Archives For Rosana Mirkovic

By Steve Rudaini, PR manager, ACCA

This is ACCA’s response to the UK Autumn Statement 2013:

The UK Economy

Manos Schizas, ACCA Senior Economic Analyst, said: “Unlike previous Budgets and Autumn Statements, or PBRs, this Statement is aimed squarely at high-street businesses with plans for slow, steady or no growth. There is an irony in how talk of ‘rebalancing’ the UK economy has disappeared now. Growth is now once again meant to be fuelled by consumption, retail spending, and housing rather than by investment.”

Sarah Hathaway, head of ACCA UK, said: “Businesses, now more than ever, are looking for long-term, sustainable measures that extend beyond the term of Parliament or government. Quick fix, sugar-coated initiatives are not what the City and the wider UK business community are looking for and create uncertainty at a time when UK plc is looking to build on firmer ground. While many announcements in the Autumn Statement are favourable to businesses, their life span and breadth of impact will be critical for the economy. This sentiment is true for other government policies, for example apprenticeship funding, so that businesses have the foundations of both finance and skills in place to grow.

“The Bank of England has shown its understanding of businesses needs for certainty, first through its introduction of forward guidance and, just last week, its decision to make the Funding for Lending Scheme a business initiative rather than the home loan vehicle it had become. Businesses need that level of certainty about the long-term from the Treasury as well as from Threadneedle Street.”

Small and Medium Sized Business

Rosana Mirkovic, ACCA Head of SME Policy, said: “The Government has moved away from the previous focus of encouraging growth in the more dynamic SMEs towards supporting smaller enterprises through business rate inflation caps and a further promise of reforms on this front in 2017. Various measures announced for supporting the bricks-and-mortar high-street businesses show a welcome move back to supporting the smallest and micro businesses. However, braver decisions could have been made – business rates reform has been put off for 2017, when it is clear from previous, recent budgets that the system was just not designed to take spikes in inflation into account.

“Reducing National Insurance contributions for young people could help small businesses, however, whether this is aimed at helping SMEs or get young people off benefits is an important distinction. SMEs in the UK are calling for a more skilled workforce, not an unskilled one.”

Taxation and State Retirement Age

Chas Roy-Chowdhury, ACCA’s Head of Taxation, said: “Families across Britain will need to look in detail at what the Autumn Statement means for them. The married persons tax allowance is a welcome move in principle, but not everyone benefits. In having an allowance restricted to those who are basic rate taxpayers creates an even more complex tax regime as well as confusion around couples who eventually become higher rate taxpayers. It should be possible for all taxpayers living with a partner to benefit from the allowance.

“There is logic in the government increasing the state retirement age to 68 by the mid-2030s, as people live longer, but at the same time families looking to save for retirement are being penalised. The annual pension contribution limit is set to drop from £50K to £40K and the total value of the pot people can have will also drop by quarter of a million pounds from next April, so those trying to be frugal and not be dependent on the state are being squeezed.

“ACCA welcomes the decision to exempt HMRC from further budget cuts. It is vital that it is properly resourced to keep the tax system running, and help give staff the promised crackdown on those who try to evade or exploit that system. However, ‘no further cuts’ actually means cuts in real terms, making life difficult for HMRC. The Government wants to tighten tax collection, but it needs to invest in HMRC to achieve it.”

The key points from the Autumn Statement can be found here

The live tweets from ACCA can be found at @ACCATaxation @ACCA_SME @ACCA_UK and @ACCANews


Rosana Mirkovic

By Rosana Mirkovic, head of SME policy, ACCA

In times of economic turbulence, issues such as business ethics, transparency and sustainability tend to slip down the policy agenda. We tend to forget that we need a business and economic environment that works for everyone.

After many years of reviewing the various pieces of legislation relating to anti-bribery laws, the Bribery Act was introduced in 2011, bringing some unprecedented changes to the legal business environment, such as making it a corporate offence to fail to prevent bribery, make facilitative payments, or bribing a foreign public official abroad.

While much concern was raised about how the new legal framework may affect SMEs, we have very little evidence that shows us whether it has had any impact in the way small businesses conduct business. Some concerns (see here, here and here) have been expressed recently that it is preventing businesses from pursuing international opportunities, and more broadly, that SMEs are left confused and concerned when it comes to compliance with the UK Bribery Act.

But there might be more to consider here, and some of the focus needs to return to the impact of bribery and corruption on business – SMEs especially – where evidence on its impact on the sector, both in the UK and internationally, remains scarce. What we can safely assume is that when bribery and corruption is rife, SMEs pay out much higher percentages of their annual revenues in bribes and additional payments than large companies do. And it would also be safe to assume that with fewer resources, smaller client basis and tighter profit margins, SMEs are especially vulnerable in any marketplace where corruption exists.

Combating bribery in the SME sector polled ACCA’s UK membership to revisit original research conducted in 2007. And there are clear insights emerging that show how the sector is responding. According to ACCA members who advise small firms, the effects of the Bribery Act has not reduced the incentive for SMEs to trade internationally, and respondents were pretty divided on whether it has added to their costs of doing business. Therefore, some of the immediate assumptions are not supported by our survey.

What we do see however is that almost one in five of accountants believe that businesses have been more willing to mis-state financial statements to cover-up for corruption and fraudulent activity since the onset of the financial crisis and only less than one third believe that SMEs are not likely to face any risk of bribery and corruption in the course of business dealings. Other surveys also show that not only is bribery an issue in the UK but that it is on the increase – TI’s Global Corruption Monitor reveals that 65 per cent of people in the UK believe corruption has increased in the last two years.

Therefore focusing on combating bribery and corruption must remain the focus in the policy sphere, and SMEs should stand to gain from any successful measures that go on to create a less corrupt business environment. And of course, while any anti-bribery laws should be proportionate and easily applied to the SME sector (in line with the better regulation agenda that  ACCA has campaigned for over many years) the focus must remain on the harm that corruption poses, in business and public life, and how we can eradicate it.

Despite some recent noises on the disproportionate impact of the 2010 Bribery Act on the SME sector and Government’s plans to create a more relaxed framework for SMEs in response to it, just over half of our survey respondents do not support a modified anti-bribery and corruption legislation for SMEs, along with 71% who believe that high profile prosecutions would have most effect when it comes to combating bribery and corruption – a sure sign that SMEs want a level playing, and ultimately corruption free, environment.


By Mark Gold, chairman of ACCA’s Global Forum for SMEs

I gave a keynote speech at the SME/SMP forum held by ACCA Uganda, in Kampala, recently.

As the chair of ACCA’s global forum for SMEs, I know that small businesses are critical about global growth because they feel there are many obstacles in their paths, such as lack of finances; absence of trusted advice in overseas markets; and scepticism of the unknown.

My speech was about these key issues and how this business sector is much more likely to use an accountant, because the advice they get from their accountants is the most trustworthy of sources.

ACCA has launched two campaigns in the past year to try and allay some of these concerns – public value and the complete finance professional. Both aim to show the wider public, including businesses, just how dependable the accountancy profession, specifically ACCA qualified accountants, is.

Due to the continuing global economic crisis, it has been hard for small businesses to find the funds to aid global growth during its time of need.

Banks are also being cautious with their money and so are not lending as much to SMEs, which fuels financial hardship for small businesses.

Accountants need to be on hand to advise those who seek it, before any “crisis” arises, not just when a problem has occurred. Problems need to be stopped in their paths before they develop into bigger problems.

Charles Ocici, executive director of Enterprise Uganda, came up with solutions for accountants and SMEs alike:

  • Cultivate the culture of taking professional advice FIRST, not only when there is a problem, or when they need a loan!
  • Offer solutions in a phased manner – if you gave a baby ten injections all in the same spot on the same day you kill it!
  • Use a language easily understood by your client
  • Take time to get into the guarded space of the entrepreneur to secure their trust.
  • Keep professional distance to be respected
  • Systems run the business – but people run the systems, so check how professional are your OWN internal and external team.
  • Price is not the main reason customers leave
  • An increase of 2% of sales equals a drop of 10% in costs.

We also had a panel discussion about why small business will not use small and medium practices (SMPs)

  • Taxes – they don’t want to register and risk having to back and regulate and pay for previous years.
  • Costs
  • Non-disclosure – cutting corners and don’t want transparency
  • So many fake accountants

There is concern over finding legitimate accountants, but the best way to check their credentials is to search for them on the internet and ensure they are ACCA approved, or contact the ACCA national office in the country you live in and they’ll be able to help you.

SMEs must include in their investment strategies good financial advice. It is key to investments and without it, decisions will not be made properly without the necessary guidance.

There should also be government support for SMEs to help them become competitive.

There is a need to educate small businesses that accountants are needed throughout their business lives, not just to get things going or to resolve any issues that may occur along the way.

SMEs are at the heart of our global economy, they have helped greatly in restarting the economy where national, and even global organisations, couldn’t.

Accountants and small businesses need to work together to keep things going. They are vital assets to the economy.


By Rosana Mirkovic, head of SME policy, ACCA

With such unprecedented focus on this topic throughout 2012, it’s difficult to imagine how such a high level of interest and activity can be sustained. Will the record increase in female NED appointments continue?

A voluntary target of 25 per cent of directors to be female by 2015 has been set in the Lord Davies report and it seems that companies are heading in the right direction towards achieving it – women now account for 17.4 per cent of the FTSE 100 board directors.

And what will happen with the European Commission proposals? In November the EC published its much awaited proposal for there to be at least 40 per cent women non-executive directors on the boards of big-listed companies by 2020. There is still debate on what this means in practice and to what extent will this translate into quotas for companies. It would appear the proposals deliberately avoid the term ‘quotas’ and instead refer to a 40 per cent ‘objective’, with unspecified sanctions against companies flouting the rules.

It is clear that over the past two years the gender equality debate has by and large been dominated by the women on board debate. It certainly has some high profile ambassadors. What we must ensure now is that we use this momentum to broaden the discussions.

We know that women are under-represented at senior levels in virtually all areas of economic activity and especially those with high financial rewards. While higher numbers of female non-executive directors would go some way towards addressing this, there is scarce evidence that it would change anything else.

In fact the Norway example that is so often used for the quota argument shows that despite 35 per cent of female NEDs on Norway’s publicly listed company boards, there has been no increase of female representation at the CEO level.

The UK is heading in the same direction – only 6.6 per cent of the FTSE 100 and 4.9 per cent of FTSE 250 of executive directors are women. In October 2012, two female FTSE 100 chief executives resigned (Cynthia Carroll and Dame Majorie Scardino) and once their resignations come into effect, this will cut in half the number of women holding the top spot at a blue-chip company (Alison Cooper at Imperial Tobacco and Burberry’s Angela Ahrendts will be the only two FTSE 100 female chief executives standing).

And this is what we are acutely lacking – a focus on why women remain under-represented in senior management positions. Issues such as stereotypes, the cost of childcare, pay inequality are the really difficult issues that are lacking high profile supporters and that are infinitely more difficult to solve and commit to such short-term targets. Two reports released last month (see here and here) show that for all the talk of women on boards, and there has been plenty, there has been no change in the prospects of women running big businesses. And this points towards a real danger of the women on boards debate overshadowing the real issues.

ACCA’s own research shows that stereotypes still remain despite the unprecedented focus of female board appointments. For this reason the language of finance is seen to help break down some persistent stereotypes about women’s competence and emotional nature. Finance is also seen as the language of the board and for women with a finance background it gives them access to the conversations. Thus, the finance qualification is seen as a masculine qualification that combats some of the female stereotypes.

We need more research that helps us understand better what is hindering women in their careers and more importantly, what is helping them succeed. The women on boards agenda does very little on this front yet it is the only issue we should be looking at. Once we have more women leading our businesses, it would seem the rest would take care of itself, including the numbers of women at board level.

After all, our research shows that for every board member in the FTSE 100, there are 5,500 employees, demonstrating a real need for a more bottom-up approach.

SMEsBy Rosana Mirkovic, head of SME policy, ACCA

What never ceases to surprise us here in the SME Team, is how similar small business issues are, no matter which country or region we go to.

Take access to finance as an example – lack of collateral, appropriate good governance and risk management, as well as the skills of owner managers themselves are more than likely to be brought up in the discussions whether they are taking place in Africa, Asia or Europe. It seems that SMEs across the world have many things in common and unfortunately most of these are likely to be problems.

However, on my recent visit to Cambodia and Vietnam where I took part in a series of events and meetings organised by ACCA offices in Hanoi, Ho Chi Minh City and Phnom Penh, I learnt something new. Export is actually a major source of SMEs’ economic contribution in these fast growing and open economies and this was not only apparent in the figures, but in the culture and the whole business ecosystem in which small business owners operate.

Here in Europe, we talk of exporting and SMEs as something marred with problems and actually quite a difficult proposition for small businesses. In Asia on the other hand, while SMEs are under acute pressure concerning demand, inflation and currency fluctuations, exporting itself is something that they see as business as usual.

Furthermore, it wasn’t just the business owners who seemed comfortable with the idea but also many of the key institutions that small businesses rely on – most surprisingly of all, banks. While over in the UK, financial products such as FX forwards, import documentary credit or foreign currency receivables financing are rarely marketed to small businesses, in Vietnam banks see this is as their key commercial advantage and advertise exactly this in their general SME marketing collateral, whereas in Europe, we are likely to view these products as rather niche. This made me think how far away we are in Europe from seeing SME exporting in this way, and it also made me wonder how much of this is actually tied to culture rather than actual practice.

This brings me to another interesting difference.  Opportunities for SMEs that will be created by the ASEAN integration were never far from the discussions. While many commentators doubt that the regional economic community will come together in time for 2015, the region is still heading firmly in that direction and SMEs are already discussing how they can be ready to make the most of opening up of regional trade.

At a time when the Eurozone is facing so much challenge and doubt in terms of its future, it was quite refreshing to spend some time in a region that is working on coming together and looking ahead to the economic potential that this represents.

Refreshing… but also depressing to come back to a Europe looking in the other direction…