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*HOW TO ENTER
Open to all accountancy firms in the country including non-ACCA firms, the
British Accountancy Awards couldn’t be easier to enter. Log onto
www.britishaccountancyawards.co.uk for full details of the criteria for each
award, online registration and category selection. Fill in the entry statement
and upload any supporting documentation – it can be updated and altered at
any time until you choose to submit your entry.
The deadline for free entries is Friday 29 July. Entries submitted after that
date and received by the final entry deadline of Friday 9 September will incur an
ВЈ85 entry fee. Judging will take place in October 2011 and the shortlist will be
announced shortly afterwards.
The inaugural British Accountancy Awards ceremony, on Wednesday 30
November at Old Billingsgate Market in London, promises to be a spectacular
industry event. You don’t have to be a finalist, or even to have entered an award
to attend. For full information about the awards, including details of all the
categories, advice on how to enter and details of how to book your table, go to
www.britishaccountancyawards.co.uk. Good luck!
PRACTICE EXCELLENCE
AWARDS
AUDIT AND TAX
EXCELLENCE AWARDS
Global firm
National firm
Mid-tier firm
Independent firm, North East England
Independent firm, North West England
Independent firm, Scotland
Independent firm, Wales
Independent firm, Northern Ireland
Independent firm, Midlands
Independent firm, South West England
Independent firm, South East England
Independent firm, Greater London
Independent firm, Eastern England
Independent firm of the year
Training provider
Community award
Tax award, global firm
Tax award, national, mid-tier,
independent firm
Audit award, global firm
Audit project, national, mid-tier,
independent firm
INDIVIDUAL EXCELLENCE
AWARDS
New accountant
Accounting technician
Training manager of the year
Outstanding contribution
UK_YPRAC_AccyAge.indd 43
Grant Thornton, Audit Team of the Year 2010
Mitten Clarke, Small Firm of the Year 2010
PROJECT EXCELLENCE AWARD
Software package
EMPLOYER AWARD
Best employer
For full information about the awards,
including details of all the categories,
advice on how to enter, entry criteria
and details of how to book your table,
go to:
www.britishaccountancyawards.co.uk
Sagars, Tax Team of the Year 2010
16/06/2011 16:48
Corporate
LATE PAYMENT ACCUSATION
Large corporates have been accused
by electronic payment agency
Bacs of consistent late payment
of bills. A Bacs survey found that
a third of small and medium-sized
businesses (SMEs) report that big
companies do not pay on time,
with payments delayed for up to 52
days. In contrast, payment times
by the public and third sectors have
improved. In total, ВЈ24bn is owed to
SMEs, mostly from big companies.
Firms operating in the manufacturing
sector have the biggest problem with
large corporations: 41% of SMEs in
the sector say that they are not being
paid on time. Bacs is promoting the
use of automated payments by large
and small businesses to improve
payment times. Mike Hutchinson,
head of marketing at Bacs, said:
�Late payment remains a big
problem, causing small businesses
millions of man hours in chasing
invoice payment.’
HELPHIRE ENGAGES KPMG
KPMG has been engaged by the
Helphire Group to assist with a trading
restatement. Helphire announced in its
interim management statement that
there may be a material discrepancy in
the carrying amount of its receivables.
The company said that difficult trading
conditions meant that profits were
significantly below market expectations.
Several management changes have
been made by the company recently,
including the appointment of a new
group commercial director and a new
insurance relations manager. KPMG will
help identify the cause of the material
discrepancy and its precise impact.
UK_YCORP_intro.indd 45
45
The view from:
Carmaking: Sheldon Thomas-Jones
FCCA, internal control manager,
Mitsubishi Corporation
International (Europe)
Q What is the role of an
internal control manager
at Mitsubishi Corporation
International (Europe)
(MCIE)?
Q The MCIE Internal Control
department was set up by
myself in 2007 to help trade
and non-trade departments
to understand, implement,
identify gaps and remedies,
and make summary reports of the effectiveness of
internal controls over financial reporting (ICFR).
Q How important is it for MCIE to have a strong
financial reporting process and what part do you
play in this?
A The Japanese Sarbox (J-Sox) law obliges all
listed companies in Japan to strengthen internal
controls and to ensure full disclosure of financial
information. The law impacts on Mitsubishi which
is listed on the Japanese stock exchange and also
affects its subsidiaries, even though they operate
in other parts of the world. I ensure company
compliance for MCIE and EMEA group companies.
Q There seem to be positive signs of recovery in
the motor finance industry, have tighter financial
controls contributed to this?
A Motor vehicle finance has benefited from tighter
controls and risk mitigation. The higher confidence
in the financial reports in the sector leads to the
attraction of additional funds and investments.
Q What is at the top of your to-do list?
A Scoping and planning for new financial year
2011–12, the J-Sox project, preparing for the
PRINCE2 Project Management certification and
the Notting Hill Carnival in August 2011.
FAST FACTS
Total assets: 10,891 billion yen (US$117bn)
(MCI financial year 2010)
Hobbies: Photography, chess and swimming
Favourite book: Who Moved My Cheese? by Dr
Spencer Johnson
45 Corporate The view
from Sheldon ThomasJones of Mitsubishi, the
importance of preparing
well for flotation; who is
really keeping the lid on
audit conversations
37 Practice The view
from Surendra Dhungana
of F Winter & Co;
progress on the adoption
of the clarified audit
standards; ACCA and
Accountancy Age’s new
practitioner awards
51 Public sector The
view from Amyas Morse
of the National Audit
Office; scepticism about
Big Society; why university
tuition fees don’t add up
57 Financial services
The view from Richard
Kerr of Standard Life
Investments; a guide to
stock exchange mergers
17/06/2011 14:52
46
Corporate
The big shush
You might be surprised to find out who is really fighting to keep audit committee
conversations under lock and key. Robert Bruce explains
It is the oldest clichГ© in the accounting
world: the balance sheet is merely
a snapshot of the state of affairs
at one particular point in time, and
thus of limited value. But another
snapshot has been taken recently,
and it is fascinating. It is the series
of responses to the UK Financial
Reporting Council’s (FRC) paper,
Effective Company Stewardship:
Enhancing Corporate Reporting and
Audit, released at the start of this year.
An outsider might assume that
auditors would not want to extend their
responsibilities for fear of liability or an
aversion to putting their heads above
the parapet, and that companies would
want a much greater extension of
disclosure to enhance their credibility
and boost their worth by providing a
greater level of assurance.
Almost bizarrely, the responses to
the FRC paper suggest exactly the
opposite. Companies appear to think
that the whole idea is madness while
UK_YCORP_Bruce.indd 46
auditors want to make more and more
of their dialogue with companies
public. Investors, it seems, just wish
that everyone would get on with it. It is
not a picture which would fill the public
– or the politicians and regulators for
that matter – with confidence.
At its heart, the original FRC paper
had a proposal for �a more substantial
communication role for audit
committees so that they provide fuller
reports to shareholders, particularly in
relation to the risks faced by the
business. The auditors’ report should,
in turn, include a new section on the
completeness and reasonableness of
the audit committee report,
particularly in relation to the dialogue
between them and the committee.’
This is the main battleground.
Mining giant BHP Billiton, for example,
thinks that such things should be kept
strictly private. �If there is to be any
change in the scope of the audit,’ it
says, �we believe that it should be
limited to the auditor providing a
private report to the audit committee
concerning any matter the auditor
believes to be incorrect or incomplete
in the annual report.’
Likewise the 100 Group (of UK FDs).
Robin Freestone, chairman of Pearson’s
investor relations and markets
committee, writes: �We do not support
the proposal that auditors be required to
comment on the completeness and
reasonableness of the audit committee
report. This will lead to further audit
processes, higher audit fees, and may
delay annual reports being issued.
�In addition, we are concerned that
the requirement for auditors to opine
on sections of the narrative reporting
could lead to significant unintended
consequences. The ability of
management to speak with one voice,
to tell the story of the company and its
governance should not be undervalued.
Such proposals could well jeopardise
this ability and lead to a decrease in
management interpretation and insight
within annual reports.’
And so it goes on. Pharmaceuticals
giant GlaxoSmithKline says: �The main
proposals, which we do not believe
would be in the best interests of
shareholders, are the greater
involvement by investors in the
selection of auditors and reinforcing
the strengths of audit committees.’
Smith & Nephew says: �It is not the
role of the audit committee to hold
management and auditors to account.
This is contrary to the concept of the
unitary board. The key to an effective
audit committee is the skills and
independence of its members and the
15/06/2011 12:15
47
No public digging: as far as mining
company BHP Billiton is concerned,
auditor reports to the audit committee
should remain private
tone at the top set by the chairman,
CEO and the CFO.’
And so on. But contrast that with
what audit giant PwC has to say on the
same topic: �We fully agree with the
notion of more expansive reporting by
the range of any judgments reached,
relevant peer analysis and
benchmarking, decisions to appoint (or
reappoint), and the provision of any
non-audit services by the auditor.’
It’s an extraordinary reversal of the
�COMPANIES USE THEIR ANNUAL REPORT
DOCUMENTS AS VEHICLES FOR SELF-PROMOTION’
audit committees, and have been active
in promoting that concept to our
clients.’ PwC goes on to welcome the
expansion of reporting on the
completeness and reasonableness of
the audit committee report as well as
�the growing strength of audit
committees’. It is a far cry from the
corporate view.
Grant Thornton pitches in: �We believe
the audit committee should be seen,
fundamentally, as a subset of the main
board, which devolves responsibility to
it for various decisions surrounding
auditor appointment and the wider
audit process and auditor reporting.’
And Deloitte: �Audit committees are a
key component of any assurance
regime. In our experience, they
discharge their responsibilities in a
diligent and challenging manner. We
therefore support moves to make their
activities more visible to the users of
accounts. We agree that, in doing so,
audit committees should report
interactions with the external auditors,
including the discussion of key risks,
UK_YCORP_Bruce.indd 47
traditional perceptions, though it is not
all black and white. Narrative reporting
is growing in support, although it is
mostly institutional investors and
auditors who are enthusiastic. The
culture within the corporate sector is
lagging far behind, though Barclays
Bank, which coincidentally has a
prominent accounting member of the
FRC on its board, produced a section
on �what the auditors reported on’, in
its latest accounts. And insurance giant
Aviva says this about audit committees:
�What is welcome is the aim of making
audit committee reports more
informative and giving them substance
within the stewardship dynamic.’
Perhaps the last word should remain
with the response that ACCA sent in to
the FRC: �There is currently a
widespread sense that companies use
their annual report documents as
vehicles for self-promotion, and this
can serve to detract, for some, from
the credibility of the main financial and
narrative statements.’
Certainly the whole debate would
move much faster to a sensible series
of enlightened reforms if the audit
firms and the institutional investors
were listened to rather more than the
corporate sector.
Robert Bruce, journalist and
commentator
*STANDARD LIFE ON AUDITOR APPOINTMENTS
This is what Guy Jubb, head of corporate governance at Standard Life
Investments, had to say about auditor appointments: �We support in principle
the view that the independence of the decision to appoint a new auditor would
be reinforced through greater shareholder involvement.
�The paper suggests that the audit committee should be required either to
report on the process by which it had reached its recommendation or discuss
the approach with a number of principal investors. We suggest that these two
requirements are not mutually exclusive and, consequently, we believe both
should apply. We should emphasise that the report on the process by which
the audit committee reaches its recommendation should provide sufficient
granularity – and not boilerplate language – so as to enable the reader to have a
genuine appreciation of the factors that influence its recommendation.’
15/06/2011 12:15
48
Corporate
Making it work
In the second of a two-part series on successful flotations,
we look at the importance of careful preparation
Directors of expanding private
companies who think that floating on
the stock exchange is an easy way to
quick riches could be in for a shock.
And not just because, as flotation
prospectus disclaimers note, the price
of shares can go down as well as up.
When a company goes public, its
culture can change in a way that
unsettles managers used to the closed
world of a private company. For the
first time, the company may have
outside shareholders and the action of
directors will be under much closer
scrutiny, as Glenn Collins, head of
technical advisory at ACCA UK,
points out.
�Entrepreneurs sometimes find it
difficult to move into a public company
culture,’ he says. �They’ve been used to
making their own decisions; now they
have to take account of a board with
independent non-executive directors.’
James Ferguson, a partner in the
capital markets team at Deloitte,
agrees. �In a public company, decisionmaking becomes more consensual and
moves from the informal to the formal,’
he says. �There tends to be more
short-termism and less looking to the
long term because the stock market is
a cruel mistress and expects results on
a regular basis.’
Changes to the board are just one of
the more visible shifts in corporate
governance that a company needs to
make as it moves from the private to
the public world, as set out in the UK
corporate governance code. Under the
code, a public company must adhere to
the principles set out or explain why it
has chosen not to do so.
The best time to beef up the board
with new experience is in the run-up to
the flotation. New directors will often
want to be involved the process, says
UK_YCORP_float2.indd 48
Marc Fecher FCCA, a partner at
Kingston Smith and chairman of
ACCA’s Corporate Sector Network
Panel. He points out that a company
going public will also usually want to
appoint new board committees – for
audit and remuneration, for example.
From a financial perspective, one of
the biggest tasks in an initial public
offering (IPO) is making the finance
function fit for a public company.
�It’s one of the hottest topics of
conversation around an IPO,’ says
Ferguson. He explains that a public
company needs financial processes
that can identify trends – good or bad
– quickly so that they can be reported
to the markets.
�For example, if there is a problem in
the business which means that the
company will not meet its consensus
earnings, how quickly will the
company know?’ he asks. �How
quickly are management accounts
produced? Is it within five days of the
month-end or not?’
Be prepared
Putting suitable financial processes
in place can, warns Ferguson, take
several months. �First, you’ve got to
identify where the weaknesses are and
then design solutions and implement
them,’ he explains. �Once you’ve
implemented those solutions – and
particularly for an LSE [London Stock
Exchange] main market transaction –
you have to test the processes to make
sure they’re working. One thing we
often front-load into an IPO is some
sort of testing of the adequacy of the
financial processes.’
Tim Surridge, a partner in
transaction services at KPMG, believes
that understanding how a public
company’s results will be reported
under International Financial Reporting
Standards (IFRS) may be a challenge
for some companies looking to float.
�In almost every IPO we work on, we
find the finance team needs to be built
up in some ways,’ he says. �They need
to be able to cope with a much more
significant level of external reporting
and to manage the expectations of
stakeholders and the market.’
Fecher points out that the CFO of a
public company will have to meet the
tight deadlines of a steady stream of
quarterly updates and half-yearly and
annual reports. Accounting procedures
must be able to produce the numbers
within a rapid timetable as markets
expect timely reporting.
Sell yourself
Ultimately, any flotation is about selling
a stake in the company to external
investors. But Andrew Jacques, chief
executive of financial and investor
communications at financial PR firm
MHP, warns that management teams
planning a float often fail to address
13/06/2011 14:03
49
the marketing issues soon enough.
�When you’re devising messages and
investment criteria, you have to start
early to get the most beneficial effect,’
he says.
The marketing effort for a flotation
will depend on its size. In smaller floats
on the junior PLUS or AIM markets,
marketing may be largely by private
placement – approaching selected
institutions or wealthy individuals who
may wish to invest. In larger floats,
however, where the company wants to
develop a broad base of both
institutional and private shareholders,
it will need to mount a much wider
marketing campaign. This could involve
significant PR activity to position the
company as an attractive investment
opportunity before the formal flotation
period begins with the announcement
of an intention to float.
A key document in the flotation is
the prospectus – initially a �pathfinder’
draft of the final version – which sets
out the terms of the offer. But this
should also include the key messages
UK_YCORP_float2.indd 49
ACCOUNTING PROCEDURES MUST BE ABLE TO
PRODUCE THE NUMBERS TO A RAPID TIMETABLE
AS MARKETS EXPECT TIMELY REPORTING
about why investors should consider
putting money into the company.
On the road
The management team, led by the
chief executive and CFO, will then
embark on a roadshow to meet
potential investors. �The management
team needs to be well briefed and
rehearsed, but not over-rehearsed to
the extent that they don’t come across
as natural people,’ advises Jacques.
Ferguson adds: �You sell by
staring investors in the eye and
presenting them with an exciting
story from a credible management
team who can deliver.’
One key issue to consider in a float
is the timing. In the past couple of
years, several companies have had
unsuccessful IPOs because they failed
to consider market sentiment. A falling
market is never likely to be the best
time to seek new investors.
Judging the market
Another key issue is deciding on
the price at which the stock will be
offered. �You need to have the hard
conversations about valuation upfront,’
says Surridge. �The expectations of
management need to be carefully
managed. If you look at a number
of IPOs in the recent past, the
expectations of the company’s
management have been wildly different
to those of the market.’
A striking example of this kind of
mismatch is last year’s IPO of grocery
delivery service Ocado. The firm had
13/06/2011 14:03
50
Corporate
hoped to set a flotation price as high
as 275p a share but had to settle for
180p after brokers and analysts
questioned the value of the company,
which had never returned a profit.
Although the upfront conversations
are important in order to gain an
appreciation of the ballpark value of
the business, the final pricing decisions
are normally taken later. During the
roadshow the float’s sponsors and/or
bookrunners will have built a list of
potential investors so that it will be
possible to make an estimate of the
likely demand for the shares.
�When setting the price, you need to
do some market testing and then you
can make adjustments,’ advises Fecher.
�Warm up a few investors in terms of
the pricing levels.’
He says that a company knows that
it has pitched the float price about
right when there is a strong demand
for the shares. Sometimes companies
worry about underpricing, especially
when demand turns out to be
stronger than expected. But Feche
says: �The reality is that if the offer is
priced at a level you’re happy with and
it delivers enough capital to execute
your business plan, are you really
underpricing? Being oversubscribed is
a better place to be than struggling to
find investors.’
Peter Bartram, journalist
LAST MONTH
*
A LOOK AT THE FACTORS
THAT COMPANIES
SHOULD CONSIDER
BEFORE FLOATING
UK_YCORP_float2.indd 50
*FIRST DATE WITH FLOTATION
Doughty: we had
to up our game
Two entrepreneurs WLTM investors with view to floating online dating company.
It’s not quite the prospectus Easydate issued when it floated on AIM last year,
but the company still successfully raised ВЈ8.8m net of expenses to fund future
expansion on its first date with the stock market.
Easydate, renamed Cupid last December, has been a flotation success story.
By this summer its market capitalisation had topped £100m – more than double
its ВЈ45m market cap at the time of its initial public offering (IPO).
The flotation was an opportunity to broaden the shareholder base and provide
funds for expansion, says Mark Doughty, Cupid’s CFO and company secretary.
But that meant that the privately owned company had to make some important
changes in the way it operated.
�We realised that as soon as we were listed we would be more in the public
eye,’ says Doughty, �so we had to up our game in customer service to make sure
that we didn’t see any negative PR from our customers.’
IT systems were made more robust, and there were important changes in
corporate governance. Cupid appointed a non-executive chairman with previous
experience of floating AIM companies, as well as another non-executive director.
Then there were key changes in the finance function. The company was
already producing good monthly financial information but not to International
Financial Reporting Standards (IFRS). It had to make changes to its financial
reporting in three key areas: the treatment of intangible assets (including
write-offs and impairments), how share options were handled, and the treatment
of income deferrals.
�It wasn’t an arduous task,’ says Doughty. �We got to grips with it fairly early
in the flotation process. Most sensible accountants have got the ability to get
under the bonnet and work out what needs to be adjusted in order to meet IFRS.’
The IPO was engineered by creating a new entity from the existing privately
owned company. It was a more complex process than floating the original
private company but there was a reason for it: the private firm had been running
some dating sites that Doughty describes as �raunchy’.
�We took the view that we would be very clean in terms of the type of
content so that nobody could say they weren’t really keen on that sort of
thing,’ he says. �It’s all stuff that you’d be comfortable with if your
grandmother saw it.’
As the new entity had been formed only nine months before the IPO, Doughty
and his team put together pro-forma historic trading figures for the previous
three years. �There was more work in the process than you’d normally have if
you’d had a nice clean consistent trading record,’ he explains. As a result, the
IPO was more expensive than for many other AIM listings of comparable size –
just over ВЈ1m in costs and professional fees, Doughty reckons. But for investors
in Cupid it has clearly been a case of love at first sight.
13/06/2011 14:03
Public sector
AUDITS SET FOR OUTSOURCING
All local authority audits for 2012–
13 are likely to be outsourced to
the private sector, local government
minister Grant Shapps has
announced. This represents the
next stage in the winding-down
of the Audit Commission, though
the decision is subject to final
confirmation after consultation. The
commission has been asked to begin
preparations for the outsourcing,
designing a procurement process
that allows a range of firms to bid.
Bidders may include an in-house
team from the commission, acting
as an employee-owned mutual.
Assuming that ministers’ intentions
are confirmed, the commission will
be greatly reduced in size by the
end of next year, with just a small
residual body left to oversee the
awarding and implementation of
contracts. Subsequently, local public
bodies would be enabled to appoint
their own auditors.
The view from:
Audit: Amyas Morse, comptroller
and auditor general, National
Audit Office
Q What are your main
challenges?
A Making sure that government
understands the relevance of
good cost and management
information, and financial
management, to the successful
delivery of policies.
Q Do you believe the fiscal
environment can and will
make the NAO more influential?
A The fiscal environment can and should increase
the focus on efficiency and effectiveness in the
use of public money. More important than our
influence is the government’s response to the
fiscal environment. It must ensure that it focuses
on good financial management and I hope that we
can help it achieve that.
Q If you could give one piece of advice to public
sector finance directors, what would it be?
A Don’t let your role be confined to the traditional
finance agenda. It is important that finance
directors contribute to all of the strategic
objectives of the department and you need to
establish yourself as credible and central at
that level.
COUNCILS LACK STRATEGIES
Local authorities must make savings
averaging 20% by 2014, yet 40%
have no strategies to achieve this
and a quarter do not believe they will
succeed, a study by support services
supplier Interserve has found. A third
of councils expect to reduce spending
by a quarter or more and 10% seek
to cut more than 30% of costs. The
study reports that 84% of councils
believe that outsourcing has delivered
savings; 58% believe it is essential to
achieve savings targets; 44% regard
political concerns as a barrier to
service outsourcing; and 34% intend to
outsource more services by 2014.
UK_YPUB_intro.indd 51
51
Q Do you enjoy your role?
A Yes. I work with great people at the NAO. The
fact that we can and do make a difference gives
me a great sense of satisfaction.
Q What keeps you awake at night?
A Worrying about work doesn’t keep me awake at
night. There’s always going to be a certain level of
friction in this job – well, in being an auditor full
stop – but if it bothers you, you’re in the wrong job.
FAST FACTS
Staff: 890
Turnover: The net cost of the NAO for 2010
was £74.7m. The NAO’s work in 2009–10 led to
savings and efficiency gains of ВЈ890m.
Turnover of audited bodies: In 2010 the NAO
audited expenditure and revenue of ВЈ950bn
across 475 accounts.
51 Public sector The
view from Amyas Morse
of the National Audit
Office; scepticism about
Big Society; why university
tuition fees don’t add up
37 Practice The view
from Surendra Dhungana
of F Winter & Co;
progress on the adoption
of the clarified audit
standards; ACCA and
Accountancy Age’s new
practitioner awards
45 Corporate The view
from Sheldon ThomasJones of Mitsubishi, the
importance of preparing
well for flotation; who is
really keeping the lid on
audit conversations
57 Financial services
The view from Richard
Kerr of Standard Life
Investments; a guide to
stock exchange mergers
17/06/2011 14:55
52
Public sector
Big Society, small state?
David Cameron’s vision of public service reform, social action and community
empowerment has been greeted with scepticism – not least within the voluntary sector
Lord Nat Wei was hardly the bestknown member of the government. Yet
his resignation as �Big Society’ adviser
is a damaging blow to David Cameron.
The prime minister’s difficulties
in getting the Big Society initiative
accepted – and, even more challenging,
understood – do not merely continue
but may actually be escalating.
Two days before Wei stepped down
to spend more time in the charity
world, Cameron had made his latest
attempt to describe Big Society and
canvass wider support for it. �We must
build a bigger, stronger society,’ he
said. �We must build that bigger,
stronger society because we can’t keep
tolerating the wasted lives and wasted
potential that comes when talent is
held back by circumstance.
�But above all we must build a
bigger, stronger society because in the
end the things that make up that kind
of society, strong families, strong
communities, strong relationships:
these are the things that make life
worth living and it’s about time we had
a government and a prime minister
that understands that... Creating a
country which feels like a community,
where our relationships are better
and the glue that binds people
together is stronger.’
Despite the strength of Cameron’s
rhetoric, there is a widespread sense
that the Big Society has little definition
and even less chance of success. The
respected commentator Philip Stevens
argued in the Financial Times: �The
prime minister... failed to anticipate
that his grandiose vision of a Big
Society would be effectively sunk by
spending cuts.’
This analysis, though, is
fundamentally challenged by some in
the voluntary sector who might have
been expected to welcome the larger
role the prime minister envisages for
UK_YPUB_bigsociety.indd 52
them. Kevin Curley is chief executive of
the National Association for Voluntary
and Community Action (NAVCA), which
represents small, local, community
groups. He says: �Some people make
the mistake of saying that Big Society
cannot be delivered because of the
depth and speed of funding cuts. But
that misses the point that Big Society
is about the cuts.
�So for organisations like NAVCA that
have always seen a thriving local
voluntary sector closely connected to a
well-funded local state as a good
thing, we see that negatively. We are
But larger charities also have their
reservations about Big Society and
whether its intentions read across
into policies across government. Sir
Stuart Etherington, chief executive of
the National Council for Voluntary
Organisations, responded to the
Cameron speech by expressing his
concerns about the government’s
healthcare reforms, outlined in the
Health and Social Care Bill. NCVO is
concerned that the reforms will reward
large providers, at the expense of
charities that would like to take a
bigger role in NHS provision.
�THE PRIME MINISTER...FAILED TO ANTICIPATE THAT
HIS GRANDIOSE VISION OF A BIG SOCIETY WOULD
BE EFFECTIVELY SUNK BY SPENDING CUTS’
much more interested in how we
sustain the relationship with local
government and sustain it on a funded
basis. In that sense, the Big Society
tent is irrelevant.’
Curley is also unhappy with another
major theme of the Big Society: the
commissioning of public services
from the voluntary sector. In practice,
many of the contracts are too large
for any but the very biggest charities
to even bid for on their own, he says.
The reality, Curley predicts, is that
private-sector bodies will win welfareto-work and other contracts, with
voluntary organisations merely
being the subcontractors at the end
of the chain.
�There are problems about getting
good terms out of the privatesector providers,’ explains Curley,
�and it is made more difficult through
payment-by-results funding, which
means a lot of costs have to be met
up front. So that favours the big
national charities.’
�The voluntary sector is a valuable
source of expertise in helping to
design health services that meet
the needs of local people,’ says
Etherington. �However, the Health
Bill as it currently stands risks
sidelining voluntary organisations
from contributing properly to service
design. We urge the government to
strengthen the measures in the bill to
ensure that GP consortia incorporate
the expertise and knowledge of their
local voluntary and community sector
in their thinking.’
The Association of Chief Executives
of Voluntary Organisations, ACEVO,
also has its reservations about Big
Society, but is positive in principle. Its
chief executive, Sir Stephen Bubb,
explains: �I welcome the Big Society
vision and the prominent place it
accords the third sector as a prime
engine of positive social change, but
I have always said the government
faces an uphill struggle to make its
vision a reality.’
15/06/2011 12:16
53
Prime minister David Cameron still
has a long way to go in persuading his
potential allies in the voluntary sector
that Big Society really is better
The ACEVO has just published the
results of a cross-party commission it
sponsored, which found that only 13%
of the public believes that the Big
Society is backed by a clear
government plan. The commission
called for greater private sector
funding of Big Society initiatives. The
ACEVO has also strongly criticised
mainstream financial institutions for
donating only ВЈ200m for the Big
Society Bank – intended to provide
funding to the voluntary sector and
social enterprises for a wider spread of
activities. The amount was �really quite
scandalous’ when compared to the
ВЈ7bn the big banks awarded in staff
bonuses, says Bubb.
Another key part of the government’s
Big Society programme is increasing
charitable donations. The recent Giving
White Paper is intended, said the
Cabinet Office, to �renew Britain’s
culture of philanthropy by working with
charities and businesses to support
new ways for people to contribute
which fit into busy modern lives’. While
the ACEVO supports the white paper’s
focus of making it easier to make
tax-free donations, it says that the
proposals do not go anywhere near
meeting the needs for funds that
UK_YPUB_bigsociety.indd 53
*WHAT IS THE BIG SOCIETY?
The Big Society has three strands: public service reform, social action and
community empowerment.
Public service reform includes externalisation of public service delivery to
mutuals that are owned, or part-owned, by staff; to charities; or to the private
sector. Social action is intended to encourage citizens and charities to do more
and the state to do less. Community empowerment includes the public having
more say in local government decisions and for community groups to have a
right to buy underused local public assets.
Big Society programmes announced in the Giving White Paper include:
ВЈ40m to support volunteering, giving and volunteering infrastructure by way
of the Social Action Fund, Challenge Prizes and the Local Infrastructure Fund.
ВЈ1m to support Youthnet which runs the volunteering website
www.do-it.org.uk
ВЈ700,000 to support Philanthropy UK, connecting wealthy people with
appropriate charities.
£400,000 to trial the �Spice’ initiative in England to reward volunteers
through vouchers and discounts.
Removal of Gift Aid paperwork for donations up to ВЈ5,000 by April 2013
Move to a new online filing system for Gift Aid claims by 2013.
Reduction in rate of inheritance tax for estates that leave 10% or more
to charity.
The government is also introducing a National Citizen Service, with more than
10,000 16-year-olds recruited for the first wave this summer.
�[These] programmes are valuable, but small scale,’ says the NAVCA’s
Kevin Curley.
*
*
*
*
*
*
*
charities now face – especially as many
lost money through local government
grant cuts.
Without even winning over the sector
that is supposed to be the main
beneficiary of the policy, the
government still has a long way to go
to make Big Society a big success.
Paul Gosling, journalist
15/06/2011 12:16
54
Public sector
The sums that don’t stack up
Analysis shows that the introduction of tuition fees for university students will not
generate the vast savings in public spending that many people expect
Tuition fees will rise substantially
from the 2012–13 academic year.
While English universities will be
permitted to charge up to ВЈ9,000 a
year in tuition fees, the government
had expected most institutions to levy
fees much below that. Those hopes
have been dashed and the average fee
will be almost ВЈ8,800.
What the government had overlooked
was the �status’ factor in high fees. Any
institution not charging the maximum
risks implying that its standards are
below the elite level.
This reality was hinted at with clarity
by professor John Coyne, vice
chancellor of the University of Derby,
when announcing it was one of the few
institutions not setting fees at ВЈ9,000.
�We don’t rest on our laurels or historic
reputations and notions of status,’ he
said. �That is old thinking. Our decision
is based on pricing not posturing,
fairness not folly.’
Most English universities need to
charge at least ВЈ7,000 to cover their
costs following a big reduction in
teaching grants from government,
according to analysis by the Institute
for Fiscal Studies (IFS). But the exact
break-even calculation depends on the
level of efficiency of an institution and
the debt burden relating to past and
present capital schemes. For example,
the University of Central Lancashire – a
former polytechnic and one of the five
largest universities in the UK – is to set
its fees at the maximum level, saying
that it would otherwise make a loss.
Specific challenge
The scale of the challenge in covering
costs is greater for universities in
England than for those in Wales,
Scotland and Northern Ireland, where
the devolved governments are not
demanding the same level of efficiency
savings. Scotland’s government has
UK_YPUB_tuition.indd 54
promised not to introduce tuition fees
for Scottish students or for students
from EU countries outside the UK
and a spokesman said that
position will not change for
2012–13. Students from
England, Wales and Northern
Ireland will have to pay tuition fees
at Scottish universities, but the level
of fees for 2012–13 has not yet
been set.
A decision on tuition fees for
2012–13 in Northern Ireland was
deferred until after the recent
assembly elections and all the
political parties there oppose
the introduction of high
fees. One option being
considered is,
as with
Scotland,
lower fees
for home
students
than for
those from
the rest of
the UK. In
Wales,
universities
seeking to
impose fees
above ВЈ4,000
will have to
obtain
permission from
the Higher
Education Funding
Council for Wales.
The financial
pressures behind
the UK government’s
decision to increase
tuition fees have not
been widely
understood. Increasing
tuition fees in England by nearly
ВЈ6,000 a year (up from ВЈ3,375) will
17/06/2011 12:03
55
achieve financial savings, but not at a
level anything like this amount in net
terms. About 40% of the higher costs
in tuition fees will actually fall on the
government, which will be obliged to
increase financial support for students
through the Student Loan Company.
The thinking explained
Haroon Chowdry, senior research
economist at the IFS, clarifies. �Our
understanding is that the government
saves money overall from the proposed
reforms. This is because the effect of
subsidising greater loans – which adds
to net debt – is outweighed by the cut
to the Higher Education Funding
Council for England (HEFCE) grant.
There are some further subtleties to
this, such as the fact that issuing
greater loans doesn’t actually impact
on the spending or borrowing figures.’
Chowdry adds: �When the
government raises the funds to issue
new loans, it’s scored as a financial
transaction in the national accounts,
which is outside of public spending. So
public sector net debt increases, but
public sector net borrowing doesn’t. Of
course, the value of the student loan
book – which is a financial asset – also
increases, but it increases by less than
the debt. The difference between them
represents the cost of the loan subsidy.
�Just to be clear: even if you ignored
the differential accounting treatment,
the net effect is to improve the public
finances. The accounting treatment is
not a necessary step to achieve that.’
Moreover, he adds, tranches of Student
Loan Company debt have been sold in
the past, generating receipts for the
government (see box).
The accounting position of student
loans is made particularly complicated,
though, by the fact that loan costs are
included in the annually managed
expenditure, while loan impairments are
UK_YPUB_tuition.indd 55
*STUDENT LOANS
Student loans were first issued in the 1990–91 academic year, as mortgage-style
loans. From 1998–99 onwards they were awarded as income-contingent loans,
with repayments calculated as a percentage of earnings (currently triggered
above ВЈ15,000). These are collected by HMRC through the tax system.
Some of the initial mortgage-style Student Loan Company debt was sold by
the government in 1998 to a NatWest company called Finance for Higher Education
for ВЈ1.02bn. Under the terms of the deal, Finance for Higher Education
delegated loan administration to another NatWest company, Lombard Tricity
Finance, which in turn subcontracted administration back to the Student Loan
Company for an initial five-year period. Loan administration on these old debts
is now carried out by Thesis Servicing, a subsidiary of Link Financial.
Despite the loan portfolio being sold off, the government continues to pay
debt servicing costs to the acquiring companies – to compensate them for the
fact that students repay their loans at an interest rate below the market level –
for up to 25 years, at a rate of more than ВЈ1m a month.
The government is keen to sell tranches of the more recent income-contingent
loan portfolio, but says that it will do so only when market conditions are right.
The value of the student loan book as at 31 March 2010 was ВЈ24.1bn, with the
value of outstanding loans having increased by ВЈ3.3bn in the previous year.
Pictured above and left: student demonstration in London, protesting against tuition fees
charged to departmental expenditure
limit budgets. This means that as more
loans are issued and at larger amounts
– to cover higher tuition fees – so the
pressures on DEL will increase as the
cost of impairments rises.
Gillian Fawcett, ACCA’s head of
public sector, explains: �In terms of the
department’s balance sheet, student
loans will be shown as a financial
instrument (loans and receivables). In
other words, as an asset. It will show
loans brought forward, new loans
issued, interest added less repayments
and write-offs.’
But, believes Fawcett, the government
and many observers have been
optimistic in their calculations of the
actual savings that will be achieved
under the new system. �In my view, a
potential problem will be the extent to
which student loans are recoverable,’
she says. �The big issue is whether the
government is overestimating the
recoverability of loans. If this is the case
then it will have to write-off significant
amounts in the future, thus hitting the
bottom line and adversely impacting on
budgets and future spending.
�It is difficult to see how the above
arrangement could improve public
spending. It looks as though there may
be potential problems being built up
for the future.’
Paul Gosling, journalist
17/06/2011 12:03
DATA PAGE
Bank Base Rates
Date
7.8.97
6.11.97
4.6.98
8.10.98
5.11.98
10.12.98
7.1.99
4.2.99
8.4.99
10.6.99
8.9.99
4.11.99
13.1.00
10.2.00
8.2.01
5.4.01
10.5.01
2.8.01
18.9.01
4.10.01
8.11.01
6.2.03
Rate
7.00%
7.25%
7.50%
7.25%
6.75%
6.25%
6.00%
5.50%
5.25%
5.00%
5.25%
5.50%
5.75%
6.00%
5.75%
5.50%
5.25%
5.00%
4.75%
4.50%
4.00%
3.75%
Retail Prices Index
Date
10.7.03
6.11.03
5.2.04
6.5.04
10.6.04
5.8.04
4.8.05
3.8.06
9.11.06
11.1.07
10.5.07
5.7.07
6.12.07
7.2.08
10.4.08
8.10.08
6.11.08
4.12.08
8.1.09
5.2.09
5.3.09
Rate
3.50%
3.75%
4.00%
4.25%
4.50%
4.75%
4.50%
4.75%
5.00%
5.25%
5.50%
5.75%
5.50%
5.25%
5.00%
4.50%
3.00%
2.00%
1.50%
1.00%
0.50%
Source: Barclays
Mortgage Rates
Date
1.6.01
1.9.01
1.10.01
1.11.01
1.12.01
1.3.03
1.8.03
1.12.03
1.3.04
1.6.04
1.7.04
1.9.04
1.9.05
1.9.06
Rate
7.00%
6.75%
6.50%
6.25%
5.75%
5.65%
5.50%
5.75%
6.00%
6.25%
6.50%
6.75%
6.50%
6.75%
July 2011
Figures compiled on 6 June 2011
January
February
March
April
May
June
July
August
September
October
November
December
1996
150.2
150.9
151.5
152.6
152.9
153.0
152.4
153.1
153.8
153.8
153.9
154.4
1997
154.4
155.0
155.4
156.3
156.9
157.5
157.5
158.5
159.3
159.5
159.6
160.0
1998
159.5
160.3
160.8
162.6
163.5
163.4
163.0
163.7
164.4
164.5
164.4
164.4
1999
163.4
163.7
164.1
165.2
165.6
165.6
165.1
165.5
166.2
166.5
166.7
167.3
2000
166.6
167.5
168.4
170.1
170.7
171.1
170.5
170.5
171.7
171.6
172.1
172.2
2001
171.1
172.0
172.2
173.1
174.2
174.4
173.3
174.0
174.6
174.3
173.6
173.4
2002
173.3
173.8
174.5
175.7
176.2
176.2
175.9
176.4
177.6
177.9
178.2
178.5
2003
178.4
179.3
179.9
181.2
181.5
181.3
181.3
181.6
182.5
182.6
182.7
183.5
Rate
7.00%
7.25%
7.50%
7.75%
7.50%
7.25%
7.00%
6.50%
5.00%
4.75%
4.50%
4.00%
3.50%
3.99%
Existing Borrowers - Source: Halifax
January
February
March
April
May
June
July
August
September
October
November
December
2006
2.4%
2.4%
2.4%
2.6%
3.0%
3.3%
3.3%
3.4%
3.6%
3.7%
3.9%
4.4%
2007
4.2%
4.6%
4.8%
4.5%
4.3%
4.4%
3.8%
4.1%
3.9%
4.2%
4.3%
4.0%
2008
4.1%
4.1%
3.8%
4.2%
4.3%
4.6%
5.0%
4.8%
5.0%
4.2%
3.0%
0.9%
2009
0.1%
0.0%
-0.4%
-1.2%
-1.1%
-1.6%
-1.4%
-1.3%
-1.4%
-0.8%
0.3%
2.4%
2010
3.7%
3.7%
4.4%
5.3%
5.1%
5.0%
4.8%
4.7%
4.6%
4.5%
4.7%
4.8%
2011
5.1%
5.5%
5.3%
5.2%
HM Revenue & Customs Rates
“OFFICIAL RATE”*
Effective Date
6.3.99
6.1.02
6.4.07
1.3.09
6.4.10
Rate
6.25%
5.00%
6.25%
4.75%
4.00%
*Benefits in Kind: Loans to employees
earning ВЈ8,500+ - official rate of interest.
Official rate for loans in foreign currencies: Yen:
3.9% w.e.f. 6.6.94; Swiss F: 5.5% w.e.f. 6.7.94
(previously 5.7% w.e.f. 6.6.94).
INTEREST ON UNPAID / OVERPAID
INHERITANCE TAX
Effective Date
27.1.09
24.3.09
29.9.09
Rate
1.00%/1.00%
0.00%/0.00%
3.00%/0.50%
INTEREST ON LATE PAID
INCOME TAX, CGT, STAMP DUTY
AND STAMP DUTY RESERVE
Effective Date
6.12.08
6.1.09
27.1.09
24.3.09
29.9.09
Rate
5.50%
4.50%
3.50%
2.50%
3.00%
INTEREST ON OVERPAID
INCOME TAX, CGT, STAMP DUTY
AND STAMP DUTY RESERVE
Effective Date
6.11.08
6.12.08
6.1.09
27.1.09
29.9.09
Rate
2.25%
1.50%
0.75%
0.00%
0.50%
w.e.f. 6.3.09
0.00% (0.00%)
0.00% (0.00%)
0.75% (0.00%)
0.75% (0.00%)
0.75% (0.00%)
0.75% (0.00%)
w.e.f. 6.2.09
0.00% (0.00%)
0.00% (0.00%)
1.00% (0.50%)
1.00% (0.50%)
1.00% (0.50%)
0.75% (0.25%)
w.e.f. 9.1.09
0.00% (0.00%)
0.00% (0.00%)
1.50% (0.75%)
1.25% (0.50%)
1.25% (0.50%)
1.25% (0.50%)
Late Payment of Commercial Debts
From
1.7.09
1.1.10
To
31.12.09
30.6.10
Rate
8.50%
8.50%
From
1.7.10
1.1.11
To
31.12.10
30.6.11
Rate
8.50%
8.50%
The Late Payment of Commercial Debts (Interest) Act 1998
For contracts from 1.11.98 to 6.8.02 the rate applying is the Bank of England
Base Rate that was in place on the day the debt came overdue plus 8%.
The Late Payment of Commercial Debts (Interest) Regulations 2002
For contracts from 7.8.02 the rate is set for a six month period by taking the
Bank of England Base Rate on 30 June and 31 December and adding 8%.
2009
2.17%
2.05%
1.65%
1.45%
1.28%
1.19%
0.89%
0.69%
0.54%
0.59%
0.61%
0.61%
2010
0.62%
0.64%
0.65%
0.68%
0.71%
0.73%
0.75%
0.73%
0.74%
0.74%
0.74%
0.76%
2011
0.77%
0.80%
0.82%
0.82%
0.83%
3 MONTH INTERBANK - closing rate on last day of month
Courts
ENGLISH COURTS
2007
6.3%
7.7%
4.6%
4.2%
4.6%
4.2%
4.5%
5.0%
5.5%
4.2%
5.1%
3.4%
January
February
March
April
May
June
July
August
September
October
November
December
2008
209.8
211.4
212.1
214.0
215.1
216.8
216.5
217.2
218.4
217.7
216.0
212.9
2008
3.6%
4.6%
4.8%
4.8%
4.2%
3.4%
3.2%
3.2%
2.8%
3.6%
2.3%
2.5%
Whole GB economy unadjusted
*Provisional
2009
210.1
211.4
211.3
211.5
212.8
213.4
213.4
214.4
215.3
216.0
216.6
218.0
2010
217.9
219.2
220.7
222.8
223.6
224.1
223.6
224.5
225.3
225.8
226.8
228.4
2011
229.0
231.3
232.5
234.4
2009
-1.7%
-5.7%
-1.1%
1.7%
0.9%
1.1%
0.3%
0.3%
0.9%
0.7%
0.8%
0.7%
2010
0.6%
5.2%
6.6%
0.4%
1.1%
1.1%
1.8%
2.1%
2.3%
2.1%
2.1%
1.3%
2011
3.5%
1.0%
1.9%*
Figures include bonuses and arrears
Source: ONS
House Price Index
2007
595.7
612.3
625.2
641.5
644.9
645.5
649.2
650.8
647.8
640.2
628.7
632.2
January
February
March
April
May
June
July
August
September
October
November
December
2008
619.1
626.1
616.9
618.0
603.5
588.3
577.5
567.7
561.0
544.2
527.1
512.8
2009
517.2
515.3
508.3
508.6
520.7
514.0
520.1
524.1
533.5
535.4
536.0
541.3
2010
535.7
537.2
543.1
552.7
547.6
538.5
544.8
546.6
529.6
534.9
528.4
522.7
All Houses (January 1983 = 100)
Exchange Rates
Encashment rates shown in brackets. Above rates are paid gross but are liable to tax.
2008
5.58%
5.74%
6.01%
5.84%
5.87%
5.95%
5.78%
5.75%
6.30%
5.84%
3.91%
2.77%
2007
201.6
203.1
204.4
205.4
206.2
207.3
206.1
207.3
208.0
208.9
209.7
210.9
Source: ONS
% Annual Inflation
up to ВЈ100K
ВЈ100K+ 0-1 mth
ВЈ100K+ 1-3 mth
ВЈ100K+ 3-6 mth
ВЈ100K+ 6-9 mth
ВЈ100K+ 9-12 mth
January
February
March
April
May
June
July
August
September
October
November
December
2006
193.4
194.2
195.0
196.5
197.7
198.5
198.5
199.2
200.1
200.4
201.1
202.7
% Change Average Weekly Earnings
Certificates of Tax Deposit
LIBOR
2005
188.9
189.6
190.5
191.6
192.0
192.2
192.2
192.6
193.1
193.3
193.6
194.1
13th January 1987 = 100
Source: ONS
Date
1.12.06
1.2.07
1.6.07
1.8.07
1.1.08
1.3.08
1.5.08
1.11.08
1.12.08
1.1.09
1.2.09
1.3.09
1.4.09
4.1.11
2004
183.1
183.8
184.6
185.7
186.5
186.8
186.8
187.4
188.1
188.6
189.0
189.9
2005
2006
2007
2008
2009
2010
2011
YEN
202
205
233
198
142
142
133
MARCH
US$ SFr
1.89 2.25
1.74 2.27
1.97 2.39
1.99 1.97
1.43 1.63
1.52 1.60
1.60 1.47
2011
522.6
523.3
524.8
525.3
Source: Halifax
on last working day
€
1.45
1.43
1.47
1.25
1.08
1.12
1.13
2004
2005
2006
2007
2008
2009
2010
DECEMBER
YEN US$ SFr
197 1.92 2.18
203 1.72 2.27
233 1.96 2.39
222 1.99 2.25
130 1.44 1.53
150 1.61 1.67
127 1.57 1.46
€
1.41
1.46
1.48
1.36
1.04
1.13
1.17
Income Support Mortgage Rate
Effective Date Rate
Effective Date Rate
Effective Date Rate
17.12.06
18.2.07
17.6.07
12.8.07
13.1.08
16.3.08
18.5.08
16.11.08
1.10.10
6.58%
6.83%
7.08%
7.33%
7.08%
6.83%
6.58%
6.08%
3.63%
From 1.10.10 the standard interest rate will be the BoE published
monthly avge mortgage interest rate. Can claim mortgage interest
on, up to ВЈ200,000 of the motgage. Waiting period 13 weeks.
SCOTTISH COURTS
Judgment Debts: High Court (& w.e.f. 1.7.91 County Courts) 8% w.e.f. Decrees: Court of Session & Sheriff Courts 8% w.e.f. 1.4.93 (previously
15% w.e.f. 16.8.85).
1.4.93 (previously 15% w.e.f. 16.4.85).
Funds in Court: Special Rate (persons under disability) 0.5% w.e.f.
NORTHERN IRISH COURTS
1.7.09 (previously 1.5% w.e.f. 1.6.09). Basic Rate (payment into court) Judgment Debts: High Court: 8% w.e.f. 19.4.93 (previously 15% w.e.f.
0.3% w.e.f. 1.7.09 (previously 1% w.e.f. 1.6.09).
2.9.85). County Court 8% w.e.f. 19.4.93 (previously 15% w.e.f. 19.5.85).
Interest in Personal Injury cases: Future Earnings - none. Pain &
Interest on amounts awarded in Magistrate Courts 7% w.e.f. 3.9.84.
Suffering - 2%. Special Damages: same as “Special Rate” - see Funds
in Court above (ВЅ Special Rate payable from date of accident to date ADMINISTRATION OF ESTATES
of judgment).
England & Wales: Interest on General Legacies: 0.3% w.e.f. 1.7.09
Interest Rate on Confiscation Orders in Crown & Magistrates Courts: (previously 1% 1.6.09). Interest on Statutory Legacies: 6% w.e.f.
1.10.83 (previously 7% w.e.f. 15.9.77).
same rate as applies to High Court Judgment Debts.
All rates and terms are subject to change without notice and should be checked before finalising any arrangement. No liability can be accepted for any direct or
consequential loss arising from the use of, or reliance upon, this information. Readers who are not financial professionals should seek expert advice.
Data specially compiled for
by
the adviser’s portal
www.moneyfactsgroup.co.uk
The UK’s largest provider of savings and mortgage data
Tel: 0845 1689 689
Financial services
MPS CALL OUT RBS ACCOUNTS
Two leading MPs have asked RBS
to prove that its accounts properly
present its financial position. Steve
Baker – who wants banks to produce
parallel GAAP and International
Financial Reporting Standards (IFRS)
accounts – and David Davis suggest
that the use of IFRS has inflated the
capital position of the bank. They
have asked why the government’s
asset protection scheme accounts
report an expected loss of ВЈ57bn on
toxic assets, yet the RBS accounts
show its losses at ВЈ32bn. The MPs
suggest this may have the effect
of the bank improving its capital
ratio to 5.5%, against 2.75% if the
scheme loss figures were used. It
is understood that RBS rejects the
MPs’ argument on the basis that its
accounts show losses for the last
trading period, while the scheme is
predicting potential future losses to
2014. RBS declined to comment.
TROUBLED DEBTS GROW
Banks’ financial troubles are far from
over, credit rating agency Fitch Ratings
has argued. It warned that the amount
of US bank loans classified as troubled
debt restructurings (TDRs) has grown
considerably over the last two years.
It believes that recent changes in
accounting standards guidance ASU
2011-2 and ASU 2010-20, along with
increased regulatory scrutiny, will
result in even more loans moving into
TDR status. The accounting changes
will also lead to greater transparency
for those loans already classified as
TDR. The new accounting standards
guidance comes into effect in the
second half of this year.
UK_YFIN_intro.indd 57
57
The view from:
Life assurance: Richard Kerr FCCA,
п¬Ѓnancial control manager,
Standard Life Investments
Q What changes would you like
to see in the sector?
A If the financial services
industry is to regain the
confidence and trust of the
public and the media, it must
rebuild from stable foundations.
It will also be interesting to
see what the future under the
prudential regulatory authority
brings. It would help if a more
consultative approach was
adopted with member firms.
Q How do you ensure consistency and adequacy
in financial reporting?
A It’s essential to keep abreast of current issues
and developments. Attendance at relevant courses
or technical updates goes some way towards this,
but there is no substitute for reading the financial
press. Completing CPD requirements is also
essential, and a network of contacts in the industry
is a great way to share knowledge and ideas.
Q What is your typical day like?
A One of the things I enjoy most about working at
Standard Life Investments is that I don’t have such
a thing as a typical day. The finance team here
is involved in many aspects of the business, so
there is plenty of opportunity for a challenging and
varied workload.
Q What would you be if you weren’t an accountant?
A A rugby journalist. I was never good enough to
play at the highest level so that wasn’t an option.
However, I’m passionate about the game and in
recent years have had plenty to say about the state
of the Scottish team! Scottish football writers have
been described as fans with typewriters – I think I
would be the rugby equivalent.
FAST FACTS
Short CV: I began my career at a small Edinburgh
accountancy firm before moving into financial
services. During 21 years in the industry I have
worked for Aegon, Franklin Templeton, Deutsche
Bank and HSBC before arriving at Standard Life
Investments just over five years ago.
57 Financial services
The view from Richard
Kerr of Standard Life
Investments; a guide to
stock exchange mergers
37 Practice The view
from Surendra Dhungana
of F Winter & Co;
progress on the adoption
of the clarified audit
standards; ACCA and
Accountancy Age’s new
practitioner awards
45 Corporate The view
from Sheldon ThomasJones of Mitsubishi, the
importance of preparing
well for flotation; who is
really keeping the lid on
audit conversations
51 Public sector The
view from Amyas Morse
of the National Audit
Office; scepticism about
Big Society; why university
tuition fees don’t add up
17/06/2011 14:53
58
Financial services
Trading places
Mergers between international stock markets can create potential monopolies, but with
technology changing traditional trading practices, how else can stock exchanges survive?
Last year a friend working at the
London International Financial Futures
Exchange, better known as Liffe,
visited the New York Stock Exchange
and, on a tour of the trading floor, he
proudly rang the bell.
The reason for his visit, besides
the chance to ring the famous bell
that kicks off trading, was because
of the tie up between NYSE, the
heart of American capitalism, and
Euronext Liffe, which was one of the
first stock market mergers in what
has now become merger mania among
the world’s bourses.
Owners of traditional stock
unveiled the first details of a merger
plan that would create the world’s
largest stock exchange.
The new company, to be
incorporated in Amsterdam, is to be
headed by NYSE chief executive
Duncan Niederauer, while Reto
Francioni, Deutsche Boerse chief
executive, would become chairman.
However, the deal is still pending.
The NYSE Group, operator of the
New York Stock Exchange, had already
scooped up Euronext for $10.2bn in
2007, beating a rival bid from
Deutsche Boerse. The combined
company handles stock and derivative
�WE ARE CREATING THE WORLD’S LARGEST
LISTING VENUE FOR THE COMMODITIES,
ENERGY AND NATURAL RESOURCES SECTORS’
exchanges have been slowly joining
forces for several years to cut costs as
competition mounts from new
computerised stock exchanges with
names like BATS and Chi-X. The
onward march of information
technology has offered banks and stock
brokers new ways of trading that mean
they are less reliant on traditional
exchanges to buy and sell securities.
The main reason behind the current
round of consolidation in the market is
because stock exchanges are under
pressure in their traditional markets
– where upstart trading venues like
BATS and Chi-X have eaten into their
market shares and narrowed profits –
forcing the exchanges to diversify
revenues and cut costs through
international mergers.
Less than a year after the NYSE/
Euronext Liffe tie-up, the next stage in
the round of stock exchange mergers
began. In February, Germany’s
Deutsche Boerse and NYSE Euronext
UK_YFIN_SX.indd 58
markets in Amsterdam, Brussels,
Lisbon and Paris, as well as the NYSE
Liffe derivatives market.
The Deutsche Boerse/NYSE Euronext
merger proposal came just hours after
the London Stock Exchange said it
would buy Canada’s TMX.
On 9 February, the LSE announced
plans to buy Canadian owner of the
Toronto Stock Exchange, the Montreal
Exchange and the junior TSX Venture
Exchange, creating the world’s largest
stock exchange by number of
companies. The deal was unanimously
recommended by the boards of both
companies and billed as �an all-share
merger of equals’.
It will be the top listings venue in the
world by number of listings – over
6,700 companies with an aggregate
market capitalisation of approximately
£3.7trn – and the biggest global
exchange for mining and energy
listings, which has been a key driver of
TMX’s success.
A successful deal would also
parachute the LSE-TMX group into
fourth position above Nasdaq in terms
of annual revenue.
Announcing the deal, the LSE said
the combined transatlantic group
would be jointly headquartered in
London and Toronto and would �offer
an international gateway, leading global
pools of capital formation and liquidity,
together with a unique portfolio of
highly complementary markets,
products, technologies and services’.
Chris Gibson-Smith, chairman of
LSE, said: �We are today announcing
the creation of a global leader in the
exchange space… I believe that
together we will be able to offer
shareholders and customers a business
significantly greater than the sum of
our parts.’ He added that the merger
�comes at a hugely important time in
the history of capital markets’.
The merger marks the first
significant deal for Xavier Rolet, the
LSE chief executive, who said he hoped
�to surprise everyone in the coming
years’ when he took over from Dame
Clara Furse. Rolet is to lead the
enlarged company, while Thomas Kloet,
CEO of TMX, is to become president.
Listings behemoth
Rolet said: �We are creating the world’s
largest listings venue for the
commodities, energy and natural
resources sectors, as well as the
premium market for small, mid-sized
and growth companies. This new
international leader, marrying the right
cost structure, financial strength,
technological expertise and product
portfolio, will be strongly positioned to
capitalise on growth opportunities in
emerging markets and deliver them to
our customers in North America,
Europe and beyond.
�Together, we will also be uniquely
17/06/2011 12:05
59
positioned to offer high-performance,
low-cost technology solutions to our
exchange clients around the world. We
are aiming at nothing less than
becoming a true
powerhouse in the global
exchange business.’
The LSE is currently
languishing at number
seven in the world
rankings (see box). A good
set of financial results
recently highlighted Rolet’s
success at cost cutting and
growing new revenue
streams, such as the
bond market, but it
hasn’t put paid to
rival bids.
As Rolet strives to get
the proposed merger
past Canadian
authorities, a rival
bidder has
emerged. In
June, Maple
Group
launched a C$3.7bn hostile bid for
Toronto Stock Exchange operator TMX
Group, an all-Canadian challenge to
LSE’s agreed bid.
The Maple Group, comprised of
four leading banks, five top
pension funds and four new
institutional investors, said in a
takeover circular to shareholders
that its offer was �superior’ in
value and provided greater
certainty for TMX shareholders.
Investors have until 30 June to
vote for the LSE-TMX
deal. The
Canadian
consortium is
therefore urging
shareholders to
vote against its
rival, because
the Maple bid
will fail if TMX
shareholders
vote for LSE’s
$3.4bn offer
on 30 June.
�TMX Group
shareholders
should be
aware that
Maple’s offer
can only
proceed if the
LSE takeover
plan does
not,’ Luc Bertrand, Maple’s chief
spokesman and vice-chairman of
Quebec-based National Bank, said
in a statement.
Regulator attention
Regulators are paying close attention to
the latest round of deals, however.
Exchange users have also voiced
warnings over the proposed tie-ups. The
main criticisms centre on the cost of
fees for clearing, the closing auctions
and small and mid-cap trading. Further
consolidation is worrying users because
together the exchanges will become
powerhouses that can easily protect
their monopolies and thus potentially
cause market distortions.
Political and regulatory hurdles may
threaten the Deutsche Boerse-NYSE
Euronext tie-up. The biggest question
mark in general is obviously the
European political and regulatory
landscape. And angry Canadians fed up
with their country’s assets being
bought up by overpowering foreigners
may scupper the LSE-TMX deal. But
whatever happens to the current
proposed mergers, further
consolidation is inevitable if the CEOs
of stock markets want to improve
shareholder returns and keep their
jobs. What form the consolidation takes
is really the only outstanding question.
Michelle Perry, journalist
*TOP STOCK EXCHANGES BY MARKET VALUE ($BN)
The Mighty Thor rings the closing
bell of the New York Stock
Exchange on 2 May 2011
UK_YFIN_SX.indd 59
1 HONG KONG EXCHANGES & CLEARING
2 CME GROUP
3 DEUTSCHE BГ–RSE
4 BMF BOVESPA
5 NYSE EURONEXT
6 INTERCONTINENTALEXCHANGE
7 LSE/TMX
24.9
20.1
15.3
13.5
8.7
8.6
6.9
17/06/2011 12:05
60
Technical update
A round-up of the latest developments in financial reporting, auditing, tax and law
FINANCIAL REPORTING
FOUR STANDARDS ISSUED
Following a long period in
which no new International
Financial Reporting
Standards (IFRSs)
were issued, in May the
International Accounting
Standards Board (IASB)
issued four new standards.
Three of the standards
are the culmination of
the project to improve the
accounting requirements
in respect of off-balance
sheet arrangements and, as
a result, IFRS and US GAAP
are now closely aligned
in this important area of
accounting.
IFRS 10, Consolidated
Financial Statements, will
replace parts of IAS 27,
Consolidated and Separate
Financial Statements,
and the whole of SIC 12,
Consolidation – Special
Purpose Entities. The new
standard builds on existing
principles by identifying
the concept of control as
the factor that determines
whether or not an entity
should be included in the
consolidated financial
statements of a parent
entity. Additional guidance
is provided to assist in
determining whether control
exists in circumstances
where a straightforward
assessment is not possible.
IFRS 11, Joint
arrangements, will supersede
IAS 31, Interests in Joint
Ventures, and SIC 13,
Jointly Controlled Entities –
Disclosure of Interests in Other
Entities. Current accounting
focuses on the legal form of
the arrangement between
UK_T_techupdate.indd 60
the parties, but IFRS 11
requires consideration of
the rights and obligations of
the arrangements between
the parties. The IASB
considers that a focus on
substance will result in a
more realistic consideration
of the arrangements.
Current inconsistencies
and choice of method
for the accounting for
joint arrangements have
been removed in the new
standard. One of the
consequences will be that
equity accounting will have
to be applied for all joint
ventures and the option of
proportional consolidation
has been removed.
IFRS 12, Disclosure of
Interests in Other Entities, is
an entirely new standard
that covers disclosures for
all forms of interests in
other entities, including joint
arrangements, associates,
special purpose vehicles
and other off-balance sheet
vehicles.
All three of the above
standards will apply for
periods beginning on
or after 1 January 2013
with earlier application
permitted.
IFRS 13, Fair Value
Measurement, marks the
completion of one of the
major convergence projects
between IFRS and US GAAP.
The harmonisation of fair
value measurement and
disclosure requirements was
also an important element
of the two standard setters’
responses to the global
financial crisis.
IFRS 13 does not extend
the use of fair value
accounting, but it does
provide guidance as to
how the concept of fair
value should be applied in
practice. The new standard
provides, for the first time,
a precise definition of fair
value and a single source
of fair value measurement
and disclosure requirements
across all IFRSs. As a
consequence, the IASB
believes that there will be
greater consistency and
complexity may be reduced.
IFRS 13 applies for periods
beginning on or after 1
January 2013 and earlier
application is permitted.
In the US, equivalent
guidance has been included
in an update to Topic 820
in the Financial Accounting
Standards Board’s
Accounting Standards
Codification.
For a related CPD article,
see page 65
BOARDROOM DIVERSITY
Lord Davies’s report, Women
on Boards, recommended
that the Financial Reporting
Council (FRC) should
amend the UK Corporate
Governance Code to
require listed companies
to establish a policy
concerning boardroom
diversity, including
measurable objectives for
implementing the policy.
In addition, the report
suggested that companies
should disclose annually
a summary of the policy
and the progress made in
achieving its boardroom
diversity objectives. As a
result, the FRC has begun
a consultation on whether
the code should be revised
to incorporate Lord Davies’s
recommendation. The
consultation closes on
29 July 2011. A decision
on whether to amend the
code and, if applicable, the
timetable for doing so, will
be announced later this year.
AUDIT
NEXT STEPS IN AUDIT MARKET
The Office of Fair Trading
(OFT) has reached the
provisional view that there
are reasonable grounds for
suspecting that there are
features of the market for
external audit services that
are restricted, distorted
or prevent competition. In
particular, it is concerned
that there are four dominant
firms that provide the
majority of external audit
services to large companies
and there are real barriers
to new providers entering
that marketplace. The OFT’s
view could be the first step
towards the Competition
Commission introducing
remedies to the audit
market, designed to remove
any perceived adverse
effects on competition.
However, the OFT has not
yet decided whether to refer
the audit market to the
Competition Commission. In
order to inform its decision,
the OFT will be holding a
number of roundtables and
discussions with interested
parties throughout the
summer. The provisional
decision will then be subject
to statutory consultation
later in the year.
AUDIT OF CREDIT UNIONS
The UK Auditing Practices
Board (APB) has published
15/06/2011 13:15
61
a revised version of Practice
Note 27: The Audit of Credit
Unions in the UK. The
revised note amends the
guidance for auditors of
credit unions in the UK to
reflect the changes required
by the clarified and revised
International Standards on
Auditing (UK and Ireland),
which apply to audits of
financial statements for
periods ending on or after
15 December 2010.
Yvonne Lang, director,
and Kern Roberts,
associate director, Smith
& Williamson, www.
smithwilliamson.co.uk
TAX
ALLOWANCES FOR FIXTURES
Fixtures are assets which
are installed or fixed to a
building or land so as to
become part of the building
or land in property law.
When a commercial property
is bought, sold or leased, it
is important to consider any
fixtures within the building
as capital allowances
implications can arise.
Examples of fixtures
are water pipes, electrical
wiring, air conditioning,
lifts, washbasins, boilers
and fitted kitchens. Some
common fixtures can qualify
as plant or machinery under
the normal criteria in the
Capital Allowances Act
2001 (CAA).
Since the introduction
of capital allowances
on integral features of
a building in 2008, the
range of fixtures on which
allowances can be claimed
has significantly increased,
UK_T_techupdate.indd 61
with expenditure on many
items now attracting the
annual investment allowance
(AIA) or an annual writingdown allowance of 10%.
Integral features
Since April 2008, the most
common types of fixtures
have fallen within a special
classification of �integral
features’ of a building
(section 33A CAA 2001).
Electrical systems
(including lighting
systems).
Hot and cold water
systems.
Air conditioning and
heating systems.
Lifts and escalators.
External solar shading.
Expenditure on integral
features is allocated to
a special rate pool, with
writing down allowances
available at a rate of 10%
per annum (reducing to 8%
per annum from April 2012).
Expenditure on integral
features counts as qualifying
expenditure for the purposes
of the AIA (ВЈ100,000 since
April 2010, reducing to
ВЈ25,000 from April 2012).
It is often beneficial for
taxpayers to allocate the AIA
against expenditure in the
special rate pool in priority
to expenditure in the general
pool due to the lower
writing-down allowance.
Further comment on fixtures
legislation, lessee and
lessor, elections, disposal
values and an over view
of some of the proposals
in the fixtures and fittings
consultation can be found at
http://uk.accaglobal.com/
uk/members/technical/
advice_support/tax
*
*
*
*
*
*WORKING TOGETHER
Working Together
provides a forum for
raising operational issues
or problems with HM
Revenue & Customs,
identified by HMRC, ACCA
or other representative
bodies, either at a national
level or through local
Working Together groups.
The Working Together
local group meetings take
place three to four times
a year. At these meetings,
representatives are able to
discuss potential issues
and evaluate the progress
on issues previously raised.
These will be issues that
either they have come
across in their practice
HMRC AND TAX AGENTS
HM Revenue & Customs
(HMRC) has launched a
consultation, Establishing
the future relationship
between the tax agent
community and HMRC,
that looks at the future
relationship between it
and tax agents. This is
an opportunity for all tax
agents to influence their
work with HMRC.
The consultation
recognises that tax agents
do not benefit from a
business-based relationship
with HMRC. It proposes
options with the aim of
saving time and providing
greater certainty for clients.
It also highlights the savings
to HMRC.
or alternatively issues that
have been brought to their
attention by other ACCA
practitioners.
ACCA has launched a
dedicated section on its
website for the Working
Together initiative. Minutes
of meetings received from
representatives of local
groups have been put onto
this website so that other
ACCA practitioners can
keep up to date and forward
any issues to their local
representative to be raised.
To find your local group,
go to http://uk.accaglobal.
com/uk/members/
technical/advice_support/
tax/hmrc/together
The consultation looks
at the concept of selfservice for enrolment and
client online services. It
also highlights certain
conditions that will
need to be considered,
including security and
professional conduct. All
accountants who act as
tax agents should read
this consultation.
CAMPAIGNS
HMRC has announced
that its latest campaign
will target individuals and
businesses who have income
above the VAT threshold but
have not registered for VAT.
Other campaigns will involve
private tutors, e-markets
and another trade.
15/06/2011 13:16
62
Technical update
REASONABLE EXCUSE:
*ARGUE
YOUR CASE
As highlighted in the June
edition of Accounting
and Business, HM
Revenue & Customs’
guidance emphasises
that a �reasonable excuse
can only exist where an
exceptional event beyond
the control of the taxpayer
prevented completion
and submission of the tax
return by the due date.’
Some cases recently
heard by tribunals have
highlighted HMRC’s
insistence that �reasonable
excuse must involve an
exceptional event beyond
the control of the taxpayer’,
which appears to have no
basis in law.
Section 71 (1) of the VAT
Act 1994 states:
�For the purpose of
sections 59 to 70 which
refers to a reasonable
excuse for any conduct:
a) an insufficiency of funds
to pay any VAT due is not
a reasonable excuse
b) where reliance is placed
on any other person to
perform any task, neither
the fact of that reliance
nor any dilatoriness or
inaccuracy on the part of
the person relied on is a
reasonable excuse.’
In addition, HMRC has
always refused to accept as
reasonable excuse:
ignorance of the law
oversight or
misunderstanding
error
*
*
*
UK_T_techupdate.indd 62
with work
* preoccupation
inexperience of business
* affairs
no intention to escape
* payment
of tax.
In several cases, the tax
tribunal found there was a
reasonable excuse without
an exceptional event. It’s
clear that �reasonable’
means just that, and
�exceptional’ is nothing more
than HMRC gloss which the
tribunal was not prepared
to uphold. Each case will be
considered on its merits, but
taxpayers may wish to refer
to earlier case judgments.
The extracts from the
cases below highlight
successful and unsuccessful
appeals. You can find
a longer article and
links to cases at http://
uk.accaglobal.com/uk/
members/technical/advice_
support/tax
Successful cases
on the advice
* ofA company,
its accountant, issued
a cheque to HMRC which
paid the tax liability and
also part of the next
year’s liability. The
cheque was both
unsigned and inadequate
to meet the liability.
HMRC considered that,
as two years’ liability was
involved, there were two
failures to make
payments and cancelled
its gross payment status.
The contractors claimed
that they had never
received the notice and it
was only when one of
their subcontractors
notified them that they
became aware of the
cancellation. They
appealed, accepted their
errors and claimed that
they were given wrong
advice. The tribunal found
that they had probably
not received the notice,
HMRC had not met its
obligation to notify and
the tribunal allowed the
appeal.
An employee left his
employment and was
paid up to date. After that
date but before the end
of the fiscal year, he
received a further
payment. Tax was
deducted under PAYE,
but only at the basic rate
and not at the higher
rate, which would have
been correct. The
taxpayer said he was
unaware that insufficient
tax had been deducted.
In April 2010, the
employee was sent a tax
return, which he
completed. HMRC stated
that as the higher rate tax
should have been paid,
surcharges were being
levied.
The tribunal said that
the point at issue was
whether the appellant had
a reasonable excuse for
the delay. �HMRC contends
that “a reasonable excuse”
necessarily involves some
exceptional event within
or without the taxpayer’s
control. That involves HMRC
putting an unjustified gloss
upon the ordinary English
*
words that Parliament has
chosen to use. A “reasonable
excuse” is just that and
does not, as a matter of
statutory interpretation,
require that there should
have been some exceptional
event within or without
HMRC’s control.’
Unsuccessful cases
One such taxpayer was
* paid
removal expenses by
his employer, but failed to
show the excess over
ВЈ8,000 on his tax return.
When he filed the return,
he had not received a
P11D and HMRC was
aware of this. It felt that,
despite this, he was
negligent in preparing his
return and imposed a
10% fine for negligence.
The taxpayer, an
American who relied on
his accountant to
complete his return,
could not be expected to
know that removal
expenses are taxable in
the UK to the extent that
they exceed ВЈ8,000,
unlike in the US, where
they are not taxable.
HMRC’s compliance
handbook (CH84540)
states that �a person who
goes to an apparently
competent professional
adviser, gives the adviser
a full and accurate set of
facts, checks the
adviser’s work or advice
to the best of their ability
and competence and
adopts it… will have
taken reasonable care to
avoid inaccuracy’.
Despite this, his appeal
was rejected and the
penalty upheld.
15/06/2011 13:16
63
REAL TIME REPORTING
HMRC announced in April
that it would pilot PAYE realtime information reporting
from April 2012, with all
employers submitting
PAYE real-time information
by October 2013. The
technical information has
now been made available
to the software providers
(www.hmrc.gov.uk/
softwaredevelopers/rti/
improving-rti.htm).
You may wish to ask your
software provider to keep
you informed about how this
change may impact you.
VAT: INTRA-EU SUPPLIES
HMRC has released VAT
Notice 20/11 on changes to
the Intra-EU supplies.
The change follows
a Court of Justice of
European Union (CJEU)
decision in joint cases of
X (C-536/08) and HMRC.
VAT Notice 725 paragraph
7.7 explains the position. It
states: �The CJEU decision
has provided some clarity.
The liability to account for
acquisition VAT where a
UK VAT number is used for
goods sent from a member
state to another without
entering the UK remains the
same.’ What has changed is
that, �it clarifies that there
is no right to recover the
acquisition VAT as input
tax’. The only time UK VAT
will be adjusted is where a
business can demonstrate
that the acquisition VAT has
been accounted for in the
member state of arrival.
TAX RETURN PENALTIES
Remember that 2010–11
self-assessment return late
UK_T_techupdate.indd 63
filing penalties are no longer
capped to the amount of
tax payable.
CONSULTATIONS
There are a number of
consultations closing at the
end of August.
Capital allowances for
fixtures.
This looks at pooling and
other ways in which the
fixtures regime might be
improved. See also page 61.
Changes to the capital
allowances anti-avoidance
rules for plant and
machinery
This is an anti-avoidance
proposal.
Extra-Statutory
Concession 3.2.2.
HMRC is consulting on
the proposal to legislate
Extra-Statutory Concession
(ESC) 3.2.2. The concession
was originally brought in
to counter VAT avoidance
schemes that took advantage
of VAT grouping. The
consultation proposes to
legislate the concession and
to bring it up to date as it was
brought in before the changes
to the place of supply rules
implemented on 1 January
2010. The consultation ends
on 3 August.
Further information can
be found at www.accaglobal.
com/uk/members/
technical/advice_support/
tax/hmrc and http://
uk.accaglobal.com/uk/
members/technical/advice_
support/tax
*
*
*
LAW
CHARITY TRUSTEE GUIDANCE
The Charity Commission has
completed its compliance
toolkit for charity trustees.
The final chapter of its
toolkit, Protecting Charities
from Harm, covers holding,
receiving and moving funds.
The toolkit should be viewed
by all trustees.
�Protecting charities from
harm is an online toolkit
that aims to give trustees
the knowledge and tools
they need to manage risks
and protect their charity
from harm and abuse,’
says the commission. In
particular it aims to:
raise awareness of the
risks charities face from
abuse
explain relevant parts of
the legal framework
within which charities
must operate
explain charity trustees’
legal duties and
responsibilities to protect
their charity
make clear what steps
charity trustees must, as
a matter of law, and
should as good practice,
take to ensure their
charity is well protected
from terrorist, criminal
and other abuse
ensure trustees properly
and responsibly deal with
incidents if they arise
highlight examples of
good practice in
managing the risks and
building safeguards
encourage charity
trustees to improve their
charities’ transparency
and accountability
add value to charities’
work and increase public
understanding.
For more, go to www.
charitycommission.gov.uk/
our_regulatory_activity/
*
*
*
*
*
*
*
*
counter_terrorism_work/
protecting_charities_landing.
aspx
BUSINESS VALUATIONS
ACCA has recently issued
five technical factsheets
relating to performing
valuations, which cover the
following topics:
167: Valuing trading
companies.
168: Valuing properties
and farming companies.
169: Valuing options
170: UK tax valuatio.n
rules and reporting.
171: Valuing goodwill.
These can be found at
www.accaglobal.com/
members/publications/
technical_factsheets
*
*
*
*
*
EQUALITY ACT GUIDANCE
The main parts of the
act came into force last
October, with elements
being phased in over the
next couple of years. The
Equality and Human Rights
Commission regularly
updates its guidance,
which aims to support
employers as they update
procedures to comply with
the requirements of the act.
It can also help ensure that
policies and procedures
reflect best practice.
The current guidance
relating to what equality
law means for you as
an employer covers the
following issues:
1) Recruiting someone to
work for you.
2) Working hours, flexible
working and time off.
3) Pay and benefits.
4) Training, development,
promotion and transfer.
5) Managing workers.
15/06/2011 13:16
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