pq magazine, july 2016

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

We’ve four greatbookkeepingcourses to giveaway. See inside!

AAT conferencefeedback

The whole audit process is being

compromised by the social

‘mismatch’ between young,

inexperienced auditors and

older, more experienced client

management, says award-

winning research from US

academics Bradley Bennett and

Richard Hatfield.

Their study found that this agemismatch often impacts on the staffauditors’ willingness to gather theadditional audit evidence needed toproperly complete the auditconfirmation task.

Young auditors, sometimes withlimited experience, can findthemselves in intimidating situationswith more knowledgeable andexperienced clients, who accordingto the research can often quicklybecome annoyed with what theyperceive as silly questions.

The worry is that when youngauditors are paired with these older,more experienced companyaccountants just 35% of themchose to meet with the accountantface-to-face to ask further questionsand gather more information. Whenthe age gap between the two was abetter match some 83% of auditorswanted to meet face-to-face to askthose extra questions.

This reluctance to ask follow-up

questions results in less evidencebeing collected and lower-qualitydocumentation and conclusions,claimed Bennett and Hatfield. Andit didn’t end there, as work paperswere often prepared in a vague way,making the loss of information hardto detect during the review process.

The only saving grace in theprocess has been the rise in theuse of email. Younger auditors aremuch more likely (69%) to requestadditional evidence this way.Bennett and Hatfield said that emailcurtailed the reduction in evidencecollection caused by avoiding liveface-to-face interaction, but did not

ACCA getstough in theexam hallTighter exam security was inevidence at many ACCA examhalls during the latest sitting.

Some candidates felt thatinvigilators seemed much tougheron what PQs can and can’t bringinto the exam hall.

We’ve heard stories of labelsbeing cut off water bottles andmint wrappers being confiscated.All phones, smart watches andother electrical devices(including fitbits!) now have to bekept in clear plastic bags underchairs.

As one student said: “They cutthe label off my beloved Evianmidway through the P1 examtoday! It took me a while to getover the trauma.” Students arealso being told they are no longerallowed to bring coffee or cans ofdrink into the hall. Even bananashave been confiscated.

Turning to the exams, the bigsurprise was a ‘decent’ P5 exam.Students genuinely wondered ifthe ‘real’ examiner was onholiday! F5 sitters were worriedabout ‘the hardest MCQs ever’ andP1 candidates wondered why theyhad done all that revising whenall they needed was a bit ofcommon sense.

PQmagazineEXCLUSIVE

‘MISMATCH’ FORYOUNG AUDITORS

Bennett:firms need to

providetraining so

your auditorsaren’t

intimidated

eliminate it altogether. They said:“Overall, while electroniccommunication helps it does notcompletely erase staff auditors’reluctance to ask follow-upquestions and, importantly, suchcommunication loses the richercontext of in-person interactions.”

Bennett told PQ magazine thatthere may be some specific trainingthat firms could provide to addressthe staff auditors’ decisions whenthey feel ‘outmatched’ by clientmanagement. He felt that managersand partners must be fully aware ofthe problem so they can address

Continued on page 10

PQ July 16 p1 q9_pq nov 11 p01,10 09/06/2016 11:59

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comment PQ

News 08AAT support Association beefs

up student learning support 10The workplace New survey

asks: where’s the diversity?12ATT concerns HMRC urged to

delay quarterly digital reporting13CIPFA/ICAS tie-up Initiative

‘adds value for CIPFA members’Features, etc06Mind your Ps&Qs A fiasco in

high heels; PER help request;and a nervous ACCA exam sitter

14Your career Royal OperaHouse COO Sally O’Neill hassome top advice for PQs

16Variances How to tacklequestions on fixed overheadvariances; plus a quick look ataccounting for value

18CIMA E3 paper We explainhow you can pass the IS inorganisational strategy paper;plus updates to PER

20CIMA P1 paper Some testquestions to help you throughthe tricky section C

22Let’s get technical Why it’svital you identify the differenttypes of ethical questions

24AAT conference All the bestbits from the recent TrainingProviders’ Conference

27CIPFA and ICAEW focus TheWhole of Government Accountsexplained; and how to passBusiness Planning: Taxation

28Target costing All you need toknow about this key subject

30Careers #1 Salary is importantwhen deciding on a new role butit’s not the be all and end all

31Careers #2 Life at KaplanFinancial; our book review; plusthe best of social media

34Fun time PwC drones on; agolfing gaffe; mortar fire; TheAccountant – the movie; andmore great giveaways

The columnistsRobert Bruce IFRS has created aworld of opportunity 8Prem Sikka BHS: the silence ofthe auditors is deafening 10Carl Lygo Education is the key toChina’s economic growth 12

Subscribe to PQ magazineIt’s FREE – see page 32 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 8,796 requested readers

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

The world’s gone bananasThis month saw bananas becoming the centre of attention inmany ACCA exam halls. So are they banned or aren’t they?And who needs to bring in their lunch into the exam hall

anyway? We were surprised to hear that candidates weren’t allowed tobring in their coffee or a can of drink, now that does seem a bitexcessive. You need to watch out for next month’s issue of PQ, wherewe will look in more detail at all the accountancy bodies’ policies onsmart watches.

PQ magazine spent two days with the AAT at the Training Providers’conference recently (see pages 24-25). Students should note that if theywant to stay on the old syllabus (AQ2013) then they mustn’t let theirstudent registration lapse. If it does they will be forced onto AQ2016.

The new AAT syllabus will put more pressure on students’ ability towrite. This will mean tutors need to find strategies to increase theconfidence of those PQs who thought accountancy was all about thenumbers, because it’s not! No one can fail to be impressed with theamount of great e-learning support the AAT has put together for the newsyllabus (see page 8). Its Green Light tests alone have been downloaded2.2 million times since their introduction.

Several PQs also got in contact with us over the new CIMA practicalexperience requirements (PER). They were being offered two ways ofrecording their experience and wondered what was going on. Wediscovered CIMA was running a ‘soft’ launch of its new online processand the institute’s Tricia Buchanan explains exactly what is happeningon page 19.

Oh, and don’t forget our great giveaways this month. We havereserved four places on HTFT’s ever-popular online bookkeeping course.

If you feel these key skills have passed you by then this is theperfect course for you. Go to page 30 for the details. You canalso win a Kangaroo, courtesy of Reckon (page 34). Whatmore do you want?Graham Hambly, PQ magazine editor – [email protected]

CONTENTS July 2016

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write something about it for us. Youcan find it on page 19.

Should I be terrified?I have to admit that I thought PQmagazine’s story last month thatACCA students were ‘terrified’ ofthe final optional papers was a bitOTT. Then I saw the pass rates! Isthat what I have to look forward to?The P1, P2 and P3 exams aretough enough, but at least the passrates are consistently on the rightside of 50%.

What is it about the optionalpapers that makes them so tough?

Some fellow ACCA students reallydo believe the ACCA is trying tolimit the number of peoplequalifying, but I just didn’t believethis. Then I saw your tweet from aP5 sitter who said they werelaminating their notes so the tearswould roll off!Joanna Hayward, by email

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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

Putting the boot inCan anyone tell me what centurywe are living in? How can PwC (inthe form of Portico) sendsomeone home for wearing flatshoes?

If someone told me I had towear four-inch heels every day Iwould simply pick up my bag andgo. The next thing to expect is aban on women wearing trousers.They would have us all wearing askirt with stockings andsuspenders!

For me the basic question hereis this: do male staff also have to

any other man who could copewith wearing them for more thanan hour.

What disappointed me is PwC’s(apparent) lack of courage inputting out a statement straightaway to say the policy was wrong,has been changed, and in futurewomen would not be expected to‘sex up’ the reception. Perhapsthey did and I missed it.

All the big firms now sell theefforts they are making ondiversity during their universityvisits, but a story like this totallyundermines all that good work.

I know employers are entitled toimpose dress codes, provided they

don’t infringe discriminationlegislation, I am not naive. Firmscan make male employees wear ashirt and tie and equally makewomen wear smart office attire,too. Nothing wrong with that.

But if you want to attract andretain the best talent you need tolook like a company that is lookingforward, not back, and standardsof dress move all the time.

The whole episode reminds meof a bad Austin Powers movie. Weare all living in the 1960s and it isfar from groovy, baby!Name and address suppliedThe editor says: Well said! We’vecovered this story on page 12.

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

email [email protected]

Impossible situationI have been following the sad storyof PwC trainee Joshua Jones withmuch interest (PQ, June 2016).

However, I was wondering whatthe firm could really have done ifhis gambling addiction was hiddenfrom them. In your story you said afew close friends knew the truth,and while some of these might haveworked for PwC they would havebeen put in an almost impossibleposition as his mental stateworsened. Telling the firm wouldhave probably made the situationeven worse for poor Joshua.David Jones, by email

An unhappy CIPFAIn the study zone for CIPFA on yourwebsite there is the followingstatement:

“Sit your exams anywhere withCIPFA – CIPFA’s transition toe-assessment will mean itsstudents will be able to sit theirexams anywhere they want to – atwork or even at home in their PJs!PQs will also be able to use theirown computers as CIPFA is usingonline invigilation, in the form ofProctor U.”

This is not correct – you can’t sitthe exams anywhere; in fact, CIPFAis very strict about where you canand cannot sit the exams.

Could I also make you aware ofthe fact that you cannot use theircentres for the exams – they have

abolished this. This has been donewithout any consultation withmembers (I am a member and noone consulted me).

I’ve had a very bad experience ofusing the online tool, as such I amtrying to opt out of this, which isproving near impossible.Name and address supplied

PER help pleaseCan PQ magazine please help?CIMA appears to have released

new PER requirements ‘under theradar’. Now I am confused. Do Iuse the old method or do I opt forwhat looks like an easier way to dothings?

I don’t want to change what I dofor something that CIMA is justthinking about.Rebecca Ash, by emailThe editor says: You are not alone.We have had a number of queriesabout this soft launch of new PERrequirements, so we got CIMA to

DUE TO LACK OF SPACE OUR SOCIAL MEDIA

UPDATES HAVE BEEN MOVED TO PAGE 31

wear high heels to look smart?Eddie Izzard might be happy withthis new policy, but I don’t know of

PQ July 16 p6 q9 ccm.qxp_pq aprl08 p04 09/06/2016 13:56 Page 1

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8 PQ Magazine July 2016

PQ news

One of the great joys of the rapidtake-up of international financialreporting standards across the worldhas been the opening up of careeropportunities. Once cultural changehad followed the spread andharmonization of IFRS around theworld then people would follow. Iffinancial reporting principles wereroughly the same in most countriesaround the world the barriers to youngaccountants transferring their skills toalmost any capital city around theglobe would not be far behind.

The great change has sprung fromthe work of the IFRS Foundation, thepromulgator of IFRS. From the outset ithas been made up of a staff from allover the world. This was deliberate –only by way of a cultural mix wouldthe advantages of diversity amongtheir number come through.

And now research has beenpublished that shows just how muchthe globalization and harmonization ofaccounting standards is affecting theway accountants are moving aroundthe world. A study by academics fromBerlin and Chicago has shown that ithas increased mobility by between17% to 24% compared with otherprofessions. That, as they point out,implies that ‘regulatory harmonisationincreased the total number ofmigrants by 11,000 to 13,000accounting professionals’ – anastonishing number. They concludethat ‘accounting harmonisation canhave a meaningful effect on cross-border migration’. The whole worldhas become the accountant’s oyster.

ROBERTBRUCE

IFRS hascreated aworld ofopportunity

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

AAT creating a host of e-learning support

Bacteria good for the nervesProbiotic milk could help calm

students’ exam nerves byproducing good bacteria in the gut,say scientists. Drinking a strain ofbeneficial bugs in the weeks beforea critical exam significantly curbsmany of the biological signs ofstress. So it’s Yakult’s all around!

New student leadersThe ICAEW Student Council

(ISC) has new leaders. The councilelected Robert Mann as its newchair (pictured with Hilary Lindsay,

the ICAEWDeputy-President)and RebeccaSutton as vicechair. Mann worksas a seniorassociated at PwCin Bristol. Thecouncil meets quarterly and feedsback their opinions of recentexams and are used as a soundingboard by the ICAEW for anychanges. In addition, the chair sitson the ICAEW governing council,ensuring students have a voice.

Samples are ‘real’ AAT sample assessments

really are just like what studentsget in the assessment, a chiefassessor confirmed at the recentTraining Providers’ Conference. Shetold a packed conference thatsample assessments come fromthe live bank and have beendeveloped as a live assessment.For more news from theconference see page 24.

New qualification launchedCIPFA has launched a new

certificate inanti-briberyand corruptionstudies. It has beendeveloped bythe instituteand the City of London Police’sEconomic Crime Academy. Itsupports compliance with the UKBribery Act and takes 15 days tocomplete (or 105 study hours). Youwill also qualify for CIPFA affiliatemembership. To find out more visitwww.cipfa.org/briberycertificate

In brief

The AAT has beefed up its learning support offering forits PQs, ready for the introduction of AQ2016.

The new dashboard on the ‘Green Light’ tests meanstudents will see the average score for their tests,creating a more competitive environment.

Perhaps more importantly, the AAT has updated thescoring so you will get marks if you get the answerpartially right. The Green Light tests have been amassive hit with PQs and some 2.2m have been satsince their introduction.

With the move to synoptic tests the AAT is offering anew ‘lucky dip’ Green Light option. This test will take10 questions from across the whole level.

The AAT has also created modules on professionalbusiness communication to help with the increasedemphasis on the written elements. These look at theright way to send a business email, report and othertypes of presentations. You are even given a chance topractise writing your own report.

A student and tutor qualification introduction video

to the new qualification should help to bring AQ2016 tolife.

And you can add to this the 67 e-learning modulesand 51 key calculation videos.

The AAT is encouraging its students to visit the AppStore of Google Play and download the Aurasma app.You need to swipe through the tutorial and create anaccount. Search aat.ls and press Follow.

Classic way to succeedWhere is thetop Brand?The ICAEW’s Sharron Gunn is oneof the surprise entries forCityAM’s Power 100 Womenthis year, which celebrates theCity’s most inspiring women.But, where is accountancy’smost powerful woman? CityAMseems to have overlooked ACCACEO Helen Brand (pictured) in itslist. Among the list of 10 top femaleaccountants is Sacha Romanovitch,Grant Thornton’s boss and JeanStephens the chief executive ofRSM International.

Also on the list are: Beth Brooke-Marciniak (EY), Tracey Groves(PwC), Stephaine Hyde (PwC),Maria Pinelli (EY), Michelle Quest(KPMG), Sharon Thorne (Deloitte),and Ingrid Waterfield (KPMG).

One way of beating those stressblues while you are revising is toplay a little bit of classical music.

Scientists have proved thatlistening to it can makeyou more receptive tonew information. So,maybe it is time to

swap your Macklemorefor Mozart and Beyonce for

Bach.Classic FM has put together 10

pieces of music it thinks will helpyou in your studies.

Top of the list is German Baroquecomposer Johann Pachelbel andhis Canon in D. But don’t go for thepiano version, you want the violinsand basso continuo.

Quite a few movie scores alsomade the list, including JamesHorner’s ‘A Beautiful Mind’ and

Philip Glass’s ‘The Hours’.Classic FM’s Top Music for

Studying & Revising1) Canon in D – Johann Pachelbel 2) Academic Festival Overture –Johannes Brahms3) Well-Tempered Clavier – Bach4) A Beautiful Mind – JamesHorner5) Piano Concerto No 23 –Wolfgang Amadeus Mozart6) Clair de Lune – Claude Debussy7) Etudes – Frederivc Chopin8) 30 Exercises for Harpsichord –Alessandro Scarlatti9) The Hours – Philip Glass 10) I Giorni – Ludovico Einaudi11) Gymnopedie No1 – Erick Satie12) The Draughtsman’s Contract –Michael Nyman13) Goldberg Variations – JohannSebastian Bach

PQ July 16 p8 v2 q9 ccm.qxp_pq sept 12 p08 09/06/2016 15:13 Page 10

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PQ news

The demise of high street retailer BHS,owned by Sir Philip Green, is beinginvestigated by two parliamentarycommittees. Some 11,000 jobs areunder threat. BHS had madesubstantial losses for the years 2009to 2014. Its balance sheet showednegative equity for the years 2012 to2014. The 2014 accounts showednegative equity (its liabilitiesexceeded assets) of £256m.

The company accounts soothedcreditor, pension scheme member andregulator anxieties with the statementthat “the directors believe thatpreparing the financial statements onthe going concern basis is appropriatedue to the continued financial supportof the company’s ultimate parentcompany Taveta Investments Limited”.The difficult is that Taveta’s financeswere not rosy. The company reported£826 million negative equity in 2005,though it declined to £357m by 2012.

BHS had been audited by KPMGfrom 2002 to 2008, and byPricewaterhouseCoopers from 2009 toits demise. It always received anunqualified audit report. Auditors didnot issue an Emphasis of Matter reportto flag potential going concerndifficulties. PwC have been close toSir Philip Green for years. In 2014,PwC received £355,000 in audit feesfrom Taveta (which included BHS) and£2.86m for non-audit fees.

It is a poor show from auditors. Thedebacle once again raises questionsabout auditor independence,regulation and the tendency to ape thethree unwise monkeys.

PREMSIKKA

BHS and thesilence ofthe auditors

n Prem Sikka is professor of accountancy at theUniversity of Essex

Where’s the diversity?

Mismatch for young auditors

Future is in the cloud

Continued from page 1and discuss the issue in a moreproactive manner.

The ICAEW’s QualificationsDirector, Shaun Roberston, saidcurrent training gives its trainees theconfidence to question the views ofsenior members of an organisation.He stressed: “They have provedthemselves to be professionallysceptical and able to give sound,objective business advice. Theirexperience or age does not imply abarrier to asking the full questions

needed to complete a full audit.”The ACCA’s head of audit and

assurance, Andrew Gambier, wasalso sceptical about the report’s one-sided view of the audit process.Seeing young auditors as weak andclients as mean is too simplistic aview, he said, although he loved theauthors’ psychological look at theaudit process and wanted to seemore of it. In Gambier’s view, youngauditors are incredibly independentand strong-minded, and are notcowed by difficult clients. He felt

another piece of research wasmissing from the report – clients whoare scared of the auditors!

He was not surprised by the moveto email ‘conversations’. An emailfrom a client is much better evidencethan a hand-written note! • Bennett and Hatfield’s report, ‘TheEffect of the Social MismatchBetween Staff Auditors and ClientManagement on the Collection ofAudit Evidence’, was recentlyrecognised with the Deloitte WildmanMedal.

The year may be 2016, but the bigaccountancy firms’ diversity policieshave some way to go. It seems just5% of partners in the top 10accountancy firms come fromblack, Asian minority ethnic(BAME) backgrounds, according toa major new survey fromAccountancy magazine.

Some 20% of professional staffat the 10 largest firms now comefrom BAME backgrounds, yet just234 out of 4,718 partners in thesefirms were BAME.

The survey found that at the toplevel women fair better, althoughthe 803 female partners in the top10 is a mere 17% of the total.

All the firms say they are takingaction to improve the situation, butaccountancy fares very badly whencomparisons are made with otherprofessions. For example, the

proportion ofBAME partnerlevel staff in thelegal and financialservices industrycurrently standsat 40%.

Accountancymagazine foundthe most BAMEpartners can befound at EY, with58 – that’s 8% ofits total partners.Smith &Williamson currently has onepartner out of its 306 who is BAME.Interestingly, EY has the mostfemale partners too, with 20%. AtSmith & Williamson one in fivepartners are also women.

When you drill down intoAccountancy magazine’s figures

you discover just 10partners out of 4,700 inthe top 10 firms areblack.

The real concern formany graduates will bethat it appears somefirms seem to be talkingup the diversity cardwithout actually puttinginto practice what theypreach.

While firms may beattracting highernumbers of BAME

students many leave before theyget into senior positions, PwC’sGaenor Bagley told Accountancy.Meanwhile, EY’s Maggie Stilwellsaid people need to see otherpeople that they can identify with,so it makes the provision of rolemodels very important.

The future ofaccountancy is in thecloud, says FreeAgent’sCEO Ed Molyneux. Andas HMRC takes us all‘digital’ accountants willhave to look to evolve.

Molyneux agrees thatit makes it very hard forPQ and NQs to maptheir careers. No onereally knows what theirworld will look like in even fiveyears’ time, he suggested. All thatyou know now might quickly be ‘oldhat’.

While some people seeautomation as a real threat,Molyneux is in no doubt that theprofession is more than capable ofevolving, and will be able to takefull advantage of the brave new

world ahead. The accountant’s role

will change, of course.Instead of chasingreceipts and workingout what happened lastyear they will beexpected to help smallbusiness set up andgrow. That meansaccountants will shiftfrom crunching the

number to becoming virtual FDs. Inturn, that also means accountantscan help businesses that theycouldn’t before – those micro-businesses. • FreeAgent provides award-winning cloud accounting softwarefor accountants working with micro-business, freelance and contractorclients.

JOB OF THEMONTH

Head of Finance Oldham Coliseum Theatre isseeking a Head of Finance.This is an outstandingopportunity for an experiencedand enthusiastic individual tolead the theatre’s financedepartment.

The Head of Finance isresponsible for the operationand accountability of allfinancial systems and theprovision of financemanagement information. As amember of senior managementteam you will contribute to thedevelopment and delivery ofthe vision, mission, goals andvalues and play a significantrole in the leadership anddirection of the company.

This is a permanent, fulltime position. Salary is£32,885.

Closing date for this role isFriday 24 June and interviewscommence the week beginning4 July.

For more information,including job description,accounts and budget, pleasedownload an application packfrom the website – go tohttp://www.coliseum.org.uk/work-with-us/recruitment/

Ed Molyneux

PQ July 16 p10 q9_pq sept 12 p08 08/06/2016 15:03

011_PQ 0716.indd 1 03/06/2016 15:28


PQ news

This month I was in Beijing for ameeting of world education leadersreviewing the 13th Five-Year Plan.There are nine key projects ineducation as China seeks to increaseboth the numbers of students from thecountry studying overseas andinternational students studying inChina. About 390,000 internationalstudents spend part of theirprogramme studying in China. Thenumber of people in university leveleducation has rapidly increased: In1980, 2.7 million students were atuniversity; by 2000 this had increasedto 9.3 million and last year reached36 million. The initial participationrate (the number of school leaversgoing to university) was 30% in 2012and last year it reached 40%.

This is rapid change. Tony Blairwas famously lambasted for setting aUK target of 50% of school leaversattending university but at this rate ofgrowth China will soon be overtakingthe UK. The worldwide number ofinternational students studying abroadhas grown fairly consistently since2000, from two million students toabout five million a year today and isprojected to hit eight million by 2025.The US attracts the most internationalstudents with 20% of the market. TheUK is second with 11%, followedclosely by China. The most popularsubject studied in China is businessand accounting. One of the keyprojects for China is to combine morerelevant elite vocational educationwith higher education. The Asian Tigeris growing in strength.

CARLLYGO

Education is key togrowth inChina

n Professor Carl Lygo ischief executive of BPP

More needs to be done to improvegender diversity in NHS financedepartments, says a report fromFuture-Focused Finance (FFF).

While women make up two-thirds(62%) of the NHS financeworkforce just 26% of financedirectors are female, a figure whichhas increased only slightly since2009, when it was 21%.

The real worry is the number ofwomen who believe the promotionprocesses are fair and based onmerit. Just 43% of women thoughtthey were fair.

Some 28% of female NHS staffalso felt they were more likely toexperience barriers to careerprogression than their malecounterparts. This stops them

applying for promotions and otherpositions.

Another problem is the fact that71% of women working in NHSfinance believe it would be harderfor them to maintain a work-lifebalance if they moved into a moresenior role.

The NHS’s chief finance officer,Paul Baumann, said: “Diversitywithin the workforce, and inparticular finance, can be used todrive business success, enablingorganisations to become moresuccessful, sustainable and betterequipped to meet futurechallenges. A diverse leadership,which bears a good resemblance tothe community which it serves, isbetter able to deliver patient-

focused care. With its mission toensure NHS finance is fullyequipped to support the provisionof high-quality patient care underincreasingly challengingcircumstances, FFF isspearheading this initiative toimprove the finance function’sperformance by bringing morediversity to its leadership.” • The report is called ‘Diversity inNHS Finance Leadership: beliefs,behaviours and barriers’.

The Association of TaxationTechnicians (ATT) is calling onHMRC to postpone the introductionof quarterly digital reporting by atleast a year. ATT believes a delay tothe consultation process is neededbecause of the EU referendummeans the new timetable is overly-ambitious.

In all there are expected to befive consultation documents onMaking Tax Digital, which will allnow be issued at the same time

with simultaneous deadlines. Thefive are expected to cover thescope of quarterly reporting,administration, software, penaltiesand payments.

ATT’s Yvette Nunn said that theMaking Tax Digital projectrepresents the biggest change inthe way taxpayers will engage withHMRC since the introduction ofPAYE in 1945. Her worry is thatHMRC will stick with the launch ofthe public testing phase of April

2017, giving just six months for fulland frank consultation.

Nunn stressed: “Rushing aheadwith this project without adequatetime for the consultation andtesting phases could put at risk themany potential benefits fortaxpayers and HMRC which greaterdigital working can bring. Thatwould be a tremendous mistakeand in a worst case scenario couldresult in a system that is not fit forpurpose.”

HMRC ‘must put quarterly digital reporting on hold’

PwC become embroiledin a dress code rowearlier this month, aftera female temp was senthome for refusing towear high heels.

Nicola Thorp (pictured)was so shocked by beingtold she had to wear heelsthat she has launched apetition. It urges parliamentto make it illegal for women

to be required to wear high heels atwork. In just two days 100,000people had signed it.

Thorp was sent to PwC’s officesby Portico, a firm that suppliesfront-of-house services to many topcompanies. PwC was reportedly “indiscussions” with Portico over itsuniform guidelines.

Perceived bias of NHS finance

Stand off over high heels

Audit ofrevenue ‘weakness’Do the big firmsneed to do moretraining in the

audit of revenue?The audit of revenue appears to

be a key ‘weakness’ of many ofthe audits looked at as part of theFRC’s audit quality reviews of thesix largest firms.

The FRC said in PwC’s reportthat revenue is an important driverof an entity’s operating results andauditors need to evaluate andaddress fraud risk in relation to

revenue recognition. It goes on tosay that a failure to performsufficient audit work in this areaincreases the risk that auditors willnot identify a materialmisstatement of revenue in thefinancial statements.

It told KPMG that insufficientrevenue testing was performed onthree of its audits. On one auditthe analytical procedures andcontrol testing did not providesufficient audit evidence.

In the other two audits only therecognition of revenue in thecorrect period was tested in detail,without testing the underlying

revenue. The FRC now wants to see

KPMG reviewing its methodologyand training for the audit ofrevenue.

The FRC said there was an

overall improvement in itsassessment of Deloitte, EY, GrantThornton, and PwC, whencompared with last year. But halfof the eight audits reviewed atBDO ‘required improvements’.

There was a significant increasein the number of audits reviewedat KPMG this time around. Twoaudits were assessed as requiringsignificant improvements and afurther six required improvements.The FRC said it needs to see animprovement in “the scope anddepth of the audit work performedby certain of the firm’sspecialists”.

PQ July 16 p12 q9_pq sept 12 p08 08/06/2016 12:32 Page 8

13PQ Magazine July 2016

news PQ

Kaplan buys Osborne Books

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CIPFA and ICAS have announcedthat they are extending their‘partnership’ with a new initiativethat enables CIPFA’s UK exam-qualified members to attain jointaccreditation and ICAS status.

The joint initiative is intended togive CIPFA members theopportunity to enhance theirprofessional accountancy status inan increasingly mixed economy forpublic service.

CIPFA’s CEO Rob Whiteman said

the latest initiative “adds value toour members, both in CIPFA andICAS, and we are confident it addsvalue for employers as well”.

ICAS CEO Anton Colella said:“What we have today is a highlymobile accountancy profession. Weare increasingly seeing peoplemoving careers at least five, six,seven times in their professionallife, and anything that could add tothe leverage they have in thatprocess is a very exciting prospect.”

New ICAS partnership initiative‘adds value for CIPFA members’

Many AAT tutors were surprised tohear at the recent AAT TrainingProvider’s Conference that OsborneBooks had been taken over byKaplan Publishing.

Apparently, owner MichaelFardon put Osborne Books up forsale last summer. Kaplan quicklybecame the preferred bidder andthe takeover was referred to theCompetition & Markets Authority.The CMA approved the bid in late2015 and Kaplan bought thecompany in mid-February this year.

Kaplan’s director of learningsolutions, Michael Smith, wanted to

ensure interested parties that it willbe business as usual at Osborne.The books will have the sameauthors. The Ecommerce andonline strategy, such as theinnovative online assessmentpackage, will also continue asnormal. The one thing that willchange is the distribution centre,which has moved from Worcester toWokingham.

Smith reiterated that OsborneBooks will be run separatelycompany and the team will workhard to keep the good relationshipsit has colleges and students.

The FRC’s CEO, Stephen Haddrillhas formally written to RichardFuller MP over his concerns aboutthe demise of BHS.

Haddrill (pictured)explained that the FRC islooking into events atBHS to determine whetherto investigate under itsenforcement arrangements.These arrangements apply toaccountants, auditors andactuaries who are members of a

professional body in the UK.He said: “It should be noted that

our enforcement powers do notextend to company directors

unless they are members ofthe relevant professionalbodies. Other regulators andlaw enforcement agencies

have powers to investigatedirectors and FRC is liaisingclosely with them to exchangeinformation that is relevant to theirrespective remits.”

FRS explains its approach to BHS

Partners: Anton Colella and Rob Whiteman, right

You’ll never guess what I heard...

Keep up with the latest industrynews – follow on Twitter @pqmagazine

PQ July 16 p13 q9 ccm.qxp_pq sept 12 p08 09/06/2016 13:33 Page 8


PQ career advice

Sally O’Neill explains how theACA qualification can get youwhere you want to go!

The Royal Opera House’s COOSally O’Neill was the recent starturn at the ICAEW’s International

Prizegiving ceremony. It meant everyonewas treated to a first – a five-minute videoof Carlos Acosta dancing in Carmen(which was spellbinding). For those not inthe know, the Royal Opera House does abit of ballet as well!

What was immediately obvious fromthe start of her talk was the fact thatO’Neill has utilised her ICAEWqualification to get her exactly where shehad always dreamed of being, and she isloving it.

At work she is in charge of a widerange of operations including finance,facilities, technology, planning, technicaland HR. She is also heading up a majornew capital project at the Opera House,called Open Up, a cultural transformationproject to ‘open up’ the building to newaudiences, improve facilities andoverhaul the small Linbury Theatre.

O’Neill joined the Royal Opera Houseas director of finance in 2009 and for sixmonths acted as interim CEO beforeassuming her current position. In truththis was created after she had done sucha great job as acting CEO!

She told the audience she wasextremely proud of her qualification, butadmitted studying the ACA with Deloittefelt “like still being a student whilewearing smarter clothes”. O’Neill stressedthat the ‘technical bit’ of the qualificationis the bedrock of what you will need.Then, as you go through your career, youwill begin to call on those leadershipskills.

Your journey is a series of choices, sheexplained. After an all-girls’ school shewent to Cambridge and studied naturalsciences. Once qualified, she took amixture of commercial and not-for-profitroles. She moved every three to fiveyears, discovering what she liked and

again and challenges you to see the goodand potential in other people’scontribution.7) Sharpen the saw. You need to renewyourself, and feed the spiritual, mental,physical and emotional you!

O’Neill said that it was also importantto know when to take good advice. Agood friend had told her to go for a jobshe didn’t feel ready for, but they lovedher and she got the role.

Mentors can be another key tosuccess. You may have to seek them outthough, as they won’t just fall in your lap.O’Neill admitted that you will sometimesfind yourself lying awake at night, but thatthis can be a good thing if you write youranswers down before you forget them!And she has learnt to make painfulchanges in good time and not just whenthings get bad. By then it can be too late.Finally, she advised the prizewinners tokeep learning.

Then it was back to the Royal OperaHouse for O’Neill, where rehearsals forTannäuser and The Winter’s Tale weretaking place. Which is nice work if youcan get it… PQ

Sing for your supper

what she didn’t. Her first FD role waswith Historic Royal Palaces.

O’Neill told the prizewinners she readsa lot and wanted to encourage them todo the same. Stephen Covey’s ‘7 habitsof highly effect people’, which she read inthe 1980s, has stayed with her, and sheshared his seven habits withprizewinners:1) Be proactive. You have to control yourenvironment, rather than letting it controlyou. So focus on what you can influence.2) Begin with the end in mind. Coveysaid this is all about personal leadershipand defining practical outcomes.3) Put first things first. Keep focused onwhat is important not just urgent.4) Think win-win. Covey explained thatwin-win is based on the assumption thatthere is plenty for everyone, so successfollows a co-operative approach morenaturally than the confrontation view ofwin-or-lose.5) Seek first to understand and then tobe understood. Communication is keyand Covey believes you must diagnosebefore you prescribe.6) Synergize. This is about co-operation

Words of wisdom:O’Neill told theICAEW audiencemembers that theyshould just ‘keeplearning’

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PQ variances

Students often struggle to calculatethe fixed overhead variancescorrectly – and in particular the

volume, capacity and efficiencyvariances. There seem to be so manyvariables involved – actual cost,budgeted cost, actual quantity, budgetedquantity, standard quantity and so on. It’sa nightmare!

And there are so many ways toremember the variances – some tutorslove formulas, some suggest drawinggraphs… I’ve always believed that if youunderstand the logic behind any subjectyou are more likely to carry out anycalculations correctly, but also to be ableto explain the meaning of your findings.

So let’s have a look at explaining thesetroublesome variances in a much simplerway than you will usually encounter in atypical accounting text book.

Meet Brian. Brian is a typical AATLevel 4 student studying the FinancialPerformance unit. He is hard-working,committed and motivated. He alsostruggles to understand fixed overheadvariances.

Brian has his exam in a couple ofweeks, so his tutor has given him someadditional homework to do. This is tocomplete four practice exams and tobring them back in to be marked thefollowing week. The tutor explains thateach practice exam has a time limit ofthree hours and Brian should stick to thiswhen he completes them.

With this information we can establishsome ‘standards’. The plan (budget) isthat Brian will complete:

4 exams in 3 hours each = 12 hours workA week later Brian approaches his

tutor and tells her that he has done really

well with his homework this week – hedidn’t just work for the 12 hours whichwere budgeted, he actually worked for 15hours on the practice assessments. Brianis happy with this. So too is his tutor.

“That’s excellent, Brian. You workedmore hours than we budgeted for – welldone!”

She then asks Brian for the completedassessments so she can mark them.

“Ah… I only managed to completethree of the assessments.”

Brian’s tutor isn’t so happy now. “So you worked for 15 hours, but you

only completed three papers! What wereyou doing?”

“Well”, replies Brian, “You see theytook a bit longer than I thought… and Iwent on Facebook… and I watchedEastEnders…and then my friend cameround...”

This little tale demonstrates perfectlythe fixed overhead variances.

Brian had a favourable capacityvariance of three hours. By comparingthe budgeted hours with the actual hours

we can see that Brian worked for 15hours against a plan of 12 hours – whichis, of course, a good thing.

But this is not the whole picture; wealso need to think about how efficientlyhe worked during these hours. And this iswhere Brian underperformed; the threepractice exams he completed should onlyhave taken him three hours each, or ninehours in total. So he took 15 hours tocomplete work which should only havetaken nine hours, which is an adverseefficiency variance of six hours.

If we add the capacity and theefficiency variances together (taking intoaccount which is favourable and which isadverse) we get a figure of three hoursadverse. This is effectively the volumevariance, except the volume variancedeals with units rather than hours. Inthree hours the standard output is onemock exam (ie one unit) – which ofcourse reflects that Brian only completedthree mock exams instead of four.

Of course, in a manufacturing settingwe would need to multiply each of thesevariances by the overhead absorption rateper hour (for the efficiency and capacityvariances) and the overhead absorptionrate per unit (for the volume variance), toexpress the variances in monetary terms.But the principles remain the same.

Many students struggle to understandhow working more hours than budgetedleads to a favourable capacity variance,or how a favourable capacity variancecan be ‘paired’ with an adverse efficiencyvariance.

Hopefully the story of Brian has helpedto clarify what each of these variancesmean so you will feel more confident inboth calculating and explaining them inyour exam. Of course, the other thing thatwould help would be having favourableefficiency and capacity variances in yourown revision! • Neil Arnott is a course tutor atPremier Training

PQ

Variances and the life of BrianNeil Arnott explains how youcan tackle exam questions onfixed overhead variances

Most people will know something about ValueBased Management (VBM). It is a managementphilosophy that, basically, focuses on thecreation of value rather than just profits.Sometimes there is, however, confusion aboutjust what we mean by ‘value’ in this context. Inthis article we will look first at what definition ofvalue isn’t used in VBM. We will then look atwhat definition of ‘value’ is actually used inVBM. We will then conclude by exploring thevarious issues, some fairly controversial, inusing the chosen definition of ‘value’.

First, what it is not. It is not value added,where companies are attempting to increaseprofits by adding customer/company value at a

product level. An obvious example of this iswhere potatoes (which often sell at less than50p per kilo) are turned into crisps and thensold at more than £20 per kilo.

It is also not added value. This is mostly ameasure used by governments and otherorganisations to measure the economic viabilityof whole industries. It looks at how industriescontribute to the economy by measuringemployee wages and benefits, taxes paid,dividends paid and the amounts reinvested inthe future of the industries.

So how is ‘value’ defined for the purposes ofVBM? It goes by several names but the one weshall use here is stakeholder value. But here is

where the problems start. As you will know,companies have many stakeholders andcreating value can be a very testing andconflicting process. It is often the case that bycreating value for one class of stakeholdersoften can end up destroying value for others.So what often happens is that the definition ofvalue becomes not stakeholder value butshareholder value, and this can be where thecontroversy starts.• John Foster is an AIA Achieve e-tutor. The AIAAchieve team is producing a series of ‘A QuickLook at….’ articles and more can be found onthe AIA website: www.aiaworldwide.com/a-quick-look-at.

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PQ CIMA E3

The role of information systems inorganisational strategy makes up 15%of the CIMA E3 syllabus, with two lead

learning outcomes:E1: Evaluate the information systemrequirements for successful strategicimplementation.• Evaluate the information systems required tosustain an organisation.• Advise management on development ofstrategies for knowledge management.E2: Evaluate opportunities for the use of IT andIS for the organisation, including big data.• Evaluate the impact of IT and IS on theorganisation and its strategy.• Evaluate the strategic and competitive impactof information systems, including the potentialcontribution of big data.

The understanding of this topic is not onlyvital for the E3 exam, but also for the Strategiccase study. Whereas in objective test examtechnology is often examined alongside otherstrategic tools such as Porter’s Five Forces orValue Chain, in the February 2016 case studyexam students were asked to review strategicbenefits and risks of e-business.

The topic of information systems is historicallyperceived by students as complex, due to theintangible nature of technology; it is often hardto grasp the practical application of many newtechnological developments such as big data orcloud computing. Yet all of us use technologyevery day by browsing the internet or using self-service checkouts, which highlights to us thatorganisations are becoming more and moreaware of the significance of IT in sustaining theirability to compete. For example, in the retailindustry the competitive battlefield has shiftedaway from physical stores towards internet sales.As a result, major retailers are now looking toharness the ability of their website to collectbetter information about products andcustomers.

Impact of IT and IS on the organisationWhen you last purchased something on theInternet did you by any chance buy it fromAmazon? The company is renowned for itsglobal reach, user friendly website and next daydelivery capability. But did you know thatAmazon is much more than just an onlineretailer of goods? Some 67% of Amazon’sincome comes from its web service division,which essentially allows other companies tovirtually rent Amazon’s technologicalinfrastructure to provide processing power.

Being a virtual organisation, Amazonmaintains limited physical presence and insteadrelies on managing its supply chain to be able todeliver its goods. The company was one of thefirst retailers to realise the benefits of usingtechnology in managing its supply chain. In theupstream supply it encourages independentsellers to list products on its website. Use of GPSand scheduling software in the downstreamsupply chain ensures on-time delivery to thecustomer. Apparently, it is even possible to booka tour of an Amazon fulfilment centre to see thewhole process in action!

Despite the large scale of the retail side of theAmazon business, it is the provision of cloudcomputing services that adds most to the

company’s bottom line. Having established thetechnological infrastructure necessary to processonline retail orders, Amazon now also hires theircomputing power and internet services to otherorganisations that might need to processcomplex calculations or just want to add extraflexibility to their data processing. At the core ofAmazon’s corporate level strategy lies theunderstanding that having built up thecompetencies in data management and analysis,it should not only use them to optimise theoperations of its website but exploit thesevaluable assets, which can generate revenueand profits in their own right. Thus by usingtechnology both within the business and as acore service offered to its corporate customers,Amazon has created a business model thatdiversifies company’s operations away from retailtowards IT outsourcing industry.

Impact of technology and big dataEfficient data processing is rapidly becoming abusiness necessity – with the arrival of the‘internet of things’ many more devices arebecoming connected. This creates a deluge ofdata that an organisation needs to make senseof. Your smartphone has a multitude of sensors,tracking information about location, pace, voiceand even temperature. By applying statisticaltools to this data a company can now betterunderstand its customers and thus improve its

products and services, which may provide it withan edge over its competitors. The big dataconcept brings together the need for vastquantities of information processed in real timefrom a variety of sources in order to helpcompanies make better decisions.

Companies such as Pinterest use big data todeliver a personalised visual bookmark service toits users by analysing the intent of each Pin.Using specialised software application, Pinterestwill take into account the context of the Pin,together with related images to makesuggestions about similar objects the consumermight like as well as the organisations you canbuy them from. With over 30 billion Pins andfast growth in the number of users, Pinteresthad to double its computing power and triple itsstorage capacity in the past six months.

Such complex processing requires powerfulcomputing capabilities often beyond theresources available to any one company. This inturn creates demand for cloud computingservices.

To support it growth, Pinterest decided to gainaccess to extra computing power throughAmazon web service division. This collaborationallowed Pinterest to reduce the capitalinvestment required to establish data centreswhile transferring the risks of technology failureand security breaches to a provider who is betterequipped to handle them.

Why you mustthe implication

Iryna McDonald tells you how to pass the E3 paper

pq july 16 p18-19 q9 ccm.qxp_Layout 1 09/06/2016 13:55 Page 2

PQ Magazine July 2016 19

CIMA E3 PQ

CIMA students might have noticed thatthere have been some recentchanges with regard to our Practical

Experience Requirements (PER), notably thereis a second choice of how to submit, writesTricia Buchanan. This is a soft launch of a newonline process during which CIMA is gatheringfeedback from applicants and assessors. Theresults of this will be used to enhance the newprocess and CIMA expects to be launchingthis pilot fully soon, and promoting it to ourstudents, training providers and employers.

What is PER? In order to become a CIMA member andChartered Global Management Accountant(CGMA), students need a minimum of threeyears’ verified relevant work-based practicalexperience. This experience is assessedthrough the process called PER applications,which are an essential part of the CIMAqualification and CIMA’s membershipapplication process.

As part of the PER, students are assessed to

determine whether they have gained sufficientprofessional experience and whether they canapply their knowledge and skills to the workenvironment.

If approved, students are awarded Associatemembership and therefore receive the ACMA,CGMA designations.

We have updated the submission processfor the PER to ensure it is aligned with thesyllabus and assessment of the 2015 CIMAProfessional Qualification and based aroundthe CGMA Competency Framework.

Our Framework consists of four knowledgeareas: Technical Skills, Business Skills, PeopleSkills and Leadership Skills, and isunderpinned by Ethics, Integrity andProfessionalism.

Each knowledge area contains a number ofcompetency categories and individualcompetencies or skills. The minimum 36months’ experience needed is required acrossthe four knowledge areas, with a maximum of60 months to be evidenced.

The new way of submitting an application

also complies with IFAC’s (InternationalFederation of Accountants) internationaleducation standards.

What does this mean for students? We have created the new user-friendlyMembership Application Tool (MAT). Once ourpilot is finished students may expect anintuitive online application process where theycan easily update their competence on the goas they continue to gain further professionalexperience.

Students can begin to record their practicalexperience on the MAT as soon as they havestarted studying at Operational level of theCIMA professional qualification. They alsohave the option of submitting their applicationfor assessment after they have completed allthree objective tests at Strategic level.

If students have not completed the Strategiclevel case study exam at the time theirexperience is approved, election tomembership will be provisional pending theirexam results.

Existing applicants do not have to worry.They are not at a disadvantage as the existingPER application process will be kept open atleast until 31 December 2016. • Tricia Buchanan is Director of OperationalDelivery at CIMA

PQ

Opportunities presented by IT and ISAt the strategic level, the conversation aboututilisation of technology is moving away fromconsidering whether one is needed towards howit could be used to generate an edge over rivals.With better access to data processing capabilitycompanies can now focus more on their corecompetencies of product innovation andcustomer service and less on technologicalinfrastructure. Therefore IS could be seen asboth a sources of competitive advantage throughthe enhanced ability to meet customer needs, aswell as the strategic imperative for the futuresurvival of the organisation, with technologyaffecting every aspect of its operations.

Have a go at these questions to test yourtechnical knowledge

Question 1: ARC airline has introduced dynamicpricing for its tickets as part of a strategy toimprove the company’s overall profitability. Itswebsite is linked to a specialised softwareapplication deploying big data techniquesthrough monitoring of travel patterns, weatherconditions and holiday periods to change ticketprices in real time. Despite the initial success of

the dynamic pricing, ARC received severalcomplaints from customers about the websitefreezing or becoming unresponsive during peakusage times. As a result, the ARC boardrequested that a change be made to dynamicpricing system operations to address thesecustomer complaints.

Which one of the following features will helpARC address customer complaints?a) Increasing the volume of indicators taken intoaccount when setting prices levels to includefrequently searched destinations.b) Use a greater variety of source of information,such as previous ticket purchases made bycustomers as well as photos and commentsmade by them on social media.c) Enhance veracity of customer data by askingcustomers to log in before confirming the finalticket price.d) Increase velocity of pricing decision by addingextra data processing capability through cloudcomputing.

Question 2: KIK, an upmarket clothing retailchain, is planning to expand abroad to countryZ. KIK currently operates through physical storesin premium locations in its home country K.Recent market research identified that incountry Z there is an increasing preferenceamong consumers for online shopping. As aresult, the KIK board has made a decision toenter country Z using only e-business operatingmodel.

Which of the following benefits will KIK gainfrom operating an e-business model? Select allthat apply. a) Enhanced shareholder returns through betterROCE.b) Decreased risk of damage to the company’sreputation.

c) Seamless management of the supply chainfrom factory to the consumer.d) Greater price transparency for its garments incountry K.e) Better customer retention through dataanalysis and relationship management.f) Greater insight into competitors’ strategies.

• Iryna McDonald is a tutor at KaplanFinancial

THE ANSWERS

PQ

Updates to PER

Question 1: answer DVelocity as an element of big data refers to speed ofdecision making. ARC’s customers complained about thewebsite becoming unresponsive as it struggled to processa large volume of information necessary to set the pricesin real time. Cloud computing will allow ARC to gain on-demand access to data processing using infrastructureprovided by a third party, thus reducing the revenue lostfrom customers who are not able to make a booking.

Question 2: answer A, C, EE-business is less capital intensive compared withoperating physical stores, which will enhance Return onCapital Employed (ROCE). A further move towardsbecoming a virtual retailer would allow KIK to link clothingmanufacturers directly to the customers orderinggarments. Through the website, the company will be ableto collect more information about its customers and thustarget them with relevant offerings, leading to bettercustomer retention.

However, the e-business model might increase the riskof reputation damage: a breach of security in the event ofhackers stealing credit card details might underminecustomers’ trust in KIK’s ability to safeguard data. Greaterprice transparency is unlikely to arise in country K as thewebsite will only operate in country Z. Although thewebsite will provide better information to KIK about itscustomers and products, it will not provide newinformation about competitors

t graspons of IT

pq july 16 p18-19 q9_Layout 1 08/06/2016 12:45 Page 3


PQ CIMA P1

In my previous article (PQ, June2016) we looked at the three keyfactors to ensure CIMA P1 success:

• Understanding – ‘why’ not just ‘how’.• Strong exam technique – keep moving,good use of proformas and formulas,confidence. • Question practice – for ALL learningoutcomes.

Having provided you with questions forSection A and B, let us now focus ourattention on Syllabus area C.

Section C ProficiencySection C, Short Term Decision Making:as with Section A, this area covers 30%of your exam and on the day you willfacing 18 questions. You should expectto be dealing with areas such as relevantcosting, strategic implications of short-term decisions, make or buy,discontinuing services or products, breakeven analysis, limiting factor analysis,linear programming and joint costs andby products.

An epic amount of content and such avariety of formulas and techniques tocontend with, meaning students musttake ownership of the syllabus and userelevant revision skills such as mindmaps, acronyms, repetition and readingto ensure technical ability andunderstanding has been achieved.

Students must also remember that halfof the questions are theory based and soshould have excellent comprehension ofthe P1 Syllabus.

Below you will find six questions thatlook at different syllabus areas of SectionC. The answers are available via email –[email protected]

I have also prepared six questions onSection D: Dealing with Risk andUncertainty, and again these can beobtained by email.

The questions – Section C1. The finance manager states “you havegiven me two unit costs for me to usewhen considering a selling price for aspecific contract. One is a relevant cost

of $13.50 and the other is a fullproduction cost of $12.00.”Which of the following statements is truewhen advising which cost to use:A: The full production cost should beused as it covers all costs including fixedcosts.B: Production costs should be used as itis higher, which means a higher sellingprice can be set and therefore generatemore profit.C: The relevant cost should be used as itincludes the costs relevant only to thiscontract.D: The relevant cost should be used as itis lower.

2. A company is considering the future ofProduct Q and the following costsrelating to Product Q are detailed in thetable below.

Direct Materials $95,000Direct Labour $82,000Insurance $6,100Overhead L $3,000

The insurance is solely related toProduct Q and would not be incurred ifthe project were discontinued. OverheadL is unavoidable and will continue ifProduct Q ceases production and areapportioned on the basis of labour hours.

What is the cost which would not beincurred if product Q were discontinued?

A: $183,100B: $6,100C: $9,100D: $177,000

3. The following linear programmingsolution has been completed:

Objective function 20x + 30yDirect material 2x + 4y ≤1600 kgDirect labour x + 4y ≤2,400 hrsMachine hours 2x + 6y ≤2,000 hrs

X 100 ≤400 Y 0

Which of the following statements aretrue?

1. The selling price of product y is $30.2. Product X uses twice as much directmaterial as product Y.3. Product Y uses 4 times as muchlabour as product X.4. Maximum demand x = 100 units.

A: 1 and 2 onlyB: All of themC: 3 and 4 onlyD: 3 only

4. A company produces two products Xand Y and they are sold in ratios of 1:4and the following information is available:

X YCS Ratio 20% 35%Sales Revenue $600,000Fixed Costs $100,000

What is the margin of safety to the nearest $

5. A company is preparing a quotation fora new customer and the job will involve200kg of material D. The company has160kg of material D in stock and hadplanned to sell this for scrap as it has nofurther use.

The following information is available forProduct D:

$Market Price 4.80Scrap 1.60Original cost 3.60

The relevant cost of the direct materialsfor this quote will be:

A: $960B: $448C: $768D: $320

6. When considering profit maximisationin a scenario with more than oneconstraint, what will the axis on agraphical linear programming solutionrepresent?

A: Product contributionsB: Products available for productionC: ConstraintsD: Profit per product

• Kate Williams is a tutor at HTFTPartnership

PQ

Section C: six of the bestHere’s part two of Kate Williams’ article on passing CIMA P1

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021_PQ 0716.indd 1 08/06/2016 15:09


PQ AAT exams

Iwracked my brain thinking of asubject to focus on this month. Ikept thinking, “do I dare try and get

away with another tax one?” After muchpondering, I thought “what is the onething which AAT students dislike themost?” Instantly, I thought of the level 3Professional Ethics unit. However, thething that catches most people out themost in this exam is not the subjectmatter. It is how to answer the questions.Knowing what the question requires isjust as important as knowing the fivefundamental principles.

There are various types of questionswhich may come up, and you need toknow how to tackle each one as they areall different.

The ‘state’ questionDuring your studies you may comeacross questions such as this: State ifJohn, who is AAT qualified, can offerinvestment advice to his client Jack?

I really feel for the student who writes:“No, John cannot offer investmentadvice. Investment advice is one of thethree restricted areas in accountancy.Being AAT qualified is not sufficientenough to be able to offer this service.”

The answer is really good. However, Ithen look at the model answers in ourmock, and we are looking for: “No”.

That’s it. That is all that you need towrite for this question. The question said“state if John can offer this service” andthe answer is simply “no”. For a questionwhich says ‘state’, we are looking for ashort, to the point, answer.

The ‘explain’ questionThe ‘explain’ question is the opposite endof the scale to a ‘state’ question. You maybe asked to explain if someone can takea certain course of action; for example:Jane has never studied, nor worked, intax. She has been asked by a prospectiveclient if she can complete his tax returnfor him. Explain if Jane can complete thetax return for the client.

If your answer is ‘no’, you are notanswering the question. The questionasked you to explain if they could take a

course of action. Therefore, you need tostate if they can do something and thensay why they can, or cannot, take thatcourse of action.

A far better answer would be: “Janecannot take on the client, as she doesnot have the necessary training orexperience. As such, she would be inbreach of the fundamental principle ofprofessional competence and due care.”

The ‘threat’ questionYou may well need to explain howsomeone’s fundamental principles arethreatened. If you are asked which ofJane’s fundamental principles isthreatened, due to the fact that she hasplayed golf every Sunday for a number ofyears with a client, and your answer is:

“Jane’s objectivity is threatened, becauseshe has known the client for many years,and plays golf with them every Sundayand so lacks professional distance fromthe client.”

Now you are so close! You clearly knowthe fundamental principles, and canapply them correctly the differentscenarios. However, you are not quitethere. If the question asks how someoneis threatened, there is obviously a threat,so you need to name the threat! Here,you will get credit for naming this as a“familiarity” threat.

How can you avoid this threat?The different ways in which you can

avoid ethical threats is one of the keysubjects in this unit. The typical AATstudent dives upon this, as they have anamazingly technical answer aboutseparate accounting and auditing teamswhich they cannot wait to give theexaminer to show how well prepared theyare. However, they often overlook theeasy option. If the scenario asks how youcould avoid a threat to your fundamentalethical principles, you will always getcredit for simply saying “I would refuse todo it” or “I would cease to act for theclient”. If any act might threaten yourfundamental principles, simply do not doit, and there is then no threat! A niceeasy point!

The factsHowever, there are certain things whichyou just have to learn. If you do not knowthese, you will struggle in this unit. Youneed to know the fundamental principles,they are, for want of a better word,fundamental. Likewise, the fundamentalprinciples will be threatened, so you needto know the names of the threats.Learning these is only the first stepthough, you need to then apply these tovarious scenarios.

In the exam you will be told how manymarks each question is worth. You canuse this as a guide as to how much towrite. The exam is hard enough as it is,so don’t make it harder for yourself bywriting an essay to get one mark. • Nick Craggs, First Intuition

PQ

It’s vital you identify the different questions inthe ethics papers, says Nick Craggs

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023_PQ 0716.indd 1 07/06/2016 09:38


PQ AAT Training Providers’ conference

Turning PQs into writers

“The closure of the QCF has meant the AAT has been able to reclaim its qualification. It has been able to listen to itsmarketplace and move forward with AQ2016” – Michelle Lofthouse

“In Africa, 25% of internet use is via Whatsapp. The challenge then is to provide learning via Whatsapp here” – Kieran Rice, MD BPP Learning Media

PQ editor Graham Hambly went to the conference on your behalf. Here’s a selection of the best bits

With the increased emphasison written tasks in AQ2016the AAT will need to turn its

PQs into writers. It does, however,understand that learners find this areadifficult.

Top tutor Catherine Littler tolddelegates at the Training Providers’Conference that students often tell themthat they opted for AAT because they are‘good with numbers’. She felt it was alsotrue to say many tutors are morecomfortable teaching the numericalquestions, too.

So while both students and tutors arehappy get their calculators out for exampractice they are far less happy aboutexpressing themselves on paper. Littlerunderstood that it doesn’t help that theinterpretation of calculations can seemobvious.

She said tutors need to have strategiesto help build students’ confidence. Shefinds working in pairs can be a good wayto start. Tutors need to pick these pairscarefully and swap people around toensure one student isn’t doing all thework!

Littler stressed that trainees will oftenwrite about subjects they find interestingor have a good knowledge of. To helppractice letter writing she asks her PQs towrite a formal letter to the England

football manager.Students still resist, she explained, but

you have to take away their worries. Theywill say: “I can’t spell”, “I make a messbecause I make mistakes” and “myEnglish isn’t very good”. But computerscan help with spelling and can be usedto clean up the mess.

She felt creating templates right at thebeginning is an invaluable tool forbuilding confidence.

Schools haven’t helped PQs here, shesaid. They put an emphasis on creativewriting, which doesn’t help with writingreports and letters. English teachers willsay start a letter with “I am writing toyou”, where Littler says they obviouslyknow that you are writing them a letter.

There is a formulae for writing a letter,

she pointed out. The opening sentenceshould state what has prompted theletter. The second paragraph explains theproblem and issue. The next paragraphexpands on that. And the next outlineswhat the writer wants to see happen. Theconcluding sentence says ‘please contactme…’. So, it’s just a question of learningthis format.

Littler said the formula for emails isfairly similar, as are other short writtencommunications.

She stressed that students need tolearn to use business language. Theseneed not be long words, but slang is areal no-no. Littler has found encouragingshort sentences helps build a student’sconfidence.

PQs also need to be encouraged toread more formally worded newspapersand online sites too – we are talking TheTimes (and PQ magazine), not The Sun.

Another key to success isunderstanding the verbs. Do studentsreally understand what they mean, shewondered. We have ‘compare’, ‘contrast’,‘describe’, ‘analyse’, ‘evaluate’, ‘interpret’,‘justify’ and ‘recommend’!

Tutors can use accounting theory tohelp writing practice. For example, theFinancial Performance examiner saysstudents can’t explain the differencebetween gross profit and gross profitmargins. A good exercise is to askstudents to describe what they are andhow to calculate them and explain how abusiness will use the information gainedfrom these calculations.

Finally, if students are still strugglingwith the written side she asks them toanswer the question verbally, and thenwrite down exactly what they have said.This can help with confidence, too. PQ

Christine Littler gave tutorssome strategies to help theirstudents cope with theincreased written content ofthe AAT qualification

TOTAL QUALIFICATION TIMEThe AAT unveiled just how much study youwill need to put in to get a pass. PQs shouldnote that with the introduction of AQ2016total qualification time (TQT) will replaceguided learning hours (GLH). The AAT is keen to stress that the actualnumber of hours students need to put inhasn’t gone up, but it feels total qualificationtime gives PQs a much better understandingof what is required and ‘reflects the reality’.That means for Level2/Certificate the GLH of240 hours will increase to 340 TQT. For theDiploma, the GLH of 340 converts to a TQT

of 460 hours. Finally, at Level 3/diploma theGLH goes from 390 to a TQT of 520 hours.

AAT EXAMS ARE TOUGH!The AAT needs to do more to publicise thefact that it takes 70% to pass itsassessments, tutors told the AAT. It was feltthat this ‘fact’ should actually appearsomewhere on an awarding certificate.The new qualification, AQ2016, will also seethe introduction of merits and distinctions aswell as the basic pass. Students will need80% over the level to achieve a merit and90% to gain a distinction. Certain parts of the

level will also be weighted. Some tutors wereconcerned about the psychological affects ofstudents just getting a pass. “Some may feelthey have failed if they get a basic pass,” onelecturer suggested.

AAT REGISTRATION RULESTransfers of AQ2013 to AQ2016 can becompleted only by training providers and thisis the same with the progression ontodifferent levels. Tutors were told not to lettheir student’s registration lapse if they wantto continue with AQ2013. If they lapse theywill be forced onto AQ2016!

pq july 16 p24-25 q9 ccm.qxp_Layout 1 09/06/2016 15:11 Page 2

PQ Magazine July 2016 25

AAT Training Providers’ conferencePQ

Passing the PTAX assessmentThere is a real problem with the Personal Tax (PTAX) unit at Level

4. Back in 2012 the assessment had a 78% success rate, butnow the pass rate has slumped to 47.4%. It all means Personal

Tax has by far the lowest AAT pass rate at the final level.Despite this, over the past three years the optional Personal Tax unit has

proved as popular as the mandatory units. For example, for the six monthsending June 2015 some 9,917 UK assessments were completed. Bycomparison, the highest number of assessments taken for a mandatoryunit in the same period was 12,967 (Financial Performance).

AAT’s Theo Ege said that in every report on AQ2013 the chief examinerhas highlighted that students have particular difficulties with tasks 2, 6, 7,and 11. Of these, task 7 is the worse of all. Just so you know, in thecurrent sample assessment tasks 6, 7, 8, and 10 are human marked inthe live assessment.

The AAT feels that many students are taking the Personal Taxassessment without a true mastery of the written task elements of thepaper. Some PQs also appear not to have a true understanding of some ofthe key computations.

Another worry is that tutors are allowing students sit the assessmentswithout a firm understanding of what it takes for students to pass, again in

particular the written elements of the assessment. Ege promised a more targeted set of guidance materials, for both tutors

and students, focusing on known areas of poor performance. Sample and live assessments for tax units will also contain enhanced

reference material specific to the Finance Act where appropriate, akin towhat happens in Indirect Tax.

He assured tutors that questions are written and checked for plainEnglish. It should also be remembered, said Ege, that marks are awardedfor correct methodology and workings in both human marked tasks andcomputer marked tasks, where this is appropriate.

Turning to AQ2016, Ege explained that its content was a bit wider, butfelt at the end of the day “tax is tax”. The main difference is the increasedemphasis on application and communication, and the introduction ofInheritance Tax.

PERSONAL TAX IN NUMBERS• Assessment duration: two hours• Number of tasks in assessment: 11• Competent pass mark: 70%• Average number of assessments taken each year: over 10,000

PQ

Johnny Javier Morales Solozano, an apprenticeat the Training Place of Excellence, walked offwith the Apprentice of the Year Award at thisyear’s AAT awards.

Solozano came to the UK from Spain viaSouth America with just €80 in his pocket. Afterfinishing the equivalent of A levels in Spain helooked at his future in his home country anddecided it wasn’t good! He took a plane with his€80 and slept on the sofa of a friend, got a jobas a cleaner and learnt English.

He admits it was all very scary as he couldn’teven say hello to anyone. Solozano, however,found places that taught English for free andenrolled on a course. He knew he wanted to dosomething with maths and that is when hefound out about AAT. Solozano said:“Sometimes you shouldn’t think too muchabout a decision, you should just do it!”

The Student of the Year award went toJessica Leyland, who completed her AATqualification in just seven (yes, seven) months.She used Premier Training and said that sheenjoyed it so much that studying AAT never feltlike a chore. In fact she said: “I loved it.”

Leyland left school at 16 with her GCSEs andit was her employer who pushed her (nicely)

into AAT. They funded it and also gave her a lotof help during her studies. She was working inan administrative accounts role, and had only abasic knowledge of using accounting systems,and absolutely no knowledge of how the systemworked. It was all just data entry. AAT gave heran understanding of ‘everything’ and she isnow also a treasurer for a fundraisingcommittee where she has to do everythingmanually. Leyland burst into tears on hearingher name read out and said she feels “reallyhonoured and immensely proud”.

AAT TRAINING PROVIDER WINNERS 2016• Pauline Sparkes Award for Best New TrainingProvider: Southend Adult Community College• Training Provider of the Year – small: DamarTraining• Training Provider of the Year – medium:Middlesbrough College• Training Provider of the Year – large: BedfordCollege• International Training Provider of the Year:Botswana Accountancy College• Distance Learning Provider of the Year: PremierTraining• Best use of e-learning: Home Learning

College• Apprentice Training Provider of the Year:Kaplan Financial• Apprentice of the Year: Johnny Javier MoralesSolorzano – Training Place of Excellence • Distance Learner of the Year: Thomas Brinsley– Home Learning College• Student of the Year: Jessica Leyland – PremierTraining• Tutor of the Year: Caroline Warburton – iCountTraining• Lifetime Achievement – AAT Tutor: ShirleyJoseph – Barnet and Southgate College• AAT Champion: South Devon College

So who walked off with this year’s AAT awards?

Jessica Leyland and Johnny Solozano

pq july 16 p24-25 q9_Layout 1 08/06/2016 12:53 Page 3

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27PQ Magazine July 2016

CIPFA focus PQ

ICAEW spotlight PQ

Imagine you’ve spent hours learningchallenging tax concepts. You feeltechnically strong. You know your

way around your open book material likeit was as familiar as your journey homefrom work. How are you going to convertthat into a pass for your BusinessPlanning: Taxation exam? It will help ifyou put yourself in the shoes of theindividual in the question. For thepurpose of this article I’ve assumed therole of a tax adviser.• Clients will not provide you with all theinformation you need. Exam questionsgenerally have some ambiguity, and youwill be expected to identify any furtherinformation that you need to finalise youradvice.• Clients like to quickly find their wayaround a document. Use subheadings.This instantly cuts down the number ofwords you write, makes it easier for yourmarker (client) to understand which partof the requirement is being answered

and will keep you on track in terms ofstructure. Adopt a brief (almost blunt)writing style, applying the informationgiven by the client to the tax rules.

Your client will want to know whenaction needs to be taken. An areafrequently forgotten by candidates, butvery important for a client, is theadministration of tax. Inform your clientwhen claims and elections need to bemade.• Clients do not pay for factsheets. Theseare simply generic documents that manyaccountancy firms produce to give anoverview of a particular area of tax. Avoidcopying straight from your open bookmaterial, but instead take the informationfrom the question and apply the tax rulesto that specific scenario. Your client isnot interested in learning tax, whatmatters is how the rules apply to them.• Clients do not provide information in aparticular order. Most questions have anumber of requirements and the

information you require to answer therequirements may well be spread overseveral pages and in a different order tothe requirements. During your planningtime you should be deciding whichrequirement(s) each bit of informationrelates to.• Clients often want you to make adecision. Make a recommendation ifasked for and ensure you justify it. Clientswill only pay for advice they have askedfor. If a client stated that they were notinterested in any VAT consequences andyou went on to provide VAT advice, youwould not be paid for this work. Similarly,you would not be given marks for this inthe exam.

Final thoughtsTaking the time to imagine you are theactual individual in the question will helpto focus what and how you write andhopefully lead to exam success.

Access Business Planning: Taxationexam resources aticaew.com/examresources • Sheridan Matthew Gray is a tutor atBPP Professional Education

PQ

Put yourself in their shoes

Getting the whole story

Tutor Sheridan Matthew Gray provides some helpful guidanceon how to approach the Business Planning: Taxation exam

As accountants, we know that assets andliabilities are just as important asincome and expenditure when it comes

to medium-term and long-term financialplanning. Why then, you might ask, when theChancellor stands up to give the Budget do weonly hear about taxes and spending? That,unfortunately, is because central government,unlike any other sector, still relies on bluntstatistical measures to forecast the future. Thegovernment too often looks to economists to doaccountants’ work.

There is, however, a glimmer of hope. At theend of May the government published the Wholeof Government Accounts (WGA). Its sixthpublication, it remains the world’s onlycomprehensive set of accounts for the entirepublic sector. It’s a credit to the government thatthey have taken this important step towardsapplying the financial rigour of professionalaccountancy to state finances. But more needsto be done in improving the usability by a rangeof stakeholders to support better policy decisionmaking.

A quick glance at the WGA provesuncomfortable reading. You would never hearthem trumpeted in a Budget statement. Forexample, the public sector pension liability hascontinued to grow at a staggering rate, risingfrom £961 billion in 2010/11 to £1.5 trillion in

2014/15. It seems that government policies arefailing to provide a check and a balance on thegrowing pensions debt. There is too much focuson addressing the short-term financial situationand not enough on addressing the ‘wickedissues’ that have the potential to store upsignificant trouble for the future.

Another area of concern is around theliabilities for clinical negligence claims against

the NHS. Although the overall liability did notchange significantly over the year, contingentliabilities for claims did rise by £2 billion to £14billion over a six-year period. Again, thissuggests that problems are being shifted into thefuture. Sadly, this is a pattern is repeated acrossthe public sector, it’s a problem that we, as aprofession must challenge before it’s too late.

As the only accountancy body in the world tospecialise in public sector finances, CIPFA isrelentless in championing better financialmanagement in government. Our members playan active role in raising and addressing theseissues that affect the lives of so many people ona daily basis. But business too needs stablesocial and economic environments that cannotbe delivered without proper accounting at anational level.

A failure to use accrual information in fiscaland budgetary decision-making is leading topoor decisions, misallocation of resources andenhanced fiscal risk. Accountants, whetherpublic or private sector, understand the perils ofshort-termism. I hope you will all take the time tohave a look through the WGA and help raise theprofile of this document, which must be thefoundation for this country’s financial planning infuture. • Gillian Fawcett, Head of CIPFA’sGovernments Faculty

PQ

Gillian Fawcett outlines why theWhole of Government Accounts

are so important



PQ target costing

AAT and ICB Level 4 students,together with those studyingManagement Accounting at amore senior level, must read thisarticle by Philip Dunn

Much literature cites Japanesecompanies developing and usingtarget costing – Toyota, Honda and

Nissan are such examples. In the US, Caterpillarand Chrysler are examples where economicbenefits of the technique have been noteworthy.

Traditional pricing and costing .Full cost pricing has been the model used bymany businesses in the past. Standards andstandard costing technique was used todetermine a product’s cost of labour andmaterial, overhead was absorbed, a share ofselling distribution and administration cost wasadded to achieve a product’s total cost. Pricewas then set by adding a desired profit margin.

This additive model worked well and wasappropriate when markets were less efficient andresponsive as they are today.

If the price was acceptable in the market itwas only experienced when the product wasactually introduced to potential customers. Thiscould result in the price being either too high ortoo low and therefore a technique was developedthat prevents pricing error and aids faster morefocused product development.

Targeting costing .“Target costing describes a process of firstassessing a target price and then designing aproduct to meet this price.” (Hergeth)

It is part of a total cost management systemwhich moves away from traditional accounting tomanagerial accounting and moves decisionmaking from an accountants perspective to themarket place.

It is a top down process:• Setting price• Setting profit• Setting cost

The process is interactive and comprises threephases: market level, product level andcomponent level (Cooper and Slagmulder 1999):

Market Level Strategy

• Target Price• Target Profit• Target Cost

Product Level

Design product to meet target cost

TARGET PRACTICE

Component level

Design components to meet target cost

Supplier management

This can also be viewed as:

Understand Customer Need

Price Sensitivity Value of Product Features

What Price What Features

Set Profit

Set Target Cost

Target costing therefore builds upon a design tocost approach where the focus is a marketdriven price as a basis for establishing targetcosts. It is said of target costing that:• The costing process becomes a managerialtool to achieve successful product design ratherthan analysing historical data.• An economically relevant target price becomesthe driver of the product development process.• It focuses on target price and marketorientation and considers long-term marketing

strategy. Marginal Costing and Activity BasedCosting tend to focus on short-term objectives.• It clearly provides relevant information andaids decision making, whereas the use oftraditional absorption costing models tend togenerate information not necessarily linked tothe decision making process.

The target costing process integrates manyactivities and tasks. The target costing teamneeds to be drawn from disciplines within anorganisation to include: finance, manufacturing,purchasing and marketing.

Management require in addition theBudgetary Control mechanism a participativeapproach to Target Cost Management.

Conclusion .Although the technique in its simplest form ismerely a model (target price – profit margin =target cost), today’s highly competitive marketplace and external environment can make thetechnique a strategic management tool. It canbe incorporated into the managementaccounting portfolio and provide an organisationwith economic value added and strategicbenefit. It will allow an organisation to focus onthe use of limited resources to maximiseopportunity to achieve target return oninvestment.

Readers are also referred to ‘A Practical Guideto Target Costing’ by Frank Robinson (a CIMApublication). • Dr Philip E Dunn, Assessor and freelancewriter, Kaplan Financial

PQ


Enhance your reputationThe CTA qualification is held in high regard by employers and their clients –

and it contributes to career progression. It enhances reputation and value

and ensures credibility of the individual and the employer.

Tax is Held in High Regard

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

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

029_PQ 0716.indd 1 09/06/2016 15:13


PQ careers

Salary is important, butit’s not the be all andend all of your working

life, say Karen Young

Salary is not the only importantconsideration when choosing your nextrole. To make the right choice, prioritise

the factors about your job and career that youfeel are most important to you, and then choosethe job that is the best fit. Being aware of all theextras available to you is an essential part of thedecision making process. Your benefits canmake a big difference to your overallremuneration package and your long-termcareer with the organisation. Sometimes, it’s notall about the money.

With your attention focused on the headlinebasic salary figure it can be easy tounderestimate the importance of a good benefitspackage. According to the Hays UK Salary &Recruiting Trends 2016 report, 64% of partqualified accountants rated flexible working asimportant when considering their next job. Some57% considered a holiday allowance of over 25days annual leave to be important and 39% ofrespondents thought an above statutory pensionis still a benefit worth having.

However, the benefits accountancyprofessionals receive are not always in line withthe ones that are important to them. Forexample, childcare vouchers are mostcommonly offered by finance employers, yetfewer than 10% of respondents said they wereimportant when considering a new role. That isnot to say that childcare vouchers will always beunimportant. The benefits we like can change atdifferent points in our careers due to changes in

work and personal life. There is also a disparitybetween employers and employees over theimportance of flexible working. When decidingbetween different jobs flexible working optionsare a priority for many, yet more than half ofemployees did not have flexible working optionsin their current job.

PQs clearly value their work-life balance, with58% of respondents saying it was the mostimportant consideration to them when evaluatingthe pros and cons of a new job offer. Yet rathermistakenly only 11% of employers thinkencouraging a good work-life balance will helpthem to attract new talent. While home working orflexi-time may not be practical for all organisations,this can be an area where employers can standout when competing for the best people.

Ambitious people will naturally look forfinancial support for training from employers, notonly for their initial professional accountancyqualification but continued professionaldevelopment throughout their career. Bothemployers and employees see the value offinancial training support. Over half of PQs(55%) ranked it as important and it is offered by

62% of finance employers. It is worthconsidering the study support on offer whendeciding on a new job. The benefits package isa crucial part of a job offer so evaluate what isbeing proposed and ask your recruitmentconsultant to help negotiate the best package.

There is a mood of confidence and ambitionwithin part qualified accountancy. Almost all(98%) of PQs feel they have the skills necessaryto do their current job. Yet almost half (46%)think there isn’t scope for progression withintheir present organisation. It is no surprise thenthat the opportunity for career development isconsidered the most critical factor whenchoosing a new role. Employers are more likelyto hire candidates who demonstrate their desireto build a career at the organisation. So enquireabout career development opportunities atinterview. It goes to show that it isn’t all aboutthe money!

For more go to www.hays.co.uk/pq and forfurther information on your salary visitsalaryguide.hays.co.uk • Karen Young, Director, Hays Accountancyand Finance

PQ

It’s not about the money…

Four great bookkeeping courses to give away!HTFT’s bookkeeping course is delivered ‘live online’ (eveningsessions from 18.30 until 20.45) and is recorded – with recordings being made available as a ‘rewind and play’ option.Although free, these courses are so popular it is hard to get aplace, but we have four reserved slots, just for you.The course covers the background to the preparation of accounts and the big three ‘needto learns’ – the dual effect, business entity concept and accounting equation. You will alsolook at recording transactions, statement of financial position, statement of profit or loss, double bookkeeping, balancing the ledger accounts and preparation of accounts.The next schedule course dates are 12 July, 19 July, 26 July, 2 August, and 8 August.To enter this great giveaway simply email [email protected] with your name and contact number,heading up your email ‘HTFT bookkeeping course’. Deadline for entries is Friday 8 July 2016.* PQ magazine’s usual terms & conditions apply

WE HAVE JOINED FORCES WITH HTFT TO OFFER PQ READERS FOUR SPACES ON ITSHUGELY POPULAR ONLINE BOOKKEEPING COURSES


PQ Magazine July 2016

careers PQ

31

The World’s Most InspiringAccountants by Steve Pipe,Susan Clegg and Shane Lukas(Added Value Solutions, £45)

Of this book the joint authorssay: “By helping accountants tounderstand the profound impactthey can have, we hope it willinspire them to stand tall,inspire them to serve theirclients better, inspire them tomake more of a difference andinspire them to improve thereputation of the entireprofession.” They certainlysucceed in their aims. Thisbrilliant book is divided into 62mini chapters, featuring 57firms in eight countries.

Written with the accountancyprofessional in mind, this to me

takes a holistic approach to thesector. While there’s stack ofinformative stuff on how tomake your business – and yourclients’ businesses – make moremoney, there’s also a focus onthe environment, work-lifebalance, leaving a legacy, andmuch more.

The beauty of this book is itsreadability. Each chapter istypically just three or four pageslong, and starts with a summaryof what the accountantsachieved for their client. It thenexplains how the desired changewas achieved, and what thelong-term impact was.

The authors explain howaccountants will go the extramile for their clients – in thecase of South Africa’s Middel &

Partners it was1600km! That’sthe distanceaccountant CoenieMiddle travelledacross the countryto help put right the problemsat Rustenberg Wines.

This book really does putaccountants in a good light, andcomes highly recommended forboth seasoned and youngaccountants alike. If the £45price tag puts you off get theboss to buy a copy for the officeto be shared around. But makesure you get your hands on itfirst, as it’s sure to be popular.

Extensively researched andeasy to read, the authors reallydo deserve a pat on the back.PQ rating 5/5 Inspirational!

Tea breaks or training?An AAT study has found a

shocking 30% of finance staffhave never had any form of work-related finance training. That hasled to 38% ofemployees in thefinance industrysearching onlineto find out howto do their jobbetter, in theirfree time. Ineffect, that means manyemployees are spending more

time on tea breaks than on anyform of work-based training!

Insider trader jailedAccountant Andrew Hind

has been jailed for three-and-a-half years for his role in alandmark insider trading case.His co-conspirator, banker MartynDodgson, was sentenced to four-and-a-half years for his role inBritain’s biggest insider-tradingscam. Hind, a former FD atTopshop, passed on informationfrom Dodgson to traders in an

elaborate scheme between 2006and 2010.

Deloitte’s women partnersDeloitte has unveiled 80

new partners, 24 of whom arewomen. The firm has establisheda series of programmes to identifyand retain high performingfemale leaders, including acommitment to gender pay gaptransparency, a return to workprogramme, and a sponsorshipinitiative for senior women withinthe company.

In brief

The PQ Book Club: books you should read

Julia Falvey, 32, Live Online Tutor and ICAEW Tax Product Specialist, based in London.She has worked there for seven years and has a degree in mathematics from JesusCollege, Cambridge. ICAEW qualified, she is the current PQ Lecturer of the Year

Life at Kaplan Financial

What time does your alarmclock go off on a workingday? 5.45am: I like to have a cupof tea and to read with mychildren before I go to work.What’s the first thing you dowhen you get to your desk?Check emails: online studentsemail far more than my classroomstudents. That takes an hour.What’s on your desk? Nothing,we have a clear desk policy. What’s the best thing aboutwhere you work? The people,both students and staff: everyoneis very friendly and appreciative ofany help you can give them.Where’s your favourite placeto go for lunch? We haven’tbeen in the new office very longso I’m still trying different places.

What (or who) can you seewhen you sit at your desk?When I’m working at home it’s theChristmas decorations as I work inour loft.What are your favouriteswebsites and why? kaplanliveonlinecommunity.co.uk, which iswhere our lecture recordings go. Which websites do you usefor work? I like to find blogs ontopics I’m teaching each week.How many hours a week doyou spend in meetings? Aboutan hour a week – we have virtualmeetings.What time do you leave theoffice? If I have an evening classit’s 8.30pm – I’m starving by then!How do you relax? I’ve joined abook club, which has really

broadened my reading horizons. What’s your favourite tipple?Gin and tonic.How often do you take workhome with you? I work fromhome at least two days a week. What is your favourite TVshow? Madame Secretary andElementary.Summer or winter? Winter – Iburn easily!Who is your hero? Anyone whoruns their own business.If you had a time machine,where would you go? AncientRome.If you hadn’t chosenaccountancy, where mightyou be right now? Being a tourguide in London, it’s my currentretirement plan.

social mediaROUND-UP

PQ is sure there will be lots of ACCAsout there still lying down in darkenedrooms after the June exams. Thanks forall your exam feedback.

However, one of our favoriteinteractions during exam week tookplace on Open Tuition’s noticeboard,and it was all about bananas! One PQsaid: “Apparently bananas are banned

from exam halls as people have beencaught writing answers inside the skinand looking at them during the exam.”Another student wondered just howmuch you can write on a banana. Thereare obviously issues about the texturethat would make it difficult, but thecrux of the issue is, what could you puton the skin that you couldn’t learn infive minutes before the exam? So weasked if anyone had spotted a bananain the exam hall and Matt came straightback on Twitter to say he saw one inLondon in a P7 exam. Then Kerrib toldus food was banned in F8 at CrystalPalace.

It was on Facebook that we found anumber of CIMA PQs who were allconfused about the new PERrequirements. Students were unsurewhether to carry on with the oldmethods or use the new one. LaurenDoyle thought at “first glance the newmethod seems a bit easier to cover allthe requirements, and a big plus is thatit says it should be back within twoweeks!” So we got CIMA’s director ofoperational delivery to write somethingin this issue, it’s on page 19.

We were also tweeting out from theAAT Training Providers’ Conference. Aswe said: “First scoop of the day…Osborne Books has been taken over byKaplan Publishing!”. Another popularretweet was: “You can now text ‘TPS’with your email address (for verificationpurposes only) to 78070 if you want tostop nuisance phone calls.” And then out of the blue we got a greataccountancy joke: “Never call anaccountant a credit to their profession;a good accountant is a debit to theprofession!” Oh how we laughed…

PQ July 16 p31 q9_pq oct07-p31 08/06/2016 15:06

Sorted, thanks topqjobs.co.uk

PQ jobs pqjobs.co.uk

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032_PQ 0716.indd 1 06/06/2016 14:32

Assistant Accountant

Corporate Finance, Central London

£30,000 – £35,000

•Part-qualifiedaccountant.

•Thisrolehasbecomeavailableduetobusinessgrowth;

servicesofferedbythiscompanyincludeauditand

reporting;controlsandsystemsprocessassurance;

internationaltaxservicesandprocessoptimisationacross

bothfinancialandmanagementaccounting.

•Thisisafantasticopportunitytouseyourlanguage

skillsincludingfluentFrenchand/orSpanish,however,

languagesarenotaprerequisite.

•Thiscompanyisglobalandcanprovideaproactively

studyingpart-qualifiedaccountantwithfundamental

experiencetosupportACCAstudiersspecifically.

•ReportingtotheFinanceManager,youwillhavethe

opportunitytogetinvolvedintheendtoendproductionof

accountsforanumberofsmallcompanies.

•Dutiesalsoinclude;thepreparationandfilingoftaxreturns

andfinancialstatements.

Finance Analyst

FMCG, Middlesex

£35,000 – £40,000

•Part-qualifiedaccountant.

•Thisrolesitswithintheprocurementfunctionofamarket

leadingfastmovingconsumergoodsorganisationandis

suitableforcandidateswithafocusonsecuringadynamic

careerpathlookingtoexcelintheirroleofchoice.

•Thiscompanycandemonstratetheabilitytobothsupport

andnurturelikemindedindividualswhoarekeentobuild

onexistinganalyticalskillsanddeveloptheirbusiness

partneringanddecisionsupportexpertise.

•Thekeyresponsibilityoftheroleistodeliverfinancial

reporting,planningandanalysisofprocurement

performance,bothfortheProcurementteamandalsofor

thewiderbusiness.

•Dutiesinclude;providingfactorieswithnewmaterial

pricingandmanagingrequestswithbuyers.

•Experiencewithworkingwithcross-functionalteamsis

desirable.

workingbettertogether

T+44(0)[email protected]

redefining financialrecruitment

033_PQ 0716.indd 1 06/06/2016 10:52

PQ Magazine July 2016

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 8 July. The main draw will take place on Monday 11 July 2016.

TO ENTER THESE GIVEAWAYS EMAIL [email protected]

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

Sudoku heavenWe have a four-book treat for all you Suduko

fans out there. These books will keep you

entertained for hours, and let you down slowly

from all those hours you spend studying. The

collection takes the puzzles from The Times

and range from mild to fiendish.

To be in with a chance of being sent one ofthese three great giveaways send your nameand address to [email protected] up your email ‘Sudoku’.

Win a toy kangaroo! PQ magazine spent a couple of days at Excel,

not for the ACCA exams this time but for

Accountex, the national accountancy exhibition

and conference. One relatively new player there

among the usual suspects was Aussie software

company Reckon. And we reckon they had the best giveaway bag –

so we blagged three for you. They include a toy Kangaroo, boomerang,

sunglasses and other nick-nacks.

To win this great giveway just head up your email ‘Reckon’ andsend your name and address to [email protected]

PWC DEPLOYING

DRONES The Big 4 firms seem to have fingers

in almost every pie these days. But

even PQ magazine was surprised to

read a story in the FT which said that

PwC was joining the ranks of

companies turning to drones and

other new technologies to upgrade

their business models. The group’s

Poland division was apparently testing

drones to help launch its commercial

surveyor offering. PwC’s Michal Mazur

is partner of the ‘drone-powered

solutions division’!

DON’T FORGET THE BONUS!Can you believe annual reports? Well, not if it is Legal & General’s! Boss

Nigel Wilson was down in the latest report as receiving an annual pay

package of £4.7m. But someone had forgotten about the small matter

of a £781,000 long-term bonus, which raised his salary to a cool

£5.5m. It has been reported that Deloitte, L&G’s remuneration

consultant, discovered the ‘mistake’. Not the auditor, which is PwC! L&G

has now apologised for the error.

DON’T THROWIT IN THE AIR!The University of East Anglia

is banning students in large

groups from throwing their

mortarboards in the air at

their graduation ceremonies.

Apparently there is a real risk

of injury from such careless

activity!

The Health and Safety

Executive has said the

university is merely ‘repeating

tired myths’ and the risks are

‘incredibly small’. The HSE

also wanted to make it clear

the law does not stop

graduates having fun. UEA

told PQ magazine it has not

introduced a policy banning

the throwing of mortarboards:

“We have simply asked our

photography supplier not to

encourage it during large

group sessions.”

UAE explained it has taken

this step because in each of

the past two years students

have suffered facial injuries.

Last year a student needed

treatment in A&E. “If

individuals or small groups

want to throw their

mortarboards they can, but

we don’t think doing it in

groups of around 250

students is sensible.”

FITTING TRIBUTEFROM UHYHACKER YOUNG?UHY Hacker Young recently announced

it had replaced a famous Banksy artwork

at its London HQ with a new piece from

urban artist Pure Evil, as a tribute to the

Queen for her 90th birthday! The new

artwork, entitled ‘Prince Philip’s

Nightmare’, depicts the Queen with black

paint streaming from her right eye. It is a

provocative anti-establishment piece and

PQ magazine wondered what the Queen

would actually think of it. There might be a few more roundhead

accountants around than we might think! UHY Hacker Young’s ‘Lab Rat’

by Banksy is on tour, and can be seen in Rome.

THE ACCOUNTANT – TEASER TRAILER OUTThe Accountant, the movie staring Ben Affleck, is

coming soon to a cinema near you. If you can’t wait

then perhaps you should take a sneak look at the teaser.

Affleck plays accountant Christian Wolff, who looks like

he serves up a great breakfast! He looks certain to turn

out to be a wolf in sheep’s clothing! Catch it at

www.youtube.com/watch?v=Qw_EO8qKydg

IF THE CAP FITSKPMG may

have to do

some more

risk

assessments

of its

sponsorship

deals after

top golfer Phil

Mickelson was named as a ‘relief

defendant’ in a case of insider

trading. It is believed that

Mickelson has paid $1m to US

regulators after benefitting from

the scam. A picture of the golfer

wearing his trademark KPMG

cap accompanied practically

every picture used with the story!

THE CAPITALDOESN’T WANTACCOUNTANTSPoor old Zac Goldsmith

didn’t stand a chance of

being elected mayor. As

one caller to the

Vanessa Feltz radio

show said: “…he’s like

my accountant. Once

he starts going I switch

off. There’s no

personality.”

pq july 16 p34 q9_pq aug 13 fun 08/06/2016 12:57 Page 42

• Postgraduate Certificate in Accounting and Financial Management

• Postgraduate Certificate in Global Marketing

• Postgraduate Certificate in Project Management

• Postgraduate Certificate in Management Consulting

• miniMBA

London School of Business & Finance (LSBF) has now joined forces with

Manhattan Institute of Management (MIM), giving you the opportunity

to study LSBF’s Executive Education courses in the heart of New York.

Internship opportunities available in New York.

Find out more: www.LSBF.org.uk/pq-new-york | 020 3005 6236

EXECUTIVE EDUCATION

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This year you could be eligible for a UK government loan

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Now there’s nothing

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expect leading-edge practical business education

with a focus on your employability.

036_PQ 0716.indd 1 03/06/2016 15:29

pq magazine, july 2016

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