PUBLIC AFFAIRS AND MEDIA RELATIONS BLOG - Clive Booth

2010 Live Budget Blog from ACCA

Hello, and welcome to ACCA's live blog for the UK's 2010 Budget.

The chancellor will be making his Budget statement at 1230 GMT on Wednesday and our live blog will begin at 1200 GMT. Providing us with their thoughts and analysis of what the chancellor is announcing are: ACCA's head of tax, Chas Roy-Chowdhury; our SME policy adviser, Manos Schizas; and our technical advisory team, headed by Glenn Collins.

Updates will appear in the comments section of the blog, so make sure you regularly update the page. You can follow the comments section in an RSS feed too by clicking on the orange button below.

Is there anything left to be said about sustainability?

ACCA hosts a public debate in London on 26 March at which the great and the good will discuss how to overcome the barriers for organisations to be environmentally sustainable and financially viable.
 
Two pieces of research to be published on the day examines organisations that have put ecological sustainability at the core of their mission, and how they are modifying business processes in response to the demands of the sustainable development agenda. Pursuing Environmental Sustainability: A Survey of Organisations That Put the Environment First also explores the barriers these organisations face in seeking to operate in an ecologically sustainable manner.
 
Key Issues in Sustainability Assurance considers sustainable assurance reporting. Sustainability assurance reports are viewed differently by different people, who often have different views and needs when looking at these reports. But their future usefulness cannot be ignored and there remains a place for assurance reports in the world of sustainability.
 
To mark the publication as well of Pursuing Environmental Sustainability: A Survey of Organisations That Put the Environment First, ACCA is looking forward to hearing from the following panellists:

• Jessica Fries, project director, The Prince of Wales Accounting for Sustainability Project
• John Lelliot, director of finance and information services, The Crown Estate
• Mark Line, executive chairman, Two Tomorrows
• Barney Rhys-Jones, managing director, Good Energy
• Professor Jan Bebbington and Nick Barter, University of St Andrews
• Professor David Owen, University of Nottingham
• Steve Priddy, director of technical policy and research, ACCA (chair)

To attend this free event, please email extevents@accaglobal.com to reserve your place.
 
Friday 26 March 2010  

• 4.30pm-5pm - Registration
• 5pm-6.05pm - Speaker panel
• 6.05pm-6.45pm - Q and A
• 6.50pm-7.30pm - Reception  

Venue
ACCA, 29 Lincoln's Inn Fields, WC2A 3EE (map) 

Women in the boardroom

In 'Skirting the issue' in this week's Schumpter business column in the Economist, the effect of imposing women onto boardrooms is examined and concludes this tackles a symptom of discrimination, not the cause.
 
Women hold fewer than 15% of positions on boards in most countries, except in Scandinavia and Norway in particular where in 2005 the government gave listed companies two years to increase the proportion by 40% or risk closure. Cranfield University produce a yearly report of women on the boards of FTSE 100 companies, which you can find here.
 
One potential downside to such engineering of social justice was that Norwegian boards might suffer from the loss of corporate experience that the men being replaced would leave. While the wheels haven't dropped off in Scandinavia, it has now become increasingly difficult for these countries to maintain the balance on the boards because the pool of female candidates has been drained.
 
Schumpter concludes that the best way to increase the number of women on boards is to ensure that more women gain the right experience further down the corporate hierarchy. For instance, training as a chartered certified accountant would be one good step onto that corporate ladder for many women.
 
But then ACCA would agree with that, wouldn't we?

Why Iceland is oh so quiet

For a country of only 320,000 people (175th in the world population rankings and about the same size as Leicester in the UK), Iceland has consistently punched well above its weight with its impact on world culture.

For fans of avant garde music, blonde footballers, fish-based naval stand-offs, ominous quiz music, and frozen food, the world would be a very different place without the volcanic Atlantic island.

Depending on your view of frozen food, football, or Björk, the swan-wearing songstress, the absence of Iceland would presumably be a bad thing; for the British and Dutch finance ministries though, Iceland and its 320,000 citizens are an unwanted £3.3bn headache.

After the Icelandic banking industry collapsed in 2008, the British and Dutch governments found themselves refunding their citizens who had just lost their savings. Since then, the British and the Dutch have been trying to get the money back (Iceland has already promised to repay most of the money, the sticking point is the terms and conditions).

The Icelanders have understandably taken a dim view of the speed at which they are being asked to repay the £3.3bn - given that it was Icelandic-based banks that lost the money rather than the Icelanders themselves - and 93% of them rejected the current repayment plan in a referendum over the weekend. As The Economist notes though, this show of people power could prove costly as a £3bn IMF loan is contingent on the country repaying its debts.

The question in Iceland is a repeat of the problem faced by the UK two years ago: whether or not it's right for taxpayers to bailout failing/failed private banks. The answer to this question is undoubtedly ‘yes' - the economic crisis would have been worse without bailouts - but really the question is one that shouldn't have been asked in the first place. The financial sector messed up, big time.

In two papers, The Future of Financial Regulation and its update, ACCA's policy team has looked at ways to prevent taxpayers being once more put in a position where they have no choice but to clean up the messes of a risk-ignorant financial sector. (The Centre for Analysis of Risk and Regulation has an excellent edition of its e-zine on regulation and the financial crisis too. Read it here).

The key points from the papers include: the need for a review of the purpose and structure of regulation; the need to consider separating wholesale and retail banking; the need for an introduction of an ethics-based corporate culture to financial institutions; the need for a review of corporate governance (particularly the role of non-executive directors); improved accountability, audit, and remuneration structures; and the need for international regulatory authorities to agree on, and enforce, a definition of optimal capital levels for the major retail banks.

So far, the British taxpayers have had to stump up for losses made by banks in both the UK and Iceland. They shouldn't have to bear the same burden again.

The Business Link adviser network has had its day

The All Party Parliamentary Small Business Group, to which ACCA provides secretariat services, met yesterday morning to discuss how to inspire entrepreneurship. 

Lord Alan Sugar, the government's enterprise champion, addressed the group at what was a lively meeting. 


On Business Link – Lord Sugar told the group that, although he was sceptical when he started in this role, he is now convinced that the centres are useful, although they are not as lean, mean and efficient as they could be. He does not, however, feel that enough people know that the Business Link centres are there, and went on to suggest that they need a massive marketing campaign to publicise their offering.

Others disagreed with this assessment, saying that Business Link has very poor penetration, that the service is too slow and that there is not enough focus on building a solid relationship with the business owners. Lord Sugar went on to suggest that there should be a 'business supremo' in each region, who has a proven background in running successful businesses. 

      

On Access to finance – On access to finance, Lord Sugar said that money has been too easy to get. He called for a return to the 'old-fashioned, sensible ways of banking and lending to small businesses', saying that if a small business is not a sound risk, then lending to it would be irresponsible. He added that people cannot be angry if a bank demands assets to secure a loan - a bank is also a business. Lord Sugar also pointed out that banks are saying that there is a lack of demand for finance at the moment. The Institute of Directors responded that 57% of their members have been declined for finance.

On Entrepreneurship – Specifically on inspiring entrepreneurship, Lord Sugar warned that there is too much of an expectation that government has all the answers and should be providing people with a blueprint of how to run a successful business. He outlined that, before setting up a business, people should be an expert in a particular area where they have a passion and an interest and have a unique selling point, or something to offer that their competitors won't.

Government's role is then to provide support on how to comply with regulations and overcome some of the obstacles. He called for a re-education of people who are 'used to getting things on a plate', a promotion of the merits of starting a business alongside more publicity of success stories in order to begin re-instilling confidence into entrepreneurship, and less of a blame culture.



Earlier this week ACCA issued a statement calling for an entirely new model of business support to replace the failed Business Link brokerage service, following Conservative Party claims that they will scrap it.



Glenn Collins, ACCA UK head of advisory services, welcomed proposals to radically reform business support. Collins said: 'Tinkering around the edges will not save Business Link. The brokerage model of business support never worked in the first place, and Business Link never became an adviser of choice or the first port of call - despite being free and having the government's unqualified support.'

        


Over the years, ACCA has been consistently critical of the way Business Link's brokerage system works, and has noted in particular how poorly it has treated professional accountants.

Professor Robin Jarvis, head of ACCA's small business unit, explains: 'If you were to call in today and ask for an accountant, you would be given three practices at random from an approved list - regardless of their expertise or their record of service. This would come with little guarantee of their competence as anyone is allowed to call themselves an accountant.

'If, on the other hand, you were to ask for a business consultant, Business Link would not be able to refer you to a professional accountant, however suitable or experienced. They won't be on the approved list because they fall into a different box in the grid.'



Yet despite supporting some of the Conservatives' plans - dealing with the macro conditions and getting out of the way - ACCA believes this cannot be the final word on business support.




Professor Jarvis continues: 'We are aware of the research on business support. We know that macro-economic conditions are more important than micro-interventions in supporting enterprise. Yet when areas of market failure are proven to exist no one would question the government's right to intervene. The point is to do this through acknowledged, valued private sector advisers.'

ACCA believes the government's online business information portal www.businesslink.gov.uk is an excellent tool for small businesses and that accountants are happy to support it. But it needs to be taken out of the shadow of the ailing bricks-and-mortar service before it's too late.



Glenn Collins explains: 'Just over a year ago, the Anderson Review reported how the poor reputation of the Business Link adviser network was holding back the online resource. Sarah Anderson and her team were so concerned that they called for a rebranding to salvage the website, but this was ignored. This problem hasn't gone away, the good online work risks not reaching small businesses. There is still time to rebrand and reach the audience if we have action now.'

Friday Round-up

Welcome to the first of my “Friday round-ups”, a weekly blog of blogs, bringing you a quick summary of some of the week’s big accountancy stories as well as some information about what ACCA has been up to over the last seven days.

Dominating the accountancy headlines this week, as it has done for a while, is the ongoing battle to converge global accounting standards. The debate was brought to the fore (once again) by a disagreement between the Chiefs of PwC and Deloitte over loan loss accounting provisions.

Further doubt was cast over the future of convergence on Tuesday, when the IASB said that convergence with its US counterpart the FASB was no longer “an objective in itself”. Our Head of Public Affairs, Veena Hudson, has blogged on the tortuous convergence process, while our President, Brendan Murtagh, has had a look at the UK’s ASB GAAP consultation exercise.

Accountancy itself came under scrutiny in the Evening Standard when City Editor Anthony Hilton noted that the profession had escaped the criticism levelled at bankers and economists in the aftermath of the financial crisis. In response, ACCA wrote to the Standard explaining that the role of auditing in business needed to evolve post-crisis, with effective audits underpinning the confidence required for a return to strong economic growth.

This week, UK inflation rose to 3.5% and Barclays’ announced a whopping 92% leap in profits as it continued its post-crisis recovery (albeit, as commented by Robert Peston, while retaining earnings which could be used for the lending which the economy desperately needs). Brendan took a timely look at what accountants can do for small businesses to help them out of recession while our blogging accountant, Simon Cox, looked at some of the challenges faced by small businesses, such as unreasonable or erroneous demands from the taxman, and the benefits of online & traditional networking.

My colleagues and I have also been busy online. Nick Cosgrove spent last Thursday evening live tweeting from an ACCA/KPMG climate change debate (which covered the opportunities for businesses in the green economy, the role which the public and private sectors should play in combating climate change, and the problem of balancing business and environmental needs), while I shamelessly promoted ACCA’s presence on social media and discussed the European Commission’s consultation on the interconnection of business registers.

Looking beyond the immediate realm of accountancy, Veena continued her series on the UK’s upcoming General Election, this week focusing on the post-election economy and the outlook for the public sector.

That’s all for this week, but this Friday round-up will become a regular feature and, as with all our blogs, please feel free to leave comments and feedback.

Cross border sharing of Business Registers: a sensible way to enhance confidence in European companies

In our official response to the European Commission stakeholders' consultation on the Interconnection of Business Registers, ACCA's position is that making company information that is currently held on national business registers available all over the EU is a practical way of making the single market more connected.
 
The European Commission's initiative to integrate all nationally-held information about private companies is a step forward. ACCA strongly encourages the EU executive to proceed, while recognising that there are considerable legal and technical hurdles to be overcome before a truly integrated system for sharing business information is available across the whole EU.
 
John Davies, ACCA's head of business law, says: 'There is currently no mechanism to make this information systematically available on a cross-border basis.
 
'There are two fundamental requirements for any EU-wide network of business registers. Firstly, the information contained within the registers must be kept up to date across territorial boundaries, and this will need to be done automatically. Secondly, the portal for user access to the information must be effective for them and designed in such a way as to encourage the widest possible use of the information.'
 
Enabling individuals and businesses to routinely access reliable and transparent data on companies based in other countries will serve the purpose of encouraging cross-border trade and cross-border investment.
 
'Making company data easily available is also essential to establish stakeholder confidence in the planned European private company and its application to SMEs,' John concludes.
 
Do you agree? Will this happen?

ACCA and the meta blog of shameless self-promotion

The English language is constantly reinventing itself, with new words, verbs, and verbal ticks regularly inserting themselves into everyday speech. Often, new words and phrases are very much appreciated: before the invention of sliced bread, for example, there was literally no way of describing how good something actually was.

In this century, the most popular 'useful' new words have been spawned by the internet. 'To google' is the prime example and probably helps maintain the search engine's all-conquering market position – you'd probably even 'google' something if you were using Yahoo!.

The latest internet-spawned verb is 'to tweet', although not everybody has entirely got the hang of its conjugation yet (I tweet, you tweet, she tweets, you are a… tweeter, obviously), which has led to some mangled sentences as people have a stab at sounding like they know what Twitter is all about ('so do you do tweetering?') but end up putting on a comedy German accent instead.

At ACCA, we like to think we 'get' Twitter, or at least are aware of the fabulous potential it offers as a channel of corporate communication with our varied audiences, which for us on Twitter is, well, everyone.

We already operate several different Twitter feeds (News, Tax, Green, Research), and two of our team are on Twitter too (myself and our social media monkey, Nick Cosgrove). We're on Facebook too (incidentally, another internet verb: 'I'll facebook you').

Twitter allows us to keep our merry band of over 4,000 combined followers up-to-date with all the latest goings on in the accountancy, finance, and business sectors, as well as letting them know what ACCA is up to or what ACCA thinks about certain issues.

For example, Twitter allowed us to report the Hector Sants resignation on Tuesday, and then get an ACCA response to several thousand people within hours, long before the reports appeared in Wednesday's papers. Over the Davos weekend, we were tweeting constantly to report on the latest developments.

Outside of the obvious (accounting standards changes, careers, or Big Four news), we've nudged people in the direction of news on the dire state of football finances (luckily nothing on the mighty Leeds United so far…), and flagged up news about Islamic Finance.

So, if you want to keep up with the latest accountancy news or want to get in touch with one of us, then you could do worse than follow us on the tweeterthingamajig.

ACCA underlines crucial role of audit in Ukraine's economic development

The role of audit, tackling a lack of transparency, corruption and the need for greater cooperation between regulators and business were among the issues discussed at an ACCA-hosted roundtable in Ukraine on 27 January 2010.
 
The event, entitled The Future of Audit - the third in a series of such events, following ACCA roundtables in Poland and Singapore last year - brought together stakeholders from across the Ukrainian audit profession and government to debate the vital role of audit in the continuing development of Ukraine's economy. In attendance were representatives from the Auditors Chamber of Ukraine, Union of Auditors of Ukraine, State Commission on Regulation of Financial Services Markets of Ukraine, as well as others from the wider profession. 
 
Among those taking part was Volodymyr Bogatyr, Ukraine's deputy minister of justice, who outlined the government's efforts to bring its legislation into line with the EU's, and the country's commitment to the full implementation of international financial reporting standards (IFRS).
 
'Financial reporting issues were reflected in the Ukraine-EU Association agreement, which puts obligations on Ukraine to bring its legislation in accordance with international standards,' said Bogatyr. 'Together with the Ministry of Finance, we are also exploring the possibility of a Ukrainian translation of the IFRS for SMEs, which would encourage greater transparency.'
 
Gerry Parfitt, KPMG partner, conceded that some of the blame for the economic crisis should lie with the profession, which he said could have employed greater effort in promoting transparency and stamping out corruption.
 
'One of the things that I would like to see in Ukraine is people and businesses appointing auditors to give transparency to the business,' said Parfitt. 'In the UK, every single company has to file their accounts annually with the registrar of companies - it is a public document easily available over the internet.'
 
Angela Prigozhina, senior specialist at the World Bank in Ukraine, further echoed the need for greater transparency, casting doubts of a quick economic recovery for the Ukraine unless it could strengthen its transparency and competitiveness.
 
She further stressed the need for auditors and regulators to work together more closely to stamp out unprofessional and non-ethical behaviour.
 
Also taking part on the roundtable were Mikhail Krapivko, vice president of the Union of Auditors of Ukraine, Ivan Nesterenko, head of the Auditors’ Chamber of Ukraine, and Dmytro Oleksienko, member of the board of the Ukrainian Federation of Professional Accountants and Auditors.
 
'ACCA is proud to have hosted this initial high-profile debate,' said Nataliya Vovchuk, head of ACCA Ukraine, Baltic and Caucasus States, after the event.
 
'Following this roundtable, and based on the issues raised today, ACCA will develop a set of recommendations outlining perspectives for the development of the audit profession in Ukraine.'

Davos is over; what did we learn?

What's that? Did I hear someone ask where they could find a handy round-up of what happened at Davos last week? Well, the problem here is that not a lot actually happened; there was a lot of talking though, but let's just stick to the banking and finance developments.

The annual knees-up kicked off with a passionate speech from France's President Sarkozy on the need for financial and accounting reforms. As mentioned previously, Forbes wasn't overly impressed with the speech, but the Sunday Telegraph certainly was, noting that his comments on shareholder value versus long-term strategy went to the 'heart' of the recent global financial problems.

Where Sarkozy went others followed, with plenty of dignitaries lining up to call for financial reforms or banker bashing, including FSA chair Lord Turner (the WSJ had the bankers lined up against a wall).

Plenty of bankers themselves eventually joined in the fun (here too), as the global elite suddenly discovered their inner populist (Real Clear Politics takes a look). All was not well in banker-land though as the public criticism and submissions seem to have masked a real anger among bankers.

Jeremy Warner at the Telegraph isn't very sympathetic though, arguing that bankers have 'blown' the chance to avoid tough regulations by not reforming voluntarily last year.

This eventually led to a series of 'secret' meetings (here and here) between bankers and politicians as the bankers sought to head off thoughts of harsher reforms amongst law-makers. As the BBC's Robert Peston notes, it is in these kinds of secret meetings that the really interesting conversations happen, but for the most part, the public aren't privy to what gets said.

Some of the attendees did break from the populist script: Barclays' boss Bob Diamond went down fighting (although he later joined the calls for a global transactions levy to fund future bailouts), while Canadian PM Stephen Harper, after doing pretty much the same in the run-up to COP15, took a different line to everyone else.

After the last canapés were eaten, and the last champagne drunk, what did Davos actually achieve? Well, not much, judging by headlines like this. Larry Elliott in the Graun picked up on a growing consensus amongst business and governments about where they go from here (and he notes that David Cameron has been left out of the loop on this), and an agreement that the global economy is still weak. Gavin Hinks at Accountancy Age suggests the lack of doom mongering this year may provide a psychological boost to the world economy.

That the global economy remains weak seems to be the only consensus formed at Davos according to other commentators. The HP and The Times both noted that there may have been a contrite and cautious feeling in the air, as well as improved optimism from last year, but no one could agree on what to do about it.

The Times' of London and New York noted that this year saw a rise in the influence of emerging economies (The Times suggests that this foreshadowed the collapse of Western-style government), which will make any consensus harder to achieve in the future (something The Atlantic says will be exacerbated by the refusal of national borders to melt away).

Last year, Davos talked about how anything that smelt vaguely of capitalism would be snuffed out. Capitalism, you may have noticed, is still here. Will anything really have changed by next year?