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By David York, head of auditing practice, ACCA

An authoritative global survey of the views of smaller accountancy practices was published in March 2015 by the International Federation of Accountants. The survey concluded that the biggest challenge faced by firms was attracting new clients and half of those surveyed said they were concerned about differentiating their firm from the competition.

One UK firm that has cracked this problem is Green Accountancy. If you call yourselves Green Accountancy the differentiation from competitors is about as obvious as it can get.  But what lies behind this is an innovative service that any firm can add to its own service lines to give an edge in attracting new clients. In this case, clients that benefit from it may also get a ‘green advantage’ with their own customers.

ACCA has worked with Green Accountancy to promote this service. We issued detailed guidance in the form of Technical Factsheet 190, which is available as a free download on the ACCA website and crucially it is issued copyright free, to encourage firms, other accountancy bodies, or indeed anyone, to tailor it to their own needs: translate it, change UK to local figures, or include it in their own materials. The service is all about helping smaller businesses measure and reduce their main environmental impacts, so the more accountants that get involved in this the better. To quote ACCA Past President, Brendan Murtagh: ACCA believes that our members’ accounting and financial reporting skills have a key role to play in the transition to, and management of, the low carbon economy. By providing additional green accounting skills . . .  professional accountants will have a pivotal position measuring and managing carbon emissions.’

Recently we have released a video to introduce the service in detail and have put a transcript and the slide deck online.  There are also short articles that provide an overview: on the IFAC Global Knowledge Gateway as well as elsewhere on ACCA’s website.

The guidance was initially issued as ‘interim guidance’ because we wanted to improve it by responding to feedback from users. It is now (June 2015) due to be updated for 2015 year-end reporting and so, in addition to a feedback request in the factsheet itself (many thanks to those who have already provided their views) we have launched an online survey. The survey is not just for those who have introduced this service; anyone who has read the Factsheet can comment.  Please do so.

ACCA has one UK member – Joe Bourke – standing as a Prospective Parliamentary Candidate (PPC). This is a blog from Joe about his experience ahead of next week’s General Election.  While ACCA is a-political, we wanted to share Joe’s experiences as it is not often we hear from the front line of the political process …

Politics is all about people, it’s about being able to represent a myriad of views and support your local constituents, making sure they have a voice in Westminster.

As someone who runs a small accountancy practice I am always surprised by the parallels of being an accountant and being a politician; it’s about talking to people, listening to their views and trying to help them.

Over the campaign, I’ve been asked a lot “what do I stand for? What does the party stand for?”

So I’ve talked a lot about SMEs. As a small business owner myself, small business is something I am particularly hot on in the campaign. I know from my own work that business rates are the biggest issue for small firms, and business rate relief must be available to help struggling companies. I certainly feel local authorities have a big role to play in securing the redevelopment of their high streets, as is due to happen in Brentford.

Like politicians of all hues, I’ve been out and about meeting people on the doorstep. This has been a really positive experience. Most people are happy to have a chat and of course this time it has been a completely different experience as I am able to discuss our record in the Coalition. I’ve really enjoyed these face to face meetings.

As an honorary auditor for the Brentford Chamber of Commerce, I am really proud of what Vince Cable has done as Business Secretary. We have reduced the regulatory and tax burden by cutting swathes of red tape and providing billions of pounds of Business Rate Relief for small businesses. Our One-in, Two-out rules mean that for every piece of regulation that costs business £1, Whitehall has to remove £2 of regulatory burden. This has slashed the costs of domestic regulation for businesses by more than £2 billion.

In Government we have also created the British Business Bank – helping thousands of companies secure over £3 billion of finance. And we are also extending the Funding for Lending Scheme, working with the Bank of England, to reduce the cost of lending across the system to SMEs.

As an accountant I know more than most that balancing the books is important, in the private and the public sector. When it comes to Government, and spending tax payer’s money, ultimately, it’s down to politicians and civil service to ensure accountability. Politicians need to be accountable too.

So what about being an accountant and a PPC? It’s not been too hard balancing the day job with campaigning because I know I am fighting for policies I believe in and which will benefit Brentford and Isleworth, and the whole country. I’m really proud to be part of the democratic process.

I know ACCA as an organisation needs to be a-political, and I am sure if it had members standing as PPCs from other parties they’d get to write a blog too.

I welcome your views, and I hope you get engaged with the democratic process as we approach 7 May.

Darren Baker

By Darren Thomas Baker, author

What is the next approach to diversity management?

It was a rather grey, humid early summer morning in New York City when I met a friend for brunch close to Times Square. My friend is a very successful and passionate global diversity consultant who supports organisations in the design and implementation of inclusive leadership and behaviour change programmes. We obviously spoke much about diversity and the current challenges in the UK vis-à-vis the US. It seems such a foretelling conversation now in light of the widespread race riots towards the latter part of 2014, arguably the result of the continued socio-politico-economic exclusion of racial minorities in the US. Another contemporary tension concerns same-sex marriage in the US. In the UK, same sex marriage was legalised in March 2014 whereas many states in the US seem reluctant to grant this (Human Rights Campaign), with even reports of proposed oppressive and frightening legislation in some states advocating the re-introduction of LGBT pro-discrimination laws (Pink News, 2015). These examples and others highlight the tensions and paradoxes facing the effective management of diversity and equality for organisations across multiple geographies. Despite two to three decades of equality management in some regions of the world, why is it that we still hear of persistent glass ceilings, ‘sticky floors’, sexism, homophobia and racism to name but a few?

Organisational diversity practices are closely tied to legislative demands at the national and supra-national level. In the US, diversity management is linked to affirmative action, which emerged from the Civil Rights Movements of the 1960s. Affirmative action is considered a relatively radical approach to equality, as in the US it demands that employers take ‘every opportunity to employ individual applicants from specific minority groups’ (Executive Order 10925). The EU has, in contrast, adopted a more ‘liberal’ approach focused on removing the obstacles to a meritocratic culture. The response by organisations operating in the EU, therefore, has been to implement HR policies that set expectations on behaviours through, for example, ‘codes of conduct’ or reflecting these in their organisational values. However, HR policies and procedures largely fail, often miserably, to grapple with the underlying causes of discrimination in organisations, such as ensuring that competencies and processes for reward, promotion and effective decision-making are disentangled from gendered stereotypes (Collinson et al, 1990, Managing to discriminate). There has also been an over-emphasis on inclusion as an outcome rather than as an approach to the under-representation of minority groups in organisations. This is a serious problem as focusing on inclusion as an outcome rather than as an enabler to diversity can dilute group identities and individualise discrimination.

However, things are changing in the EU and there is now significant pressure brewing regarding imposing 40% quotas on non-executive boards for all member states (EC Press Release). There is compelling data to suggest that more radical approaches specifically the implementation of quotas and targets are more likely to guarantee the representation of minority groups within positions of power within organisations. In the case of the impact of gender quotas on boards in Norway, the study by Wang and Kelan (2013) shows not only an increase in the representation of women on boards but also a trickle-down effect throughout the organisational hierarchy. This supports organisations in the development of a robust diversity ‘succession pipeline’.

Transforming diversity management

Neither radical nor liberal approaches seem to deliver separately. So what’s in store for diversity management over the next few years? From these criticisms, a new ‘transformational approach’ to diversity management is emerging. The approach seeks to challenge both structural and cultural inequities within organisations. First, it transforms the business practice of an organisation, such as its procurement, decision-making, recruitment, training and career planning activities. Second, the approach drives cultural and behavioural changes particularly around implicit bias, inclusive leadership, conflict resolution and leveraging critical and diverse thinking. This is based on research that highlights how changing organisational structures can catalyse the effectiveness of cultural initiatives (Kalev et al., 2006).

I leave you with three questions to contemplate:

  • How far have you really come in the representation of minority groups throughout the organisational hierarchy?
  • Are you spending too much time on PR activities that look and sound good, but engender very little long-term change within the organisation?
  • How can you redefine your diversity and inclusion strategy so to create greater change within the organisation, ensuring legal, ethical and social expectations, and increase your financial return on diversity

For further reading, please see my forthcoming chapter:

Baker, D.T. and Kelan, E.K. (April 2015) The Policy and Practice of Diversity Management in the Workplace. In: Managing Diversity and Inclusion: An International Perspective. Sage Publications.

leaders

By Mark Cornell, market director – Western Europe and North America, ACCA

This week, we launch a new ad campaign called “Aspire to Lead

With posters in London Underground stations (Holborn and Euston for example) and online, we’re shouting loud about the value of accountancy and finance professionals to business.

We have real accountants in the ads – yes, real ones – who have agreed to be the stars of a campaign that illustrates accountancy is a great career choice. They – and we – believe that training to be an accountant gives you the skills, knowledge and strategic insights to climb the career ladder in many sectors, in many countries.

The “skills” word has come up in the news a lot recently – from Barclays CEO Anthony Jenkins in the Sunday Times, to Travelodge’s Chief Executive Peter Gowers, and Dame Pauline Neville Jones from Business in the Community talking about skills on BBC Radio 4’s Broadcasting House recently.

These business leaders expressed concern about whether schools were equipping young people with the ‘life skills’ they need for employability. They said there are still basic gaps in literacy and numeracy and so young people seemingly lack the essential “skills of everyday life”.  Gowers said he has to train apprentices and young staff on how to shake hands, and get eye contact. They were echoing Jenkins’ comments in the Sunday Times, where he said the UK is in danger of having a nation of awkward teens – unable to shake hands and get eye contact.

Helen Brand OBE, ACCA’s Chief Executive, wrote recently in City AM that the lack of soft skills can affect the bottom line, and that we need to see younger people as assets to business.

With the right training, development and mentoring – and perhaps a smattering of natural talent – young people can reach their aspirations to become confident leaders.

The leadership equation

Relevance is also part of this leadership equation. ACCA has always believed in providing a qualification that is relevant to today’s business market, providing accountants and finance leaders that the world needs.

This is why the ACCA Qualification not only covers the technical skills such as taxation and audit, but also management accounting and performance management. And there’s also a soft skills module which all ACCA members can now complete an optional professional skills module during their studies. This includes two modules – Communicating Effectively and also Working Relationships.

As a parent myself, perhaps we’re a bit too hard on youngsters – we’re expecting them to hit the working ground running; we tend to forget that these digital natives are ahead of the curve when it comes to exploiting technology, and this is a definite skills-set business needs.

I know from personal experience, starting as an apprenticeship with BT, just how important it is to not only learn the technical skills to do your job, but also to develop communication skills.

Starting at an apprenticeship level you have to prove you have the all-round ability to rise through the ranks and become a leader. Being a leader is about more than just knowing your job. It’s about being able to communicate effectively with everyone, regardless of their level. Being able to negotiate, being able to inspire confidence in those around you and motivate them.

Apprenticeships are a hugely important route in to the workforce and over the past decade we’ve seen a huge rise in the number of businesses offering apprentice-level training in finance. This has opened the profession up to talented individuals who may not be able to afford to go to university, or who are put off by the ever increasing amount of debt that today’s graduates are carrying. We believe that is a hugely positive thing. ACCA has always believed that becoming a finance professional is about ability and dedication, not ability to pay for a degree.

So for those aspiring to lead, what does the future hold? Previous research from ACCA and IMA called Future Pathways to Finance Leadership revealed that to get ahead, the CFO of the future needs to understand and handle risk, have strategic insights, be tech and data savvy, be prepared to be an excellent deal maker and possess excellent leadership skills, communication skills, strategic skills and change management skills. They need to be The Complete Package.

It’s clear our Aspire to Lead stars have these skills in abundance. They also prove that ACCA members are plying their knowledge and (soft) skills in every sector across most markets across the globe – from traditional accountancy practices, to the Big 4 to oil and gas to technology, to corporate and financial services and of course in the public sector.

I’d love to hear what you think about leadership and meeting aspirations. Leave your views in the comment section below this blog, and I hope you see our ads soon.

When it comes to spotting the warning signs of developing fiscal problems, the availability of quality information to support decision making is of utmost importance writes Chris Ridley, public sector policy manager at ACCA.

Most countries run with a public sector finance deficit and have done so for many decades, but when does it become unsustainable?

The recent shift towards an integrated global economy has driven the requirement for information to be available on a comparable basis. Gone is the time when national finances can operate in blissful ignorance of conditions overseas. This has resulted in a growing number of nations moving away from country-centric accounting standards towards a common set of international standards for budget and reporting purposes.

International Financial Reporting Standards (IFRS) are already widely used and an equivalent set of International Public Sector Accounting Standards (IPSAS) have been developed alongside them. While being similar in many respects, they reflect the unique requirements of the public sector. For example, the focus on public service provision rather than profit making, and the levying of tax and other charges by government to meet the financial commitments created. This is important as the public sector commonly accounts for around one-third of the Gross Domestic Product (GDP) in the majority of developed countries.

A significant number of countries continue to manage their public sector finances on a cash basis, although an increasing number have adopted full accrual accounting. This has the advantage of looking beyond a simple income and expenditure analysis towards the complete financial position, including the assets and liabilities held. Where this information is consolidated, for example as a set of Whole of Government Accounts (WGA), this provides strategic information on the sustainability of the national fiscal arrangements.

ACCA remains supportive of IPSASs and continues to encourage a move towards the adoption of full accrual rather than cash-only IPSASs given the additional financial information provided. With the move towards IPSAS in many countries, ACCA launched the Certificate in International Public Sector Accounting Standards (Cert IPSAS) at the end of 2014. ACCA’s Cert IPSAS is a flexible, top-up qualification for finance professionals working in / with the public sector. As a globally accessible online course and assessment it meets the needs of individuals and organisations wishing to develop essential working knowledge of IPSAS in an efficient and cost effective way.

Only by improving the information held on public finances and then acting on the issues raised can public services be maintained and improved for the future. Otherwise, as recent events have highlighted, countries could find themselves with severe financial difficulties that might take a generation to resolve.

When it comes to financing sustainable public services, more often than not, there are no quick fixes.