Run your small business without letting it run you

Posted by & filed under Bookkeepers, Run your business.

As a business owner, you’re used to juggling a lot, but being busy doesn’t always mean you’re being productive.

It’s easy to lose sight of why you started your business in the first place, but taking a step back to reassess your priorities on a regular basis could make a huge difference

Are you spending your time wisely across all the activities you’re involved in?

It’s not all about the money

If you started your business to get more flexibility, better health or more free time to spend with your family, are you achieving this? Or have you fallen into the trap of always striving for more money; money you may not even need?

Focus on the work that reaps the most reward, and you could redirect more time towards your original goals. A 4 day work week, or that next family holiday could become a reality.

Could you work smarter? Here are 10 questions to help you find out…

  1. Would other people say that you had a good work-life balance?
  2. Do you ever turn down work, and what is your criteria for accepting or rejecting a client or project?
  3. What non-business related activities do you take part in every week that are non-negotiable?
  4. Do you ever do work or give away additional services for free?
  5. Could you narrow your offering to cut out less profitable services?
  6. Have you ever ‘sacked’ a client? Are you giving the most attention to your more profitable clients?
  7. When did you last raise your rates?
  8. Are you performing business processes which should be automated, delegated or outsourced?
  9. Are you giving your team members the opportunity to learn and grow?
  10. If you were hospitalised for three months tomorrow, would the business survive without you?

Get organised

When business is busy, it can feel impossible to spend time on anything but actually doing the work. But if you know you’re not as organised as you could be, then blocking out time to get things in order is going to save you so much time and effort in the long run.

Focus on one thing at a time in order to achieve this, e.g:

  • clearing out your inbox
  • sorting out your paperwork
  • designing new client packages, processes and clearly-defined deliverables
  • writing and implementing marketing plans
  • starting to use digital tools that can help you speed up or automate work.

The hardest part is getting started – lots of things won’t take half as long as the amount of time you’ve spent procrastinating!

In the first instance dedicate an hour, set a timer and get cracking. You’ll be surprised how much you can achieve.

Have a break

There are no prizes for consecutive days worked or months passed without a holiday. Take some time off! It’ll give you a renewed sense of motivation, help generate ideas and put things into perspective.

You’ll enjoy work more for it and other people will enjoy being around you more!

If you’re self-employed and worried about not getting holiday pay then this is something that should be built into your rate. Schedule time off well in advance so that you can prepare for it, plan around it and let your clients know.

As well as longer breaks, make sure you include daily and weekly breaks in your schedule for exercise and leisure time.

Get the right mindset

You can’t just change your mindset overnight, but a good first step is to practise acknowledging when you worry or give yourself a hard time. You’ll get better at identifying this over time, which will enable you to control those feelings and how they affect your actions.

Often it’s not the people around us that make us feel bad; we bring it on ourselves. Cut yourself some slack, stop feeling guilty, trust yourself to go with your gut instinct and don’t sweat the small stuff or take things personally.

Creating healthy habits can be really important in getting your mind in the right place. Some healthy habits you could incorporate more of today are;

  • getting some exercise, even just heading outside for a walk
  • eating well
  • drinking lots of water
  • cutting down on caffeine and alcohol
  • getting a good night’s sleep
  • and building a support network made up of people you trust; people you can turn to for help

In Summary

Step back from everything for a moment, and check in with yourself today. Have you been blindly cramming everything into your day, without focussing on your day-to-day happiness?

Follow our five tips above to get more of a balance in your life, and you should soon notice the pressure easing off.

Read more on running a small business here:

Smarter thinking: mindfulness in the workplace

Your first year of business: how is it going?

The benefits of collaborating with other industries for your business

Why cyber security skills are in demand within accountancy

Posted by & filed under Cyber security, Future of accounting, Job hunting, Members, Students.

Cyber security has shot up the business agenda in recent years, with the Big Four accountants – KPMG, PwC, EY, and Deloitte – now the top cyber security hirers in the UK.

Last year, one in every 17 new KPMG recruits were cyber-related roles, like IT security specialists. And at PwC, cyber experts account for one in 20 recent hires.

So why are we seeing this growth in accountancy in particular?

The growing need to be cyber secure

Indeed’s Bill Richards explains: “By definition, accountancy firms need to store lots of sensitive financial information, and they therefore require robust cyber defences.

“Nevertheless, it’s striking that the Big Four dominate all four top spots in our league table of the UK’s most prolific cyber hirers.”

Cyber security has become a priority for UK companies in general as businesses face more and more costly attacks. Small businesses alone are being hit with an average of 65,000 attempted cyber attacks every day, according to 2018 figures from insurer Hiscox.

As a result, the amount companies are prepared to spend on securing digital systems has increased as well.

Tighter regulations

Tighter regulations are also increasing the pressure on companies of all kinds to be cyber secure.

“General Data Protection Regulation (GDPR) is forcing companies to look more closely at how they store their data,” said Gavin Cartwright, Associate Partner at EY.

But why are accountancy firms strengthening their cyber security teams at a faster rate than other companies?

The fact they have access to so much data on their clients – and need to be ready should a client be targeted – is one obvious reason.

“Accountants have access to very valuable data – namely their clients’ financial details,” Kolochenko said. “In a way, they are handling other people’s secrets, so the need for security is even greater.”

But according to EY’s Cartwright, that’s not the whole story.

“The Big Four don’t only provide accountancy services,” he said. “While some cyber security professionals are being taken on for internal protection, others are being recruited to provide client consultancy and support services.”

Key takeaways: The accountancy sector is spending more on cyber security at an ever-increasing rate, for a number of reasons:

  • businesses, including small businesses, are facing more frequent and costly cyber attacks
  • tighter GDPR regulations are forcing companies to re-assess and invest more in their data storage and security
  • accountants have access to sensitive client data, so the onus is on them to ensure it is safe and secure
  • cyber security professionals allow firms to broaden their offering and provide cyber security consultancy and support

How to become more cyber security savvy

Cyber security specialists may be leading the fight against digital crime and data theft. But they can’t do it on their own.

You can make a difference by enhancing your digital skills and learning good practise with file management and digital security.

Here are four easy ways to improve your skills.

1. Attend AAT cyber security events

AAT branches often put on events focused on cyber security. Branches running events of this kind over the next few months include those in Merseyside, Glasgow and Shrewsbury. Find one near you here.

2. Research how cyber attacks happen and how they can be stopped

About 80% of breaches are due to human errors, such as employees unwittingly allowing viruses into the system by opening malicious email attachments. If you understand the risks you will be a potential asset to your employer. Read about the dangers here, or try this Government guide.

3. Get up to speed on the cloud

Storing data in the cloud is one of the most effective ways to foil cyber criminals. So why not brush up on your cloud computing know-how by signing up for an online course? You’ll be reducing the risk of a security breach in your current role, and boosting your employability for the future.

4. Stay abreast of cyber security news

Reading accountancy titles such as Accountancy Age or The Accountant will allow you to stay in the loop regarding any recent breaches.

In summary

The need for cyber security specialists in accountancy is growing and will continue as the number of cyber attacks continues to rise.

Employees can also play a part in protecting the organisation by becoming aware of threats and good practice.  This will help your employer and increase your own employability.

Read more on cyber security and digital skills here :

Hack your clients to better security

Cyber security – help yourself, help your clients, help the country

The importance of keeping your cyber security up to date

Why KPMG finds apprenticeships good for business

Posted by & filed under Apprentices, Case studies, National Apprenticeship Week, Social mobility.

Leading accountancy firms are investing in school-leavers at a time when more young people are choosing apprenticeships over university.

Here, AAT meets three talented apprentices on KPMG360°’s ground-breaking programme.

Since it launched in 2015, the KPMG360° programme has enhanced the career prospects of many keen apprentices including Gabriele Scavinskyte, Vivian Laditan and Brian Nounev. The three apprentices have been fortunate enough to apply their learning to help KPMG restructure companies across Europe, whilst picking up AAT qualifications and are now hurtling towards chartered status.

The rotational apprenticeship programme has offered great opportunities to develop critical employment skills. Along the way, the apprentices racked up once-in-a-lifetime experiences: such as, speaking at the Labour party conference and changing the tyre of a F1 car during a pit stop.

Before joining KPMG360°, the only place Vivian Laditan had worked was in Waitrose, as a stock assistant.

“Your parents always want you to go to university,” says the 24-year-old Londoner. “But KPMG360° challenges that, giving you the chance to pursue a career you love… I wouldn’t have these opportunities elsewhere.”

The impact of the programme for KPMG

“It’s important we have people in our firm who relate to our clients in different ways. The only way we can do that is having people from a diverse range. It’s good for our business, our clients and KPMG,” says Joan Egenes, Head of Business and Leadership.

Tizzy Blythin, KPMG’s Head of Professional Qualifications and Accreditations, agrees. “Our clients look for solutions to problems,” she says. “And hiring people who think in different ways, have different mindsets and backgrounds means we can offer more rounded solutions, which is very beneficial. The people we recruit represent the breadth of society.”

Four years into KPMG360°, it’s clear it’s delivering on its aims. David Sutton is Gabriele’s Manager in Mergers & Acquisitions. He’s been dazzled at how his young charge has progressed. 

“Seeing how she’s developed has been amazing,” says David. “Thanks to AAT’s assessments, Gabriele’s really developed her confidence. Now, she’s managing projects and coordinating overseas offices in 30 different courses. I joined KPMG as a graduate, but wouldn’t have been able to do that at her age.”

One of the most important roles managers have is supporting apprentices. As Joan says, “It’s tough when you’re in school and have no knowledge of what the working world is like.”

To help smooth the transition into the workplace, Tizzy explains that apprentices receive tuition in “softer skills such as how to present themselves in the workplace and to clients, how to write reports and speak articulately.”

What’s involved in the KPMG360° programme?

The ‘360’ moniker, KPMG360°, course is rotational, with apprentices spending 9-12 months in different parts of the company. This sees them working with a diverse bunch of clients, from start-ups to multinationals, and in sectors spanning aerospace to healthcare.

“At 18, I didn’t know what area of the firm I wanted to work in. But the rotational aspect has allowed me to choose somewhere I felt I could progress. No two days are the same,” Brian Nounev.

The necessary entry requirements are grades BCC (or higher) at A-level, plus five GCSEs at A*-C (UK) or grades BBBB (or higher) in your Highers and five Standard Grades at grades 1-3 (Scotland).

KPMG360° apprentices must complete AAT up to level 4. Studying the UK’s leading accounting qualification is something that apprentices, Vivian, Gabriele and Brian have found invaluable, not least the fact they are able to use the practical skills in their day-job.

Studying AAT lays strong foundations

Gabriele says, “AAT has laid a strong foundation. When I was working in Audit or Real Estate Tax, it meant I already knew what financial statements looked like, or how to do tax recommendations.”

“The skills and knowledge I’ve gained through studying AAT have been incredibly useful and transferable to all my KMPG roles… It also helps that AAT is an internationally-recognised qualification; the company that I worked with in the Netherlands picked up on it,” says Brian.

Outline of the KPMG360° programme:

  • the course is six years long
  • there are three levels: Foundation, Technical and Professional
  • foundation is Year 1 and involves two placements in different business areas. You’ll also complete AAT Level Three
  • technical is Years 2 and 3. The placements are for longer spells, and you’ll complete AAT Level Four
  • professional Level is Years 4-6. You can decide to specialise in Audit, Tax, Consulting or Deal Advisory
  • after six years, you can become a chartered accountant, a KPMG assistant manager or do secondments in overseas countries.

What qualities are the managers looking for in next year’s KPMG360° applicants?

“Individuals who can express themselves well, both numerically and verbally, and are confident in terms of talking,” says Joan. “But we’re also looking for people with curiosity because we don’t know the ‘[kind of work] these apprentices will be doing in five years’ time.”

Has KPMG achieved its aims of nurturing different kinds of leaders/decision-makers?

“Yes,” says David. “People who have gone down the KPMG360° route really do have something different to bring. They’ve had so much more professional experience than they would have done otherwise. They’re also more motivated, because they left school and decided what they wanted their career to look like.

“Having a job where you attain a professional qualification like the AAT, which is paid for you is very compelling versus the university route: leaving school not sure of what you want to do, then perhaps leaving university still unsure of what to do and having incurred debt, then having possibly to study again.

Apprenticeships will only get more compelling as people realise the benefit.” says Joan

Find out more from the apprentices themselves: How being a KPMG apprentice has fast-tracked my management career

How to help your customers avoid fraud

Posted by & filed under Run your business.

One of the key roles of an accountant is to help customers make growth and revenue forecasts and identify areas where there are anomalies in the figures.

A benefit of this overview for companies is that your careful analysis of the financials can sometimes uncover problems with fraud.

What are the risks?

Fraud can happen at any time, but businesses are particularly at risk if they are growing rapidly, taking on a lot of new staff or buying other companies in order to expand. Accountants can help businesses understand what the risks are, and how to mitigate them.

On an individual basis, individual taxpayers can also fall victim to fraud. For example, HM Revenue and Customs (HMRC) has introduced new defensive controls to stop scammers who had been impersonating its most recognisable helpline numbers.

According to the government’s own information since the controls were introduced in April this year, HMRC has reduced to zero the number of phone scams spoofing genuine inbound HMRC numbers. This has resulted in the tax authority already receiving 25% fewer scam reports against the previous month.

Fraud is growing – how can you help your clients?

Fraud is now the UK’s most common criminal offence. It costs businesses billions of pounds ever year and much of it goes undetected until it is too late.

Bookkeepers and accountants can help clients detect and prevent fraud in a number of ways:

  • Educating individual taxpayers about how to communicate with HMRC, and why unsolicited calls are likely to be fraudulent
  • Becoming the main point of contact with HMRC on your clients’ behalf
  • Ensuring that individuals keep proper records and raise any questions with you as soon as they arise
  • Encouraging managers to put policies and practices in place which minimise the opportunity for fraud
  • Recommending that managers reduce access to sensitive financial information to just a few key staff
  • Putting in measures to control and audit petty cash or expenses claims
  • Making sure all stock is accounted for, in and out of the company
  • Helping managers understand how accounting software can give them greater control over their income and expenditure patterns

Jim Gee, author of Crowe’s Annual Fraud Indicator, estimates that UK businesses suffer a combined fraud cost of over £140 billion. Smaller companies are particularly vulnerable – SMEs lose over £60 billion to fraud.

 “There are a number of actions companies should consider taking to minimise the cost of fraud, including creating a strong anti-fraud culture,” he says. “In any workplace, the vast majority of employees will be honest, but a very small minority may not be.”

By identifying the weaknesses in those processes and systems which might  provide opportunities for fraud to take place, companies can take steps to reduce or eliminate the risk.

Fraud as part of the procurement process

If, as a service to the company, you carry out regular audits, rather than just an annual review of finances, you can help companies identify potential areas of fraud.

“It is not just fraud from outside that businesses need to worry about,” says Laurent Colombant, Continuous Controls and Fraud Manager at SAS. “Occupational fraud, where an employee deliberately abuses company resources for their own gain, is now prevalent in organisations of all sizes”.

To combat this, organisations must take greater control of their procurement process and detect fraudulent activity before it even begins.

 “First and foremost, this involves recognising the risk at hand. Fraud can occur at any stage of the procurement process or during any point of the supplier relationship. This means that one general audit a year is by no means enough to stay on top. Rather, organisations must keep an eye on the entire procure-to-pay process, ensuring regular audits are held to detect any suspicious behaviour.”

Expecting all fraud to be picked up by your employees is a flawed strategy, he says. Instead, using tools like AI and advanced analytics can help companies and accountants sift through large volumes of data in multiple formats, picking up patterns and anomalies which would otherwise be missed and alerting investigators before the actual fraud takes place.

The fraud statistics

HMRC has seen an increasing number of phone scams against UK taxpayers:

  • 2016 to 2017: 407 reports
  • 2017 to 2018: 7,778 reports
  • 2018 to 2019: 104,774 reports

The cost of fraud

  • UK businesses suffer a combined fraud cost of over £140 billion
  • SME’s lose over £60 billion to fraud.
  • Small enterprises lose £38.4 billion to fraud
  • Medium enterprises lose £21.6 billion.

Key takeaways

Maintaining regular contact with clients and customers and encouraging them to use technology to simplify their financial records, can help prevent fraud.

SMEs in the UK lose £60 billion to fraud and areas of vulnerability include loss of stock, problems when growing or acquiring new companies, employee dishonesty or fraud, and lack of clear policies and guidelines.

In summary

You can help your clients by identifying potential areas of fraud, sometimes at an early stage, and encouraging them to invest in new software and implement good financial housekeeping.

How to write a reference for an employee

Posted by & filed under Employers, Run your business.

Being asked to act as a referee for a colleague or acquaintance can feel like an acknowledgement of your achievements in life.

But should you jump at the opportunity? And if you do agree to be a referee, what should you write?

Can you say no?

An employee has asked you to be a referee. Don’t agree to do it without first considering what you’re going to say and indeed whether you have to give a reference. You can refuse – or at least in most cases you can.

Solicitor Max Winthrop, partner at Short, Richardson & Forth and chair of the Employment Law Committee of the Law Society explains that there is no obligation on an employer to provide a reference for an employee. ‘The only exception is if the employee works for a Financial Conduct Authority regulated firm’.

What to take away: Don’t feel you have to give a reference: you might not have to.

Keep it short and sweet

However even though it might not be the law to give a reference, it might be written into the company policy.

Winthrop says: ‘Most employers will have a policy which will be included in your job contract or works handbook which will say what kind of reference they will give. Many will say that they will only provide a basic reference such as the job title and dates of employment’.

Such a basic reference might not best please the employee looking for a job, but sticking close to the facts does keep things simple.

‘Most employers will want to keep it brief’. Winthrop advises: ‘If you’re writing a reference then be concise, accurate, not too glowing (unless clearly justified) and definitely not derogatory’.

What to take away: If you want to give more than a basic reference be sure that you are being scrupulously fair and neither over enthusiastic about an employee’s skills nor unfair about their lack of them.

Bad reference

Part of being a great employer is all about being consistent. If you are only happy in providing basic references then you should do so for all members of staff, says Winthrop.

‘If you give a reference which is found to be derogatory then you as the referee may be liable for defamation’ warns Winthrop. ‘If you say, for example, that the employee has been absent for 252 days in the last year when it was actually 2.5 days and because of that detail the employee didn’t get a promised new job you could be liable to legal action’.

What to take away: Either do full references for all staff or none. And make sure you are accurate or risk the possibility of legal action.

What to say in a full reference

In a full reference, you cover the person’s skills, ability and experience and their suitability for the role they’ve applied for. You might make comments (or respond to questions from the would-be new employer) on the employee’s strengths and weaknesses pointing out any particular projects they were involved in.

What you must not mention are any of the ‘protected characteristics’ which it’s usually against the law to mention. These are age; disability; race; gender reassignment; marriage and civil partnership; pregnancy and maternity; religion or belief; sex and sexual orientation.

What to take away: Keep to the facts. There’s more information here and here on what you should and should not do when writing references

What if it’s personal?

As well as a professional reference, you could be asked for a character reference for someone. Unlike an employer reference, a character reference comes from a third party – not the current or future employer. Its aim is to focus on whether you as the referee think someone has the right characteristics to perform a role.

Being a character referee can feel like an honour that someone asks you to do this for them, but you still need to consider whether you’re happy to give one. You should only give one if you are certain you know that person well enough to do so. If you don’t, say no – though it might be kind to suggest someone else who perhaps will know them better.

What to take away: Treat character references just as seriously as employment ones. Don’t do it unless you’re sure you know the person well.

Summary

Don’t feel pressurised into writing a reference. And a short reference is perfectly acceptable. Be careful if you’re going to give a fulsome opinion of someone – you could face problems if what you’re written is seen to be derogatory by the job applicant. Keep to the facts and don’t say anything you are not 100% sure of.

If you’re the person wanting the reference, then good luck with your job hunt – check out this article for advice on what to do before signing that new job contract and this article will help you in your first few days in your new workplace.

Study tips: Sales and purchases – part 4

Posted by & filed under Foundation Certificate, Students.

The fourth article of our series on sales and purchases.

Study Tips: Sales and purchases series

We’re going to look at sales and purchases in double entry bookkeeping systems.

Before we progress, it’s vital to have understood the business basics covered in part one and part two. And also, the similarities and differences between cash and credit transactions discussed in part three.

What’s the difference between sales, sales ledger and the sales ledger control account?

Let’s start with sales, also known as revenue or turnover, meaning the amount of money earnt by a business from selling goods and services.

Every time we sell something, our sales revenue increases and we need to record our sales activity. This happens in the ‘Sales’ account in the general ledger of an accounting system, and it’s this account that we often get confused about. 

The sales account

Firstly, we must be clear that the Sales account is an account, as opposed to a ledger.

A ledger is a group of accounts and ‘Sales’ is a single account within the group known as the general ledger.

Then we need to know the ‘Sales’ account is categorised as an income account and its purpose is to record the sales revenue.

It starts each financial year with a nil balance, which then increases every time a sale is entered.

Remember the ‘Sales’ account must not be confused with the ‘Bank’ account, as it only records the net value of the sales, not the actual receipt of the money, which will include VAT.

If we continue with our example of Emily selling stationery to Adam, let’s first look at it as a cash sale to see how it works.

Cash transaction

A cash transaction means that the money changes hands at the point of sale.

Adam paid on his debit card but remember the method of payment is unimportant. The crucial point is that Emily will have received the money straight away.

We ignore the banks’ processing time.

Put into T accounts, the entries in Emily’s accounting system would be:

In a cash sale, the value of the net sale is recorded in the ‘Sales’ account and the payment is received into the bank account immediately.

The same sale on a credit basis

The value of the sale remains the same. The method of payment is still unimportant.

The difference is that Adam has 14 days from the invoice date to pay.

It’s this timing difference that means our accounting entries have to be different. The transaction is no longer completed in one go. We make the sale now and then we have to wait before we receive the money.

Therefore our accounting entries have to take place in two stages too.

The first stage is still recording the sale in the general ledger accounts. Let’s look at what we did for a cash sale and compare it to a credit sale:

As Emily hasn’t been paid straight away, she needs to record that Adam will pay her in 14 days’ time instead. This is where the sales ledger and sales ledger control account (SLCA) come in.

What is the sales ledger?

We’ve already said a ledger is a group of accounts.

The sales ledger therefore is the group of individual credit customer accounts.

Adam will have an individual account in Emily’s sales ledger that records all her sales activity with him – invoices when he buys stationery, credit notes if he returns anything and payments when he settles his account.

The sales ledger is not part of the double entry system though.

Double entry only takes place between accounts in the general ledger and this is why the sales ledger is also known as a subsidiary ledger.

All the entries made into sales ledger accounts will be memorandum postings, which are repeats of the actual double entry postings that will occur in the SLCA.

The sales ledger control account

We can turn the long title to our advantage by using it to help us understand what it is. In other words, the account that controls and summarises the activity in the sales ledger. 

The SLCA is a general ledger account and like all accounts in the general ledger, it’s part of the double entry system. It contains all the entries related to the credit sales process – sales, sales returns, discounts allowed, receipts etc.

If we look to our credit sale, the SLCA will replace the Bank account in the first stage, as the account Emily needs to use to record that Adam owes her the value of the invoice:

The double entry is complete but we still need to post the memorandum entry into Adam’s account in Emily’s Sales Ledger:

Now we have to wait for the agreed amount of time, because delaying payments for goods or services in accordance with legally binding agreements is what makes transactions credit transactions.

In Emily’s case she agreed Adam could pay 14 days after the invoice date. So when he does, the second stage has be performed in the accounts.

This involves recording several steps:

  1. The receipt in the Bank
  2. The decrease in the balance in the SLCA
  3. The fact that Adam has paid the invoice in his individual account

In summary

The credit sale is now complete and if you look at the accounts that have balances on them, you’ll see they’re exactly the same as they were at the end of the cash sale process.

This is because at the end of the day a sale is a sale and the only difference between a cash and credit sale is timing.

However, the implications of that difference for the accounting system are significant – a two-step process and the introduction of the sales ledger and SLCA.

We’ll look at this in slightly more detail in the last article of this series when we focus on purchases.

Browse the full range of AAT study support resources here

Career profile: Financial director

Posted by & filed under Career, Career profiles.

Moving from practice to industry can be a challenge but Jo Wilkinson did just that and found a surprising new passion. 

Wilkinson is the finance director (FD) for North Bar Ltd, owner of several bars in Leeds and the surrounding area, and craft brewery North Brewing Co which she was instrumental in helping establish.

What’s your day-to-day like?

I work with the other owner-directors who focus on the strategic direction of the company. Forecasting, funding applications, decision making and thinking about what we’ll invest in and when.

I do a lot of compliance work – we export our beer to the EU and outside the EU so I need to ensure we comply with different regulations applying to that. Making sure the paperwork is correct is complex; when the new Alcohol Wholesaler Registration Scheme, for example, was introduced I had to make sure we were compliant both from the bar side, and the brewery side.

What are your challenges?

Staying up to date is important. Both with the brewery-specific regulation, and business changes like GDPR (General Data Protection Regulation). Being part of a body like AAT is excellent for that because you pick up the knowledge you need from webinars, seminars and other training opportunities.

What impact does being qualified have on your salary?

Every time I’ve passed a level of either of AAT or ICAEW exams I’ve gained a pay rise, and I’ve also usually moved up a rung on the ladder each time. Moving into industry as a qualified individual also probably boosted my salary; if I’d gone into industry with less qualifications, I probably wouldn’t have reached the level I have done, and that would have limited salary. Pay rises really do materialise in line with job title development and qualifications.

What else have you discovered on your journey?

I’ve suffered all the way through from anxiety and depression, but have never had experience of an employer who wasn’t accommodating to this. At the start of my career I would avoid being open about this. But as I moved up I’ve shared how I was feeling with managers and they’ve worked with me to ensure I can stay in work – when feeling really low, they’ve helped me work flexible hours so I can get better. Workplaces are becoming so much better at dealing with this and I would very much say, try not to be afraid to talk about it or ask for help. Some large professional practice firms now have their own internal counselling teams who can help, so don’t shy away. It certainly hasn’t stopped my career development.

What do you recommend professionals do to progress in their careers?

Think strategically about what you want from your role. Northbar had been a client of mine for ten years, and it was when I decided I wanted to focus on helping out one client instead of working with lots of people that I knew it would be a good path to pursue.

What are you proudest of?

I was shortlisted for a Forward Ladies Rising Star Award in 2016, and at same time I was on the 35 under 35 list in industry in Financial Director magazine. Awards are all part of differentiating yourself; you have to be confident to put yourself forward. I hesitated about entering the Forward Ladies award because it felt a bit narcissistic. But now – it’s on the CV, I’m proud of it and I got to go to an awards ceremony and dinner as well. As modest people we tend to downplay our achievements and if we’re not careful we can stop seeing them as such.

The corporate lattice: How lateral career moves can help you progress faster

Posted by & filed under Members.

Traditionally, climbing the proverbial corporate ladder has equated career success, especially in accountancy and finance.

But research shows that we’re moving away from the conventional corporate ‘ladder’ path, to a more flexible ‘lattice’ path.

But what exactly is a lattice?

In mathematics and chemistry, a lattice is a structure or a pattern that extends in any direction. A ‘lattice’ career move therefore can be lateral, diagonal, or even vertical, either within the same company or elsewhere.

This potentially opens up a host of new opportunities and job roles you may not have considered before.

The world of work has changed

Corporate structures are generally flatter now, so there are fewer options for people to move ‘up’, especially in smaller companies. This forces employees to make lattice moves, whether they want to or not.

Lee Owen, director at Hays Accountancy and Finance, believes a big contributing factor to this changing world is people spending longer in their jobs.

“The lifespan of our careers is the longest it’s ever been,” explains Owen. “As such, we are seeking more variety and flexibility, which for some means making non-linear career moves outside of a traditional hierarchical structure.”

Heather Townsend, executive coach and co-author of How to make partner and still have a life, says: “Generation X and the millennial’s tend to see roles in two-year stints. This means the days of people staying in one firm from trainee to partner are numbered, and so accountancy firms are now more open about hiring laterals, even up to partner level.”

Key takeaway: Flatter corporate structures, people spending longer in their careers, and the constant influx of younger generations has all led to a step away from the career ladder.

The career ladder mentality

But it’s understandable why some still cling to the career ladder mentality . The traditional ladder path offers a degree of security.

Liz Sebag-Montefiore, co-founder of HR consultancy 10Eighty, says: “Typically, you know the rough timescale of what position you’ll have and when, and how much you’ll be paid on each promotion. You know the job description at each level and who your team will be (unless people leave).”

But even where the career ladder is firmly established, it is evolving. When it comes to attaining partnership in a practice for example, Townsend says it’s now less common for future partners to have only worked at one firm.

“But this vertical route to partnership can still be right for you, if you are confident that your personal values and those of your firm are closely aligned, and that your firm is able to meet your personal partnership ambitions in your chosen specialism, within your personal timetable.”

Key takeaway: Moving up the ladder within one organisation can still make sense if you and the employer are the right ‘fit’ in all respects (and if it’s likely to stay this way).

The lattice approach

Townsend adds: “A lateral move could be the right choice if your route to partnership within your current firm is blocked by others who will make partner before you, if your firm has many partners within your particular specialism who aren’t likely to leave or retire in the short to medium term, or if you want to experience work in more than one firm.”

Of course, not everyone wants to be a partner. “Moving from practice into industry is also a good idea if you aren’t entirely convinced that you want a long-term career within a professional services firm,” Townsend points out.

Lateral moves, whether between practices or practice-to-industry and vice versa, are good for your CV, too.

“Do move sideways to get line experience if you can’t get it with your current employer – you will be instantly more employable,” says Sebag-Montefiore, co-founder of HR consultancy 10Eighty.

Owen adds that if you embrace a ‘lattice’ career path, you will demonstrate that you are open-minded, adaptable, resilient and a fast-learner.

Key takeaways:A lateral career move is advantageous if you:

  • Feel you don’t ‘fit in’ where you currently work
  • Have poor promotion prospects
  • Want to increase your commercial acumen
  • Want variety
  • Weed to improve your employability.

How to lattice your way to the job you want

If you start to think about career advancement in terms of a lattice, the choice of options may be overwhelming at first.

“There are so many jobs and roles out there, it may be difficult to decide which one is right for you at this specific point in time,” Sebag-Montefiore says.

Do you stay with your current employer, or do you look elsewhere? How do you plot the order of your moves so that you will benefit the most in the long-term?

Townsend says: “The key first step is to decide on the destination of your travel – what is your end game? Then look at this ‘to-be’ vs. your current ‘as-is’ in terms of the skills, knowledge and attitude that you need to develop to get from your ‘as-is’ to your ‘to-be’. Next, estimate what and how many moves you may need to make within or outside your organisation to achieve your end game.”

Addressing the skills and knowledge gap may be the hardest part.

“I recommend that you use the STAR approach,” says Jo Taylor, managing director of Let’s Talk Talent consultancy. “It stands for Skills, Training, Attributes and Relationships – by thinking about these areas you can hone down exactly what you need to do to eliminate the gap. You can then seek to do this perhaps through stretch assignments or through formal professional development programmes.”

Key takeaway:A lattice approach to your career requires careful planning and preparation. Decide on your end-goal, what moves you need to make to get there and what skills you need to acquire to make those moves possible.

In summary

If you want to forge the career you want, step away from dated ideas of a corporate ladder. Gone are the days when a linear climb to the top was the only way to progress. As long as you are flexible, it is worth considering lateral moves to progress your way to the top.

Read more about personal career management here:

How to shift industries – but not careers

What to do if you feel stuck in your career

How to set attainable career goals

Digital skills: one of the top 5 skills needed for high paying jobs

Study tips: the non-current assets cycle – part 3

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

The third and final article of our series on the non-current assets cycle.

Study Tips: Non-current assets cycle series

This is the final article in our series that’s looking at the cycle of buying, owning and disposing of non-current assets.

In part one we discussed IAS 1 and the practical application of the concept of materiality in different business contexts.  In part two  we analysed a sales invoice for the purchase of a new machine that included a part-exchange.

We also discussed IAS 16 and the difference between capital and revenue expenditure, as well as looking at how to process the transaction in the accounting records and non-current asset register.  Now we need to complete the disposal of the machine that was sold in part-exchange for the new one.

A disposal completes the non-current asset cycle but in order for it to make sense, we need to start at the beginning. Let’s look again at LMO Ltd’s non-current asset register:

Assuming that machine – KOL346 is the one that was sold, we can see details of its acquisition in January 2015. We can also see the accounting treatment that has been applied to it whist it’s been owned by LMO Ltd, the depreciation.

The register records the annual depreciation charges and carrying values, once the accumulated depreciation has been deducted from the cost.  Sometimes the register also records details of the accounting policies an organisation has in relation to depreciation.  LMO Ltd’s policy is:

Depreciation is for plant and machinery is calculated on a straight line basis for each full calendar month an asset is held.

Let’s assume that KOL346 was expected to have a useful economic life of four years and a residual value of £2,000. This information, in conjunction with the depreciation policy, enables the annual depreciation charge to be calculated.  Using the straight line method we:

  1. subtract the residual value from the original capital cost: £8,650 – £2,000 = £6,650
  2. then divide the adjusted cost by the expected life: £6,650 ÷ 4 years = £1,662.50

If £1,662.50 is set against the original cost, every year for four years, it will be reduced to the residual amount of £2,000. In other words the cost will have been spread over the economic lifetime of the machine.

This is the purpose of depreciation as set out in IAS 16 – Property, Plant and Equipment.  It is also an application of the accruals concept because the cost of KOL346, in the form of the depreciation charges, is matched to the income generated by it, over the four years it is expected to be owned by the business, regardless of the fact it was bought in 2015.

However, if we look again at the non-current asset register, we can see that the full annual charge was not applied in the year ending 30th September 2015.  This is due to the organisation’s policy of applying depreciation on a monthly basis.  As the machine was bought in mid-January, the depreciation charge was calculated for the eight full months it was owned in the year of acquisition.  As the straight line method calculates equal annual instalments, the £1,662.50 charge was calculated as above, but then divided by twelve and multiplied by eight, to calculate the pro-rata figure of £1,108.33.

This proportioning needs to be repeated in the year of disposal so that all the depreciation is accounted for before we finalise the accounts. The date of disposal is shown on the invoice:

As the disposal date is at the end of May, we need to count the full months that LMO Ltd owned the machine in the year ending 30th September 2018.  This is seven months, from October 2017 to April 2018, so the depreciation charge will be:

£1,662.50  ÷ 12 x 7 = £969.79

The non-current asset register can be updated to show:

Note, that the disposal proceeds are the part-exchange allowance and that the carrying value is nil as the machine has been sold.

The accounting records also need to be updated to reflect the disposal and a disposal account is need for this purpose. The disposal account brings together all the accounting entries involved in the non-current asset cycle and balances them off.

Buying

Owning

Disposing

Completing the cycle

The disposal account shows that a  £1,747 loss was made.  However, this isn’t a true loss as it is not a cash transaction but an adjustment to the depreciation now that the cycle is complete.  In this case, LMO Ltd thought it would keep the machine for four years, at which point it was expected to have a residual value of £2,000.  In reality, it was disposed of after three years and three months and had a residual value of £1,500.  This resulted in too little depreciation being charged during LMO’s ownership to spread out the original cost to reduce it to the actual residual value.

A loss on disposal really means that more expense needs to be charged in the statement of profit or loss (SoPL) to balance the cycle once it is complete. Equally when a profit is made, this actually means that the asset had been over depreciated during its ownership and the expenses need reducing.  The accounting adjustment for this is to add additional income, hence the profit in kind.

The non-current asset cycle is complicated and involves lots of accounting theory, concepts and advanced bookkeeping skills. An acquisition with a part-exchange is the most complicated variant of the cycle so having worked through this series you are in a great position to tackle this tricky topic.

* In part two we posted the part-exchange allowance as part of processing the invoice so strictly speaking this entry would have already been in the account.  However, I have amended the order of entries and the account references for ease of understanding.

Browse the full range of AAT study support resources here

“Social mobility needs to be at the heart of everything we do at AAT” – Mark Farrar

Posted by & filed under Social mobility.

AAT is about recognising talent, in whatever form it comes in, and giving it the opportunity to thrive. It’s in our DNA. The number of inspirational stories from AAT members who have been able to forge impressive careers through both their own work ethic and the right opportunity is phenomenal.

By definition, we facilitate open access across the finance sector, and people see us as a force for good when it comes to accessibility. But we must take it further than that.

Social mobility needs to be at the heart of everything we do at AAT. We are here to enable people to achieve their potential, and we are open to all.

New initiatives to break barriers

We’re currently active with the Ministry of Justice to find out how we can help in prisons to deliver qualifications for inmates to build a legitimate career. That might not be what most people understand by ‘social mobility’ but this discussion should have no bounds.

Further Education in emergency mode

Solutions generally start much further upstream. Imbalance begins in our education system. There is a close link between low achievement in education and low social mobility.

The media talks about a funding crisis in schools. However, there is an even bigger problem in Further Education and it is closing off opportunities to those who need help the most.

Money allocated to 16- to-18-year-old college students has fallen by 8% since 2010. FE colleges were already running at a lower base than sixth-form equivalents so that had a huge impact. As a result, the Government had to set aside £57m of emergency funds for FE colleges in 2017. That’s why organisations such as Hull College Group have racked up millions in debt and have laid off staff.

All of this has a massive impact on social mobility – for many young people, it closes off their dream careers. Without action, we will end up with a lot of untapped potential in the UK.

Closing the gender gap

The gender divide is another key area. Women from less affluent backgrounds are more disadvantaged than men. Employers must do more to level the playing field.

AAT works hard to advance the cause of women in the workplace. We’ve been shortlisted for Employer of the Year at the Women in Finance Awards, with the likes of Aviva Investors, RBS and PwC. So we hope we’re doing something right in this regard.

Access for people with disabilities

People with disabilities also have to battle inequality. Those whose parents are professionals are twice as likely to land a job in a profession, compared to people with disabilities from a working-class background.

In general, we need to attract more disabled people in to the workplace. Scope suggests that a 10% rise in the employment rate among disabled adults would contribute an extra £12bn to the Exchequer by 2030.

Three ways to make a difference

All in all, there is some good work being done to improve inclusion. But of course, we want to achieve more. So how do we do it? Well as a starting point, here are three challenges to address:

1. Education can change the game

The Government needs to find more money for education. There needs to be balanced funding across schools, colleges, universities and apprenticeships.

This is a long term fix, but without more money and better priorities, inequality will be ‘baked in’ to our education system.

2. Business can make a difference

We will have to wait for funding changes to make a difference through education. But businesses can make an impact now. More organisations need to step up to the mark and commit to apprenticeship programmes. This will create a talent pipeline for them and create a way into the workplace for those who cannot consider the prospect of attending university.

It’s not all about apprenticeships, though. Employers need to raise the bar with training. In particular, there needs to be more retraining to support people who find they need to re-skill midway through their careers.

3. AAT members can have an impact

There are many ways AAT members can be a force for good. Those who run their own businesses, or who influence recruitment and employment policies within larger organisations, could look take a fresh look at their current practices.

Where good work is being done, why not shout about it? Inspire others. Be a force for change.

And where there is an opportunity to improve, take up the gauntlet, as some of the larger accountancy firms have already done.