“Accountants must choose a more central role,” Mark Farrar

Posted by & filed under Future of accounting, Members.

Mark Farrar, AAT Chief Executive, has been discussing how accountants can meet the future needs of businesses and the public sector. Find out where he thinks the accountancy profession is heading.

The recent International Federation of Accountants (IFAC) session made me think on how the role of accountants must change, which is very relevant to our AAT members. Around 45% of our members operate in commercial sectors, and 23% in the public sector.

The message, in a nutshell, was that accountants need to look beyond the balance sheet and take a more central role within the business.

It’s something we as accountants must choose to take the initiative on.

Thanks to the digital tools we now have to hand, there’s a much larger space that we as accountants can occupy. And therefore a wider spectrum of information that accountants need to take ownership of.

Accountants can bring valuable insight to data analysis, beyond financial data. They should also be able to improve internal communication of this data, and potentially, for certain larger organisations, external communication of it as well.

Embedded accounting

For me, this is where the fun starts.

We talk regularly about business partnering, but accountants need to be embedded in the very fabric of the business – an integral part of the decision making.

That includes those in practice, who can take on that “virtual finance director” role. In turn, that would improve the attractiveness of the profession in terms of what it’s doing.

So what sort of non-financial data could accountants own?

An example could be the carbon footprint of the business. Not just reporting the carbon footprint, but saving money, reviewing various processes, the unit costs. It’s about looking at procurement and business cases.

Ultimately, it’s about bringing different blocks of data together and analysing them in a coherent way, so it makes sense too for the people trying to run the organisation.

A lot of this is about taking the accountant’s skills around data and controls, and starting to analyse a much wider range of information. It’s a constant theme that I hear time and time again.

Choose to do it

It goes all the way back to that integrated reporting message. If a CEO wants someone to dig out some carbon statistics and analysis – it’s not finance, necessarily, so is it our territory? It is, if you choose it.

If you don’t choose it, someone else will, and the more someone else does it, the harder it will be for you to break in.

A senior finance professional from the Shell Group said that it’s proving challenging to recruit into the accountancy space, but it’s an awful lot easier to recruit into the digital one. That’s indicative of other organisations as well.

We need to seize control and shift the focus. The power that can come from the job, if you push into these spaces, is intertwined with business management – you are the business management at that point.

You’re not just partnering it any more.

For more on looking beyond the balance sheet as an accountant;

How to get life-changing results from your CPD

Posted by & filed under CPD, Members.

Two AAT award-winners have taken continuing professional development (CPD) to the next level, making real changes to their lives. From improving as a boss to saving millions of pounds for clients, find out how they’ve done it.

Whenever the words ‘continuing professional development’ (CPD) crop up in the workplace, it’s all too easy to dismiss it as another pointless box-ticking exercise from HR; an unnecessary distraction from the realities of your day-job.

Given that CPD is ongoing, generally not urgent, and relies upon you alone to complete (rather than a boss breathing down your neck), this often means it gets shunted to the bottom of to-do lists… 

However, done properly, CPD can reap real benefits.

We often acquire skills, knowledge and experience in our jobs without even realising. Keeping a document of these skills – either in a Word document, software such as Trello/Xero or a physical folder – is a brilliant way of keeping track of your progress.

It helps identify any weaknesses and set achievable goals. And in the ever-changing world of accountancy, it’ll help you keep up-to-date with important legislation, technological developments, or even the latest Making Tax Digital news.

Best of all, at some point during your continuous professional development, you’ll see exactly how much you’ve improved. It’s a massive confidence boost.

CPD enhances professional skills, making you more employable. Here are two AAT members on how CPD empowered massive changes in their lives.

Gina Gardner MAAT on how AAT CPD helped her to become Xero-certified and has saved her clients millions of pounds

“CPD helped me become Xero-certified and save millions of pounds for my clients” – Gina Gardner

Gina Gardner MAAT, 23, is a corporate tax accountant for Gloucestershire-based Randall & Payne. CPD has empowered Gina’s career progression so far, leading to Xero certification and helping her clients save £15m.

Gina says: “You don’t expect to generate business chatting to a stranger on the 07:42 train to Bristol Parkway…

But a random conversation with a self-employed woman on a train led to us keeping in touch on LinkedIn, eventually resulting in her referring clients on to us at Randall & Payne.

I doubt I would have been as confident to strike up that conversation, and develop it into business, without having done CPD first and extended my knowledge beyond my normal study leave.

How CPD led to Xero certification

Aside from developing networking skills, I’ve also learned Xero through CPD. The cloud-based accounting platform changes every few weeks, so it’s important to keep abreast of these so I can engage with my clients.

I’m tested on Xero via multi-choice questions, which give credits. These credits count towards my Xero certification on an annual basis, and contribute to my AAT CPD record.

I have maintained my Xero-certified adviser status for two years. Having this knowledge has really helped me in my job, especially when explaining how to operate Xero to individual clients.

Recently, I received a LinkedIn recommendation from a client saying I had restored his faith in accountancy!

The ‘continuing’ element of CPD

Most people think CPD only involves training courses. We do attend these, but it’s a mistake to think that this is the only thing that counts towards your CPD.

So many other things can contribute. Whenever I receive a query within the corporate tax team that I need to research, I include that within my CPD, as it’s increasing my knowledge within a particular area.

I also watch webinars and read AAT magazines to keep up-to-date on relevant topics. Not many people think sitting around reading a magazine can count towards CPD, but it does!

Development in my job role

CPD has led to me picking up new work responsibilities, such as being involved in share transactions and investor relief submissions. But largely specialising in R&D.

As a Corporate Tax team, we have helped save our clients £15m in R&D savings, over the last five years.

Together with my studies, CPD is enabling me to progress towards an end goal of becoming a Chartered Accountant and Chartered Tax Adviser. Without CPD, I would not have had the growing confidence to assist my clients, as my knowledge would have been limited to previous exams – which isn’t enough.”

Gina’s advice:

Use CPD as a way of keeping track of developments within your industry, whether it’s new tax legislation or technological developments within Xero. Your knowledge will make you more employable and aid career progression. It’s definitely worth spending an hour a week on it.

“CPD helps me improve as a boss” – Farid Gasanov

Farid Gasanov MAAT, 30, is Founder and CEO of London-based Q Accountants. CPD has delivered some great results for both his staff – and himself. He’s also set up an effective method of keeping track of it…

Farid says: “As a business-owner, I believe CPD is absolutely vital. When meeting clients, it’s important to know what’s going on with the accounting industry and any legislation changes. Accounting, such as VAT, is changing so much that a large chunk of knowledge you have from three years ago isn’t relevant now.

CPD enables you to refresh your knowledge and learn something new.

Encouraging CPD among your team

I’ve got a team of nine staff at Q Accountants, and I regularly send them HMRC updates on payroll changes, or links to webinars, so they can stay ahead on CPD. Each member of staff also gets an annual training allowance of £600 to attend any CPD course they want, whether it’s money laundering, Citibank training, or improving presentation skills.

One course we always attend every year is Xerocon, which covers trends and features guests such as cyclist Chris Hoy; it’s essentially three days full of CPD activities!

How to track your CPD

But CPD is ultimately managed by the employees themselves, not the boss. So, you need good e-learning software. At Q Accountants we use project management app Trello with each member of staff receiving their own board for tracking CPD. My board consists of three columns:

  • Coming. This is a list of the events/webinars/mastercourses that I’ve signed up for.
  • Attended. When I attend events, I move the card to ‘Attended’. This information is useful in case AAT ever ask for it! After each event, you can also put your observations and takeaway points here.
  • Potential. Here I put the events I’ve heard of, jotting them down on-the-go through Trello’s mobile phone app. If it’s worth attending, I’ll put them into ‘Coming’.

These Trello boards are particularly useful when it comes to performance reviews and seeing what people have achieved over the last year, and what new skills they want to acquire.

There are always areas to improve my own CPD too. I attend the AAT tax update mastercourse once a year, which covers changes within the tax industry and is also a great chance to meet other accountants.

We have lots of startup clients at Q who go through fundraising and have complex share structures, so I’m currently working on enhancing my technical knowledge too. Accountants rarely deal with details of transactions, but the more I know about share capitals and corporate restructuring, is a big help.”

Farid’s advice:

Sometimes it’s a struggle to find time to do CPD. However, what I’ve found useful is learning on your commute. Even if you’re driving, it’s still possible to listen to audiobooks that could increase your personal development.

In summary

There are a huge number of ways you can accomplish your continuing professional development, ensuring you continue to grow and advance in your career. But even though CPD is a requirement of maintaining your AAT professional designation, don’t let it turn into a box-ticking exercise.

Follow in the footsteps of our previous AAT award winners above; identify challenges you face and potential areas for growth, and set out to make a real change. This is a fantastic opportunity to expand your communication skills, develop your staff to fill business needs, improve your networking to generate more business, and so much more.

Read more on how to make an impact with your continuing professional development;

What skills do you need to run your own practice?

Posted by & filed under Career.

Running your own company gives you the freedom to work when and how you like and specialise in an area that particularly interests you.

Whether you are a recent graduate or are thinking of leaving employment at a larger accountancy practice, deciding to go it alone is not a decision you can take lightly.

A lifestyle choice

It requires all manner of other skills from HR to marketing, not just your accountancy skills. For some people, that is part of the appeal – being able to grow a business and mentor and develop other people.

What are the options?

Sole trader:

For many people, working for yourself offers a high level of flexibility and efficiency which contributes to a healthy work-life balance.

Paul Smith, FMAAT, 48, is an AAT Licensed Accountant and runs his own business Paul R Smith Ltd from Halifax and Florida. He tried setting up a partnership and employing staff but now works for himself because he prefers the freedom to set his own hours.

“When you work in a partnership you can’t be spontaneous. You are set in a rigid work pattern. I enjoy the fact that I don’t have to commute to work or sit in a lot of client meetings. Most issues can be resolved over the phone, and my clients, who run their own businesses, appreciate being able to talk to me in the evenings when they have finished work.”

He set up his own business in 1999 and since 2008 has been based in Florida but working with UK SMEs, doing everything from bookkeeping, payroll, tax and income.

Building a business – first steps

Recruiting:

“It’s hard to recruit when you start out,”, says James Poyser at inniAccounts. “Firstly, you have no cash, you have no reputation, and to a certain extent, you have no vision to sell people. This means you have to compromise, and it might mean you select the wrong people or get the wrong partners in place. We learnt the hard way and almost lost the entire business over the wrong partnership.”

He says that looking back, he would have done things differently.

“I would have spent more time building a local reputation for potential employees. We’d have increased the value of the starting salaries and worked on building a good story to sell to people, including thinking through their development opportunities in advance.”

In recent years, the nature of an accountancy practice has changed, and communication skills and data management have become key. He says he is now putting together a five-year plan, taking into account the changes that automation, AI, and technology will play in it.

Take your time

Don’t rush into hiring staff, though, because they don’t always work out and the recruitment process can be time consuming in itself, says John Yardley, Founder and Managing Director of Threads Software.

“The productivity of a single employee can differ by a factor of 10 depending on who you have recruited,” he explains. It is better to offer a temporary role and if it works out, offer a permanent one. The temporary role is like having a very long interview.

And if you are starting from scratch with no customers, it may be an economic necessity to keep overheads as low as possible.

“In the current digital age, there is no commercial reason why any service-based businesses cannot be run from home,” he says.

“As soon as you employ someone, the benefits of an office are even greater because you can never get the same degree of interaction and team spirit when everyone is working from home,” he says. “Don’t hire an office as an ego trip though.”

How to attract the best staff

When you are looking to build a business you need to understand how to appeal to prospective employees. One of the key things young people look for is opportunities to develop.

As an owner-manager, you need to think about how you train your staff.

“Consider ‘how’ this training is going to be delivered,” says Teresa Boughey, CEO of Jungle HR, a strategic HR Consultancy Practice that works with Executive Boards and Leadership Teams during times of change and business transformation.

“It could be formal training but it could also be mentoring, shadowing, projects or on-line training for example. Creating a culture of continuous learning is also something which is really important.”

The skills you need  – business tips from the experts

  • Get clear on your vision and your values.
  • Don’t take on massive overheads. You don’t necessarily go and raise a load of money, take a load of loans, buy a load of equipment because that just puts pressure on your ability to grow, says Rob Moore, founder of Progressive Property.
  • Find excellent people to delegate to. Don’t do things on your own just to save money, says Shazia Mustafa, Cofounder of Third Door.
  • Choose a target customer – be as specific as you can – it means your marketing efforts are more likely to land. Start promoting and do 100 times the promotion than you think you need to, says Simon Paine, co-founder and CEO of the PopUp Business School which helps people from all walks of life to start their own businesses.
  • There is absolutely no substitute for understanding everything you delegate. Accountants should take the same view about software. One good way to learn is to buy the cheapest product, learn to use it so you understand all the things you really need that it doesn’t do. Then you can spend more money on the right product, says John Yardley, Founder and Managing Director, Threads Software.

Key takeaways

  1. Know your market
  2. Buy in expertise
  3. Learn to delegate
  4. Be prepared to train staff
  5. Consider specialising
  6. Understand the importance of marketing
  7. Don’t take on huge overheads

Becoming self-employed with AAT

If you’re an AAT professional member, you can apply for an AAT licence to become self-employed. This entitles you to start taking on clients and offering professional services on a self-employed basis.

If you’re interested in becoming an AAT Licensed Bookkeeper or Accountant and starting up your own business, the first step is to check out the information online to ensure it’s right for you, then download the AAT licensed member application form, and follow the guidance on how to complete the form.

In summary

There are a number of different skills you will need if you want to run your own practice. Self-discipline, resilience, the ability to delegate, a willingness to help with training and development, and an eye on planning for the future are all essential ingredients in a successful business.

For more on running a small business:

How to submit a Suspicious Activity Report (SAR)

Posted by & filed under Anti-money laundering.

Something about your client doesn’t sit right.

The money going through the business doesn’t seem to match the set-up. The company structure seems a little hard to fathom – some of the shareholders are companies based overseas.

Your instinct is that something is wrong.

In that case, it’s your duty to submit a Suspicious Activity Report (SAR).

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

Preparing a SAR

SARs can be submitted to the National Crime Agency online. You will be required to fill out several fields – include as much information as possible, including all customer due diligence information.

All fields must be filled in – if you don’t know something, write the word “unknown”.

Make sure you include the client’s date of birth, as it’s essential to ensure they are identified correctly.

Ensure the report is clear and concise, with a summary of your suspicions, a chronological sequence of events, and no jargon or acronyms.

Explain your work briefly if you’ve been providing quite technical services. Include evidence, including financial data.

To avoid tipping off your client, you may have to undertake activities that you suspect may be offences under the Proceeds of Crime Act. In this case, you need to request a Defence Against Money-Laundering (DAML), which you can use as a defence to a money-laundering offence if necessary.

The NCA will then assess the case and inform you if you’ve been successful.

The SAR is submitted

Once you have sent in your SAR, it will be reviewed by the authorities. Again, keep your suspicions to yourself. It’s important that you do not tip the client off in any way. Ask them questions in a neutral way, as if you’re just checking your facts.

Your SAR will be investigated to determine whether a case can be built.

The National Economic Crime Centre (NECC) has strong links with the NCA, the Serious Fraud Office (SFO), the FCA, HMRC, The Home Office, The Crown Prosecution Service and City of London Police.

Within the NECC is the Joint Money Laundering Intelligence Taskforce, which is a public/private information sharing initiative to help build a better picture of the patterns within high-end money laundering. Your information may be shared there.

The investigation process

The NCA and Police will look into your SAR to determine whether there is a case to bring to court. This may involve surveillance, warrants to search properties, or a forensic investigation involving the assistance of forensic accountants.

Read more on AML as part of our #AATPowerUp Anti Money Laundering campaign for November:

AML compliance tool

AAT licensed members can have a free 14-day trial of AMLCC – a comprehensive tool for AML compliance and risk management. There’s an exclusive discount when you register.

Try AMLCC

How to get a 15 year old to manage their finances

Posted by & filed under Members.

Alarmingly, the “Bank of Mum and Dad” is now a top ten lender, according to a recent report, creating a generation who aren’t familiar with managing their money. Can accountants help course-correct?

What should today’s young people be thinking about? Where are the knowledge gaps, and is there a role for accountants to play?

Planning for young people

Let’s say our target audience is 15, how would you advise them at this early stage?

“Start monitoring your spending,” says Alexandra Bond Burnett, Director of finance communication company Bond Ambition, “and get into the habit of doing cash flow forecasting.”

This doesn’t sound like an awesome Friday night, she acknowledges, “so the key is to change the terminology. Call it future planning, for example.” Communicating with teenagers means putting things into language and concepts that will resonate with them.

“Look at what your goals are, and what you want to achieve. Do you want to go to university? Buy a car? Go travelling? Start a business? These are all expensive things. How will you get there? What do you need to do to make it happen?”

As soon as you start communicating in this way, Bond Burnett says, young people will get engaged. “You need to make goals tangible because even a year seems such a long way away.”

The main objective is to help young people start to think strategically.

Encourage aspirational dreams, and approach them pragmatically. “Have those dreams, absolutely – and then think, if I want to do X, I need to do Y.”

Key tip

  • Ask the right questions. Use terminology that appeals to young people.

What kind of plan?

It can be large or small. “When I was 16,” she says, “what I was most interested in was music. So I got a job in Our Price, because I got a discount on cassettes.”

Those of us who are no longer 15 may well remember Our Price – and cassettes. “Then, when I was 18 I got a job in a mobile phone shop to get a discounted phone, and of course when I was at college, the most sensible part-time job was in a bar.”

This, Bond Burnett says, is financial planning – taking on the job that’s going to get you a head start in what you most want from life – but thinking like this needs a nudge.

For Bond Burnett, “the thing that’s perhaps the most different now from when I grew up is your financial footprint. Young people might not think about it now, but one day they’ll want to buy a house or a car; you never know how your credit rating might impact things.”

An informed awareness is sufficient. “Be on the electoral register; and don’t move around too much if you can help it.”

Key tip

  • Know your credit rating profile. “It’s not something we’re ever told about, but it’s essential.”

A role for accountants

Sam Tasker-Grindley, Associate Director, Accounting and Business Advisory at RSM UK, believes there’s a strong argument for accountants getting involved.

“Perhaps in the past, accountants might say – that’s not my job. But I would say we do have a role, if not a responsibility.” It would make sense for accountants to do this gratis, he says – build relationships with young people, and show along the way how accountancy might be a career they might be interested in.

“It’s a win-win because it’s a way of giving something back to the community, whilst acknowledging that the profession has a massive talent gap. In a candidate-driven market, it would be great to find ways of finding and nurturing future accountants.”

Should money be taught in schools? “Absolutely. You don’t need an exam on it – but there should be a compulsory module, perhaps just an hour a week, to give you what you need to know on personal finances.”

Key tip

  • Learning about money should be taught in schools; and accountants could go in to share knowledge. “I was taught very little about money as a teenager,” says Tasker-Grindley.

Tap into their love of tech

How best to make the advice resonate with our slightly reluctant 15-year-old? “Talk about tech,” says Tasker-Grindley. “That is absolutely the way to reach young people. There are lots of apps out there that will help you, that didn’t exist when I was at school.”

It can range from small amounts of pocket money, towards (if you’re fortunate enough) trust funds.

“Monzo and Starling and the challenger banks offer these kinds of apps. Yolt is a specific expense tracking one. Or look at Moneybox. If you buy a drink for 85p, it rounds your expenditure up to £1 and saves the 15p.” So not only is it easier to start investing, it eases you into thinking along those lines.

“If I’d had that at 15, a few pounds a week would have really built up by now,” Tasker-Grindley says, with just a trace of wistfulness. “You can set aside particular pots of money, for particular things you want to buy.”

Key tip

  • Apps can help you look after your future. “You can see instant rewards, and it’s far more exciting than going to a hole in the wall to see what your balance looks like.”

Getting creative with the property ladder

When it comes to buying homes, inevitably today’s children will have to be creative.

“It’s problematic, but the key is to think – at some point in your life you will need a large chunk of money, and even if you get some help, you can’t rely on it coming from family,” says Bond Burnett.

“If you can get to the point where you can put a deposit down, try to make it pay for you – can you rent it out until you can move in, or rent part of it out when you’re there?”

Thinking long-term might enable creativity. “Say you’re commuting into London, but you can buy a cheaper property in a different part of the country. You might not want to live there yet, but could you see yourself doing that long-term?”

Key tip

  • Be creative about how you see your finances long-term.

In summary

  • Encourage young people to get a head start. “[They need to] have a budget, and learn how to make their finances work for them,” says Alexandra Bond Burnett.  
  • Think about the terminology you use. Don’t call it financial management – instead ask, what do you most want, and how are you going to get there?
  • Be creative, and use the tech. Software to run finances is a way of making money management more appealing. 
  • There’s a role for accountants. “But if you do go into schools, it has to be the right person,” says Sam Tasker-Grindley. “Someone who can connect with young people, not a – shall we say – traditional grey-pinstriped figure at the latter end of their career!”

Further reading on the next generation and managing your finances;

Know your anti-money laundering responsibilities inside out

Posted by & filed under Anti-money laundering.

Here are the essential things you need to know to fight money-laundering.

The tricks of money-laundering crime rings are constantly evolving and becoming ever-harder to spot, as the 2017 National Risk Assessment made plain. It is also increasingly likely that professional services, such as accountancy, could provide a gateway for criminals to disguise the origins of their funds.

So accountants need to be vigilant and effective in their efforts to fight money laundering. They also need to stay up-to-date with criminal tactics and professional obligations.

Here are the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).

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

Procedures, policies and controls

Does your firm have written policies, procedures and controls in place to combat money laundering? These can be proportionate to the size and nature of the business, but they need to be clear, written down and well-understood. Appropriate policies and procedures include:

  • Client due diligence
  • Record-keeping
  • Clear communication of policies and procedures
  • Internal checks and controls
  • Risk management practices
  • Compliance monitoring

Client due diligence

Is your firm doing appropriate risk assessments on clients? Controls must be in place to ensure due diligence is undertaken before services are provided to a client. There must also be processes set up to identify and respond to any changes later in your relationship that might present a risk. It’s important that you keep a written record of all client risk assessments, and revisit them regularly – particularly those with which you’ve identified an element of risk, but not enough to terminate the relationship.

A whole-firm risk assessment

MLR 2017 requires accountants to undertake a regular, firm-wide risk assessment of activities. This should happen at least every year. A firm-wide risk assessment should consider:

  • Your clients
  • The country in which you operate
  • The services you offer
  • Transactions
  • Delivery channels

You are required by law to keep a written record of your risk assessment and review it frequently. AAT licensed accountants will be expected to supply a copy of their risk assessment as part of their annual practice performance review.

Awareness, training and CPD

Are employees kept up to date with the necessary skills and knowledge to carry out their responsibilities? Every employee who deals with customers or transactions in any way needs to understand the firm’s policies, controls and procedures. They need to understand the legal requirements, the risk of money laundering, checks they should make, and how to report suspicious activities.

Record-keeping

Records should be kept of relationships with clients. Does your firm keep anti-money laundering records for at least five years after a business relationship with a client concludes? Record-keeping is a constant theme in anti-money laundering compliance. When policies and plans are reviewed, a note should be made – even if nothing is altered.

Supervision

It is important that your firm not only has its own supervision standards, but that it is meeting them. There are also regulatory requirements such as carrying out a criminality check on all beneficial owners, officers or managers. These are required for AAT supervision of anti-money laundering compliance.

Suspicious activity reporting

Your firm must have specific internal reporting procedures for when a member of staff knows or suspects (or has reasonable grounds to know or suspect) a person is engaged in money laundering or terrorist financing. Does the procedure include other factors such as timescales and tipping off? The annual review is also an opportunity for the money laundering reporting officer to carry out a review of any internal suspicious activity reports and how this impacts the risk management of the firm.

Ongoing monitoring

It’s important you carry out regular reviews and updates on your AML procedures. The money laundering reporting officer and senior management should monitor the effectiveness of the review so that improvements can be made when inefficiencies are found. A firm should always compliment the annual review with regular meetings, too.

Read more on AML as part of our #AATPowerUp Anti Money Launderingcampaign for November:A

Drug dealing, money laundering and crime – just another day in the office?

Posted by & filed under Anti-money laundering.

Billions of pounds of illicit money are laundered in the UK every year and the authorities say it is happening far too easily.

When you hear stories on people trafficking, terrorism and drug cartels you wouldn’t think that would have much to do with your day job. Sat in your office with your morning cup of coffee, running through the company figures you could be closer to corruption that you think… 

As part of a new #AATPowerUp on Anti Money Laundering, we’ll be providing a range of content and resources on AML to give you the resources you need to combat what is now a huge problem for the UK.

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

Accountants: complicit or complacent?

Senior police officers have accused accountants of failing in their duty to draw attention to fishy financial dealings.

Crime commander Karen Baxter, national lead on economic crime, recently said accountants were ‘complicit’ or ‘complacent’ in laundering ‘dirty money’. She also criticised them for failing to report suspicious activities.

In recent weeks a Panorama documentary has also kept accountants in the spotlight. It raised questions as to whether accountants had fulfilled their duty to report suspicious activities at one of the world’s largest gold refineries, where a drug gang laundered money by selling 3.6 tonnes of gold.

The accountant concerned – EY – strenuously denies any wrongdoing and states its Dubai subsidiary ultimately helped bring to light the breach of applicable regulations. But the publicity has done little to improve perceptions of the profession.

Anti-money laundering: the issue

So, how exactly does the process of money laundering work?

On a small scale, it can be cash funnelled through small, apparently respectable, businesses that are a front for crime. For example, Walt White in Breaking Bad laundered his drug money through a car wash that wasn’t properly checked.

Money laundering can also operate on a much more industrial scale, with perpetrators passing tens of millions through financial and professional services, transferring funds through complex corporate webs, often via offshore jurisdictions.

If accountants are not diligent, they can be unwitting links in these chains. This is why they must carry out thorough checks when taking on new clients and setting up companies. They also have a legal obligation to report suspicious activities.

 “Accounting and legal professionals, and estate agents, can be criminally exploited – this is sometimes complicit, sometimes negligent, and sometimes unwitting,” says the National Crime Agency . 

How to submit a Suspicious Activity Report (SAR)

How to stop money laundering?

The simple fact is that the NCA is reliant on tip-offs in order to shut down money-laundering operations.

It needs accountants and other professionals to be its eyes and ears and to report dubious behaviour through Suspicious Activity Reports (SARs).

Last year, just 1.06% of all SARs came from accountants – a figure the police say is far too low. At the same time, HMRC, the Financial Conduct Authority and the NCA are putting more onus on accountants as a crucial source of information.

Complicity vs complacency

Mark Ballamy, a forensic accountant who has worked on many money laundering cases,  says that accountants need to be more sceptical of the people coming through their doors. “Too frequently, accountants do not insist on obtaining reliable, independent evidence that corroborates the economic activity undertaken by a prospective client that resulted in the client’s possession of wealth.”

Mark Halstead, a partner at Red Flag Alert (a credit risk management solutions company that specialises in anti-money laundering systems), believes that not enough accountants are doing enough to really meet the law. “It’s only about 0.01% of accountants that are complicit in money laundering,” he says. “The rest, you could argue, are complacent. That’s what the government wants us to wipe out.”

Record £7m HMRC fine

Accountants are obliged to report suspicious activity. If they are negligent –  or complicit –  they risk criminal convictions, fines and a ruined career.

Businesses could also pay an increasing heavy penalty for failing to uphold the law.

HMRC is getting tougher in issuing fines as it seeks to drive home the message that money-laundering has to be stopped. In September 2019, it issued a record fine against Touma Foreign Exchange Ltd – a money transfer business. Between June 2017 and September 2018, the business breached rules on:

  • Risk assessments and associated record-keeping
  • Policies, controls and procedures
  • Fundamental customer due diligence measures
  • Adequate staff training

6 ways AAT Licensed Accountants are failing

Touma’s failings are still shared by many accountants.

AAT conducts compliance monitoring of licensed accountants who it supervises for AML purposes. The process identified the following common shortcomings:

  • No written procedures, policies or controls.  
  • No initial or ongoing client due diligence procedures.
  • Members not carrying out an adequate risk assessment of clients.
  • No annual review of compliance with MLR2017.
  • No or inadequate training taking place.
  • No whole firm risk assessment being carried out.

Adam Williamson, AAT Head of Professional Standards sums it up like this:

“The simple, if harsh, message for accountants is that no-one is exempt. Big or small, high or low-risk services – it doesn’t matter.

“If you’re not fully compliant with the regulations then you’re committing an offence which also means, for AAT licensed members, removal of licence and membership. There is no more room for complacency.”

How to stay on top of AML

It is vital that AAT licensed accountants fully understand their responsibilities. We’ve put together an easy-to-follow guide summarising the key points for practices.

Licensed members must also complete AAT’s AML survey by Friday 6 December.

You can find out about the survey by clicking this link.

In Summary

  • Accountants are obliged to report suspicious activity if they come across it in their professional lives.
  • If they are negligent, or complicit, they risk criminal convictions, fines and a ruined career.
  • HMRC may impose measures, including a financial penalty, if you do not comply with the Money Laundering Regulations. In more serious cases, it may consider criminal prosecution.

Read more on AML as part of our #AATPowerUp Anti Money Laundering campaign for November:

4 mistakes all accounting websites make – and how to fix them

Posted by & filed under Marketing, Members, Run your business.

Ben Stanbury, Director of Prosper Web Design & Branding, has been assessing accountancy websites, and he’s spoken to us about what accountants are doing wrong.

According to my research, almost all accounting websites are the same – and they all make the same mistakes

As part of my job, I look at many accounting practice websites. I recently looked at 100, as part of some ongoing research into the quality of accountants’ web presence.

There is, shall we say, much room for improvement. To go one further, I’d say that accounting websites are all the same.

Many of the websites lacked any real structure in the way they presented written information to their users. Overly wordy, busy page layouts confused the eye, with no discernible hierarchy of information (such as a clear positioning statement).

Misleading results

On average, most websites actually performed well in the Google Lighthouse rankings of Performance, Accessibility, Best Practice, and SEO (with average scores of 64, 70, 75 and 88 respectively out of 100). But these metrics can be misleading, leaving you overconfident in your website.

A single-page website can score incredibly well in this tool, for example, but perform poorly with real users. A high Google Lighthouse ranking does not necessarily mean a slick, well-designed marketing tool.

Alarmingly, 42% of sites we tested did not have an SSL certificate (which allows for secure server connections). Google has confirmed that a website with an SSL certificate will have an advantage over other websites that do not, potentially ranking higher in the search results. As if that’s not reason enough, it’s essential to process payments and sensitive data securely.

18% of accountancy websites were not mobile-friendly – so you can forget about making a good impression on the 60% of visitors coming to your site on a mobile device.

The average number of social media links and Google Reviews were practically non-existent – 1.7 for social links and 2.1 for Google Reviews. Google Reviews are a potent social tool to reassure potential clients. They will often be the first thing a prospect may notice, before clicking through to your website. Ask yourself – would you bother to call a company with ten one-star reviews?

Overall, these are the 4 things that most accountancy websites are getting wrong – bear them in mind when designing your website, or for your next chat with your developer.

1. Timid, samey branding

The majority of accounting sites we surveyed had the same brand colour: blue.

59% of websites chose blue as a primary or secondary colour.

Blue may be the accepted colour of trust, but it’s also the colour of cliché in this industry.

Branding is there to resonate with your client, so keep that at the front of your mind. You don’t have to use blue or grey, or a traditional serif typeface. Take a look at other accounting websites and go in a completely different direction.

Stand out.

2. Unclear positioning

Make your positioning statement centre stage, as it is the first thing your visitor sees when they land on your website.

What exactly do you do and who is your audience?

Vague statements like “we’re not like other accountants” or “we’re accountants that care” don’t really tell your audience anything.

Be clear and specific. Why should potential clients choose you?

3. Poor graphic and website design

There’s a science to this sort of thing, and you can tell which firms buy into it and which don’t.

Regardless of your industry, your website needs to communicate visually to your audience, which boils down to effective graphic design and typography.

Your website also needs to work – if it isn’t secure and mobile-friendly, you won’t make a good impression (to Google or to your audience).

4. No content

Provide original and helpful content aimed at your specific audience – your potential and current clients. Then share your website content on social media (where your clients are) to drive people back to your website.

Only 18% of reviewed practices did this, so you can go some ways to differentiate yourself just by showing your audience some engaging and helpful written content. Having an automated HMRC news content feed on your website does little to demonstrate your expertise.

Key tips for creating and sharing content

  • Try copying and pasting the first few lines of your most recent news feed into Google and see how may firms display the same articles as you. Now go back to your article and edit it to make it unique.
  • Think about what your clients might want to read. “A handy guide to starting a business”, or “the pros and cons of registering for VAT”.
  • “How to choose a business bank account” is another good topic, or “getting started with cloud accounting apps”.
  • Giving away some expertise for free is no bad thing. Your customers will find it useful, and they’ll remember you for it. It might even put a smile on their face.

In summary

A lot of businesses think of their website as a box-ticking exercise; as long as they have something online, they’re sorted. But this isn’t the case. Your website is more than just a brochure; it should be a functioning marketing tool that works on your behalf. Done right, your website can reach new potential client bases, help you make money while you sleep, and build your all important reputation. Don’t neglect this important tool.

Read more on marketing your accountancy practice the right way here:

Can AI help accountants fight financial crime?

Posted by & filed under Anti-money laundering.

AI is a powerful tool in fighting financial crime, with usage set to triple by 2021. But what about the risks?

AI has the potential to revolutionise every aspect of daily life. Businesses use AI for recruitment, customer support, sales and more. And it’s fast becoming a vital part of security surveillance – tackling financial crime like fraud and money laundering.

The National Crime Agency (NCA) believe hundreds of billions of pounds are laundered each year in the UK, so it’s a huge problem.

Not surprisingly, the big banks are in the best position to make use of AI to fight money laundering, according to Jim Gee, Head of Forensic Services at Crowe.

They have access to vast volumes of data, and AI is ideal for trawling through massive data sets looking for patterns and anomalies. Suspicious activity can often be flagged up in real-time.

“With technology used more effectively and creatively, you can reduce manual and repetitive tasks, and humans can focus on the more material risks,” he adds.

Limited, but effective, capabilities

However, Adam Williamson, head of professional standards at AAT, says AI’s ability to deal with big data is the “extent of its capabilities” right now.

It hasn’t reached a level where it can make complex decisions. But it’s excellent at data mining and helps accountants make connections and perform due diligence.

José Hernandez, forensic accountancy specialist, author of Broken Business and Founder and CEO of Ortus Strategies has worked on some of the largest fraud, bribery and money laundering cases on record.

He says it “wouldn’t have been possible” to gather relevant facts and evidence relating to the cases had it not been for AI.

“Each of the significant internal investigations we’ve been involved in have employed very sophisticated digital forensic tools. They used AI to organise, search and analyse vast quantities of data like emails, chats, text messages, calendar entries and financial records,” he says.

“These cases often involved a dark web of third-party intermediaries and offshore shell companies. Without such tools, we wouldn’t have been able to separate signal from noise and identify patterns quickly and efficiently.”

Finding hidden criminals

As Hernandez explains, AI tools play a crucial role in helping organisations identify hard-to-detect forms of criminal activity.

AI can also help identify modern slavery practices and human trafficking, says Williamson. It comes into play when gang leaders bringing trafficked people into the UK open up multiple bank accounts in numerous branches (often on the same day).

“It’s a common smurfing technique, where small amounts of money are put into multiple accounts as a way of hiding larger amounts of money,” Williamson explains.

“Someone might be paid £500 every week, or there might be regular, multiple payments to travel agencies and low-cost airlines. On their own, such transactions may not necessarily be suspicious, but together, they can point to trafficking and other unlawful activities.”

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

Often however, AI’s ability to flag up potential criminal activity relies on information sharing, particularly as gangs will open up accounts across different banks. But Williamson says there’s a general “market reluctance” to share information, not least because of ethical and confidentiality issues.

“If you have limited data to work with, the system can’t make the connections and join the dots,” he says. “But banks aren’t always happy to give out customer information.”

However, the Fifth Money Laundering Directive – due to come into force in January 2020 – focuses on transparency and direct access to information. It will require banks to hold registers of bank accounts, their owners and beneficiaries, so AI systems will hopefully have more access to vital information.

Unethical AI?

Ironically, ethical issues are arising from using AI tackle this type of crime, and not just around GDPR and information ownership.

Williamson warns there have been countless examples of inbuilt or learned bias from AI because it hasn’t yet got a strong enough cognitive ability. Limited data sources and crude programming can result in discriminatory conclusions.

AI is learning to stereotype.

He uses the example of loan approvals, where people from a particular demographic or background may be turned down for loans despite meeting the criteria. It happens because the system has “learned” from previous process outcomes or is using limited data sources to determine risk. “AI will exacerbate any inbuilt or learned bias,” he says.

There’s also the issue of AI itself being used to actually commit crime.

It becomes a bit like financial chess, says Williamson, with two systems pitting against each other, learning to out-manoeuvre the other.

“There’s a continual learning process between both parties,” Jim Gee adds. “Those perpetuating financial crime will be using AI to increase their chances of success.”

The most significant impact on fraud and financial crime, he says, has come from changing the balance of human behaviour: mobilising and growing the “honest majority” and deterring and shrinking the “dishonest minority”.

In summary

Gee insists that the future of AI lies in identifying weaknesses of criminal systems – every flaw removed is another financial crime stopped. “Ultimately though,” he says, “AI needs to prevent crime, not just detect it.”

AI is streamlining fraud detection and getting ever more efficient and creative. With the Fifth Money Laundering Directive hitting the scenes in Jan 2020, the hope is that this results in much more access for AI systems. And with larger data sets to comb through, AI should exponentially improve with crime detection.

From here, the next step is developing further towards crime prevention.

Read more on financial crime and anti-money laundering here:

What is CPD and why is it important for your career?

Posted by & filed under CPD, Members.

CPD stands for continuing professional development and is the maintenance and growth of your knowledge, skills and experience relating to your career. It is mandatory for AAT members, including affiliate members.

It’s, therefore, the responsibility of every AAT member to undertake CPD activities after considering their own personal training and knowledge needs. It’s also important to document the details, outcomes and benefits of these CPD activities on an ongoing basis.

This is partly to help with CPD planning and development, but also to provide written evidence should a member be selected for CPD monitoring which AAT conducts with a sample of its membership throughout the year.

Why is CPD important?

CPD encourages professionals to follow changes in legislation, technology and working practice, to develop skills and to acquire experience which will support them in meeting their career aspirations.  It can also help with personal development – confidence will grow alongside knowledge and credibility.

How to plan your CPD

Think about what skills and knowledge gaps you have and your ongoing career objectives. With CPD you can plug those holes and reach your goals. It will also give you lots of evidence to add to your CV and examples to talk about in interviews. CPD demonstrates your commitment to your job and shows a strong work ethic.

What counts as CPD?

You may be surprised to know that you’re most likely completing CPD activities on a daily basis without realising. CPD comes in many different formats – some that you can even complete on your commute or lunch break.

CPD examples include:

You can search for upcoming AAT CPD courses and masterclasses using our AAT events search.

Members can access AAT networking events and a huge range of free CPD resources including our award-winning e-learning, podcasts, webinars and blogs which means that you or your teams can do their CPD with complete flexibility.

AAT’s CPD Policy

AAT’s CPD Policy has recently been updated to make it simpler and more streamlined. It was created by a small CPD Policy Working Group whose work has been informed by extensive internal and external research and benchmarking.

You can read AAT’s CPD Policy here. The key updates that we’d like to draw your attention to are listed below.

  • AAT Members who work for organisations that are in the AAT Employer Scheme (previously known as Accredited Employers) will no longer be exempt from CPD monitoring.
  • Similarly, AAT members who are also full or fellow members of other IFAC membership bodies are no longer exempt from CPD monitoring but can supply the CPD records by which they are compliant with their IFAC body.
  • The policy is now more specific in the required CPD areas that are applicable to the licensed service activities that licensed members must include in their activities, including anti-money laundering and practice management.

In Summary

Whatever direction you want your career to go in, it’s worth focusing on your CPD so that you can continue to improve your skills and put into practice what you’ve learnt.

By keeping your CPD portfolio up to date you’ll always have a full overview of the professional development that you’ve achieved to date and this individual documentation will allow you to reflect and plan for the future. Instead of avoiding activities or areas that you consider as weaknesses, consider all the options for increasing your competence.

Further reading