Accounting dilemmas: 5 AML obligations

Posted by & filed under Ethics.

Sometimes in business, you can find that company ‘policy’ is more in the imagination of middle management then committed to paper.

For his fifth article on ethical situations, AAT’s head of professional standards Adam Williamson considers what happens when firms have not followed requirements to publish an anti-money laundering policy.

One major part of the accounting role is dealing with the various ways of working that different clients have. This could be to do with the systems they use, the way they gather information, or the depth of the policies they have in place.

Take this scenario, for example:

The scenario

While working as a sub-contractor, you have been engaged by a medium-sized accountancy firm, which has three chartered accountant partners.

You are assigned to a long-standing account. When working on it, you become aware that there appears to be little in the way of client-onboarding information. This appears to be similar to other client accounts.

You request a copy of the firm’s anti-money laundering (AML) policy. This is in order to familiarise yourself with their processes.

However, you are told that there is no such policy, in written form at least, but that each team has someone who ‘deals with that side of things’.

What should you do?

Considerations and actions

It seems quite clear that this firm is not meeting its AML regulations.

As a minimum, the 2017 MLR regulations require the following to be carried out:

  • Client Due Diligence checks on every client. These must be documented, reviewed, and updated on an annual basis.
  • An overall risk assessment for the firm, also updated and reviewed annually.
  • A documented AML policy, which is available to all staff members.

In Summary

It is your responsibility, at this stage, to raise the issues directly with the partners. If changes are not immediately implemented in order to ensure the firm is AML compliant, you should disengage.

In addition, you may wish to consider raising the matter with the relevant AML supervisor for the company and (if the supervisor is not a professional body) the professional bodies of which the partners are members.

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Accounting dilemmas: 4 Expansion advice

Posted by & filed under Ethics.

It is always great to be approached for new business, but what if your services don’t quite match what the client is looking for?

AAT’s head of professional standards Adam Williamson focuses on when it is right – and wrong – to accept new work.

We often want to expand our skill set in order to improve the breadth of services we can offer our clients. But equally, it’s good to specialise, and ideally to be able to refer clients to other specialists if we can’t do the job ourselves.

So what happens if a client believes we are better placed to offer advice than we do?

The scenario

A long-term client has asked you to provide some strategic advice on her digital marketing business, with a mind to possible expansion and diversification.

This type of advisory service is something you have been increasingly looking to involve yourself in. However, you have limited experience to date.

You do have some experience in offering informal advice to a friend, who runs a company offering similar products and services to your client in the local area.

You previously advised that friend when they were setting up their business and recommended an accountant to them – another friend of yours who specialises in digital businesses.

Before accepting your client’s request, what action might you need to take?

Considerations and actions

There are plenty of ethical pitfalls in this scenario of which you will need to be aware.

Firstly, your level of professional competence. By your own admission, your experience is limited in the area that the client is looking for. Therefore, you must consider whether you have the suitable and appropriate expertise to offer the advice requested.

Do you fully understand their business? How about the marketplace they are operating in? And are you up to speed with all the compliance issues around their industry?

You also should consider your objectivity, as there is a potential conflict of interest given your friend’s business. If you’d like to proceed with the job, you should at least highlight this to the client and seek their consent to continue, given that the conflict of interest, in this case, is limited. You have no direct involvement in your friend’s business, so it could be that a colleague checks work to ensure there is no unconscious bias taking place.

Finally, there’s the issue of confidentiality. If you decide to go ahead and provide advice on a one-off or regular basis, it is vital that you don’t discuss specifics with your friend. Will you be in a position to do this successfully?

In Summary

A lot of what has been outlined above has no concrete rules set in place to govern it. However, as more firms are asked to become trusted advisors to their clients’ businesses this type of scenario will become increasingly common, and it is vital to exercise caution, discretion and above all common sense when approaching them.

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Accounting dilemmas: 3 Politically exposed persons

Posted by & filed under Ethics.

What should you do if you discover a potential client’s brother-in-law is on the EU’s sanctions list?

AAT’s head of professional standards Adam Williamson cuts through the ethical thicket in search of answers.

Finance professionals are faced with the challenge of making ethical decisions and dealing with difficult situations on a regular basis. Often it’s not always easy to know how to deal with such issues, and generally, there are few hard-and-fast answers available.

While it’s impossible to list out every scenario you may encounter as a practitioner, here’s one you may face at some point, complete with a few tips on how to start to address it:

The scenario

A potential client comes to you. They are setting up a new high-end clothing business and wish you to act as accountants. The client has a significant cash investment of £500,000 to start up the venture. This is to cover everything: premises, stock and everything else they may require.

However, having done some basic background research, you discover that the client’s brother-in-law is a politically exposed person and on the EU sanctions list. What do you need to consider, and what action do you need to take in this scenario?

Considerations and actions

Firstly, you’ll need to consider where the investment money actually came from. The client should be the starting point in this investigation: ultimately you will want details about the funds from a bank or investment firm. An accountant should expect legal agreements or bank transfer details which show the source of the money.

Then, you must identify whether the brother-in-law has any involvement in the business. Again, the client is the first port of call here, but the company structure is also relevant. Are there other directors, partners or shareholders? If so, who are they? Do any of them have links to the PEP that you can find?

These actions will potentially give you the reassurance you need, but they equally may throw up more questions than answers.

Do you have any reason to suspect any money laundering issues?

Probably not, at this stage, unless you’ve been unable to get a proper answer to where the investment money has come from. While documentary evidence isn’t absolutely necessary, you can’t just take the client’s word for it.

If you’ve received suitable answers to the above questions then you may engage in business. However, you’ll need to proceed with caution, continuing to undertake enhanced due diligence.

However, if the answers you have received are unclear, or if the brother-in-law is involved, then don’t engage the client. Instead consider a suspicious activity report (SAR) to the National Crime Agency, as you should do if you have any future suspicions.

Failure to do this may result in disciplinary action by your professional body and potentially lead to prosecution under the Proceeds of Crime Act (failure to report) which can result in up to five years imprisonment.

In Summary

There’s no doubt that despite the challenges posed by scenarios such as the one outlined above, ethical compliance is key to maintaining public confidence in the accountancy profession and your own professional standing.

For more ethical accounting dilemmas:

Accounting dilemmas: 2 Trustees and whistleblowing

Posted by & filed under Ethics.

What should you consider if you discover that your organisation’s trustees are unaware of a fraud investigation?

In his second article, AAT’s head of professional standards Adam Williamson provides tips on how to deal with unethical practice.

As many finance professionals are well aware, fraud is not as uncommon as we’d like to think, and a number of organisations don’t always have clear guidelines as to how they will tackle such situations of wrongdoing from their own employees.

Whistleblowing policies are supposed to help uncover certain fraudulent scenarios, but even when this has been followed, does every stakeholder need to be made aware? Consider the below:

The scenario

You work in the finance team of a charity. One of the directors is being investigated for fraud involving the reselling of IT equipment, and personal use of a company credit card.

It has come to your attention that the trustees of the charity have not been made aware of this.

After the initial issues came to light, the charity immediately implemented a whistleblowing policy which required incidents to be reported to the Chair and Deputy Chair of the Board. However, the Director General has subsequently advised all staff that this particular matter should not be discussed with trustees.

What do you need to consider, and what action do you need to take in this scenario?

Considerations and actions

Firstly, you’ll need to consider why exactly the Director General has decided to advise staff in this way. You should enquire in writing directly to him on this, asking him to set out reasons why he is instructing staff to disregard the whistleblowing policy.

Bear in mind, of course, that there may well be legitimate reasons for his advice. For example, it may be in connection with the police investigation into the fraud, other legal proceedings, or indeed any internal investigations.

However, if the Director General does not provide any acceptable reasons, then go ahead and follow the whistleblowing policy.

There are two areas of AAT’s own code of professional ethics, of which all other professional bodies have similar versions, that this particular example relates to.

  • The principle of objectivity, where accountants are obliged not to compromise their professional or business judgement because of bias, conflict of interest or the undue influence of others
  • Confidentiality, as there are some situations where the law legally allows a breach of the duty of keeping information confidential. This would clearly be an example of where disclosure can be necessary.

In Summary

The accounting profession has countless examples where accountants are challenged by unethical or even illegal behaviour, and ethical compliance – such as demonstrated in this example – helps to correctly tackle such issues.

For more ethical accounting dilemmas:

Accounting dilemmas: 1 Vulnerable clients

Posted by & filed under Ethics.

What should you do when you suspect an elderly client is falling victim to a scam? In his first in a series of five articles dealing with ethical scenarios, AAT’s head of professional standards Adam Williamson helps to see the wood for the trees.

Accountancy is a high-risk profession, and we need to accept that we need to be alert to bad practice on a daily basis. But sometimes we need to also help others realise when they are in potentially at risk, especially when they are in a particularly vulnerable situation.

Take this example of an elderly client who is failing to recognise the risk in front of them:

The scenario

You have a client in his mid-80s. You suspect that he may be in the initial stages of dementia, but you cannot be sure.

The client has been contacted by a party in Spain. They have advised him that he has won £1.9 million in a lottery. The party has asked for payments from the client, which in turn will allow them to facilitate receipt of his winnings.

The client has asked you to pay the monies owed to the party in Spain. Concerned about this, you call Spain with your client in the office. When questioned for details, the person in Spain hung up.

Despite this, the client is convinced he has won and adamant that you should make payment. What next?

Considerations and actions

It is well established that elderly people are particularly vulnerable to, and targeted by, scam operations purporting to promise them significant financial returns. This example has all the hallmarks of that scenario.

Clearly, you should refuse therefore to make any payments to the Spanish contact. If necessary, you may need to disengage should the clients’ insistence of payment continue.

You are also obliged to warn any subsequent accountant the client engages with when they are asking for professional clearance.

But do your duties stop there? Given your suspicions, contacting a family member, or even the client’s local GP, may be positive steps. In addition, you ought to consider contacting the Spanish authorities to share the information that you have about this situation, for them to deal with if they deem it necessary.

In Summary

This example is all about acting with integrity – which means disassociating yourself, and the client if you can, with anything that appears false or misleading. In addition, you are demonstrating your objectivity, by not allowing your client’s desires to override your professional judgement, as well as being unafraid to risk losing a paying client in order to do the right thing.

Finally, you are ensuring you are not bringing your own business, or the wider accounting profession, into disrepute, by allowing a vulnerable client to be scammed.

For more ethical accounting dilemmas:

Which AAT qualification is best for your staff?

Posted by & filed under Employers.

AAT provides a large range of qualifications, from basic bookkeeping for clerical assistants to advanced diplomas for senior finance managers.

Here we outline the different qualifications available, from six-week courses to 9-18 month diplomas, who they are aimed at and the practical skills and training they provide.

Access level qualifications

The Access Award is aimed at junior staff looking to move into the role of a cashier or clerical assistant. It takes around 12 weeks and introduces students to the basics of bookkeeping, including: 

  • how to process customer and supplier transactions 
  • how to process payments and receipts 
  • financial transactions and how to handle these 
  • the duties and responsibilities of a bookkeeper  

This qualification is often taken alongside the AAT Access Award in Accounting Software to help develop a rounded set of skills and knowledge that finance teams need.  

Access Award in Accounting Software 

This qualification, which also takes around 12 weeks, introduces students to accounting software and how to use it in a business environment. It outlines the benefits and the potential risks and gives students, including cashiers and clerical assistants, a basic overview of the following:

  • set up accounts 
  • record bank and cash transactions 
  • produce reports using accounting software 

Access Award in Business Skills (approx. 12 weeks)  

This qualification provides students with a more general overview of the world of business focusing on the basic skills, knowledge and behaviours the world of work requires. It helps students get a more detailed understanding of:

  • how to use numbers within business 
  • the processes and set up of typical business environments 
  • the importance of accurate sales and purchase records in business 

Bookkeeping and accounting software qualifications

Foundation Certificate in Bookkeeping (12 weeks)  

Manual bookkeeping is still at the heart of accountancy and finance and the foundation certificate provides staff, including trainee bookkeepers, finance assistants and account administrators, with the essential skills and knowledge they need to support their finance managers.  This certificate helps staff develop skills in:

  • double-entry bookkeeping 
  • recording and dealing with financial transactions accurately
  • completing bookkeeping procedures, including VAT, reconciliation and trial balances 

Foundation Certificate in Accounting Software (6 weeks) 

With more and more organisations moving to cloud accounting, accounting software skills are an essential requirement for any accountant… 

The Foundation Certificate in Accounting Software, aimed at Accounts Clerks and Accounts Administrators, helps develop well-rounded finance staff with the right practical and technical skills needed to administer business finances online. This course outlines how to:

  • set up new accounts in accounting software 
  • process sales and purchase transactions 
  • perform bank and cash transactions 
  • perform period end routine tasks 
  • produce reports   

Advanced Certificate in Bookkeeping (6 months)  

The advanced certificate takes employees bookkeeping skills to the next level and helps prepare Senior Bookkeepers, Ledger Manager and Accounts Managers for all eventualities. It includes:

  • the advanced principles and concepts of bookkeeping  
  • how to prepare financial statements  
  • issues around indirect tax and VAT 

After completing this qualification, students can also apply for professional bookkeeping status, AATQB.

Accounting Qualifications

AAT’s highly established, industry recognised accounting qualifications cover three levels – foundation, advanced and professional for all members of a finance team.

Foundation Certificate in Accounting (6-12 months)  

The foundation certificate in accounting introduces staff to the basic accounting principles and techniques, from costing and double entry bookkeeping to using accounting software. It’s ideal for administrators and assistants and gives them the skills to:

  • process payments and receipts 
  • prepare invoices 
  • complete bank reconciliations 
  • use accounting software to manage your accounts administrations  
  • communicate accounts and business information effectively with other colleagues.  

This qualification gives finance staff, including Payroll Administrators, Accounting Assistants and Trainee Accounting Technicians a solid understanding of the practical skills they need to efficiently administer their business finances. 

Advanced Diploma in Accounting (6-12 months)  

The Advanced Diploma is a good stepping stone qualification for staff to move from dealing with day to day accounts administration to supporting finance managers with strategically managing budgets. It’s tailored towards Payroll Supervisors, Tax Assistants and Finance Assistants and helps them to:

  • make provisions for doubtful and irrecoverable debts 
  • reconcile ledgers with the cash book 
  • apply professional ethics within a working environment 
  • analyse variances 
  • use spreadsheets to manage and record information in the accounting environment 

Once the diploma has been completed, they can also apply for professional bookkeeping status (AATQB).

Professional Diploma in Accounting (9-18 months)  

The Professional Diploma is the highest accounting qualification and covers complex accounting challenges which help Finance Managers and Senior Finance Officers strategically run and manage finances. It provides an overview of the following:

  • drafting and interpreting limited company accounts 
  • preparing forecasts of income and expenditure 
  • preparing draft budgets and revising them reflect your business needs 
  • measuring performance and preparing performance reports 
  • reviewing the financial function to help you identify risks and make recommendations to improve efficiency and financial management.  

This qualification also provides accountants with the chance to apply for full AAT membership, MAAT.

In Summary

Ultimately, the huge array of qualifications available means there is something for every employee, at every level, from junior cashiers with limited experience to finance managers looking to expand their skillset. Find out more here.

Further reading

How we took our business to the next level as an AAT Employer

Posted by & filed under Employers, Run your business.

Lucy Cohen FMAAT, co-founder of Mazuma Money, tells us her recipe for success and why becoming a member of the AAT Employer Scheme has always been part of the plan.

Cohen’s very confident when talking about Mazuma Money’s future outlook: “We’ve set a goal of 10,000 clients over the next three years.”

Sounds like a weighty ambition, but you can’t really expect anything less from someone who competed in powerlifting internationally, for both Wales and Great Britain (nowadays, Cohen sits on the board of the Welsh Powerlifting Association and is involved in the coaching of the Welsh powerlifting team).

But how is this kind of growth even possible outside the bigger firms? And how do you service that number of clients without compromising on the quality of your service?

You have to be different

Cohen and her childhood friend Sophie Hughes FMAAT set up Mazuma in 2006, soon after both had completed their AAT qualifications.

And they quickly identified a gap in the market, inspired by Cohen’s experiences. She grew up in a family of self-employed creatives, who struggled with the tax and accounts side of things. Together, Cohen and Hughes created a solution for these issues, in the form of a low cost, hassle-free subscription-based accountancy service for small and micro-businesses.

Cohen explains: “Our clients simply put all of their paperwork into our trademark Freepost Purple Envelope®, or they can upload into our app – whichever suits them best. Then we do the rest: all of their bookkeeping, management accounts and a monthly advice report with things like a tax estimation.”

Cohen says Mazuma closes the gap between tech and compliance for small businesses that don’t want to deal with having to use software or a spreadsheet. “In this way, we offer a different service from your typical online accountants who have a preferred software that their clients have to use themselves.”

Their different offering has stood the test of time and is perhaps even more effective – and in demand – today.

“The accountancy market out there has significantly developed in recent years, but it still doesn’t effectively deliver for the sole trader, partnership or small limited company,” says Cohen. “For example, software products such as QuickBooks or Xero still need the business owner to ‘drive’ them.”

She adds that traditional, high-street accountants are too expensive for small and micro-businesses. Offering this service online doesn’t work for the large accountancy firms, either: KPMG pulled the plug on their small business online accounting venture in February 2019, after just five years in the market.

With impending Making Tax Digital for taxes in addition to VAT, the demand for Mazuma’s services from software-shy micro business owners is set to grow even further.

Investing in technology

New technologies help Mazuma respond to increasing demand, grow the client base and keep fees low at the same time.

“While the offering to our clients has remained the same over the years, the tech that we use has allowed us to become more and more efficient,” says Cohen.

Mazuma now use high capacity scanning machines to digitise all paperwork, and OCR (optical character recognition) and ML (machine learning) to extract data from documents.

Other than increased efficiencies, Cohen says this also means their staff can focus on providing exceptional customer service and added value over more manual processes like bookkeeping work.

Investing in and developing people

Mazuma has recently appointed a new Chairman of the Board of Directors and an experienced sector NED. They are now working closely with Cohen and Hughes, and the wider management team, to get them to the 10,000 clients mark.

As for the rest of their team of 26, seven of their staff are AAT-qualified and five more are currently studying towards gaining the qualification.

Cohen says encouraging staff to study AAT is a total no-brainer in terms of developing their team.

“It’s such a fantastic qualification and completely applicable to our line of work. It means that their practical knowledge of accountancy is good, that they can apply their studies into a real-world scenario. And that is vital for what we do.”

Read more about choosing AAT training.

Becoming an AAT Employer Scheme member

Becoming a member of the AAT Employer Scheme was a no-brainer, says Cohen.

“The membership was part of our business plan right from the start. It was important to us that we aligned ourselves with an organisation that demonstrated high levels of expertise and integrity. ”

In deciding to become a member of the AAT Employer Scheme, Mazuma has joined the ranks of Barclays Bank, Department for Work and Pensions, NHS, Sainsbury’s, Asda, Transport for London, and many other household names.

The AAT Employer Scheme is free to join.

Read more about the employer scheme’s membership criteria and how to apply.

Cohen says being a member of the scheme demonstrates that the company is committed to supporting their employees’ professional development.

“It also helps us attract the best talent as it shows future candidates that we take learning and development seriously via a professional qualification, that we take our reputation and professional standards seriously and that they will be working in a high-quality environment.”

Want to start your own business?

Cohen says she would advise any other members thinking about going self-employed to define their market first and then stick to it. “Know what you do well and keep focused on that.”

Also, make sure that your “house” is in order. “Get to grips with compliance and the legal side of things quickly and set up systems that will last you.”

She warns that starting a business is a steep learning curve and that there will be some tough lessons along the way. “You’ll get things wrong. But as long as you learn from your mistakes, you will be moving forward.”

And don’t sweat the small stuff, she says.

In summary

Cohen and Hughes started Mazuma Money from a spare bedroom, with just the two of them; now they are headquartered in Bridgend, West Cardiff with almost 30 employees. Their story shows that building a successful accounting business starts with the right positioning in the market, and that growth is driven by hard work, investment in the right technology and in professionally qualified staff.

Find out how Lucy and Sophie got started in our 2011 article.

Further reading on starting your own business:

Pick the right domain name for your business

Posted by & filed under Run your business.

Your website domain name is a huge part of your online brand. But with over 300 million domains already registered, securing the one you want isn’t always straightforward.

Just like choosing your business name – and the two are intrinsically linked – you need a domain that reflects what your business is about and makes your website easy to find and promote.

What is a domain name?

A domain name is the name of your website e.g. www.google.com. It’s the address that people type into a website browser address bar to access your website.

Your domain name is completely unique to your website, like a digital fingerprint.

Your domain name isn’t stuck to your website. You can point it to any website you own. However, it can only point to one website.

You can secure as many available domains as you like, but your main domain should be the primary domain address for your website. Your website and domain are separate entities but one can’t exist without the other.

Steps to registering a domain

  1. Choose a reliable domain registrar such as GoDaddy or 123-reg.co.uk.
  2. Use the registrar’s domain name search tool.
  3. Select the best available option for your business.
  4. Finalise your order order.
  5. Verify ownership of your domain registration.
  6. Review and renew annually.

Checklist: How to pick the right domain name

Your domain name is your identity on the web. It’s extremely important to get it right.

Dedicate time to ensuring you pick the best name for your business in first place. For many startups, a company name is chosen based on whether a .com domain is available for it. This should be your first port of call when deciding on a business name. Halt any branding processes until you’ve checked there is a domain available for it.

Here are some other considerations when selecting your domain name:

1. Keep it relevant

Depending on the type of company you own, you could consider adding a bit more detail into your domain name to assist search engine optimisation (SEO) and avoid any domain name clashes with other businesses.

For example; if your business is called Herron & co, it would clarify your service offering by using the domain Herronaccountancy.com.

2. Avoid slang

Make it easy for customers to remember/type your domain name. Avoid any confusion by using the correct words rather than slang. For example, ‘express’ instead of ‘xpress’.

3. Keep it short and simple

The longer your domain, the harder it is to remember and the more opportunity there is for mistyping. Snappier URL’s are also easier to fit on a business card or advert.

4. Include keywords

Immediately improve your SEO with a keyword-friendly domain name. Consider the type of keywords your customers will be using to find your business. Could you include them in your domain? For example: 

  • www.bike-repair.com
  • www.experiencedays.co.uk 
  • www.daysoutwiththekids.co.uk

It’ll also help customers understand the nature of your business quickly. Just make sure that your domain is evergreen and won’t be affected by any future business plans to expand into additional sectors.

If such plans exist, you might want to consider this in your domain name choice, or buy additional domain names at the same time to cover your bases.

5. Consider going local

If your business is based in one specific area, consider using its location in your domain name to target local web traffic. For example: 

  • www.fistralbeachsurfschool.co.uk
  • www.blushbeautyofmayfield.com

Again, make sure it considers any future expansion plans and if so, consider securing some additional domain names or build a website with options to expand in the future.

6. Avoid numbers and hyphens

If customers hear about your business and try to search for your website, don’t include numbers or hyphens in the domain name as this can make it difficult to find. 

7. Be random

There are millions of registered domains out there. It’s likely the most popular ones are already taken, or very expensive to purchase. While adding specifics such as keywords and location will increase the chance of your domain name being available, using a completely random name will also help to obtain a .com domain.

While this won’t aid your broad keyword SEO, it will mean you won’t have to wrestle competitors for coveted domain names. You might need to rely more on a strong branding campaign and word-of-mouth to increase your brand awareness though.

For example, the name ‘Moonpig’ has nothing to do with cards and gifts, but it’s unique branding and jingle-led marketing campaigns have earned customer recognition within its market. Best to consider this approach if you have enough budget to put towards bigger marketing campaigns and you’re operating in a competitive market.

8. Do your research

Speaking of competitors, don’t forget to make sure any business and domain name you use isn’t trademarked, copyrighted or being used by another business. It could result in an expensive legal mess.

9. Your domain extension: build and protect

Extensions are suffixes at the end of web addresses e.g. .com, .co.uk. Make sure you use the best one for your business.

‘.com’ is the most trusted and well-known by Internet users, plus many SEO experts believe Google favours .com sites in its search results.

Some UK-based businesses might prefer .co.uk but again you need to ensure this fits in with your business development plans.

To be on the safest side possible, secure your .com domain alongside additional extensions for it.

You don’t have to build a website for every domain you own. You can own a number of additional domains but point them to your primary website domain so all customers are directed to the website you want them to arrive at. This ensures you retain control of your domains and protect them from other companies purchasing them.

10. Make room for typos

A popular tactic is to purchase a few misspelt versions of your domain name. This will ensure customers still reach your main domain, even if they misspell your web address.

In summary

There’s a lot to consider before buying your website domain name. But if you pick your domain with SEO and customer usability in mind, you’ll be setting yourself up for success.

Head over to part 2 of this article, where we look at the ins and outs of actually purchasing a domain, including choosing your domain extension, and what to do if your domain is taken…

Further reading on running your business;

Police chief says accountants turning a blind eye to money laundering

Posted by & filed under Anti-money laundering, Members.

Hear from Commander Karen Baxter, Head of Economic Crime for the City of London Police, on how accountants need to do more to combat money laundering.

After 27 years in policing, dealing with serious and complex crimes like murder, kidnap, terrorism and child abuse, I’ve seen the worst of it. I moved from the Police Service of Northern Ireland to be the Head for Economic Crime on 1st July 2018, coordinating 43 forces and nine organised crime units on how they respond to fraud.

We’re seeing huge growth in fraud

The financial world is a very interesting place with many different stakeholders (accountants, banks, solicitors, the public and private sectors) and a wide range of systems. Historically, law enforcement hasn’t always worked closely with all of these but in a move towards great collaboration, the National Economic Crime Centre is now making a move to join up law enforcement and the private sector, sharing assets and information.

The main reason for this is the huge growth in fraud. It’s the fastest growing crime – up 35% in five years with an estimated 3.8 million frauds committed last year, costing the economy £193 billion. And where does this money go? It goes to funding criminal lifestyles and serious crimes like sexual exploitation, the trafficking of young women, the sale of drugs and to street gangs.

Fraud is not a “victimless crime”

For too long fraud has been seen as a “victimless crime”. People in society, law, banking, finance and accounts, and even policing have (with some ease) divorced the fact that laundered money often comes from individuals losing their earnings, their security and their pensions with a hugely detrimental impact on lives. Often it will be linked to criminal networks that cause more loss of life than terrorism. Vulnerable young people are being targeted online to become money mules and allow their bank accounts to be used to clean money which can be a step into criminal offending. 

The role accountants play

Less than 2% of Suspicious Activity Reports (SARs) last year came from accountants which seems unusual given that they are the people dealing with money every day, they are experts at seeing how it’s moved and patterns of behaviour, which may well indicate something suspicious.

We will prosecute the criminals that are causing the most harm and at the moment information is sitting in different silos. We are working hard to bring that information together to better identify offenders and bring them to court.

Complete your AML survey

If you are an AAT licensed member who is supervised by AAT for AML, your firm must respond to our AML survey by Monday 6 December. Click below to find out more:

Find out more

The importance of regulation

Another big problem we have in the finance sector is that anyone can turn up on the high street and say they’re an accountant or tax advisor. We have cases where people use this loophole as an opportunity to defraud people. We need to look at disqualifying them from setting up a business and engaging in financial advice in the first place. Strong regulations have to be part of this for prevention.

There is the need to look beyond the regulations too. You can be a good accountant, demonstrating that you are meeting the requirements and being compliant but do you ask enough questions? Are you looking past the minimum requirements and at the individual? If a company turned over £1million last year and jumps to £2million this year without much change to their business, are you researching this a bit further? The ICAEW already conduct checks on businesses and that is to be encouraged. With the growth in fraud, it probably needs to increase in the future.

Banks are upping their game

The banking and private sector are now beginning to have a level of understanding about the implications of these crimes and are determined to work hard to stop fraud. They have a voluntary code that if someone is scammed through push payment fraud, the bank will undertake to pay that back, within certain conditions and where people have taken some degree of diligence. Collectively there is a priority to better understand and target the criminals behind these cases.

It’s not free money. We will all pay for it in charges and eventually as part of losses to the economy or to life.

Act if you have a suspicion

If you have a suspicion about transactions you can input intelligence through a Suspicious Activity Report (SAR). If you don’t do this you’re leaving yourself open to investigation. If it doesn’t meet the threshold but you have a concern you can also report it to Crimestoppers.

We all have hard decisions to make as part of our professions but if we don’t all take responsibility, criminals will erode the very fabric of our society.

Key takeaways

The responsibility lies with all of us to be more proactive, to consider our positions as professionals and how we can contribute. We need to start having more open discussions. Fraud is not just a police issue. Everyone can be a victim, and, with damage to the economy, will be a victim. Report any suspicious activity or you could be investigated yourself.

Further reading:

Excel tips: Vlookup vs Index/Match

Posted by & filed under Excel tips.

You can tell we’re starting to get a bit adventurous with Excel, when we start to use the VLOOKUP formula. But could an Index/Match combo be better?

VLookup

The Vlookup formula will look for something in one area of a spreadsheet, and return the result from another area (sometimes even from different sheets or files altogether):

Foe example, if we had a list of Product Codes and their Selling Prices, we could enter the Product Code elsewhere, and the Vlookup would return the Selling Price from the list (as per the yellow cell below), without us having to go and find it manually.

The Vlookup formula used here would be as follows:

That’s ACE… right?

Limitations of a VLookup

Well, yes it is, but there are a couple of restraints with this formula:

• The Vlookup will only find the ‘Row Number’, you have to manually define the column to use This is defined by the 3 in the formula: =VLOOKUP(B3,’Selling Prices’!$A$3:$C$12,3,FALSE) and represents the third column in the range).

• The Vlookup will only return a result to the right of the column where it finds a match

• The Vlookup can only look for an ‘Exact Match’ or a ‘Nearest Match’

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Index / Match Formula

There is another formula we could use that negates all of these issues, and that is a combination of ‘Index / Match’.

The ‘Index’ formula will look at a range and return a result from the row and column that you specify i.e.:

Unfortunately, most of the time we won’t know which Row & Column we want to use… and that’s where the ‘Match’ formula comes in, as we can use that to define the Row & Columns.

This is the formula that has been used in cell C3, in this example:

=INDEX(‘Selling Prices’!$A$2:$C$12,MATCH(B3,’Selling Prices’!$A$2:$A$12,0),MATCH(A3,’Selling Prices’!$A$2:$C$2,1))

This will return the correct Price from the table, for the selected Date (A3) and Product (B3).

This looks like a big scary formula, and would put most people off using it, so here is a more detailed explanation:

  • INDEX(‘Selling Prices’!$A$2:$C$12,

This is the ‘Index’ part of the formula, and is basically saying: Look in the Range A2:C12 in the sheet ‘Selling Prices’.

  • MATCH(B3,’Selling Prices’!$A$2:$A$12,0),

This is the 1st ‘Match’, and will return the Row Number to use.

This formula is saying Match the value from B3, within the range of A2:A12 (in the sheet: Selling Prices), and find an exact match (this is what the 0 at the end represents).

  • MATCH(A3,’Selling Prices’!$A$2:$C$2,1))

This is the 2nd ‘Match’, and will return the Column Number to use.

This formula is saying Match the value from A3, within the range of A2:C2, and find a value less than A3 (this is what the 1 at the end represents).

The formula would return the result for the Matches first, which would make the formula look like this: =INDEX($A$2:$C$12,5,3)

This is basically saying: from the range A2:C12, what is the value in Row 5, Column 3.

In summary

The Index/Match formula can return a result from any column, not just columns to the right of the match. It can also return both Row & Column (unlike Vlookup). The Match formula also gives 3 options: Less Than (1), Exact Match (0) & Greater Than (-1), so gives greater flexibility than the Vlookup.

The Index/Match is a little trickier to use than a Vlookup, but it is real GENIUS, and it’s really worth trying to understand it a little better. 

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