Why it pays to think green Posted 09/02/2011 by Tom Kelman & filed under AAT news, News. Planning for the future is not just about ensuring financial stability – a business can’t grow when the resources it depends on are diminishing. As professional accountants, we have a key role to play in helping organisations ensure their business is sustainable. We can do this by integrating key performance indicators into our standard systems and processes, and use our accounting skills to collate and analyse data to monitor, manage and maintain sustainable development. This is just one of many reasons why AAT is involved in the Prince’s Accounting for Sustainability Project. Set up in 2004 by HRH Prince of Wales, the project aims to develop practical guidance and tools to embed sustainability into an organisation’s decision-making and reporting processes. AAT is representing the voice of small business in developing this reporting process to ensure it is practical for all organisations regardless of size or turnover. In addition, we see our role as educating our membership and providing guidance to the wider SME community. We believe this process is so crucial that the AAT is fully committed to embedding sustainable development and integrated reporting into the qualification and educational process. As an organisation, AAT is also playing its own part in the journey towards a sustainable business model. Last year, AAT’s Council set up a working group to research the best way to achieve this and sustainable development is now a key part of our business plan. Over the last few years, more and more of our services have been moved online meaning a reduction in printing and postage but also greater efficiencies for the membership. We also reduced our carbon footprint in late 2007 by moving from premises split over eight floors to one and a half floors decreasing our square footage by over 3,000ft. Sustainable development is really about making the best use of what resources we have available – rather than wasting them now at the expense of future growth. We fully believe sustainable development should be at the heart of every organisation in order to secure its future.
Early stage accountancy advice 2 Posted 08/29/2011 by Henry Cooper FMAAT & filed under Run your business. In the second installment of our early stage accountancy advice article AAT Vice President, Henry Cooper FMAAT offers advice on investing your time to build up your knowledge My second tip for budding entrepreneurs is to invest your time in building up your accountancy knowledge. Here’s why: How can you succeed if you don’t know how much your business is worth? Or you don’t know the difference basic terms such as cash flow and profit How can you communicate effectively with not only your accountant but also your investors, suppliers and employees if you don’t understand the basic Gaining accountancy knowledge and know how will allow you to make better and more strategic business decision Businesses that do their own bookkeeping and do it well can use their accountants for a higher level of expertise You can monitor your competitors by having a firm understanding of their annual reports I often think this should be obvious. Surprisingly, it isn’t. Most entrepreneurs either don’t invest time to understand the basics or lack interest in this area of the business. However, there is no excuse nowadays to turn a blind eye – there is such an array of resources available to the SME market and often these resources are free. In the first instance Business Link should always be the first port of call. Not only is this website a hub of knowledge but a place in which links directly to HMRC and businesses can take advantage of doing their VAT return online through the site. Companies House, will provide a key tool for company directors as will the actual HMRC website. All these websites will keep you up to date on changes to tax legislation and accountancy standards. My third tip is to think wisely about your business entity This will take a lot of thought and again it’s worth seeking professional advice and guidance in order to weigh all the options. Also, take note that whatever legal business structure you decide to be, you have to register with HMRC. Things you must understand before you make a decision: Understand the differences between the various business structures with strong emphasis on sole-trader, partnership and Limited Company/ Limited Liability Partnership Sole-trader and Partnership The process of setting up your business under the entity of sole-trader or partnership is relatively straightforward. All you are required to do is register with HMRC. You don’t have to publish your accounts publically and you only pay tax on the profits you make. However, the disadvantage is that you have little security and no unlimited liability. Therefore if you acquire debts that can’t be paid then your creditors are in a position to seize your personal assets. Limited Company Registering your business under this title means that you will have a lot more regulations to abide too. Not only do you have to register through companies house and let HMRC know how many employees you have, you will also have to pay national insurance and income tax. The advantages are that you benefit from limited liability and your personal assets are more protected. In more corporate environments this type of structure is seen as more reputable. Legally you are also required to publish a yearly basic financial report, in which this data is available for anyone to purchase. It’s wise to consider: The pros and cons for each business structure and to think wisely about your business needs now and in the foreseeable future Be aware that depending on what structure your business becomes this will have consequences on what records and accounts you have to keep While you can change your business structure, it’s important to be aware that being a sole trader/partnership is taxed differently to those businesses that operate as a limited company and therefore if you change from one business structure to another then you should wait until the end of the tax year Don’t miss my final installment of tips on 5 September when I will look at how to implement an accounting system which is right for your business requirements.
Labour of love Posted 08/23/2011 by Stuart Waterman & filed under Run your business. In the economic downturn, consumers inevitably cut down on spending and find ways to tighten their belts. This often leads to an up-surge in consumers finding new ways to be resourceful. For example, there was a noticeable trend in people taking up ‘crafts’ during the peak of the UK recession. John Lewis reported a 57% increase in sales of sewing machines in 2009. Further to that, sales of buttons went up by 18%, silk prints up by 75% and basic haberdashery by a further 11%. With the ‘make-do-and-mend’ culture continuing to thrive, it’s hardly a surprise that many start-ups are turning their crafting hobbies into businesses. More often than not applying business knowledge and financial awareness to the business ‘dream’ can be frustrating for budding creatives attempting to start up a successful business. The harsh reality is that three in five start-up businesses fail within a year. Many creative businesses therefore need to have a firm understanding of basic business skills, finance, book keeping and business management in order to succeed in a very competitive business arena. Starting a creative business will always be hard work. Budding creatives can put themselves at an advantage by having a strong business head and a firm understanding of how to keep their finances in order, especially when it comes to keeping proper accounting records that will satisfy HMRC. Of course, a creative business cannot succeed on creative flair alone – a strong business model needs to be in place to ensure survival and growth. It doesn’t take much time to draw this up – when you know how – and it will be time well spent and something that can be built on in years to come.
Going for gold Posted 08/15/2011 by Lungile Mawonga & filed under Career, Inspiring stories. AAT student, Lungile Mawonga, blogs on his experiences of studying AAT in South Africa I work in the head office for AngloGold Ashanti Ltd Pty – a leading global gold producing company operating in 11 countries, with more than 65,000 employees. I have been with AngloGold Ashanti Ltd Pty for five and a half years. I joined when I was 23 as an Accounts Assistant and since then I’ve moved departments and now work in the procurement and purchasing department as a Commercial Purchasing Officer. I work in a team of 17 people and I’m directly responsible for purchasing crucial gold mining equipment and machinery. My day-to-day work varies and I could be doing anything from working up quotations and placing orders to buying new products. AAT is widely recognised in South Africa so in 2005, when my employer asked if I’d like to do the AAT accounting qualification, I jumped at the chance for sponsorship. I immediately knew how much AAT would help me further my career development and how useful it would be in my day-to-day working life. Funnily enough I’d considered coming to the UK to do AAT, so it was a dream come true when I was offered the chance to do the qualification in my hometown. I’m currently studying Level 4 and I would be lying if I said I found it easy. Studying and working is demanding – especially as I’m now working on my Unit 10 project. After work, I usually cram in two to three hours of study every night. I’m also self-financing this part of the qualification. I’m the only employee at AngloGold Ashanti Ltd Pty training with AAT and therefore I enjoy the comradeship of other AAT students online – the website is an invaluable tool for me. I use the MyAAT section all the time and especially find past exam papers and the online student forums very useful. I also get in to the classroom two or three days a month. Sometimes it’s hard to keep motivated and currently I don’t have much time for my hobbies or hanging out with my friends. However, I’m happy to make a few small sacrifices to reach my end goal. I have a target in my head for the completion of my AAT qualification by December this year. The studying won’t end there though as it’s my dream to continue on and to get chartered status. I’m so excited by the prospect of joining the AAT international family as a qualified member. AAT carries a strong level of prestige and professionalism that is recognised everywhere. I feel proud that I’m the lucky employee at AngloGold Ashanti Ltd Pty to be given this opportunity and I’m immensely proud that I’m almost there.
The modern apprentice: hired, not fired Posted 08/11/2011 by Rob Alder & filed under Career. With the rise in university fees and the decline in graduate jobs, young people are wise to look at alternatives. A degree is no longer a guaranteed route into the professions. Figures released in January show that one in five recent graduates are still unemployed six months on – and this does not include people who may be employed in entry level jobs. Conversely, at the Association of Accounting Technicians (AAT), we have noticed an increase in the number of employers choosing to recruit school leavers instead of graduates. Examples include Proctor & Gamble (P&G), who have decided to recruit school leavers solely into their European Finance Centre. However, this trend is not just restricted to the large multinationals, but seems to be across the board in companies of all shapes and sizes. This growth has also been reflected in our student figures. Last year, the number of students under the age of 18 grew by 11%, suggesting both employers and young people are moving towards this approach. Along with earning a salary, an accountancy apprentice training with AAT can avoid student debt whilst still get a professionally recognised qualification. The apprentice gets to put the skills they’re learning into practice, which means the qualification is put into context. In the case of accountancy, qualifying with AAT enables you to progress and become a chartered accountant quicker than someone with a degree. It is quite possible that someone going through this route could qualify as a chartered accountant at 21 – the average age of a university graduate. But, not only are there benefits for the apprentice – there also are benefits for the business too. Research from the National Apprenticeship Service (NAS) shows: 80% of employers who employ apprentices agree they make their workplace more productive 88% of employers who employ apprentices believe that Apprenticeships lead to a more motivated and satisfied workforce 83% of employers who employ apprentices rely on their Apprenticeships programme to provide the skilled workers they need for the future AAT has developed an apprenticeship programme for employers who want to complement their finance recruitment with employees undertaking work-based training. As the AAT Accounting Qualification is so practical, it means as the employer, you get to see the benefits of training immediately. Employing an AAT apprentice can also be cost-effective. Government funding is available depending on the needs of your organisation and your training requirements. You can access full funding for all 16-18 year olds – so you only need to pay their salary. You may also be eligible for funding for apprentices aged 19 years and over. In addition, the government has committed to recruit 75,000 new apprentices by 2014. We know a worry for employers is having extra administration. But, you won’t be bombarded with forms and paperwork. Your apprentice’s training provider will do most of the admin for you, including a health and safety check. However, you will need to commit to supporting your apprentice’s time spent out of the office, and provide a mentor for them at work. An apprenticeship not only offers value for money but helps you grow someone into your organisation’s culture. Above all, you’re giving someone a great opportunity to take their first step in their accountancy career. Next year’s National Apprenticeship Week runs from 6 -10 February. More information is available on the official website.
Bribery Act comes into play Posted 08/10/2011 by Tania Hayes & filed under Accountancy resources. What is bribery? It’s a common question that may be easier to answer with the introduction of the Bribery Act, argues Tania Hayes. It was Labour peer and former Football Association chief Lord Triesman who cried foul. According to Triesman, the FIFA Vice President, Jack Warner, allegedly asked for £3m to be channelled through him to build an education facility in Trinidad and Tobago to secure his vote for England’s 2018 World Cup bid. Another member allegedly asked for a knighthood. The Bribery Act 2010 has, as of 1 July – and after some delay – finally come into force in the UK, and its relevance to the FIFA row is clear. The Act creates four key offences: the offer of a bribe; the receipt of a bribe; the payment of a bribe to a foreign public official, and failure of commercial organisations to prevent bribery. These apply to the public and private sectors – no entity, or individual, will be outside the scope of the Act. So, going back to the recent allegations made against FIFA members, these individuals are likely to be classed as foreign public officials, given the public nature of FIFA as the international football federation. This would make Lord Triesman vulnerable had he acquiesced to the requests from Warner et al (there is absolutely no suggestion that he did). The key test would be how a reasonable person in the UK would expect FIFA officials to perform their function. How would we expect them to decide on the winning World Cup bid? Well, I hope I do not speak only for myself when I say I would like them to make their decision based on the merits of the bids, not on the potential for boosting their bank balance or receiving a knighthood. The devil lies in the detail with this law. A financial or other advantage could be anything, so individuals and organisations will need to analyse their dealings to ensure they stay true to the Act, particularly over gifts and hospitality. Businesses will be held accountable for the actions of intermediaries acting on their behalf – whether or not they ratify unorthodox behaviour – on the basis that, ultimately, they are the beneficiaries of improper acts. To assist businesses in protecting themselves, the Ministry of Justice (MoJ) has published comprehensive guidance on the Bribery Act 2010, aimed at commercial organisations in particular. The emphasis is on proportionality and adopting a risk-based approach to business dealings. There are, however, case studies that will help you understand the application of proportionality in determining whether a situation presents the risk of bribery. Senior officers in firms are strongly encouraged to adopt the MoJ’s principles-based approach to insulate their business from the risk of prosecution for failure to prevent bribery. The principles are: proportionate procedures; top-level commitment; risk assessment; due diligence; communication and training, and monitoring and review These words will be familiar from the Money Laundering Regulations 2007. It is possible to update existing systems to incorporate obligations under the Bribery Act.
True value of apprentices Posted 08/08/2011 by Jane Scott Paul & filed under Run your business. Apprentices have never had a higher profile. Jane Scott Paul, Chief Executive of AAT, finds that many employers are now recruiting apprentices straight from school instead of graduates. With the average university fee hiking up to approximately £9,000 next year – many young people are looking at alternative routes into their chosen careers. Should employers now be looking to school leavers instead of graduates for their next generation of managers? University is no longer a viable option for most young people and it’s fair to say that university has for some time not been a guaranteed route into a large majority of graduates’ chosen careers. Recent research commissioned by AAT and the Centre for Economics and Business Research (CEBR) has revealed that an estimated 55% of this year’s university leavers will graduate into unemployment or unskilled roles. While many young people may feel a door has been closed with university fees being hiked up, it’s actually a really exciting time for ambitious school leavers and businesses alike. We are currently noticing a big trend with employers recruiting school leavers over graduates through apprenticeship schemes. Proctor & Gamble, for instance, have adopted this approach solely recruiting school leavers for their European Finance Centre and lots of other companies of varying size and scale are following suit. Why? Firstly school leavers tend to have a strong idea about the career they want and therefore are determined to work hard to achieve their goals of getting into their chosen career rather than it just being something they “fell” into. They also have a strong sense of pride and willingness to learn. They don’t come with huge expectations and are aware how lucky they are to be earning, training and working at the same time. They also tend to have a good work ethic and are used to a school routine – this lends itself well to the office environment. School leavers also have a strong sense of loyalty to their employer and apprentice scheme. They invest in the business and the business invests in them. This sense of ‘worth’ instils confidence in the school leaver and as they climb the career ladder they of course add more value to the business. School leavers are not just stop gapping before something better comes along. Not only can apprenticeship schemes be more cost effective but all businesses across all sectors must appreciate the benefits of ‘cherry picking’ highly motivated young people. While, of course, I understand that there will always be some professions which will always need graduates of a certain calibre, I do think there are still many businesses nationwide that haven’t considered hiring anyone other than a graduate and it’s these employers that should think again. I’m excited by our apprenticeship programme and the new school leavers joining us this autumn. They have the right foundations that our business needs. If they work hard, maintain a positive attitude and are supported properly, then they will go far. In this fragile economy all employers should wise up and see the potential of a school leaver, knowing what a sound and solid investment it can truly be.
Media Monitor: market meltdowns Posted 08/05/2011 by Steven Perryman & filed under News. It’s been a slow week in the main headlines. As the phone-hacking behemoth lumbers on – this time in the direction of the Daily Mirror – the summer recess seems to have arrived in the news too. So what has caught the eye of Media Monitor this week? The Daily Telegraph reported that 31 per cent of parents from relatively well-off households believe that university courses are too expensive. The study – by Edge, a charity chaired by Lord Baker of Dorking, the former Tory education secretary – surveyed 500 parents from households with an income of £15,000 to £40,000. More than half of parents with children aged 11 to 18 said a university education was less valuable than it was 10 years ago, while 47 per cent claimed that degrees no longer gave young people a good start in life. What was most encouraging was what the great Lord had to say. ‘For too long, middle income parents have been blinkered to the alternative education options to university for their child,’ he sniffed. ‘The vocational route equips young people with the skills they need to succeed in the workplace.’ Amen to that, my Lord. They are prophetic words from the big man given The Independent’s report that as many as 200,000 students face disappointment in getting a university place this Summer. Of course the threat of increased fees and limited places has resulted in huge demand. And once the fees come in won’t there be an ‘Olympic ticket’ style scrap, where those with the highest budget will get places and those with the least left to fight over the scraps? Just a thought. And in a week when the Bank of England has held the interest rate at 0.5% (horray for borrowers, boo for savers) we have seen the alarming news of stock market mayhem across the world. When The Sun reports such matters it must be bad, right? Now, Media Monitor is no expert economist (check out Robert Peston’s superb blog for intellectual, informed analysis), but it seems this slump is as a result of the deficit reduction of Governments. If reports are to be believed, investors are getting nervous that overstretched governments – such as Ireland, Greece et al – may not be able to pay off their debts in full whilst they are attempting to cut back. It really is one big merry-go-round. But I can’t end on that note. Instead I will return to the Daily Mirror – purveyor of probably the most bizarre, un-newsworthy and downright bonkers story of the week. It’s this 1,400 word character assassination of Radio 2 DJ, Steve Wright. This startling piece of investigative journalism – which aims to highlight the ‘weird’ world of said DJ – highlights a man who likes chicken pies from Eat and visits his Mum at weekends. Really? Blimey, get me a straight jacket right now too. You can only imagine that the writer of this piece is an over-eager summer intern at the paper. I hope so, anyway. If not, then this is the type of lazy tabloid journalism we can expect as a result of phone hacking from hereon. If that’s the case then bring back phone hacking, I say. All is forgiven. PS. Completely unrelated, but Media Monitor couldn’t go without highlighting this fabulous piece of journalism from The New Yorker on the operation to kill Osama Bin Laden. At nearly 8,500 words it’s no light read. Instead, copy, paste and read over the weekend – it is breathtaking journalism that will reward your time.
Early stage accountancy advice Posted 08/04/2011 by Henry Cooper FMAAT & filed under Run your business. Half of start-up businesses fail in the first year and 95% fail within the first five years. Yet despite the economic downturn, the SME market continues to grow. While no one knows if a business will succeed or fail – you can take steps in order to help your business get off to the absolute best start. While most entrepreneurs focus on getting their business up and running, many often forget the importance of accountancy and how it sits at the heart of every business proposition. Every entrepreneur wants their business to grow and be profitable, but the problem is that a lot of entrepreneurs forget that in order to be profitable you have to understand your finances and the process of your financial management from day one. While it’s easy to shy away from the basics of accountancy, those that do this do themselves no favours further down the line. The financial management of your business affects everyone from your supplier through to your customers, investors, employees, shareholders and HMRC. In this economic climate businesses that don’t understand the fundamentals of basic accountancy and bookkeeping will sink quickly. As will those that see the professional guidance of an accountant as an unnecessary cost. Every business regardless of size and turnover needs the professional advice, expertise and support of a professional accountant, especially when first starting out. When looking for accountancy support, use an accountant that is registered with a professional body and therefore up to date with their continuing professional development (CPD). Tip one: Before you set the wheels in motion and part with both yours and your investor’s cash, seek professional support from a professional accountant Why? An accountant has years of knowledge and insight and can be a solid advisor to you throughout your business journey An accountant can spot problems with your finances before it’s too late An accountant can offer you advice and act accordingly on important issues such as tax legislation, PAYE, NI benefits, liquidation etc An accountant will keep you up to date with changes to government legislation An accountant can find ways to maximise the potential of your company in order to ensure growth Just as much as it’s important to have on hand a professional accountant, it is equally as important for you as the budding entrepreneur to have a good grasp of your financial management and the basic accountancy terminology. This is part one of a three-part post. The second installment will be posted on 29 August.