AAT 2023 Annual Report highlights a year of achievements Posted 08/21/2023 by David Nunn & filed under AAT news, Members. Refocus, renewal, relevance are the three themes of the 2023 Annual Report. AAT has just published its Annual Report, capturing a year of remarkable progress in which we continued to have a positive impact on the careers of students, members, businesses and society as a whole. One of our key accomplishments is a 3% increase in professional membership, with an impressive 91.2% retention level and an 82% satisfaction rate among AAT members. We believe this reflects members’ trust and confidence in the organisation and its services. There was also a 9% rise in licensed member applications, indicating the growing recognition and value associated with being an AAT Licensed Bookkeeper or AAT Licensed Accountant. Accessible careers for all At AAT, we are committed to making finance careers open to all. Towards that end, there was a 12.6% increase in apprenticeship starts compared to the previous year. Over 3,700 apprentices completed their courses, with many finding employment in small businesses. AAT made further strides in support of diversity and inclusion. The Gender pay gap – now stands at -0.2% due to an increase in women winning senior management roles. AAT also achieved Disability Confident Level 2 and received the Employers’ Network for Equality and Inclusion Talent Inclusion and Diversity Evaluation bronze award. Awards for AAT learning materials External recognition for AAT came in the form of two awards at the Digital Finance Function Awards: The Digital Decoded webinar series was honoured as the Learning Event of the Year. Chief Executive Sarah Beale was recognised as the Influential Woman of the Year. AAT also achieved the prestigious Institute of Customer Service service mark, recognising its dedication to providing excellent customer service. Driving up standards AAT’s flagship Accountable campaign gained significant traction, leading to an invitation to address the House of Lords Economic Affairs Finance Bill Sub-Committee. The campaign received support from 82% of surveyed MPs, further reinforcing the need for appropriate qualifications in tax advice. Real World Ready strategy In February of this year, AAT unveiled its new strategic plan, which extends to 2030. This plan aims to advance the recognition of accounting technicians globally and strengthen AAT’s community through innovative products and services. The Annual Report outlines how AAT intends to achieve these objectives while also acknowledging potential challenges that may arise. Sarah Beale, Chief Executive of AAT, comments: “This year, we re-evaluated our purpose in a post-pandemic world, which led to the launch of our new strategic plan in February 2023. We also launched our new suite of qualifications, Qualifications 2022, in September 2022. “Both of these have helped lay the foundations for our new strategic mission to build global recognition of accounting technicians, attract a wider talent pool, deliver high-quality, relevant qualifications and embrace innovation whilst keeping our members and students at the heart of everything we do.” Why not take a look at the Annual Report for yourself? You can find it here.
AML made easy – the seven golden rules of successful compliance Posted 08/21/2023 by AAT Comment & filed under Anti-money laundering, Members. Be in the know about anti-money laundering. Our explainer tells you all you need to know to get started with compliance. Anti-Money Laundering (AML) refers to a set of legal and regulatory measures implemented globally to combat financial crimes, such as money laundering, terrorist financing and proliferation financing. These measures aim to deter and detect illicit activities by establishing robust systems and controls within financial organisations. Relevant persons must comply with the Money Laundering Regulations 2017 (MLR 2017). Who is a relevant person? Relevant persons are defined in Regulation 8(2) of the MLR 2017 and include: external accountants – a firm or sole practitioner providing accountancy (including bookkeeping) services to clients (Regulation 11) tax advisers – a firm or sole practitioner providing material aid, or assistance or advice, in connection with the tax affairs of clients (Regulation 11) trust or company service providers (TCSPs) – a firm or sole practitioner providing any of the services defined under Regulation 12(2) to clients. To comply with AML legislation, here’s what you need to do: 1 Register with a supervisory authority First off, you must be supervised by a recognised supervisory authority. If you are an AAT licensed member, then this task is usually performed by us. What does the supervisory authority do? Registering ensures that your AML procedures are subject to oversight by a supervisory authority. Supervisory authorities ensure: Relevant persons are fit and proper Supervisory authorities are required to carry out a fit and proper test on any applicant for supervision and any beneficial owners, officers, or managers (BOOMs) of the applicant. This involves the supervisory authority assessing relevant information, such as the skills and experience of the applicant and any BOOMs, and any previous breaches of AML legislation. Supervisory authorities also require a criminality check to be completed to verify that the applicant or any BOOMs do not have an unspent conviction for a relevant offence listed in Schedule 3 of the MLR 2017. Relevant persons comply with the legislation As a relevant person, you must implement policies and procedures to detect, prevent and report money laundering, terrorist financing and proliferation financing (Regulations 19 and 19A). The supervisory authority will conduct periodic checks and inspections to ensure your compliance with the AML regulations. They may request various reports or information to assess the effectiveness of your risk assessments, customer due diligence measures, internal controls and reporting procedures, record-keeping, and your own compliance monitoring. Where a relevant person fails to comply with the legislation, enforcement action is taken. This may result in penalties being imposed by the supervisory authority. These actions can range from warnings and remedial actions to fines, suspension, or even revocation of your membership. Relevant persons understand their obligations and are aware of the risks the sector faces Supervisory authorities often provide guidance and support to help supervised firms understand and effectively implement AML regulations. They may offer training courses, workshops, webinars, or resources to enhance a firm’s knowledge and keep them updated on evolving AML requirements and sector risks. Overall, registering with a supervisory authority for AML purposes demonstrates your commitment to combatting money laundering and ensures that you are operating within the legal framework and industry best practices in the UK. 2 Conduct a firm-wide assessment Performing a firm-wide risk assessment is essential to identify and understand the potential money laundering risks associated with your clients and your practice. You must assess factors such as client type, services offered and delivery methods, transactions, and geographic locations to determine the level of risk your business may face and analyse client profiles to single out those that pose a higher risk (Regulation 18). 3 Undertake Customer Due Diligence (CDD) You must undertake CDD to verify clients’ identities and assess the legitimacy of their financial activities (Regulations 27 and 28). But CDD is not something you do only once. Embed procedures in your onboarding process to verify the identity of the client. This should include obtaining identification documents and proof of address for all beneficial owners, conducting background checks, verifying business information and receiving copies of any relevant business documentation, such as any previous books and records, sets of accounts and annual returns. You need to know your client to prevent your business from being used for money laundering, terrorist financing, or proliferation financing. Undertaking a client risk assessment identifies the risks posed to your firm, allowing you implement appropriate AML measures to mitigate potential risks. Your client risk assessment should consider factors such as the client’s background and ownership structure, their business activities, the nature of the services you are providing, the jurisdictions they operate in, whether they are a politically exposed person (PEP) or are subject to any financial sanctions. You may need to examine financial statements and scrutinise transactions to identify the sources of funds and to detect any inconsistencies or red flags. You must regularly conduct ongoing customer due diligence to ensure there are no changes to the ownership of your client that require new verification, any irregularities or unusual patterns are detected early, and new risk factors can be considered and appropriately mitigated against. 4 Implement internal controls You need to establish robust internal controls to foster a strong culture of compliance. This includes segregating duties, employee screening, maintaining a strong audit trail and regularly examining the effectiveness of your AML policies, procedures and controls. The regulations require a relevant person to appoint a responsible individual as a Nominated Officer, also known as the Money Laundering Reporting Officer (MLRO). Their role will be acting as the main point of contact for any suspicious activity reporting (Regulation 19(3)). Relevant persons must also consider whether a Compliance Officer should be appointed under Regulation 21. Internal reporting procedures must be clearly documented so that staff know how to report any suspicious activity to the MLRO. 5 Provide staff training If you have staff, you must educate them on the importance of AML compliance, the red flags associated with money laundering activities, and the proper procedures to follow. Regular training must be provided to ensure that employees whose work is relevant to the application of the AML legislation are aware of their obligations and can contribute to detecting and preventing money laundering effectively (Regulation 24). 6 Create an AML manual Develop an AML manual that outlines the procedures, controls and systems to detect, prevent and report money laundering, terrorist financing and proliferation financing within your practice. This must be in writing, regardless of whether or not you employ staff, and should include details of your risk assessment practices, customer due diligence measures, internal controls and reporting procedures, record-keeping policy and compliance monitoring procedures. 7 Monitor and report suspicious activity Keep a watchful eye for any transactions or activities that appear suspicious or unusual. Document any suspicions you may have and report them to the National Crime Agency (NCA), through a Suspicious Activity Report (SAR). Conclusion Maintaining compliance with AML regulations is not just a legal obligation but also essential for safeguarding your reputation and protecting the financial system from criminal activities. By following these steps and remaining diligent, self-employed accountants in the UK can play their part in combatting money laundering and contributing to a safer business environment. Remember to stay up to date with any changes and amendments in AML regulations to ensure you consistently meet your obligations. High-risk activities Here are some examples of activities, job roles and sectors that are considered high-risk. For up-to-date bulletins about these and other areas, consult AAT’s Knowledge Hub. Cash-intensive businesses can disguise criminal sources of wealth, or smuggle large amounts out of the UK. Shell companies registered in tax havens can be used to disguise the actual owners of funds and facilitate money laundering activities. Professional services providers, such as lawyers, accountants, and trust and company service providers, who may facilitate money laundering through their knowledge of legal and financial systems. Offshore financial centres, such as the Cayman Islands, British Virgin Islands, or Luxembourg, which are known for their loose regulations and secretive banking systems. Countries with weak AML controls and digital currencies with a high degree of anonymity, such as Belize, Panama or the Isle of Man. Casinos, especially those located in jurisdictions with lenient AML regulations or a lack of proper oversight. Money service businesses, including remittance and currency exchange services, which often deal with large amounts of cash and can be susceptible to illicit activities. Real estate markets in cities known for attracting foreign investors seeking to launder money, such as Miami, London or Vancouver. Cryptocurrency exchanges with lax AML procedures, allowing individuals to convert illicit funds into digital currencies that can be easily transferred and anonymized. Private banking services that cater to high-net-worth individuals, as they can provide a veil of legitimacy to illicit funds through their complex financial structures and global networks. Trade-based money laundering, where legitimate trade transactions are exploited to move illicit funds across borders by manipulating invoicing, misrepresenting the value or quantity of goods or using false documentation.
What the new Consumer Duty Rules mean for accountants Posted 08/21/2023 by Annie Makoff & filed under Financial accounting and reporting, Members. The expectations, benefits and impact of the new regulations on accountants and their clients. On 31 July 2023, new Consumer Duty Rules came into force which place greater emphasis on financial service firms to ensure fair value and good outcomes for customers. Introduced by the Financial Conduct Authority (FCA), the new Consumer Duty refers to the addition of a new principle – Principle 12. This, together with eleven existing principles, forms part of existing guidelines for FCA-regulated businesses. In essence, the Consumer Duty Rules require FCA-regulated businesses to: Act in good faith towards customers Avoid causing foreseeable harm Enable customers to pursue financial objectives. The rules also centre around four main outcomes: Product and service outcome (Is the product/service fit for purpose?) Price and value outcome (Does it provide ‘fair value? Is there a reasonable relationship price and customer benefit?) Consumer understanding outcome (Do customers have enough understanding and comprehension to make informed decisions?) Consumer support outcome (Does design and delivery meet the needs of customers?) The second deadline for Consumer Duty Rules is 31 July 2024 which looks at legacy products – products which are no longer sold or available but which are still serviced and operated. Accountants who provide advisory services to FCA-regulated clients will need to be familiar with Consumer Duty Rules – including key dates – to ensure their client is meeting the requirements. We spoke to accountants and financial specialists to find out more about what the new rules will mean for accountants and their clients in terms of benefits, expectations and impact. Accountants will need to be a ‘critical friend’ to financial service clients to improve standards Ewen Fleming, Partner, Head of Consulting and Rob Sargent, Senior Manager, Johnston Carmichael Chartered Accountants and Business Advisors The new Consumer Duty Rules introduce Principle 12: “a firm must act to deliver good outcomes for retail customers” as an addition to the existing principles enforced by the FCA. Principle 12 enforces stricter requirements around how firms communicate their offerings as well as testing customer comprehension. Do customers understand the products on offer and the different options available? Do they fully understand the implications? Products and services offered also need to be appropriate to the customer and their situation, taking into account vulnerabilities including disabilities. Vulnerabilities could be temporary or permanent (bereavement, financial stress or those with literacy or numeracy comprehension difficulties for example). Many accountants offering advisory services to financial services firms impacted by these rules will be able to support their clients to meet the new standards and help them identify and evidence remediation of any potential gaps or shortcomings. In terms of benefits to consumers and businesses, the Consumer Duty has been introduced to improve their customer experience and prevent foreseeable harm. Examples of the improvements they may see are: pricing changes or improved benefits in relation to the products they hold; choice of a better-priced option if available; and the redesign of products and services to give them a consistent experience and offering regardless of the channel their journey started in. Verdict: Accountants with an advisory role can be a critical friend to financial service clients, supporting them to identify and repair any gaps or shortcomings and ultimately helping to improve standards in the financial services sector. The rules will aid time-poor businesses with quicker decision making Stuart Crook, Partner, Wellers The new consumer duty rules set higher and clearer standards of consumer protection for financial services and require firms to put customers’ needs first. The difficulty lies in situations where we are asked incorrectly posed questions. Some questions simply don’t have definitive answers, require extensive research, or are not easily quantifiable for exact time or cost estimates. For example, completing a tax return can include the same components but may be more involved depending on the information, circumstances and interpretation of the clients. In any business, particularly ours, we try to present all information so the customer can make informed decisions. They will then understandably look for comparative services and costs. Yet many business owners are often time-poor – they don’t want to pore over multiple considerations, they just need to make quick decisions and the new rules are aimed at achieving this. The question we get asked is ‘how much tax do I have to pay?’. The expectation is that you apply every possible relief or exemption. However, a number of these may be ‘grey areas’ that need more explanation and require us to provide a caveat for potential risks. At some point they want you to make assumptions based upon our knowledge and experience of them as a person and business, based upon a long-term relationship. They don’t simply want a yes or no machine. So, for businesses, the benefit will be quicker decision-making and less back and forth, which will reduce admin time. Meanwhile, it will allow financial experts to spend more time carrying out the task at hand, which can only be more efficient for all concerned. Verdict: The rules will aid time-poor businesses with quicker decision-making due to increased standards and customer protection. Firms will need to exercise judgement and a reasonable approach to customer communication AR Tamin, Financial Accountant, PowerYourCurls The consumer duty requirement meets diverse consumer needs at every stage of their purchasing journey and ensures clear communication, effective support and high-quality products and services. The rules also ensure that products and services should sell at a price that is reflective of their true value without excessive fees. Under the new rules, firms need to exercise judgment and create a reasonable approach to monitoring consumer communications and act where issues are identified. They should have appropriate governance processes established to oversee communications sent as part of their anti-financial crime due diligence activity, and they should consider securing a record of any relevant actions taken. If part of the anti-financial crime program activity is outsourced to a third-party vendor, the firm is still responsible for ensuring the outsourced meets the duty. In terms of benefits, the rules will make it easy to evaluate or identify any potential problems or cancel a product. It will also aid better understanding resulting in better outcomes. Verdict: Firms will need to exercise judgement and a reasonable approach to improved customer communication leading to better outcomes. Businesses now have to document and evidence their processes around products and services – not just talk about it doing it Andy Severn, Tax Expert and Director, Duncan & Toplis Consumer Duty sets higher and clearer standards for businesses to review when it comes to products and services as well as evidencing they are delivering good outcomes for their clients. This means that all financial advice businesses should have reviewed their processes and in particular the products and services they provide, the ways they communicate with their clients, pricing and the delivery of timely advice. For many firms this is, and always will be, an ongoing review item. However, businesses now have to fully document their processes rather than just saying they do it! Verdict: Under Consumer Duty Rules, businesses now have to document and evidence their processes towards delivering good outcomes – not just talk about doing it.
When accounting “isn’t just about the numbers” Posted 08/16/2023 by AAT Comment & filed under Community, Inspiring stories, Leadership, Members. Donating your time and accounting skill can be hugely valuable to a charity, and your own wellbeing. Earlier this year Mark Clayton FMAAT won an AAT Award for his inspiring work with charities in China. Here, he explains more about the role accounting technicians can play in giving something back. Ronnie ‘Chopper’ Keelan was a popular member of the expat community in Zhuhai – the Chinese city I had made my home. By day, he’d teach English at the local flight attendant training school; by night, he’d play guitar in local bars. He was looking forward to becoming a father. Sadly, when his wife was seven months pregnant, Ronnie passed away of a heart attack in his bed. Helping carry his body out of his apartment and down the stairwell was one of the hardest things I’ve ever done. Ronnie’s wife was distraught. On top of their grief, his wife and daughter were also facing an uncertain financial future – unfortunately, Ronnie’s employers had only given him a basic life insurance package. Sitting around with my friends in the weeks afterwards, trying to process Ronnie’s death, it was clear we had to do something. Somebody had the idea of doing a music festival. Paying it back ‘Chopper Wood’ (so-called after Ronnie’s nickname) was held in September 2011 and featured a raft of local musicians and bands. It was a resounding success, raising $20,000 (£16,000) for his wife and daughter. It taught me that everybody can give something back and make a difference. That’s why some friends and I decided to launch the Come Together Community (CTC), a non-governmental organisation (NGO). Through CTC, we’ve since hosted annual music festivals that have raised money for local underprivileged children such as orphans or those with health problems. I remember one girl who had seven brain surgeries; we were able to help her family with living expenses from the festival’s proceeds. All this philanthropic work has definitely made me happier. The more you help others, the more you start to see goodness everywhere. In 2014 I was introduced to the Zhuhai Autism Society (ZAS), set up by parents of autistic children in the region. At the time, China didn’t recognise autism. The concept of ‘face’ (the dignity or prestige somebody has in their social relationships) is big in many Asian cultures. Many families don’t want their peers to learn their child might have autism because they don’t want to lose this ‘face’. Some would refuse to acknowledge their children were living with autism and would put their kids in public school, rather than getting the specialised help they need. It’s sad to see – but things are improving. We worked with the ZAS to fund a day-care centre – a safe space for the children while their parents were at work. One of my proudest moments came in 2021 when this day-care centre shut its doors. I know that sounds strange, but the reason it closed is that the local government finally recognised they needed to help children with autism and their families (partly thanks to us raising awareness) and decided to extend the hours of the local special needs school. CTC has helped organise projects for the children such as arts and crafts and baking programmes. One of our most exciting projects is our robot programme, which sees teachers training children with autism how to build and control robots. We’ve also partnered with Flex, one of the world’s largest electronic manufacturing companies (they make Xboxes among other things) to teach transferable skills to children with autism, which they can use to get jobs, generate an income and be self-sufficient. Flex has enabled many children from the ZAS to get jobs working on its assembly line, opportunities that otherwise might not have been open to them. Since founding CTC in 2011, I’m proud to say we’ve raised more than $385,000 (£310,000) for great local causes. I’m currently chairman and council member, a wide-ranging role that sees me look after charity accounts and audit, head marketing, plus provide the corporate governance and risk oversight for the NGO. Accounting for charities These charitable activities are undertaken alongside my role as group chief financial officer at China 2 West (C2W). Just like my day job, my AAT studies have come into good use in the charity world. If you have accounting skills and want to do something purpose-driven, there are so many opportunities where you can employ this knowledge. For example, if we’re hosting a programme teaching children with autism how to rollerskate, we’d need to break down the costs of venue hire, the teacher’s salary per hour, the social worker’s salary, the cost of the rollerblades and so on. I firmly believe that if you’re planning to work in charity, AAT is the best thing to study. It isn’t just about the numbers: the ethical knowledge you acquire when training as an accounting technician is also a massive help. Transparency is essential in charity. Sadly, there are many bad eggs out there, but if you’re transparent and have the ethics to underpin that, you can do some brilliant things helping others. Pride in ethics This was something I discovered when I wanted to register CTC as an official NGO in China in 2013. Thanks to my ethics training at AAT, I really pushed this as I knew few people would trust us with their money unless we became an official organisation. We needed to let people know that we are a 100% ethical charity and every single renminbi we raise is used to help children. H Our work has also been acknowledged overseas, and I’m beyond flattered to have won the AAT Impact Award earlier this year, as well as seeing CTC pick up a prestigious United Nations Social Impact Award in 2019. All this philanthropic work has definitely made me happier. The more you help others, the more you start to see goodness everywhere. On 27 May, CTC hosted its first music festival since Covid-19 struck. I wanted to make it the biggest festival we’ve ever hosted and raise more money than ever. I also hope we’ve made Ronnie proud.
Accountants lack fulfilment and confidence at work Posted 08/16/2023 by AAT Comment & filed under Confidence, Members. Employers and employees need financial transformation for job fulfilment, survey suggests. In a survey conducted with University of Georgia Consumer Analytics Program, accounting workflow automation software provider FloQast asked accountants about the current state of the profession, and how it might look were they in control. It also covered their fulfilment in their jobs and the tools and training they had received. Respondents included 284 accounting and finance professionals from individuals to organizations, varying in title, tenure, company size and IPO status. Key insights The survey data shows accountants’ ideal-on-the-job state, the role of technology in their future, and recommendations for their employers. It found that most accountants recognise that their employers need financial transformation to drive strategic business performance, and in many cases, a lack of on-the-job fulfilment gets in the way of that reality. Accountants who are more fulfilled by their job are more confident in their work A little more than half (58%) are very confident in their work. However, that means 42% of accountants are not completely confident – alarming when taking into account the sensitive financials handled by accountants on a daily basis. Research indicates that 60% of accountants would give their fulfilment from the profession a C or lower. Only 5% of accountants would rate their fulfilment in their job as A+. When determining what creates fulfilment for an accountant, many echoed the same sentiment: finding solutions to the puzzles that arise at work, as well as contributing to the decisions in their organization, and being recognized for their contributions and ideas. Most accountants believe there are better ways to accomplish their jobs How they allocate their time in their job: Most accountants’ time is spent managing finance and accounting functions (16%), capturing and classifying transactions (14%), preparing and issuing financial reports (12%), and executing the Financial Close (13%). However, respondents aspire to be more of a strategic partner, informing the organization in planning and projects, mitigating risks and ensuring that controls are in place to protect the organization. Unfortunately, one-third or less of accountants believe that their organization’s leadership sees them as a valuable strategic partner. How they do the work: When asked how they would approach their job differently if given the opportunity, accountants reported that they would like to set the strategic direction for projects (83%) and have more of an impact on the success of their organization (78%). Accountants believe that these activities and more could be possible with more reliable systems, more automation, and clearer processes that everyone understands and follows. How the technology can support the work they do: Accountants believe that having the right technology would mean that upstream and downstream processes would be better integrated with their work (76%) and the execution of their work would be solid (75%). In addition, technology would favourably impact company performance (75%), and they would be better equipped to make more strategic decisions (74%). Further, their company culture would even be stronger (67%). Financial transformation Ultimately, accountants’ assessment of their environment, challenges, opportunities, and aspirations is consistent with the concept of financial transformation, the reshaping of the organization to unleash employee potential and achieve faster and more accurate insights that drive strategic business performance. Therein lies both a disconnect and an opportunity – 70% of accountants said that their company is in strong need of financial transformation. “There is a massive opportunity to bring accounting into the 21st century by aligning accountants’ roles and responsibilities with their desires,” said Mike Whitmire, CEO and co-founder of FloQast, CPA. “FloQast exists because of my own desire as an accountant to add strategic value to the organization by automating basic, repetitive tasks. This dream to accomplish more still permeates the accounting industry.” This survey marks the fourth chapter of FloQast’s Controller’s Guidebook series.
Encouraging multi-generational collaboration at work Posted 08/15/2023 by Annie Makoff & filed under Leadership, Members, Run your business. Given inter-generational friction is frequently evident in news coverage and online, how can accountancy firms enable good relationships within the workforce? With as many as four – sometimes even five different generations – working together in the same workplace, employers have their work cut out in ensuring they’re continuing to meet the needs and expectations of a hugely age-varied workforce. While it’s important never to stereotype based on age demographic, knowing what each generation may expect or need can sometimes be a helpful guide for employers from a recruitment and retention perspective. Much has been written about the characteristics of each generation based on economic situation, market trends and popular culture – here’s an overview. Traditionalists/Silent generation (1928 – 1945): Although there are relatively few Traditionalists left in the workplace as most have retired, those that remain bring a huge amount of experience to their roles. They have a strong work ethic, value traditional hierarchical structures and are extremely loyal to their employers. They often have formal attitudes to work and relationships and can be less comfortable with new and flexible ways of working. Baby Boomers (1946-1965): Now nearing retirement, Baby Boomers also bring a wealth of experience to their roles. Many of this generation grew up during a relatively stable economy and are likely to be the last generation to enjoy good pensions. They have a similar hard-working ethic to previous generations, though they’re generally more comfortable taking risks than Traditionalists. Generation X (1965-1980): This generation are typically entrepreneurial and have a much more flexible attitude to their work environment. They value autonomy in the workplace and a focus on personal development and career ambition. Work-life balance can be extremely important to this generation, as many have caring responsibilities for children and/or elderly relatives. Generation Y/Millennials (1981-1996): Now the largest generational workplace cohort, Millennials grew up during rapid technological advancements, hence tend to be tech-savvy. They are results-orientated and are not afraid to challenge authority in order to problem-solve or innovate. A creative generation, they value autonomy, independence and flexibility in their working environment. Generation Z (1997-2015): Gen Z is the newest generation to enter the workforce and are true ‘digital natives’. They have a global mindset and are adaptive to change. They’re more cynical than previous generations, so place greater value on transparency along with diversity and social responsibility. Generation Alpha (2010-2025): Although not due to enter the workforce for many years yet, the emerging Gen Alpha, which overlaps slightly with Gen Z, are the only generation to live entirely in the 21st century. Already, they’ve lived through several significant events – Brexit, Covid-19 pandemic, war in Ukraine, global recession and so on which will inevitably shape attitudes and behaviours as they mature. A multi-generational workforce can bring diversity of thought as well as experience. How can accountancy firms bridge inherent differences to foster a culture of collaboration, encouraging colleagues of different generations to work together? We spoke to several accountancy firms to find out how they’re doing it. It’s a balance between experience and fresh input Jess Middleton, Accountant and Founder, MPAS (Middleton Professional Account Services) We have three generations working in our team, between the ages of 20 and 60. What’s been the most challenging is the gap between qualification and experience. When you are freshly qualified without any practical experience, there’s a tendency to think things should be done one way when actually there are a number of alternative ways to do things. Equally difficult is making sure that experience doesn’t cloud the fresh input of a newly qualified individual. These are two aspects we’ve worked hard to battle, to make sure both the theory and the practical can reside happily side by side. We hold monthly team meetings and ask each staff member to list their learning and how they can use it to move forward. Often, this means there is an open dialogue between generations. We also have an anonymous ideas hub which encourages everyone to be involved in moving the practice forward. Staff are also sent on various CPD courses to level the playing field. Viewpoints can be limited if you have just one generation in an office. Working across generations means everyone continually learns. There’s no stagnancy or rigidness. Practices have to be willing to invest time, money and resources into making sure their teams gel, and need to recognise that people of all ages bring something special to the table. Verdict: We try to balance experience with fresh input, and encourage open dialogue between generations. We’ve also implemented an ideas hub to facilitate innovation. Working together plugs skill gaps Alex Beattie, Managing Director, KRW Accountants We have three generations in our business, with staff ages ranging from 60 to 19. A large proportion of our team are between the ages of 25 and 40. We even have a mother and daughter working together. We have a very open and cohesive culture here at KRW. We try to work to our strengths and help each other’s weaknesses. So when we roll out new software, typically, the younger generations embrace it quicker. Many of the younger generation are our ‘tech champions’ who are responsible for implementing and training everyone on new software. Those in the older generations have a wealth of experience that we can lean on and apply to the modern world, so there’s mutual respect between the generations. For example, sometimes there’s a tendency for the younger generations to rely heavily on software accuracy – but older generations will have the experience to critique the output and know whether something doesn’t look right. Equally, younger generations have grown up in a tech-driven world and therefore operating new fast-moving tech is second nature to them. Older generations on the other hand have been through similar cycles and can draw on past experience to know what may work and what won’t, bringing different ideas to the table. Verdict: We encourage collaboration between generations, working to our respective strengths and supplementing each other’s skill or knowledge gaps. We take practical steps to encourage internal networking Sophie Austin, HR Partner, Monahans Having a mixed generational workforce is vital: it provides a range of views, perspectives and opinions which generates new ways of thinking and approaching things. Ensuring all generations are working together leads to personal growth and development for everyone, not just the younger ones. At Monahans, with employees spanning the ages from 18 to 60, we truly do have a multi-generational workforce. It’s fair to say that those entering the workforce now have been adversely impacted by the covid pandemic. Their learning has suffered, as did the development of their social skills, at a critical time in their education. Organisations need to consider how to support these individuals and fill these gaps in order to develop much-needed communication and interpersonal skills. How we encourage multi-generational collaboration: Through our structure and approach to resource planning, as all employees work together across different age groups. Offering flexibility to work collaboratively across all our offices and teams. Our Associates (trainees) work with any manager, based anywhere. This not only helps the younger employees build relationships and improve communication skills, but it develops their breadth of experience and skills, learning from those who are further into their careers. Utilising tools such as employee forums, focus groups, suggestion schemes and engagement surveys to ensure we receive a different range of perspectives and opinions from each generation. Employee feedback is vital to us for understanding trends, identifying key issues and putting plans in place to solve them or make positive changes. Verdict: Take practical steps to encourage internal networking. We offer flexibility for employees to work collaboratively across all offices, teams and people of different age groups to help build relationships and improve communication skills. Discussions and mentorship bring different perspectives Lauren Bilton, Business Development Administrator, UHY Hacker Young A multi-generational workforce brings many benefits. Younger members tend to have enthusiasm and a new way of looking at things, whereas age and experience tends to bring a little bit more pragmatism. The two, if working well together, can help to get some good new initiatives off the ground in a workable way. Our Nottingham team crosses four generations – from Baby Boomers to Gen Z – collaborating to deliver fantastic support to our client base. The younger generation that has come through certainly arrives with different expectations. Having started their career in recent years, they see hybrid working and a positive work-life balance as higher priorities. As these school leavers and graduates have completed a large portion of their formal education online, we want to continue to provide this agency with their work. Having a multi-generational workforce brings a net positive benefit to the workplace. It blends experience with the modern education experience of graduates who are more aware of the future of the industry. By encouraging collaborative discussions and mentorships, our team brings different perspectives and life experiences that perhaps wouldn’t be considered without that representation. Verdict: We encourage collaborative discussions and mentorships to bring different perspectives and life experiences. Socials help everyone bond Claire Moloney, HR Manager, McBrides As a training firm, we have four generations working at McBrides: Baby Boomers, Gen X, Millennials and Gen Z. It can be very easy to generalise the needs and expectations of the different generations in the workplace and we guard against this. We tend to find that it’s often one generation training together while working with other generations at manager, partner and client level. As a values-driven firm, we learn so much from each other and recognise that everyone brings different perspectives in meetings and when working together. We do find that employees work together naturally together anyway, without the need to actively encourage collaboration between the generations, especially as training is an intrinsic part of who we are and what we do. However, we do hold staff socials, which is an opportunity for everyone to come together and get to know each other better. Verdict: Different generations already work well together and often train together – but after-work socials can help get to know each other better.
Tackling tutor recruitment and retention challenges Posted 08/10/2023 by Mindful Education & filed under Learning. This content is brought to you by Mindful Education. Many providers are facing challenges to recruit and retain staff to deliver AAT courses and apprenticeships. The AoC report, ‘College Staffing Challenges in 2022’, highlighted that there were 6,000+ total job vacancies in England’s colleges – the highest in over twenty years. In a recent survey of 4,252 teachers, trainers, support staff and managers by the Education and Training Foundation, 19% of respondents cited recruitment challenges, and 10% time pressure, as their main concerns. 23% of respondents also expressed frustration at the amount of paperwork as well as poor administrative systems. Through our experience of working with over 65 college partners, we have seen several tutors leave the profession in recent months for a variety of reasons, including switching to an employer that delivers more flexibility which suits their lifestyle. Using intuitive technology to relieve the pressure of many aspects of a tutors role will have a positive impact on staff retention. On top of this, high-quality blended learning solutions can enable providers to focus tutor time to where they can make a real difference to learners, rather than having to deliver every element of teaching, learning and assessment by themselves. This change to a blended format can make it the ideal solution for colleges who are experiencing staff shortages or who wish to transfer valuable teaching hours to other subject areas. Giving tutors the time to focus on the learner Mindful Education’s blended learning courses and apprenticeships make it easier for colleges and training providers to deliver AAT qualifications by providing staff with flexibility and freeing up their time. With an Online and On Campus course or apprenticeship, learners study high-quality online learning materials based on video lessons, with questions to check their understanding of every concept. They also meet regularly with a college tutor who guides them through the course. This approach allows tutors to support their learners in unlocking more challenging subject areas, and spending more time working on exercises that are better suited for face-to-face class delivery rather than online. Samantha Carnegie, Course Leader for Accounting and AAT Provision at Westminster Adult Education Service said “It makes my life a lot easier, it allows me to do what I enjoy and that’s working with the learners.” In 2022, over 3,000 of our learners completed more than 2.5 million questions on our platforms, all of which had correct and incorrect feedback to help at the point of learning. Data from each cohort is available to tutors to access on demand, or via a regular weekly report. This allows them to see how and where learners are progressing, and enables them to plan their on campus sessions to match the needs of that particular cohort, or even for individual learners within the class. Eve Jones, AAT Lecturer at BMet said “Instead of standing there talking to the students, Mindful Education is doing that with the videos, and when you come in [to class] you are doing more active learning. So we are not tutors anymore, we are facilitators. The advantage is you have less time teaching, and more time working together.” Two years ago we moved to an unlimited tutor support model and also launched bespoke tutor training sessions on our VLEs for our partner tutors. We aim to continue to enhance our tutor support, indeed last month we launched our Partner Hub, which is a new platform encompassing all of our extended tutor support in one place. Working in partnership with hundreds of training providers, colleges and employers, Mindful Education’s compelling mix of academic, technical and creative expertise brings learning to life. We’re working closely with AAT to raise awareness of teaching career opportunities within further education and skills, by highlighting the benefits a teaching career can bring. Kelly Warrick, Head of Accounting Delivery at Mindful Education said ‘We know how hard AAT tutors work to help their students and ensure that they thrive throughout their studies, so we are always looking at new and better ways that we can support them’. Please get in touch to find out more about how we can support your team to deliver AAT qualifications. This content is brought to you by Mindful Education.
There could be a solution to your firm’s late payment problem Posted 08/04/2023 by AAT Comment & filed under Automation, Prompt payment, Technology. As late payments persist and the culture of ‘buy now, pay later’ grows, apps can help you get paid. Late payments can be a pain, and if widespread and persistent, they can even threaten a business’s survival. Smaller companies were owed £250,000 in outstanding invoices on average, according to a survey of SMEs conducted by alternative finance specialist Time Finance. It added that around a fifth of respondents said relationships with customers had been damaged by chasing up money owed. Not only that, but according to one of the world’s largest insurers, Allianz, operational costs as a proportion of turnover have hit their highest level since the 2008 and late payments continued to rise last year, with nearly a fifth of businesses worldwide reporting that typically they were paid after 90 days or more. As overheads creep up and credit becomes more expensive due to rising interest rates, taking steps to curb late payments is crucial, according to Bobby Lane, co-founder of Factotum. Why an app might work for you “I was incredibly cynical about these apps to begin with,” Lane says. “I used to think nothing beats having a relationship with clients and getting on the phone to them and speaking, but when you automate the process, it accelerates payment, and payments are made in a more timely fashion.” It removes the personal element For many, the personal touch is a key to their offering, but in Lane’s experience, that should not perhaps extend to getting paid. “I don’t know why this is the case psychologically, but if you send an email with an invoice attached, we find a client will ignore it,” Lane says. “But if they get an automated email from a system with an invoice, for some reason they seem to take it really seriously and I’ve had a few panicked emails saying ‘We thought we’d paid it, we’re sorry!’” Real-time data Using apps such as payments management tools provide businesses with real-time visibility over their performance and allows them to see where they stand. “It gives you the discipline to make sure things are happening,” Lane explains. “In the pandemic, businesses became more interested in their cash flow, real-time information and forecasting. People became acutely aware of the cash available in their business and what they needed to survive. Managing your working capital and making sure cash is in the business is crucial, especially in periods of uncertainty.” A case where it’s worked… Payments went from 60 days to 45 days Lane cites one client who managed to reduce their debtor days by an average of 15 days, simply by better monitoring. “They were doing everything manually, including credit control and chasing invoices,” he explains. “When they introduced their payment management software, their collection period went from 60 days to 45. That’s just by putting in a process and a system that was monitoring things automatically and making sure those chasing emails were going out.” …and a case where it hasn’t Lane also notes that another client attempted to introduce a payments management system, but didn’t execute it correctly. “It went badly,” he says. “They were trying to do their own bookkeeping, and it was one of those situations where they’d write up their books when they were trying to do their VAT return. You’ve got a bank account that’s not reconciled and invoices that are still showing as outstanding on the receivables ledger. Payments have come into the bank account that haven’t been checked off against the invoices and their system is sending our chasers for things that aren’t due. “That doesn’t look particularly good reputationally.” The drawbacks Incomplete data As with so many systems, the quality of data fed into it is crucial to its function. “Your systems have to be up to date,” says Lane. “It can get a bit embarrassing if you’re not reconciling your bank account and your books. It can mean your payment processing software is sending out emails to people saying ‘Can you please pay your invoice’ and you’re getting responses saying it was paid weeks ago. So you’ve got to make sure your software is updated and linked up properly to the rest of your system.” Spam filters “Company spam filters can be quite strong,” says Andy Murray FMAAT, finance manager at Galson Sciences. “A lot of government agencies, which make up a lot of our clients, work like that, and filter each new domain they get emailing in, so we have to be careful clients check their junk, because if that continues, they won’t receive any chase emails and we won’t get paid.” Taking payment management to the next level Customisable, interactive payments management Examining that data in more depth and with greater flexibility is the natural next step for payment management tools. Most standard tools offer a dashboard and automated communications at set intervals, but additional tools such as Microsoft’s PowerBI enable users to interrogate their data in much greater detail and engage in various forecasting activities and modelling. “From a dashboard and visibility point of view, more interactive data is always desirable,” says Murray. “That allows you to manage your cash more closely and go through ‘what if’ scenarios, so you can be confident you have enough cash in your business to meet your own obligations. “If, for example, you’re a mergers and acquisitions business acquiring companies, and you’re looking at making a purchase, you can interrogate the trends there and stress test whether it would work and you have enough coming in to absorb it.” Greater automation Open Banking APIs are set to play an increasing role in late payment. They can help gauge the risk that clients and/or potential clients will pay late or not at all, as well as facilitate automatic payments between trusted parties. APIs provided by fintech providers that can be securely used by online merchants in apps and websites simplify the management of sending, authorising and clearing payments. “Everything can be one automated process and fully integrated,” explains Lane. “The real-time data that these apps create and are at business’ fingertips is so far ahead of where it was even two or three years ago, and it’s made life easier for businesses to see where they stand at any point in time. That will only continue.” He cites AI as a clear candidate for inclusion in the process, particularly given its rapid iteration and progress in a short period of time. “We’ve seen the recent developments in AI and how it can predict certain trends, that will be integrated more with that real-time information on accounting. “There is talk that there may be changes to the accounting regulations, which will mean in future that small companies won’t be able to file abbreviated or filleted accounts. Instead, they will have to include their turnover and profits and deeper detail on Companies House. This, Lane says, will change the dynamic. “That will mean much greater detail on the small companies you’re trading with will be available to you, and you’ll have a clearer picture on how they’re doing, the size of it, and so on.”
Brexit tariffs could close UK car factories Posted 08/04/2023 by AAT Comment & filed under Brexit, Members, Tax. One of the world’s biggest carmakers has warned it may be forced to close its UK factories if the government can’t renegotiate part of the Brexit deal with the EU. The UK’s new car production has been trending downward in recent years. In 2022, 775,000 new cars were made in the UK, down from around 1.5 million in 2018, according to industry trade body SMMT. Unfortunately, tariffs could contribute even further. Stellantis, which owns various well-known car brands including Vauxhall, Peugeot, Citroen and Fiat, is due to make electric cars in the UK, but it now says that is under threat due to the terms of the UK’s departure from the EU. It warned it could face tariffs of 10% on exports to the EU due to rules on where parts are sourced from. These would commence from January 2024, when 55% of an electric car’s components by value must come from the UK or EU to avoid tariffs. From next year, 45% of the value of an electric car should originate in the UK or EU to qualify for trade without tariffs. This will rise to 65% in 2027. “If the cost of electric vehicle manufacturing in the UK becomes uncompetitive and unsustainable, operations will close,” Stellantis said, in what is the first time a major car producer has openly called on the government to revisit its Brexit deal. Stellantis called on ministers to come to an agreement with the EU to keep rules as they are until at least 2027. Business and trade minister Kemi Badenoch held a meeting with Stellantis executives in May in a bid to better understand the issue and how it could be addressed. According to BBC News, the meeting between Badenoch and Stellantis was constructive, and it is also believed the EU is receptive to the issue as many manufacturers in the UK and EU are facing difficulties sourcing batteries.
How technology is shaping finance and accounting job roles Posted 08/03/2023 by AAT Comment & filed under Members, Recruitment, Technology. As tech takes on rote tasks, finance and accounting roles are becoming more strategic – but harder to fill. In the ever-evolving landscape of modern business, finance and accounting (F&A) departments are starting to transcend their traditional roles as number-crunchers. F&A teams and finance leaders are playing an increasingly critical role in keeping businesses resilient and agile. Today, they hold a pivotal position, with the ability to provide vital financial intelligence that contributes to strategic decision-making. As a result, skills that go beyond the traditional and transactional are increasingly in demand. However, according to the Financial Reporting Council, the number of students and qualified members joining established industry bodies like ACCA and ICAEW has declined since 2016. Amid fierce competition, F&A leaders are quickly realising that building their future talent pipeline is as crucial as it is challenging. Increased demand for tech-savvy recruits Meanwhile, technological advancements over the past decade have unleashed a vast array of opportunities for businesses to streamline processes, optimise workflows and improve overall efficiency. From automation and data analytics to financial reporting and regulation compliance, technology serves as the catalyst for a more efficient and strategic F&A. The fast evolution of Generative AI and Machine Learning in recent months has only pushed this topic further up the business agenda and highlighted the need to keep up with the latest technological advancements. Historically, F&A has been the victim of a serious lack of investment from a technological perspective when compared with other areas of a business. However, research commissioned by BlackLine suggests that technology, and in turn those with technology skills, are now more in demand as businesses try to adapt to market instability. In fact, in a recent survey, a fifth (21%) of C-suite and F&A professionals said their company would actually increase investment in technology during economic uncertainty, in order to boost their company’s resilience. This means the demand for professionals who can seamlessly blend financial expertise with tech-savvy skills is also at an all-time high. In a previous survey, the same audience were asked about the skills their company would need to adapt and grow over the next five years. The biggest concern, shared by 38% of respondents, was not having the right skills to digitally transform as quickly as competitors. Respondents also said the biggest challenge their organisation faces when it comes to recruiting future F&A talent was the ability to find people with the right mix of technology and F&A skills. Additionally, over a quarter (27%) admitted they didn’t currently have enough people at their company with software and technology experience within the finance function – this rose to nearly a third (31%) amongst CFOs. Removing the mundane While new technology undoubtedly adds more demands to the long list of requirements for new F&A recruits, its positive impact on talent acquisition and retention cannot be underestimated. By removing rote, repetitive, manual tasks, businesses can free up time to allow F&A talent to focus on developing their roles and careers. Instead of moving numbers around a spreadsheet, F&A employees can focus on the tasks that will provide the insights and consultancy needed to help their business make smarter, faster decisions. This can undoubtedly help with retention, alleviating the demand issue. Importantly, it also creates a more attractive workplace environment to appeal to the limited supply of new talent. A third (32%) of survey respondents said younger workers in particular expect their organisation to be more digitally capable than it is. If companies wish to appeal to the very best new F&A talent, they need to address the expectations of new recruits. By removing the mundane, they will be in a stronger position to offer more creative, strategic roles. Embracing a new F&A It should go without saying that to attract and retain top-tier talent, organisations must prioritise career development and upskilling initiatives. By providing comprehensive training programs that focus on developing tech skills, companies can empower their existing finance teams to adapt to the changing landscape and become more agile in handling digital tools. Meanwhile, emphasising a culture of continuous learning and technological innovation will attract professionals who are eager to embrace the digital transformation of finance and accounting. The convergence of financial expertise and tech skills will be the driving force behind the transformation of F&A roles. By investing in the automation of manual tasks and upskilling existing talent, businesses can bridge the gap between finance and technology, and create a robust and agile F&A department prepared to play its pivotal role in business success over the coming months and years. Joshua May, Consulting Manager EMEA, BlackLine