pq magazine, august 2016

PQmagazineAugust 2016 www.pqmagazine.co.uk / www.pqjobs.co.uk

MANAGINGTHE UK’SECONOMY

2015 ANNUALREPORTS

We review the annual reports – so who’s really was the best?ACCA: YOU’RE THE JUDGE!F4 students mustunderstand the Tort of Negligence

PRACTISE THEACCA’S CBEsTop advice fromAlan Hatfield

THE VOICE OF ALL PQs

AAT: THE CBARESULTS P22

So what were the successstories – and the failures –from the most recent set of

exams?

PLANNINGAHEAD P26

You’ve taken your exams, sowhat’s your next step?

Contact usemail: graham@pqaccountanttwitter: @pqmagazinecall 020 7216 6444

GREAT ADVICEON HOW TOPASS THE CIMAMANAGEMENTINTEGRATEDCASE STUDY P16

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P14

P20Monetary

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comment PQ

News 08CIMA scores All the results

from the latest set of exams09ATT initiative Tax institute

launches CIOT pathway10ACCA tie-up ACCA forms

strategic alliance with CA ANZ12CBE exams ACCA publishes

specimen papers for new examsFeatures, etc06Mind your Ps&Qs A CIPFA

apology; new ACCA resources;top advice from a dedicated PQ;and a baffled CIMA sitter

14You’re the judge Getting togrips with the Tort of Negligenceconcept for ACCA F4; plus A Quick Look at IFRS 11

16CIMA case study How to getthrough the ManagementIntegrated case study

18CIMA F3 paper In part one ofa three-part series we look at thetopic of long-term finance

20Annual reports We took along, hard lookat the bodies’annual reportson your behalf.So who has thebest one?

22AAT examresults Thegood, bad andugly percentagescores; plus a selection ofphotos from the recentmembers’ conference

24Let’s get technical Tools thegovernment can use to helpmanage the economy

26Careers #1 Life after exams –what should you be doing?

27Careers #2 Life at Tata Motors;our book review; plus the best ofsocial media

31Fun time Useless A-levels; aFamily Guy gag; plus more ofour great giveaways

The columnistsRobert Bruce Matters of principleand why they are important 8Prem Sikka Why workers shouldsit on our companies’ boards 10Carl Lygo East Africa and its‘European’ experiment 12

Subscribe to PQ magazineIt’s FREE – see page 29 or go to

www.pqmagazine.co.uk

ABC July 2014 – June 2015 32,233

Publisher’s statement: We send adigital issue of the magazine to anadditional 8,866 requested readers

Free to all accountancy studentsAnnual subscription: £35 (£50 overseas)

Don’t make it Messi!My son often argues with me about who is the best footballerwho ever played. Sorry, I can’t engage him in the same wayabout the ‘best accountant’! Of course I am right, as I have

Pele at number one and Maradona (a drug cheat) at two. They bothchanged the game. He has Lionel Messi as his champion. But whathappens to a hero if he is sentenced to 21 months in prison for taxfraud? Messi is now facing millions of euros in fines for using tax havensin Belize and Uruguay to conceal earnings from image rights. That said,neither Messi or his dad are expected to serve any time in jail. In Spain,if you are sentenced to less than two years in jail you can serve yoursentence under probation.

In need of a friendFor CIMA and ACCA PQs there has been some big news this month.The AICPA and CIMA have agreed on creating an ‘association’. How thisworks in reality will be interesting to see – remember, they aren’t actuallymoving in with each other. It’s like a platonic relationship and we allknow how they end! However, just as CIMA thought it had the limelightthen another landmark agreement comes along. The ACCA and CA ANZhave unveiled a new strategic alliance. Where were they hiding that one?

An annual digestWe lead this month with the accountancy bodies’ annual reports. Asalways, we are moaning about CIPFA. We think CIPFA is one of the UK’sleading accountancy bodies, but not when it comes to the transparencyof its top executives’ pay. Every accountancy body (including the AAT)provides the name and exact salary of their top-paid employee – CIPFAdoesn’t! We undersand that Rob Whiteman might be embarrassed abouthaving his pay packet on show, but everyone else does it – except him.Does CIPFA have anything to hide?

Graham Hambly, PQ magazine editor – [email protected]

CONTENTS August 2016

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to me a couple of weeks back. Istruggled with CIMA F3 recentlybut one failure left me veryperplexed. I received feedbackstating where I had been‘proficient’ and ‘not proficient’,according to CIMA’s complicatedexam results. Turns out I had beenproficient in all areas with a markof 97 (bearing in mind the pass

rate can change dependingon the questions you

receive).According to CIMA,

you cannot query resultsbut I felt this needed

clarifying, so I emaileddemanding an explanation.To my surprise, CIMA

confirmed an administrative errorhad happened and one of myareas was ‘not proficient’ and myfail result was correct. I requestedto see my exam due to this errorbut this was rejected.

Has any other student had thiserror before and what steps didthey take?Nick Osborne, by emailThe editor says: Thanks Nick –we’ve covered this story on page 10

PQ have your say

PQ Magazine Fourth floor, Central House, 142 Central Street, London EC1V 8AR | Phone: 020 7216 6444 | Email: [email protected]: www.pqmagazine.co.uk | Editor/publisher: Graham Hambly [email protected] | Advertising manager: Polly Thrasivoulou [email protected]

Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: [email protected] | Contributors: Robert Bruce, Prem Sikka, Carl Lygo, Tony Kelly, Phil Gammon, Jo Daley | Origination and print services by Classified Central Media

If you have any problems with delivery, or if you want to change your delivery address, please email [email protected]

Published by PQ Publishing © PQ Publishing 2016

A CIPFA explanationIt is with interest that we note theunhappiness of a CIPFA memberwith our new e-assessmentprogramme (PQ letters, July ’16).Firstly, an unreserved apology toanyone involved who did sufferadditional stress from issues withthe process and systems.

Early feedback shows that aminority of students and theiremployers had problems, butevery individual deserves our fullsupport and attention throughtheir studies and as a member. Allfeedback, such as that publishedrecently, is welcome and helpful.

The new approach was

who needed a flexible approach toexam sittings. Developing thesystem revealed a number ofadditional advantages that we feltwere of benefit to all our students,regardless of location, includingthe ability to introduce additionalexam sittings and turning aroundmarks faster, and for employers inreducing incidental costs (such astravel to exam centres).

While we do have to apply rulesabout how exams are sat tomaintain integrity, we have at leastthree different options availableand we explored a few more in themost recent sitting on requestfrom those experiencing mostdifficulties.

Unfortunately, the last sitting

(our first full roll-out) also revealedsome shortcomings in our pre-exam communications, on-the-daytechnical issues and theturnaround time in some supportareas. We are learning from these,and are consulting widely withstudents and employers overimprovements that we can make.

Although the indicativecompletion rate of exams taken isthe highest of any first-adoptiononline exam system there is, ofcourse, still room for improvement.Every student deserves oursupport to our highest possiblelevel, and we will always seek toaccommodate individualrequirements. Giles Orr, CIPFA Director

The writer of the star letter each month wins a fantastic PQ memory stick!

email [email protected]

Dedication pays offI am pleased to say that I am nowfully CIMA qualified, having passedmy case study in the Februarysitting, and I have now had myexperience approved.

I sat my first CIMA professionallevel exam in November 2007. Ihave had almost two years off fromthe exams so the time taken in totalwas almost seven years. I passedmy exams either first or secondtime, until I got to the strategiclevel, where I struggled. I failed F3four times in a row and almost gaveup on several occasions – I justcouldn’t see how I was going to getthrough to the end.

Through sheer persistence anddetermination I managed it, andmy advice to students in a similarsituation is don’t take no for ananswer – if you fail just keep going.I know it’s easier said than donebut be stubborn and say toyourself, “I will do this”! Noteveryone passes exams first timeand it really is worth it in the end.

I would be grateful if this lettermade it into the magazine as I’msure there are students that are inthe same position as I was in. Also,please can I now subscribe to NQmagazine? I have been waiting solong to ask that!Les Caswell, by email

We’re here to helpI’m responding to your article‘ACCA’s are terrified of the optionaltest’, as I really don’t want ourstudents to be alarmed or terrifiedof the Professional level examoption papers (PQ, June ’16). Iwanted to take the opportunity tohighlight our resources to supportstudents.

Employers recognise that theACCA qualification is rigorous andchallenging and this is partly whatmakes our students attractive tothem. It’s a qualification that canbe trusted. The Professional levelexams are set at Masters level – asevidenced by our position oneducation frameworks in the UK,Ireland and other countries. Thisdemonstrates that the standard ofthese exams is appropriatelychallenging to ensure that studentswho pass are able to demonstratethe skills required by theworkplace.

ACCA works really hard toensure that the exams are fair, atthe right standard and can bemanaged in the time available –they are evaluated externally beforecoming to students.

ACCA provides a lot of supportfor students approaching all exams,including the Options. Pass ratesare higher for students attending

our Approved Learning Providersand using Approved Content fromBecker, BPP and Kaplan. For thosestudents unable to attend tuition,we publish detailed ‘self-studyguides’ – see our website forexamples.

For students who do not passfirst time, we additionally providedetailed retake guides in everysubject too – again, seeour website forexamples.

These guides helpstudents useeffectively the broadrange of resourcesproduced on ourwebsite to guide themthrough their studies, whetherworking with or without a learningprovider.

All relevant resources arehighlighted through the free onlinemagazine SA which is sent tostudents and can be personalisedfor their own studies.

We hope this providesreassurance and maybe raisesawareness of some of the supportavailable to students.Dr Mary Bishop (pictured), Director-Learning, ACCA

Confused by CIMAI had something interesting happen

DUE TO LACK OF SPACE OUR SOCIAL MEDIA

UPDATES HAVE BEEN MOVED TO PAGE 27

developed in response to requestsfrom CIPFA’s students andemployers from across the world,

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8 PQ Magazine August 2016

PQ news

It was 10 years ago that ICAS issueda report arguing that financialreporting needed to be based onprinciples rather than rules. The worldhas, largely, moved in that directionever since. In the UK in particular,principles have the upper hand. It isnot necessarily a coincidence that,thanks to the FRC, company directorshave to certify that reports are ‘fair,balanced and understandable’. It hasbecome a rallying cry. It is very hardto argue that something in the reportthat is not fair or balanced should bein there. And that is the point.

Principles are things you can havean argument and a discussion about.If it is a rule that is much harder and,as the US experience shows, rulescan lead, when unfairly applied, toresults that are the opposite of whatwas originally intended. This wasmemorably demonstrated a year afterthe publication of the ICAS report,when a conference was held in NewYork to discuss its ideas. Onespeaker, US lawyer, Michael Young,ended his presentation with a highlyeffective theatrical gesture. He wavedtwo books above his head, a slim oneand a thick one. The first was theDeclaration of Independence, thesecond FAS133, the accountingstandard then dealing withderivatives. “The Declaration ofIndependence is principle-based,” hepointed out. “FAS133 is rules-based.And I’d much rather be defending theDeclaration of Independence.”

And there was, as any lawyer couldtell you, no answer to that.

ROBERTBRUCE

A matter ofprinciples

n Robert Bruce is an award-winning writer onaccountancy for The Times

Latest CIMA results showpass rate riseCIMA’s OT pass rates just can’t stopgoing up! The new results show theoverall exam pass rates are trackingup by at least one or twopercentage points in every paper.

CIMA’s exam chief, SteveFlatman, was particularly pleasedwith the rise in the P3 and F3 pass

rates. Both haveseen a 20%increase in overall pass rates froma year ago, when CIMA released itsfirst set of results.

For Flatman, these latest resultsshow the exams are “consistent,reliable and fair”, and he felt sometraditionally ‘difficult’ papers – suchas P1, P2 and P3 – now seem veryachievable.

The case study pass rates alsoheld up in May, with the exceptionof the Strategic level, where thepass rate slipped to 46%. Flatmanhas already looked into this andexplained there were more studentsresitting this paper in the summercohort.

For the first time CIMA released

grade descriptors with the results.These are designed to help showstudents where they are failing.Flatman stressed that this was notjust for looking back, but to helpstudents going forward, too. He feltit is vital that CIMA is clear andtransparent about the standardsexpected of exam candidates.

CIMA pre-tested the descriptorswith both students and otherstakeholders and they “really loved”this new approach, said Flatman. • PQ magazine would like to thankCIMA for allowing us to print thepass rates in full. It means allstudents now get the pass rates aweek earlier too – on 15 July!

ACCA to review policy on currency

Trainee accountant Adil Jamil wasattacked in his BMW in Leyton,London, a few days after the Brexitvote by an attacker wielding a metalpole and reportedly screamingracist abuse.

His windscreen was smashedbefore the attacker was pinned tothe ground by an off-duty securityguard.

Jamil said: “Since Brexit thereseems to be a rise in these attacksand people need to look out foreach other, no matter who it is.”

ACCA has revealed that it is lookingat its multi-currency pricingstructure. This is in direct responseto concerns from members and ifinstituted could have massiveramifications to the ACCA’s400,000 international students.

The association is currently

assessing the impact such a movewould have on IT systems andfinancial risks of currencyfluctuations.

At present fees have to be paidin pounds sterling.

ACCA’s Mark Cornell said: “Wehear from members, affiliates and

students that multi-currencypayment options would greatlyenhance their ACCA experience, soit is important that we assess thisand indeed other issues raised bymembers to ensure that we focuson providing the best value possibleto all members.”

PQ attacked

Top AAT tuition provider PremierTraining has launched its annualsponsorship programme, offeringone lucky candidate a life-changingopportunity to gain the AAT

qualification free of charge. Premieris even throwing in an iPad 4 for thelucky winner.

Anyone can apply, regardless ofwork experience. Premier Training

will consider candidates without anyrelevant qualifications orexperience, as well as those whomay already be working in theprofession and have already startedbuilding up their accountingqualifications.

The application process issimple. All you need to do iscomplete the online application formand click the submit button. If youare shortlisted Premier will contactyou to arrange a telephoneinterview. The package includes alltraining assessments andmembership fees.

Closing date for applications ismidnight 31 August 2016.

See www.premiertraining.co.uk/sponsorship for all the details.

BPP University has developed a new free Englishlanguage course to help ACCA students at every stageof the qualification.

All students can now access the new coursedesigned to support the English language skills neededfor the ACCA F1-P7 exams. It is available online as aself-directed and flexible learning programme. Thesupport will include around 70 one-hour modules and

have been specifically designed to identify and reducesome of the common difficulties that students whodon’t have English as a first language may encounterthroughout their ACCA exam journey.

The innovative new course is written and deliveredby BPP University’s School of Foundation and EnglishLanguage (SoFELs).

Go to accaglobal.com/bppenglishforacca for more.

Sponsorship up for grabs

BPP University launches language course for ACCAs

A past winner:Amy Scott

CIMA CASE STUDY EXAMS – 2016/2015May 16 Feb 16 Nov 15 Aug 15

Operational 67% 62% 61% 34%Management 63% 64% 78% 77%Strategic 46% 56% 62% 67%

CIMA OT pass ratesOverall First time Total

E1 88% 80% 76%P1 67% 47% 42%F1 84% 74% 69%E2 93% 86% 83%P2 72% 52% 43%F2 72% 49% 45%E3 80% 65% 60%P3 77% 55% 50%F3 75% 55% 49%

PQ Aug 16 p8 q9_pq sept 12 p08 07/07/2016 12:08 Page 10

PQ Magazine August 2016 9

news PQ

The Institute of Certified Bookkeepers

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The Association of TaxationTechnicians (ATT) and CharteredInstitute of Taxation (CIOT) havelaunched a new flexible route toobtaining both the ATT and CIOTqualifications.

The new Tax pathway will allowstudents to study for both the ATTqualification and the gold-standardCTA qualification together in lesstime.

Those opting for this route willhave one fewer exam to sit, too.

ATT President Michael Steedsaid: “ATT is delighted to launch

the new Tax Pathway, with theCIOT. The Tax Pathway has beendesigned to deliver the highestquality qualifications in tax whilereducing time out of the office, studycosts and duplication of study.”

At the launch Steed said thepathway gave students an “agilequalification”, and was a directresponse to the needs of bothstudents and employer.

The pathway goes live on 1 September, although anyone whohas already booked up can transferonto the new scheme

CIMA and AICPA members have agreed to join forces to create a newassociation.

Some 89.7% of CIMA members recently voted for the changes, and theAssociation will launch in 2017. It will represent some 600,000 currentand next-generation professionals worldwide.

Both bodies insist that the new organisation is designed to complementrather than replace them. CIMA is also keen to stress its structures androyal charter will remain, as will its management accounting focus.

Students have been promised access to more learning tools. CIMAbelieves its PQs will also benefit from the increased recognition of thequalification.

CIMA/AICPA form new association

New tax pathwaylaunched by ATT

The National Film and Television School (NFTS) has unveiled a new part-time 12-month diploma in production accounting, in partnership with theProduction Guild.

The diploma is ideal for those already working in a finance or accountingrole and who are keen to move into the film and television sector. Studentswill learn the specialist knowledge required to work as a productionaccountants and help establish key contacts to enable them develop theircareers, says the NFTS.

Applications are open for the new courses until 13 October 2016.

New production accounting diploma

PQ Aug 16 p9 q9_pq sept 12 p08 05/07/2016 14:08 Page 11


PQ news

The BHS debacle shows thatshareholders made millions while20,000 employees are facing massivecuts to their pension rights becausethe company did not repair thepension scheme deficit. BHS is notalone, and the same fate may befallthousands of other employees. Arecent report by investment advisorsAJ Bell shows that 54 of the FTSE100companies with a pension schemedeficit paid £48bn in dividends in2014 and 2015. In 2014, the samefirms had a £52bn deficit on theirpension schemes. Dividends paid by35 of the FTSE100 firms were biggerthan their pension scheme deficits.

In 2014, Royal Dutch Shell had apension scheme deficit of £6.7bn, butpaid out dividends of £7.5bn and £8bnin 2014 and 2015. AstraZeneca had adeficit of £1.87bn in 2014, but paid adividend of £2.2bn and £2.4bn in2014 and 2015. Vodafone had adeficit of £549m but paid dividends of£3bn and £3.04bn for 2014 and2015.

The statistics show that companiesprioritise appeasement of markets andshareholders over obligations toemployees. Directors personallybenefit from dividend payments as theyhold shares and high dividends alsoincrease value of their share options.

Corporate governance structuresneed to change. Employees help togenerate corporate wealth and shouldhave a significant presence on boardsof major firms. This would enable themto remind directors of the socialconsequences of their practices.

PREMSIKKA

Workers onthe boardcan avertpensionscrisis

n Prem Sikka is professor of accountancy at theUniversity of Essex

New landmark alliance

CIMA F3 PQs baffledby ‘wrong feedback’Many CIMA F3 students have been

left dazed and confused after

receiving their OT

results and feedback

recently. Some of

these PQs were told

they were proficient

in all areas, but were

still told they had

failed. “Can this be

possible?” asked one

F3 student.

CIMA’s director of exams,

Stephen Flatman, has confirmed

that all students have now

“received the correct grades for the

exams they have taken”. He

explained that CIMA experienced

technical problems, which led to a

number of students receiving

incorrect feedback

concerning section C of F3

OT exams taken between 1

May and 1 June 2016.

He said: “On discovering

this, we immediately

conducted a full audit and

then contacted all affected

students, as well and

updating their CIMA records.

“We understand that this may

have been stressful for those

affected. We would like to assure all

our students that we have

introduced additional safeguards to

prevent such an error re-occuring.”

To help PQs get the most from their

ATT/CTA studies and help boost

their confidence BPP is running

free 90-minute webinars via its

Online Classroom Live platform this

August.

The ATT webinar will run on

Monday 8 August and start at 6pm.

The CTA webinar takes place a day

later on Tuesday 9 August, at 6pm.

The webinar will help students

manage the volume of information

they receive – there’s a lot of tax

legislation out there. You will also

be shown effective study tips and

how to pass the exam.

In addition, students will have

the option of asking questions and

have the chance of interacting with

fellow ATT/CTA students.

If you would like to attend (or

listen to a recording) then register

your interest at http://accountancy.

bppeloqua.com/webinars

FREE WEBINARS FROM BPP AIM TO HELP TAX STUDENTS

ACCA and the Chartered

Accountants Australia and New

Zealand (CA ANZ) have unveiled a

new strategic alliance which both

believe will add value to members

both locally and nationally.

By sharing expertise across

geographies and sectors the

alliance will ultimately create a

stronger voice on behalf of 308,000

members and 480,000 students

across 181 countries.

One area that the bodies plan to

work closely on from the start is the

promotion of their accounting

technician propositions. The

ACCA has CAT, which

competes directly with

the AAT.

The move will also

provide an opportunity

for dual membership of

both bodies. ACCA members

resident in Australia and New

Zealand will be invited to apply for

CA membership, and CA ANZ

members will be invited to apply for

ACCA membership, subject to

meeting the eligibility

criteria of the other

body.

ACCA President

Alexandra Chin,

pictured, said that CA

ANZ is a natural partner

for ACCA, sharing its

commitment to upholding the

highest ethical, professional and

technical standards.

Introduction to Payroll Skills is the

hardest AAT assessment to pass,

according to the latest success

rates (see page 22). The Level 2

paper had a pass rate of just 43.4%

for the year ending 31 December

2015. The next lowest pass rate at

Level 2 is Computerised Payroll

Skills with a pass rate of 77.1%.

Personal Tax remains the real test

at Level 4. It has a UK pass rate of

46% and an international one of

just 26.7%.

The AAT has also released the

overall CBA success rates. Perhaps

not surprisingly they go down as

students progress. So at Level 1 the

pass rates are 92.4%; by the time

PQs get to Level 4 they are 63.2%.

AAT unveilsCBA results

New offer from ACCA/CSOECAn innovative new certificate

in business valuations has been

launched by ACCA in partnership

with CSOEC. The certificate is

accessible globally, and is available

in both English and French for

anyone interested in applying the

principles of valuing businesses to

any type of business. The course

costs £199, discounted to £149 for

ACCA members.

Standard amendmentsThe International Accounting

Standards Board is amending IFRS

3 and IFRS 11. The amendments

are designed to provide a clearer

guidance to help distinguish

between a business and a group of

assets when applying IFRS 3. They

also clarify how a company should

account for a previously held

interest in a business, if they were

acquiring control or joint control of

that business.

ATT route for ACCA PQs ACCA members interested in

tax have a great way of

differentiating themselves from

their ‘competitors’ – the Association

of Taxation Technicians (ATT)

qualification. ACCA members are

eligible for up to two exemptions.

Without these PQs

need to pass three

certificate papers – two

core subjects and one

non-core plus two

additional papers, Law and

Professional Responsibilities &

Ethics, which are examined

through E-assesement. See

att.org.uk for more details.

FRC on the caseThe Financial Reporting

Council has launched two new big

investigations. One is into PwC’s

conduct in relation to the audit of

BHS; the other is into KPMG’s

audit of HBOS. The investigation

into the conduct of KPMG Audit

Plc’s audit of HBOS plc goes

back to the year ended 31

December 2007. The investigation

was instituted by the FRC’s

conduct committee following the

completion of the Executive

Counsel’s preliminary enquiries.

In brief

PQ Aug 16 p10 q9 ccm.qxp_pq sept 12 p08 05/07/2016 14:58

011_PQ 0816.indd 1 04/07/2016 09:56


PQ news

On the day of the EU referendum I wasin Nairobi for the Annual Conferenceof East African Universities. There is alot of interest in the UK accountingqualifications in East Africa. In 2011,the Institute of Certified PublicAccountants of Kenya (ICPAK) enteredinto a reciprocal agreement withICAEW so qualified members couldapply for reciprocal membership. In2015, ICPAK entered into a strategicpartnership with the ACCA, and CIMAalso offers exemptions for qualifiedmembers of ICPAK. But as the Britishvoted on their future in the EU I wassurprised to learn about the EUequivalent in East Africa and Africa.The East African Community (EAC)comprises of Burundi, Kenya, Rwanda,Tanzania and Uganda with SouthSudan having agreed a treaty to jointhis year. The objective is to createan East African Federation, a singlesovereign state (sounds familiar). In2010, the EAC launched its owncommon market for goods, labour andcapital, with the goal of creating acommon currency and monetary unionby 2023. The EAC is a part of theAfrican Economic Community (AEC)which in turn has the goals ofcreating a common currency, acentral bank, free trade areas, acustoms union and a single market.The result of the referendum came injust as we were about to start day twoof the conference. There was a roundof applause from the audience as theresult was announced and thespeaker “welcomed Britain back”.Interesting times ahead for all of us!

CARLLYGO

East Africaapes theEuropeanexperiment

n Professor Carl Lygo ischief executive of BPP

The ACCA has taken a giant stepforward with the publication of itsspecimen papers for the new CBEexams, being launched thisSeptember.

Anyone planning to sit the new-look F5–F9 exams can now sit thepractice exam by going tobit.ly/ACCA-CBEtest.

The CBEs involve the use ofspreadsheets and word-processingquestion types, which the ACCAbelieves better reflects theworkplace.

The association is also keen tostress these new-style exams testexactly the same learning outcomesto the same standard as the paper-

based exams, which will be runningin parallel in September.

Students will need to have thefollowing browsers to takeadvantage of these new resources:Chrome 31.0, Firefox 33.0, InternetExplorer 11.0 and Safari 8.0. You

will also need to ensure you haveapplied the Mircosoft update tosupport the new currency symbolfor the Russian Rouble (Windows 7and above). Pop-up blockers onyour browser have to be disabledbefore commencing the exam andyour screen resolution has to be setto 1280 x 1024.

Alan Hatfield, ACCA’s ExecutiveDirector – Strategy & Development,told PQ that early feedback fromboth employers and students hadbeen very encouraging.

He said they liked the questiontypes and use of spreadsheets andword processing in theassessments.

ICAEW’s CEO Michael Izza got anice rise in his pay packet again thisyear, according to our review of theannual reports. His remunerationnow stands at a cool £554,000, afteran increase of £9,000. One CEOwho seems to be catching Izza upfast is ICAS chief Anton Colella – hissalary jumped to £418,000 in 2015.It should be remember that whilethe ICAEW generates income of

£101.6m and has a membership of146,000, ICAS has an income ofjust £15.58m and membership of21,000.

CIMA’s Charles Tilley received apackage worth £347,000 and AAT’sMark Farrar took home £174,000.

CIPFA still doesn’t provide openand transparent information when itcomes to its top-paid employee. Wecan only guess that it is CEO Rob

Whiteman who is earning between£210,000 and £219,999. Itappears that the institute has nointention of following the goodpractice of the other accountancybodies. The AAT even provides aratio of the CEO’s emoluments to itslowest-paid employee, which iseight. • Go to page 20 to see our annualreports review in full.

What does your chief executive get paid?

Most finance directors believe thetime is now right for governmentsand international agencies to worktogether to abolish offshore taxhavens.

The poll, conducted for The Timesnewspaper and ICAS, discovered73% of finance leaders think payingthe right amount of tax is more areputational issue, not just a

technical or compliance imperative.ICAS CEO, Anton Colella said:

“This shows that the UK’s financeleaders are in agreement that weneed to enter a new era ininternational corporate taxes torestore trust in the global tax system

and in business.”Some 80% of those polled also

felt the leaked Panama paperswould lead to further legislation toclamp down on tax avoidance. Butat the same time they want asimpler tax system at home.

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013_PQ 0816.indd 1 01/07/2016 09:56


PQ ACCA F4

Accounting for joint arrangements is anexample of a topic where the accountingstandard (IFRS 11) is relatively straight forwardto apply. The difficult part is identifying if a jointarrangement exists, and if one is presentdeciding what type of arrangement is it. Thefollowing questions will help you determine thecorrect accounting treatment.

Does a joint arrangement exist?Under exam conditions many students fail torecognise that a joint arrangement exists orjump to the conclusion that it does exist. This isthe real challenge when applying IFRS 11.

The crucial point in determining whether youare dealing with a joint arrangement is whetherjoint control exists. This means that all materialdecisions relating to the arrangement require

the unanimous consent of the parties sharingcontrol. Joint arrangements can exist betweentwo or more parties, remember decision makingbased on a simple majority is not a jointarrangement. A joint arrangement is where allparties need to agree for a decision to bemade.

What type of joint arrangement is it?Joint arrangements are either joint operations orjoint ventures. It is not easy to remember thedifference between the two, but try to thinkabout a joint operation being something that iswithin the normal operating activities of theorganisations involved. A joint arrangement thatis organised through a separate vehicle, whereall parties have rights to the net assets of thearrangements is likely to be a joint venture.

What is the correct accounting treatment?Once you know the type of joint arrangementthe treatment is straightforward.

For a joint operation, a joint operator in boththeir individual and consolidated accountsshould recognise the operation in relation totheir interest in all of the individual elements ofthe arrangement. e.g. the assets and liabilities.

For joint ventures the equity method shouldbe use on consolidation, in individual accountsthe venture should be recognised inaccordance with IAS 28, i.e. at the lower of costor net realisable value.• Caroline Chaffer is an AIA Achieve e-tutor. TheAIA Achieve team is producing a series of ‘AQuick Look at….’ articles and more can befound on the AIA website: www.aiaworldwide.com/a-quick-look-at.

A QUICK LOOK AT... IFRS 11 – Joint Arrangements

YOU’RE THE JUDGE

The case of Sayers v Harlow UDC(1958) is a celebrated case inthe area of English law called the

‘Tort of Negligence’. This is an importanttopic within the ACCA F4 syllabus and byreading about and understanding keycases you can help build yourknowledge, which will help you pass yourexam.

In this case, Ms Sayers paid to use apublic toilet but when she came to leavethe cubicle she found the lock andhandle were defective and so shecouldn’t open the cubicle door. In the1950s public toilets were usually lookedafter by an attendant so Ms Sayers triedto attract attention for several minutes tono avail.

As no one came to help she tried toclimb out, firstly by stepping onto thetoilet itself and then using the toilet rollholder, which unfortunately gave wayunder her weight causing her to fall andbreak her leg.

Ms Sayers sued Harlow UDC, whowere responsible for the maintenance ofthe public toilet, arguing that they hadbeen negligent in not properlymaintaining the cubicle lock and handle.

But was she successful in her claim?

Outcome of the case Ms Sayers was partly successful in herclaim for damages. It was held that theinjuries she suffered were a natural andprobable consequence of the defendant’s

(Harlow UDC) actions. It was also heldthat her actions were not unreasonable inthe circumstances and that the injurieswere therefore a foreseeableconsequence.

However, there are defences that canbe used when being

sued for negligence. One of these is theconcept of ‘contributory negligence’,which can be used when a personsuffers damage that is partly of their ownmaking and partly the fault of any otherperson or persons. A claim in thisrespect is not lost but the damagesrecoverable can be reduced at the

discretion of the court to allow a just andequitable outcome taking into accountthe claimant’s share in the responsibilityfor the damage.

In this case, Ms Sayers had beencontributorily negligent and had her

compensation reduced by 25%. Another example of this can be seen

in the case of Foom v Butcher (1975),where the occupants of a car who werenot wearing their seatbelts wereinjured following a traffic collisioncaused by the negligent actions ofanother driver. This case was finallydecided in the Court of Appeal, wherethe injured persons had theirdamages reduced by 25% due totheir contributory negligence by not

wearing seatbelts. ‘You’re the Judge’ is just one of the

many innovative and engaging activitiesthat forms part of Home LearningCollege’s ACCA course. • Paul Kirkwood is lead ACCA tutor andCatherine Murphy is ACCA product andcommunity coordinator at the HomeLearning College

PQ

Tort is an important concept that F4 studentsmust get to grips with. Here Paul Kirkwoodand Catherine Murphy explain it by way of acouple of precedent-setting cases

Court in session: the judge in question is none other than co-author Paul Kirkwood!

On the case:Catherine Murphypoints the finger

To see ‘You’re TheJudge’ in action seewww.homelearningcollege.com/judge

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015_PQ 0816.indd 1 05/07/2016 09:40


PQ CIMA case study

Clare Finch and the HTFT team look at the Management Integrated case

Hopefully you have booked your examslot and are now ramping up for theSparkSpace case. I would say after the

pressures of sitting the Management level OTpapers (E2, F2 and P2) you may actually findyou enjoy the preparation for case study. Firststep is to get very familiar with the pre-seen andwith your ‘part’ in this experience. For threehours you will be the SparkSpace FinancialManager, reporting to Gerald Sim, the SeniorFinancial Manager.

The examThe case study exam is a computer based examof three hours – there is no reading time added.The exam aims to integrate and apply theknowledge tested in the objective test exams.

The exam is based on:• Pre-seen material which is already publishedon CIMAConnect.• Additional unseen material given to you in theexam room.

The answers you give will be long form andtyped into the exam system, this will consist ofall forms of modern communication, includingemails, reports and briefing notes as examples.

Some 39% of the MICS is based onknowledge of the F2 and P2 Learning outcomesplus the assumed knowledge brought forwardfrom F1 and P1. So you need to make sure youbring technical knowledge to the MICS party

Writing skillsFor those who have completed the F2, E2 andP2 papers under the 2015 OT style of paper thiswill be the first time you will get to display toCIMA your ability to ‘write’ long form answers atmanagerial standard. You will need to be able tocombine the competencies from the CIMAframework with an ability to structure an answerwith a ‘logical flow’. Practising answering longform questions based on SparkSpace is going tobe key. If your tutor offers to mark homeworktake them up on the offer, as getting as muchfeedback as possible is very important.

FocusThe most important skill on the day is notmentioned in the competency framework butbasically is this: have you answered the tasks setwith sufficient application to SparkSpace? Somecalculations are included where they givecontext but the focus needs to be on the writtenparts of these questions.

You have a great job, overseeing themanagement accounting function forSparkSpace, including preparing the budget.You need to be aware that P2 is the lead paperon MICS and therefore being prepared fortechnical questions on Advanced Management

Accounting is key. Note you also get (whoopwhoop!) to “assist the Finance Director onspecial projects as and when required”. So youare expecting tasks from F2 (and often F1) andfrom E2 (and often E1) also.

SparkSpaceYou are going to get one of the five variants.Each variant has four sections. You get 45minutes to answer the task within the section.The task will have more than one part andanswering all parts of the task, before thesystem moves you on after 45 minutes, is key.The elements of the task can be pulled from theP pillar, the F pillar and the E pillar. The variantsare built around a major theme. Being veryfamiliar with the SparkSpace pre-seen can helpyou to feel comfortable with the subject matteron the day, but you must answer the question asset on the day not ‘one you did earlier’! Youneed to be prepared for a ‘curved ball’ variant.Often one variant is rogue and it would beimpossible for anybody to have seen the anglecoming. It is quite positive to get the roguevariant as the more difficult the variant theeasier it can be for you as an individual to shine.An easy paper may seem like a ‘gift’ but youhave to outperform other candidates. It can behard to believe but a tough paper is often easierto pass for a competent student who thinks ontheir feet, generate ideas and answers all partsof all tasks.

SparkInnovateThe HTFT team agrees that Page 8 of the pre-seen offers a likely theme for one variant.Students need to be very happy with the contentof the pre-seen and how it links to the CIMASyllabus. Read the extract below from the preseen:SparkInnovateLarge sums of money are being spent onresearch and development (R&D) projects in theIT industry are often long-term and speculative.SparkSpace aims to maximise the value of itsexpenditure on R&D through its SparkInnovateinitiative.

SparkInnovate is SparkSpace’s vehicle forfunding research, primarily through WestlandCentral University. Through SparkInnovate,SparkSpace sponsors research studies byacademic staff and also supervised postgraduateresearch projects. As part of this initiative,SparkSpace has donated a powerful dataprocessing cluster to the university. SparkSpacebenefits from its engagement with thedeveloping research activities, many of whichhave led to commercially viable products. Therehave also been indirect outputs arising fromobserving how the science and engineering

academics at the university have configured thedata processing cluster in order to process theirresearch data. Such observations have yielded anumber of improvements to the design of futuremachines and also the operating instructionsgiven to clients.

SparkSpace also maintains close contact withthe university by offering placements toundergraduate students. This offers SparkSpaceinsights into current developments in areas suchas computer science and electronic engineering.It also creates contacts with students whosecareer ambitions may well put them in a positionto recommend SparkSpace to future employers.

SparkInnovate has delivered significant valuefrom SparkSpace’s investment in R&D.

SparkInnovate – P2 focus This part of the pre-seen ties easily and directlyinto the key P2 theme of performancemanagement. SparkSpace need to have aneffective way of measuring the performance ofSparkInnovate. The unseen may well giveinformation about the current performancemeasurement system and ask you to suggest analternative. Students need to be aware that thereis no ‘correct answer’ in this situation. Anyreasonable approach would be acceptable.

A SPARK OF INpq aug 16 p16-17 q9_Layout 1 05/07/2016 14:27 Page 2


CIMA case study PQ

What is key is that the SparkSpace boardhave information that allows them to understandhow research activities are progressing. Abalanced scorecard approach could be used,with a scorecard available for each majorresearch project. Measures could be includedrelating to major milestones being achieved.

Students need to be aware that with regard toresearch it can be very difficult to establishwhether value for money is being obtained.Using multiple criteria for performancemeasurement can reduce the risk ofdysfunctional behaviour.

Students will need to use the unseen on theday and assess what they are told is currentlybeing used for performance management andconsider if the claim that SparkInnovate hasdelivered significant value or whether otherapproaches could add more value.

Past variants have been known to tailorrequirements on assumed knowledge from theoperational papers. This extract for SparkSpaceallows for further discussion on appropriatecosting techniques. One recommendation wouldbe to use Lifecycle costing given the heavyinvestment within Research and Development.Lifecycle costing will ensure that all costs areincluded when making pricing decisions.

SparkInnovate – F2 FocusMICS students need to be aware that standardsfrom the F1 syllabus are being examined onMICS as frequently as the F2 accountingstandards. Therefore you need to be prepared toexplain accounting for research anddevelopment costs from the F1 syllabus.

See below the extract from SparkSpaces notesto the accounts:

Page 3 tells us that SparkSpace uses IFRS

SparkSpace is based in Westland, where thecurrency is the W$ and financial statements areprepared in accordance with IFRS.

Students need to be prepared therefore toexplain the IAS 38 Intangible assets rules foraccounting for research and development costs.There are strict criteria that must be met for therecognition of a development assets. For theexpense to be treated as an asset as per thenotes to the accounts SparkSpace must havemet the criteria:• Probable future economic benefits from theasset, whether through sale or internal costsavings.• Intention to complete the intangible asset anduse or sell it.• Resources are available to complete thedevelopment and use or sell the intangible asset.• There is the ability to use or sell the intangibleasset.• The project is technically feasible so the assetis available for use or sale.• Expenses attributable to the intangible assetduring its development can be measured.

Development expenditure should beamortised over its useful life as soon ascommercial production begins

Research costs must be expensed andtherefore the ‘Investment’ in research cannotactually be treated as an asset. It is written off asincurred to the statement of profit or loss

SparkInnovate – E2 Focus The E pillar is often triggered by a planned

change and the impact on staff. For example,SparkSpace could start to be concerned aboutthe relationship with Westland Central University,competitors could also start working with theuniversity and they could consider setting up anin-house research and development department.This would trigger project management, changemanagement and people issues.

Innovation appears to be significant toSparkSpace andthey need tounderstand theirapproach tostrategyformulation –consideringdeveloping aresource-basedapproach (likeApple) to invent,research and haveunique, corecompetencieswithin theorganisation.

If they decidedto bring R&D in-house they would have torecruit a research and development director.Students may have to advise on the selectionand recruitment process both for the leadershipof this new division and the staffing.

Negotiation skills can also be examined hereas this decision could damage the closerelationship they have with the university. Thiscan lead to SparkSpace losing the access theycurrently have to new recruits and the pool ofplacement students.

Ethics could be brought in here, if there wasany suggestion of SparkSpace trying to poachkey staff from Westland Central University. Theissue of staff retention can also be covered here.Once the department is established canSparkSpace manage to retain marketable staff ina competitive environment

Finally, with this case your E1 assumedknowledge on the HR cycle is looking very key.SparkSpace are certainly in a growth period,with many posts to be filled. Staff retention andmotivation issues seem to be key.

ConclusionTry to enjoy your case study experience. Throwyourself into the role, get familiar with the caseby reading some of it each day, get your ‘ideagenerating’ head on, be practical.

Practice as many tasks as you can, keepapplying to the pre-seen. Do not rote learn, butget ready to apply all you learnt in theunderpinning exams. • Clare Finch is Partner at HTFT Partnership.The HTFT August MICS team includes KateWilliams, Jodie Lucas and Kirsty Blount

PQ

INSPIRATIONINTANGIBLE ASSETS

Patents Development TotalW$ million W$ million W$ million

Cost as at 30 September 2014 950 250 1,200

Additions 370 180 550

Cost as at 30 September 2015 1,320 430 1,750

Amortisation as at 30 September 2014 379 147 526

Charge for year 191 106 297

Amortisation as at 30 September 2015 570 253 823

Net book value at 30 September 2015 750 177 927

Net book value at 30 September 2014 571 103 674

pq aug 16 p16-17 q9_Layout 1 05/07/2016 14:27 Page 3


PQ CIMA F2

In this series of three articles I willexplore in further detail some of theareas of CIMA F2 that have become

an Achilles’ heel for students.As I’m sure you know, 2016 is an

Olympic year, with the games takingplace in Rio. Just as the IAAF (theInternational Association of AthleticsFederations) monitors the performance ofits athletes, CIMA regularly monitors theperformance of students on their CBEs toidentify unusual trends and spot studentweaknesses.

Like a triathlon, but with more mentalthan physical pain, the CIMA F2 syllabusis split into three main areas:

CIMA reports that the topic areas F2students consistently love to hate are notfrom the hefty financial reporting section;not the dreaded consolidation with itssub-subs, PURP adjustments, mid-yearacquisitions and disposals et al. Neitheris it the IASs – you seem to know thedifference between the accounting ofavailable for sale and fair value throughprofit or loss financial instruments;between equity settled and cash settledshare based payments. It isn’t theanalysis topic, with its treacherous “applyall” requirements and finickity financialstatement evaluations. Surprisingly, it isthe smallest topic area in the exam that isconsistently the Eddie the Eagle of F2(Winter Olympics references count, too) –sources of long-term finance.

It is easy to see why students performpoorly on this topic area. I’d imagine adisproportionate amount of classroomand course time (and rightly so) isdevoted to the more technical and wideranging financial reporting syllabuscontent. As a result, students will spendmuch of their time focusing on thesemeaty parts to the detriment of the long-term sources of finance topic. Like aBritish 100m relay runner who focuseson training hard to run fast but neglectsto learn how to actually pass on thebaton, your chances of success arelimited if you disregard this topic area.

At least nine questions will be set onthis topic. The actual content of thesyllabus is fairly restricted and as a resultyou can predict with confidence anumber of areas in which you would(almost) guarantee will appear in yourexam – narrative questions on themarkets and methods of raising finance,equity vs debt finance, characteristics ofpreference/ordinary shares; calculationquestions on cost of debt, cost of equity,yield to maturity and WACC. Thisindicates that the sources of long-termfinance topic, like a Russian athlete’surine sample, is worth spending thatextra bit of time studying.

In these articles I am going to initiallyfocus on the origins of the calculationelements in the long-term sources offinance topic – cost of debt, cost ofequity and yield to maturity.

This will be followed by two furtherarticle providing further details and examquestion technique on cost of debt andyield to maturity.

Origins of the calculationsBeing discerning readers of PQ magazineand, as such, educated individuals I amsure you are aware that the Olympicsoriginated with the ancient Greeks. Theorigins of the mysterious calculation ofcost of debt (kd) and cost of equity (ke) isless widely known among the studentfraternity. This may contribute to studentsstruggling with the content of thecalculations.

The formulas quoted in the formulaesheet and textbooks for kd and ke arederived from the calculation of thepresent value of cash flows received inperpetuity.

The receipt of a perpetuity may,allegedly, help the decision when itcomes to deciding where to host largesporting events like the Olympics or theWorld Cup. Allegedly. Did I mentionallegedly…?

To receive cash flows in perpetuity is toobtain a constant stream of identical cashflows forever. The present value of

In the first is a new seriesJohn Sharratt focuses on thelong-term finance topic in F2Advanced Financial Reporting

Playing the long game

perpetuity is given as:PV = Cashflow x 1

re.g the present value (how much youwould pay in today’s prices) for a 50cdividend in perpetuity with a discountrate of 10%

= 0.5 x 1 0.1

= $5You would expect to pay $5 today (theshare price) for shares giving a 50cdividend in perpetuity.

Another way of expressing theperpetuity formula is:

PV (today’s price) = cashflowr

With a bit of jiggery pokery, the formulacan be rearranged as:

r = cashflowPV (price)

The cost of debt and cost of equityformulas are just riffs based upon thisformula, illustrated below.

Cost of debtkd (for irredeemable debt) = i(1-T)

Poi = interest = cash flow from loansPo = Ex-interest market value = price ofthe loan

This calculation will be investigatedfurther in next month’s article.

Cost of equityke = d

Pod = dividend = cash flows from sharesPo = Ex-dividend share price = price

To enable us to understand thesecalculations that are commonplace withthe F2 exam, understanding the originsof the calculations arise from perpetuitycalculations is essential knowledge.

In the next article I will be outlininghow you can become gold medallists inthe different disciplines involved withinthe cost of debt calculation. PQ

% Number of exam questions per examSources of long-term finance 15 9Financial reporting 60 36Analysis of financial performance and position 25 15 –––––––– –––––––– 100 60

• John Sharratt isa CIMA contentspecialist withKaplan Publishing

pq Aug 16 p18 q9 ccm.qxp_Layout 1 07/07/2016 13:56 Page 2

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019_PQ 0816.indd 1 01/07/2016 09:51


PQ annual reports

AAT2015 was a good year for the AAT as newstudent numbers and membership bothgrew. Total membership increased by1.3% to 135,369, and the student intakerose by 4.7% to 27,605 (2014: 26,359).

The number of new training providersmoved in the right direction too, and grewby 54 in the UK and eight globally.

In 2015, AAT ‘entered’ seven newmarkets, including Ireland andSingapore.

During the year the AAT’s Greenlighttest also passed a significant milestone –over 2m tests have now been taken since2012. The qualifications department wasalso busy launching seven newqualifications.

The finances show a surplus of£1.962m for this year on an income ofjust over £27m. This is despite a£341,000 investment loss, put down tothe fall in global stock markets andturmoil from China.

Student and affiliate member feesbrought in £7.819m. Full membersubscription fees brought in an additional£6.599m.

The accounts reveal AAT CEO MarkFarrar was paid a total of £174,000 inpay and benefits. The ratio of the CEO’semoluments to the lowest paid employeeis 8.Members: 135,369 (2014 – 133,600)Students: 74,498 (54,736)Staff: 235 (218)PQ SAYS: The Q&A session at the frontof the report with the President and CEOwas a nice touch. But we couldn’t findhow many students AAT actual have.There were no pass rates either 7/10

HOW’S YOUR BODY Yes, it’s that time again folks– annual report time. Here iswhat we found for you…

CIMACIMA generated a financial deficit of£1.9m in 2015 on a turnover of £54.2m.

The annual report goes on to explain it‘acquired’ (we don’t like that word)30,023 new students during the year,which is a 15% reduction on 2014 and19% below the annual target.

CIMA admits that the revised syllabusand new assessment platform has had aprofound impact on CIMA’s businessmodel. But it was able to report passrates have dramatically increased from46% to 62%. Now that is good news!

Strong competition from otherprofessional bodies also isn’t helping,particularly in Africa and Asia. And youcan add the strength of sterling to thepot, which makes everything moreexpensive!

During 2015, CIMA’s memberpopulation passed the 100,000-barrierand now stands at 102,942 (that’s a 3%increase year-on-year).

Outgoing President Myriam Maddenhomed in on gender diversity andhighlights the 45:55 female to malestudent ratio.

Turning the financials we are really notliking the ‘acquire’, ‘deepen’, ‘retain’ and‘fulfill’ tag lines, they really don’t work forus. The figures show exams andexemptions brought in £12.48m in 2015.Unfortunately, we can’t see student subincome ads it is clubbed together withmember fees (totally £34.68m).Members: 102,942(2014 – 99,943)Students: TotalCGMA and studentpopulation 279,137(271,353)Staff: 201 (200)PQ SAYS: This reportis getting a bit messy.The tie-up withAICPA means thateverything getsintegrated and lessclear. We couldn’t tellyou how manystudents CIMA has,and neither couldCIMA! 6/10

CIPFADespite the challenging climate CIPFAwas able to report that membership in2015 grew for the first time in severalyears. Membership increased by 400during the year to 13,960. Spookily,student numbers grew by the sameamount (400) to 4,092.

The institute is certainly growing itsinternational credentials too and now has

1,834 international students, and signedsix international agreements withpartners.

The two big PQ stories also featureheavily: the ICAS/CIPFA integrated auditqualification, and its totally online exams(from December 2015).

The financial summary shows afinancial loss of £980,000 from total

income of £27.14m.CIPFA spent £6.3mon educating andtraining studentmembers andbrought in £4.3m inincome.

Sad to say, CIPFAstill doesn’t tell uswho earned what atthe top level. Wewant those namesand exact salaries,and wonder whymembers andstudents don’t wantthat too!

There has been abig change, however.In 2014, someone at

CIPFA business earned over £250,000.Now the top paid employee at CIPFAbusiness earns around £120,000.

The senior employee at CIPFA, we areguessing that is CEO Rob Whiteman, alsogot a pay rise. How much is anyone’sguess! All we know is in 2014 that‘person’ was paid between £200,000 and£209,999. For 2015, the salary rose tobetween £210,000 to £219,999.

Finally, you will be pleased to knowCIPFA’s Mansell Street HQ saved 32.1trees, 56,700 litres of water and 2,457tonnes of carbon dioxide.Members: 13,960 (2014 – 13,560)Students: 4,092 (3,692)Staff: 274 (256)PQ SAYS: CIPFA has produced a lovelyclean report, a real favourite. But its lackof transparency will always count againstit 5/10

ICAEW2015 saw the highest number of studentadmissions since 1993 at the ICAEW –and the 8,256 total is much higher thanthe 6,645 it targeted for.

And as a result of whole universitydepartments registering with it in the UKand South East Asia the institute’s CFABintake rocketed to 5,542.

The financials show the ICAEWgenerated £101.6m, generating anoperating surplus of £300,000.

Membership stands at a healthy145,746, which was lower than the target

NOTE: The ACCA’sAnnual Report isnot due to bepublished untilSeptember – wewill review it then



annual reports PQ

Y DOING?for 2015 because “of a higher thanexpected number of reported deaths”!

Increasing access and diversity is a keystrategic objective and the ICAEWfinancially supported 35 students directlyin their studies.

Internationally, ICAEW opened officesin Vietnam and Indonesia, and ran mockexams in Indonesia toenable students toget a taste for ICAEWtraining.

The institute wasalso proud of its firstMOOC, producedwith Leeds Universityon ‘The Importanceof Money’. This mightget another mentionin the 2016 report asin February is walkedaway with a PQAward!

Revenue frommember fees andsubs rose during theyear by 4% to£45.2m. Income

from qualifications increased by£900,000, reflecting the record growth inACA and CFAB intakes.

Learning and development costs,however, jumped by nearly £2m to£17.4m.Members: 145,746 (2014 – 144,167)Students: 24,149 (22,001)Staff: 711 (685)PQ SAYS: This report really works for us.It was easy to find what we needed andwe loved the ICAEW’s five-year summary,which helps put everything into context.Top of the class with 8.5/10

ICASThe message from ICAS in 2015 is allabout ‘building a professionalcommunity’. One of the key headlines forICAS was the launch of its ‘Power of One’business ethics initiative. The ‘virtualICAS’ also became more of a reality in2015 and its partnership with CIPFA wasanother ‘landmark’.

ICAS has been doing better with itsunder-35s and getting them ‘engaged’. Atop initiative here is the ‘One Young CA’competition. The institute is also proud ofthe fact that its Foundation is nowhelping 70 young people. That’s far morethan what the ICAEW is doing!

The annual report stresses the numberof students trained by ICAS remains‘extremely healthy’. For 2015, thestudent intake was 992, up on the 903

taken on in 2014. But what we don’t getis the total number of students incontracts or pass rates.

Membership subscriptions remainICAS’s main source of income (48%). In2015 this income was £7.5m.

Total group income rose by £445,000in 2015 and a profit before tax was£170,000. Total income for the year was£15.575m.Members: 20,709 (2014 – 20,401)Students: ? (3,140)Staff: 142.2 (137.8)PQ SAYS: An OK read but nothingspecial. Not the best report, but not theworst so 7/10 PQ

You’ll never guess what I heard...

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PQ Magazine August 201622

PQ AAT conference and results

RESULTS IN

Level/Assessment name Short Code UK Int'l WorldL1 Access AA 95.0% 93.5% 94.8%L1 Bookkeeping and Accounts BKAC 82.0% n/a 82.0%L1 Computerised accounts COPA 92.7% n/a 92.7%L1 Computerised Payroll Administration ** CPYA 78.4% n/a 78.4%

L1 Spreadsheets software SPRS 92.2% n/a 92.2%L2 Applied Business Communications and Personal Skills ABPS 55.1% n/a 55.1%

L2 Accounting skills to run your business * ASYB 63.2% n/a 63.2%

L2 Basic costing BCST/BCCG 94.7% 89.8% 94.3%L2 Control accounts, journals and thebanking system CJBS 86.9% 80.8% 86.6%

L2 Computerised accounting CPAG 94.7% 75.6% 93.4%L2 Computerised Payroll Skills CPSK 77.1% n/a 77.1%L2 Developing Study Skills DSSK 86.5% n/a 86.5%L2 Introduction to Payroll Systems IPSY 43.4% n/a 43.4%

L2 Processing bookkeeping transactions PBKT 89.9% 83.9% 89.5%

L2 Spreadsheet Software SPSO 82.6% n/a 82.6%L2 Work effectively in accounting and finance WKAF 92.8% 80.5% 91.9%

L3 Accounts preparation ACPR/API 60.8% 45.3% 59.2%L3 Computerised accounting* COAG 83.3% n/a 83.3%L3 Costs and revenues CSTR 80.8% 62.4% 78.7%L3 Prepare final accounts forsole traders and partnerships FSTP 84.2% 71.1% 82.7%

L3 Indirect tax ITAX 81.4% 62.7% 79.2%L3 Professional ethics PETH 74.0% 55.0% 71.9%L3 Spreadsheet software SDST 82.9% 57.8% 80.5%L4 Budgeting BDGT 71.3% 44.9% 67.3%L4 Business tax BTAX 63.2% 48.1% 61.3%L4 Credit control CRDC 77.5% 44.1% 61.3%L4 Cash management CSHM 58.4% 20.3% 52.7%L4 External auditing EXTA 83.5% 40.9% 59.7%L4 Financial performance FPFM 60.0% 30.8% 56.1%L4 Financial statements FSTM 71.0% 44.1% 67.0%L4 Internal controls and accounting systems ISYS 88.9% 77.1% 86.5%

L4 Personal tax* PTAX/PTX 46.0% 26.7%* 46.0%

Less than 50 assessments (ASYB = 19, COAG = 18, PTAX Int = 15)** Less than 100 assessments (CPYA = 97)

Future proofing the profession

The AAT has now released theresults for its assessmentsfor the year ending 31

December 2015. The papers with the lowest pass

rates are the usual suspects –Introduction to Payroll Skills (L2) with43.4% and Personal Tax (L4), whichhas a pass rate for the year of just46%. The concern for the AAT will bethat the PTAX pass rate is still goingin the wrong direction. Six months

ago the pass rate was 47.4%, and in2012 believe it or not the pass ratefor this assessment was 78%.

AAT has revealed that the overallCBA success rate at Level 4 for theyear was 63.2%. This rose to 74.3%for Level 3, and a much morehealthy 90.1% and 92.4% at Level 2and Level 1 respectively.

The next report for the year-ending30 June 2016 will be available in PQmagazine in November. PQ

The AAT’s annual conference recently took place over twodays in Birmingham. It is open to both affiliates andstudents, so make sure you don’t miss out next year!

PQ Aug 16 p22 q9 ccm.qxp_Layout 1 07/07/2016 13:56 Page 1

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PQ AAT exams

Gareth John explains the devicesgovernments can use to helpmanage the economy

Are you sitting comfortably? Then I’llbegin. Once upon a time there were twopretty princesses…

I was reading my daughters their bedtimestory one night when they asked me about thedifferent ways that the government can managethe performance of the economy. Given therelevance of our discussion to some AAT papers(not to mention a typical career in finance!) Ithought I would share my thoughts with you.

The performance of the economy of a countryis extremely important to everyone who livesthere as it affects the availability of jobs, thewealth of the population, the prices of goods forsale, interest rates on loans and exchange rates,among many others aspects of day-to-daybusiness – and life.

If an economy is not growing this is known asa recession and can lead to unemployment anda reduced level of wealth in the economy. If aneconomy is growing very quickly this can seemgood in the short term, but often leads to arecession when the ‘bubble bursts’ (in the sameway that a big night out can leave you feelingrather poorly the next day).

In essence, the government doesn’t want thegrowth of the economy to be too slow or too fast;just a sustainable level of modest growth. This issometimes referred to as the ‘Goldilockseconomy’ as it is ‘not too hot, and not too cold’.

The government takes an active role in tryingto manage the performance of the economy andthis can have an impact on the businesses thatoperate there. There are two principal forms ofgovernment economic policy; monetary policyand fiscal policy.

Monetary policyMonetary policy is the way that the governmentmanages the economy by influencing the supplyof money (hence ‘monetary’ policy). In generalterms:• If the economy is not growing fast enough thegovernment will want to increase the supply ofmoney to improve levels of demand and speedthe economy up.• If the economy is growing too fast thegovernment will want to reduce the supply of

money to slow the economy down in order toprevent it becoming a ‘bubble’.

There are different ways that the governmentcan manage the supply of money in theeconomy:• Changing interest rates (the most commonapproach): in a recession, the Bank of Englandmay reduce interest rates. This will reduce thecost to businesses and individuals of borrowingmoney and also makes it less attractive to savethe money that they do have. Both of thesethings will increase spending and result ingreater levels of demand for goods that will helpto get the country out of the recession.• Influencing bank lending: in a boom thegovernment can sell gilts (forms of low-riskinvestment) to banks. This will reduce theamount of money that the banks have to lend,therefore reducing the money supply. In arecession they can buy back these gilts to givemoney back to the banks to allow them to lendmore which will increase the money supply.• Altering the availability of consumer credit: ifthe government encourages extension ofadditional credit to the public they are likely tospend more as a result which will help toimprove demand levels in the economy.• Creating more money: the government cancreate extra money (possibly by literally printingmore banknotes) and pump this into theeconomy. The government does this by buyingassets from commercial banks in exchange forthe newly created money. This will give thebanks more money in their accounts to lend outto businesses and individuals.

Quantitative easingIn recent years many governments throughoutthe world have engaged in quantitative easing(QE) as a way of improving economicperformance during the worldwide financialcrash. QE is an unconventional form of monetarypolicy where the Bank of England creates newmoney electronically in order to buy investmentslike government debt back from investors suchas banks.

With the extra money they now have thebanks can lend the money to people in theeconomy. This should lead to an increase in theamount the people have to spend which willhelp to fuel growth of the economy during arecession.

One of the reasons that QE has been used inthe past few years is that interest rates arealready very low (virtually 0% in a lot ofcountries) which makes the normal monetarypolicy approach of reducing interest rates tospeed up the economy a bit useless. As a result,governments have felt the need to pump moneyinto their economy directly. As the level ofeconomic activity increases this should lead toreduced levels of unemployment in the economybut can lead to higher levels of inflation. • Gareth John is a tutor/director with FirstIntuition and helps to manage their AATdistance learning programme

For the full article, which includeshow the government uses fiscalpolicy, go to the AAT section of theStudy Zone – pqmagazine.com

PQ

LET’S GET TECHNICAL

pq aug 16 p24 q9 ccm.qxp_Layout 1 05/07/2016 14:57 Page 2

Enhance your reputation!The CTA qualification is held in high regard by employers

and their clients – and it contributes to career progression.

Find out more about how the CTA can help your career and to register as a

student at: www.tax.org.uk/workingintax

025_PQ 0816.indd 1 05/07/2016 11:06


PQ careers

Karen Young givesguidance on what toconsider after your

exams and before your results

For many of you the final stageprofessional accountancy exams arebehind you and you will be receiving

your results in the coming months. Although itcan feel like a time of professional limbo, theperiod between finishing exams and receivingresults offers you a window of opportunity to lookahead to life after exams. As soon-to-be-qualified accountants the career path ahead ofyou will require some planning and choices, sodon’t forget to take the chance after your examsand before getting your results to clear yourhead and think about your professional future.Use this time to explore how you can capitaliseon your fully qualified status and think about thenext steps in your career path.

In working out the right path, ask yourself –what do I enjoy? What industry or environmentdo I see myself working in? Researchingorganisations and job roles will help you to makethese decisions. This is equally importantwhether applying for internal jobs or promotions,

or considering taking your CV to the external jobmarket. Discussing options with a recruiter canenable you to explore the market opportunitiesand gain a better understanding of different jobroles, working environments and sectors, butmore importantly it will give you an externalbenchmark against which you can compare thechoices available to you with your currentemployer.

The demand for newly qualified accountantscontinues to be strong across all industries andsectors and there are no current signs of thisslowing. This is good news for those of youexpecting strong exam results, as a great set ofgrades will open up new and exciting careeravenues for you to explore.

Planning your career and filling in your skillsgaps will give you a competitive advantage. Sodon’t rest on your laurels after your exams. Don’toverlook the value of expanding your softerskills; employers are always on the look-out forwell-rounded applicants with a range of skills.Think about any additional training you mightneed to develop your IT or communication skills,and use these upcoming weeks to work on askill that you haven’t previously had a chance todedicate time to.

We all have to deal with what life throws at us.Sometimes things just don’t go as well as we

planned, exams included. Planning your careerand developing your skills is as important if notmore so if you worry your exam results may notbe what you had hoped for. Planning your careerdevelopment will give you a goal to focus on andwill help motivate you during any retakes.Expanding your skills will enhance gaps in yourCV and help to boost your morale, which willincrease your chances of success next time.Good luck, wherever life after exams takes you.

For further information visitwww.hays.co.uk/pq • Karen Young, Director, Hays Accountancyand Finance

PQ

Life after exams

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PQ Aug 16 p26 q9_Layout 1 05/07/2016 14:32 Page 2


careers PQ

27

Great Answers To ToughQuestions at Work By MichaelDodd (Capstone, £12.99)

As a former foreigncorrespondent and politicalinterviewer, Aussie MichaelDodd is used to asking thetough questions. In this book hehelps the reader develop theskill of how to answer toughquestions and turn difficultsituations to your advantage(exactly what it says on the tin).

Fundamentally, this is a bookabout communication, and howto improve your all-round skills.How many times have youstumbled through the answersto a series of searchingquestions? Or thought of adevastating riposte an hour after

you’ve finished theconversation? Well, digest thelessons from this book andthose days will be behind you.

It is split into two main parts.The first deals with tactics andstrategies to tackle toughquestions, and includes adviceon harnessing the power ofstories, adopting the correcttone of voice and how to dealwith various personality types.

The second half helps readersapply this new-found wisdom torise to the challenges theworkplace brings, from the jobinterview to contractnegotiations.

Observing lessons of how notto react while in the spotlightcan also be illuminating, saysthe author. He cites the

example of formerCEO of BP, TonyHayward. He madean infamous gaffeafter the Gulf ofMexico oil spillagein 2010. During the furoreabout what the company wasdoing to tackle the devastationhe told one reporter that “I wantmy life back”. The reputationaldamage to both him and the oilgiant was immense.

While your misplacedcomments will almost certainlynot cause such damage you cando yourself – and your company– many favours by reading thisbook and digesting the lessonswithin its pages.PQ rating 5/5 This really shouldbe your summer holiday reading

PQ admonishedPQs need to be aware that

as student members of aprofessional body their standardof work is under constantscrutiny. CIMA registered studentTracy Thomas recently agreed, byway of a consent order, to theimposition of a sanction of anadmonishment over a complaintthat she failed to retainappropriate information(timesheets, invoices and deliverynotes) to support claims forpayment from her firm’s clients.

No further action will be taken byCIMA.

North versus southSouthern accountants enjoy

a better standard of living thattheir counterparts in thenorth, according to aleading recruitmentconsultancy. Thatsaid, it also foundthat accountants inthe South West have thebest quality of life in England.Bottom of the index ranking were

accountants living in the EastMidlands. See the next issue ofNQ magazine for the full story.

I’ll have the sameIf you have an important

business lunch (do they stillexist?) then you need to orderthe same food as the personyou are trying to impress, sayscientists. Apparently, people

who eat the same foods aremore likely to trust one another,smooth out problems and evenmake more lucrative deals.

In brief

The PQ Book Club: books you should read

Peter North, 35, has worked for five years as a Systems Accountant at Tata MotorsEuropean Technical Centre, based in Nuneaton. AAT qualified, he is now studying CIMA.He once played snooker against former world champion Shaun Murphy.

Life at Tata Motors

What time does your alarmclock go off on a workingday? 5:30am.What’s the first thing you dowhen you get to your desk?Log on to my PC, make a drink.What’s on your desk? Twomonitors, laptop, paperwork.What’s the best thing aboutwhere you work? Seeinginnovative ideas and designscome to fruition.Where’s your favourite placeto go for lunch? Subway.What (or who) can you seewhen you sit at your desk?The new NAIC building beingconstructed, which will becomeTMETC’s new home shared withJaguar Land Rover and WarwickManufacturing Group.

Which websites are yourfavourites and why? BBC –very up-to-date news and sport.Which websites do you usefor work? HSBCNet, Google.How many hours a week doyou spend in meetings?Around six to 10.What time doyou leave theoffice? Around4pm.How do yourelax? Snooker, cricket, cinema.What’s your favourite tipple?A good single malt scotch whiskey.How often do you take workhome with you? Not very often– I like to concentrate on myyoung family. I have three childrenaged nine, four and two.

What is your favourite TVshow? The Apprentice – Ientered a few years back and gotthrough to the first group interviewstage.Summer or winter? Summer.Pub or club? Pub.Who is your hero? MuhammedAli – an iconic figure whotransformed the world and theway we look at cultural diversity.If you had a time machine,where would you go? Aboutthree years into the future.Without wanting to wish my lifeaway, I would gladly skip by theexam stress!If you hadn’t chosenaccountancy, where mightyou be right now? My othercareer choice was graphic design.

social mediaROUND-UP

CIMA exams can be tough, so cananyone help Mia Seymour? She told theCIMA Distance Learning Facebook pageshe needed tips to stay awake whilestudying (surely CIMA study material ismore interesting than that?), and shewants recommendations on pens thatdon’t hurt your fingers when you write.The Uni-ball Jetsream Ballpoint Pen –0.7mm – Alpha Gel Grip Series – BlackBody, came back the recommendation.She is still waiting for alternatives tocoffee!

We also loved Rachel Connolly’srevision plan – get your boyfriend toinvite the lads around to watch thefootball and stay at work to get someproper study time in.

The CIMA Distance LearinngFacebook page is open to all studiersand you would be mad not to join!

Meanwhile, our news story that moreneeds to be done to improve gender

diversity in NHS financedepartments wasone of the biggestretweeted storiesthis month. Whyis it that just26% of financedirectors arefemale when62% of thefinance workforceare women? Many

workers just don’t think the recruitmentprocess is fair, explains the report fromFuture-Focused Finance.

PQ magazine’s ACCA exam feedbackand new tougher exam rules also got alot of people retweeting and addingnew comments. Kerry Crook said in herexam hall “clear pencil cases werebanned today. Reasons why?” Beth toldus that bottles have been banned for awhile but added: “Was told someonehad printed a label with exam info onbut might be a myth.”

And we couldn’t help but smile whenBro Azri said the P7 exam was “timepressured all the way to China”. Wewill be watching closely again comeSeptember.

In the meantime, watch out for ourtweets and news on our website aboutthe ACCA pass rates. They are due outon Monday 18 July. PQ magazine isparticularly interested in the F5, P5 andP6 pass rates. F5 and P6 were deemedthe problem papers in June. P5 sitterswere convinced the examiner had goneon holiday and been replaced withsomeone nicer!

PQ Aug 16 p27 q9_pq oct07-p31 07/07/2016 11:12 Page 31

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028_PQ 0816.indd 1 05/07/2016 11:19

YOU’VE WORKED HARD NOW IT’S OUR TURN

As a soon to be qualified accountant, all your hard work

will have finally paid off – so what’s next?

Hays is a leading recruiter in accountancy and finance.

We’ll do the hard work to put you in touch with some of

the UK’s top companies from a wide range of sectors.

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To speak to an expert consultant, or to find out about

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Alternatively, you can visit us online.

hays.co.uk/pq

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029_PQ 0816.indd 1 01/07/2016 09:54

EGYPT’S LOST WORLD OF TAXESThe magnificent Sunken Cities: Egypt’s Lost Worlds exhibition atthe British Museum reveals the treasurers from the lost cities ofThonis-Heracleion and Canopus. And tax is there in the form ofa wonderful complete stela. It advertises a 380BC royal decreeof the Egyptian pharaoh Nectanebo I and states the 10% of thetaxes collected on all goods imported from the ‘Sea of theGreeks’ into Thonis-Heracleion and on all trade operations atNaukratis were to be donated to an Egyptian temple.


W E V E G O T T H E L O T’

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must bereceived by Friday 5 August. The main draw will take place on Monday 8 August 2016.

TO ENTER THESE GIVEAWAYS EMAIL [email protected]

PQ got a story, funny or serious, you want to share? Email [email protected]

Your IFRS Pocket GuideWe have five IFRS ‘Pocket Guide to IFRS Standards: the globalfinancial reporting language’ to giveaway, coutesy of the IFRSFoundation. The updated guide gives an overview of adoptionof IFRS standards and the IFRS for SMEs standard in 143countries around the world. This is a fantastic reference tool,and we promise you won’t be able to put it down!To enter this great giveaway send your name and address(remember we have to send the guide to you) [email protected]. Head up your email ‘IFRSPocket Guide’

Colour yourself calmerWe have three copies of Millie Marotta’s ‘WildSavannah’, a colouring book adventure to helpcalm your nerves this summer. Her latest book is a collection of illustrations of all kinds of wild andwonderful creatures from our planet’s swayinggrasslands. So, whether you enjoy colouring as agreat way to beat stress or simply want to step back from your digitalworld then this is the giveaway for you.Simply email your name and address to [email protected]– head up you email ‘Wild Savannah’ and we will do the rest.

USELESS A-LEVELSThe i newspaper recently published a list of A-levels it thoughtwere of little use to man, woman or beast. It named the five ithad little time for, and on the list were leisure studies, worlddevelopment, communication and culture, accounting andphilosophy. What, asks PQ magazine, is wrong with an A-levelthat helps the entrepreneurs of tomorrow prepare andunderstand accounting concepts? We also like philosophy,where students can learn the importance of morality! Thereisn’t enough of that out there.

TAXING MORALS Roger Daltrey, The Who’s 72-year-old lead singer, hasvery definite views on taxation. In a recent interview hesaid he wasn’t worried about rich people putting moneyin tax havens. “All this moral thing about tax is bullshit.Go looking to pay more tax? Are you kidding? We areincredibly over-taxed already. I find it kind of ironic thatwith the offshore Panama thing, the only politician withquestions to answer was Jeremy Corbyn. He put [his tax return] in late so he wasfined a hundred quid, and he hadn’t declared a pension. Does that make him acrook? We are all so bloody self-righteous.”

SPEND YOUR WAY TO SUCCESSPQ magazine wondered if it was with apinch of irony that a recent copy ofEconomia (the mag for ICAEW members)printed a picture of the Bournemouth FCmanager and chairman in its ‘FootballFinance Healthier Than Ever’ story! Thisis the same Bournemouth who were fined£7.6m for breaching the fair play rules.The Cherries posted a £38.3m loss forthe 2014/15 season after spending£30.4m on players to help get promotion.The fine was only revealed when the clubaccounts were registered with CompaniesHouse

I’M AN ACCOUNTANT TOO! HMRC’s chief executive Jon Thompsonrecently appeared before the Public AccountsCommittee where his many job titles werequestioned by chair Meg Hillier. He explainedthat on top of his CEO title he was also aPermanent Secretary and the PrincipleAccounting Officer – Spending. Thompsonwas appearing to talk about the quality ofservices to personal taxpayers. Fortunately, the services haveimproved drastically. For April and May this year 90% of callswere actually answered, and the average wait time was sixminutes. You don’t want to know how bad it was before!

BEWARE MIDGET ACCOUNTANTSFamily Guy is a pretty ‘out there’ cartoonseries. So we weren’t surprised when StewieGriffin (the baby) decided to tell anaccountancy joke in one episode we justhappened to be watching. Well, you can’tsay we didn’t warn you. Here it is: Whyaren’t there any midget accountants?Because they always come up short…”

DO YOUREMEMBERWHEN…? PQ magazine was recently flickingthrough some old issues when we cameacross a feature in the September 2006issue looking at four decades ofaccountancy. For the classof the 1990s’ student wehad none other thanRob Whiteman, nowthe CEO of CIPFA. Headmitted that “wemaintained the studentethos of the 1970s toconsume a great deal ofalcohol after lectures”. Goodboy. The average house pricein 1990 was £59,785 and apint of beer cost £1.14.

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