Archives For ACCA

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By Jason Piper, technical manager – tax and business law, ACCA

I’ve spent the last few weeks making people laugh. Not intentionally you understand; in fact, I’ve been talking about something which is really rather horrible. But every time someone asks “so what have you been up to then?” I’ve told them I’m putting the finishing touches to a paper on pillage. To be fair, not everyone laughs. Quite a few people just look puzzled. After all, I’m supposed to be working on business law and tax issues; pillage sounds more like an academic historian’s territory.

But here’s the thing, it’s not. Pillage isn’t about Viking longboats any more, or even squads of cavalry sweeping over the hill, knocking down haystacks and stealing barrels of beer. Pillage these days is big business. If you’re reading this then there’s a fair chance you’re doing so at least in part using pillaged goods. You may be wearing, eating and looking at things produced as a result of pillage.

We’re living in a world of long supply chains and minutely differentiated products. Someone recently worked out there were over a million variants on one new model of car launched by GM. You can order your mobile phone in the colour of your choice, buy cheap clothes at the out-of-town mall full of chains stores you choose, and buy customised birthday cards one at a time off the internet. And behind that incredible array of choices lies a global web of trade and manufacture which almost defies comprehension. Not so long ago in Europe, it was discovered that horsemeat had been entering the human food chain, often labelled as beef. And supply chains were so long, so opaque, so poorly understood, that even the supermarkets who were supposedly at the head of them had to admit that they didn’t know what they were buying; they didn’t know what was going into their own-brand products.

Pillage is a legally defined criminal offence. It’s theft in the context of military action, and it’s a lot more common than perhaps we’d be comfortable thinking about. But it’s also hard to prove. And because there can be big money involved, there’s a very significant incentive for players further down the chain to close their eyes and close their minds to what may be going on. Minerals taken from mines in conflict zones, timber logged by warlords, cotton processed by victims of war, all can be classed as pillaged goods.

And over the last few years there have been a range of developments which have revitalised the importance of the crime. Pressure groups are looking at the jurisprudence of recent judgments and finding grounds to launch actions at corporate level. Consumers are more aware of supply chains. And theft, including handling of stolen goods, has become one of the offences which can lead to a conviction for money laundering.

So if you’re a business and there’s goods in your supply chain that might be tied up with pillage, you could be in trouble on 3 fronts – if the pressure groups can’t get a prosecution for war crimes, the authorities can come after you for financial crimes. And in either case, your PR consultants will (or at least, should be) waking in a cold sweat in the middle of the night thinking about the reputational damage that association with either event could cause – not to mention the bottom line impact of being barred from public procurement contracts.

Pillage is no laughing matter; it never has been. But now it is becoming more than ever the spectre behind the high street, a pollutive taint spreading throughout the production process of goods enjoyed around the world. If not for the sake of the victims, then at least for the sake of their own bottom line, business should be looking to do all it can to eradicate every link with pillaged goods.

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By Clare Minchington, executive director – strategy & development, ACCA

More than 450 education providers from around the world joined ACCA live at an online conference recently – Access ACCA – to find out more about the developments that we’re making to our qualifications to introduce added flexibility and relevance into our exams. My team shared detailed information about the changes we’re making, the timeframes we’re working towards, the potential impact and highlighted key resources to support our global education providers so they can continue to deliver high quality tuition through this transition.

It was really encouraging to see the level of support our education providers have for the future of our qualification and our vision as an organisation to be number one in developing professional accountants. Everyone agreed that the increased rigour and choice that we’re introducing into our qualifications are necessary to develop the next generation of finance professionals and meet the demand of businesses around the world.

We know that the changes we’re making will have a big impact on our partners. That’s why we’re taking a phased approach to each development instead of making any big bang changes. It’s important to use events like Access ACCA to inform and engage with our stakeholders and bring them on this journey with us.

During the conference there were a lot of questions about the introduction of four exam sessions, particularly about the impact this will have on students and education providers. With all of our developments, the overriding objective is to offer our customers more choice. Education providers can choose how to utilise the introduction of four sessions to maximise their business models. This could include introducing resit courses or developing courses that meet employer needs. Interestingly education providers told us during the conference that they will use the added flexibility to look at their tuition models to understand how they can restructure them to maximise the benefits.

Our aim is to introduce four sessions in 2016 following a pilot exercise the previous year. It’s important that we trial our changes and make sure that they work in the market place before rolling them out to everyone. This ensures that both students and education providers have the best exam experience possible.

We are also looking to add more choice and relevance into our assessments through the introduction of computer based exams (CBEs) for papers F5-F9, which we’re targeting for 2016.  As I’ve said we want to transition any changes over time to ensure that students and education providers have the time to adapt and adopt with minimum disruption.

During the conference we were able to reassure our education providers that we will maintain the rigour and the relevance of the qualification. ACCA is committed to delivering a qualification that helps build the complete finance professional. Tutors were impressed to learn about our exam trialling activities that we’ve undertaken as part of our exam development process, undertaken for the new formats being introduced for F4-F9 later in 2014. We are confident that the work we do to ensure the ACCA Qualification remains rigorous and relevant will ensure that it is as respected globally in the future, as it is today.

The event is still online and can be dipped into for those interested in finding out more.

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By John Davies, head of technical, ACCA

There is no doubt that professional advisers have on occasions been implicated in money laundering schemes.

Numerous cases have been reported of solicitors being successfully prosecuted for being involved, innocently or otherwise, in such activities; there have been other cases where solicitors have been found to have been actively complicit.

Given the expertise that is called for in order to devise and execute the more sophisticated laundering schemes, it is perhaps only to be expected that criminals will seek out the advice of technical experts who understand how business works and how laws and practices can be manipulated to facilitate substantial transfers of criminal property.

The UK Government is conscious of this and is seeking to step up its efforts to tackle serious organised crime. In a new Bill, presented to Parliament last week, the Government has included a clause to make it a criminal offence to ‘participate’ in an organised crime group. While there is no express reference in the Bill to accountants and lawyers, the Home Office’s press briefings in advance of its publication made it clear that accountants and lawyers were very much the targets of the new measure.

The Bill would make it a criminal offence to take part in any activities that the person concerned knows or suspects are the activities of an ‘organised crime group’ or which would provide help to such a group.

Few would argue with the proposition that involvement in serious criminal activities should be actively discouraged by the law.

The question is whether we need another criminal offence in this area with the additional pressure and uncertainty it would impose on professional advisers.

Under the Proceeds of Crime Act as it currently stands, any person, whether a professional adviser or not, commits an offence if s/he becomes directly involved in holding or transferring criminal property or becomes involved in an arrangement which s/he knows or suspects facilitates such activity.

Accountants and lawyers have additional specific responsibilities to inform the authorities, again on the basis of either knowledge or suspicion, if they come across information suggesting that any of the aforementioned offences have been committed. While there is an exemption from disclosure to cover circumstances of legitimate professional privilege, that exemption is not available where the adviser is aware that the client’s motives in seeking advice are criminal.

In addition to the above, accountants and lawyers are obliged to take all reasonable steps to verify the identity of new clients, ascertain their motives and to monitor on an on-going basis the financial transactions of their clients.

Failure to comply with any of these requirements is already a serious matter and punishable by large fines and long prison sentences. The following comment by a solicitor jailed in 2006 for failing to satisfy a court’s retrospective judgment about what he should have known about his clients sums up the force of the current law:

‘I made a simple mistake, amounting even in its worst interpretation, to no more than an error of professional judgement, from which I made no benefit … all sole practitioners and money laundering reporting officers (MLROs) in professional practices should take heed.’

So what will the new measure achieve that is not achievable under the present rules? As the above example shows, those who conduct professional work for groups of individuals who turn out to be criminals, already run a serious risk of prosecution and imprisonment, even if they make an honest mistake about the client’s motives. An accountant or lawyer who has even a suspicion that he has come across an organised crime gang in the course of his work will already be covered by an obligation to pass on his information to the authorities.

Rather than introducing stringent new offences which don’t appear to add much to what we have, we should surely be focusing on ensuring that we optimise the effectiveness of the existing framework. The regulated sector in the UK, one of the most comprehensive of its kind in the world, provides over 300,000 suspicious activity reports to the National Crime Agency every year, yet there remains a widespread perception that the extensive efforts that go into providing this information do not translate into effective enforcement action against serious crime.

A study by CCAB, to be published on 23 June, brings together the views of stakeholders on both sides of the fence about the operation of the UK’s anti-money laundering regime. It reports that some practising accountants are not convinced that the regime is as efficient as it might be. In particular some feel that there is too much regulatory focus on prosecuting cases of non-compliance with rules and too little emphasis on using the information advisers supply to clamp down on serious criminal activity. They call for a greater effort by regulators to share information with individual firms about how the system is working, with the intention of encouraging more of a shared commitment to the ultimate aims of the exercise.

The Government should heed the feedback from practitioners before it enacts its new Bill. Tackling money laundering is a cause that is vital to both the economy and wider society, and one that accountants and other regulated parties are generally happy to contribute to for that reason. But buy-in from those at the sharp end is crucial, and for that to happen the authorities need to resort to the carrot as much as the stick.

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By Petros Fassoulas, head of policy and public affairs – Europe, ACCA

It is this time again in the political circle when we are asked to step up and elect Members of the European Parliament (MEPs). Some view these elections as having little relevance to their everyday life, but that could not be further from the truth.

The European Parliament is, together with the Council of Ministers where member state governments are represented, the main decision-making body of the European Union. Its members decide on the rules and regulations that govern significant parts of the European economy.

The Single Market Committee, chaired by Malcom Harbour MEP, a British Conservative, has been instrumental in the design and adoption of many of the laws that govern the biggest common market in the world, where about 50% of British exports go, worth about £200 billion a year.

The Economic and Monetary Affairs Committee, chaired by another Brit, the Liberal Democrat Sharon Bowles MEP, played a key role in the decisions that re-engineered supervision of the banking and financial services sector in the EU.

The audit reform dossier was spearheaded in the European Parliament by Sajjad Karim, you guessed it, yet another British MEP, who was the rapporteur (the person who held the pen) while the EP’s Legal Affairs Committee scrutinised and amended the European Commission’s proposals.

So the European Parliament and its members play a crucial role and most British MEPs are usually at the core of the decisions made, decisions that affect British business. This is why the choice of who we send to Brussels is crucial. ACCA works closely with British MEPs on all the policy areas that affect our profession, so we know first-hand how important it is that our MEPs are influential, involved, active and constructive, prepared to engage, build alliances, lead, write reports, vote and be part of the decisions that affect us all.

The European Parliament Elections are not a mid-term assessment of the government or an opportunity to give mainstream parties a kicking. They produce the MEPs that represent us and our interests. It is imperative that we engage by showing up to vote so we can ensure that the people we elect are able and willing to do the job.

Voting for the European Elections takes place in the UK on Thursday 22 May and polls are open from 7am until 10pm.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

How will the finance function fare in the face of significant disruptive future changes in our business and personal lives? Broad social changes, the unstoppable rise of digital, the new “technological” industrial revolution, a much more mobile connected and powerful consumer generation, transitioning business models, a much more challenging competitive landscape, the proliferation of risk, and so on. All of these, and other changes, present new challenges, as well as new opportunities, to businesses. By inference, they have significant implications for the future finance organisation too.

At ACCA, we believe the future for the finance organisation is bright, and the changing business landscape presents new opportunities for finance leaders. It is fair to say the historic reputation of the finance department has been biased towards stewardship, the control centre of the enterprise. But in an increasingly complex, volatile environment, whilst control and risk management responsibilities remain essential, too often the nomenclature of “back office” has been used to describe finance activities. This belies the increasingly critical role finance will have to play in leading the enterprise in its growth strategies, and providing the important financial insight it needs to drive value. Smart finance functions will ensure they strike the right balance.

Over the next 18 months ACCA will lead a global campaign to understand the leading practices finance functions are adopting in their goal to becoming smarter. How are best-in-class delivering the insights that make a real difference to corporate performance, whilst continuing to drive effective stewardship and control of the enterprise. The campaign has already identified a number of critical areas in which progressive finance functions must look to excel. Over the next 18 months, it will seek to understand and showcase the good practices, challenges, issues and opportunities corporate finance functions face in working smarter in four key areas: the quality of its leadership, the extent to which it effectively uses technology, its human capital practices, and its ongoing ambitions to transform the function. Visit accaglobal.com/smart for further information and to access our ongoing thinking in this area.