NQ magazine, April 2016•

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An online magazine for newly qualified accountants and those in the final stages of their qualification. It's packed full of careers advice, industry news and topical features on the state of the accountancy industry across the globe. A must-read for aspiring accountants everywhere.





    Self-interest rather than regulation is the

    way forward, says report



    Are you being paid what you should


    Contact usemail:


    twitter: @pqmagazine

    facebook: pqmagazine.com

    call: 020 7216 6444

    April 2016





    Page 14









    What are the pros and cons of using a recruitment consultant to nd your next role?



    What should you do when your boss wants you to write a biased report?

    Page 12


    and a whole lot more

    Pages 5 and 7

  • workingbettertogether

    T +44 (0)20 8408 9999 E info@walkerdendle.co.uk www.walkerdendle.co.uk

    redefining financial recruitment

    Finance Manager


    60,000 65,000 + benefits













    Financial Analyst


    55,000 + benefits














    Leasing is the big story

    We are again shining the light on leases this month. We know, that is two issues in a row now, but we honestly believe this is big news! The new standard, IFRS 16 Leases, replaces accounting standards introduced more than 30 years ago and considered no longer fit for purpose.

    What is being proposed is a major revision to the way companies account for leases. And there are a lot of leases out there. It has been estimated that listed companies alone

    have US$3.3trn of them, of which 85% do not appear on the balance sheet. How can investors and others get a truly accurate picture of a companys lease assets and liabilities? In industries such as aviation, shipping and retail leases are a key component in how they operate.

    IASB chair Hans Hoogervorst says that when IFRS 16 becomes effective in 2019 it will result in a substantial change to many companies balance sheets. All leases will be recognised as assets and liabilities by lessees, better reflected the underlying economics (read Hoogervorsts thoughts on page 22).

    Before you get there you should read about Sharon Harris, our NQ of the Year. The first thing she did when she qualified was burst into tears from the relief. Its OK, once she had recovered the rest of the day was spent with a big smile on her face! See page 18 for more.

    We have a great, honest piece by Walker Dendles Phillippa Lusty about why you should use recruitment consultants (page 8). We believe that using one is a bit of a no-brainer. It is how the market works, so use it to your advantage. It is, after all, a free service. With the help of Hays we also produce an NQ salary checker you wont find this anywhere else!

    Graham Hambly, Editor (graham@pqaccountant.com)



    Number of NHS finance

    professionals who feel valued by the public and patients P5


    and rising the number of self-

    employed workers in the UK P14


    Percentage of large companies

    to have reported some form of security breach P16


    The total amount of leases held by listed companies P22


    Average salary for NQ working in the corporate sector, according to the Hays salary checker P10


  • 5NEWS

    NQ Magazine April 2016

    New CPD Centre for

    all ACCA members ACCA members now have exclusive access to a range of

    continuing professional development (CPD) courses through

    a new online CPD Centre provided by BPP Professional


    The new CPD centre is a dual-branded platform that both

    parties hope will deliver a smooth booking process, making

    online CPD course purchases easier. On offer are 150

    high-quality courses and learning packages that have been

    specifically designed to fit around the schedules of busy

    business and finance professionals.

    To celebrate the launch of the new site, BPP is offering

    ACCA members 20% off their entire online catalogue until

    30 April. You will need to use the code ACCA2016 at the

    checkout to redeem the offer.

    Deloitte publishes socio-economic data

    In an effort to dismiss some of the myths about social

    mobility Deloitte has become one of the largest UK

    employers to publish data on the socio-economic and

    educational background of its partners and staff.

    A sample of 1,000 staff shows 43% of Deloitte

    employees attended a non-selective state school, 16%

    an academically selective grammar school and 20% an

    independent school. The data also revealed 51% were the

    first in their family to go to university, while 9% received

    free school meals.

    Women earn 17,000 less

    New research has shown that women in accountancy earn

    17,000 less than men. Total remuneration for women

    in accountancy stands at an average of 67,680, while

    men earn 84,970. Men also did better when it comes to

    bonuses. The average bonus for men was equal to 18.2%

    of their basic salary; it was 13.9% for women. The only

    good news, if there is any, is that the gender pay gap is


    Aspiring to reach the top? No thanks!

    European countries are lagging behind developing

    countries when it comes to female ambition in the

    workplace, according to the Hays Global Gender Diversity

    Report 2016. Just 11% of women in the UK believe they

    need to reach the most senior levels, MD or CEO, in order

    to feel successful in their careers, compared with 14%

    of men. This compares with 28% of women in Malaysia,

    22% in Colombia and 18% in the UAE. In contrast, British

    women are much more satisfied in reaching mid/senior

    level roles. Almost four in 10 women in the UK (36%) say

    they would need to reach director level to feel successful.


    Feeling valued? NotNHS nance workers Just 5% of NHS finance professionals feel valued by the

    public and patients, says a new briefing survey from the

    Healthcare Financial Management Association (HFMA).

    Luckily, faint praise is not what motivates accountants

    for working in the NHS. The latest NHS Finance Function

    in 2015: England report found that for well over two-thirds

    (71%) of respondents it is public sector values that keeps

    them going. Improving patient care is a motivation for 60%

    of those surveyed.

    Finance professionals working in the NHS also feel their

    departments provide real value for money well, 89% think


    Despite the challenges of grappling with tight financial

    statements and trying to add value to patient care, some

    two-thirds of accountants say they would like to spend the

    rest of their career working for it.

    In all, 16,211 finance professionals are currently working

    in the NHS, a 3% rise on 2013 figures.

    The survey worryingly revealed that there is still a large

    imbalance between the number of women working in finance

    roles and those in the top jobs. Some 62% of finance staff

    are female, but only 26 % of FDs are women.

    Sharon Harris (right) of Agchem Project Consulting recently

    picked up her NQ of the Year trophy from Lisa Dendle of

    Walker Dendle at the PQ magazine Awards. Harris said: If

    I had told my 16-year-old self that, at the age of 52, I would

    be a chartered accountant with an honours degree I think

    I would have asked them what they had been drinking. In

    the past 12 months Sharon has been accepted as a CIMA

    member and gained the ACMA, CGMA designation. She

    also received a rst class honours degree from Manchester

    Metropolitan University in Sustainable Performance


    Read all about her on page 18.

  • Drive yourcareer withpqjobs.co.uk

    PQ jobspqjobs.co.uk

  • 7NEWS

    NQ Magazine April 2016

    Preparing for the futureThe CFO of the future may need to bring much more

    multidisciplinary skill set to the job, according to Finance

    2020: closer than you think, a new report from Robert Half.

    The report says the nance function faces what is possibly

    the biggest era of transformation in its history. Process

    automation, corporate digitisation and the ongoing need to

    protect assets while managing costs are conspiring to bring

    even more pressure on nance professionals.

    For many CFOs the priority is to meet regulatory

    compliance mandates, but in the long-term it is to keep pace

    with changing technology.

    So, what were perceived to be the most important skills

    to develop over the next ve years? Greater knowledge of

    nancial software packages was seen as the biggest technical

    skill that needs to be mastered (cited by 45% of CFOs).

    Leadership, communication and commercial acumen were

    seen as the soft skills nance professionals need to develop.

    The traditional

    audit process is

    not delivering

    enough, claims

    the ACCAs head

    of audit and

    assurance, Andrew



    a series of



    he said that

    in developed

    countries there

    were strong views

    that while the audit

    and assurance

    process was important, it was neither timely nor offered

    insights as to where businesses could have done better.

    He said that in countries where audit is still being

    developed it was valued far higher than in countries where it

    has been long established.

    Gambier said that investors had said they want real insights

    into how a company could have addressed risk better and

    where they could have maximized pro ts.

    Gambier went on: While the traditional approach might

    reassure regulators and company bosses, its usefulness to

    investors is shrinking all the time, prompting questions over

    its future. Business leaders expect information in real time,

    so why do we expect investors to wait months for the audit


    He felt that auditors need to look at how they can use

    technology to deliver high quality audits in a more ef cient

    and timely manner.

    For more read the ACCA report The Future of Audit.

    First management accounting standard BSI, the British Standards Institution, has published PAS 1919

    the worlds rst management accounting standard. The guide,

    sponsored by CIMA, is designed as a best-practice guide to

    management accounting, de ning what good looks like.

    The PAS provides a framework to support decision-making

    and supports improved performance. It sets out four outcome-

    based management accounting principles:

    Communication provides insight that is in uential

    encouraging insightful communication that drives better

    decisions across an organisation.

    Information is relevant reviewing past, present and forward-

    looking performance management information.

    Impact on value is analysed understanding an

    organisations strategy and business model.

    Stewardship builds trust balancing short-term commercial

    interests against long-term value for stakeholders.

    Audit must now evolve or die

    Threat of court over new UK sugar tax Soft drinks manufacturers look set to take Chancellor George

    Osborne to the European court over his discriminatory sugar


    The new tax put forward in the recent Budget may never

    see the light of day, as Coca-Cola and other drink makers put

    together a legal challenge to the proposals.

    The soft drinks manufactures look set to argue in the

    European courts that the tax, due to levied from 2018, is

    discriminatory because it will not hit other beverages with high

    sugar content.

    This is not an idle threat. There have been successful

    challenges to similar tax moves in Denmark and Finland. Last

    year, the European Court of Justice also blocked Scotlands

    plan to enforce minimum alcohol pricing.

    Chancellor Osborne was hoping the 24p a litre tax on high

    sugar products would help raise 520m a year.

    Many fruit juices and smoothies contain more sugar than

    the traditional cans of zz, and should be included in the new

    sugar tax, according to some experts. Its a no-brainer to

    include fruit juices and smoothies in the levy, says University

    of Liverpools Simon Capewell.

    Among the drinks that would be exempt, for example, is a

    Krispy Kreme Strawberry Kreme milkshake, which contains

    21.8g of sugar per 100g. That is double the amount of

    sugar found in Coke (10.6g per 100ml). A McDonalds large

    strawberry milkshake contains 74g of sugar, 50g of which

    is added. Thats 12 teaspoons of sugar and is 160% of your

    recommended (aged 11 and over) daily dose.

    Andrew Gambier

  • 8 NQ Magazine April 2016


    And the hunt begins: youre on the market and the

    time is ripe to take the next step along the path

    of your financial career. Perhaps your current

    employer cant give you the opportunities you need to

    progress, or perhaps it is just time for a change. You have

    a clear picture of what you are looking for in terms of

    remuneration, location and role now its just about finding

    that perfect job. So do you go to a recruitment consultant?

    Reasons not to

    Bad press: In the world of recruitment, a common myth

    about consultants is that they are shallow, pushy salesmen

    Phillippa Lusty outlines the

    pros and cons of using a

    recruitment consultant from

    both the individuals and the

    companys perspective

    and women just

    looking to make a

    quick buck. Unfortunately,

    in some cases this may be true,

    but on the flip side a good recruitment

    consultancy relies heavily on its reputation

    and by building positive, long-standing working

    relationships with clients and candidates alike.

    Fees: Clients looking to fill a vacancy have to remember

    that, like your company, a consultancy is a commercial

    business and works speculatively. It will invest on your

    behalf on advertising, job boards and mail shots, taking a

    risk with you too: no placement, no fee.

    Going direct: With the rise of in-house recruiters, online

    job boards and professional networking sites that seem to

    cut out the middle man, are recruitment agencies becoming

    obsolete? The nature of the business is changing, but in this

    chaotic world of apparently endless opportunity the role of a

    recruitment consultancy is as valuable as ever. Heres why

    Why use a recruitment consultant?

  • 9NQ Magazine April 2016


    Why use recruitment


    Experts in their field: Recruitment

    consultants are career match-makers who

    specialise in their own niche in regards to sector

    and location. They are therefore great advisers who

    have their fingers on the pulse; it is their job to know their


    Remove the stress: Whether you are looking for a job or

    looking for someone to fill a job, lets face it: changing jobs

    is a big deal. Its an emotional decision and as a mediator

    between candidate and client, a consultant both presents

    and represents you: they handle objections from both sides

    and keep all parties in the loop during the whole process.

    Confidentiality: Client or candidate, finding or filling a

    role is a very sensitive topic and not one that you always

    want broadcast for all to see for many reasons. The danger

    of going direct comes with its own hazards and word always

    gets around.

    Time vs. outcome: Finding a new role or new candidate

    is a long, time consuming process and can become the

    bane of your life. Recruiters are problem solvers who cut out

    the legwork by presenting a shortlist of roles or candidates

    that are matched to your specific criteria.

    From the candidates perspective

    Saving time and money: We all know the pain of endlessly

    filling out extensive applications forms and not even

    receiving an acknowledgment, let alone a rejection letter. A

    consultants services are free and they bring the jobs to you.

    More access to competitive opportunities: Consultants

    have strong networks and relationships with their clients,

    and will have access to non-advertised roles through

    connections with key people in their industry.

    Support and advice: From CV and interview help, to

    sharing knowledge of the client, to giving feedback, to

    negotiating a better remuneration packages on your behalf.

    From the clients perspective

    Time vs. money: Finding the right candidate can be like

    finding a needle in a haystack and filtering through a sea of

    applicants can be highly time-inefficient for a business.

    Dont underappreciate their service: They may only

    present a small shortlist, but in delivering this to your desk

    they will have trawled their networks, sieved through and

    screened countless applications, interviewed candidates

    and checked references to provide you with just the cream

    of the crop. The bottom line is that time equals money and

    the fee is a small price to pay for the time and effort they

    save you.

    Wider resources: Rather than relying on the keen

    applicants who crowd your mailbox, recruiters have access

    to people who will not be in your network. This casts your

    net wider and brings in a better source of candidates.

    What can you do?

    Dont just sign up to any and every recruitment consultancy

    you come across. Do your homework and pick the right

    recruiters ones that specialise in your field and want to get

    a deeper understanding of your needs.

    And keep in contact. A recruiter should be keeping in

    regular contact with you, but this shouldnt stop you from

    picking up the phone and giving them a call. A relationship

    is a two-way street after all!

    Phillippa Lusty is a recruitment consultant at

    Walker Dendle


  • 10 NQ Magazine April 2016


    Are you getting paid what youshould be?

    Typical Range

    North West 36,000 33,000-38,000

    North East 38,000 35,000-42,000

    Yorkshire & Humber 34,000 33,000-38,000

    West Midlands 33,000 30,000-38,000

    East Midlands 33,000 28,000-36,000

    East of England 39,000 34,600-41,600

    London 45,000 43,000-50,000

    South West England 38,000 28,000-40,000

    South East England 40,000 35,000-42,000

    Scotland 32,000 30,000-35,000

    Northern Ireland 30,000 30,000-36,000

    Wales 32,000 28,000-36,000

    National Average: 35,833

    Typical Range

    North West 40,000 36,000-45,000

    North East 40,000 35,000-42,000

    Yorkshire & Humber 37,000 35,000-40,000

    West Midlands 40,000 36,000-42,000

    East Midlands 40,000 36,000-43,000

    East of England 45,300 38,300-49,300

    London 48,000 45,000-55,000

    South West England 40,000 35,000-42,000

    South East England 45,000 40,000-50,000

    Scotland 37,000 35,000-40,000

    Northern Ireland 31,000 28,000-33,000

    Wales 36,000 30,000-38,000

    National Average: 39,942



  • 11NQ Magazine April 2016


    Are you getting paid what you Heres our latest region-by-region salary checker, with

    gures kindly provided by Hays Accountancy and Finance


    Typical Range

    North West 45,000 40,000-50,000

    North East 44,000 40,000-50,000

    Yorkshire & Humber 42,000 40,000-45,000

    West Midlands 43,000 38,000-50,000

    East Midlands 43,000 38,000-48,000

    East of England 45,300 40,000-49,300

    London 55,000 50,000-60,000

    South West England 40,000 38,000-45,000

    South East England 55,000 45,000-60,000

    Scotland 40,000 37,000-42,000

    Northern Ireland 35,000 32,000-38,000

    Wales 40,000 36,000-45,000

    National Average: 43,932

    Typical Range

    North West 42,000 36,000-47,000

    North East 38,000 38,000-45,000

    Yorkshire & Humber 36,000 35,000-40,000

    West Midlands 38,000 33,000-42,000

    East Midlands 37,000 30,000-40,000

    East of England 42,300 36,600-45,300

    London 50,000 45,000-55,000

    South West England 40,000 30,000-45,000

    South East England 48,000 40,000-52,000

    Scotland 33,000 32,000-36,000

    Northern Ireland 33,000 29,000-36,000

    Wales 35,000 32,000-40,000

    National Average: 39,358



  • 12 NQ Magazine April 2016


  • 13NQ Magazine April 2016


    Working with limited resources and to tight deadlines, youre

    expected to produce a report that might be used to justify

    redundancies at your rm. What should you do?

    resources available, because the

    work could not be relied upon. You

    could ask for more time to complete

    the work to the required standard,

    or ask for the work to be outsourced.

    This would have the added benefit of

    enhanced objectivity.

    Clarifying the process

    The process of clarifying the

    intended use of the information and

    expressing your concerns regarding

    its reliability is likely to enhance your

    credibility. You could suggest that

    your line manager discuss the issue

    with the president or other members

    of the board, as appropriate.

    If your line manager is

    unsympathetic to your concerns,

    you should not allow yourself to be

    associated with information that may

    be misleading. You should consider

    the most appropriate way in which

    to make your concerns known to

    the board. This may be through the

    president or the company secretary.

    If after exploring all these routes

    of communication you still find

    yourself under unreasonable time

    pressure you may have to make

    clear your refusal to conduct the

    work, and possibly resign from the


    You should document, in detail,

    the steps that you take in resolving

    your dilemma, in case your ethical

    judgement is challenged in the



    Outline of the case

    You are a qualified accountant.

    You have been asked by your line

    manager to complete a costing

    exercise with a very short deadline

    and limited resources. You think

    that the president of the company

    is planning to use this information

    to restructure the company,

    including making some of your

    close colleagues redundant. You are

    worried that your work cannot be

    robust enough to be used for such

    a big business decision, but your

    line manager is putting you under a

    lot of pressure to complete the work


    Key fundamental principles

    Objectivity: Could you maintain an

    unbiased stance throughout, in view

    of your close relationships with your


    Professional competence and due

    care: Can you realistically produce a

    costing, with the time and resources

    available, without compromising the

    standard of your work?

    Confidentiality: Given the

    sensitivity of the situation you should

    maintain discretion and not share

    your concerns with other staff who

    may not be aware of the presidents



    Identify relevant facts: The company

    is considering restructuring, and the

    president needs to have the most

    up-to-date and complete financial

    information to inform any decisions.

    As a professional accountant, you

    must ensure that any financial

    information you provide is robust.

    Identify affected parties: Key

    affected parties are you, your line

    manager, the president and anyone

    else who may use the results of the

    costing exercise. Other stakeholders

    in the company may also be

    affected, including those employees

    who might suffer redundancy.

    Who should be involved in the

    resolution? Is there anyone else

    in the company with whom you

    can raise your concerns? Is there

    a senior finance officer who could

    advise you, or another member

    of the board with whom you can

    discuss your dilemma? Should you

    approach the president directly?

    Possible course of action

    You think that the president of

    the company is planning to use

    the information you produce to

    restructure the company. As a

    professional accountant you have a

    duty to make your line manager and

    other users of the information aware

    of the limitations in the scope of your

    work. With this in mind, you should

    attempt to obtain certainty regarding

    the use of the information.

    You should arrange a meeting

    with your line manager and explain

    that you are unwilling to do the work

    to the deadline requested, with the

  • 14 NQ Magazine April 2016


    Bringing National Insurance

    Contributions (NICs) and

    Income Tax (IT) closer

    together would create a simpler and

    fairer system for businesses and

    taxpayers, says the Office of Tax

    Simplification (OTS).

    The OTS has published the findings

    of a detailed review into bringing the

    two payroll taxes closer together to

    create a simpler and more modern

    system. It recommends a seven-stage

    programme to closer alignment to

    achieve a system more aligned to

    current and future working patterns,

    but cautions that the impacts need

    to be carefully understood and


    Angela Knight, OTS Chair, felt most

    people dont know what the National

    Insurance Contributions they pay gives

    them in benefits, with the system

    giving different outcomes for the

    employee, the self-employed and those

    with more than one job. And employers

    who are the collectors of income

    tax and national insurance find the

    current system for NICs complex.

    She said: As the structure of

    the UK economy moves rapidly

    towards scenarios often referred to as

    uberisation, the sharing economy or

    the gig economy, these different ways

    of working are with us, are expected to

    accelerate and so the current system is

    simply out of date.

    Inevitably, Knight said some will

    gain and others will lose from any

    change. By highlighting both the need

    for reform and by shining a light on

    those difficult areas now, the OTS

    intends this review to trigger a full and

    The Of ce of Tax Simpli cation believes two taxes can

    become one! Here we explain how and why

    informed debate about the impacts,

    how the changes could be made,

    how the challenges can be addressed

    and the timetables required, to make

    change as seamless as possible and

    to provide a system that is fit for the


    The OTS review sets out seven key

    steps to more closely align NICs with

    IT, but stresses the need for more work

    to be done on the proposed changes

    to properly assess the considerable

    potential impacts of change.

    John Whiting,

    OTS Tax Director,

    said: We found


    support for reform

    to the NICs system

    with many seeing

    alignment as a

    simple and obvious

    step. The potential gains in easier

    administration, proper transparency

    and greater understanding are clear.

    However, he was mindful that the

    impact of change will be considerable.

    Whiting explained millions of people

    would pay more in NICs, but millions

    would also pay less. Some paying more

    would gain contributory benefits but

    all these impacts need to be carefully

    worked through and thought about.

    More work is needed and so is a

    proper, informed debate about the

    considerable implications.

    The OTSs seven key stages to closer

    alignment are:

    Move to an annual, cumulative and aggregated assessment period for

    employee NICs as happens with PAYE

    and income tax. This could mean many

    people paying more NICs and many

    paying less NICs.

    Base employers NICs on whole payroll costs. This would be easier to

    understand and reduce distortions from

    fragmented hours.

    More closely align the NICs position for the UKs 4.7m, and rising, self-

    employed with that of employees. This

    would remove complexity and could

    potentially deliver more benefits.

    Critically review the contributory principle, but first increase

    understanding of what it really does

    and doesnt do; for example, finding

    people who believe that NICs pays for

    the NHS and that they need to have a

    full contributions record to qualify for

    NHS treatment is worrying.

    Align the definition of earnings for IT and NICs and the reliefs available

    for IT and NICs to make it more equal

    for employees and cut the burden

    of managing the differences for


    In the same way, bring taxable benefits in kind fully into NICs to

    remove the distortions in the NICs

    treatment of non-cash pay.

    Harmonise the rules governing the management of IT and NICs, and their

    administration, including setting up

    a method so that any changes can

    operate automatically for both taxes,

    to make it easier for employers and

    HMRC to administer the system and

    reduce unnecessary differences.

    The OTS review concludes there

    would need to be a well-signposted

    path to this major reform, with clear

    explanations to ensure all groups were

    well aware of the implications. NQ

    John Whiting

  • 15NQ Magazine April 2016


  • 16 NQ Magazine April 2016


    A new report from ACCA

    claims self-interest rather

    than regulation is the future

    of cybersecurity because technology

    is evolving at such a rate that any

    legislation would be out of date before

    it is signed in to law.

    Constant Forward Motion: The

    evolving phenomenon of cybersecurity

    regulation and the race to keep

    up examines the growing threat

    to businesses and the problems

    lawmakers have because of the fast

    pace of technological evolution.

    Cybersecurity falls broadly into

    two parts preventing attacks and

    defending against attacks that

    can and do happen. The most

    comprehensive theft prevention deals

    with the cause rather than the effect.

    Apprehending attackers is the role

    of law enforcement, and the often

    unusual nature of the offences allows

    for a new range of strategies: either

    through direct action against individual

    perpetrators, or wider actions to disrupt

    their business model.

    The stats are alarming: 81% of

    large companies have reported some

    form of security breach, costing each

    large organisation on average between

    600,000 and 1.5m,

    and attacks on SMEs

    are increasing.

    Reported cases

    and remember

    most cases will not

    be reported show

    2,460,000 instances

    of computer misuse

    and 404,000 of


    access to personal

    information. The

    cost of fraud for

    UK businesses

    is around 3% of

    total business


    For many businesses there are

    obvious risks such as disruption of

    supplies, sales and the loss of cash.

    But two other areas stand out such

    as the potential legal action from

    individuals and companies for loss

    of their data by a business, and

    reputational damage, which can spell

    the end of a business.

    There have been many instances

    over the past five years or so of how

    much reputational damage a data

    breach can cause to a large firm or a

    public service. Customers and potential

    customers are likely to think very

    carefully about their involvement with

    a company if they have had a data

    breach. We all want to know that our

    personal data is secure and that it

    is protected whether it is our bank

    details or our medical records.

    In this respect, organsiations have

    to take the lead. They need to be aware

    of the value of the data they hold, the

    value in protecting it, and the damage

    that can be done if they fail to do so.

    Looking after your own

    Self-interest not regulation

    needs to drive cybersecurity,

    says Jason Piper

  • 17NQ Magazine April 2016

    tills and card readers for future use,

    without the need for any direct internet

    involvement. As the hardware we use

    continues to evolve rapidly, so will the

    available attack vectors a further

    problem for legislators trying to keep

    up with possible offences.

    Employees are also major threat to

    a companys cybersecurity. It is likely

    that in every data breach an employee

    will be involved whether directly or

    indirectly and whether knowingly or

    unwittingly. Employee involvement in

    data breaches demonstrates the need

    for increased knowledge and awareness

    amongst all in the company. And it is

    for this reason that everyone has a role

    to play in the protection of data.

    They also have a role to play in

    whistleblowing when they think an

    internal data breach is likely. Managing

    the risk is clearly important. And this is

    where the accountancy profession can

    add real value because we are adept at

    managing risk. We have to be vigilant

    against cyber security in our personal

    lives and also at work.

    Jason Piper, Senior Manager,

    Tax and Business Law, ACCA



    Because of the nature of

    cybersecurity, authorities and

    governments would be best placed

    using their resources to raise

    awareness among businesses,

    and to put resources in to creating

    mechanisms to catch perpetrators of


    Data is being used in all sorts

    of ways for example to predict

    purchasing and money transfer

    patterns and criminals can use this

    information to commit fraud. As a basic

    rule of thumb, if there is value in the

    data to a criminal then there is value in

    protecting it and because data is digital

    it can be replicated over and over

    again, potentially before the business is

    even aware.

    The big question for authorities is,

    how do you regulate? Is it better to

    prescribe hard law or soft law? Both

    have advantages and disadvantages

    but ultimately the problem that

    lawmakers have is that anything they

    pass into law is likely to be archaic very

    quickly and they could spend the whole

    time running to catch up.

    The same can be said of insurance.

    Mandatory insurance now would force

    insurers to offer cover without the

    information necessary to be able to set

    premiums. Insurance is a growing area

    in the field of cybersecurity but it is an

    extremely complex job for underwriters

    to value data and set suitable

    premiums. Insurance can however,

    act as an awareness raiser in a similar

    way to soft laws if you can insurance

    against the loss of data then its security

    needs to be taken seriously.

    Large organisations can play an

    important role in cybersecurity. Most

    criminals will look to go after the

    weakest link in the supply chain as a

    point to access data. This will usually

    be the smaller businesses, as they

    have fewer resources. The larger

    companies in the chain can support

    the small ones by providing guidance

    and expertise. This would be of benefit

    to the whole chain, as once a criminal

    has access to one area they will be able

    to infiltrate the entire chain causing

    more damage, both financially and


    The report also looks at other threats

    to cybersecurity and how technology

    means that data thefts dont always

    have to involve the internet. Physical

    devices can be used to collect

    information from ATM cards, electronic

  • 18 NQ Magazine April 2016


    When did you know you wanted to be a chartered management accountant?Not until I joined my current company and was inspired by a

    friend who was studying ACCA. However, I hate personal tax

    so decided to do CIMA instead. Also, CIMA was more relevant

    for my current job as there is a strong focus on interpreting

    data for management accounts and KPIs.

    How did you find the CIMA exams? I felt very much like a guinea pig as I was in one of the

    first groups to have to switch over and study using the new

    syllabus and objective test exams. It was quite shocking the

    lack of information from CIMA prior to roll out and the lack of

    practice questions in the early days. However, I understand

    that things have now improved.

    Sharon Harris was recently named NQ of the Year by our sister

    magazine, PQ. We caught up with her to nd out what makes

    her tick

    Driving ambition

    Shocked, relieved and proud was how Sharon describes her feelings on becoming quali ed



    What are you reading?

    The End of Oil: On the Edge

    of a Perilous New World by

    Paul Roberts

    Last CD bought:

    Coldplays A Head Full of


    Favourite TV show?

    Currently The Night


    When did you last laugh

    out loud? At Michael

    McIntyres Happy and

    Glorious show

    How do you chill?

    Listening to music and


  • 19


    NQ Magazine April 2016

    What did you feel like once you had finally qualified?Shocked, relieved and very proud.

    What was the first thing you did when you found out you had passed?Burst into tears from the relief that I had qualified. Then I

    spent the rest of the day smiling.

    Do you have plans for any more study?Im considering doing an MSc in Strategic Business

    Management with Manchester Metropolitan University, but

    the next course doesnt start until September so Im enjoying

    the break from study and research.

    You are now our NQ of the Year how did it go down at work? They were thrilled for me and very proud of my achievements

    (see http://www.apc.eu.com/apcs-sharon-harris-wins-


    How did you enjoy the PQ Awards night?I had a lovely time at the awards and even if I hadnt have

    won I would have still had a great night out. Accountants are

    definitely not boring!

    You work for Agchem Project Consulting as its finance & operations manager. What is a typical day like?

    There is never a typical day at APC and I am still growing

    into the role with guidance and support from the managing

    director and the other directors/board members. APC

    is an expanding business, so Im currently dealing with

    the creation of a subsidiary company in Hungary (far too

    much paperwork!), as well as keeping on top of my normal

    accounting responsibilities.

    We understand you went back to university to study a degree in sustainable performance management. What lessons have you learnt from your BA (Hons)?Dont try to do this course while studying for your CIMA

    finals and holding down a full-time job its far too stressful!

    However, the main lesson was that I still have a lot to learn,

    especially when it comes to sustainability and strategic

    management decision making.

    Where do you see yourself in five years time?Still with APC as a director and full board member.

    We know all accountants are interesting, so what do you do to ensure you are? Outside work I am Treasurer of Solent and District Land Rover

    Club (www.sadlrc.co.uk), so I tend to spend weekends driving

    around the countryside when the Land Rover doesnt need


    In her spare time Sharon is Treasurer of Solent and District Land Rover Club


  • 20 NQ Magazine April 2016


    Decisions, decisionsTony Manwaring outlines the ndings of a recent survey into

    decision making within the organisation

    At its heart, management

    accounting is about decisions.

    For most management

    accountants this means providing the

    information and analysis to inform

    choices. For those who have made it

    to the top, it means making strategic

    decisions themselves.

    This is why CIMA and our

    colleagues in the American Institute

    of Certified Public Accountants

    recently commissioned a report into

    the state of decision-making. We

    surveyed 300 leaders in blue chip

    companies worldwide from EY to

    the US Army and conducted in-

    depth interviews with nine of these,

    to ascertain how big decisions are

    made, what works well, and what

    could be improved. The result is

    Joining the Dots: decision making

    for a new era, which can be

    downloaded from the CGMA


    We discovered five common

    mistakes in decision-making. Put

    together, they form a convincing

    case for arguing that the biggest

    companies are not necessarily the

    best decision-makers. But it wasnt

    all bad news. We uncovered a

    minority of organisations which we

    referred to as integrated thinkers

    who are far better able to make

    the right decisions and achieve great

    outcomes even in times of disruption

    and uncertainty.

    The first problem we found was

    that some organisations are too

    rigid to act quickly. Nearly a third

    (29%) of respondents said that

    organisational silos and bureaucracy

    are creating coordination problems.

    Some 72% reported that at least

    one strategic initiative has failed

    in the past three years because of

    delays in decision-making. Too many

    large organisations, it seems, suffer

    from diseconomies of scale their

    size may give them clout, but it

    has cost them agility. This neednt

    be the case. Many of the worlds

    largest companies remain agile. The

    solution, we would argue, is the

    management accountants mandate

    to cut through siloes and consider

    data from across the business.

    A second problem was lack

    of trust within organisations

    themselves. Nearly two-thirds

    (65%) of respondents reported

    there was moderate or significant

    room for improving trust between

    leaders and employees; 70% said

    the same about collaboration. This

    has a knock-on effect on decision-

    making lack of trust prevents the

    sharing of information and insight

    that is crucial for the best decisions

    to be made. Again, solutions to this

    problem exist: we argue that greater

    transparency, and empowering

    colleagues further down the chain,

    can overcome barriers caused by lack

    of trust.

    Thirdly, many respondents

    reported that the metrics and rewards

    they use to measure and motivate

    their business were poor. A third

    (34%) say their companys incentive

    and bonus structures are hindering

    their ability to generate value for

    the short, medium and long term.

    The same proportion report they find

    it challenging to select the right

    combination of metrics to measure

    business performance. We would urge

    businesses and the public sector to

    look beyond traditional accounting

    figures to other measures, such as

    intangible assets, to help solve this


    The fourth problem is the sheer

    amount of data available in todays

    world. An overwhelming 80% of

    respondents admitted that their

    organisation had used flawed

    information to make a strategic

    decision at least once in the past

    three years. One-third (32%) say

    big data has made things worse,

    not better. Clearly information is

    relevant the second management

    accounting principle is something

    that not all organisations have yet got

    to grips with.

    Finally, some senior leaders do

    not have the skills to make effective

    decisions, and need to develop new

    abilities. Just 28% of respondents

    felt their organisation was effective

    at enabling senior leaders to learn

    from the outcomes of decisions.

    Only 35% of organisations rate their

    senior leaderships openness to input

    and challenge as highly effective.

    The solution is to invest in skills, and

    new learning and review processes.

    While the report revealed many

    issues there was good news, too.

    A small but relatively homogenous

    group of respondents managed to

    navigate choppy waters and take

  • 21NQ Magazine April 2016



    consistently excellent decisions.

    They are characterised by a

    disproportionate focus on the areas

    within the Global Management

    Accounting Principles they

    communicate in a way that is

    influential; they choose the most

    relevant information; they analyse

    the impact of their decisions before

    they take them; and they prioritise

    being long-term stewards of their


    For newly qualified accountants

    board-level decision-making can

    seem distant. But many of the

    required skills are the same as those

    management accountants practice

    day-to-day. Management accountants

    have a mandate to look beyond the

    usual numbers, and consider factors

    such as trust, metrics, and where

    their data comes from. Continuing

    to hone these skills can help you

    become an integrated thinker, and

    can hasten your journey towards the

    top of your organisation.

    Tony Manwaring is Executive

    Director, External Affairs at CIMA

  • NQ Magazine April 2016

    significant long-term operating lease

    commitments on their stores and yet

    had deceptively lean balance sheets.

    In fact, their off-balance sheet lease

    liabilities were up to 66 times greater

    than their reported debt. Clearly, the

    accounting does not reflect economic


    To compensate for this missing

    information, many investors use

    various techniques to add operating

    leases back onto the balance sheet.

    However these adjustments are often

    rough calculations, which may be way

    off the mark.

    Moreover, not all investors are

    able to do this add-back and the

    prevalence of operating leases


    Shining the light on leasesHans Hoogervorst says there will be

    substantial changes to many companies

    balance sheets when IFRS 16 comes

    into effect in 2019

    Leasing is a common form of

    finance for many businesses,

    especially in sectors like the

    airline industry, retail, and shipping.

    At the moment, listed companies

    around the world have around US$3.3

    trillion worth of leases. Under current

    accounting requirements, over 85% of

    these leases are labeled as operating

    leases and are not recorded on the

    balance sheet.

    Despite being off-balance sheet,

    there can be no doubt that operating

    leases create real liabilities. During

    the financial crisis, some major retail

    chains went bankrupt because they

    were unable to adjust quickly to

    the new economic reality. They had Hans Hoogervorst


  • NQ Magazine April 2016


    indicates that companies are aware

    of that. In some cases companies go

    to great pains to structure their lease

    obligations so that they remain off-

    balance sheet, probably to look better

    in the eyes of the unwitting investor.

    Finally, the current accounting for

    leases leads to a lack of comparability.

    An airline that leases most of its

    airplane fleet looks very different from

    its competitor that borrows to buy

    most of its fleet, even when in reality

    their financing obligations may be very

    similar. There is no level playing field

    between these companies.

    To address these problems, the

    International Accounting Standards

    Board, which sets the IFRS Standards

    for financial reporting around the world,

    has issued a new standard on lease

    accounting, IFRS 16.

    When IFRS 16 becomes effective

    in 2019, it will result in a substantial

    change to many companies balance

    sheets. All leases will be recognised as

    assets and liabilities by lessees, better

    reflecting the underlying economics.

    This change is expected to affect

    roughly half of all listed companies

    and will not be popular with everyone.

    Accounting changes are often

    controversial and can be met with

    warnings of adverse economic effects,

    defaults on debt covenants, and costs

    of system changes. The IASB has

    looked at all these possible risks very

    carefully and has concluded that the

    risks and costs are manageable.

    First of all, IFRS 16 will not put

    the leasing industry out of business.

    Leases will remain attractive as a

    flexible source of finance. It will remain

    appealing to companies to lease assets

    so that they do not bear the risks of

    owning them. While the cosmetic

    accounting benefits of leasing will

    disappear, the real business benefits

    of leasing will not change as a result of

    the new standard.

    Secondly, we think it highly unlikely

    that the improved visibility of lease

    obligations will lead to significant

    effects in terms of the cost of borrowing

    and debt covenants. The majority of

    credit providers and rating agencies

    already take lease obligations into

    account when evaluating a companys

    ability to pay its bills, albeit often in

    an imprecise manner. Moreover, many

    debt covenants are unaffected by

    changes in accounting requirements.

    We do not deny that there will be

    costs involved in updating systems

    to implement IFRS 16. But we have

    done our best to keep these costs to

    a minimum. For example, we are not

    requiring companies to put short term

    and small ticket leases on the balance

    sheet. This should be especially

    beneficial for smaller companies.

    In sum, we expect the benefits of

    IFRS 16 to greatly outweigh its costs.

    The new visibility of all leases will

    lead to better informed investment

    decisions by investors, and to more

    balanced lease-versus-buy decisions

    by management. IFRS 16 will lead

    to improved capital allocation, which

    should be beneficial for economic


    Hans Hoogervorst is the chairman

    of the International Accounting

    Standards Board (IASB), the standard-

    setting body of the International

    Financial Reporting Standards )IFRS)




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