities are suffering amid the economic fallout of the pandemic. Unemployment has never been higher, and local authorities are facing greater financial difficulties than ever before as they continue to provide vital services to their local areas. In response to the crisis, frontline workers such as NHS staff, care workers and police officers have responded heroically to the new challenges that they have been dealt. Behind the scenes, public finance professionals have also offered incredible support to ensure that money is managed effectively and public services are delivered to those who need them. The work that we do in the public sector is both rewarding and, yes, heroic. The individuals who work in public finance have the responsibility of managing the deployment of resources to support the vulnerable. In many respects, public finance professionals can also be considered key workers. If your career goals are rooted in making a difference and helping the people who need it most – now is the time to work in public sector finance. The impact you could make on the lives of the most vulnerable has never been greater than it is right now. As public finance professionals tackle the aftermath of Covid-19, there is so much that can be brought to the table by bright, new minds with a fresh take on how to get things done. Finance professionals are needed in all areas of the public sector. You might choose to embark on a career in health sector finance by undertaking an NHS Professional Accountancy Apprenticeship. This crucial

Whiteman: ‘the work that we do in the public sector is both rewarding and, yes, heroic’

role is the backbone of public financial management to ensure the fight against Covid-19 continues resiliently. Housing is another area of focus for the public sector, and one that is crucial to helping those in need. Even before the pandemic, the UK was facing a housing crisis. CIPFA’s data shows that the council housing backlog in England would take upwards of 17 years to work through. With so many families facing evictions and homelessness in this country, the need for public finance professionals to both work in and in support of the housing sector is high. Another group of frontline responders who keep our communities safe are police officers and firefighters. They too need dedicated public finance professionals to manage their resources and ensure that they have the equipment to carry out their vital duties.

The coordination and hard work exhibited by members of the public sector to fight this pandemic has been nothing short of incredible. In a short time, we were able to respond with speed and resolve to change our ways of working to fight Covid-19. If you are considering a career in the public sector, now is the time to do so. You have the opportunity to make a lasting impact on local communities at a time when so many are struggling. The shockwaves that are being felt around the sector will have an impact for years to come, and the decisions that we make now will change people’s lives. You could be part of the next generation of public finance leaders that not only fought through the aftermath of Covid19, but also shaped the future of public service delivery, changing the world for the better. • Rob Whiteman is CIPFA’s CEO

PQ exam advice

Answer the question! Geoff Cordwell explains that passing accountancy exams should be straightforward to the well-prepared PQ: just answer the question as set

hy do hardworking students fail exams? This is an interesting question. Maybe you should pause and think about it for yourself for a moment. Maybe the exam was especially difficult. Maybe the student was just a bit unlucky with the topics that came up. Maybe the pressure all got a PQ Magazine January 2021

bit too much and a little panic set in. These are all possibilities, and some might apply to you or someone you know in the past. But what is the most common reason for failure? If you’re a hardworking student, then you should know enough to pass. The precise questions asked shouldn’t have

upset you, and besides you make your own luck, don’t you? Gary Player, the legendary South African golfer accused of being lucky having holed from a bunker, once said: “The more I practise, the luckier I get”. He won nine major championships and is fourth equal in a list of most major titles won. The reason most students fail an exam is that they fail to answer the question set. Of course, you say, since if you don’t do that you can’t score marks. The reason for not answering the question isn’t that the students did not have the knowledge, since they are hardworking and practised. It is that they either misread the question, answered a different question or wrote so poorly that the marker couldn’t give them credit. • Geoff Cordwell is an ACCA APM tutor at FME Learn Online 19

PQ awards 2021

YOUR

TIME TO

SHINE

The search is on for nominations to the PQ magazine awards 2021. It’s time to cheer yourself up, or maybe someone you know, by getting on our awards longlist e are living in strange times. What’s needed is something to put a smile on your face. And yes, we have something for that – the 18th PQ magazine awards! Come on, who wouldn’t like a shiny ‘PQ’ trophy, and the opportunity to spend the night celebrating the accountancy profession. We have pushed the next awards night back into April 2021, from our usual February date, in the hope that we can all come together to celebrate the nominees and winners. We are also planning for virtual awards, too. We will still give you some great entertainment, and if you are longlisted we will be sending you a goodie bag. Who knows, there might be a trophy in it for you, too. But, as we always say, you have to be in it to win it! You can get a flavour of last year’s awards by clicking on the video bar on our website’s home page (www. pqmagazine.com). HTFT won big on the night, and became our Accountancy College of the Year (private sector), with Winchester University taking the College of the Year, public sector prize. Study Resource of the Year was won by Premier Training’s MyPTA mobile app, and Innovation of the Year went to ACCA’s student wellbeing hub. Bethany Duffy is the reigning PQ of the Year. The Grant Thornton AAT was on a holiday of a lifetime with her mum on awards night, but still sent us a thank you all the way from Australia. That was last year, which to be truthful seems a lifetime ago; all those people in one room! But moving

on, now is the time to get nominating for 2021. All you need to do is download the nomination form from our website. Just go to www.pqmagazine.com and click on the ‘PQ awards’ bar at the top of the home page. Alternatively, you can just email us your entry direct, making it clear which category you are entering. It is also vital that we have all your details too, because we may need to invite you to the awards night. There are lots of PQs up for grabs, 19 in all, so there are plenty of chances to be a PQ magazine award winner. As always, we are looking for a college and lecturer of from both the private and public sector. We have also introduced a new award this year, too – Accountancy Graduate of the Year. This is for university accountancy and finance degree students, who we thought might need cheering up more than most after that first term back. How can you win one of these awards? Well, we keep it sweet and simple: all we need is you to write 250 words on why you or your nominee should win. If you want to provide supporting evidence just attach it to the nomination. Don’t be shy about nominating yourself, we know people aren’t always appreciated as they should be. Once you have everything ready send it to awards@ pqmagazine.com or post to: The Editor, PQ magazine, PO Box 75983. London E11 9GS. We have independent judges who will read everything you send in and create the longlist for each category. Deadline for nominations is Friday 19 March – but please don’t leave it to the last minute!

AWARDS CATEGORIES 0 PQ OF THE YEAR 0 NQ OF THE YEAR 0 DISTANCE LEARNING STUDENT OF THE YEAR 0 ACCOUNTANCY GRADUATE OF THE YEAR* (*New category) 0 APPRENTICE OF THE YEAR 0 STUDENT BODY OF THE YEAR 0 ACCOUNTANCY BODY 0 ACCOUNTANCY COLLEGE – PUBLIC SECTOR 0 ACCOUNTANCY COLLEGE – PRIVATE SECTOR 0 ONLINE COLLEGE OF THE YEAR 0 LECTURER – PUBLIC SECTOR 0 LECTURER – PRIVATE SECTOR 0 STUDY RESOURCE OF THE YEAR 0 INNOVATION IN ACCOUNTANCY 0 BEST USE OF SOCIAL MEDIA 0 TRAINING MANAGER/ MENTOR 0 ACCOUNTANCY TEAM 0 ACCOUNTANCY PERSONALTY 0 EDITOR’S SPECIAL AWARD

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PQ Magazine January 2021

awards 2021 the PQ

PQS OF THE YEAR...

2020 – Bethany Duffy

Grant Thornton’s Bethany has a boundless infectious enthusiasm and does everything to an amazing high standard and always with a smile. She completed all her AAT Level 3 and 4 exams through distance learning, including five Level 4 exams between August 2019 and January 2020, achieving marks of 96%, 95%, 92% and 91% (she was waiting on one result). A valuable member of the Carlisle Public Sector Audit (PSA) team, she became the software champion for Inflo and took the lead on piloting data analytics within PSA North.

PQ Magazine January 2021

2019 – Rebecca Dixon

Rebecca has worked for the NHS for the past 11 years. An AAT studier, she initiated the setting up of a new finance twitter page, regularly posting updates of the achievements and events in the department. She would have had to tweet her own award-winning news after becoming our PQ of the Year! Rebecca also helped set up a quarterly finance newsletter and help promote training sessions for the team. This hardworking, respected team member was always looking at innovative ideas to bring her community together.

2018 – Tyson Nsimbie

It’s best we let Tyson explain what he does: “Problem solver, solutionist, accountant, project manager, consultant – accountancy gives me superpowers to support the dreams and aspirations of family and friends, as well as improve my local community by sharing my expertise and experience.” This ACCA PQ works for FairFX, and in five years’ time hopes to be managing a “team of Tysonly trained geniuses taking finance, compliance and risk to the next level”. His advice? Do your homework!

PQ LSBU/PQ conference

One-day conference:

2021 and beyond Is this the time to reset the accountancy button, and create a new-looking profession? The London South Bank University and PQ magazine’s one-day conference is back, and this time it’s virtual. Editor Graham Hambly explains why you need to get involved

t’s been a tough 2020, of that there is no doubt. However, the worldwide pandemic could be a massive chance to create a new normal for accountancy PQs. The amounts of money governments around the world have borrowed to help their citizens get through it all is unparalleled, eye-watering even. But, as we come through the tunnel into the light will we just go back to the old ways of doing things, or have things changed forever? Surely we don’t want to waste this opportunity for forging a better accountancy profession? I personally think some of the changes that have happened in our working lives were coming; the pandemic has meant we have just got there quicker. Remote invigilated exams have been created at breakneck speed, and generally considering the massive logistical issues involved have been done really well. Remember, if the bodies were rolling these out in normal times (pre-March 2020) then they would have three-year project teams sorting this stuff out. CIMA got its remote exams up and running in just seven weeks after lockdown. What it shows is that radical change is possible, and it can happen quickly if people are fully engaged in the process. But, even with the rise of the robots and AI (we haven’t forgotten they are coming!), we must not forget the huge role accountants can play in making the world a better place. Here at PQ magazine we still firmly believe accountants can help save the planet. And the accountancy bodies now seem to have finally taken a leading role in the sustainability debate. Just take a look at their syllabuses. But let’s talk about the conference. We are creating a fantastic line-up for you and it’s all totally free – you just need to go online and sign up as our GUEST! Lord Sikka and Professor Richard Murphy will be there to give their own special spin on what 2021 holds, and how accountants can shape that future. We also have the wonderful Francesca Sharp and Caroline Kearns, who will explain how the ICAEW has gone carbon neutral and why the UN Sustainability Development Goals have never been more important. We haven’t forgotten about the jobs market, either, and have signed up PQ magazine’s very-own agony aunt Karen Young for the conference. She’s a director of Hays

Accountancy and Finance, and come February the results of the Hays salary survey should be available, along with longer-term trends in employment. We have other great speakers lined up too, so watch this space. This is our fourth conference with London South Bank University, and each one has got

bigger than the last. We hope hundreds of you will join us this time. Sign up to our free one-day conference on 3 February 2021, brought to you by London South Bank University and PQ magazine. Just sign up as a Guest at: https://www.lsbu. ac.uk/whats-on/2021-beyond-new-normalaccounting-030220 PQ Magazine January 2021

AA study advice PQ

A time to remember Top tutor Erin Morton shares her top tip for staying sane while studying

ould there really be just one solution for managing your studies? No way! Passing an exam is like preparing a special dinner. There are lots of components and you need the right blend of ingredients to get it right. Project management First up is time. The kindest thing we can do for ourselves is to allow for lots of it. Second to that, we need to use it well. However, most of us do not have this luxury and therefore we need some other tricks to help us. Time is important, even if it is limited. The first thing to do is plan how much time you have. PQ Magazine January 2021

How many weeks till the exam? How many hours do you have free each day or each week? Take off time for work, family and even a bit of leisure. If you are studying a wordy subject, such as AA, this may be one of the few calculations you will be making over the coming weeks – but it matters. This is basic project management. But what other tricks or tools can we use? How can we absorb vast amounts of information? Here I will go through some key techniques I have applied to my work to help students to success. Acronyms and mnemonics If there is a lot of related content to absorb, create a high-level framework with a connect acronym. This gives you a start. The detail will follow.

If a question asks you to ‘Describe substantive audit procedures you would carry out on the receivables balance’, where do you start? How do you remember good audit procedures to use in the exam? 3Cs might help jog your memory. Circularisation – selecting a sample of customers with receivables balances at the year end and sending circularisation letters asking them to confirm their year-end balance. Cash received after the year end. For a sample of customer balances, inspect the post year end bank statements to agree they have paid. Investigate any that have not with the client. Cut-off – for goods despatch notes (GDNs) just before and after the year end, note the despatch date, trace to the invoice, to ensure it was recorded in the correct financial year. If you are armed with some good acronyms and mnemonics, get some good ideas down, your confidence will grow, and more ideas will follow. Mnemonics: This is one step on from an acronym. You might remember ‘circulating cash cuts off audit trail’. It’s a meaningless sentence, but it may help you remember those 3 Cs. Create your own acronyms and mnemonics – the process of making them up helps you remember (and keeps you engaged). Mind maps: I do not know what I would do without a mind map. Any time I plan I have a piece of paper with me that turns into bubbles and lines. Break down your content, or use the chapters given to you in your study material. If you have not been given mind maps by your tutor, create your own. Use colour. Stick it on your wall (or the fridge) and refer to it regularly so you remember the big areas. These are great for helping you to revise and highlight areas you might not feel confident with. Repetition: Our brains have a lot to do and so they cannot always keep information in. By regularly going back over small amounts of information from your studies, your brain will be forced to retain it. Not all of us are effective crammers. Do this over time and look at your content using different formats (visual diagrams, brief notes, online videos to name a few). If you do not have an on-demand course where you can repeat your tuition videos as many times as you like, record yourself on your phone with some of the content. Listen to it regularly. Mini study sessions Break down your studies into small sessions. If we promise to study all day at the weekend, the chances are, we won’t. If we do, we will not retain enough knowledge. Break it up into a few mini sessions throughout the week and test yourself at the end of each session. Even if it is with a few OTQs/MTQs. Then reward yourself with some deserved free time to enjoy life. We are aware, more than ever, how important it is to be kind to ourselves. This is even more important when under pressure to pass exams. So, my top tip for staying sane? Be a kind and caring manager… of yourself. Whatever time you have, use it effectively. Spread out your learning. Slow and steady always wins the race. • Erin Morton is an ACCA AA tutor with FME Learn Online 23

PQ AAT assessments

Pass rates AAT has released its annual pass rates to June 2020. So what do they look like?

etailed in the table below are the worldwide pass rates for computer-based assessments (CBA) for the 12 months ending 30 June 2020. The pass rates shown are the rates for all assessments completed between July 2019 and June 2020. This does not include assessments that would have been completed during the period of suspension. For this reason, the pass rates should not be compared like for like with those published for the same period last year. Level

Assessment name

Short code

Worldwide

Access

Access to Accounting Software

AASW

87.1%

Access

Access to Business Skills

ABSK

92.4%

Access

Access to Bookkeeping

ATBK

95.3%

Foundation

Bookkeeping Controls

BKCL

72.3%

Foundation

Business Communications, Personal and Learning Skills

BPLS

94.8%

Access CBA pass rate*

Foundation

92.6%

Advanced

82.5%

Professional

73.5%

64.3%

*Please note that the information in the above table refers to the pass rates based on the CBAs only and not achievements rates for the qualification. It is not possible for AAT to calculate and provide qualification achievement rates for AQ2016. End Point Assessments The following table shows the pass rates for the End Point Assessments for the year-ending June 2020.

Foundation

Bookkeeping Transactions

BTRN

87.2%

Foundation

Elements of Costing

ELCO

85.5%

End Point Assessments

Foundation

Foundation Synoptic Assessment

FSYA

86.3%

Foundation

Introduction to Business and Company Law

IBLW

59.9%

Foundation

Introduction to Payroll

INPY

84.4%

Foundation

Using Accounting Software

UACS

85.9%

Advanced

Advanced Bookkeeping

AVBK

74.5%

Advanced

Advanced Diploma Synoptic Assessment

AVSY

54.9%

AAT Assistant Accountant End Point Assessment Advance Diploma Synoptic assessment Assistant Accountant Portfolio and Reflective AAT Professional Accounting Technician End Point Assessment Professional Diploma Synoptic assessment Professional Accounting Technician Portfolio and Reflective

Advanced

Final Accounts Preparation

FAPR

77.1%

Advanced

Indirect Tax

IDRX

80.8%

Advanced

Management Accounting: Costing

MMAC

85.6%

Professional

Business Tax

BSTX

75.4%

Professional

Credit Management

CDMT

58.7%

Professional

Cash and Treasury Management

CTRM

61.1%

Professional

External Auditing

ETAU

72.3%

Short code

Percentage

AVSY AARF

66.2% 98.8%

PDSY PPRF

77.5% 95.2%

Graded Qualifications Qualifications awarded by AAT include four graded qualifications. The table below shows a summary of the grades awarded for each qualification between 1 September 2019 and 30 August 2020 Qualifications and grades awarded

Pass

Merit

Foundation Certificate in Accounting

Distinction

45%

46%

Professional

Financial Statements of Limited Companies

FSLC

59.2%

Foundation Diploma in Accounting and Business

17%

63%

20%

Professional

Management Accounting: Budgeting

MABU

76.5%

Advanced Diploma in Accounting

26%

55%

19%

Professional

Management Accounting: Decision and Control

MDCL

56.9%

Professional Diploma in Accounting

53%

44%

Professional

Professional Diploma Synoptic Assessment

PDSY

60.1%

Professional

Personal Tax

PLTX

65.0%

The date for the publication of the next set of CBA pass rates is to be confirmed. For further information about AAT please visit: www.aat.org.uk

Expert tutors. Top courses. Personal Support.

SUNIL BHANDARI ACCA AFM, FM, CIMA F3

TOM CLENDON ACCA SBR

GEOFF CORDWELL ACCA APM

ASHIM KUMAR ACCA SBL

10 years of online tuition. 100 years + of tuition experience. 24

ERIN MORTON ACCA AA

RICHARD POOLE ACCA ATX, AAA

SEAN PURCELL ACCA SBL

www.fmelearnonline.com/pq PQ Magazine January 2021

financial reporting PQ

Financial Reporting in the age of Covid FC Training’s Umar Tariq looks at how the pandemic has changed financial reporting he UK Chancellor of the Exchequer recently predicted that the UK economy will shrink by 11.3% this year, the biggest fall in output in 300 years. Covid-19 is affecting the whole economy and almost all industries are facing challenges, directly or indirectly, associated with the new economic conditions resulting from the efforts to contain the virus. Industries such as travel, hospitality, leisure, and retail have seen sharp declines in revenues due to regulatory requirement and social distancing measures. The continuation of these ‘circumstances’ could result in an even broader economic downturn, which could prolong the negative impact on many entities financial results. In many cases, businesses immediate focus is likely to be on survival, for some, on dealing with the immediate impact on staff, supply chains, and how to deliver goods or services to customers. Therefore, the focus has shifted abruptly to cash flow and solvency from growth. The current attention will be how long the business can survive under lock-down and how resources will be preserved in order to be able to return to normal operations as the crisis abates. While the financial statements primarily look at history, they should also look forward. Users of the financial statement may not expect management to be able to accurately predict the future. They may nevertheless be able to indicate areas affected or be able to describe the level of confidence they do have, even if lower than usual, in the company’s prospects. The impact of Covid-19 has various consequences on how income, expenses, assets and liabilities must be recognised and measured, when preparing financial statements,

PQ Magazine January 2021

whether reporting under International Financial Reporting Standards ‘IFRS’ or ‘FRS 102’ - the Financial Reporting Standard Applicable in the UK and Ireland. The FRC has produced helpful information which addresses the key areas that need to be considered on how the measurement and recognition in financial statements could be affected due to Covid19. However, it is important for companies to consider whether the impact is an adjusting or nonadjusting post-balance sheet event. There are key areas of considerations that need to be made by the accountants who are responsible in preparing financial statements of the company and those who sign them off. Here they are: Events after reporting date: IAS 10 Depending upon a company’s year-end, the impact of Covid-19 may be an adjusting or a non-adjusting event. For UK companies with a 31 December 2019 year-end, the Financial Reporting Council has stated, the spread of the virus after 31 December 2019 is a non-adjusting event for the majority of companies. This is because at that date, only a few cases of the virus had been reported to the WHO and the subsequent spread and identification of Covid-19 after 31 December 2019 does not provide additional information about the conditions that existed as at 31 December 2019. However, for companies with later year-end reporting dates, year-end balances might be affected. Companies must ensure that non-adjusting events are disclosed within the financial

statements, if material. Disclosure should include the nature of the event and an estimate of the financial effect, for example disclosing information about the impact on the carrying amount of assets and liabilities and recognition of income and expenses. If an estimate cannot be made, then the entity is required to disclose the fact. Events and information which occur, or are obtained, after the reporting period, and which are directly linked to the Covid-19 outbreak are adjusting events if the financial statements are established as at 31 March 2020 or any subsequent date. The entity should adjust the amounts recognised in its financial statements. This is because by 31 March, the extent of the crisis was known and the key economic support measures had been announced. The measurement of assets and liabilities as at 31 March 2020 or any subsequent closing date should reflect the conditions existing at that date, but information received subsequently, or further details on support measures implemented by governments, may confirm the situation at the end of the reporting period. For companies whose year ended as at 31 January 2020 or 29 February 2020, discussions are ongoing regarding the potential need for adjustments to reflect events that took place following the WHO’s declaration of a public health emergency on 30 January 2020. Significant judgement will be needed to determine the conditions that existed at the balance sheet date and whether, the amounts recognised in the accounts need to be adjusted. Continued on page 26 25

PQ financial reporting Continued from page 25 This judgement will be heavily dependent on the reporting year end in question, the entity’s own individual circumstances, and the particular events under consideration. Assessing Going Concern: IAS 1 The standard requires financial statements to be prepared by assessing a company’s ability to continue as a going concern and this needs to be assessed up to the date of the issue of the final accounts. The assessment relates to at least the first twelve months after the balance sheet date. The FRC’s recently issued guidance on Covid-19 notes that companies should disclose judgements and assumptions which have the greatest effect on the financial statements and those relating to going concern are an obvious focus. It is most likely many companies small and large, particularly in some sectors, will continue to have disruptions of their operations due to ongoing restrictions, and this needs to be considered by management carefully. There are wide verities of factors to take in to account by management in establishing going concern judgements. This includes travel bans, government assistance and potential source of financing of a companies activities,

liquidity of suppliers and customers and their effect on their profitability, debt repayment and other key financial performance ratios. The FRC notes that it expects more companies to disclose material uncertainties relating to going concern. These are events or conditions which cast significant doubt on the company’s ability to continue to trade for at least the next 12 months The degree of consideration required, conclusion reached and level of disclosure that needs to be made will depend on the facts and circumstances in each case, because not all entities will be affected to same extent. If management’s view is the company is no longer a going concern, the financial statements may have to be another basis such as liquidation. Non financial assets Impairment of assets: IAS 36 states an asset is impaired when an entity is not able to recover its carrying value either by using the asset or selling it. The scope of assets subject to this requirement includes plant and property, equipment, intangible assets, goodwill, right of

PQ Magazine January 2021

financial reporting PQ use of asset, investment property, etc An entity performs an impairment test to estimate the recoverable amount of the asset. The recoverable amount is the higher of the fair value(FV) less cost of disposal of the asset and the value in use(VIU).The value in use is defined at the present value of the future cash flows that the asset is expected to generate. The standard requires at the end of each financial period that an impairment test needs to be performed on the entityâ&#x20AC;&#x2122;s non-financial assets such as goodwill and indefinite life intangible assets. For other classes of assets within the scope of the standard, an entity is required to assess whether there are any indications of impairment. The impairment test only has to be carried out if there are indications the assets are impaired. The indicators of impairment include significant changes with an adverse effect on the company that have taken place during the reporting period, or will take place soon in the market or economic environment in which the company operates. Temporarily ceasing the operations, decline in demand of product and service rendered or prices are clearly events that indicate impairment. Companies need to assess whether the impact of Covid-19 has potentially led to asset impairment. For most companies, the economic effects are likely to trigger an impairment test for long lived assets and other group of assets. Managements are required to disclose specifically the assumptions used to establish

PQ Magazine January 2021

going concern and its sensitivities in the context of entities assets and its operations. Valuation of inventory: In valuation of inventories IAS 2 requires, companies to assess whether inventory is held at the appropriate carrying value, being the lower of cost or net realisable value, as at the reporting date. When determining the net realisable value of inventory, management must assess the estimated selling price of the goods less the estimated cost of completion and the estimated costs necessary to make the sale. Principal factors that may lead to inventory net realisable values being less than cost include a reduction in estimated selling prices, an increase in selling costs or estimated costs to be incurred to make a sale and obsolescence of products, all of which are likely consequences on businesses as a result of the impact of Covid-19. Entities should assess the significance of any write downs and if they require disclosure in accordance with IAS 2. Property plant and equipment: Disruption due to Covid19 mean, property plant and equipment is underutilised or not utilised for a period of time. As mentioned above under IAS 36, the impairment test should be made for this class of asset when there is an indication. In addition to that, IAS 16 requires that depreciation continues to be charged to the profit and loss account while the asset is temporarily idle. Financial instruments and lease Credit loss assessment: If an entity has any financial instruments within a scope of IFRS 9 such as loans, trade and other receivables, debt instruments which are not measured at fair value through profit, Covid-19 impact needs to be evaluated by the credit loss assessment model. Recoverability of receivables: Companies are likely to be impacted by the loss of customers and significant reductions in debts being paid due to customerâ&#x20AC;&#x2122;s experiencing financial or cash flow difficulties. Companies reporting under FRS 102 must assess whether, as at the reporting date, there is objective evidence of impairment, such as a customer being in significant financial difficulty or it being probable that a customer will enter bankruptcy, and where there is such evidence, an impairment loss should be recognised. Management should therefore give careful consideration to indicators that their customers may be experiencing financial difficulty, such as later than normal payments or partial payments, and recognise impairment losses or make realistic provisions based on the losses expected, as necessary to the applicable reporting framework. Expected credit losses should not be changed in the financial statements due to subsequent events related to the Covid-19 outbreak. Leases considerations: A lesser and a lessee might renegotiate the terms of a lease as a result of Covid-19.A lessor might grant a lessee a concession of some sort in connection with lease

payments. In some cases, a lessor might receive compensation from local government as an incentive to offer such concessions. Both lessors and lessees should consider the requirements of IFRS 16 Leases and as to whether the concession should be accounted for as a lease modification and spead over the remaining period of the lease. Lessors and lessees should also consider whether incentives received from a local government are government grants. Other financial instruments consideration: Impact of the changes to the terms of any borrowing or loan agreement because of action taken by government or renegotiation of terms between a borrower and a lender needs to be taken into account in preparing a financial statement. To determine the impact, both parties should apply the guidance in IFRS 9, whether the change to the terms results in de-recognition of the loan, reclassification or recognising a modification as gain or loss. Additional disclosures might be required. IFRS 7 for example, requires disclosure of defaults and breaches of loans payable, gains and losses arising from de-recognition or modification of loan. Non financial obligations Recognition of provisions: According to IAS 37, for a provision to be recognised, there must be a present legal or constructive obligation as at the reporting date as a result of a past event. There must be an obligating event, it must be probable that the company will have an outflow of economic benefit, and the amount of the obligation can be estimated reliably. The impact of Covid-19 is changing the way businesses are operating and as a result companies may be experiencing increased operating costs from needing to increase cleaning or employing additional staff to cope with distribution demand, or be experiencing loss of revenue from reduced customer demand. Future operating losses or future operating costs or losses are not permitted to be recognised because they do not meet the conditions to be recognised as a provision. Furthermore, companies need to consider whether any contracts may become onerous as a result of an expected loss of revenue, and increased costs associated with a contract. An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceeds the economic benefits. An example of this could be, an operating lease for aircraft, restaurants or retail spaces. Where a contract has become onerous, a provision is required to be recognised. IAS 37 requires that an entity discloses the nature of the obligation and the expected timing of the outflow of economic benefits if provision is recognised in the financial statements. Measurement issues relevant to financial instruments Fair value measurement (FVM): IFRS 13 defines fair value as price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market Continued on page 28 27

PQ financial reporting

Contimued from page 27 participants at a measurement date (exit price) at the reporting date. Fair value of an asset or liability at the reporting date should be determined using the applicable standard. The objective of FVM is to convey the FV of the asset or liability that reflects conditions as of the measurement date not at the future date. Events and transactions occurring after the measurement date may provide insight into the assumptions used in estimating FVM at date of measurement. They are only adjusted for FVM to the extent where they provide additional evidence of conditions that existed at the measurement date and these conditions were known or knowable by market participants. During the current environment, physical inspections might not be possible or there might not be an active market to establish fair value (FV).The volatility of prices on various markets increased and this will affect FVM either directly or indirectly. Therefore, special consideration needs to be given on commodity pricing that is used in developing FV conclusions. Disclosures are needed to enable users to understand whether Covid-19 has been considered for the purpose of FVM. For 2020, fair value measurements, particularly of financial instruments and investment property will need to be reviewed to ensure the values reflect the conditions as at balance sheet date. Other areas of considerations Revenue from contract with customers: Entity’s sales and revenue might decline as a result of 28

reduced economic activity following the steps taken to control Covid-19.This is accounted for when it applies. Companies must give careful consideration to the relevant standard when determining the amount of revenue to be recognised under customer contracts. Revenue may only be recognised if collection of the consideration that the company is entitled to under the contract is probable, when determining the contract’s transaction price, variable consideration may only be recognised if, and to the extent that, it is highly probable that a significant reversal will not occur when the uncertainty is resolved according to IFRS 15. Management should consider carefully the expected impact of discounts, returns, refunds, credits and penalties when assessing the amount of revenue to be recognised. IFRS 15 requires that entities to disclose information that allows users to understand the nature, amount, timing and uncertainty of cash flows arising from revenue. Assistance from government: Government responded to the impact of Covid-19 with a variety of measures and introduced a range of initiatives to help businesses including, the Corona virus Job Retention scheme, tax and business rates holidays, and grants for certain sectors. Management should consider whether this type of assistance received from government meets the definition of a government grant in IAS 20. Government grants may not be recognised until there is reasonable assurances that the entity will comply with the conditions

attached to it and its certain that the grant will be received. Grants are recognised either on the performance model or the accrual model. Income related grants are presented as part of profit or loss, either separately or under a general heading such as ‘other income’. Some government assistance may involve deferral of tax payments or other tax allowances. The accounting treatment for tax allowances may need to be accounted for under IAS 12 ‘Income Taxes’ rather than IAS 20. Please make reference to the relevant standard, if this is applicable for the business in question. • The article is not intended to cover all aspects of Covid-19 impact on entities financial performance, rather to give guidance on key areas of considerations. Further areas of consideration include, but not limited to, differed tax assets (IAS 12), Employee benefits (IAS 19), share based payments (IFRS 2) and contingent assets (IAS 37) in the case of recovery of insurance policies which are certain. • Each entity needs to consider the applicable standard, the transactions and contracts it has entered into and the environment in which it operates, and what might be considered material to its users when determining the impact of Covid-19 on the financial statements. • FC Practical Accountancy Training has a course developed for those who would like to advance their accountancy careers in to semisenior/senior level by giving training on how to produce annual statutory accounts using account finalisation software. For details of the course please contact us at https://www.fctraining.org/ • Umar Tariq, is a senior training consultant at Future Connect Training PQ Magazine January 2021

money laundering PQ

Accounting

for fraud

John Dobson explains how accountants can help prevent money laundering – and fulfil their legal responsibilities

ith reforms to Companies House being announced recently, as well as the FinCEN Files shining a spotlight on the vast scale of moneylaundering, those entering the accounting profession need to be more aware than ever of the signs of fraud. Accountants are the gatekeepers to the financial system and need to understand their legal anti-money laundering (AML) obligations, which include identifying suspicious activity and submitting suspicious activity reports (SARs). These reports play a crucial role in identifying the potential fraud issues. However, the FinCEN leaks demonstrated a clear issue with the current system as SARs were being raised, but transactions still went ahead. Identity verification One of the key points of the Companies House reforms proposal is an emphasis on identity verification. Previously, to start a limited company there would be little or no background checks to establish on whether the person starting the business was who they claimed to be. However, the reforms will mean all directors, people with significant control (PSCs) and anybody who files information on behalf of a company will need to have their identity verified. The first step for these will be to run initial know your customer (KYC) checks. These form part of the required customer due diligence (CDD) checks under money laundering regulations. These will involve identifying and verifying the customer and screening them against politically exposed person (PEP), special interest person (SIP), relatives and close associates (RCA) and sanction lists. But that is not the end of the process. In order to comply with regulations you must also continue to monitor clients for any changes. The pandemic made these KYC checks more difficult and the Financial Conduct Authority sent a letter out to CEOs stating that identity verification needs to continue. But at the same time it offered firms a number of suggested workarounds if they are unable to operate their normal processes. Incredibly, this includes allowing firms to accept ‘selfies’ and scanned PDF documents in place of originals. These decisions will undoubtedly reduce

PQ Magazine January 2021

the ability of accountants to detect fraud as selfies and scanned PDFs are much easier to replicate. Fully digital KYC solutions are available that allow firms to continue with ‘business as usual’ in the event of key staff being forced to work remotely. Electronic verification (EV) has been shown to be more secure than traditional document-based checks. Therefore, accountants should look to use these digital systems to effectively do their due diligence. Due diligence With the lockdown increasing the potential for fraud via virtual communications, it is more crucial than ever for accountants to be doing their due diligence. Under money laundering regulations, accountants must perform customer due diligence (CDD) on all customers to check they are who they say they are. However, if the risk of money laundering is high, if a client is on a PEP or SIP list, then accountants are required to carry out an enhanced due diligence check. This is crucial to assess the potential increased risk that a customer may pose to your

business. By utilising a digital solution like SmartSearch, it is possible to screen clients against PEP, SIPs and RCAs within seconds and process whether they need further due diligence. Risk-based approach A development from a few years ago, but is still relevant today, was the update to the money laundering regulations, which built on the previous regime and added a requirement that every firm must carry out and document a ‘whole-firm’ risk assessment. This firm-wide assessment should consider, clients, the country in which you operate, the services you offer, transactions and delivery channels. Accountants also must have in place systems and controls (including training) capable of: • Risk assessment. • Performing client due diligence (including enhanced for higher risk clients). • Assessing existing clients. • Recording appropriate information. • A system for reporting suspicious activities both internally and externally. Lack of reporting Accountants often get to know their clients well, and once trust is formed it becomes an obstacle to reporting anything suspicious. Understandably, some view reporting clients (especially those they know well) as a betrayal, particularly if the suspicious activities are of low monetary value. Accountants also have argued that HMRC is sometimes already aware of a suspect transaction, so they do not submit a SAR because it would serve no purpose. This may be understandable, but leaves accountants exposed to the risk of reputational damage, fines and even prison. However small a transaction, it is not exempt from the UK’s money laundering requirements. Failure by an accountant to disclose knowledge or suspicion is itself a money laundering offence. Accountants work in the public interest and must act with integrity and uphold the law at all times. This is where training is crucial. Every employee who deals with customers or transactions in any way needs to understand the firm’s policies, controls and procedures. They need to understand the legal requirements, the risk of money laundering, checks they should make, and how to report suspicious activities. It’s important to carry out regular reviews and updates on AML procedures. Whoever is appointed as money laundering reporting officer and senior management should continually assess the effectiveness of the measures in place. Especially if little or no SARs are reported. This should flag that the procedures may not be working. The best advice for accountants looking to navigate the money laundering landscape is straightforward: understand risk in the business, submit SARs whenever anything suspicious arrives and continually look to improve. • John Dobson, CEO, SmartSearch 29

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test bank PQ

Knock it out the park Philip Dunn sets the questions on marginal costing break-even analysis

his test bank issue will be most appropriate to the Accounting Apprenticeship Assistant Accountant

Level 3. Batcraft Limited produces high-quality cricket bats, some of which are used by both Test and county cricketers. It plans to produce and sell 6,000 units per year at a selling price of £250. The following is an abstract of the cost structure per unit, together with its fixed overhead. Variable cost per unit £180, semivariable costs: fixed element £15,000 and £2 per unit variable, fixed overhead £175,000. Also, in addition to the plan the management wants to consider the effect on profit at differing levels of output. Q1. Calculate the total contribution at a production and sales volume of 6,000 units. Q2. Calculate the total contribution at a

production and sales volume of 4,000 units. Q3. Calculate the total contribution at a production and sales volume of 8,000 units. Q4. Calculate the profit from a production and sales volume of 6,000 units. Q5. Calculate the profit from a production and sales volume of 4,000 units. Q6. Calculate the profit from a production and sales volume of 8,000 units. Q7. Calculate the contribution per unit of output. Q8. Calculate the company’s break-even point in units (to the next whole unit). Q9. If the management decided that it had a target profit of £252,000 how many units must it produce and sell? Recently there has been a shortage of highgrade willow, the main direct material used in the product. This has had the effect of increasing the total variable costs per unit to

£200 (and includes the variable element in the semi-variable cost). Q10. Calculate the company’s break-even point in units taking into account the recent cost increase. Q11. Calculate the company’s break-even point in sales value taking into account the recent cost increase. Q12. Based on your answer to Q10 and assuming the company achieved a volume of 6,500 units, what is the margin of safety in units? Q13. Express your answer to Q12 as a % margin of safety (to nearest whole number). Q14. Orders for the following year indicate that the production and sales volume will be 7,500 units. Given the information in the opening scenario and the change in costs calculate the profit achievable from this level of volume.

Answers: Q1. £408,000 Q2. £272,000 Q3. £544,000 Q4. £218,000 Q5. £82,000 Q6. £354,000 Q7. £68 Q8. 2,795 units Q9. 6,500 units Q10. 3,800 units Q11. £950,000 Q12. 2,700 units Q13. 42% Q14. £185,000 PQ Magazine January 2021

PQ ethics

Do the right thing An ethical dilemma at work can cause real anguish for an inexperienced accountant. Bryony Clear Hill explains what you should do should you find yourself facing such a situation

he modern workplace can be an ethical minefield. This column will help you tackle the thorny, but very real challenges that management accountants face in the workplace. Written by the CIMA professional standards team and based on realistic situations, the following is a practical guide to using the CIMA Code of Ethics to guide good decision-making. The scenario You are working at a small business on a finance training scheme. You have been there for one year and have completed the Operational Level of the CIMA Professional Qualification. You work in a team of three: you, your manager and a third-year graduate trainee. Your team should have more people, but recent budget cuts led to losing two members of your team, and those who remain are under significant pressure to deliver work quickly. Your line manager finds you in the office one afternoon and asks you to complete some complicated revenue calculations before you leave for the day. You don’t feel confident doing this. It’s a new type of work that you have briefly touched upon in your studies, but you have no practical experience. It will take hours, and the other members of the team will be going home very soon. Ethical issues and guidance CIMA’s Code of Ethics (the Code) applies to students as well as members and should be used as a resource in helping you decide on the best course of action. The fundamental principle of professional

competence and due care (Section 113 of the Code) requires that members and students “attain and maintain professional knowledge and skill at the level required to ensure that a client or employing organisation receives competent professional service”. In this scenario you are concerned that you do not have the professional knowledge to complete the task competently. It is vital that you are open and honest about this, rather than trying to complete work you are not qualified for, which will open up the business to risk and also mean you are in contravention of the Code. The Code goes on in Section 260.6 A7 to highlight a number of threats to the professional competence and due care principle. The relevant threats to this situation include “insufficient time for properly performing or completing the relevant duties” and “insufficient experience, training or education”. The Code suggests a number of ways to safeguard against these threats in Section 260.6 A8, which include performing additional research, obtaining assistance from someone with the necessary expertise, and consulting with superiors within the organisation. You should highlight your concerns to your line manager, citing the CIMA Code of Ethics and your obligations as a CIMA student to follow this. You should express your concern that you have not completed this type of work before and therefore do not feel sufficiently qualified to complete the work alone. You should also highlight that you don’t think this work is achievable in the suggested time frame, as the work will need to be rushed and this could increase the risk of mistakes being made.

You could suggest that you work on the calculations together with the more experienced third-year trainee when they come into the office the next day. This will mean that the work is overseen by someone with more experience, and you can use the opportunity to gain some experience, which might allow you to complete this work on your own in the future. If you frame it in a positive way and suggest a solution, it is likely to come across better to your line manager than if you simply focus on the reasons you cannot do what you have been asked. Highlight the fact that working with someone on this will both reduce the risk of errors being made and allow you to develop skills that will be helpful in the future for managing the workload across the team. If your line manager isn’t willing to listen to your concerns and insists you should complete the work, you should think about whether there is someone you could talk to. This could be a mentor or someone responsible for the trainee programme. They may be able to speak to your manager on your behalf to reiterate the points made about your lack of experience and offer some practical solutions to help get the work done whilst also supporting your development. After you have dealt with this situation, you could ask to schedule some time with your line manager or another relevant person to discuss your training at the company to ensure that you are gaining the practical experience you need to complement the exams you are taking. Through being proactive in having these discussions, you may find that your line manager is open to ensuring your development continues even as the business is going through a difficult time. • Bryony Clear Hill, Associate Manager – Ethics Awareness at the Association of International Certified Professional Accountants. This article was first published in FM Magazine in February 2020.

PQ Magazine January 2021

OECD research PQ Seven up: Estonia tops for tax for seventh year in a row

Making tax competitive We take a look at the latest International Tax Competitiveness Index

ow important is it for a country to have a competitive tax rate? In today’s globalised world capital is highly mobile and businesses will look for countries with lower tax rates on investment to maximise their after-tax rate of return. If a country’s tax rate is too high, it will drive investment elsewhere, leading to slower economic growth. High marginal tax rates can also lead to tax avoidance. According to research from the OECD, corporate tax is the most ‘harmful’ tax for

The UK’s position The UK has been ranked 22nd in the latest International Tax Competitive Index, which is put together by the Tax Foundation. That is one place worse than 2019. Here are the perceived strengths and weaknesses of the UK tax system: Strengths • The corporate income tax rate is 19%, below the OECD average (23.3%). • The UK has a territorial tax system exempting both foreign dividend and capital gains income without any country limitations. • The UK tax treaty network with 130 countries is the broadest in the OECD. Weaknesses • The personal income tax rate on dividends is 38.1%, well above the OECD average (23.9%). • Corporations are severely limited in the investment costs they are able to write off, particularly for industrial buildings. • The VAT of 20% applies to less than half of the potential consumption tax base. PQ Magazine January 2021

economic growth. Taxes on immovable property have the smallest impact on growth. Meanwhile, a neutral tax seeks to raise the most revenue with the fewest economic distortions. This means that it doesn’t favour consumption over saving, as happens with investment taxes and wealth taxes. This also means few or no targeted tax breaks for specific activities carried out by businesses or individuals. As tax laws become more complex, they also become less neutral. If, in theory, the same taxes apply to all businesses and individuals, but the rules are such that large businesses or wealthy individuals can change their behaviour to gain a tax advantage, this undermines the neutrality of a tax system. A tax code that is competitive and neutral promotes sustainable economic growth and investment while raising sufficient revenue for government priorities. There are, however, many factors unrelated to taxes which affect a country’s economic performance. With this in mind, the International Competitive Tax Index aims to measure the extent to which a country’s tax system adheres to what it sees as the two important aspects of tax policy – competitiveness and neutrality. Estonia tops the league For the seventh year in a row, Estonia, had the best tax code in the OECD. Its top score is driven by four positive features of its tax system. First, it has a 20% tax rate on corporate income that is only applied to distributed profits. Second, it has a flat 20% tax on individual income that does not apply to personal dividend income. Third, its property tax applies only to the value of land, rather than to the value of real property or capital. Finally,

it has a territorial tax system that exempts 100% of foreign profits earned by domestic corporations from domestic taxation, with few restrictions. While Estonia’s tax system is the most competitive in the OECD, the other top countries’ tax systems receive high scores due to excellence in one or more of the major tax categories. Latvia, which recently adopted the Estonian system for corporate taxation, also has a relatively efficient system for taxing labour income. New Zealand has a relatively flat, low-rate individual income tax that also exempts capital gains (with a combined top rate of 33%), a well-structured property tax, and a broad-based value-added tax. Switzerland has a relatively low corporate tax rate (21.1%), a low, broad-based consumption tax, and a relatively flat individual income tax that exempts capital gains from taxation. Italy is least competitive Italy has the least competitive tax system in the OECD. It has a wealth tax, a financial transaction tax and an estate tax. Italy also has a high compliance burden associated with its individual tax system. It takes businesses an estimated 169 hours to comply with the individual income tax. The Italian consumption tax system covers less than 40% of final consumption, revealing both policy and enforcement gaps. In general, countries that rank poorly on the ITCI levy have relatively high marginal tax rates on corporate income. The five countries at the bottom of the rankings all have higher than average corporate tax rates, except for Poland, at 19%. In addition, all five countries have high consumption tax rates, with rates of 20% or higher, except for Chile, at 19%. For more go to: https://taxfoundation.org/ publications/international-tax-competitivenessindex/ 33

PQ wellbeing

Pandemic takes its toll Research from Hays shows accountants are struggling with mental health issues during the ongoing Covid crisis, says Karen Young

t won’t come as a surprise to hear that the pandemic has taken its toll on the wellbeing among professionals. Those in accountancy have certainly felt the impacts of this, as many in the profession have had to take on new responsibilities and projects outside of the remit of their role. Our recent research suggests that the picture of wellbeing among accountants is complex and continuously changing. So let’s delve into this and find out: how has accountants’ wellbeing been impacted by the pandemic? And what can employers do to support wellbeing in their organisations? Wellbeing plummets The reality is that wellbeing among accountants has dropped significantly since the onset of the virus. We carried out some research in October 2020 based on a survey of nearly 500 accountants which brought this to light. We found that only about two in five (42%) accountants rated their wellbeing positively in October, which is a significant drop to the 66% who gave this rating before the first national lockdown commenced in March. Not everyone has been affected equally though, with results varying across ages. Fewer accountants in Generation X (those born between 1961-1982) rated their wellbeing positively than other age groups (38% gave this rating). On the other hand, Generation Y (born between 1983-1995) gave their wellbeing the most positive rating (47%).

rate their work-life balance between average and very poor. This is more or less unchanged with what they felt in July (43%) and only a small drop from when the first national lockdown commenced in March (48%). Being part of such a vital profession means it’s likely that accountants will have found themselves taking on extra responsibilities to keep their teams and organisations afloat throughout the pandemic. Worryingly, work-life balance looks to be an ongoing issue for the profession. Our research found that nearly three-quarters (70%) of accountants expect their work-life balance to remain at its current level over the next three months. Support has ramped up For the most part, employers are stepping up their support to help employees maintain a positive work-life balance. Many have

established new policies to address worklife balance and offered resources to inform employees and allocated leaders to offer guidance. Wellbeing support will only become more important to employees as further changes to our world of work are expected. The organisations which go above and beyond to support employee wellbeing will position themselves as employers of choice and benefit from drawing in top talent.

What further action is needed? While it’s encouraging that employers are stepping it up where wellbeing is concerned, our findings suggest that more needs to be done. In light of how different age demographics have been impacted, it’s important that employers tailor the support they have on offer. After all, what an accountant over fifty needs to manage their wellbeing may be different to someone in their twenties. One size certainly doesn’t fit all, and the more employers realise and act on this, the more supported their employees will feel. Another recommendation for employers is to lead from the front and overtly display a healthy work-life balance. If your team sees you sending emails after work hours, never taking a break during the day and working during annual leave, this sets the tone that it’s acceptable for others to do the same. People follow by example – so ensuring that the example from the top demonstrates a healthy work-life balance will go a long way. Ultimately, this is an issue which needs to be addressed by employers and employees alike. Both parties have a responsibility to maintain a positive wellbeing and a healthy work-life balance, even if the spotlight is on employers to ensure they have the necessary support in place. By keeping wellbeing on the agenda and taking on board the above recommendations, accountants will be able to put their best foot forward as our world of work continues to adapt and evolve. • Karen Young, Director, Hays Accountancy & Finance

Is work-life balance to blame? Our research also shone a light on work-life balance and the degree to which this is an issue for accountants. Currently, 42% of accountants 34

PQ Magazine January 2021

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PQ tax planning

Death and taxes Neil Da Costa keeps it simple in explaining the CGT and IHT implications of lifetime gifts

ere, I am going to show you how to keep it simple. Having been an Advanced Tax lecturer for more than 20 years I am fully aware of which areas examiners say that students struggle with. These areas feature regularly in the tax exams, and by ensuring you understand them you can be confident of earning these marks in the question. In this article I will be showing you how to deal with the CGT and IHT implications of lifetime gifts using simple examples. To help your understanding I will contrast the differences between the gift of an investment property with a gift of a business asset. Example: Moneybags and Skint When an individual gifts an asset to another individual, the disposal takes place at market value and a CGT liability arises on the donor. Moneybags is a wealthy individual who decides to gift a rental property worth £1 million to his nephew Skint. Moneybags bought the property for £300,000 many years ago and has already used his CGT annual exemption for the tax year. He is an additional rate taxpayer. The CGT liability payable by Moneybags is (£1,000,000 – £300,000) = £700,000 x 28% = £196,000. IHT implications of a gift: A gift to an individual is called a potentially exempt transfer or a PET and is only taxable if the donor dies within seven years of the gift. The value taxable is the value at the date of the gift NOT the value at death. Each tax year, we get an annual exemption

of £3,000 for IHT. If you do not use it, it can be carried forward to the next tax year. Exit Moneybags Moneybags dies three years later when he unfortunately crashes his Rolls-Royce. At the date of death, the rental property is worth £1.2 million. Moneybags did not make any other lifetime gifts. The value of the property at the date of the gift was £1 million. The IHT liability payable by Skint is: (£1,000,000 – 2 x £3,000 annual exemption) = £994,000 – £325,000 nil rate band = £669,000 x 40% = £267,600. CGT implications for business assets: Business assets like furnished holiday lettings are eligible for CGT reliefs such as entrepreneurs’ relief, rollover relief and gift relief. In terms of IHT reliefs, business assets are eligible for 100% business property relief which makes the asset tax free for IHT. Another example Moneybags is a wealthy individual who decides to gift a furnished holiday letting (business asset) worth £1 million to his nephew Skint. Moneybags bought the property for £300,000 many years ago and has already used his CGT annual exemption for the tax year. He is an additional rate taxpayer. Moneybags’ capital gain of (£1,000,000 – £300,000) = £700,000 will be postponed under gift relief and is deducted from Skint’s cost of £1 million. Skint’s base cost going forward would therefore be £300,000 which is the same as

Moneybags’ original cost. In order to claim gift relief, Moneybags and Skint should make a joint election within four years from the end of the tax year of the gift. IHT implications for a gift of a business asset: Moneybags dies three years later when he unfortunately crashes his Rolls-Royce. At the date of death, the business asset is worth £1.2 million. Moneybags did not make any other lifetime gifts. At the date of death, Skint still owns the business asset. As Skint still owns the asset at the date of Moneybags’ death, the business asset is eligible for 100% business property relief and no IHT is payable by Skint. HMRC will only allow business property relief to be claimed on the furnished holiday letting if there was substantial personal involvement by both Moneybags and Skint in the rental business. Tax planning Clearly, there are obvious tax advantages with gifting a business asset over the gift of an investment property. In the Advanced Tax exam, you are very often asked to select the most efficient option. By gifting a business asset, the immediate CGT liability is avoided under gift relief and the asset is tax free for IHT due to Business Property Relief. You have now understood the CGT and IHT Implications of lifetime gifts and can easily pick up marks on this popular exam topic. • Neil Da Costa is a Senior Tax Lecturer with Kaplan. He believes in keeping things simple and rigorous exam question practice PQ Magazine January 2021

sustainability PQ

Making a commitment ACCA’s Jimmy Greer explains why the association is committing to the UN’s Sustainable Development Goals

n September 2015 an historic event happened in New York when representatives of all 193 members of the United Nations approved a bold, collaborative proposal to change the world. They signed a document called ‘Transforming our world: the 2030 Agenda for Sustainable Development’, which included targets to tackle inter-connected issues – environmental, economic and educational – which together pose a critical threat to our lives and our world.

This agenda is a plan of action for people, planet and prosperity. The UN’s 17 Sustainable Development Goals and 169 targets introduced in this report are rightly seen as humanity’s last chance to collaborate to ensure that our planet

ACCA’s commitments and the relevant SDG: We will offer access to a quality finance and accountancy education that is free from artificial barriers.UN SDG 4: Quality education We will promote gender equality across our global community and achieve gender equality across our employee population. UN SDG 5: Gender equality We will support our community to progress in their careers so they can actively contribute to sustainable economic growth. UN SDG 8: Decent work and economic growth We will empower our community so they can support organisations to be ethical, sustainable, successful and able to

PQ Magazine January 2021

participate in the global economy.UN SDG 9: Industry, innovation and infrastructure We will advocate for inclusion, diversity and social mobility within, and on behalf of, our community, and ensure ACCA is a fair and inclusive place to work. UN SDG 10: Reduced inequalities We will promote sustainable practices and reporting, working with our community and our employees to reduce the consumption of resources. UN SDG 12: Responsible consumption and production We will embed green finance in our qualifications and learning products to improve capability across the

profession for climate action. We will advise and support governments and regulators to develop and adopt the regulations and reporting practices needed to transition to a Net Zero carbon economy. At ACCA, we’re committing to becoming Net Zero by 2030. UN SDG 13: Climate action We will promote and adhere to the highest standards of professionalism, integrity and ethics. UN SDG 16: Peace, justice and strong institutions We will work in partnership to build an inclusive global profession that supports the development of ethical, sustainable and successful businesses and economies. UN SDG 17: Partnerships for the Goals

remains habitable and viable to the end of this century and beyond. As the UN SecretaryGeneral at the time, Bank-Ki Moon, pointed out: “We don’t have plan B, because there is no Planet B.” There has been some progress in the five years since, but there is recognition that global action is not advancing at the speed or scale needed. That’s why the current UN SecretaryGeneral, António Guterres, has called on all parts of society to mobilise for a ‘decade of action’ to reach the goals by 2030. For ACCA, we have embarked on our own decade of action that we hope will inspire PQ readers. We have publicly committed to nine of the UN’s Sustainable Development Goals, embedding them into our strategy and focus, and promising to report annually on our progress. We have studied the goals and chosen the ones which are the most relevant to ACCA and our members in the accountancy and finance professions, so that we can give our focus to the areas where we believe we can make the most difference. We have aligned these to our strategy, with measures we will report on annually. While sustainability isn’t a new concept for ACCA, we believe that now more than ever it’s time for action. Making our commitments public is an important and necessary step to ACCA and our community plays a key role in the change business and society needs to see over the next decade. So our approach is collaborative as we know that we can make the most impact towards the SDGs by delivering change for public good through our connected community of members, future members, employers and learning providers. Professional accountants have a massive role to play here, as they are vital to supporting economies to grow and prosper in a sustainable way. This was a point made by Mark Carney, former Governor of the Bank of England and COP 26 Finance adviser, at an event for Climate Week in October 2020 where he said: “The accountancy profession is absolutely essential in the fight against climate change.” We’re in this for the long term as it’s an important issue for all of us, and ACCA looks forward to updating PQ readers on our progress. • Jimmy Greer is head of sustainability at ACCA 37

PQ personal development you write them down you are impressing them deeper and deeper into your subconscious mind. At a certain point you will begin to believe, with absolute conviction, that your goal is achievable. Once your subconscious mind accepts your goals as commands from your conscious mind it will start to make all your words and actions fit a pattern consistent with those goals. Your subconscious mind will start attracting into your life people and circumstances that can help you to achieve your goal.

Better yourself,

day by day In part two of his article on personal development, Pantelis C. Fouli outlines a different approach to setting your goals

hen writing down your daily goals you need to use the ‘Three P Formula’. Your goals must be written and described in the positive, present and personal tenses (the three Ps). Your subconscious mind is only activated by affirmative statements phrased in the present tense. You therefore write down your goals as though you have already accomplished them. Instead of saying, “I will earn $50,000 in the next 12 months,” you would say, “I earn $50,000 per year.” Your goals must be stated positively as well. Instead of saying, “I will quit smoking,” or “I will lose a certain number of pounds of weight,” you should say “I am a non-smoker” or “I weigh X number of pounds”. Your command must be positive because your subconscious mind cannot process a negative command. It is only receptive to a positive, present tense statement. The third ‘P’ stands for personal. From now on, and for the rest of your life, write out every

goal beginning with the word “I”, followed by a verb of some kind. You are the only person in the universe who can use the word “I” in relation to yourself. When your subconscious mind receives a command that begins with the word “I” it is as though the factory floor receives a production order from the head office. It goes to work immediately to bring that goal into your reality. For example, you would not say “my goal is to earn $50,000 per year”. Instead, you would say “I earn $50,000 per year”. Begin each of your goals with phrases such as: I earn, I weigh, I achieve, I win, I drive such-and-such a car, I live in a such-and-such a home, I climb such-andsuch a mountain, and so on. Trust the process When you begin writing your goals, you may have no idea how they will be accomplished. But this is not important. All that matters is that you write and rewrite them every day, in complete faith, knowing that every single time

Just do it! Whenever you write down a new goal of any kind you may be sceptical and doubtful about the likelihood of accomplishing it. You may have the idea in your conscious mind, but you will have not yet developed the total belief and conviction that is possible for you. This is normal and natural. Don’t let it stop you from using this method every day. Even if you are sceptical about this method, it only requires about five minutes each day to try it out for yourself. What do you have to lose? Time will pass anyway. You can multiply the effectiveness of this method with a couple of additional techniques. First, after you have written down your goal in the positive, personal, present tense, write down at least three actions that you could take immediately to achieve that goal, also in the present, positive, personal tense. For example: “I have a 32-inch waist”. 1. Exercise first thing in the morning, five days a week. 2. Eat nutritious, healthy food six days a week. 3. For one meal a week have a treat. Whatever your goal, you can easily think of three action steps that you can take immediately to achieve that goal. When you write down the action steps, you programme them into your subconscious mind along with the goal. At a certain point, you will find yourself actually taking the steps that you wrote down, sometimes without even thinking about it. And each step you take will move you more rapidly toward your ultimate objective. I would love to hear from you all if any of you undertake this new way of writing out your goals. I would also be able to answer any questions you may have. • Pantelis C. Fouli is ACCA qualified and an ACCA Advocate and Student Mentor. Anyone wishing to get in touch with him can connect via LinkedIn (https://www.linkedin.com/in/ pantelisfouli), but please mention in a personal message that you are PQ reader.

Award-winning AAT courses and apprenticeships Flexible learning to suit your lifestyle mindful-education.co.uk/students 38

PQ Magazine January 2021

contract dilemmas PQ

Where’s the paperwork? PQ magazine takes a look the problems of awarding contracts in a pandemic

he rush to buy personal protective equipment and other services to deal with the Covid-19 pandemic meant the exact reason why particular suppliers were chosen, a lack of paperwork, and potential conflicts of interest, all seem to take a back seat when awarding some contracts, says a National Audit Office report. The UK government’s response to the pandemic meant by 31 July over 8,600 contracts worth £18 billion had been awarded. Individual contracts ranged from

less than £100 to £410 million. The NAO revealed of the £17.3 billion of new contracts awarded some £10.5 billion were awarded directly without a competitive tender process. For procurements where there is no competition NAO said it is important that awarding bodies set out clearly why they have chosen a particular supplier and how any associated risks from a lack of competition have been identified and mitigated. This is to ensure public trust in the fairness of the procurement process.

In a selected sample of 20 contracts, it found examples where departments failed to document key decisions, such as why they chose a particular supplier or used emergency procurement, and failed to document their consideration of risks, including how they had identified and managed any potential conflicts of interest. The NAO also found that some contracts were awarded retrospectively after work had already been carried out. For example, a £3.2 million contract was awarded to Deloitte to support the cross-government PPE team’s procurement of PPE on 21 July 2020, with the contract effective from 14 March 2020. The Cabinet Office’s contract with Public First was awarded on 5 June 2020, with the contract effective from 3 March 2020. By asking for work to be delivered without a formal contract, risks such as underperformance are increased. A clear trail of documents to support key procurement decisions was sometimes missing, too. The Cabinet Office recently asked the Government Internal Audit Agency to review six PPE contracts that have attracted media attention. The review found that while there was evidence for most controls being applied, there were some gaps in the documentation, such as why some suppliers which had low due diligence ratings were awarded contracts. Many of the contracts awarded over this period have not been published in a timely manner either. Guidance issued by the Crown Commercial Service recommends that basic information about the award of all contracts is published within 90 days of the award. Of the 1,644 contracts worth more than £25,000 awarded up to the end of July 2020, 55% had not had details published on Contracts Finder by 10 November 2020, and only 25% were published within the 90-day target. For contracts of a higher value which are required to be published to the Official Journal of the European Union, DHSC published 89% of 871 contracts. Transparency is a key control to ensure accountability for decisions taken. The NAO recommends that, should the need to procure significant volumes of goods with extreme urgency arise again, the UK government needs to identify and manage potential conflicts of interest and bias earlier in the procurement process. Government should additionally ensure that basic information on contracts are published within 90 days of award.

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PQ Magazine January 2021

PQ wellbeing

How to tackle stress Gareth John explains how you can deal with stress and anxiety in these tough and troubling times

ental health and wellbeing are incredibly important topics at the moment and are likely to remain so throughout the coming winter. Many people will be experiencing increased levels of anxiety about the future, and stress about coping with the current situation. We need to take more time to look after each other, and ourselves. Here are my top tips for reducing stress: Look after your head 1. Deep breathing: Often when we are anxious our breathing becomes quite shallow, reducing the amount of oxygen we are supplying our brain and body with, which tends to make the feelings worse. By breathing deeply for a few minutes when you start feeling stressed you send a powerful message to your brain to relax and calm down. I try counting to four while breathing in, and to eight while breathing out, making sure I am filling my tummy with air rather than just my chest. 2. Meditation or mindfulness: Taking some ‘time-out’ can do wonders for calming down a panicking brain. For me this is often an extension of deep breathing, just done for a little longer. Closing my eyes lets me focus on my breathing in and out. I like to concentrate on the sensation of the soles of my feet resting on the floor. I try to notice every noise around me, and every feeling such as the gentlest breath of wind on my skin, every scent in my vicinity. There is a saying in Zen Buddhism: “You should meditate for 20 minutes a day. If you are too busy for that, then you should meditate for an hour.” Look after your body The next three points in some respects go

together, because when we are stressed and feeling overwhelmed they are the things that we are most likely to ignore, when they are actually some of the best solutions to those very feelings: 3. Eat well: Stress is often caused by being very busy, and at these times it is easy to find ourselves becoming reliant on junk food, sugar and caffeine. Challenging times in your life need to be fuelled in the same way as an endurance race; lots of fresh fruit and vegetables, good quality cereals and carbohydrates such as porridge, Weetabix, beans, bread, rice and pasta (brown carbs are always better than white) and small amounts of fresh chicken and fish. Snack on fruit and nuts during the day to keep up energy levels and give much-needed vitamins. 4. Exercise well: As with eating well, feeling stressed can make you less likely to follow your regular exercise plan, when exercise is actually one of the best things you can do to beat stress. Whether it’s running, riding, cycling or anything else that gets you sweating, exercise produces endorphins in the brain which promote a general sense of well-being. Improved strength and fitness will also make it far easier for you to take on the demands of each day. Exercising regularly can also improve your ability to sleep. 5. Sleep well: Avoid trying to work late nights, no matter how busy you might be. Dealing effectively with any challenge in life requires consistent good quality sleep of around eight hours a night. Remember that every hour of sleep you get before midnight is worth two hours of sleep after midnight, so don’t stay up too late. And try to avoid too much screen-time immediately before bed as the blue light given off by phones and tablets make your brain more alert.

Stay grounded My final points relate to increasing your feeling of connectedness, which I think is important to avoid the feelings of isolation and loneliness that anxiety can bring. It is all too easy to start thinking you are alone to tackle your problems and end up focusing inward in an unhealthy way. 6. Take a walk in nature: As well as providing some valuable exercise, taking a walk in nature can be a really effective way to reduce stress. The fresh air and sunlight are really good for your body but will also be a big boost to your mental well-being. Even a twenty-minute walk along a river with my dog puts my problems into perspective and reminds me of the joy of life. 7. Make time to do the stuff that you really enjoy: Stress and pressure is always easier to deal with if it is interrupted with little doses of fun and pleasure. You should take the time to reward yourself for the challenges you have faced as this will make the next challenge easier to take on. 8. Talk to a good friend: They say that ‘a problem shared is a problem halved’ and one of the most powerful ways I have of reducing my own feelings of stress is to have a good heart-to-heart with someone I trust and who I know cares about me. When you are really busy, and under pressure, it is easy to feel that the problems and hurdles ahead of you are far bigger than they really are. Old friends have a good way of helping you focus on the positives of your situation, of helping you see the strengths you have to deal with things, and of putting everything into a clearer perspective. • Gareth John is Chief Executive of First Intuition Cambridge PQ Magazine January 2021

careers PQ

Dear Karen Ask PQ’s very own agony aunt Karen Young when you need advice from a real expert. Email your dilemma to graham@pqmagazine.com, and he will pass on the best ones to Karen THE DILEMMA I’m looking for a new job but haven’t had much luck so far. I keep hearing that LinkedIn is important when looking for new opportunities, but how true is this? And what are your tips for how I can make my account stand out? KAREN’S RESPONSE What you’ve heard is true – LinkedIn should be a crucial part of any job search. There are millions of jobs posted on LinkedIn and more than 700 million people across the globe use it. Many of these are recruiters are employers who are able to connect you to new opportunities. Here are a couple of tips on how to take your account to the next level. Profile picture: If you haven’t already, upload a picture. It personalises your profile which, in turn, makes it more memorable. Research shows that profiles with pictures receive more views and more connection requests than those which don’t. Open to work: Another quick win is to let recruiters and employers know that you’re open to new job opportunities. All you need to do is download a green photo frame which sits over your profile picture. You’re more likely to stand out to those who are actively hiring. Pitch yourself: Not enough people use the summary section on their LinkedIn, but it’s like your personal elevator pitch. It is a great place for you to summarise who you are and an opportunity to stand out from others. Skills and experience: Make good use of the experience and skills sections. Highlight your roles and what you were responsible for and include your key strengths and accomplishments. Any relevant education, side projects and volunteering experience is also worth including. • Karen Young is a director at Hays. She is passionate about helping people to find the right job, and companies to find the right person

PQ Magazine January 2021

Life at Cardiff Council Jessie Atkinson is an accountant at the local authority, part-way through her CIPFA studies. She has a degree in French and Politics and recently won three awards at CIPFA’s prize-giving ceremony What time does your alarm go off? I have a light-up alarm which wakes me up gradually by 7am. If I’m lucky I’ll get a cup of tea brought up to me about then… What is on your desk? My full PC setup brought home from the office and a lamp. That’s it! I like to keep it tidy and minimal. Do you have a favourite lunch? I’ve been eating a lot of salads recently, but beans on toast is my go-to. On Fridays I treat myself to a vegan sausage roll and a doughnut from Greggs. What can you see when you sit at your desk? My partner, with whom I share the spare-roomturned-office. It’s nice to have an office buddy still. Which websites are your

favourites? I love charity shopping, so sites like eBay, Depop and re-fashion.co.uk. How many hours a week are spent in online meetings? Anything from one hour to 10. I like catching up with colleagues so I’m always happy to join a call. Are you spending more time working now than normal? No – I’ve been strict with myself about maintaining a work/life balance. How do you relax? Watching trashy reality TV, and having a cwtch with my cat, Patrick. What is your favourite tipple? I love any kind of fruity cocktail. What’s your favourite TV show? A variety – from Real Housewives to University Challenge. What is the best film you have

watched recently? The Eurovision film on Netflix was brilliant. Summer or winter? Summer! I’m not a fan of dark winter evenings. Pubs or clubs? I really miss going to clubs for a drink and a dance. Do you have a hero? Elle Woods from Legally Blonde. She might be fictional but she inspired me as a young teen to work hard. What is the first thing you are going to do when lockdown is properly over? Spend some quality time with my niece, who was born in April. Many of my family are in England so it’s been difficult to meet up this year. If you had a time machine where would you go? A hundred years into the future, to see what humanity will have accomplished.

then head to Switzerland. New research from Invezz. com and GlassDoor found that with earnings of £83,248 Swiss accountants make 26% more than the average salary in the country (£66,196). In second place is Denmark, where accountants make on average £60,029 a year. The figures show Irish accountants’ average pay comes in ahead of UK accountants’ pay. In Ireland they earn £40,832, compared with the UK average of £35,000 (which seems a bit low). Bottom of the salary table is Croatian accountants, who earned just

£6,563 a year. That’s just below Russian accountants on £6,643.

In brief Pap Do looks hold you back? Almost six out of 10 students fear their looks could put off prospective employers, a new survey suggests. However, eight out of 10 said that they were more concerned about nepotism. Milkround, the careers website, found that students felt hiring was still based on personal characteristics rather than skills and experience. Twothirds would like companies to introduce blind recruitment. Pap Swiss are best paid If you became an accountant for the money

Pap Mobility for KPMG KPMG UK remains a strong performer for social mobility, ranking third in the Social Mobility Employer Index 2020. This year’s position sees the firm hold a top-three ranking for the fourth consecutive year. Employers were assessed across seven key areas: their work with young people; routes into the company; how they attract talent (recruitment and selection); data collection; progression; experienced hires; and advocacy.

The PQ Book Club: books you should read Thriving Mind – How to Cultivate a Good Life by Dr Jenny Brockis (Wiley, £10.99) Author Jenny Brockis wants to help you create happiness in your life, because this is what leads to success. She feels that the search for happiness is sometimes dismissed as trivial, but in fact it is vital to our resilience, to buffer us against our daily difficulties and stress, and to reduce our risk of burnout or mental illness. It’s important you feel your work is meaningful. This, she explains, can be achieved by linking our values, what we stand for, with what is being

done. Brockis points to research by KPMG which drew the following conclusions: • If your job has special meaning for you – for example it has a social impact – you will be twice as satisfied with it. • Sharing your story of doing purpose-driven work, recognising and celebrating the meaning and social impact of it strengthens your emotional connection to the organisation. Cultivating an attitude of gratitude also helps the human brain. She believes saying thank you is never a small deal. It validates what’s happened between us, whether it’s a

business transaction or a great lunch shared with friends. Brockis also has laughter and play, sleep, good food and exercise as areas that will help you thrive. Interestingly, she has music and dance on that list – two things often overlooked, but not by her. PQ rating 4/5 There’s lots of great advice and practical help which should put you on the road to being happy. 41

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

I’ll swear by it Black Friday’s not worth it Did you spend a bundle of cash on Black Friday? We hope you read our tweet before you did – it pointed to a study that found the overwhelming majority of deals could be brought more cheaply at other times of the year. Consumer group Which? tracked the prices of over 200 popular products advertised as Black Friday offers across five large retailers in the six months before and after last year’s ‘event’. It discovered just 1% of the deals were actually at their cheapest on Black Friday itself. Just so you know every single deal offered by AO.com, Argos, Currys PC World, and John Lewis were all cheaper or at the same price for the six months after Black Friday. As hard as it is to say, only Amazon appeared to offer any genuine deals on the day, and even so 90% of these could still be bought for less or the same price in the six months afterwards.

Bribery loophole closed in Switzerland

Bribes paid by companies to private individuals and money spent to ‘facilitate’ crimes will no longer be tax deductible in Switzerland. Calls for reform have been growing, with the Swiss wanting to shed their tax haven reputation. The changes will come into effect in 2022 and harmonise tax law with its criminal code, which banned private bribery in 2015. Companies will also be barred from deducting foreign fines from their taxes, except in exceptional cases.

’ WEV E Unicorns

Did you know that when it comes to profanities that accountants say the most? A new survey discovered that swearing is relatively common in today’s workplace and a study (from Savoy Stewart) of 14 different job sectors put accountants at the top of the ‘swear table’. They beat the lawyers into second place with an average of 80 swears a week to their 60. Oh, and top swear word for accountants is ‘fuck’. The lawyers prefer a ‘bullshit’ and in travel and hospitality its ‘knob’. There that’s something for the profession to be proud of!

Words not word

In a break from tradition, the Oxford English Dictionary will not be having a word of the year for 2020. Instead it has a whole series of words. The dictionary has tracked more than 11 billion words found in web-based news sites, blogs and other sources to provide this year’s list. It found that Covid-19 quickly overtook coronavirus at the start of the pandemic as the word to use, but both made it onto the list. Here are some of the rest: bushfire, acquittal, impeachment, lockdown, social distancing, reopening, Black Lives Matter, cancel culture, BIPOC, mail-in, Belarusian, moonshot, super-spreader, net zero. Conversely, Collins went with the one word – ‘lockdown’. But surely it should be Covid-19?

Time to fly! Research by Cardiff University has found that scientists who specialise in climate change fly more than other researchers. They take on average five flights a year for work, compared with colleagues who average four flights. Climate professors catch nine flights a year compared with eight for all professors. Despite their higher levels of awareness and concern about aviation on climate change climate scientist also took an average of three international flights a year for personal reasons, the same as other researchers.

Cardigans are banned!

A top London law firm’s email about its dress code has gone viral after it was revealed the wearing of cardigans was banned. Vardags’ founding partner, Ayesha Vardag, sent a memo to all staff reminding them that they need to look “like a pro” and not “pretty young things”. Along with cardigans, woolly jumpers and singlets (woolly vests) are also on the ‘not-to-wear’ list. Out too are super-tight trousers for male staff, and pointed shoes. She wants shoes to be black and classic in style, obviously. And don’t get Vardag on trainers! However, on the plus side you can wear a cravat and formal waistcoat.

GOT THE L OT Top annual

How can you beat a dot-to-dot book on cute cats and Move over ‘Match’ and ‘Beano’, we have the best puppies? One word will do it – unicorns! If you love annual out there to give away this month! This unicorns you will love connecting the dots to reveal year will be forever remembered as the year of magnificent unicorns in this magical collection of Covid-19 and there is only one tome that will help gorgeous, hand-drawn illustrations. Suitable for all you put it all in perspective – the ‘Private Eye ages, each enchanted image ranges from 200 to 600 Annual 2020’. Full of all the best bits, the Big 4 dots. And once completed you can also colour them will be pleased that they do not seem to make in if you wish. We have three copies of ‘Dot To Dot the annual this time. That’s not true of the most Unicorns’ to give away this month. editions of the Eye, though. To be in with the chance to win one of these enchanting books send To enter this great giveaway send you name and address to giveaways@ your name and address to giveaways@pqmagazine.com. Head up your pqmagazine.com. Head up the email ‘Private Eye’ and we will enter you email ‘Unicorns’ and we will do the rest. for the prize draw. Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries Terms and conditions: entry giveaway Youonmust send11your must be received by Friday One 8 May. Theper main draw willplease. take place Monday Mayname 2020.and address to be entered for the draw. All giveaway

entries must be received by Friday 8 January. The main draw will take place on Monday 11 January 2021.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM 42

PQ Magazine January 2021

PQ magazine, January 2021

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