PQ magazine, July 2021 by PQ magazine

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July 2021

A CULTURE OF FEAR AMONG AUDITORS There is a ‘culture of fear’ in audit that prevents junior auditors from speaking out, says a new report from the Institute for Public Policy Research (IPPR). The report, ‘Remaking Audit: A plan for culture change and regulatory reform’, claims that long working hours and high-pressure environments both help to discourage junior auditors from raising concerns they might have about the work they are doing. Many of those starting out on their audit careers with the accountancy firms also fear what ‘being difficult’ will do to their careers. The IPPR report says junior auditors need to be actively trained to speak up and raise concerns with the audit senior. The idea is to openly discuss failures. There must also be clear timelines to feed back the outcome of any issues junior staff raise. Shreya Nanda, IPPR economist, said: “Audit firms should openly discuss past cases of audit failure, and routinely analyse their root causes with new joiners. To this day, NASA analyses the root causes of the explosion of the Challenger

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Shreya Nada: ‘We need to bring the audit industry into the 21st century’ spacecraft as part of the induction for new staff. To prevent another Carillion, audit firms should learn from NASA, and do just the same. “We need to bring the audit industry into the

21st century by stepping up regulatory oversight and ensuring that, among other much-needed change, the failings of its internal culture are also addressed.” The report’s authors say a complete culture change within the UK’s audit industry is needed to ensure that other crucial reforms fully restore public trust in the system. Without a new approach that encourages challenge to clients and speaking up within the audit firms themselves, there is a real risk that past mistakes will be repeated. Culture change within the industry, including the dominant Big 4 audit firms, should not be treated as an afterthought but should be rigorously prioritised, defined, put into effect and tracked. The IPPR paper, the second in a series of three, comes as the government is considering reforms to the industry, proposed in its recent white paper. IPPR argues that auditors should be set a renewed public purpose of becoming a trusted referee of business so that audit is far Continued on page 4

Technical meltdown at ACCA UK centres ACCA students sitting the summer exams in the UK were hit with huge delays as technical issues swept through exam centres. On day one of the June sitting at least six of the 75 UK centres were affected. ACCA admitted centres in Brighton, Stevenage, Kia Oval (London), Leicester, Glasgow and Ealing had ‘technical issues’. PQ magazine understands there were also problems at Portslade, Hove.

PQ Magazine July 2021

June sitters also talked about frozen screens and software that shut down mid-exam. The chatrooms were busy as students sat in the waiting rooms with no idea when they were starting their exam. Little did they know that they would be waiting eight hours before their exam would be cancelled. As one PQ said: “It’s Monday, so there are problems with the ACCA exams. Is it me or does

this happen every time?” Another sitter suggested that ACCA should run a test day on Sundays before exam week so the systems are properly tested. The problems ran into day two and ACCA revealed 140 students at Ealing and Hammersmith College had their exams cancelled, and they have been offered a refund. However, students have said this is not good enough. Students

believe the ACCA now has the technology in place to offer those affected a remote invigilated exam before September. One angry but articulate student told PQ: “It was a mess, and now I have to wait three months to sit an exam I had paid for and had sacrificed for. Why am I being punished when ACCA could offer something real like a resit?” It is something the ICAEW did when their exams didn’t go as planned. • For more on this turn to page 5

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IN THIS ISSUE

July 2021

A note from the Editor Wow, what a month! The problems at the ACCA June exams meant I missed a dentist appointment and two important Zoom meetings with a big tuition provider! That’s not a complaint. I didn’t have to spend over eight hours in a waiting room only to be sent home – oh, and then be told to come back in September, with no guarantee it won’t happen again. There is a quick remedy for these ‘technical issues’ – all students affected should be offered a free, remotely invigilated exam by the end of July. If this is not possible ACCA should provide or pay for a free revision course with an approved provider for the September exams. That way students are not disadvantaged and have the best chance of passing their exam. I have asked ACCA for an online meeting, so if you have questions you want to put to them then send me an email at graham@pqmagazine.com and I will pass them on. We have more on this on page 5, including a statement from ACCA, and you can check out ACCA’s ‘advanced notice’ of its annual figures on page 4. Graham Hambly, Editor and Publisher, PQ magazine News 04 CIMA criticised Institute is failing students with its lack of study resources, says top tutor 05 ACCA exam meltdown Students experienced a whole host of problems – and many have just about had enough 06 AAT’s new boss Sarah Beale has been appointed the association’s new CEO 08 Award winner Meet our Distance Learning Student of the Year, Demel Johnson 09 Hays survey How has the pandemic affected the jobs market, and people’s attitudes to it?

10 G7 Summit Countries agree deal over minimum corporate tax rate 12 Data survey Deloitte research finds almost half of employees are happy to share their health data with their bosses Features, etc 14 Have your say There’s was only one topic of conversation this month – the ACCA exams fiasco! Plus our social media round-up 16 PQ Awards 2021 We might have had a remote awards night this year – but we’ve still managed to get some of the winners together in one place!

18 International standards We examine the IFRS for SMEs – a subject that may just crop up in the ACCA SBR exam 20 ICAEW spotlight Why data analytics software is here to stay 21 ACCA spotlight Beware exam scammers – they could get you in a whole heap of trouble 22 A question for Tom Top tutor Tom Clendon answers your question on measuring assets 23 Wellbeing Studying and sitting exams can really take it out of you, so make sure you take time out to look after yourself 24 CIMA spotlight Why question practice is the best way to prepare for your exams 26 Xero offer Add to your CV with a Xero qualification – and you can do it through PQ for FREE! 29 AAT exams Nick Craggs explains the difference between mark up and margin 30 CIPFA spotlight Student president Will Goodchild urges you to sign up for July’s Public Finance Live conference 31 Local government ARGA gets local authority audit powers 32 Target costing Philip Dunn explains all you need to know about this important concept 34 Test bank How much do you know about material control and reporting direct material cost? 35 Keep it simple Neil Da Costa

p22 on quoted shares for individuals 36 AAT guru In the first in a regular series, Teresa Clarke looks at how depreciation works 38 Future emploment What happens when AI manages people? 39 Careers Life at Zzoomm with our PQ of the Year; Agony Aunt Karen Young has more career advice; and our book review 40 Fun The lighter side of life; and more great PQ giveaways The columnists Lisa Nelson It’s not enough to know – you need to understand

Robert Bruce Change is possible – but collaboration is needed 6 Prem Sikka Why importing skills robs developing countries 8 Anna Kate Phelan Cash is no longer king in my world 10 Mike Day SMEs are looking to broaden their horizons 12

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PQ Magazine July 2021

LISA NELSON The need to know

Einstein once said that “any fool can know. The point is to understand.” As you might expect from the man who devised the theory of relativity he makes two very simple yet profound observations, in this instance about learning. Firstly, that there is a difference between knowledge and understanding and secondly, that understanding is far more important. Exams are hard because the professional bodies need to test more than a superficial grasp of a topic. They want to be sure you understand it. Understanding by Design, by Wiggins and McTighe (1998), is an instructional framework that can help deepen understanding of a subject. The model suggests you should try explaining what you have just learned to someone else. If you can relate it to your own experiences and apply it in different contexts that’s even more valuable. For example, if trying to explain supply and demand, could you say how it might work for a shortage of supply and an increase in demand? The next stage is to explore the idea from different perspectives; ask what’s wrong with supply and demand, in what circumstances might it not work, and lastly challenge your own understanding – what doesn’t make sense to you? The truth is there is much you will never fully understand, but if you try you get closer – that’s what makes learning so much fun! Lisa Nelson is Director of Learning at Kaplan

More resources for CIMA PQs please CIMA needs to provide more online study resources on its main website, claims a leading tutor. They said that currently there are eight articles under exam technique and 11 under study support, with technical articles, ‘coming soon’. She said: “Are CIMA telling us these 19 articles do the job? Have they looked at what ACCA provides its PQs – the comparison is embarrassing.” They felt CIMA needs to up its game and start providing real insight into how students can pass these difficult exams. She emphasised: “CIMA needs to do a benchmark exercise and step away from the day-to-day challenges, to decide what a body in 2021 should be providing. It’s great that they recently gave students a free resit, but why not make the

resources better and more focused, so students can pass first time? What message does this send to prospective students?” That said, the free resit is still available to students who

ACCA unveils big surplus A massive savings drive has helped the ACCA to turn a revised budgeted £8.9m deficit into a £20.3 million surplus for the year to 31 March 2021 (subject to external audit confirmation). Ahead of its annual report, ACCA has again released an ‘advanced notice’ of its strategic performance, and it makes interesting reading. The full report is out on 30 July. ACCA explains it was assumed that the first exam session of

2020-21 would be cancelled everywhere (except China) with exam income broadly returning to normal thereafter. But, due to

A CULTURE OF FEAR AMONG AUDITORS Continued from page 1 more than a ‘tick-box exercise’. That means stablishing confidence in audit firms’ ability to detect and warn of fraud, financial

misstatements and problematic accounting practices, and to live up to the same standards in audit-related consulting activity.

and provide advice on shaping careers. Among the speakers in the main conference are Professor Mike Savage from LSE, Dr Holly Birkett from the University of Birmingham and Aasmah Mir, a broadcaster and journalist. To find out more go to https:// publicfinancelive.org/.

part of the settlement deal over the multi-billion-dollar scandal at 1Malaysia Development Berhad (1MDB). The Finance ministry said in a statement that is also in negotiation with KPMG in relation to 1MDB. Nearly $4 billion from the 1MDB fund has now been seized and returned to Malaysia, said the ministry.

scheduled an OT exam between 1 February and 31 July 2021. The free resit is also valid for the operational case study, but not management or strategic case study.

the ‘second wave’ impact over Q3 and Q4, it saw another £8 million of further disruption to its exam income during the year. In the end, some 595,425 exams were sat during the year, which is down on the expected 831,000, projected in prepandemic times. ACCA takes ownership of these figures and for the coming year it promises to run exams in as many markets as possible, bolstering capacity through online exams with remote supervision. The percentage of students passing an exam in a year stands at 29.3%. This is crucial if the industry is to be trusted with a broadened role, also advocated by IPPR: to report on the quality of business governance, environmental risk reporting, and data and cyber governance.

In brief Pap #PublicFinanceLive21 CIPFA annual conference which was due to take place on 7-8 July at the QEII Centre, will now run virtually. This year’s conference has three content streams – place, planet and profession. On day two there is the free CIPFA student conference which will include the student prizegiving ceremony. Our favourite session is ‘senior manages stories’, where top people from the world of public finance share their stories (often very honestly and openly) 4

Pap Deloitte agrees settlement deal The Malaysia government has said it has now received $80 million from audit firm Deloitte as

Pap Sex offender excluded form membership ACCA member Stephen Nicholas Knowles has been excluded

from membership and ordered to pay costs of £5,500. Knowles was convicted at Birmingham and Solihull Magistrates Court of making indecent photographs/ pseudo photographs of children contrary to section 1 (1) (a) of the Protection of Children Act 1978, which is deemed discreditable to the Association and the accountancy profession. The Committee further ordered that no application for re-admission by Knowles may be considered until the expiry of a period of four years. PQ Magazine July 2021

news extra

ACCA exam: the meltdown PQ editor Graham Hambly catalogues students’ woes at the latest set of ACCA exams The June ACCA exams were a catalogue of cancelled and delayed exams as UK exam centres struggled to cope with ‘technical difficulties’. Many PQs waited hours (some over eight hours) only to be told their exam would not be going ahead. ACCA students were also shocked when they walked into the Viglen House exam centre in London (see picture). Sitters told us there were “wires everywhere” at the Dalston, Manchester and Leicester centres. A PQ said: “It is hardly surprising there where technical difficulties when you are running 100+ computers off extension leads from one power source.” For many the pictures were confirmation that some centres were simply not up to the job. As one PQ said: “I had a fire extinguisher beside me with all the wires under the desk.” Another simply said: “So health and safety does not come

PQ Magazine July 2021

into ethics then, ACCA?” Students at many centres revealed it wasn’t plain sailing even if they got logged onto the exam. Many spoke of keyboards having a mind of their own, even deleting work as they typed in their answers. “My screen

just kept going on and off,” explained an AA sitter. One frustrated PQ even claimed it was time for BBC Panorama or C4 Dispatches to get on the case. We have also heard there were technical difficulties in India too, for the remote invigilated exams. And some students have actually called for a return to paper

exams. Students are demanding ACCA take a serious look at how it is going to address these continuing issues. “We don’t hear the AAT or CIMA having the same amount of problems,” suggested one sitter. With the availability of remote invigilated exams on demand, students believe the time is right for ACCA to offer affected sitters the chance to sit a new exam before September. • Despite the technical difficulties, computer crashes and noisy air conditioning, the exams themselves generally got a thumbsup with the usual caveats of time management issues. To read our paper-by-paper feedback go to www.pqmagazine.com.

ACCA statement about cabling problems at exam venue – 9 June

ACCA apologises to students who have been affected by delays and issues at some exam centres this week. We are currently investigating complaints from students about the cabling at one of our venues. We understand that one room at Viglen House in London was not set up in an appropriate manner. We take these matters very seriously and have launched an investigation with our partners at this site. We are sorry that students for the morning session were delayed and some had to withdraw because they were not able to stay for the delayed sitting in the afternoon. We will refund their fee and ask them to rebook their exam. We would also like to apologise to 140 students who had their exams cancelled at Ealing and Hammersmith College yesterday, where we had technical problems. They will also have their fees refunded.

ROBERT BRUCE Coming together for change At the back of the impressive annual report of the International Integrated Reporting Council is a single page. It is essential. It is a list of acronyms. The world of climate change and all the bodies that are arrayed in support of the many ways in which change is being sought is wide. The essential task is urgent. The many constituent parts fighting valiantly for the change that has to come have done fine work. The Task Force on Climaterelated Disclosures has transformed the way corporates have had to face up to future change. Measurement does indeed change behaviours. The way such measures are transforming efforts to tackle climate change was thrust into centre stage by the communiqué issued at the G7 meeting in June. It brought ever more urgency to the task. It wanted much of the measuring to be made mandatory. And in so many words it urged the tackling of all those disparate acronyms. The main bodies for setting financial reporting standards, for integrated reporting standards and for sustainability standards, will all come together as an alliance ahead of the great jamboree of COP26 in Glasgow in November. The resulting ‘baseline global reporting standard’, as the G7 communique puts it, will continue to ramp up the speed. Process will be transformed from acronyms to change. Robert Bruce is an award-winning writer on accountancy for The Times

AAT unveils new CEO AAT has announced that Sarah Beale will become its new CEO, replacing Mark Farrar later this year. His last day in post will be 1 July 2021, and Beale begins her tenure as chief executive on 1 November – leaving a three-month gap. Sarah started life as an AAT before studying with the ACCA. In 2005 she joined the Construction Industry Training Board and in 2017 became its CEO. In 2019, Sarah was awarded an honorary fellowship by the University of Wales for services to diversity, inclusion and innovation in the training sector. More recently she became a member of the Green Jobs Taskforce. AAT President David Fredrick said: “We are delighted to announce Sarah’s appointment as AAT’s new Chief Executive. She has led the CITB in a complex commercial and political environment and her wide range of skills and experience will be invaluable to AAT as we move to the next phase of the organisation’s journey. We look forward to welcoming Sarah when she formally joins AAT later in the year.”

Ben Wilson joins FME Learn Online Ben Wilson has joined FME Learn Online, to deliver his new innovative on demand courses for ACCA AAA. Ben is an ACCA Expert Tutor for auditing papers, and helps create the ACCA’s student resources for both the AAA and AA papers. He also has a huge amount of experience as an audit examiner and audit exam marker, which means that he

understands exactly what it takes to pass the AAA exam. FME Learn Online’s Sunil Bhandari said: “It is fantastic to have Ben come on board at FME Learn Online. His expertise in ACCA AAA is unrivalled. As I promised earlier this year, FME Learn Online would continue to expand the provision of our expert tutor driven ACCA courses.”

Workforce engagement key to good corporate governance Engaging the workforce lies at the heart of good corporate governance, says the Financial Reporting Council. It points out that the UK Corporate Governance Code wants companies to report their engagement with the workforce.

However, new research shows that many FTSE 350 annual reports appear to downplay the importance of their workforce engagement. The work by the University of London and the Involvement and Participation Association found

to send everything via email as it does not have access to any post.

accompanying article in the June issue of PQ (page 23). We also have Back to Basic videos on: • Weighted Average Cost of Capital (WACC): https://vimeo. com/536755049. • The Trail Balance: https:// vimeo.com/500074449. • Double Entry Bookkeeping: https://vimeo.com/429252329. • The Strategic Planning Process: https://vimeo.com/437139421. • Financial Maths (for ACCA AFM sitters): https://vimeo. com/446780185.

changes in workforce engagement have been more evolutionary than revolutionary, with many companies merely amending existing practices to fall into line with the code. The research authors stressed that the actual mechanism of engagement is less important than companies’ desire to genuinely engage with employee views and recognise the benefits that such engagement can bring.

In brief Pap No face-to-face until September Face-to-face events will now be postponed until at least 31 August 2021, says the AAT. It said that this is so it is able to maintain the health and safety of all members and partners. AAT stressed it will continue to deliver new updates, insights, learning and support through its wide range of online events “so you won’t miss a thing”. The AAT office remains closed and all staff are working from home. It reminded students that they need 6

Pap Back to Basics – assets PQ magazine has joined forces with FME’s Tom Clendon to help you get to grips with assets. In just a few short minutes, nine to be exact, he explains that what helps to define an asset is all about ‘control’. This word also helps you understand when a resource becomes an asset. To see the video go to https://vimeo. com/5439340, and there’s an

Pap UHY Hacker Young sanctioned The Financial Reporting Council has issued a severe reprimand to both UHY Hacker Young and Julie Zhuge Wilson over the statutory audit of the consolidated financial statements of Inch Kenneth Kajang Rubber plc (IKKR), for the financial year ended 31 December 2016. UHY and Wilson have agreed to pay the Executive Counsel’s costs of the investigation – UHY will pay £146,751.97 and Wilson £62,893.70. PQ Magazine July 2021

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PQ news

PREM SIKKA

Importing skills is a means to transfer wealth

The UK parliament is debating the Professional Qualifications Bill. It is a left-over from Brexit. When enacted, the Act will enable the UK to recruit foreign professionals to meet skills shortages. The Bill affects over 160 professions that are regulated by legislation by a network of more than 50 regulators. Mutual recognition of professions is likely to feature in post-Brexit trade deals. This is good news for many as it enhances prospects of employment, social mobility, cultural and knowledge exchanges. But there is also a downside, especially as economic migrants are likely to come from poorer countries. The UK hopes to entice doctors, architects and accountants from poorer countries by offering what would seem to be higher wages. So despite making huge investment in the production of professionals, poorer countries will not reap the expected benefits. It can take more than a decade to train a surgeon. The loss of skilled professionals would retard the development of the local economy and healthcare system. The Bill does not offer any compensation to poorer countries for the value lost. The reliance upon foreign nationals to plug skills gaps may persuade the UK government to neglect the development of institutions necessary for the local production of skilled workers. Why spend billions on training doctors and surgeons when they can be recruited at a fraction of that cost from poorer countries? Prem Sikka is Emeritus Professor of Accounting at the University of Essex

Meet our Distance Learning Student of the Year winner Being named Distance Learning Student of the Year at the recent PQ Magazine Awards was a ‘wonderful surprise’ for Demel Johnson. The AAT student was recognised at this year’s online ceremony after overcoming a range of challenges during his Foundation Certificate in Accounting studies. And Demel is understandably delighted to have been selected for such a prestigious award. He said: “It’s unbelievable! I never expected to win, but it was a wonderful surprise and I am very grateful. “I work full time in retail and see my son on weekends, so didn’t have the time to travel to a classroom. Distance learning gave me the flexibility to study whenever and wherever I wanted. The very

definition of ‘convenient’.” Demel is planning to build on his first accountancy qualification

by making a career change and continuing his studies. “My most immediate goal is to secure my first job in finance,” he confirmed. “I have been in retail for almost 15 years now and a change would be most welcome. After that, I intend to keep studying and potentially move onto the ACCA qualification.” Having unlimited tutor support available throughout the week is helpful for any distance learning student, and Demel believes this has been key to his progress. He said: “None of this would have been possible without the excellent service provided by (my training provider) Premier Training. “The fact that you can always and easily contact a tutor is a huge benefit. Work is always marked and returned with valuable feedback within a suitable timeframe. The mobile app, MyPTA, was beyond helpful.” • Check out more winners on page 16 and 17.

CIPFA in rude health CIPFA’s annual report is out, and CEO Rob Whiteman points out that despite the pandemic it “achieved the most successful performance for many decades”, delivering a £3 million trading surplus and £2.8 million improvement on budget. He explained CIPFA also used the past year to review its business model, refresh the senior leadership team and craft a new five-year plan. In March, it successfully and very rapidly moved from face-toface classes to online delivery. CIPFA was the only professional accountancy body to offer exams throughout the first lockdown, thanks to its early adoption of online invigilation, and it has hosted a highly successful series of webinars on student wellbeing

and mental health. The figures show the institute had income of £26,417,000. Income from education and training student members was £5,138,000 and expenditure came in at £5,6444,000. Membership subs brought in just under £3 million.

The three winners of our of the PQ Bumper Quiz have now received lovely new Nespresso Vertuo Plus coffee machines in PQ colours. And here’s Rachel Spence holding tightly onto her prize!

Taxwatch Pap Land Value Tax for an independent Scotland? A Land Value Tax could be part of the route to a fair independent Scotland, according to a new report from the Social Justice and Fairness Commission. It believes the introduction of an LVT would remove the dependency on Council Tax, Land and Buildings Transaction Tax and non-domestic rates, and the report authors say such a reform has the potential to provide local government 8

with much greater control over resources than it does at present. The Commission believes that LVTs – which apply only to the land itself and not to improvements on it such as buildings or infrastructure – have significant advantages over property value taxes, which apply to both the property and the land it stands on. LVT incentivises the development of land – and discourages land hoarding for speculative purposes – because the tax liability for landowners

is the same whether land is developed or not. There was also seen to be a case for making the owner of the property responsible for paying LVT, rather than the tenant. This is because land values tend to rise more rapidly than rents in inflationary markets, and since it is the landlord who benefits from the increased value of land, then landlords should pay. Of course, some of the cost of the LVT would be passed on to the tenant in the form of a higher rent, but this

would, said the Commission, likely reduce overall cost to the tenant and be less than an increase in land value caused by a house price boom. It understood that some would argue that everyone should contribute directly to local government revenues, and for that reason, as the Commission on Local Tax Reform suggested, it said it may be preferable to have more than one local tax. For example, part of income tax could be placed under local control. PQ Magazine July 2021

news PQ

New scholarship set up

EY has agreed to pay New Jersey $100,000 and create a $500,000 scholarship programme in response to a sexist training video for women executives. The agreement puts to bed the investigation of whether the firm violated state laws against discrimination by providing outdated gender stereotype training. The ‘Power-Presence-Purpose’ training programme included such advice as “don’t flaunt your body” and “be polished… good haircut, manicured nails”. The story was first brought to light by the Huffington Post, where employees said they were made to feel “like a piece of meat”. Before attending the seminar, participants were also asked to score their own feminine and masculine traits. The scholarship will be used to attract more women and other underrepresented groups into accountancy.

The pandemic one year on The biggest professional challenge employees face in our new pandemic landscape is interacting with colleagues, according to a new Hays survey. The report, called ‘Covid-19 one year on’, found some 32% of employees said they missed the interaction with fellow workers. Interestingly, this was felt most acutely among older workers, with 35% of Baby Boomers saying this has been their top professional challenge during the past 12 months. A further 30% of professionals say that finding a new role has

been a significant challenge. Here it was those from younger age groups who have felt this challenge most keenly, with 42% of Gen Z professional citing this as their

biggest professional challenge over the last year. Employees have also come up against difficulties adjusting to working away from the workplace. A quarter (25%) have faced challenges with remote working in the last year, and 24% have been battling against a lack of motivation. A lack of motivation is particularly a prominent challenge for Gen Y and Gen Z (31% and 38% respectively). You can download the full report at: https://www.hays.co.uk/lead-inthe-new-era/lockdown-one-year-on

Become Xero Certified Advisor with us PQ magazine has teamed up with Xero to offer you the chance to become a Xero Certified Advisor – for free! All you need to do is create a simple Xero login, and when you are asked to choose your ‘organisation’ just scroll down to PQ magazine. One click and you are away.

When you are register you will be directed to the eLearning pack. It will take between eight and 10 hours to complete, and has assessments running throughout. Once done you will be awarded a PDF certificate which you can add to your CV and LinkedIn profile! It really is that simple. No matter where you are in

your accountancy journey you can benefit from this great tie-up. Once you become a Xero Certified Advisor you can continue on to Payroll Certification, App Advisory Badges, Hubdoc and Xero Tax. This pack of eLearning takes about 10 hours. Go to: https://www. xero.com/uk/training/certificationequivalent-courses/

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PQ Magazine July 2021

PQ news

JOB OF THE MONTH

ANNA KATE PHELAN Why cash is no longer king Like many of you, I don’t carry cash anymore. I use my phone for anything from the Tube to the ballet. The convenience is unprecedented; I never have to worry about finding a cash machine and all of my transactions pop up immediately in a pretty graph format for maximum guilt. The only minor downside when compared with cash is that cash is unlikely to run out of battery in the bowels of the Central line. According to the payment processing company Worldpay, the UK is due to be almost cashless by 2024 due a shift in consumer habits as a result of the pandemic. In only three years’ time just 7% of in-store purchase could be made via cash. This is in comparison to 27% of in-stores transactions in 2019 and 13.4% last year. The unprecedented growth of phones and debit/credit cards has put a heavy dent in any need for notes and coins. In fact, Worldpay predicts that by 2024 phones will make up a third of all payments. However, we have to remember those that suffer in a cashless society, such as the elderly, charity collections or the homeless. A cashless society will lead to fewer cash machines and most likely fewer bank branches, meaning that those who need those services (including small businesses) may have more trouble accessing them. One thing is certain – the digitalisation of small transactions and increasingly ‘automated’ reconciliation tools will affect the accountancy world, most say for the better. Anna Kate Phelan is Senior Product Manager at Eintech

‘Historical’ deal on global tax G7 finance ministers have agreed an ‘historic’ deal for a minimum corporate tax rate, which means the big tech companies will pay more tax. Following a meeting in London, the G7 countries have said they will ensure they abide by a global minimum corporate tax rate of ‘at least 15%’. They believe this will create a more level playing field for firms and help crack down on tax avoidance. The new rules apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries where they operate. It was also agreed that large companies need to pay tax in the countries where they do business.

Auditors must do fraud detection Auditors need to do more ‘fraud detecting’ of company accounts, says the Financial Reporting Council (FRC). To this end, the FRC has issued a revision of its UK auditing standard on the responsibilities of auditors relating to fraud: ISA (UK) 240 (Revised May 2021) – The Auditor’s responsibilities Relating to Fraud in an Audit of Financial Statements (see https://tinyurl.com/49msdtnr). The revisions to the standard are designed to provide increased clarity

EY’s office destroyed in Gaza EY’s Gaza offices were destroyed by an Israel airstrike on 15 May. Fortunately, the building had been evacuated prior to the attack. The building was also home to Al-Jazeera, and other international press offices, including the Associate Press. A tweet from the EY Muslim Community said: “We would like to take this opportunity to once again join the United Nations call to cease all violence… We would also like to extend our hand of support to our EY colleagues 10

That means companies pay more tax where they sell their products and services, rather than where they put their HQs. Following years of negotiation, the new two-pillar global deal covers the US, UK, France, Germany, Canada, Italy, Japan and the EU. UK Chancellor of the Exchequer Rishi Sunak, who hosted the summit, said the agreement would make the global tax system finally “fit for the global digital age”. Janet Yellen, the US Treasury Secretary, said the agreement will hopefully end the race to bottom in corporate taxation. German finance minister Olaf Scholz felt it would “change the world”. The agreement now goes to the G20, which includes China, Brazil and Russia.

about the auditor’s obligations, addressing the concern raised by Sir Donald Brydon in his review of the quality and effectiveness of audit. The revisions include enhancements to the requirements for the identification and assessment of risk of material misstatement due to fraud and the procedures to respond to those risks. The revised UK standard is effective for audits of periods beginning on or after 15 December 2021 with early adoption permitted.

in the region that may have been affected by this terrible situation. For those whose mental health may be affected by the current climate, please reach out to your local EY Mental Health team for assistance.” Office space going free Major employers plan to reduce their office portfolio by up to nine million square feet, equivalent to 14 ‘Walkie Talkie’ buildings, according to PwC’s Occupier Survey of 258 of the UK’s largest companies. The new figures show half of the organisations surveyed expect to reduce the size

Financial Analyst An international professional service firm is looking for a PQ financial analyst. You will be based within the commercial finance team and be responsible for providing high quality data and analysis. Your role will include: • Preparing management reports with a focus on fee earning financial performance. • Working with data, slicing, dicing, analysing and presenting. • Ensure that timely and accurate metrics and forecasts are built and maintained. • Performing scenario and sensitivity analysis. • Understand variances between forecasts and actual results. • Maintaining the budget model and the workflows through it. You can expect a salary of £45,000 – £50,000 plus benefits and study. Applications close on 25 June. For more go to https:// tinyurl.com/ajss5fs6

of their real estate and, of these, a third believe they will reduce their office footprint by more than 30%. Just 10% of those questioned agreed that the level of employees working from the office will return to pre-pandemic levels. And, despite mass vaccination, around 50% of senior executives said employees will continue to work virtually two or three days a week. PwC’s Angus Johnson said: “The figures couldn’t be more clear: the shift to hybrid working, with part of your time at home and part in the office, is pretty much embedded into the working culture of many organisations. So much so that a significant proportion of the businesses we spoke to are planning to reduce their office portfolio, which could lead to up to nine million square feet of vacant space.” PQ Magazine July 2021

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tech news

MIKE DAY SMEs are looking to broaden their horizons The boom in e-commerce and new EU trading conditions are driving many SMEs to break into fresh territories and customer segments. According to Xero’s Future of Small Business report, more than a third (36%) say it’s too expensive to sell to European countries, due to Brexit trading regulations and import-export charges. This hasn’t dampened small business ambitions. It pushed 44% to explore new markets for the first time, with one-third (33%) increasing their customer base geographically during the pandemic due to a bigger focus on borderless e-commerce sales. More than half (57%) of SME owners plan to expand trade to new territories outside the EU and at home after the pandemic with the help of online tools. The rise in remote working and rapid adoption of new technology has made it much easier to sell beyond physical location. Two in five (41%) say that online tools have been key for targeting new customers both at home and abroad. And 34% of SME owners are now more willing to hire staff that are completely remote as a result of the pandemic. Accountants will also have an even bigger role to play in helping small businesses to turn data into actionable business insights. With 61% saying their accountant supports them in areas they struggle with or are baffled by, and 63% wanting their accountant to help them use insights and data more effectively. The report is essential reading for PQs at shorturl.at/eyW27. Mike Day, Director, UK Education Sector, Xero

Happy to share your health data? Almost half (46%) of workers across the UK would share their personal health data so that their employer could improve their wellbeing at work, according to new research from Deloitte. The findings found one in four (26%) employees would be comfortable for their employers to monitor their personal health data in order to provide improved wellbeing support. Meanwhile, one in three (33%) workers say that monitoring employee health data collected from devices is acceptable, with 37% agreeing that this would prove their employer was committed to improving workplace wellbeing. Additionally, 36% of those surveyed said they were in favour of sharing data on their stress levels with their employers, while

the same proportion (36%) would be willing to provide data on their physical health. Many employees are uncomfortable with the prospect of sharing their health data with their employer. Half (49%) say

that their personal health data is none of their employer’s business and 46% say they don’t think their organisation should be able to monitor their personal health data, even if this enables them to offer improved wellbeing support. Despite this just one in five (21%) say they do not trust their organisation to use their personal health data responsibly. Deloitte’s research highlights that wellbeing plans do not seem to reach all employees equally. While 82% of workers aged 16-24 say that they find their employer’s approach to wellbeing helpful, just 63% of workers aged 55-75 say the same. Meanwhile, 14% say that their employer does not have a wellbeing plan, rising to 23% of workers earning below £20,000 a year.

Single user causes web meltdown

Online tax break to go E-commerce businesses in the UK have been put on notice that new European Union rules will remove VAT exemptions for SMEs. The overhaul of the treatment of sales taxes on products outside the EU will result in thousands of online traders facing additional red tape and costs. The new regime will come into force on 1 July and there will no longer be VAT exemptions on shipments of €22 or less, as all imports into the EU will be liable

for tax. Tax consultancy Avalara has estimated that 26,000 traders in the UK now need to register for VAT for the first time. It said it could cost these traders €8,000 (£6,800) a year each. The Federation of Small Businesses said the EU system, called the ‘import one-stop shop’ come with advantages. Firms will, for example, only have to register for VAT in one EU member state.

A recent major internet blackout that hit high-profile websites such as Amazon, Reddit and PayPal has been blamed on a simple software bug. Fastly, the cloud-computing company that provides other companies with their content delivery network, was forced offline when apparently one of its customers made a configuration change, causing a total shutdown. The bug caused about 85% of Fastly’s networks to display error messages. Fastly’s senior engineering executive, Nick Rockwell, said: “This outage was broad and severe – and we are truly sorry for the impact to our customers and everyone who relies on them.”

Tech briefs Pap Google fined €220 million French authorities have fined Google €220 million for abusing its dominance of the online advertising market. The competition watchdog revealed that Google has agreed to change its practices to help create a more level playing field in online advertising. Currently, the deal only covers France. In a statement the competition authority said: “The practices in question are particularly serious because they penalise Google’s competitors in 12

the sell-side platforms market and publishers of mobile sites and applications.” Pap China cracks down on crypto currencies The price of Bitcoin took a tumble recently after China imposed fresh curbs on all cryptocurrencies. Financial institutions and payment companies have been banned from providing transaction services for the currencies. It has been illegal to trade cryptocurrencies in China since 2019, as the state

tries to curb money laundering. However, people were still able to trade online, which was a worry for Beijing. There is now pressure on western regulators to ‘get tough’ and follow suit, as they are looking to create their own digital currencies. Pap Banks block crypto payments Several banks have started to crack down on transfers to cryptocurrency exchanges, amid continuing fears that

they are a key tool for financial crime. Customers at Starling, Monzo and Barclays have all been blocked from transferring money onto cryptocurrency platforms. Starling revealed that it had suspended all payments to cryptocurrency exchanges because of “high levels of suspected financial crime with such payments”. However, it is only a temporary measure as the bank puts in additional measures and checks for those using cryptocurrency exchanges. PQ Magazine July 2021

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Totally wired What has happened with the ACCA’s exam centre provision? It seems to have introduced remote invigilation and forgotten how exam centre exams work! Stress-free exams don’t work with wires and extension leads everywhere – that’s health and safety gone mad! I showed the picture you put on your website to friends and they were shocked that ACCA could let this happen. Surely, they still inspect centres before going live? We all know with ‘the new normal’ that you don’t have to physically visit – you could get the invigilators to give you a virtual tour of the rooms on Sunday afternoon and have them signed off then. Just like we do for

ACCA remotely invigilated exams! PQ needs to step up, too. You are supposed to be our champion. True, you are the only ones

shining a light on the situation, but please you must do more. I seem to remember you said ACCA had solved its ‘Monday Exam Blues’. That hasn’t happened. I have also read that there is real fear that what is happening will have a negative effect on people looking to join the profession. As my favourite Facebook group said: “They couldn’t do it worse if they tried”. Name and address supplied The Editor says: I read that comment. UK (Only) ACCA Distance Learning Students is a fantastic group and was shortlisted at the PQ awards. We are on the case and will keep up the pressure. As one tutor said: “The excuses are wearing thin.”

Our star letter writer wins a fantastic ‘I love PQ’ mug! Tech doesn’t work After the continuing problems with ACCA CBE exams, both in exams centres and remotely, I think it’s time they return to traditional pen and paper. ACCA’s technology doesn’t work. If people get lucky then it’s fine, if not they get stuck with an accountancy body whose aim is only to raise exam and membership fees every year. They don’t think of the well-prepared students on the day of the exam when they offer a repeat in three months. Circumstances change, my three months became a year! A student, sent via LinkedIn

Nothing changes… In all honesty the whole ACCA exam process was a shambles back when I was sitting them nearly 10 years ago. I’ve witnessed question papers not printed properly and the invigilator taking their sweet time sorting it out, exams starting when not everybody has question and answer booklets and practically at every exam the chatter and laughter amongst the invigilators was infuriating! So sadly these issues are probably the tip of the iceberg! An FCCA, on LinkedIn

Flexibility is needed It happens too often. ACCA at least need to be flexible and allow the students to resit the next day/ week. It’s very unfair to make them wait three months. So much effort goes into the exams and it is as if

they couldn’t care. They don’t even offer compensation for the stress or the cost of taking another revision course to refresh your memory for the next session only a refund for the exam. A June sitter, via LinkedIn

The fall-out from the latest ACCA exams has led to a call for a return to paper exams. One PQ told us: “Please restart paper based exams again in all centres around the world in light of Covid19. I may not sound reasonable but this is the only way out until all technical glitches for strategic professional exams, including both centre based CBE and remote CBE, are resolved.” Another said: “New structure is absolute crap. Why change the exam methodology when you can’t implement it successfully?” There was a suggestion that ACCA should run computer and paper-based exams simultaneously. They could then be ready to offer a paper exam when there is an issue with the CBE. Some students felt the CBEs are not practical for exams because of the lengthy scenarios and different sheets: “You miss sheets because the screens are too small. You cover the clock and the time just passes,” explained one sitter. This wasn’t universally supported. One PQ stressed: “I really do not understand the fuss. CBE is the future. We need people doing practical problems on spreadsheets.” They also reminded everyone of the complaints about having to physically write for hours on end. “This is not time to go backwards, we need exams that live in the real world.” said another. We also discovered there have been with thefts at one of the exam centres. At Vitspro Newcastle one sitter had £30 taken from their purse. The thief, however, left her Apple wrist watch and Kindle untouched. Another students confirmed on twitter she too had had £20 stolen, and ACCA is now on the case. It is rare for such thefts to take place as the bags are usually secure and only students and invigilators have access to them.

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, Lisa Nelson, Anna Kate Phelan, 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

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PQ PQ awards 2021

Smile! Our winners caught on camera

The PQ Awards were held remotely for the first time, so we got our lovely winners to send in their snaps of them celebrating their achievements. Here’s a selection of the best he PQ magazine online awards were a massive hit. Over 900 people joined us on the night and some 1,800 have now watched them on YouTube. If you want to see the action as it happened then go to https://tinyurl.com/26bv9tb6. We had lots of PQ awards to give out – 21 in all, and now we have the united the winners with their trophies. There is even a picture of last year’s PQ of the Year, Bethany Duffy, whose trophy was in selfisolation in Grant Thornton’s London office for a year and a half. Bethany was shocked how heavy her trophy is! It’s great to see the winner of the Public Sector College of the Year, the University of West London, used the win to get everyone together for the first time. Training Link, who helped Simon Cordell to his PQ of the Year award, also held an office party on award’s night, and we are truly sorry to have missed Mike Tucker’s cool moves! Another star on the night was FME’s Mark Ingram who really cheered everyone up with his ‘presentation’. Well, that’s the PQ magazine awards 2021 done for another year. We are truly hoping that next year we will see you all in person. It all starts again in the Autumn when we begin our search for the 2022 shortlisters. In the meantime, we want the winners to enjoy their success. And, if we are live next year, all our 2021 winners will be invited to the ceremony. We will also be asking Mike on stage to show us his moves!

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Demel Johnson, our Distance Learning Student of the Year. He’s studying AAT with Premier Training Rebecca Wright from University of South Wales, Public Sector Tutor of the Year It’s time for ‘Play Your Cards Right’ and editor Graham Hambly transforms into Brucie for the game!

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ICB’s Ami Copeland uses their two awards to keep fit in lockdown PQ magazine award’s night had a special promotional video created watch it at: https://www.pqmagazine. com/videos/ Training Link’s Mike Tucker getting in the mood for the awards night!

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A top personality and our Personality of the Year, Andy Hardy CIMA Level 7 apprentice at Rolls-Royce, Haider Ali, the Apprentice of the Year Training Link held a party at the office, and the PQ goodie bag was a big hit with Danielle Tuckey PQ Magazine July 2021

PQ awards 2021 PQ

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Talking of goodie bags here it is! FME Live Online’s Mark Ingram beamed in all the way from sunny Australia to announce the PQ of the Year The Claude Littler Business School, University of West London, get together for a rare picture in 2021. They are our Public Sector College of the Year A proud Tim Jones shows off his Training Manager/Mentor of the Year trophy Everyone got involved in cheering on the nominees

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Meet our 2021 PQ of the Year Simon Cordell. He’s studying AAT with Training Link Emma Mellor from Lincoln University is our first-ever Accountancy Graduate of the Year Training Link’s Zoe Wilkinson making a noise for the winners right until the end After a year-and-a-half in isolation, last year’s PQ of the Year trophy finally gets to meet its new owner – Bethany Duffy Who didn’t love our 1970s-look glasses…?

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PQ Magazine July 2021

PQ ACCA SBR

IFRS for SMEs

Hard work could pay dividends if this subject comes up in the next Strategic Business Reporting exam – and Martin Jones expects that it might just do so… t appears that this subject has come back on the radar for ACCA SBR students. The subject has been on the syllabus since the standard was first issued in 2009. But since the early years this subject has been rarely examined. However, a recent article on the ACCA SBR webpages and a recent exam question appear to indicate we can expect more from this subject. The subject is largely just learning. So if you can cram a flavour of this knowledge into your head and get lucky with an exam question on the subject then you can expect to score good marks. The ACCA article starts with this quote and we will use this to get the ball rolling: “The SMEs Standard is self-contained, incorporating accounting principles based on extant IFRS Standards which have been simplified to suit the entities that fall within its scope.” So the IFRS for SMEs is simplified accounting in theory available to companies that are not public interest entities.

Reporting Standard for Small and Medium Entities’ the definition of an SME has nothing to do with size. In fact, the IFRS for SMEs does not define ‘SME’ at all, it simply recommends a definition based upon limited public interest and leaves the actual definition down to the governments of each country as that country adopts the IFRS for SMEs. The IFRS for SMEs recommended definition is that an SME is an entity with no publicly traded instruments that operates outside of the finance industry. So HSBC would fail this definition twice; once because HSBC is in the finance industry and again because HSBC is listed. But Asda would qualify as an SME despite its size because it is not a bank and all its shares are held by the parent Walmart.

Availability In practice, however, the availability is restricted, because the IFRS for SMEs has not been widely adopted across the world following issue despite being widely demanded before issue. Essentially, the IFRS for SMEs is only available to SMEs in the UK. Even the UK SME accounting is only loosely based upon the IFRS for SMEs.

Exclusions The main exclusions are elements of financial reporting that apply to listed finance entities. Since an entity cannot be listed or financial these elements can be safely removed from the IFRS for SMEs as follows: • earnings per share • interim financial reporting • segmental reporting • insurance • assets held for sale

SMEs Despite the name ‘International Financial 18

Development The IFRS for SMEs was developed essentially by taking the full IFRS and taking some stuff out (exclusions) and dumbing down other elements (simplifications).

Simplifications Some of the main simplifications in the IFRS for SMEs are as follows: 1. Goodwill recognition Partial method is required. 2. Goodwill amortisation Amortisation is required (over 10 years) to avoid the annual impairment test. 3. Borrowing costs The capitalisation of finance cost on PPE is not allowed. 4. Development costs Development is written off like research. 5. Financial Instruments FI are generally held at amortised cost except derivatives which are carried at fair value. 6. Associates and Joint Ventures These can be carried at cost. 10% The IASB are fond of saying that the IFRS for SMEs is only 10% of the full IFRS and thus is a 90% reduction in the burden upon SMEs. This somewhat bizarre statistic is actually a reference to the number of words in the IFRS for SMEs as compared with the words in the full IFRS. In practice, SMEs must still do most of the accounting that full IFRS expects including cash flow statements and deferred tax and share based payment accounting. So the reality is that the IFRS for SMEs is not quite such a spectacular reduction in burden to SMEs. Exam advice The trick with this subject is to reread the above and try to get a flavour of the IFRS for SMEs. Then if you are faced with a question in the exam on the IFRS for SMEs then try to play with what you remember to score marks. It is highly unlikely that you will need to remember everything. So go for flavour recall. • Martin Jones is a lecturer at the London School of Business & Finance PQ Magazine July 2021

PQ ICAEW spotlight

Data analytics software is here to stay ICAEW has introduced data analytics software into some exams, enabling students to interrogate ‘real’ client data and so demonstrate their interpretive skills echnology is and will continue to be critical to the work that chartered accountants do. The introduction of data analytics software is one way in which ICAEW is ensuring that ACA trainees are fully prepared to embrace the opportunities that technology can provide, while at the same time being mindful of the possible challenges and risks. This move by ICAEW also helps to strengthen the link between the real world and the exam world; using tools and techniques which are

used day in day out by chartered accountants globally. The introduction of this software also helps to develop students’ core professional skills. When interrogating ‘real’ company datasets comprising many thousands of transactions, students will learn to focus attention on risky areas, question and interrogate data and interpret visualisations. Embedding these techniques within exams ensures that ICAEW exams continue to reflect the current and future workplace and will help to

develop judgement, professional scepticism and critical thinking skills. “Data analysis has always been one of the key aspects of what chartered accountants do,” explains Adam Birt, Head of Qualifications, Strategy and Development at ICAEW, “and so we are enhancing this in our exams by providing students with the data analysis tools that they use in the workplace within the exam platform. “In doing so, we can further train and assess them on exercising skills like professional scepticism and judgement. In addition to having to manipulate the data,

they’ve also to question the origins of that data and be able to tell their client – or in this case the examiner – the story of what that data is telling them. So it broadens that whole skillset, and brings it much more up to date within the exam framework.” Data analytics software now features in the Professional Level Audit and Assurance and Advanced Level Corporate Reporting exams. ICAEW has developed a suite of resources for students sitting these exams which can be found at icaew.com/das including practice questions and datasets, walkthrough guides and videos.

GROUND-BREAKERS: GEN Z AND THE FUTURE OF ACCOUNTANCY This report gives a voice to the ambitions and desires of the next generation. It offers employer perspectives and an understanding of the emerging skills most valued by employers, to help Gen Zs boost their employability and career chances.

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PQ Magazine July 2021

ACCA spotlight PQ

Beware false promises Don’t fall foul of exam scams – you won’t gain an advantage, and you could pay a very high price for cheating, warns Joe Johnson here’s no doubt that preparing for exams is hard work and sometimes difficult. And, at those times, it may be tempting to believe that there could be a shortcut to success as a chartered certified accountant. Recently, we’ve noticed an increase in online adverts promising to provide students with genuine ACCA exam questions or to provide fake certificates for exemptions. We know that most students understand that these claims are unfounded and that they are almost certainly a waste of money. But if any students are considering using them then it’s important that you understand what the consequences might be for you and your career. Students who are suspected of misconduct or other malpractice may be referred to our Professional Conduct team for investigation. And, most importantly, risk losing the opportunity to complete their ACCA qualification. ACCA offers a rigorous qualification – integrity is at the heart of everything we do. We provide our members with a strong basis upon which to build their careers because of our reputation for integrity and high quality. As a student, it is important to consider your

own motivation. You are following a career path towards becoming an accountant or finance professional committed to upholding the highest ethical standards. It’s why employers around the world respect the ACCA qualification and why ACCA members are sought after by employers globally. I see the ACCA qualification as a ‘badge of honour’ and I know it is a big achievement that takes dedication. I was delighted to accept my current role. And I am proud of the work that my Professional Conduct team do because I see it as protecting the quality, integrity and reputation of our qualification. Our remotely invigilated exams have strict rules and regulations in place. Students are supervised by live invigilators in addition to using sophisticated artificial intelligence checks to monitor any suspicious activity. Although we have exam sittings at different times of the day, we also have rules to make sure that students sitting exams at different times cannot gain any advantage. ACCA has protocols in place to protect the integrity of our exams. We don’t sell or publish our question banks, which are controlled by strict security. ACCA investigates those that

claim to do so. Anyone selling ACCA content could only have obtained it illegitimately. If anyone sees or is offered ACCA content please send details to us using our new email address: examsintegrity@ accaglobal.com. Then we suggest that you do the same as you would do with any junk mail – delete it and don’t click on unsecure links. By deleting and stopping the further spread of such messages you are helping us to uphold the value and integrity of the qualification. It is important to remember that ACCA wants you to succeed, and to succeed fairly and with integrity, so that we can continue to support you through what we hope will be a long and prosperous career as an ethical and professional ACCA member. My advice to students would be to think about your actions, behave with integrity and do not be tempted to try to take short cuts to membership. Doing so may put your ability to qualify and place your longer-term career prospects at risk. ACCA has a wealth of resources to support students in their studies and our learning partners also offer online study support materials to help. Behaving with integrity and working hard at your studies are the best ways to achieve success. • Joe Johnson is director of professional conduct at ACCA

Award-winning AAT courses and apprenticeships Flexible learning to suit your lifestyle mindful-education.co.uk/students PQ Magazine July 2021

PQ measuring assets

Question for Tom Tom Clendon explains why you can’t compare lambs with footballers!

A student’s question I know that lambs born on a farm have a zero cost to the farmer and are required to be measured at fair value. Well, why can’t Premier League football clubs do the same with footballers that come through their academy? After all, I understand that the players bought from other clubs are recognised as intangible assets. Tom’s reply An interesting question! I love the desire to understand the principles and to apply them to real life situations. So here goes… Farm animals as assets! You are right that IAS 41 Agriculture is explicit in requiring animals such as lambs that are born on the farm to be recognised as assets and measured at fair value. The gain is then recognised in the profit and loss account – after all, breeding is an operating activity for a farmer. This treatment ensures a faithful representation of a farmer’s statement of financial position. If the lambs were included at their zero cost they would be invisible and

therefore the accounts would be incomplete. A fair value for farm animals can be easily determined by observing their market value. This is because such animals are fungible in their nature; i.e. a one-month-old merino sheep weighing a certain weight will be worth the same as the next one, and are regularly bought and sold. Footballers as assets!

It is also true that when a Premier League football club buys a player’s registration the club recognises an intangible asset in accordance with IAS 38 Intangible Assets. After all, there has been a transaction, a sum of money (the transfer fee) has been paid and the buying club controls the player’s registration, which should bring future economic benefit. By contrast, however, academy players that become professional footballers are not underpinned by a single transaction. There is no reliable measure of either their cost or value because they are not bought and do not have value that can be reliably measured. There is after all only one Marcus Rashford and there was only one Steven Gerrard. The same reasoning applies for the accounting for both brand names and goodwill. Yes, if a business buys them, then they are recognised as intangible assets. But if the brand or goodwill comes about from self-promotion they are prohibited by IAS 38 Intangible Assets from being recognised as an asset. One final thought It is a fair criticism to observe that the statements of financial position of football clubs are incomplete in that they fail to recognise as assets their academy players that go on to play for the first team. • Tom Clendon is an ACCA lecturer and podcaster who teaches SBR online – see www. tomclendon.co.uk

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PQ Magazine July 2021

wellbeing PQ

Putting yourself first The exams are over – now it’s time for a bit of self-care, says Pantelis C. Fouli ongratulations to all who showed up and gave it their best shot at the ACCA’s June exam sitting. They say just showing up is half the battle. I would take it one step further and say: “Showing up isn’t half the battle. It’s not 90% of the battle. It is the battle.” I remember when I sat my ACCA exams. I don’t think there was an exam session that I did not want to drop out. I would try to talk myself out of attending a session and picking it up again after the holidays (Summer or Christmas), but most times than not I would show up. Having said that, there were times when I would not – but I did not give up. This article is for us all; those who showed up and smashed their exam sitting, those who showed up and would have rather not, and those of us who pulled the plug at the last minute. Guys, there is nothing wrong with deferring your ACCA success, because that’s what it is. A no from an examiner (fail mark) just means not now. Not getting that pass means you’re just pushing it down the road, deferring it. We are all human, there are no unicorns and there is no perfection.

Lessons learned A quick story about me – I registered as an ACCA student in May 1994. I qualified as an ACCA (believe it or not) on 17 July 2017, six days after I turned 43! You read that right. Even though I passed all my professional exams at the first attempt while

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in full-time employment and married with two wonderful girls, I left huge gaps and periods of not taking advantage of the exam sittings. Do I have any regrets? No! My experiences over the two decades I was fighting the good fight to qualify taught me hundreds of lessons that money cannot buy. In turn, I chose to use those experiences to help and support for free and in my spare time aspiring accountancy students, so they know that they are not alone on this path. If there would be one thing I would ask from you all is to take time for some self-care now that your exams are over. Six types of self-care Emotional self-care: activities that help you

connect, process and reflect on a full range of emotions. Examples include seeing a therapist, writing in a journal, creating art, playing music, etc. Practical self-care: tasks you complete that fulfil core aspects of your life in order to prevent future stressful situations. Examples include creating a budget, taking professional development classes, organising your wardrobe, etc. Physical self-care: activities you do that improve your physical health. Examples include taking a walk during a lunch break, sleeping eight hours a day, staying hydrated, etc. Mental self-care: any activity that stimulates your mind or your intellect. Examples include reading a book, solving a puzzle, playing chess, going to a museum, etc. Social self-care: activities that nurture and deepen the relationships with people in your life. Examples are brunch with friends, going on a date, making time to call your family regularly, etc. Spiritual self-care: activities that nurture your spirit and allow you to think bigger than yourself. Spiritual self-care does not have to be religious, although for some it is. Examples are meditation, yoga, going to a place of worship, being in nature, dedicating time for selfreflection, etc. Until next time. • Pantelis C. Fouli is ACCA qualified and an ACCA Advocate and Student Mentor. Anyone wishing to get in touch can connect with me via LinkedIn (https://www.linkedin.com/ in/pantelisfouli), but please mention in the personal message that you are a PQ reader

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PQ Magazine July 2021

Tom Clendon

PQ CIMA spotlight

Give yourself a head start Question practice is the most effective exam preparation strategy, says CIMA’s Clancy Peiris

id you know that whenever we ask CIMA students to list the tactics they found most helpful when preparing for their exams, question practice always tops the list? Tuition providers also find that students who practise questions generally pass their CIMA exams on the first try.

impacted by technological issues (e.g. software compatibility) or a lack of familiarity with the testing system. Where possible, I’d advise that you thoroughly test and use the same equipment and software for the exam practice and the actual exam – this will reduce the chances of issues occurring on exam day.

Why is question practice so important? Firstly, it gives you the opportunity to test whether you’ve fully understood what you’ve learned. It enables you to identify which topics you’ve fully grasped as well as the ones you’re yet to master. It’s a simple way to help focus your future study and revision sessions on areas where you didn’t perform well. Secondly, you’re more likely to retain information if you learn it in multiple, spreadout sessions. Practicing CIMA exam questions will stimulate your memory and recall earlier learning, which in turn is likely to help you improve your ability to retain information. In short, question practice may be more beneficial to you than spending the same amount of time studying. Thirdly, we found that question practice helps remove some of the mystery around CIMA exams and can reduce exam stress and anxiety, especially if done under mock exam conditions. The more you get accustomed to sitting for a period of time, answering exam questions, and pacing yourself, the more comfortable you’ll feel on exam day. Finally, when it comes to computer-based testing, your exam performance can also be

How can I make the most of question practice? Question practice must be an integral part of your CIMA learning and studying experience. This means that every time you finish studying a topic, you need to practise doing a few exam questions on that topic. You should also plan to practice questions across the entire CIMA syllabus once you’ve completed all your studying sessions. So when planning your study and revision sessions, make sure to build this into your study plan. Remember that ‘how’ you practise CIMA exam questions is more important than ’how many’ you can do.

Best practices for CIMA OTs: single and multi-choice questions 1. Read the question in full before reviewing the answer options. You need to make sure that you understand what’s expected and that you’ve considered all factors, rather than jumping straight to what seems to be the most logical answer. In multiple-choice exams, not reading the question thoroughly could cost you dearly. 2. Answer the question in your head before reviewing the answer options. This will help

prevent you from talking yourself out of the correct answer. It will also give you a chance to reflect and think, making the most of your active recall. Eliminate incorrect answer options before selecting your final answer. Even when you believe you know the right answer, this will help save time by narrowing your answer options and focusing your attention only on potential correct options. Using the process of elimination significantly increases your likelihood of selecting the correct answer. Select the best answer for the question. Many answers may seem correct to you on the first glance, but they’re in fact distractors designed to test your knowledge and skills. This may seem like a ‘no-brainer’, but you must read every answer option before selecting your final answer – don’t make assumptions! Remember, there’s typically a best answer to the question, and that’s the one you need to find. If you’re unsure, make an educated guess. If you’re having difficulty answering a question, move on. Answer all the questions you know the answers to and come back to tackle the tricky question once you’ve done so. Pay attention to the wording of the answer. In particular, words such as ‘not’, ‘sometimes’, ‘always’, and ‘never’. For example, an answer that includes ‘always’ or ‘never’ must be irrefutable. If you can find a single counter example, then the answer isn’t correct. Take extra care if you see ‘all of the above’ and ‘none of the above’ among the answer choices. Don’t select either of these options unless you’re fully confident that none of the other answer options are either correct or incorrect.

Best practices for CIMA OTs: problem-based questions 1. Thoroughly read the question to understand the problem and take time to think. Clarify what you need to find and determine what the unknown element is. Drawing a sketch on paper will help you break down the problem. It’ll also enable you to think more clearly to find the best approach to solve the problem. Make sure to write down all key information and formulas you think you’ll need to answer the question and devise a plan. 2. Carry out the plan. For numerical problems, be careful and make sure to carry out the calculations carefully in the correct order. It may be a good idea to write down the intermediary answers before moving onto the next step. 3. Sense check your answer. This requires the same quality of thought you originally used to solve the problem. Is your answer what you thought it would be in your original estimate? Is it a quantity that makes sense? Is your answer in the correct units? PQ Magazine July 2021

CIMA spotlight PQ 4. Let yourself be stuck. Yes, you read this right and I meant it. You need to give yourself a reasonable opportunity to think, recall earlier learning and come out with an approach to find the best solution. When practising, don’t sneak-peek at the suggested or model answer if you get stuck. Keep trying. Build your resilience and only check the answer after you’ve attempted to answer the question. Enhancing your learning with exam question practice Question practice will help you assess how far you’ve come with your studies and progressively prepare you for the Strategic Case Study exam, the capstone exam of the CIMA Professional Qualification. To help you get there, you must ensure that you reflect on your performance and put an emphasis on continuously work to improve your exam skills. 1. Identify all questions where you couldn’t find the correct answer. For each question, ask yourself why the answer you provided was incorrect or incomplete. 2. List the reasons why your answer was incorrect or incomplete. Once you’ve done so, write down what actions you can take to ensure that you won’t repeat the same mistakes in your next question practice session and your exam. 3. Reflect on the list. Make sure you fully understand what went wrong, what actions

you need to take and what knowledge gap you need to fill before attempting your next practice question. Assessment

Corrective action

I misunderstood/ misinterpreted the question requirement/ the answer choices.

Read questions carefully until you’re confident you understand both the question and answer choices.

I couldn’t recall the relevant theory that was essential to answer that question.

Thoroughly revise that topic and use memory recall techniques such as revision notes.

I couldn’t answer the question because I’ve not sufficiently studied, or skipped, a topic.

Study that topic again. Make sure you understand its learning outcome and have a look at the representative task statements in the CIMA exam blueprints.

I made a mistake in my calculation or misinterpreted the data due to my lack of attention to detail/lack of knowledge.

Be more vigilant next time and always double-check your answers. If you have a knowledge gap, go back to that topic and spend some additional time to master it.

Where can I find practice questions? We recommend that you get practice exams from a CIMA Registered Tuition Provider, they’re either paper-based or computer-based. Some of the tuition providers offer practice exams free of charge and others offer them for a fee.

Another option is to use CIMA Aptitude, our official online question bank that simulates an actual CIMA exam. It’s available for all exams of the CIMA Certificate in Business Accounting and CIMA Professional Qualification. CIMA Aptitude is a great complement to your chosen CIMA study method – it’ll enable you to make the most of your exam question practice sessions and assess your exam readiness. You can use CIMA Aptitude either in practice mode or in a timed assessment mode. For the former, you can attempt questions at your own pace, get instant feedback on your answers and an explanation of the correct answer. This mode allows you to focus on specific areas and practice questions after finishing a topic. For the latter, you can test yourself on 60 questions under exam conditions, get a full feedback report and links back to incorrect answers. I hope that you found this article to be a helpful guide to question practice, and that you can now see how you can include and build up this active learning method into your study plan to complement your passive learning (e.g. reading, attending a lecture). One final word of caution though, question practice reinforces and supports your CIMA learning but it’s not a replacement for studying! You can read more on the perils of practice questions here. • Clancy Peiris, Senior Learning Development Manager, Association of International Certified Professional Accountants (AICPA & CIMA)

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

PQ Magazine July 2021

PQ Xero offer

Get ahead with Xero Certifications and Badges – for FREE Xero qualifications offer a unique combination of education and employability – and PQ has got together with Xero to offer them to you for free nlike any other accounting software provider or platform, Xero now offers a mix of education opportunities that benefit PQs, training providers and, ultimately, employers. Our mission is to help you become the best you possibly can, as efficiently as you can.

Demonstrate your abilities Xero Advisor Certification is the core way for accountants and bookkeepers to demonstrate their knowledge and understanding of using Xero in practice. Originally, this was only available to those already working and using Xero – but now that’s all changed. Advisor Certification has opened up opportunities for anyone with ambitions to work in this new world of cloud accounting. Taking around eight hours to complete, the course consists of a complete pack of self-paced e-learning modules, getting to grips with cloud fundamentals and an introduction to the Xero platform. Completing this certification doesn’t just show a commitment to working in the industry, it saves employers hours in training new joiners on unfamiliar software – it’s good all round. All you need to do is to visit Xero Advisor Certification and create a Xero login, choosing PQ magazine as the organisation, and you are ready to start your learning journey. We’re also very pleased to announce that you are now able to continue with your learning, again for free. It’s highly recommended that you complete the Advisor Certification first but then you can continue on to Payroll Certification, App Advisory Badges, Security, Hubdoc and Xero Tax. This pack of eLearning takes about 10 hours and 26

details will follow in the next PQ magazine, so don’t miss it. This is all fantastic for digital skills and employability; with Xero Certifications in very high demand we have seen hundreds of students gain employment in both practice and industry since launch. As 83% of accountants in practice believe understanding technology is now as important to them as understanding accountancy, tech knowhow is now a higher priority than ever before (Xero research with Censuswide 2016). Changing the face of education Last year, we unveiled Xero Learn – a brand new way for training providers to introduce cloud accounting to their students and deliver a digital skills agenda. This unprecedented shift creates a more flexible way of teaching and learning as both tutor and student have access to a full, live version of Xero wherever there’s wi-fi – so, they can use it on any device, anywhere, any time – and it’s all backed up in real-time.

Students learn using real life business simulations, and tutors have greater control and creativity than ever before. They’re able to create, and view progress on, in-Xero exercises and manage their students’ access to Xero. So, it’s not just a chance for their students to get a broader education but for tutors to add another string to their bow. We’re excited to see the first wave of students successfully passing the ‘Using Accounting Software’ module of their AAT and ICB qualifications – using just Xero, a groundbreaking achievement. Everyone’s a winner No matter where you are on your accountancy and bookkeeping journey – just starting out, sharing your knowledge or growing your practice – you can benefit from these initiatives. If you’re learning the ropes and making yourself stand out to potential employers, you have the opportunity to shine – demonstrating a thirst for knowledge and an understanding that the world of accountancy is evolving. If you’re bringing on this new generation of accountants and bookkeepers, Xero can provide all the tools and support you need to successfully train them in cloud accounting, gaining genuine experience, not just hypotheticals. If you’re bringing new blood into your practice, you can look out for candidates with Xero Certifications or accounting software qualifications through recognised training providers – you’ll be hiring the cream of the crop. Where else can you find that combination of qualification, added value and employability? Zoe Robinson, Director of Learning for Kaplan UK said: “Whilst knowledge of accounting concepts will always be important, the Xero Certification course gives our students a practical understanding of the impact cloud accounting technologies has on the profession – and helps them better apply their knowledge to add value to their clients.” If you are a training provider and would like to know more, please go to https://www.xero.com/ uk/partner-programs/xero-learn PQ readers can sign up with Xero at https:// www.xero.com/uk/training/certificationequivalent-course/ Remember to choose PQ magazine as the organisation PQ Magazine July 2021

“The most comprehensive ACCA

ACCA SBR

course, ran by the best teacher I have ever

Online Courses

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September & December now open for enrolment Tom Clendon | ACCA SBR Online Tutor clendon@hotmail.co.uk | 07725 350793

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14/06/2021 16:46

Tom Clendon takes you through Double Entry Bookkeeping You should be able to master the rules of double entry bookkeeping in just eightand-a-half minutes. So do you know your credits and debits? You can find Tom’s feature explaining all on page 22 of the July issue.

MICHELE BAKER – THE TRIAL BALANCE Accountancy can be simple if you know the basics! PQ magazine has gathered together the top tutors in the world to help us help you. Our back to basics video series will guide you through some of the fundamental topics of accountancy. Some of the videos even come with an accompanying article! In just six short minutes Michele Baker will explain how to create the trial balance and why you are doing it. Michele will let you know whether a balance is a credit or debit, and help you get to grips with ‘DEAD CLIC’. She’s had over 300 views already! Check out her video at: https://vimeo.com/500074449.

Sean Purcell looks at the Strategic Planning Process Sean looks at the three steps you need to understand the strategic planning process – analysis, strategic choice and strategic implementation. See pages 24-25 in the August issue for the accompanying feature. Sunil Bhandari delves into financial maths This presentation is slanted to ACCA FM and AFM students sitting the CBE exams, but will be useful for any PQs wanting to understand financial maths that bit better. See pages 20-21 of the September issue for the accompanying article. Check out these short videos at www.pqmagazine. com. Either click on the video bar at the top of the home page or scroll down to the video section PQ Magazine July 2021

Mark up and margin explained Nick Craggs explains the difference between mark up and margin and tests your knowledge with some questions on the subject

eing a tight Yorkshireman, I am always looking to get as much ‘bang for my buck’ as possible. So I thought, what subject can I write about that will benefit as many people as possible? Suddenly, mark up and margin came into mind. This is tested at Level 2 AAT, then again as part of incomplete records at Level 3 AAT, and finally at Level 4 under Financial Statements in relation to group accounting. Before we get into some numbers, which I am sure you are desperate to do, as all accounting students are, let’s look at the differences between mark up and margin. Before I do that, just remember that cost + profit = sales price, and conversely, sales price - profit = cost. Mark up is where we are using the cost of the product to calculate the profit that we want to make. Once we have calculated the profit, we add this to the cost price, and this is the amount that we will charge our customers. Say, for example, we had a product that costs us £200 to make, and we want to add a mark up of 30% on this – the profit that we will add on will be £200 x 30% = £60. Therefore, when we add the profit to the cost to come to a sales price of £260.

PQ Magazine July 2021

Whereas with margin we are using the sales price of the product to calculate the profit that we want to make. So we will start with the sales price, deduct the profit that we are going to make and that will leave us with the cost of the profit. Let’s look at an example: if we sell a profit for £260 and we want to make a profit margin of 30%, we will have a profit of £260 x 30% = £78. We can then take this from the sales price to come to the cost of £182. Note that in these examples we have the same profit percentage and the same sales price, but the profit and costs are different.

AAT exams PQ DO NOT mix these up, you will get the answer wrong. I know you are desperate for some numbers, but I will keep you a little longer, let’s talk about the advantages and disadvantages of both. With margin we are using the sales price to dictate the profit, so we will set the sales price and then calculate the profit. The advantage of this is that we can set a price that is competitive compared to our competitors. The downside of this is that the cost price is whatever we have left after we have deducted our profit, and this might not be enough to cover what it actually costs to produce your product, so you might be making a loss. With mark up we are adding the profit to the cost, so we will always be making a profit. The downside is that the price is whatever the cost plus the profit is, and it doesn’t take into account what your competitors are charging, so you might end up being a lot more expensive than your competitors. At level 3 and 4 we might have to work some of the costs and or sales price backwards, which is a little trickier, but remember that the figure that we are starting with is always 100%. If we have a product that costs £80, and we have a profit margin of 20% of the sales price, we know that the cost must be 80% of the sales price. We can then work backwards to come to the sales price, if £80 is 80% of the sales price, we can divide by 80 to get 1% of the sales price, and then multiply by 100% to get 100% of the sales price. The calculation would be £80/80 x 100 = £100. With margin the figure we start with is the cost, so the cost is 100%. Under mark up we would add a percentage to the cost to come to the sales price. If we have a mark up of 20% and we have a sales price of £100, the profit ISN’T £20. We have added the profit to the cost to come to the sales price, so the sales price is 120% of the cost. Then in our example we could divide the sales price 120 to get 1%, and then multiply by 100 to get the original cost price. The calculation would be £100 /120 x 100 = £83 Why don’t you have a go at the following questions: A) If a company has a product it sells for £720, which includes a mark up of 20%, what is the cost of the product to make? B) A company has a profit margin of 30% and sells a product for £800. What is cost of the product? C) A product costs £300 to make and the company sell it with a profit margin of 40% on the sales price. What is the sales price? Answer: A) £600 calculated as £720 / 120 x 100. B) £560 if the margin is 30% of the sales price the cost must be 70% of the sales price. C) £500 calculated as £300 / 60 x 100 Remember if the margin is 40% the cost must be 60%. • Nick Craggs is an award-winning tutor and AAT distance learning director at First Intuition 29

PQ CIPFA spotlight

Setting tomorrow’s public finance leaders up for success CIPFA Student Network President Will Goodchild explains why you should be attending the upcoming Public Finance Live conference e all know that balancing your studies and career can be incredibly difficult, especially in the new home working environment that can leave some students feeling overwhelmed. As the world reopens, it will be important to take the opportunity to meet others who have faced similar challenges and hear how they made the most of them. The upcoming Public Finance Live conference on 7-8 July will have a full day dedicated to tomorrow’s public finance leaders. Students will be able to hear from those with decades of experience in the profession, as well as meet other aspiring professionals. Each year at the annual conference, senior managers share anecdotes about how they entered the public finance profession and give

their advice on how they landed where they did. Last year we heard from CIPFA CEO Rob Whiteman, as well as speakers from the health and police sectors, who provided insights and inspiration for the journey ahead. This year’s conference also features senior leaders who will share stories from across the world of public finance to provide examples of how the hard work they put into their roles made a difference to their careers and society at large. During times of uncertainty, this type of support from leaders in the sector will be invaluable for those starting out and trying to get a grip on the places where their careers could take them, and how their new skills will be best placed to help those in their communities. Students will have the opportunity to

attend our traditional CIPFA Student Network networking drinks event and meet professionals who have been working in the sector for decades, newly qualified members and fellow students who might have similar experiences. Opportunities to connect with others both in and out of the profession have been rare during the pandemic, so the conference will be a great opportunity for all of us to check in with those who might not have had the chance to meet other CIPFA members or students during this time. Students will find the plenary sessions from the main conference useful as well, with topics ranging from sustainability, the future of health and social care, place-based leadership, technological innovation and more across the programme. The public finance profession is constantly evolving, so taking advantage of opportunities to network with others, as well as hear insights on the future of the profession will be invaluable for starting a successful career. I’m looking forward to seeing many of you there on 8 July and hearing more about all of your experiences over the past year. Public Finance Live will take virtually on 7 and 8 July. The NSF conference is planned for Thursday 8 July and is free to CIPFA students. For more go to https://publicfinancelive.org/. #publicfinancelive21 #CIPFA

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local government PQ

ARGA gets local government audit powers The UK government creates a standalone local audit unit in response to Sir Tony Redmond’s independent review he Audit, Reporting and Governance Authority (ARGA) – the new regulator being established to replace the Financial Reporting Council (FRC) – will be strengthened with new powers over local government audit. The UK government hopes this will help to protect public funds and ensure councils are best serving taxpayers. A standalone local audit unit will be created, bringing all regulatory functions into one place, to “better coordinate a new, simplified local audit framework”. The ARGA will continue to act as regulator and carry out audit quality reviews as the FRC does now. It will now also provide annual reports on the state of local audit and take over responsibility for the updated Code of Local Audit Practice – the guidelines councils are required to follow. The government has confirmed that the Public Sector Audit Appointments (PSAA) will continue

as the appointing body for local audit, in charge of procurement and contract management for local government auditors. In the very short term, the Ministry of Housing, Communities & Local Government will set up and chair a Liaison Committee, which will comprise senior stakeholders across the sector that will oversee the governance of the new audit arrangements and ensure they are operating effectively. These measures finalise the government’s response to Sir Tony Redmond’s independent review into local audit, carried out last year. The government has already announced £15 million to support councils with additional costs in audit fees, and recently consulted on the distribution of this funding. Government is also consulting on improving flexibility on audit fee setting and has extended the deadline for when councils must publish their audited accounts. The Minister for Regional Growth and Local Government, Luke Hall MP, said: “It is essential

The story so far In response to Sir Tony’s Review, since December the government has:

1 2 3 4

Announced £15 million for this financial year to support councils with likely additional costs in audit fees. It has also consulted on the distribution of this funding. Launched a consultation on proposed changes to regulations related to fees that will allow more flexibility to ensure that audit firms receive payment for additional work required. It is also working with stakeholders to deliver the other recommendations where a sector-led or system-wide response is appropriate. Extended the deadline for when councils must publish their audited accounts from 31 July to 30 September, for an initial two years, to give firms more time to complete audits.

PQ Magazine July 2021

Other facts • Councils in England are responsible for 22% of total UK public sector expenditure. • The responsibilities for local authority audits and how they are conducted is set out within the Local Audit and Accountability Act 2014. • The 2014 Act gave effect to government manifesto commitments to abolish the Audit Commission and its centralised performance and inspection regimes and put in place a new localised audit regime, refocussing local accountability on improved transparency. • The abolition of the Commission centralised audit regime and its top-down inspection was estimated to save taxpayers £1.35 billion over 10 years. that we have an effective and transparent local audit system that ensures value for money for the taxpayer.” He felt the changes mark an important milestone with the ARGA’s powers over local government audit, ensuring local audit systems are “resilient, councils are truly accountable and providing the certainty the sector needs”. CIPFA CEO Rob Whiteman said: “CIPFA welcomes the announcement that the ARGA will be the new systems leader for local audit. We’re pleased to see ARGA bring together regulatory functions, the Code of Audit Practice, reporting on local audit functions, and performance monitoring and review. “Our concerns around audit supply and market instability remain. It is vital that any changes to the local audit system focus on these issues and emphasise the need for high quality audits in the short and longer term.” Whiteman added: “Local authority accounts are vital to transparency and accountability. As with the rest of the public sector and the private sector, ensuring that useful information in accounts is accessible to users is becoming increasingly difficult, the statement of accounts is often described as long and complex. CIPFA supports the Redmond Review recommendation for a summary statement that is able to communicate key messages to its council tax payers, service users and other key stakeholders.” 31

PQ target costing

Hitting the target Philip Dunn explains everything you need to know about this important technique

• Due to its specific purpose target costing tends to provide decision relevant data, while traditional absorption costing models tend to document all cost, independent of the decision making relevance.”

hose preparing for CIMA P1 and ACCA PM need to be fully aware of target costing and the way in which it adds value to the understanding of the factors that drive cost and price in a competitive environment. Much literature cites Japanese companies developing and using target costing; Toyota, Honda and Nissan are such examples. In the US, Caterpillar and Chrysler are examples where economic benefits of the technique have been noteworthy.

Traditional pricing and costing Full cost pricing has been the model used by many businesses in the past. Standards and standard costing technique was used to determine a product’s cost of labour and material, overhead was absorbed, a share of selling distribution and administration cost was added to achieve a product’s total cost. Price was then set by adding a desired profit margin. This additive model worked well and was appropriate when markets were not as efficient and responsive as they are today. If the price was acceptable in the market it was only experienced when the product was actually introduced to potential customers. This could result in the price being either too high or too low and therefore a technique was developed that prevents pricing error and aids faster, more focused product development. Target Costing “Target costing describes a process of first assessing a target price and then designing a product to meet this price” (Hergeth). It is part of a total cost management system which deviates from traditional accounting to managerial accounting and moves decision making from an accountant’s perspective to the marketplace. It is a top down process: • Setting price. • Setting profit. • Setting cost. The process is interactive and comprises three phases: market level, product level and component level (Cooper and Slagmulder 1999): Market Level Strategy • Target Price • Target Profit • Target Cost Product Level Design product to meet target cost Component Level Design components to meet target cost Supplier management

Castout case study Castout is an SME that manufactures sea fishing rods. The company operates target costing methodology. They would need to compare the original estimated cost of a product to target cost. If this was greater than target we would need to reconsider design and possibly reduce associated expenses or examine our decision to offer the product. This could involve re-examining processes to introduce cost reducing efficiencies. Target Cost Profile Product: Castout Ace H5 Price/cost element This can also be viewed as: Understand Customer Need

Price Sensitivity

Value of product features

What Price

What Features

Set Profit

Set Target Cost

Target costing therefore builds upon a design to cost approach, where the focus is a marketdriven price as a basis for establishing target costs. Hergeth in his research states: “The key element in target costing is the market orientation of the entire costing and product development process. By introducing the market price as the focal point of the analysis, target costing avoids problems of other costing approaches: • Costing becomes a managerial tool to achieve successful product design rather than documenting historical data. • An economically relevant variable (price) becomes the driver of the product development process rather than its output. This results in a market and profit driven product development process. • Due to its market orientation target costing can consider long-term corporate strategies in the market. Variable costing and activity based costing tend to focus more on shortterm goals.

% Factor

Target price Profit margin

20%

Selling, distribution and admin

10%

Overheads Target cost (Direct) *

30%

Per Unit Factor £ 90.00 18.00 72.00 7.20 64.80 19.44 £45.36

*Labour and material The target cost of the product (Direct Costs) is £45.36 and therefore that is the benchmark set for this activity. The target costing process integrates many activities and tasks. The target costing team needs to be drawn from disciplines within the company to include finance, manufacturing, purchasing and marketing. We need, as with our budgetary control mechanism, a participative approach to target cost management. Conclusion Although the technique in its simplest form is merely a model – target price minus profit margin = target cost, today’s highly competitive marketplace and external environment can make the technique a strategic management tool. It can be incorporated into our management accounting portfolio and provide the company with economic value added and strategic benefit. It will allow us to focus on the use of limited resources to maximise opportunity to achieve target return on investment. • Readers are also referred to ‘A Practical Guide to Target Costing’ by Frank Robinson (a CIMA publication). • Dr Philip E Dunn is a freelance author and technical editor for Kaplan and Osborne Books PQ Magazine July 2021

PQ test bank

Get a grip Tests your knowledge of material control and reporting direct material cost, with out latest Test Bank Q1: Which IAS/IFRS deals with the treatment of Inventories? Q2: How does the International Financial Reporting Standard referred to in Q1 state how inventories are to be valued? Q3: Name the two methods of valuation recommended by the standard? Q4: Name the method of valuation outlawed by the standard? Q5: When establishing material control levels for each item in the inventory in a system of inventory control what three levels are usually set?

Q6: From the following information relating to a single item of inventory calculate the Minimum Level also referred to as the Buffer Level. Usage per month: maximum 1200 units, minimum 900 units per month. Estimated delivery period: maximum four months, minimum two months. Management have set the Re-Order Level at 4,400 Units. Q7 The Maximum Level is said to be that level to which inventories are normally allowed to rise and if such levels are constantly exceeded there is the risk of tying up excess what?

Q8 The following information relates to an inventory item. 6,000 units are required annually and the expenses relating to start up costs are £25 per order and carrying costs are £0.20 per unit per annum. Orders can be arranged in lots of 600, 1200, 2000, 3000 or 6000. Calculate the Economic Order Quantity EOQ and the number of orders to be placed per annum. Q9: Batcraft Ltd uses rubber grips in the production of its standard club short-handled bat. At the beginning of January it had 400 grips in stock at a cost of £4.00 per grip. During February it received a delivery of 200 grips for £812.00. During the remainder of February it issued 300 grips to production and in March a further 200 grips were issued to production. In April 400 grips were received at a cost of £1640.00 Determine using the FIFO method of valuation the value of the closing inventory as at 30 April. Q10: Using the above information determine the value of the closing inventory at 30 April based on the AVCO method of valuation. Q11: Noble Fertilizers produce a liquid fertilizer that passes through three processes. In January, 4000 litres of direct material entered process A where the anticipated normal loss was 2% of input. The output to process B was 3850 litres. Calculate the Abnormal Loss in units for the month. Q12: Considering the information above if output to process B had been 3950 litres. Calculate the Abnormal Gain in units for the month. Q13: Batcraft uses a system of standard costing in the production of its cricket bats. They pass through three separate cost centres: Machining, Finishing and Packing. In January 2021, they planned to produce 500 junior size 3 club bats. Each unit of production requires five units of direct material at £10.00 per unit issued to the Machining cost centre. During the month 550 bats were machined and transferred to finishing and 2805 units of direct material were used at a cost of £28,611. Calculate the Direct Material Cost Variance for the month. Q14: Calculate the Direct Material Usage Variance for the month. Q15: Calculate the Direct Material Price Variance for the month. • Dr Philip E Dunn is a freelance author and technical editor for Kaplan and Osborne Books

ANSWERS Q1: IAS 2 Inventories. Q2: At the lower of cost and net realisable value. Q3: FIFO and AVCO. Q4: LIFO. Q5: Maximum, Minimum (buffer) and the Re-Order Level. Q6: 1250 units. Q7: Working capital. Q8: 1225 units, approximately five orders per annum. Q9: £2046. Q10: £2042. Q11: 70 litres. Q12: 30 litres. Q13: £1,111 Adverse. Q14: £550 Adverse. Q15: £561 Adverse. 34

PQ Magazine July 2021

shares PQ

Shares for individuals simplified! In this month’s article in the ‘Keep It Simple’ series, Neil Da Costa tackles a topic that examiners always say students struggle with – quoted shares for individuals

restructure its debt arrangements. If this is the case, then the original cost of the shares must be apportioned between the different elements of new capital based on the market value of new capital at the date of exchange. Simple reorganisations example: Meera and Bigbank Plc Meera bought 1,000 Bigbank Plc shares for £5,000. Bigbank Plc had a capital reorganisation and Meera’s shares were exchanged for 2,000 preference shares with a market value of £3,000 and £1,000 2% loan stock with a market value of £3,000. Meera sold 1,000 preference shares for £4,000 two years later. Compute Meera’s capital gain on disposal before the annual exemption. Solution to Meera and Bigbank Plc The first step is to apportion the original cost between the preference shares and the loan stock. As each element is worth 50%; 50% of the original cost of £5,000 is allocated to the preference shares which is £2,500. Meera has sold just 1,000 of the 2,000 preferences shares she received so the deemed cost of the 1,000 shares is £1,250. Meera ‘s capital gain on the preference shares is £2,750 (sale proceeds £4,000 less cost of £1,250).

here are four main aspects regarding quoted shares for individuals: matching rules; rights and bonus issues; reorganisations; and takeovers.

Matching up shares sold with shares bought Shares sold are matched up with shares bought in the same company as follows: • Shares bought on the same day. • Shares bought in the next 30 days. • Shares bought before disposal. These shares are put in a pool. Simple matching example: Jaz and Bigtech Plc During the lockdown, Jaz has been dealing in Bigtec Plc shares. On 1.1. 2022 he sold 1,000 Bigtec shares for £10,000. On 15.1 2022 he bought 400 Bigtec shares for £4,400 Before 1.1.2022 Jaz had bought 2,000 Bigtec shares for a total cost of £14,000 Compute Jaz’s capital gain on disposal before the annual exemption. Solution to Jaz and Bigtech Plc Jaz has not bought any shares on the same day, so we first match up with the 400 shares bought in the next 30 days. This would result in a capital loss of £400 computed as follows (sale proceeds £4,000 less cost £4,400). The remainder of 600 shares should be matched up with 2,000 shares from the share pool that cost £7 each. This would result in a PQ Magazine July 2021

capital gain of £1,800 (sale proceeds £6,000 less cost of £4,200). The capital loss of £400 must be offset against the current gain of £1,800 to give a net gain of £1,400. Rights and bonus issues Bonus shares are free shares while rights shares are shares purchased at a discount. Companies use rights issues to raise finance.

Takeovers On a takeover, a shareholder can receive some cash as well as predator shares. The treatment is similar to a reorganisation and the original cost is apportioned based on the market value at the date of takeover. If the cash element is either more than 5% of consideration or more than £3,000 a capital gain will arise on the date of takeover.

Simple rights and bonus issue example: Ling and Bigoil Plc Ling bought 2,000 Bigoil shares for £8,000. Bigoil had a 1:2 bonus issue a year later. Bigoil had a 1:3 rights issue for £3 a share after that. Compute the number of shares Ling has and the total cost.

Simple takeover example: Steve and Bigshop Plc Steve bought 1,000 Bigshop Plc shares for £10,000. Bigshop Plc was taken over by Megashop Plc and Steve received £5,000 cash and 1,000 Megashop Plc shares worth £10,000. Compute Steve ‘s capital gain on takeover.

Solution to Ling and Bigoil Plc Ling bought 2,000 Bigoil shares for £8,000. The bonus issue is 1:2 so Ling will get 1,000 bonus shares which will be free. She now has 3,000 shares and the cost is unchanged at £8,000. The rights issue is 1:3 rights at £3 a share so as Ling has 3,000 shares, she can buy 1,000 rights shares at a discounted price of £3,000. This means that the total number of shares is 4,000 and the cost is £11,000.

Solution to Steve and Bigshop Plc The cash element is more than 5% of total consideration and more than £3,000 so a capital gain will arise on takeover. The deemed cost allocated to cash will be one-third as the £5,000 cash is one-third of total consideration of £15,000. This means that the deemed cost allocated to cash will be £3,333. As a result, the capital gain arising due to cash on takeover is £1,667 (sale proceeds £5,000 less cost of £3,333). • Neil Da Costa is a Senior Tax Lecturer with Kaplan in London. He is the author of Advanced Tax Condensed, which summarises the entire syllabus using memory joggers

Reorganisations A company could have a capital reorganisation to enable it to manage dividend pay-outs or

PQ AAT focus

Depreciation, and how it works In the first of a new regular column, AAT expert Teresa Clarke looks at the thorny issue of depreciation Diminishing (reducing) balance depreciation For this method you need to know the cost of the asset and the depreciation percentage. Any other information such as residual value is not relevant. Example: Let us look again at the crisp factory. The business buys a delivery van which could be used by the business for several years, so the diminishing balance method has been chosen. The cost of the new delivery van is £24,000. The rate of depreciation is 15% reducing balance. To calculate: Year 1 – cost x depreciation percentage £24,000 x 15% = £3,600 Year 1 depreciation charge = £3,600 Year 2 – carrying value x depreciation percentage (£24,000 – £3,600) = £20,400 x 15% = £3,060 Year 2 depreciation charge = £3,060 Year 3 – carrying value x depreciation percentage (£20,400 – £3,060) = £17,340 x 15% = £2,601 Year 3 depreciation charge = £2,601 To summarise this: Year Depreciation charge Carrying value 1 £3,600 £20,400 2 £3,060 £17,340 3 £2,601 £14,739 And this would continue until the van is disposed of.

he accruals concept is a principle of accounting that requires the recording of expenses in the period in which they are incurred, and depreciation is an example of this. The value of a non-current asset reduces each year, mainly due to wear and tear, and this reduction is known as depreciation. We enter depreciation charges each year as a debit in the depreciation charges ledger account and as a credit in the accumulated depreciation ledger account. Let us look at the following depreciation methods: • Straight line • Diminishing (reducing) balance • Units of production An exam task may give the following variations: a) Depreciation is calculated on a yearly basis and charged in the year of acquisition but none in the year of disposal. This means that you enter a depreciation charge for the year in which it was purchased, regardless of when in the year the purchase took place, but no entry is made in the year the asset is disposed of. b) Depreciation is calculated on a yearly basis and charged on a monthly basis for the months

the machine is owed. This means that if the machine was purchased, or disposed of, part way through a year, you need to calculate how many months the asset was owned for in that year. Then take the depreciation charge for the year, divide by the 12 months in the whole year and multiply by the number of months it was owned. Straight line depreciation For this method you need to know the cost of the asset, any residual value (the estimated selling price at the end of its life with the business) and the life of the asset. Example: A crisp making machine in a crisp factory. The business buys a new machine to make strawberry flavour crisps and expects to make these crisps for three years only, after which the machine will be sold for scrap. The cost of the new machine is £68,000. The useful life is three years. The scrap value of the machine at the end of the three years is £8,000. To calculate: Cost – residual value / years of useful life £68,000 – £8,000 / three years = £20,000 The depreciation charge for each of the three years will be £20,000.

Units of production depreciation For this method you will need to know the cost of the machine and how many units the machine can make before it no longer useful in the business. Example: The crisp factory buys another machine for £35,000 to make chocolate coated crisps. The machine can make 10,000 tonnes of crisps, after which it will be disposed of for £1,000. The business expects the following volume of crisps to be manufactured using this machine. Year 1 – 3,000 tonnes Year 2 – 5,000 tonnes Year 3 – 2,000 tonnes To calculate: (Cost – residual value) / total units to be produced x units produced each year Year 1 – (£35,000 - £1,000) / 10,000 tonnes x 3,000 tonnes = £10,200 Year 2 – (£35,000 - £1,000) / 10,000 tonnes x 5,000 tonnes = £17,000 Year 3 – (£35,000 - £1,000) / 10,000 tonnes x 2,000 tonnes = £6,800 • Teresa Clarke FMAAT If you would like to work on more depreciation tasks, you might like this workbook, which is one of my series of revision workbooks devised to support your studies. It’s called ‘Depreciation and Disposals Revision Workbook’, and is available on Amazon for £3.30 in paperback or £1.89 as an eBook. See https://www.amazon.co.uk/dp/B08X63FJH2 PQ Magazine July 2021

PQ future employment AI-powered technologies now making “high-risk, life changing” decisions about workers’ lives. These decisions include selecting candidates for interview, day-to-day line management, performance ratings, shift allocation and deciding who is disciplined or made redundant. And AI is being used to analyse facial expressions, tone of voice and accents to assess candidates’ suitability for roles. Left unchecked, the report warns that AI could lead to greater discrimination with workers in the gig economy and insecure work particularly at risk. The TUC says that without the right to a human review of decisions, workers could be hired and fired entirely by algorithm.

What happens when AI manages people? Who will give you your next job – a human or a robot? Do we have the right laws in place to ensure fairness in the workplace? ears are rising that workers are being “hired and fired by algorithm”, and new AI employment laws are now needed to protect employees, says a report from the Trades Union Congress (TUC). The report ‘Technology Managing People – the legal implications’ said that tech companies, employers, and government need to help create a new set of legal reforms for the ethical use of AI at work – to help fill in the “huge gaps” in UK employment law. The TUC believes that there needs to be a legal right to have any “high-risk” decision reviewed by a human.

TUC general secretary Frances O’Grady felt the use of AI at work stood at “a fork in the road”. She said: “AI at work could be used to improve productivity and working lives. But it is already being used to make life-changing decisions about people at work – like who gets hired and fired. “Without fair rules, the use of AI at work could lead to widespread discrimination and unfair treatment – especially for those in insecure work and the gig economy.” Hired and fired by algorithm The report highlights how the use of AI has been accelerated by the coronavirus pandemic, with

Lack of voice and transparency The report warns of a huge lack of transparency over the use of AI at work, with many staff left in the dark over how AI is being used to make decisions that directly affect them. TUC research published in November revealed that fewer than one in three (31%) workers are consulted when any new forms of technology are introduced. And six in 10 (60%) said that unless carefully regulated, AI could increase unfair treatment in the workplace. The TUC says employers must disclose to workers how AI is being used in the workplace to make decisions about them. The union body believes the UK GDPR needs amending to ensure staff understand precisely how AI is operating at their workplace. What the lawyers said Leading AI and employment rights lawyers Robin Allen QC and Dee Masters said the TUC is right to call for urgent legislative changes to ensure that workers and companies can both enjoy the benefits of AI. They explained: “Used properly, AI can change the world of work for good. Used in the wrong way it can be exceptionally dangerous. “There are currently huge gaps in British law when it comes to regulating AI at work. They must be plugged quickly to stop workers from being discriminated against and mistreated. “Already important decisions are being made by machines. Accountability, transparency and accuracy need to be guaranteed by the legal system through the carefully crafted legal reforms we propose. “There are clear red lines, which must not be crossed if work is not to become dehumanised.” To see the report in full go to https://tinyurl. com/72dadzw3

Job-Oriented Practical Accountancy Training Qualification with Work Placement In collaboration with KBM Chartered Certified Accountants and Registered Auditors. Become Sage 50, QuickBooks and Xero Certified. 020 8992 4506 | www.kbmtr.co.uk 38

PQ Magazine July 2021

careers PQ

Dear Karen Ask PQ’s agony aunt Karen Young when you need expert advice. Email your dilemma to graham@pqmagazine.com, and he will pass on the best ones to Karen THE QUESTION Why is it important to think about my career pathway in the long-term – do you have any advice?

Life at Zzoomm plc Simon Cordell is a Build Supervisor at the broadband company, based in London. He is studying for the AAT Advanced Diploma and was recently named PQ of the Year at our annual awards What time does your alarm go off? 4.30am. What is on your desk? Laptop and lots of notepaper How long is your commute to that desk? One hour. Do you have a favourite lunch? A bacon Sandwich What can you see when you sit at your desk? Our breakout area and coffee machine. Which websites are your favourites? Anything motorcycle related.

How many hours a week do you spend in online meeting rooms? About 14. Are you spending more time working now than normal? Yes. How do you relax? Going for a ride on the bike. What is your favourite tipple? JD and coke. What’s your favourite TV show? Columbo. What is the best film

you have watched recently? Hacksaw Ridge. Summer or winter? Summer. Pubs or clubs? Pubs. Do you have a hero? No. What is the first thing you are going to do when lockdown is fully over? Take a road trip. If you had a time machine where would you go? Back to the 1960s.

Pap Carbon ‘border’ tax The UK government is looking at a carbon tax on imports from polluting industries in a move to protect British farmers from overseas competition. To start with the tax would target heavy industries such as coal and steelmaking, but could naturally be extended to a major CO2 emitter – agriculture. There is concern that while Britain reduces pollution it will allow ‘dirty goods’ to be imported in larger and larger qualities. Former government minister Liam Fox believes the UK should take the lead on introducing a

carbon border tax in the run up to the COP26 climate conference. The EU is looking at introducing a similar tax.

In brief

KAREN’S RESPONSE Career planning is something that often falls by the wayside in our everyday lives, but the value of a career plan isn’t to be underestimated. Having goals in place over the short and long term will give you direction and motivation, and help you see the value in some of the everyday tasks you do. Try segmenting your career planning into different time frames. For instance, where do you want to be in six months? Where do you see yourself in a year? And what are your long-term projections for the next two to three years? Keep your career plans flexible enough to allow for change and opportunity, but specific enough to give yourself a good direction of where you’re going. Reflecting on your career ambitions might illuminate options that you hadn’t considered before, or make you realise changes you can make in the short term in order to set you on the path to long-term success. Lastly, remain open-minded. The Covid-19 crisis may mean that we see surges in demand, industry shifts and emerging trends that have a sustained impact on not just finance jobs but the world at large. Maintain an awareness of areas in demand and consider how your skillset and experience could help you in the future. • 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 July 2021

Pap You decide! While many firms are being prescriptive about the return to work, accountancy firm BDO has told its staff that they can decide for themselves when they come into the office in a post-pandemic world. It said it will not be telling its employees how many days a week it expects to see them in the office. A staff survey found nearly 80% of employees preferred the idea of either working from home or a hybrid working model. BDO employs around 5,500 people in its 18 UK offices. It furloughed 700 staff in 2020 and after a bit of dithering paid back the taxpayer support it received (around £4.1 million).

Pap Foreign investment rises The UK is the most attractive destination in Europe for foreign investors and brought in more money than any country except France. The UK attracted 975 new projects in 2020, according to the EY attractiveness survey. The report said “the UK has demonstrated resilience and adaptability in attracting investment”. However, its former dominance of the FDI market has been replaced by a competitive three-way tussle with Germany and France. Researchers attributed Britain’s performance to the success of the vaccine roll-out and signs of an economic rebound.

The PQ Book Club: books you should read You are a Champion: How to be the best you can be, by Marcus Rashford and Carl Anka (Macmillan, £9.99) Before he was a Manchester United and England footballer, and long before he started his inspiring campaign to end child food poverty in the UK, Marcus Rashford was just an average kid from Wythenshawe, South Manchester. With his new book, aimed at young people, he wants to show you how to achieve your dreams with an inspiring guide to life. Marcus is the youngest of five siblings, but what you might not know is he doesn’t have a

middle name. He also loves strawberry cream biscuits and Coco Pops! We liked the fact that early on he stresses that you are only in competition with yourself – comparing yourself to other people gets you nowhere. We think a lot of adults would do well to remember that, too. Marcus also talks about studying and learning, and says if you have a disappointing exam result try to figure out what went wrong but be kind to yourself when you are doing it. Marcus asks if you ever get nervous? He did when he was forced to read out loud at

school. The big thing he learned was not to become too fixated on mistakes. He noticed his fellow pupils made as many mistakes as him but just charged on regardless. Finally, he reminds us that ‘nothing changes if nothing changes’, and like him we really love that saying. PQ rating: 5/5 If you have a young person in the house this would be a great book for them – if they read them! 39

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

Super-rich don’t pay income tax! A news website recently claimed it had received leaked details of just how little income tax US billionaires pay. ProPublica says it has seen tax returns for Jeff Bezos, Elon Musk and Warren Buffett, and that Bezos paid no tax in 2007 and 2011, and Musk paid nothing in 2018. The leak has been called ‘illegal’ and is now being investigated by FBI and the tax authorities. ProPublica’s Jesse Eisinger said: “Ultra-wealthy people can sidestep the system in an entirely legal way. So, while the value of their wealth grows enormously through their ownership of shares in their company, that’s not recorded as income. They also take aggressive tax deductions, often because they have borrowed to fund their lifestyles.”

Time to convert the shed?

Waltons vs Bezos Here’s the ultimate pub quiz question for you: where do the Walton family beat the Bezos family? The answer is in the latest Sunday Times Rich List 2021. The Walton family own Walmart and are worth an estimated £166.8 billion. Poor old Jeff Bezos, who is shooting into space with his brother, is worth a mere £128.3 billion. No one from the UK is among the top 50 richest people in the world, with the US dominating the top 10. They are all there – Musk, Gates, Zuckerberg, and Ellison. That said, this year’s Rich List identifies a record 171 billionaires living in the UK – 24 more than in 2020. That is the biggest jump in the 33 years the Sunday Times has been tracking the fortunes of the UK’s most affluent people.

Homeworkers are starting to look more lovingly at their sheds, imagining how they can convert them into their new WFH office space. An Aviva ‘How we live’ study discovered that WFH isn’t the panacea many make it out to be. In fact, one in five (19%) of home workers admit WFH is stressful, as they have to compete for space with lots of other people. And, while a third of those surveyed have a home office, one in 10 are now using a converted shed, summerhouse or outbuilding. However, there are many more are making do from tables, sofas and even beds! Almost a third (31%) of home-workers aged under 25 admit that they work from their beds on some occasions

Pass the hand sanitiser

Oh, how the world has change in one short year! The UK’s cost of living calculator is also changing to reflect this – it will now include hand sanitisers and men’s jogging bottoms to help work out inflation. The annual review by the Office for National Statistics has added electric cars, hand weights and smartwatches to the basket of goods. Out goes white chocolate, ground coffee, canteen sandwiches and lamb shoulder on the bone. In all, the ONS has added 17 items, removed 10 and left 729 unchanged. Some 180,000 prices are looked at across thousands of outlets to calculate inflation, which is then used as a benchmark for our finance decisions.

The website addicts

How long have you spent online today? According to Ofcom, adults in the UK have been spending longer online than in any other European country. On average, British adults are online for three hours and 37 minutes a day. That is up from two hours 57 minutes in 2017. This figure doesn’t include online streaming of Netflix and the BBC iPlayer – you can add another one hour 21 minutes. There are two countries ahead of us on the web addiction league – the US and Canada. The average daily internet use in the US was four hours and 38 minutes.

’ WEV E

Emission calculator Want to know your carbon footprint? If so then you must read Sarah Bridle’s book, ‘Food and Climate Change: Without the Hot Air’, which is free as an ebook. She explains down to the gram how your food and drink choices are affecting the planet. For instance, a Latte is 10 times worse for the planet than a regular coffee. That’s down to the milk being used, and drinking a Latte pushes your emissions to nearly half your daily food emissions budget of 3kg. Bridle thinks we need to halve our daily emissions from 6kg down to 3kgs. Anything to do with cows seems bad – we are talking cheese, butter and of course the meat itself. Bridle explains that your favourite cheese sandwich may not as good for the planet as you think. It takes 10 litres of milk to make a kilo of cheese and every litre of milk involves one methane and carbon-dioxide burping cow eating 4kg of grass. Bridle also puts a different perspective on organic, as this often increases emissions.

GOT THE L OT

Time to be mindful We have three copies of Dr Gareth Moore’s ‘The Mindfulness Puzzle Book’ up for grabs this month. These relaxing puzzles will really help you to de-stress and unwind. This is the first puzzle book designed specifically around mindfulness. Moore says that you should feel the tension release as you focus on each achievable and fun task, and experience the endorphin reward buzz as you successfully finish each puzzle. I may keep one for myself! To enter this giveaway send your name and address to giveaways@ pqmagazine.com. Head up the email ‘Mindfulness’ and we will enter you in the prize draw.

We are the champions A top man who occasionally plays football, Marcus Rashford has joined forces with Carl Anka and Katie Warriner, in this new book ‘You are a Champion: how to be the best you can’. Packed full of stories from Marcus’s life, you will discover how to dream big, use your voice and never stop learning. As Marcus says: “You already are a champion – you just might not know it yet.” You can read our review of this book on page 39. To be in with a chance of winning one of three copies send your name and address to giveaways@pqmagazine.com. Head up your email ‘You are a champion’ and we will do the rest.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be received by Friday 6 August. The main draw will take place on Monday 9 August 2021.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM 40

PQ Magazine July 2021

PQ magazine, July 2021

Articles inside

Careers Life at Zzoomm with our PQ of the Year; Agony Aunt Karen Young has more career advice; and our book review

Fun The lighter side of life; and more great PQ giveaways

Future emploment What

Target costing Philip Dunn

Test bank How much do you know about material control and reporting direct material cost?

AAT exams Nick Craggs explains the difference between mark up and margin

Keep it simple Neil Da Costa

CIPFA spotlight Student

AAT guru In the first in a regular series, Teresa Clarke looks at how depreciation works

Local government ARGA gets

Xero offer Add to your CV with a Xero qualification – and you can do it through PQ for FREE!

A question for Tom Top tutor

Have your say There’s was

ACCA spotlight Beware exam

International standards We

CIMA spotlight Why question

Wellbeing Studying and sitting exams can really take it out of you, so make sure you take time out to look after yourself

ICAEW spotlight Why data

ACCA exam meltdown