How to attract mature talent to your firm Posted 01/10/2024 by Christian Koch & filed under Employer newsletter, Employers, Recruitment. With their years of experience, power skills and willingness to learn, older applicants have plenty to offer workplaces. Here’s how to find them. Businesses are hiring over-50s to new roles because they complement the firm in many ways, from mentoring younger generations to taking less time off (according to research from insurance firm Ria, over-50s take half as many sick days as their twentysomething counterparts). Moreover, since the pandemic, many employers have noted a lack of soft skills in their Gen Z hires. It seems mature candidates could be the answer. Besides recruitment, apprenticeships are providing a route to a new career for mature talent. Figures from the Office of National Statistics (ONS) show nearly half (47.4%) of all apprentices who started in 2021-22 were over the age of 25. In fact, out of the 349,190 recruits taken on during that year, one in 10 (30,510) were over 45. There are no upper age limits on apprenticeships in the UK, meaning any employer wishing to hire new recruits with experience of the workplace can readily dip into this talent pool. How to recruit mature talent Where to find them Liv Thompson, Senior HR Adviser, Haines Watts: “We use Indeed, LinkedIn and a LinkedIn-style platform called Workvivo. One of the biggest challenges we’ve found when hiring mature talent is that candidates over a certain age won’t necessarily apply for jobs: they’ll use agencies instead. So it’s worth getting on the radar of agencies.” Ensure your imagery and language in adverts and other recruitment content is age-inclusive Thompson, Haines Watts: “We ensure photos of starters on our website and on LinkedIn show people of all ages, to demonstrate they’ve all had different journeys. Also, instead of using terms such as ‘graduates’ or ‘school-leavers’ – which might scare off older candidates – we refer to new people as ‘trainees’ instead.” Finding career-changers within your own organisation Thompson, Haines Watts: “It’s also about encouraging employees to speak up more. Line managers aren’t necessarily going to know whether they’ve got somebody who wants to pursue a career in the audit department. Sometimes we don’t find this info out until they fill their exit questionnaire when leaving!” How to ensure more mature candidates make interview stage Joe White, Associate Director in talent acquisition, RSM UK: “We tailor our adverts to highlight no previous experience is required and that we are searching for transferable skills. The assessment stages are typically small groups followed by individual face-to-face interviews focused on specific skills, motivation and attention to detail.” Kevin Basmadji, Head of talent acquisition, KMPG UK: “When applying to KPMG, age is not important. To help eliminate bias (and promote diversity and inclusion), we operate a blind recruitment process and don’t accept CVs as part of our student application approach”. Why businesses are recruiting mature talent Their experience can be invaluable Liz Wright, Partner, RSM UK: “Over the last couple of years, we’ve recruited a modest number of career-changers (around 50) into our business… They bring with them a wealth of transferable skills and experiences. For example, their knowledge of other sectors might align with our clients who work in those industries. More broadly, they also bring maturity, strong communication and time management skills, plus a genuine desire to learn and improve.” Thompson, Haines Watts: “We don’t rule anybody out because they haven’t got the right qualifications. Instead, we look at the whole picture: the broader professional perspective of over-25s can be a real asset… Working at our offices often involves lots of ‘hands-on’ work. Because mature candidates have more experience under their belt, they’re often better equipped at dealing with this.” Mature candidates are great at handling clients (and may even bring in new ones) Thompson, Haines Watts: “We often find mature employees have a real ability to speak with clients at all levels, whether it’s a top pharma firm or a business owner who wants to pop into the office for a cup of tea. Mature candidates also seem unafraid to pick up the phone or invite somebody in for a chat. Any business wants to be relatable to their clients, so these are great skills.” Wright, RSM UK: “Often mature employees are much more confident in dealing with clients because they use skills from prior roles such as retail or hospitality. Because they understand what good customer relations look like, they can spot areas where we can improve our delivery to clients.” Career-changers can make excellent ready-to-go managers – they’re often quicker to be promoted too Wright, RSM UK: “Once they’ve grasped the technical skills, mature employees are often faster to take on management tasks such as supervising junior staff, taking a lead in team activities and generally being a ‘go-to’ member of the team. In one business area of RSM, its 2022 intake of career-changers were promoted last year.” Career-changers can help with difficult-to-fill areas Thompson, Haines Watts: “Like many other accountancy firms, we sometimes struggle to fill roles in audit. When that happens, we immediately look at what we can do to promote others within the business, such as somebody in another department looking for their next career move.” The ‘quit factor’ isn’t as high among older workers Thompson, Haines Watts: “One of the difficulties we have with graduates, is that they sometimes want to change jobs three months down the line. However, one of the pros of experienced employees and career-changers is that they will look at staying within the role”. Because a more diverse workforce always works better for business Basmadji, KPMG: “As a firm, we harness diverse thinking and strive to attract people from all backgrounds and at every stage of their career. We have a broad range of entry routes into our firm, whether graduates, apprentices or experienced professionals. This inclusive environment is fundamental to our success as a business, as we believe greater diversity brings with it fresh thinking, different perspectives and ultimately better outcomes for clients.” Challenges of working with mature talent Dealing with mature candidates with no prior experience of accountancy Wright, RSM UK: “It can be daunting to start over, especially for people who are used to knowing what they’re doing. However, RSM has a defined training programme for the first few months which allows mature candidates to build their knowledge and skillset, including soft and technical skills. After six months, they can decide to study for a professional qualification, but only after they feel comfortable. The pace and timing of study is flexible and driven by the individual to accommodate other responsibilities.” Basmadji, KPMG: “We run various returners programmes which help experienced professionals from all genders return to work after an extended career break. We also run a Military Leavers’ programme which assists former service personnel with their transition into a civilian life with a career in the professional services industry.” Dealing with requests for flexible working Thompson, Haines Watts: “I’ve interviewed a few candidates who’ll start the conversation with, ‘I didn’t think you’d call me because I’ve been bringing up my children for the past few years’. It’s awful they might think this. Some returning parents also need flexible working. Try to find out what these candidates need and see if you can offer them something. For many businesses, this is a missed opportunity: they lose out on talent because of their unwillingness to be more flexible.”
Here’s what an all-in-one software solution can do for your practice Posted 01/10/2024 by Xero & filed under Members. This content is brought to you by Xero. Practices across the UK have shown incredible adaptability by embracing a digital tax system and adopting cloud-based software. However, many practices aren’t reaping the full rewards of software – using it purely as an accounting solution and not a practice-wide management tool. It’s like buying a top-of-the-range bicycle, but only using the first gear. If you haven’t fully integrated your software, you could be missing out on a whole suite of practice management and client management tools. Features that save you time and make your service more valuable for clients. Many practices end up in a position where they have to implement different tools to serve different clients. The result is a disconnected set of programmes, manual processes, and client dependencies that create even more work for you and your team. Traditional practice workflows can then seem like a complicated jigsaw puzzle. You may find you’re piecing together multiple systems and programmes, dedicating hours to manual data entry, and engaging in lengthy back-and-forths with clients to capture missing data. Breaking free from old habits and processes isn’t easy. But failing to fully integrate your software could leave you stuck with: Manually tracking and assigning tasks and deadlines Chasing clients for evidence by email and phone Spending hours on manual data entry from client records Constantly training staff on expensive legacy software Duplicating data entry across programmes Modern practices need more than just cloud bookkeeping and accounting software to keep business ticking along. You need cloud compliance, practice management and ecosystem software that fosters collaboration with clients, helps you manage practice workloads, and delivers reliable and accurate data that’s easy to interpret. This doesn’t mean you need multiple software packages. With a single end-to-end platform, such as Xero, you can manage the entire practice and client base in one place – compliantly, securely and efficiently. Data passes seamlessly through the software, and you don’t have to walk the tightrope between multiple programmes and tools. Admin is easily automated, saving you time and improving the accuracy of your accounts. Reconciliation is fast and automated – bank rules and cash coding automate reconciliation and unburden your practice of manual data entry. Data is accurate, reliable and timely, and you can use it to enhance your advisory services. Reports and forecasts are generated based on your digital records – so you can count on them for real-time insights. An end-to-end solution swaps clunky tools and processes for one simple software package. In our latest guide on practice evolution, we share how you can use Xero’s cloud-based software to its full potential. We highlight the unique advantages of running a digital practice, and break down the individual tools and features that can save you time and improve your services. You’ll learn: Which existing systems and processes may be hindering your growth The long-term benefits of running a digital practice How to build a practice workflow that works for everyone (team and clients alike) How to use the Xero functionality you know and love for your own practice Read our practice evolution guide This content is brought to you by Xero.
Insider tips on hiring accounting apprentices – from the top 100 employers Posted 01/08/2024 by Christian Koch & filed under Apprenticeships, Employer newsletter. Whatever the size of your company, you can learn from the best – and accelerate your results. What’s the best way to get results with an accounting apprenticeship at your firm? Here, some of the top 100 apprenticeship employers share how to get started – and just as importantly – how to succeed. The annual Top Apprenticeship Employers recently announced the 100 organisations they’ve ranked as the best employers of apprentices in England (the British Army came out on top). The rankings – developed by the Department of Education – recognise businesses committed to onboarding new apprentices, have a diverse intake of trainees and a high number of people completing the schemes. Free guide – 7 steps to start an apprenticeship AAT’s free guide to launching an apprenticeship in seven easy steps will walk you through the process, from job description to funding. Download Around 25% of the companies are AAT customers and are therefore active in finance apprenticeships. All the businesses have successfully implemented on-the-job training – while their high ratio of apprentices to other employees (between 20-40% for many firms) is strong testament to the commercial benefits apprenticeships can bring. Work with a training provider Charlotte Woodham, HR adviser, Old Mill: “When we decided to launch an apprenticeship, we contacted a training provider. They talked us through it and have since deciphered the jargon, ensured we’ve been doing the right thing with funding rules and have kept our paperwork up to date. Getting to grips with funding rules, for example, requires a lot of reading but training providers will help with this.” Guy Wilmshurst-Smith, head of training ,Network Rail: “Even an organisation of our size seeks advice from our training providers. For example, we contract out the basic administration of apprenticeships to our suppliers [rather than doing it in-house]. Finding a training provider that is a good fit for your company and your programme is critical to success, as we explain in AAT’s free eBook – 7 Steps to starting your first apprenticeship programme. AAT help you find a suitable training provider and can provide free, impartial advice on how to structure your apprenticeship. Recruiting the right way Woodham, Old Mill (47th) “When recruiting, you’ll find some candidates display traits which mark them out for future success. Usually, it’s those applicants asking questions about career progression. If you want to build your apprentices into business professionals, consider those candidates who are looking to the future rather than those asking, ‘How quickly can I become a qualified adviser and start earning money?'” Guy Wilmshurst-Smith, Network Rail (57th): “Make sure you involve whoever will manage the apprentices in the recruitment process. If you don’t, they might not be too enthused about the person they’ll be managing.” Rob Worrall, head of people, BDO (17th): “[If you’re recruiting from] school-leavers, early engagement is critical; we reach out to students from Year 9/10 onwards. We work with our training providers to access schools directly and advertise on platforms such as social media.” Advice for smaller firms: Jez Brooks, Early Talent manager, Moore Kingston Smith (33rd): “You can’t advertise an apprenticeship vacancy on your company website and hope for the best. Forging partnerships with other organisations is important, even for firms of our size. Obviously, you can use the Government’s Apprenticeship Service for recruitment, but also try partnering with organisations such as GetMyFirstJob, Not Going to Uni or Bright Network too.” Make your firm apprenticeship-ready Wilmshurst-Smith, Network Rail: “Apprentices don’t just get value from their training, but the people they work with. Before your apprentices arrive, it’s important their line managers understand everything there is to know about the apprenticeship scheme and what their contribution will be. If your line managers don’t know what’s expected of them, they won’t be able to help the apprentice.” Woodham, Old Mill: “In a typical accountancy practice, line managers will be qualified accountants who are chargeable. However, allocating apprentices to a line manager who isn’t chargeable means apprentices can get more support and development because their managers won’t be in a constant trade-off about how much time they can give.” Advice for small firms: Woodham, Old Mill: “Appoint a quality training provider [see below] and sign up for the government’s Apprenticeship Service. Your whole apprenticeship can be run through there if you wish.” What you can achieve Worrall, BDO: “There are many myths around apprentices, such as the idea apprenticeships don’t lead to senior management. That’s nonsense. At BDO, several of our senior leaders (including Managing Partner Paul Eagland) qualified as accountants through an apprenticeship. Another myth is apprentices don’t do ‘real jobs’ in their first years. At BDO, our apprentices hit the ground running from day one. The key is to get them involved in real projects for businesses – they’ll learn invaluable practical skills along the way.” How to get results quickly Woodham, Old Mill: “It can take up to a year for apprentices to find their groove. If you don’t set them targets and give them tasks from day one, it can result in them doing menial tasks within the workplace. They need constant movement.” Wilmshurst-Smith, Network Rail: “Those first few weeks are important: you’ve got to hit the ground running. Nobody wants apprentices standing around with their hands in their pockets with nothing to do. As an employer, establish what work-ready skills they can use in the workplace to engage with their teams. Also, make sure you give them the equipment they need, such as laptops and phones. Yes, younger generations like this, but it also shows you value them and are serious about the contribution they could be making to your workforce.” Brooks, Moore Kingston Smith: “We ensure our apprentices do some basic introductory bookkeeping early on, but we also get them out onto client sites as soon as possible. There’s no substitute for seeing the client’s situation and experiencing what it’s like working within a team.” Advice for smaller firms: Woodham, Old Mill: “The Knowledge, Skills & Behaviours (KSBs) element of the apprenticeship means apprentices start making the connection between what they’ve learned and how it applies within the workplace. [From the start of their studies], they start to think differently – almost as business professionals, rather than somebody who just does well at exams.” How to grow Brooks, Moore Kingston Smith: “Our trainees aren’t just bought in to do the same job, day-in, day-out. We give them the opportunity to experience different industries: healthcare, media, renewable energy, non-profits, and corporate finance. They don’t just do audit or accounting either, but a wide range of tasks. It gives them a broader experience, helps them understand the breadth of the organisation, but also aids career progression too.” Wilmshurst-Smith, Network Rail: “Apprenticeships often focus on the trainee’s role as an ‘individual’ and their personal journey to success. But it’s important they enjoy that journey! We embed our apprentices within teams at the start of their apprenticeship so they experience the values and joys of working with colleagues. This comradeship continues throughout their time at Network Rail. We have an 85-95% retention rate with our apprentices – camaraderie plays a big role in that.” Brooks, Moore Kingston Smith: “The last few years have been horrendous for anybody leaving college/school, so it’s important apprentices realise businesses aren’t just work, work, work. We make sure our trainees bring their energy to social events, such as our recent Pride march, summer ball, charity walks and celebrations for our 100th anniversary.” Worrall, BDO: “When somebody joins an apprenticeship at BDO, they’re never siloed away from anybody else. We always ensure they’re part of a cohort with other apprentices and embedded into a wider team.” Advice for smaller firms: Brooks, Moore Kingston Smith: “Apprentices relish the chance to be trusted. If you give them the opportunity to demonstrate what they’re capable of, they’ll get responsibility from the outset and thrive on the trust you’ve invested in them.” Creating a sustainable pipeline Brooks, Moore Kingston Smith: “Apprenticeships are a great way of building the supervisory capability at your firm. I was speaking with a group of AAT trainees the other day who are 18 months into their apprenticeships – they were all working as semi-seniors supervising junior apprentices who’d just joined the firm.” Woodham, Old Mill: “At Old Mill, we don’t take on more apprentices than we need. This ensures we can dedicate more time to growing them within the business.” Brooks, Moore Kingston Smith: “Get everybody at the firm involved with apprenticeships to ensure that it’s not only managers who are left looking after trainees. It’s written in our job descriptions that all employees should be involved in welcoming and supporting our trainees. We’ve also got a strong support structure: a buddy system, trainee managers, plus a dedicated Early Talent team of five people who provide holistic support from the apprentice’s recruitment through their AAT qualifications all the way to qualifying as a chartered accountant.” Advice for small firms: Woodham, Old Mill: “We pay higher than the national minimum wage for apprentices [currently £5.28 per hour]. [It indicates] we want them to do real work, rather than basic admin.” Advice for smaller firms: Brooks, Moore Kingston Smith: “If you’re a small team and haven’t got the resources to have a dedicated apprenticeship coach, then the training provider can fulfil this role.” Photo: Charmaine Cardozo, who studies AAT through an apprenticeship. Free guide – 7 steps to start an apprenticeship AAT’s free guide to launching an apprenticeship in seven easy steps will walk you through the process, from job description to funding. Download
AAT’s 2023 Salary Survey shows the benefits of being licensed Posted 01/05/2024 by Christian Doherty & filed under Members. Accounting income is increasing steadily across the profession, though licensed accountants have the most to gain. The new AAT Salary Survey provides a revealing snapshot of the state of the profession going into 2024. It shows that accountants are seeing their incomes rising steadily, a significant achievement in a sluggish economy where investment and confidence levels are down across the board. The headline figure confirms the positive post-pandemic picture of salary levels for AAT members. There’s been a 14% increase in average salaries for the two years from 2021 for AAT’s students and non-licensed members. Income on the rise The survey also finds the benefits of attaining licensed status are being felt across the accounting profession. These go beyond the basic financial elements, with job satisfaction levels remaining high for those holding licensed status. Full-time licensed accountants reverted to a positive fee income in 2023, after the 4% drop in average (median) fee income in 2021 compared to 2019. The average fee income for 2023 is 43% higher than 2021 and 38% above 2019. Meanwhile, over half of all licensed accountants (54%) say they have seen their fee income increase over the last year, compared to 43% in 2021. This figure for 2023 increases to 59% for those who are purely self-employed. It’s also worth pointing out that licensed membership is especially positive for women. A larger percentage of female licensed accountants saw an increase in their fee income in the last year: 62% of those working full-time compared to 55% of men. As to how licensed accountants are structuring their working practices, just under a third of licensed accountant survey respondents (32%) have their own practice and are also working in an employed role. This has dropped by only 2% since 2021 (and is close to the average since 2011 which is 31% of LAs). The average full-time salary, bonus and fee income in 2023 for LAs who are both employed and run their own practice rose by 3% from 2021, up to £31,000. Job satisfaction among licensed members also remains strong, particularly compared with non-licensed peers. Fully self-employed licensed accountants top the chart, with 90% satisfied. Meanwhile those working in business (81%) and practice (78%) aren’t far behind. Non-licensed accountant satisfaction levels are a little lower, having reached 77% for those in practice – the highest level on record, but still below licensed peers. The bigger picture However, there is a bigger picture that bears looking at, and it becomes more nuanced when we look at the findings around stress and work-life balance. Firstly, it should be said that levels of stress, long hours and feelings of overwork remain almost identical to 2021 for licensed accountants. 51% of licensed accountants reported feeling overworked in 2019; by 2023, that figure had increased to 55%. Meanwhile, those reporting feeling stressed at work also grew, up from 55% to 58%. And while the figure for those reporting long hours has remained broadly unchanged at 61%, that proportion is high, and is not coming down. And certainly, when contrasted with the non-licensed cohort, it’s clear that licensed members are feeling the strain. Of this group, 61% report working long hours, compared to 36% of non-licensed accountants and 37% of AATQBs. In 2021, we did see a small increase in feelings of overwork, stress and long hours among non-licensed accountants. By 2023, though, stress and long hours were back down by 4% and remain significantly lower than among licensed accountants. Persistent wellbeing concerns This issue isn’t going away. And while increased salary levels and status are clearly important indicators of a thriving profession, wellbeing matters. Clare Bennison is Executive Director Customer, Partnerships and Innovation at AAT. She says the statistics around work-life balance are useful in shining a light on this important area, with accountants bearing the brunt of some really significant economic challenges. “We are still recovering from the effects of the pandemic, so that many accountants have not had a break. If you think about those practitioners during the pandemic, it was brilliant what they did [for clients], but horrendous for them. “Licensed accountants who do the job really well and are genuine business advisors to their clients can take on sometimes some of their clients’ troubles as well. So you’ve got to take all of that in the round. It means you’re working harder and you’ve got to work smarter and adapt to everything else. So I think this will be a continued theme, but it’s one that we’ve got to do something about.”
Accountants share their New Year resolutions and goals for 2024 Posted 01/03/2024 by Annie Makoff & filed under Members. The first few months of the year are already busy enough, and some of you are making additional plans. Accountancy is one of those sectors where it’s nose to the grindstone almost as soon as January hits. January to April is the season of tax returns, with January in particular being one of the busiest months in a practice accountant’s calendar. Q1 includes the Self Assessment online deadline for tax returns (31 January) and Corporation Tax return deadlines (usually nine months after the end of the business’s accounting period) along with additional tax document filings. After that, the focus is on consolidating figures for the end of the financial year (April) in addition to month-end and quarter-end. Yet tax returns and financial conciliation aren’t the only priorities for accountants in the first few months of the year: it’s also a good time for planning for the year ahead. While some practice accountants may be looking to grow their business and are preparing roadmaps over the next 12 to 18 months, accountants in industry may be reviewing internal financial systems and looking at ways to boost efficiency and accuracy. Other resolutions and areas of focus for the coming year may include: building up client base through networking and optimising social media channels reviewing pricing structure looking at alternative ways to offer added value automation financial transformation. We spoke to three accountants – in practice and in business – to find out what their plans are for the coming year and beyond. We’re developing new financial processes as we scale up Andy Murray MAAT AATQB, Finance Manager, Galson Sciences Ltd We’re transitioning from an SME to a large corporation so there are a lot of processes to review, integrate and develop. We’re heavily excel-based and this needs changing. We’ll be making efficiencies within the finance function to save time and improve the robustness of internal controls, while adopting new policies and procedures into the wider group. Part of this is not just understanding how we’re going to run things differently but why. We’ve been operating for 30 years and many people will say ‘the system isn’t broken so why change it?’ so there’s a need for education around change and transformation. The focus this year in particular is going to be the return on gross revenue and how this translates to the bottom line. In mid-January, I’ll be running an internal audit to scope out our financial transformation project which will hopefully be completed by the end of Q2, ideally. We’ll also be continuing to plan and develop our new financial system which is expected to go live in January 2025. Other priorities and areas of focus for 2024 include: • Financial business partnering to work with project managers and fully understand how our 70 live projects – which are entirely different from each other in structure and financial requirements – are operating. • Closer working within the Egis Group (whom Galson Sciences are a part of) to review risk strategies, planning, re-forecasting etc. • Replacing manual process with automation (e.g. invoice payments) and reducing number of Excel spreadsheets. Verdict: We’re scaling up from SME to large business and will be developing new systems and procedures in 2024 in anticipation of this. I’m moving from sole trader to business owner in 2024 Sallyanne Sheppard MAAT, Sheppard Bookkeeping Services In 2024 my focus is to go big. I want to grow and expand my business. Currently, I’m a sole trader but I’m aiming for my business to become a limited company by April so I’ll move from sole trader to business owner. I have big plans to re-brand and I’ll be creating a new company name and implementing a new pricing matrix. The new pricing structure will move away from output-focused and task-driven tasks to focus on the service itself and providing value-add to the client. I also have big plans to develop my client base and pull in more clients through advertising and sales leads and be much more proactive. Part of this is getting the right clients and fine-tuning my target market. It’s been a big mindset change, spurred on by a business coaching programme I’ve been attending which has inspired me to take more risks and scale up. Verdict: I’m moving from sole trader to business owner in 2024 and I’m aiming to fine-tune my client base and generate more leads. Growing through SEO and online marketing Tom Smith MAAT, Director, Every Cloud Accounting I’m focusing on business growth this year and carving out more time in which to do this. My wife and I are expecting our first baby, due in April, so the business needs to become sustainable to support the family. A big part of this is about having the flexibility in my work to be creative – so carrying out accountancy work for existing clients while having the time to implement creative marketing campaigns. Online marketing is therefore going to be a big area of focus for me in 2024 and beyond. I’m developing a long-term SEO marketing strategy. Part of this will include producing consistent, regular blog and video content on my website with a local focus on Lichfield and surrounding areas, which is where I’m based. Regular content like this will ensure my website appears higher up in Google search when potential clients search for Lichfield-based accountants. I’ve also been reaching out directly to local businesses over the past year and I will continue to do this in 2024. Verdict: I’m focusing on SEO and online marketing this year to grow my business.
High-Risk Third Countries and the treatment of Politically Exposed Persons (PEPs) Posted 12/21/2023 by AAT Comment & filed under Anti-money laundering, Anti-money laundering, Ethics. Read the latest AML alert on amendments to the Money Laundering Regulations. Changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) have been made by the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2023 and the Money Laundering and Terrorist Financing (Amendment) Regulations 2023. All AAT licensed members must consider whether their firm’s existing anti-money laundering (AML) policies and procedures remain sufficient in light of the changes. Money Laundering and Terrorist Financing Controls in High-Risk Third Countries The MLR 2017 requires the UK regulated sector to apply enhanced customer due diligence in relation to high-risk third countries. The list of high-risk third countries (HRTC) was amended on 05 December 2023 by the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2023 to align with both the Financial Action Task Force’s (FATF) ‘Jurisdictions under increased monitoring’ and ‘High-risk jurisdictions subject to a call for action’ documents. Added to the list of HRTCBulgariaCameroonCroatiaNigeriaSouth AfricaVietnam Removed from the list of HRTCAlbaniaCayman IslandsJordanPanama The full list of HRTC can be found in Schedule 3ZA of the MLR 2017. AAT licensed members are advised to read the HM Treasury Advisory Notice: High Risk Third Countries to ensure they are fulfilling their obligations under the MLR 2017. Treatment of Politically Exposed Persons under the Money Laundering Regulations On 10 January 2024, the Money Laundering and Terrorist Financing (Amendment) Regulations 2023 shall amend the MLR 2017 in relation to the treatment of Politically Exposed Persons (PEPs) who are entrusted with prominent public functions by the UK (known as ‘domestic PEPs’). The amendment makes clear that under the MLR 2017, the starting point for regulated firms in their treatment of domestic PEPs, or a family member or known close associate of a domestic PEP, must be to treat them as inherently lower risk than non-domestic PEPs. Accordingly, regulated firms must apply a lower level of enhanced due diligence to domestic PEPs compared to non-domestic PEPs, unless other enhanced risk factors are present. AAT licensed members are advised to read the Treatment of Politically Exposed Persons under the Money Laundering Regulations statement made by Baroness Vere of Norbiton on 14 December 2023.
Policy developments that will affect accountants in 2024 Posted 12/20/2023 by Adam Harper & filed under Members, Policy. As 2023 draws to a close, we look ahead to next year, when we hope to see significant progress in a number of areas of regulatory reform. The year ahead certainly promises to be a busy one, not least with a general election in the offing. From an AAT perspective, with a series of mooted regulatory and compliance changes coming down the pipe, we hope to see real progress in 2024. From off-payroll working calculation of PAYE liability in cases of non-compliance to implementation of R&D tax reliefs reform, no doubt policy makers, civil servants and their counterparts in the profession will have their hands full in delivering necessary reforms. At AAT, our general outlook and approach will remain the same: above all we value clarity and speed when it comes to regulatory reform. And while we recognise it is unrealistic to expect that all of our asks will be reflected in every new development, by making timely and clear decisions based on meaningful consultation the government can go a long way to enacting effective reform. Because make no mistake, we are in difficult times both for businesses and the profession. The economy continues to struggle, and political expediency and turmoil (of which both we can expect more in 2024) can often get in the way of enlightened policy making. Recognising the impact of those disruptive factors doesn’t detract from the fact that further work towards a fairer and simpler tax system would offer immediate benefits. We have been clear both in public statements and in our responses to government consultations that the current tax system is failing to meet this objective. Making Tax Digital For the year ahead, then, we would like to see government really get on top of some key issues around tax. Firstly, we must see some progress on the next iteration of Making Tax Digital (MTD). The recent scathing report from the PAC made it clear that MTD for Income Tax Self Assessment is in real danger of failure without some significant improvements in HMRC’s performance. Many of the promised benefits of MTD centre around the move towards a fully digital tax system. And while we support that aspiration, once again it’s important to point out that simply digitising a system doesn’t necessarily make it simpler or more effective. That simplification must be a central priority of any reforms in 2024. The arguments may sometimes get drowned out by new initiatives, but tax simplification for SMEs can improve compliance and productivity, something the UK desperately needs. R&D tax credits Take R&D tax credits: Some members may feel that the regime governing R&D tax reliefs is under constant review, but 2023 was a year in which the government did at least confirm that some significant reforms would be introduced in 2024. The principal change is the decision to merge the RDEC scheme with the SME intensive scheme in order to provide a simplified system for businesses and encourage more R&D investment. The decision was very much in keeping with our support for a single merged scheme that we felt would be beneficial for R&D investment, as well as being fairer, simpler and more transparent. The decision on future reforms also aligned well with our suggestion that the government make efforts to truly incentivise SMEs to invest in R&D. It’s been confirmed that rules will be introduced to complement the SME intensive scheme which was announced at the 2023 Spring Budget. But there needs to be real action around the significant increases in costs of the SME scheme driven by the many unregulated advisers currently operating, as well as increasing awareness among SMEs of their eligibility for the various reliefs. Late payments SMEs will also hope to see real progress on tackling late payments – currently around 50,000 firms are closing each year due to cash flow problems. The ongoing pressures felt by smaller businesses in relation to late payments were the subject of a welcome report earlier in the year. The report built on and incorporated responses to the consultation on the Payment Practices and Performance Regulations 2017, as well as the statutory review of the role of the Small Business Commissioner. While no specific timetable has been given for the implementation of the measures set out in the Government’s Payment and Cashflow Review Report, we are hopeful that primary legislation may come forward in 2024 to make the reforms permanent. In doing so, and in implementing measures such as making the Prompt Payment Code compulsory for organisations with more than 250 employees, the government would go some way to creating a fairer and more supportive environment for smaller entities in the UK. Regulating accountants Finally, with all these challenges facing businesses, 2024 would be an ideal time to make progress on the requirement for all paid-for tax advisers and accountants to be a member of a recognised professional body. It’s a cornerstone of AAT policy that unregulated accountants and advisers – who currently make up one third of those working in the sector – are brought under a professional standards umbrella. We have taken, and will continue to take, a positive and pragmatic approach to this. Our Accountable campaign makes it clear that compulsory membership of a recognised professional body is an effective, low-cost solution that benefits business and the taxpayer. As with every issue raised here, at AAT we are committed to making the voice of AAT members and the wider profession heard throughout 2024.
Why recruiters value AAT-qualified candidates Posted 12/05/2023 by Christian Doherty & filed under Employer newsletter, Members, Recruitment. The AAT qualification signals a higher quality of candidate, with technical knowledge and experience. In a competitive market for talent, the importance of qualifications and experience can’t be underestimated. For that reason, a growing number of recruiters are embracing candidates with AAT qualifications. AAT develops sound technical skills from the ground up, and helps candidates acquire real-world experience in practice and business as candidates combine learning and working. Serving as a foundation for further study and experience, AAT gives people at the beginning of their careers an ideal grounding in all aspects of accounting and finance, making them attractive candidates for recruiters looking to fill positions in both business and practice. Employers like candidates committed to the career Jamie Caulfield, Regional Director, Sharp Consultancy Anyone who has committed to and completed their AAT qualification is focused on a career in accounting and finance. It’s a clear signal from that individual that they’re dedicated to growing and developing in accountancy, whether that’s in a firm of accountants or in business like manufacturing, retail or construction. We find that the AAT gives a fantastic grounding for those that perhaps don’t want to go to university, and allows them to get vocational experience as well as a practical qualification that puts them on an equal footing with their graduate counterparts when they begin studying that further full qualification to be a qualified accountant. And it’s certainly true that AAT qualified can command a slightly higher salary versus a non-qualified AAT person with the same experience. You would expect that their salary could be between 20-30% higher. AAT candidates have work experience invaluable to the job Harriet Busby, Associate Director, Axon Moore A big part of AAT is learning good technical accounting and bookkeeping knowledge. I have clients who’ve asked technical questions in the interview, going right back to basics and asking about processing debit or credit on an invoice, and quite often candidates get stuck. If they’re not able to demonstrate good technical knowledge, they won’t get the job – but AAT candidates just have much better knowledge in this area. Beyond nailing the interview, AAT is a great way to get experience. Somebody might do Level 2 in college at age 16, Level 3 at age 17, then come out of college aged 18 with those qualifications and get a job. So by the time they’re 21, they’ve got three years of experience, they’ve probably done the level 4 and have started CIMA or ACCA. Granted, they’ll be behind on some of the graduates who’ve got their own exemptions, but they’ll be miles ahead with three years’ worth of experience, whereas a graduate will have none. I understand that degrees are a huge commitment as well and they are difficult, but I don’t have a bias towards graduates. In fact, I probably have more of a preference for AAT qualified candidates because there’s a hell of a lot more exams, and it takes a lot more commitment to do while trying to work as well. AAT qualifieds are ambitious people who want to study Charlotte Greenwood, Senior Community Manager, Harmonic Finance We find that AAT qualifieds become experts in transactional and day-to-day finance duties. That’s really important for their long-term career as they will likely manage transactional finance teams in the future. Throughout their AAT, they can build the basic skills they use in their role on a day-to-day basis. We see this in action a lot. Earlier this year, we were working with a food and beverage start-up in their search for a Finance Assistant. The aim was to find an ambitious and committed individual with some financial knowledge, who was keen to grow and develop with the company. Given the financial parameters and the company’s growth stage, we focused on identifying candidates who possessed fundamental finance and accounting skills and also demonstrated a strong commitment to long-term career development within finance. The concern with candidates who were advanced in their ACCA or CIMA studies is that they’d qualify in the next two years and want a Financial Controller job title. Due to the growth stage of the company, such a salary increase just wouldn’t be possible. To address these concerns relating to budget and potential future role transitions, we strategically targeted individuals actively pursuing their AAT qualification. By engaging with such candidates, we managed to secure dedicated individuals who brought a combination of financial acumen and a genuine enthusiasm for self-development. This profile both aligns with the company’s budget issues and also ensures a workforce positioned to develop alongside the company’s growth trajectory. We also find AAT attracts ambitious people who want to study but who are not at the point where they need to be qualified within the next few years. It also appeals to those looking to make a quicker entry into industry from practice. We find the qualification allows access to talent from a more diverse background, for example opening up the role to school leavers.
10 accountancy books for your Christmas stocking Posted 12/04/2023 by Marianne Curphey & filed under Students. Use the December break to catch up on some great reading. Our round up of classics, new titles and thought-provoking paperbacks will keep your brain stimulated as you tuck into the turkey and mince pies. 1. Financial Accounting for Decision Makers by Peter Atrill and Eddie McLaney Understanding the pressures and motivations behind making strategic decisions is essential for any accountant advising a business customer or looking to add consultancy to their portfolio of services. The 10th edition of this well-regarded book focuses on the ways in which financial statements and information improve the quality of decision-making. The book has been updated to include real-world examples, showing the pressure on industries resulting from the Covid-19 pandemic. It analyses real company reports to explore how accounting practices are used in making business decisions. Buy the book 2. Business Model Navigator, The Strategies Behind The Most Successful Companies by Oliver Gassmann, Karolin Frankenberger, Michaela Choudury and Michaela Csik This book shows the different ways a business can be designed, how business models work, and analyses how innovation is essential to future-proof a company. It suggests how out of date business models may impact the profitability and longevity of a firm. This book is essential reading for any accountant who wants to be able to talk to corporate clients with a good understanding of what makes businesses work in the medium to long term. Buy the book 3. The Essentials of Economics by John Sloman and Dean Garratt Updated for 2023, this primer provides a clear and concise introduction to economics. A new edition of a classic textbook, the book includes updated analysis and insights into real global problems, such as the climate emergency, the Russian invasion of Ukraine, the Covid-19 pandemic, and the cost-of-living crisis. There is also a discussion of the problems facing governments regarding economic policies, geopolitical tensions and what measures could be taken to tackle these issues. An important book for understanding the global context in which finance and business operate. Buy the book 4. Technofeudalism: What Killed Capitalism by Yanis Varoufakis Controversial Greek economist and former Greek finance minister Yanis Varoufakis argues that capitalism is dead and a new economic era has begun. Whether or not you agree with his doomsday scenario, his arguments are certainly thought-provoking. In his book he describes how the world is facing an entirely new concentration of financial and economic power, and that we are all complicit in it. He uses the story of the minotaur to argue that we are facing a huge threat to the global financial system. Whether or not you agree with him, his outspoken polemic is worth reading. Buy the book 5. The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them (Cryptography, Derivatives Investments, Futures Trading, Digital Assets, NFT) by Antony Lewis Increasingly, clients may hold cryptocurrency investments, some industries are now heavily using blockchain, and individuals may want to pay for goods and services with bitcoin. While cryptocurrency is not yet widely used as a method of payment, it is important to understand the technology and practices which lie behind it. The book looks at the history of Bitcoin, how payments are made, how digital tokens work and how blockchain is affecting the digital economy. Buy the book 6. Audit and Accountancy Pitfalls: A Casebook for Practising Accountants, Lawyers and Insurers by Emile Woolf and Moira Hindson Whether you are an accountancy student, a forensic accountant or working in general practice, this book details many of the challenges and mistakes that a technician might make in their work. It analyses how and where errors in audit and accounting that might go undetected and looks at the different aspects of fraud and how it manifests in organisations. A technical book for those who want to deep dive into the details of audit. Buy the book 7. Think And Grow Rich by Napoleon Hill Still one of the classic tomes on wealth creation, Napoleon Hill’s 1937 book explains how to change your mindset on money and life, become more optimistic and stop procrastinating. His philosophy espouses incremental improvements, using imagination and the subconscious mind to propel yourself towards your objectives, and having a clearly-defined goal and purpose in life. He recommends persistence and decisiveness and a positive mental attitude. Throughout the book, Hill analyses the habits and behaviours of successful individuals, including Andrew Carnegie. This is much more than a book about money – it is about how to life your life effectively. Buy the book 8. Success secrets for Motivation If you are feeling ground down by the trials of lockdown and the pressures of the current economic climate, boost your personal motivation and that of your team by reading theperspectives of eleven successful entrepreneurs from around the world. They discuss their own personal experience of motivation, where it has helped them and their clients achieve more, and how to create motivation, especially in difficult environments. The contributing authors are Alison Shadrack, Christopher Sigmond, Clive Digby-Jones, Gareth Martindale, Jane Thomas, John Lunn, Keith Holdt, Melanie Attwater, Nick Griffith, Owen O’Malley and Robin Winnett. They are business leaders and experts in many different fields including marketing, property, wellness, strategy, design, finance and philosophy. Buy the book 9. The Answer is a Question, by Dominic and Laura Ashley-Timms Two top executive coaches explain how much of the executive burnout and stress that managers and teams experience can be alleviated by changing the way you communicate. The Answer Is A Question reveals how leaders can ditch the command-and-control leadership model and adopt an enquiry-led approach that cultivates a new wave of engaged, problem-solving employees. To do this, managers need to start using questions in a more purposeful way. Learning to communicate effectively can help you when you want to inspire teams, encourage collaboration, initiate difficult conversations and strengthen working relationships. A valuable book to read no matter where you are in the structure of an organisation because improving your communication skills with colleagues and clients can pay dividends. Buy the book 10. Tech for Good: Solving the World’s Greatest Challenges by Marga Hoek Of the world’s 100 largest economies by revenue, 69 are companies, not countries. It is business that has the influence and power to pave the way for a sustainable future. Marga Hoek examines how we can harness technology to solve global challenges and create solutions at scale. The book features 75 inspiring, real-world case studies of businesses leveraging tech to deliver UN’s Sustainable Development Goals. It reveals how eight key advanced technologies – including AI, robotics, Spacetech and Extended Realities – are being used to accomplish everything from eradicating hunger to achieving gender equality. A thought-provoking read on what the future might hold for all companies, no matter what their size or global reach. Buy the book
There’s a proposed global system of carbon accounting Posted 12/01/2023 by Vivienne Russell & filed under Climate change, Members, Sustainable Business. This innovative method would help measure Scope 3 emissions, which may become mandatory reporting next year. The new ISSB standards that kick in next year will include mandatory reporting for Scope 3 emissions. The government is currently consulting on whether or not to adopt these standards in the UK. That means that Scope 3 emissions may soon be something accountants will have to understand and measure. Two leading accounting academics have developed an accurate and useful method for accounting for Scope 3 emissions, which we will go into below. They aren’t regulators or standard-setters, but their method may help with regulatory and compliance-related demands regarding Scope 3 and decarbonising supply chains. Sustainability for accountants Our masterclasses, webinars and e-learning courses can help you with sustainability reporting and measuring your carbon performance. Learn more The context Just ahead of the United Nations’ major climate change conference – COP28 in Dubai, which began this week – accounting professionals convened for the annual Accounting for Sustainability summit. Founded by King Charles in 2004 when he was Prince of Wales, Accounting for Sustainability – or A4S – is a charity that aims to connect and inspire finance leaders to make a shift towards more sustainable business models. “The financial and accounting systems that underpin our economy focus on short-term financial outcomes and do not adequately reflect the dependency of our economic success on the health and stability of our communities and the natural environment,” A4S says. It advocates for a change in focus to long-term, sustainable performance that better understands the interdependence between financial, social and environmental factors. Sustainability needs to become embedded in organisations’ strategy, operations and reporting, it argues. Finance is of course key to success. If we are to achieve net zero, we will need significant investment in green industries, technologies and adaptations. But the accounting and financial reporting process can also help companies and other organisations better understand their climate impact, informing management decisions that will support the move to a decarbonised economy. Emission scopes One emerging area of innovative thought and practice is adapting accounting principles to support the measurement and reduction of Scope 3 emissions. Carbon emissions are divided into three categories or scopes. Scope 1 is the emissions a business generates directly through the boilers and vehicles it runs. Scope 2 is those that are incurred indirectly through, say, the gas and electricity it buys. Scope 3 is the trickiest to get a handle on as these are the emissions that are generated throughout the value chain, for example from suppliers or from its products once they are being used by customers. It’s where the bulk of an organisation’s carbon footprint – estimated at around 70% – is found, but is challenging for organisations to understand and control. Measuring your supply chain’s footprint This is where accounting innovations come in. Two leading accounting academics, Professor Robert Kaplan of Harvard Business School and Professor Karthik Ramanna of the Blavatnik School of Government at the University of Oxford, have developed a methodology to help businesses track their Scope 3 emissions. Dubbed the E- (or environmental) liability approach, the professors set out their thinking in a paper published two years ago and have since founded a not-for-profit institute – the E-liability Institute – to advance the idea further. “We’re trying to put a specific value on any product or service produced in the economy,” Prof Ramanna told the A4S summit. Any entity that uses financial accounting knows the embedded cost in its products or services and the same principles can be applied to emissions, he explained “It’s not just an exercise of accounting for accounting’s sake, because as you start calculating these embedded emissions, cradle to gate, what you’re able to do is identify actions that might contribute to decarbonisation.” Once the emissions value of individual products and services are understood these can be aggregated to give an overall picture of an organisation’s emissions. “So just like you construct the financial balance sheet of a company by adding up what happens at [the level of] individual transactions, events or conditions, you can compute an environmental ledger for any organisation by adding up the embedded emissions of its products or services,” Prof Ramanna said. How it works In order to make this system work. each part of the supply chain passes on details of its Scope 1 emissions to the next customer in the chain, starting right at the beginning with the production of raw materials, Prof Kaplan added. “And [emissions value] just goes naturally up the chain the same way the cost of goods sold flows up even the most complex and diverse supply chains,” he told the A4S summit. “The beauty of this is that the companies need only get information from their immediate suppliers who they all know. So in addition to understanding the prices that they’re paying, they will also understand the carbon content in every single one of the products or services they’re purchasing.” Scaling up this approach globally will be “a journey” and will take some time, Prof Kaplan said. But he estimated that in three to five years we could have a global system of carbon accounting that will be relatively easy and inexpensive for companies to adopt. Maintaining accuracy Scope 1 emissions need only be measured once, avoiding double counting, and at the place where they occur, he added. It is also important that they are audited, again at the place where they occur. “We need assurance that the data coming downstream is valid,” Prof Kaplan said. “We can get to a solution here where the accuracy and the reliability of the carbon data is as strong as financial accounting and reporting data are today.” The approach is currently being piloted by a range of organisations in the public and private sectors in the UK, US and further afield, Prof Ramanna said. “The idea is that we can start with a small network of lead steer organisations that are really interested in seeking answers in their own decarbonisation journeys.” The e-liability system helps companies understand how clean or otherwise their supply chains are and make decisions about where they source materials from accordingly. For instance, copper from a clean mine in northern Sweden will be very different from copper from a mine in South America that has to be transported over thousands of kilometres before it can be processed, Prof Kaplan explained. “It’s so important not to use averages, but to look at the specifics of each company’s supply chain.”He urged accountants in the A4S audience to follow Nike’s advice and “just do it”, approaching the E-liability Institute for any support and advice they may need. “Dip your toe in the water and start the journey.” Sustainability for accountants Our masterclasses, webinars and e-learning courses can help you with sustainability reporting and measuring your carbon performance. Learn more