NQ magazine, April 2016•
Post on 27-Jul-2016
DESCRIPTIONAn 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.
THE VOICE OF ALL NQs
Self-interest rather than regulation is the
way forward, says report
Are you being paid what you should
call: 020 7216 6444
SIMPLIFICATION WHY TWO TAXES
SHOULD BE MERGED
TOP CAT WE SPOKE TO SHARON
HARRIS, WHO WAS
RECENTLY NAMED PQ
MAGAZINES NQ OF THE
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?
ALL THE NEWS YOU NEED
and a whole lot more
Pages 5 and 7
T +44 (0)20 8408 9999 E firstname.lastname@example.org www.walkerdendle.co.uk
redefining financial recruitment
60,000 65,000 + benefits
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 (email@example.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
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
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.
audit process is
the ACCAs head
of audit and
a series of
he said that
were strong views
that while the audit
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
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.
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
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
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
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
10 NQ Magazine April 2016
Are you getting paid what youshould be?
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
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
NEWLY QUALIFIED Corporate
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
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
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
UP TO TWO YEARS QUALIFIED Corporate
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
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
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.
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
The OTSs seven key stages to closer
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
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
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
most cases will not
be reported show
of computer misuse
and 404,000 of
access to personal
cost of fraud for
is around 3% of
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
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
NQ OF THE YEAR
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
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
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
How do you chill?
Listening to music and
NQ OF THE YEAR
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
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
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
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
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
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
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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