How green taxes will shake up life in the UK

Posted by & filed under Tax 2020.

The Government has pledged to end the country’s contribution to man-made global warming by 2050, requiring the UK to bring all greenhouse gas emissions to net-zero.

So far there’s been little detail on how the Government intends to meet this vital goal – and how it will be funded.

While the policy can be summed up in a sentence, the measures needed to achieve it are far more complex. What we do know is they are likely to lean heavily on taxation and incentives…

What is net-zero?

Net-zero means reaching an overall balance between greenhouse gases emitted and those removed.

Getting to net-zero carbon emissions will require a range of actions:

  • Reducing greenhouse gas emissions
  • Offsetting remaining emissions by removing greenhouse gases
  • Planting more trees or creating ‘carbon sinks‘ to absorb CO2.

How can it be achieved

The Treasury has claimed that cutting carbon so far, so fast could cost the UK economy £1 trillion by 2050.

But while the UK joins a growing number of countries, to adopt net-zero targets, none has yet implemented clear policies to achieve them in the near term.

Most likely the Government will introduce a range of taxes, incentives and penalties. These will encourage business and consumers to reduce carbon emissions and improve energy efficiency. Here are some examples.

  • Regulating out high-carbon products.
  • Subsidising low-carbon technologies to drive cost reduction
  • Taxing high-carbon activities, particularly in key sectors such as the energy, vehicle, aviation & shipping, housing, agriculture and waste sectors.

Some idea of the scale of change can be found in the report of the Committee for Climate Change (CCC), which advises the Government; and in proposals from the London School of Economics. The LSE has advocated using new and existing taxes to set a ‘carbon price’ of between £40 and £100 per tonne of carbon-dioxide-equivalent (tCO2e).

Agriculture

In farming, Brexit could be an opportunity to shift the focus of farming subsidies to encourage low carbon agriculture.

The CCC recommends financial payments in the new UK Agriculture Bill be linked to actions to reduce emissions from 2022. LSE suggests a tax on red meat that would equate to an additional £0.23/kg of beef and £0.46/kg lamb in 2020, rising to £0.70 and £1.41 in 2050 respectively.

Transport

Transport is the UK’s single largest source of greenhouse gases, transport.

The CCC wants the Government to bring forward a ban on fossil fuel-powered cars to 2035. Alongside this, it argues from the 2020s onwards vehicle and fuel taxation should incentivise commercial operators to buy and run zero-emission HGVs. Air passenger duty should also be reformed.

The LSE’s ideas include adding 10p per litre to fuel duty in 2020, rising to 14p per litre in 2050. In aviation and shipping, LSE  proposes a tax on international transport fuels.

Construction

Advisors say incentives are needed to spur the huge changes that will be required across the economy. The CCC advocates this to encourage low carbon building design and construction techniques.

Other industries

The CCC report argues the Government must incentivise other industries to reduce emissions through energy and resource efficiency, electrification, and the capture and storage of hydrogen and carbon.

Longer-term, it suggests international sectoral agreements, procurement and product standards that would require consumers to buy or use low-carbon products or through border-tariff adjustments that reflect the carbon content of imports.

Potential pitfalls

The Government has a patchy track record when it comes to decarbonisation policies – past initiatives, such as the Renewable Heat Incentive and Green Deal have fallen short of expectations, often because they have lacked the underpinning evidence base to ensure effectiveness.

The CCC has made clear that 2% of annual GDP needs to be invested if the UK is to meet its 2050 net-zero target

But in the Government’s latest spending round, the Department for Business, Energy and Industrial Strategy was awarded just a 2.2% increase in its resource budget for 2020-2021, with only £30m going towards new projects to accelerate the UK’s progress to net-zero emissions.

Campaigners and politicians were quick to criticise the amount of cash earmarked for the net-zero target as falling “woefully short”.

In summary

The Government has not filled in the details of how it intends the UK to fulfil its carbon-neutral pledge. However, such a big objective will involve tax and regulatory changes that touch almost every area of life.

Read more on CO2 and the environment:

Read more on tax updates and policy as part of our #AATPowerUp Tax 2020 campaign:

How to get the best from your millennials

Posted by & filed under Employers.

The ‘millennial generation’ tend to get a bad rep in the media, but if you can harness this new generation of talent, they could be the jumpstart your business needs.

Millennials – born roughly between 1980 and 2000 – are redefining the workplace. They already make up 35% of the UK workforce and are expected to account for 50% of all employees by next year, according to a recent report from accountant KPMG.

Employers keen to attract and retain the best people, therefore, need to recognise what the roughly 14 million UK millennials are looking for in their careers, and how that differs from previous generations.

Faith Howe, Director of Talent at communications agency FleishmanHillard Fishburn, said: “Millennials approach work and life differently to those who have gone before. This creates opportunities, as well as challenges.”

Working flexibly

Work life balance is a hot topic across the board. For many millennials, it’s a must.

According to research from insurer Aon, more than 95% of employers agree that today’s employees expect different things, with flexible working hours and agile working moving up the agenda.

So to attract and retain high-achieving millennials, offering flexible working options is one way to enable them to find their ideal work life balance.

And the good news is that even small changes can make a big difference.

You could, for example, offer workers the chance to start and leave an hour earlier one day a week, or give them a day off each year to support a good cause.

The AAT salary survey 2019 saw 58% of all members – young and old – ranking flexitime as one of their top 5 company benefits, so it’s not just a desire for millennials. If possible for your business, flexible working can boost overall staff happiness, and has even been touted as the key to closing the gender pay gap.

Key takeaway: Flexible working conditions tend to be very important to millennial workers, so have a think about alternatives to the 9-5 regime.

Harness the power of technology

Unlike some of their older colleagues, millennials – who have been using the internet since before they hit their teens – are happy to embrace hi-tech tools.

From faster communications platforms to cutting-edge software, they have the digital skills required to take advantage of the latest technology to boost their performance at work.

And they expect to be able to use them. According to a recent survey by European business school INSEAD, 60% of millennials think their employers’ digital skills are inadequate.

The obvious solution is to invest in appropriate technology.

So why not empower your younger members of staff to do feasibility studies on tech that could save time and strengthen profits across the business?

Key takeaway: Millennials are attracted to employers that take a hi-tech approach; capitalise on this by using their digital skills to cut costs and boost productivity.

Stay human in a digital world

While technology such as apps and software can enhance working conditions, they cannot – and should not – replace face-to-face interaction.

And while millennials value technology as a workplace tool, they also appreciate employers who encourage teamwork and offer learning opportunities such as training and mentoring schemes.

Anna Rasmussen, founder of the performance tool Open Blend, said “Research shows that the younger generations in the workforce are looking to work for organisations that can demonstrate a genuinely people-centric culture.

“The need to create genuine human connections at work and build relationships is becoming increasingly important.

“So to attract and retain talent, a more human-focused approach to people management is key.”

Key takeaway: Embracing more technology does not equate to less human interaction. Build valuable relationships with your team, offering learning opportunities and mentoring to keep them engaged.

Ensure employees feel valued

Online networking and job searches make it much easier to move companies, and as a result the average millennial stays in a given role for just three years, the KPMG report suggests.

Making the office environment more attractive, for example by creating a cool workspace with relaxation areas, is one way to avoid having to replace employees on a regular basis.

Offering a wide-ranging employee benefits package is another.

“Companies should ensure that they offer a package deal where pay is only one element and doesn’t have a dominant weighting,” the KPMG report concludes.

Given millennials’ technological proficiency, using tools such as apps and online portals to allow staff to manage their own benefits can also be a good idea.

Aon’s figures suggest this is becoming increasingly common, with 45% of employers already having an online benefits portal in place, and a further 20% planning to introduce one within the next three years.

Key takeaway: Whilst salary is important, it’s not the only concern for millennial job seekers; an employee benefits package can boost retention rates, giving you an edge over other employers.

In summary

Millennial employees can bring different skills and attitudes to the table, particularly when it comes to technology.

They value the opportunity to use these skills, alongside flexible working conditions, a broad range of employee benefits, and the ability to learn from senior colleagues.

Keep these things in mind, and you could build a happier, more diverse workforce.

For more on managing employees of all ages:

Simplifying tax reporting – More trouble than it’s worth?

Posted by & filed under Tax.

Due to the rise in self-employment in the UK, the Office of Tax Simplification (OTS) has decided to start a project examining the pros and cons of simplifying tax reporting and payment arrangements for self-employed people.

The tax system has not always kept up with this rapid change in working practices and so the OTS is to be commended for looking at the tax return process for those who no longer work in traditional ways.

The OTS has previously suggested that “some of those working freelance or in the gig economy, would welcome the option to report information and pay tax to HMRC periodically or on the completion of work assignments, rather than only through self-assessment.”

Support from AAT members?

A desire to make tax payments after the completion of sales, work assignments, rentals and so on appears to be a logical assumption to make but it wasn’t supported by any of the 100 AAT licensed members who were recently surveyed on this issue.

Of those that responded, there was uniform agreement that such a change was not necessary, that it would result in considerable complexity, additional work for both clients and agents and that few if any, practical benefits would flow from such changes.

Does this harsh reality presented by AAT members accurately represent the wider views of the business world or is it simply that the type of clients many of our licensed members represent are very different to the intended audience?

Making users aware of their responsibilities

Many users of digital platforms remain unaware that they have to file a self-assessment tax return and often wrongly believe their platform income is not taxable. That situation is unlikely to be changed by changes to reporting and payment schedules but instead requires greater efforts by platforms to make their users aware of their responsibilities.

Perhaps the most significant benefit from such a change would be a likely reduction in the tax gap – £9bn of which is attributed to avoidable errors – and increased compliance.

The same arguments have been put forward in support of Making Tax Digital, given more frequent interaction and checking is likely to make mistakes, omissions and surprises less likely and/or reduced in impact given they will not be hidden for a year. 

Likely benefits

Similarly, more frequent interaction with the tax authority in itself is logically likely to lead to a reduction in errors over time.

Here the assistance of tax/accountancy agents will again be crucial given the need for the supply of accurate information and for clients to understand exactly what is required and when.

There has often been a misplaced assumption that quarterly or more frequent reporting requirements/options empower small businesses and the self-employed to undertake their own tax affairs without recourse to any form of agent assistance.

Time and time again all the available evidence suggests that agent assistance proves more rather than less necessary in such circumstances. This view has been expressed by members of the AAT Tax Panel, focus groups, member forums and numerous AAT licensed accountants. It has also been expressed by numerous SMEs especially self-employed individuals.

Lessons from abroad

Other countries already offer the self-employed different tax reporting and payment options and may prove good case studies for the OTS to consider before making any recommendations.

In the USA, the self-employed generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. Estimated tax is for the payment of income tax, a specific self-employment tax and alternative minimum tax. Such payments are made on a quarterly basis.

Reflecting on the OTS concerns about different options for different industries, in the US, the estimated tax requirements are different for farmers and fishermen in recognition of some of the unique features of those industries.

Anyone seeking more information about how and when such payments are calculated and payable should have a look at Form 1040-ES.

Summary

This new found focus on different reporting and payment requirements, whilst well-intentioned, may be unnecessary given wider policy developments.

Making Tax Digital will eventually be compulsory for those below the VAT threshold and for income tax, meaning more frequent tax payments are likely to follow.

As a first step, the groups identified by the OTS as being likely to welcome the option to report periodically would probably be well advised to take-up the existing MTD offer. This would negate any need to radically overhaul current tax reporting and payment systems whilst better meeting their particular needs.

Further reading:

The healing power of volunteering at work

Posted by & filed under Learning.

Getting involved in a charitable project can be a great way to help you and your colleagues connect and feel better about yourselves and each other.

Helping others doesn’t just make the world a better place; it also makes us feel good about ourselves.

As former US President Barack Obama said: “If you go out and make some good things happen, you will fill the world with hope, you will fill yourself with hope.” 

Feel better about yourself

Numerous studies show that helping others reduces stress levels and makes us healthier in general, which is why the NHS recommends volunteering as a way to improve your mental health and wellbeing.

“Giving to others and co-operating with them can stimulate the reward areas in the brain, creating positive feelings,” it said.

“Helping and working with others can also give us a sense of purpose and feelings of self-worth.”

Connect with your colleagues

Joining forces with your colleagues to support a good cause will allow you to share positive experiences outside the office – creating a more collaborative working environment.

If you are new to a company, volunteering is also a great way to meet people from different parts of the business and develop stronger links to the local community.

“The opportunity to make a connection that boosts organisational wellbeing while helping neighbours is too good to pass up,” said Ali Payne, an employee engagement expert at consultancy Gallagher.

Sharpen your skills

Volunteering is also a great way to develop new skills, and hone your existing ones.

You may, for example, be able to gain valuable work experience by offering accountancy or bookkeeping services to a local charity.

National Council for Voluntary Organisations (NCVO) research manager Amy McGarvey said: “Lots of smaller charities struggle to find people with finance expertise, for anyone in accounting, becoming a charity trustee is also a great way to get board-level experience and insight into a different organisation.”

Other examples of skills volunteering can help you improve include:

  • Event organisation
  • Public speaking
  • Marketing

Many people also report feeling more confident as a result of volunteering at work.

How to get started

From organising lunchtime litter pick-up walks to setting up fundraising pages to support local or international causes, there are lots of ways to get involved with volunteering at work.

If you work for a large company, you may well find there are schemes already in place.

And if not, offering to start one will show initiative and should be welcomed by most employers.

“If your company doesn’t have a workplace volunteering programme already, most will be more than happy for you to establish something,” McGarvey said. 

Either way, choosing a cause you feel strongly about will boost your chances of having a rich and enjoyable experience.

Three steps to get started with volunteering

The NCVO suggests following these three steps:

1. Think about what interests or excites you

This could be something you enjoyed doing before, or something completely new.

2. Think about what time or skills you can give

With so many opportunities to choose from, it’s a great idea to narrow down the choices by deciding what you’re willing to give.

3. Start researching!

There are a number of websites dedicated to helping you find the right volunteering opportunity. Examples of these include:

Tips for first-time volunteers…

Encourage your employer to get on board

Many companies now offer volunteering schemes. If yours doesn’t yet, try explaining to your boss that offering volunteering opportunities is a cost-effective way to increase employee engagement. Ways they can support your efforts include providing flexible time or paid leave for volunteering and ensuring initiatives are effectively communicated.

Look for inspiring local causes

Volunteering for local causes can create a real sense of community within the workforce, and a quick online search should throw up plenty of inspiring ones to support. You might, for example, be able to arrange regular group visits to a nearby retirement home or animal sanctuary.

Organise a fundraising event

Ask your employer for permission to organise a fun day where employees can support a good cause by baking cakes, setting up games, or selling second-hand items such as books and clothes. Other options include pub quizzes, football or rounders matches, and raffles with prizes donating by local shops and businesses.

Get active – together

Training for an event such as a fun run after work or during your lunch hour can be a great way to get fit while building stronger links with your colleagues. Fundraising websites such as JustGiving and GivePenny make it easy to set up donation pages.

In summary

Taking the time to help a good cause by volunteering at work can be good for your career as well as your soul.

It’s a great way to meet people, learn new skills, and build stronger relationships with your colleagues.

For employers, the benefits of offering volunteering opportunities in the workplace include a happier, more productive workforce, and a better reputation in the local community.

If you’d be interested in volunteering as a member you can find out more here (login required).

For more on volunteering at work:

Excel tips: Creating financial statements series part 3 – Using basic functionality

Posted by & filed under Advanced Diploma, Excel tips, Students.

Excel tips: Creating financial statements series

Working with spreadsheets can make accounting tasks much more efficient and reliable once we have learnt to use the required functionality.  However, in order to achieve that we have to combine accounting knowledge with spreadsheet skills and for many of us, bringing both areas together is a real challenge.

In this article we’re going to create financial statements from an extended trial balance (ETB) using Excel’s basic functions, because it is easy to underestimate their value and role as a platform to building on, when we come to use advanced functions and formulas.

Click to download the ETB we sorted in the last article.

The first tab contains the ETB, the second, the year-end adjustments and the third, blank financial statements. 

Hiding columns to prevent errors

There is one final change we can make to our ETB so that its presentation is actually of practical help to us in terms of creating the financial statements. That’s to hide the TB and adjustment columns to ensure that we can’t accidentally link to unadjusted cells.

Highlight columns B to E, right click and select Hide from the drop down menu:

To unhide columns look for a gap in the alphabetical order of the columns, highlight the columns either side of the missing ones, right click and select Unhide from the drop down menu:

Linking up the correct cells

Now we can finally start to create the statements, which is mainly a matter of linking to the correct cells in the ETB and amending the generic proformas to suit our specific needs. 

Start by using direct referencing to link the sales and cost of sales figures between the sheets, as we did in the ETB article:

Then write formulas to calculate the cost of goods sold and gross profit:

Then, add or delete rows as necessary in order to customise the other income and expenses sections. You may want to make another copy of the worksheet so that the SoFP layout is retained.

You can also link the account names and their corresponding amounts then drag both columns references in the SoPL.

Be careful not to include the inventory and to link the office expense, repairs and maintenance account seperately.

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AutoSum is a really useful tool to use when adding up a list such as the expenses. Click on the cell you want the total in and then press the AutoSum button on the HOME ribbon. The cells that Excel suggests may not be the ones you want:

So, select the ones you do want:

Check the profit figure on the statement matches the ETB figure before using the same skills and functionality to create the SoFP.

The appropriate lines can be altered by using the borders function:

Highlighting can be maintained though the fill colour function. The selection of no fill can be really helpful if deleting cells has resulted in formatting that no longer works:

Check the closing capital and net assets figures match and then tidy up the rest of the formatting, as in the previous article, with regards to cell size, font size, number and decimal formatting and use of comma separators. Lastly name the tab by right clicking on it and selecting rename:

Use the same process to delete any worksheets that you made copies of but no longer need. 

In summary

You’ll know whether your statements are correct or not based on whether they reconcile with the ETB but you can also click here to download my finalised spreadsheet and compare it to yours.

Further reading:

Browse the full range of AAT study support resources here

How to voice concerns without seeming negative 

Posted by & filed under Career.

No one likes to complain but inevitably your job will sometimes bring up things that you don’t agree with and  times you might have to deliver negative feedback or a difficult message to someone.

We explore steps you can go through to ensure that your opinions and concerns are heard and that they’re received in the best possible way.

7 steps to complaining constructively

  1. Time your concerns appropriately
  2. Be specific
  3. Be objective and lose your emotional attachments
  4. Come with solutions in mind
  5. Focus on the positives
  6. Leave the decision up to the boss
  7. Get support if necessary

Time your concerns appropriately

First it is important to ask yourself if your concern is really worth bringing up. Is this something you can act upon yourself to make a positive change without having to involve other people in the process? If it is something that needs addressing then do it sooner rather than later. Arrange a meeting with the relevant person so you have a dedicated time and don’t have to talk in front of others.

Be specific

Writing things down is a really good way to make sure that you have all your ducks in a row. However clear things are in your head, it’s easy to jumble them up and lose your train of thought when you start speaking to someone.

Justify your opinions – don’t just say that you “don’t like it” and tailor what you’re saying to who you’re speaking too. One size doesn’t fit all and it’s not natural to deliver bad news or critique people so consider your best approach for the individual you’re talking to before you start.

Key takeaway: Having written notes will show that you’ve put some real thought into the matter.

Be objective and lose your emotional attachments

Try to remain objective about the situation and remove emotion. Don’t get caught in a cycle of assuming the worst outcome – it’s really unlikely that this will actually happen so don’t torture yourself with worry. What advice would you give to someone else who was in the same position? – take that advice.

Be honest, confident and professional and give your concerns in a tactful and logical manner. Delivery is key for how your views are received and the response you’ll get. Many people will unconsciously clam up if they feel any form of confrontation so be reasonable and don’t use any aggression.

Key takeaway: Being overly-critical is not likely to help you get the reaction you want as the other person will become defensive.

Come with solutions in mind

Describe the problem and its implications and then go on to talk about the possible solutions and benefits. Be prepared to answer the question “what would you do?” Bring your ideas and present them in specific steps that can be taken to improve and how you think this can be measured.

Focus on the positives

By focusing on the possible solutions you’ll demonstrate that you’re not being negative and are more likely to get people on board with your ideas as they can visualise the benefits.

Key takeaway: Accepting responsibility for the outcome will really demonstrate your commitment to ensuring success.

Leave the decision up to the boss

If you’re making a case for change to your manager, acknowledge that it is their call to make. Frustrating as it can be if you don’t agree, there may be other financial or practical reasons why they make decisions that might not seem reasonable to you.

Get support if necessary

You don’t have to do it alone. Ask for advice from a mentor, friend or trusted colleague and really listen. If you have a concern and you are really not sure what to do about it then ask for help from your (or another) manager or HR.

Key takeaway: Don’t be afraid to ask for help.

In summary

If you have concerns in the workplace there is a process that you can go through to make sure you have the best chance of getting heard. By writing down your ideas and presenting them in a professional manner you’ll elicit a better response and if you’ve already thought of some possible solutions you’ll ensure that you don’t come across as negative. Don’t put it off but do plan it correctly.

Your next reads:

Study tips: how to prepare closing inventory for financial statements

Posted by & filed under Advanced Diploma, Students.

Accounts preparation is tricky, because to do it successfully we have to understand what we’re doing, as well and why we’re doing it. 

In this article we’re going to focus in-depth on closing inventory.

What is it?  Closing inventory is the amount of stock that an organisation has at the end of an accounting period.

It is a combination of raw materials, work in progress (WIP) and finished goods.  For a manufacturing business that is what’s left in the stock room, on the factory floor and in the warehouse.  However, for a retailer it is more likely to be a stockroom full of goods bought for resale and for a service business, like an accountants, it might partially complete contracts.

Why is it important to value it?  It is included in the financial statements and has an impact on both an organisation’s profits and the value of its assets.

Monitoring and controlling inventory levels and costs throughout the year is generally seen as a management accounting function.  However, year-end financial accounting standards require a value to be placed on the closing inventory for inclusion in the financial statements.  It forms part of the ‘cost of goods sold’ (COGS) calculation on the Statement of profit or loss (SoPL) due to the accruals concept.  It is also a current asset on the Statement of financial position (SoFP) as it is owned by the organisation but its value will change within a 12 month period.

How is it valued?  At the lower of cost or net realisable value (NRV) in accordance with IAS2.

A physical stock take is required to ascertain the levels of each stock line and reconcile them to the accounting records.  Each type of inventory and each inventory line within each type, must be valued separately by comparing its cost to its NRV and choosing the lower value.  For example, 5mm nails and 5mm screws are both raw materials but are different lines.

Definition of cost:

The purchase price plus the cost of getting the inventory into its current position, for example, a supplier’s delivery charges.

Definition of NRV:

The expected selling price of the inventory, less any further costs to be incurred such as selling or distribution costs or repairs.

Worked example:

Inventory line GM47 costs £9 plus £1 delivery per unit and sells for £13 per unit.  The packaging of 100 items has become damaged and needs to be repackaged at a cost of £2.50 per unit.  They will then sell for £12 per unit.

Calculate the total cost and total net realisable value of the inventory and state the correct value to be used in the financial statements.

Total cost is £1,000

£9 cost plus £1 delivery is £10 per unit.  100 units x £10 per unit = £1,000

Total net realisable value is £950

£12 selling price less £2.50 additional costs is £9.50 per unit.  100 units x £9.50 per unit = £950

The inventory should be valued at £950 in the financial statements as the NRV is lower than the cost.

How do we calculate the inventory value if we are only given the selling price?  If we know the selling price is greater than cost, then because of IAS2, we know to value the closing inventory at cost as it will be the lower of cost and NRV.

Worked example:

GM Manufacturing’s selling price is calculated by marking up the cost by 27% and the sales price of the closing inventory is £265,457.

Calculate the total cost and total net realisable value of the inventory and state the correct value to be used in the financial statements, rounded to the nearest whole £.

Total net realisable value is £265,457

The cost value equals 100%

As the NRV is 27% higher than the cost, £265,457 represents 127%

Therefore the total cost is calculated as £265,457 ÷ 127 x 100 = £209,021.25

How is the year-end adjustment made?  By debiting closing inventory on the SoFP and crediting closing inventory on the SoPL.

This is usually done by using a journal or in the adjustment columns of an extended trial balance.

Why is the accounting treatment of inventory an application of the accruals concept?  Because it matches the cost of the inventory to the financial period in which it will generate income.

Accounting for inventory is a cycle. The cost of goods sold calculation on the SoPL starts with opening inventory, which was last year’s closing inventory.  We then add this year’s purchases as that is how much we have spent on inventory during the year.  The opening inventory and most of the purchases will have been sold to generate this year’s sales figure, but there will be some left unsold and that’s the closing inventory.  Therefore, in order to calculate the true cost of the goods sold, we need to deduct the value of the closing inventory.  This will become next year’s opening inventory and the cycle will continue.

Browse the full range of AAT study support resources here

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Long-term illness in the workplace and how to manage it

Posted by & filed under Social mobility.

At some point, at least one of your colleagues will suffer from a long-term or serious illness. This situation can be tricky to handle – but there is a way to do it right.

No matter how concerned you are for your team member, as a manager you need to make sure your team’s work is done efficiently – that can be harder to achieve if one person is unwell.

“It may be the employee is off sick more than other employees, or it may be they can’t carry out some of their duties or can’t carry them out as quickly as others in the team,” says Tom Neil, guidance writer for ACAS.

Overcoming departmental challenges

Team members may become resentful about picking up the slack. Another challenge, often unrecognised, is the emotional impact on your staff. “The rest of the team may be upset to see a colleague experiencing a health issue and may need extra support themselves to cope with it,” says Neil.

There may be occasions where a team member hides an illness; their work might suffer, and you don’t understand why. This can be a particular problem with mental health issues, as there’s more of a stigma around these.

“Employees experiencing mental health problems can and do make a valuable contribution to the workplace,” says Emma Mamo, head of workplace wellbeing at mental health charity Mind. “They may just need additional support. But, too often, staff worry about coming forward, so colleagues aren’t aware that they’re struggling or might benefit from some support.”

Supporting the individual

“This will usually involve sensitively talking to the employee, but it may also require further discussions with HR, senior managers and the rest of the team, bearing confidentiality in mind,” says Neil.

“A manager should also consider asking the employee for permission to contact their GP or referring them to occupational health (where this is an option), who could provide further guidance on the effects of the health issue and the type of support and adjustments that would help the employee in the workplace.”

Know your policies

“There should be effective policies in place for managing people issues, including absence, health and wellbeing,” says Neil.

These issues are exactly what HR departments specialise in, as Jessica Barlow, a finance manager in a publishing company, discovered when she faced a difficult situation.

“Tim was excellent at his job most of the time, with a really innovative way of approaching problems. But he was always late for work and seemed constantly on edge.” Barlow became increasingly worried about her team member’s erratic behaviour.

“Once I’d approached HR and they stepped in, the situation improved. Tim was honest and said that he had bipolar disorder. It had been well managed but he had moved to a new area and had stopped taking his medication. With the help of HR, we were able to support him in taking some time off to register with a new GP and get back on track”.

Get clarity and communicate

When dealing with sickness, communication is key, says Neil. He points out that a manager dealing with an affected team member will need to understand:

1. Exactly what the health issue is.

2. The support or adjustments that could be made to help the employee, both practical (such as adapting a workstation) and emotional.

3. What steps need to be put in place to mitigate the impact on the team and organisational performance.

4. What the employee wants the rest of the team to know and not know.

5. How other team members are finding the situation. While you may be focused on the person with a health issue, listen to others’ concerns too.

6. What the impact on the individual might be, and how this may affect their work.

Don’t assume the worst

Managers and staff alike may worry that a team member will lose their job once HR gets involved in a health issue. This is a worst-case scenario and is an unusual occurrence. “When concerns around an employee’s health do arise, resources and processes should be focused on supporting them and identifying ways to help them back to better health,” says Neil.

“Dismissal should only ever be considered as a last resort.” On rare occasions, it may be in everyone’s best interests for the affected team member to leave their position.

Create a healthy culture

If the culture in your team is generally open, it will be easier to deal with any problems that do crop up. Team members will find it easier to approach you. You will be more familiar with their backgrounds, which could help you identify issues more quickly. “We work with organisations to help them create mentally healthy workplaces by promoting wellbeing for all staff, tackling the work-related causes of stress and poor mental health, and supporting staff experiencing mental health problems,” says Mamo.

Regular team get-togethers and informal chats about stress and wellbeing, among other things, could make a real difference over time. “When concerns around an employee’s health do arise, resources and processes should be focused on supporting them”

Neil’s top tips

1. Have regular conversations with the affected team member and their colleagues. Keep this up even when the situation seems to have settled.

2. Reassure everyone that you want to help.

3. Check-in with the team member regularly to find out how they are getting on.

4. Listen carefully to all your staff – don’t make assumptions.

5. Be patient: don’t force anyone into having conversations if they seem reluctant. 6. Be clear you’re always available to talk.

Further reading:

How to start an AI project

Posted by & filed under Artificial intelligence.

Adopting artificial intelligence (AI) systems within your business can be a great way to boost productivity and improve the accuracy of your accounting. Here’s everything you need to know about getting started…

The accounting industry has been around for thousands of years. During that time, it’s embraced new technologies such as papyrus scrolls, Casio calculators and Excel spreadsheets. The latest disruption-causing tech facing the industry is, of course, the introduction of artificial intelligence (AI).  

The benefits of AI are evident

As we’ve explored in our previous two articles on AI seeWhat AI can already do for your company and Adopting AI in your business, accountants might be approaching AI with some trepidation, but the benefits to their businesses are all-too-evident.

Instead of your staff spending hours inputting tiresome tax data into spreadsheets, AI can do the task within seconds. For clients, AI analytics can use forecasts to predict where savings could be made within their firms. Customer enquiries can also be dealt with 24/7 thanks to the use of AI chatbots.

Unfortunately, having an AI-powered office isn’t a matter of getting some IT wizards to sprinkle algorithmical magic over your computer systems. You need to identify what problems AI will solve, as well as rigorously testing the software with a pilot project too.

Here’s what you need to know about getting the show on the road…

Consider how AI will be used in your workplace

If you’re dipping your toes into AI waters for the first time, it’s generally not a good idea to sink all your resources into the first snazzy software you latch eyes upon. Leave that for the big four, who can afford it.

Instead, figure out why you actually need AI in the first place:

  • is the company displaying any signs of inefficiency or inaccuracy? If so, what departments? Would staff workload be eased by speeding up administrative tasks such as processing invoices or preparing tax returns? 
  • would it help client relations if you could use data analytics to predict financial trends and forecast revenues/savings?
  • does your customer service need to improve? If so, would a natural-language bot that allow them to pay for services and/or offer customer support be beneficial? 

Things to consider when getting set up

  • how easy/difficult would it be to implement your proposed AI solution?
  • how well-equipped is your organisation to build, manage and support AI systems?
  • what would the cost be?
  • can you add AI systems to existing software, such as Sage or Xero?
  • how would AI affect the division of labour between humans and computers? In some cognitive AI projects, 80 per cent of decisions are made by machines. What impact would this have upon your workflow?
  • would adopting AI require a restructure of your organisation with staff working in different roles?
  • what staff will you allocate to the project? Or will you bring in new employees? Who will you get to lead the project?
  • does your company have cloud and data infrastructure large enough to deal with the changes?
  • do you know of any firms who have adopted similar AI systems? What has the impact upon their business been like? Has it delivered a return on investment?

Confused? Most accountancy firms start with some form of robotic process automation (RPA) see here:  What AI can already do for your company. This can relieve staff of repetitive tasks that are often prone to human error.

Having considered these factors and selected the AI systems you want to use, it’s time to move onto the next stage: launching a pilot project to see how well it works.

Launching a pilot project

A pilot project – where your company road-tests the AI software before potentially rolling it out to the rest of the firm – provides a great opportunity for you and your staff to gain first-hand knowledge of how the systems will work.

Providing you’ve got the resources, it makes good sense to trial-run several smaller pilots at once, which will increase your odds of success. If you hurl all your eggs into one big AI-shaped basket by choosing a single standalone project, you’ll be back at square one if it fails. 

Ideally, the first project(s) that you launch should be something that can be completed quickly (six-12 months) and have a high chance of racking up some small ‘wins’. It’s also worth selecting software that generates a ‘buzz’ among your staff and/or customers. Try fostering a culture whereby staff can regularly engage with the new technology and provide feedback on it.

Establishing timelines and budget

Next up? Well, because you’re evidently a sensible business-owner, you’d need to decide upon a timeline and earmark a budget for the project(s). Even though some RPA can accelerate tasks such as invoicing, it could also slow down staff productivity as employees become adjusted to the new tech. Therefore, scheduling your pilot project(s) for December and January, when accountants are at their busiest, would be foolhardy. But you knew that, right?

Recruitment is key too. Your organisation may want to hire external AI specialist engineers and/or consultants. Try to allocate eager members of your staff to the project; you’d probably want people who could act as AI champions within your workplace, spreading the word to staff about how effective it is.

Getting cynical employees on board is one of the biggest challenges businesses face when adopting AI. Try hosting presentations on its benefits and broadcast any breakthroughs or landmark successes you experience during the project(s).

Running a pilot project

After a while, you should soon able to gauge whether the pilot(s) have created any value.

  • Has your company increased revenue as a result of the AI? If you’re using data analytics, has it resulted in any financial gains for your clients?
  • Has it resulted in any new business opportunities?
  • How has the AI changed workflows? With more tasks carried out by machines, are your staff now feeling redundant with nothing to do? Or are they pursuing new assignments that drive business?
  • Have you detected any changes among your clients or customers? Do they seem satisfied now that work is (hopefully) being completed quicker?

Summary

Implementing an AI project is a daunting experience for any company. But launching a portfolio of projects (rather than just one) is a fantastic way to gain some insight into the revolutionary new tech.

The key to making AI work is taking some time out to identify <why> you need it and whether your company has the infrastructure to support it. Achieve that and you should hopefully see some results within months of starting the projects.

Further reading:

Making a difference: how to become a Mental Health First Aider

Posted by & filed under Mental health, Social mobility.

Millions of Britons struggle with mental health problems such as stress and depression. But spotting the signs of poor mental health – in yourself or others – is not always easy.

Becoming a Mental Health First Aider should help you to take better care of your own mental wellbeing as well as that of your colleagues.

Why is mental health at work important?

Mental health problems cost the UK economy up to £99 billion every year, according to the 2017 Government-commissioned review “Thriving at Work”. Employers bear the brunt of that cost, losing up to £42 billion a year.

But taking simple steps to improve mental health and wellbeing in the workplace can make a big difference.

Emma Mamo, head of workplace wellbeing at mental health charity Mind, said: “When Mind surveyed more than 44,000 employees this year, we found that 48% had experienced poor mental health, such as stress, while working at their current organisation.

“Considering how much of our lives are spent at work and how common mental health problems are, its important employees feel supported and employers feel confident supporting them.”

Key takeaways

  • Mental health problems are bad for business as well as individuals.
  • Simple steps can make a big difference.

How can Mental Health First Aiders help?

It’s not always easy to spot the signs of poor mental health, especially as social stigma means we often try to hide our symptoms.

According to Mind’s Workplace Wellbeing Index 2017-18, only half the 48% of workers who have experienced poor mental health in their current job told their employers about it.

By training as a Mental Health First Aider, you can learn how to recognise when people are struggling and to step in before their problems spiral out of control, while making yourself more valuable to your employer at the same time.

Simon Blake OBE, chief executive of training provider Mental Health First Aid (MHFA) England, believes having people trained to help within the company can also encourage people experiencing mental health issues to seek help.

“Knowing that someone is available in your workplace as a listening ear can be really powerful in breaking down stigma and helping people to come forward when they are struggling.”

Key takeaways

  • It can be hard to spot when someone is struggling with poor mental health.
  • Early intervention is key to recovery.

How do I become a Mental Health First Aider?

All you have to do to become a certified Mental Health First Aider is take a two-day course run by MHFA England.

This course can be completed at a venue near you or at your workplace (if your employer is keen to train several members of staff).

On the course, which should be refreshed every three years, you will learn practical skills such as how to follow the five-step Mental Health First Aider action plan:

  1. Approach the person, assess and assist with any crisis
  2. Listen and communicate non-judgementally
  3. Give support and information
  4. Encourage the person to get appropriate professional help
  5. Encourage other supports

You can then put these into practice if you notice a colleague is struggling, or if someone approaches you for help.

“MHFA England training raises awareness of common mental health issues such as anxiety, depression, and psychosis, and gives people the skills, knowledge and confidence to spot the signs and symptoms of mental ill health, listen non-judgementally and signpost a colleague to further support,” Blake said.

“We don’t teach people to be therapists, but we do teach people to listen, reassure and respond, even in a crisis.”

Key takeaway

  • A two-day course – at work or at a nearby venue – is all you have to do to become a Mental Health First Aider.
  • You will need to refresh your skills every three years.

In summary

By training as a Mental Health First Aider, you will learn skills that will help you in your everyday life, and could make a huge difference to the people you work with.

You can find out more about how to become a Mental Health First Aider by visiting the MHFA England website.

For more on mental health and social mobility in the workplace: