Reconnect with your AAT branch as networking returns

Posted by & filed under AAT news, Members.

After more than 18 months of hiatus, in-person branch events have made a welcome return to the AAT calendar.

The resumption of in-person meetings is reinvigorating AAT’s branch network after more than a year and a half online as a result of the pandemic.

Running alongside the online events, there is also now strong demand for the in-person events, which provide a range of CPD and networking opportunities to members.

Branches have wasted no time in organising their return events, AAT product support and delivery manager Tom Duncan explains. The Leicestershire branch’s event on trading with the EU after Brexit on 27 October marked the first in-person AAT branch meeting since March 2020.

“One of the biggest advantages of local events is networking and building local connections,” he says. “It’s a great opportunity to have a cup of tea with people in a similar position and discuss those issues – whether it’s getting the answer to your question or can talk it through and feel better about it.”

Those connections can be crucial and are more difficult to replicate through online events, Duncan notes.

“The online branch events were really successful, and these sessions were well attended and received very good feedback as a great way to gain extra CPD, but on the flip side, they didn’t replace the networking that happens at in-person events. The fact that the online events were so successful and offered a convenient option to members means this is still an opportunity to keep that going. We will blend that with the opportunity for members to actually meet in-person, so we can provide the best of both.”

Volunteering

There are further benefits for those who wish to help out at their local branch, including the vital experience volunteering can provide for future senior roles in other organisations.

“A lot of people who have gone onto AAT Council, vice presidency and presidency of AAT have started their progression by volunteering for the various local branches,” explains Duncan.

“It’s a great way for people to get more involved and volunteer their time to progress in that way. Past president David Frederick is a good example of that – he was on the London branch committee before going onto AAT Council and subsequently becoming vice president and then president last year.”

For younger members who are likely to have less work experience, Duncan adds, volunteering for your local branch represents an ideal opportunity to add more strings to your bow through roles such as treasurer or event planning and organisation, which otherwise may be hard to come by.

Local committees

Steve Harratt is the Vice Chairperson of AAT’s Leicestershire branch. Like all branch committee members, he is a volunteer, who fits organising branch activities around his work and his personal commitments. The return of in-person branch events is not only welcome, he explains, but absolutely crucial to maintaining the relationship with local members.

“From a perspective of the branches, we feel we’ve out- Zoomed ourselves,” he says. “We had our first face-to-face committee meeting recently and it actually felt much more real. When you have members on Zoom and you’re trying to sort things out for them, it’s different.

“Over the last 18 months, we’ve not done as much as we usually would by virtue of being remote, when we usually would have six or seven events over 12 months. Actually meeting in-person like this is great.

“I joined my local branch nearly 20 years ago and it’s a resource I absolutely did not want to lose. It was a training tool to me and that’s the reason it’s important we try and retain that. If we can get back to physical meetings, it will feel more real to people.”

AAT president supports branches

The return of in-person meetings is something AAT’s new president Heather Hill is delighted to see, and she has taken the opportunity to attend and meet with members, starting with the Leicestershire branch.

“When I first moved to my area in the early 1990s, I set up on my own, but I felt quite isolated,” she explains. “I remembered AAT has its branch meetings, so I joined my local branch. I was so happy that I had somewhere local to go and start networking. When you’re in practice on your own and just starting out, it can be handy to talk things through with someone else who can offer you that reassurance.

“Nothing beats in-person and if you find out somebody needs assistance, you exchange contact details, so you have that supportive network and bonding. Branch meetings have such a warm atmosphere and it’s great to be with other like-minded people.You miss that online.”

The photograph illustrating this article is a library shot taken before the pandemic and may not represent the way current events are held.

Year-end pressures on professional standards

Posted by & filed under Members.

The pressures of year-end can lead to stress, short cuts and even breaches of professional standards. Here’s how to beat the clock

It’s the year-end and you can feel the pressure building.

There is tension in the office and during Teams meetings, as clients frustratingly submit information for their tax returns late or not at all. The risk of errors rises and, with so many clients to deal with, everyone in the team is feeling slightly overwhelmed.

It’s a common picture for accountants up and down the land. It can be bad news for accountants’ wellbeing and potentially the industry’s reputation.

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AAT understands the difficulties, but it is also keen to reduce the number of complaints it receives relating to year-end pressures. It does not want accountants to act in a way that would bring the profession into disrepute, and it urges members to familiarise themselves with the guidance and help sheets it has produced (which are available at aat.org.uk). AAT hears grumbles that accountants are not obtaining consent from clients prior to a tax return being filed because the deadline is so tight.

Other taxpayers are upset that they were not given enough time to scrutinise a return before handing it back to the accountant.

“Often accountants will assume everything is fine because they have verbal consent, but the guidance states the importance of obtaining and retaining evidence of client consent,” says AAT professional standards officer Adam White. “If this doesn’t happen and there is an error, it comes down to a ‘he said, she said’ situation, which can be a problem.”

Fellow professional standards officer Donna Drew says accountants can make the mistake of thinking they are doing their client a favour by submitting returns without written consent because it will avoid late filing fees.

“This is a common reason, but there can be serious implications should AAT receive a complaint,” she says. “Some members are not as familiar with the guidance and our code as they should be.”

Risks

By not following the guidance, an accountant could face potential negligence claims. This highlights the importance of professional indemnity insurance.

When it comes to dealing with errors, firms are responsible for a return being accurate based on the information provided.

“But this is not a get-out-of-jail-free card for accountants,” says White. “An accountant has a professional and ethical duty to ensure they are not associated with any return they have doubts about and think could be incorrect.”

Errors can often become clear during the following year and an accountant’s duty of confidentiality can make the situation uncomfortable when it comes to disclosing errors to HMRC.

AAT guidance explains the steps members should go through and reiterates the importance of allowing enough time in the initial review process to spot any errors prior to a return being submitted.

Deadlines

One way to alleviate some of the year-end pressure is to be tougher with clients when it comes to setting deadlines for receiving information.

Many AAT members now offer discounts for early submission of tax information, while others are not afraid to resign clients that are consistently late and put unwanted anxiety on the accounting team.

Good communication is crucial and accountants can protect their reputation by making it clear if they will be unable to get a return in before the deadline because there is not enough time to review the information properly.

“There are other ways to avoid too much pressure, including not taking on more work than you or your firm can reasonably do,” says Drew. “Don’t over-promise and then under-deliver. This isn’t just about not taking on too many clients, but also not doing additional work out of the goodness of your heart because you feel a sense of obligation to the client.”

She adds that accountants and their clients cannot expect a sympathetic ear from HMRC when things do go wrong.

“I’ve not seen a case yet where HMRC has overturned the penalty given because of an error caused by the actions of one of our members. They feel it is the taxpayer’s job to get returns in on time and if there is an issue between client and accountant, it is up to them to sort it out. Often that can mean a complaint lands on our desks.”

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“Smooth out your workload through communication”

Alastair Barlow has worked with companies of all sizes over the past 20 years, from start-ups to multinationals, and he believes good planning is the secret to reducing year-end pressures.

The founder of Flinder, a company providing accounting services and management information support, Barlow communicates with clients on a monthly basis so his team does not feel inundated with work at one time of the year.

He always stresses to clients the importance of deadlines and would resign a client if they were consistently late in providing tax information.

“When it comes to planning, this means setting deadlines and being good at planning your employees’ workload,” he says.

Barlow is also an advocate of charging clients a premium to work with them in the busy season. By the same token, he may also offer customers a discount if they buy services during the firm’s quieter times.

“Errors appear when people are under time constraints and rushing,” says Barlow. “But at Flinder we would not let anything go out of the door unless it has been properly reviewed. You must still have the authority to review things even if you are coming under pressure from the client.”

He always makes sure his team feels supported. This includes looking for pinch points during the year and discussing ways to evolve different processes, so the firm’s workload is smoothed out throughout the year. This includes adopting technology to handle tasks that were previously undertaken manually.

“Manage clients early to get ahead of issues”

Don’t assume client directors and entrepreneurs are aware of what they need to do when it comes to filing their tax information.

This is the message from Chris Conway, director and co-founder of Multiply Accountancy, who says one way to reduce year-end pressure is to improve your client management.

“My approach has always been to assume no knowledge and outline the timelines and stages clearly from the start,” he says. “If the client needs help, you can step in and address problems early. This isn’t always possible because you may not have the luxury of time if it’s a new client with a pressing deadline. In this circumstance, it pays to manage the client’s expectations and if it’s not possible, say so.”

To avoid errors coming back to haunt the accountant and the taxpayer, Conway’s advice is to keep records of all correspondence, including outlining when reminders have been sent.

“Some clients can never be persuaded to provide information on time, and they are probably the same ones who pay invoices late or expect you to drop everything when they need something,” he explains.

“My view is that the ability to get something done on time is largely down to the nature and personality of the client. Some are very organised and are well-prepared ahead of deadlines. Others are consumed by running their business and prioritise things differently. It is in everyone’s benefit to lay the cards out on the table clearly from the outset.”

“Simplify the process as much as possible”

CARL READER admits he leaves his own tax return to the last minute, so he understands how human nature can make accountants’ lives a misery.

The Director at D&T says it is all about communication, including reminding clients that they face fines from HMRC.

“We try to incentivise clients with discounts for early submission and many of them like to be given a hard deadline by us,” he says. “We provide a clear checklist for them to follow. They also tend to pay us monthly, which enables a regular dialogue.”

He believes that ongoing communication means there should be time to review errors. He also stresses the importance of following industry best practice, such as AAT’s guidance.

“This is vital because without it we could see more fraud. The guidance is also crucial for the industry’s reputation and for taxpayers who do the right thing.”

What AAT’s guidance says

When experiencing pressures around year-end, consulting AAT’s Professional Conduct in Relation to Taxation guidance can be useful (available at bit.ly/3G5J3gY). Key points are:

  • When it comes to dealing with errors, it is important to establish the facts, and a client should be informed about any errors as soon as possible.
  • Explain the fees involved when an accountant claims a repayment on the taxpayer’s behalf due to a mistake.
  • The risk of errors when there are time pressures demonstrates the importance of keeping appropriate records.
  • An accountant should not give the impression they are assisting a client to commit or conceal an offence.
  • Where a firm has made an error, they may need to notify their professional indemnity insurers and take legal advice.
  • Ultimately it is the taxpayer’s responsibility to submit current and complete filings, and the accountant’s role to prepare filings on client’s behalf based on the information provided.
  • Making Tax Digital means members must also be aware of online security issues when digital filing. This includes having cyber security and GDPR policies in place.
  • When communicating with HMRC, consider explaining that you are relying on information supplied by the client.

Is the typical finance team measuring carbon?

Posted by & filed under Climate change, Members in business, Sustainable Business.

Regulations are on the way and there is pressure from customers and employees to account for carbon. So how are finance teams responding?

The UK Government is taking its first steps towards making climate-related disclosures mandatory in annual reports. Large businesses, investment funds and pension scheme providers will be expected to disclose their environmental impacts under the proposed Sustainability Disclosure Requirements (SDR).

While this will only affect larger entities in the first instance, it is likely to extend to smaller ones over the coming decade. Even without a mandated requirement, companies are under considerable pressure from investors and customers to put more information into Environmental, Social and Governance (ESG) reporting.

There is no unified approach to monitoring and measuring these factors. While environmental reports were once seen as the domain of the marketing team, ESG reporting now requires the rigour of the finance function.

Many finance functions are only just starting to look into ESG reporting in a big way. Our panel of members explain how they’re approaching environmental and social issues.

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At a governance and planning level, we can make a difference

Clare Elliott, FMAAT, CFO, ILUX

ESG factors are important for any business to consider, regardless of size. I think it’s easy to downplay these in a small business. Large corporates tend to do a lot more advertising around ESG, putting many more messages out in the public domain. Internally, SME’s are doing exactly same – although perhaps many people don’t realise they are considering ESG to quite the extent they are.

While ESG has become a bit of a buzzphrase, it’s actually always been important in business. It’s a big selling point to attract good employees and ideal clients. That’s why finance should be heavily involved in such areas. How a business acts and how it is perceived, within the marketplace will heavily influence how successful they are. Companies will want to set themselves goals and targets, to ensure they are continually progressing.

Within our organisation, although we are small, we (as Directors) spend a lot of time ensuring our ESG policies and standards are what we need to be the best in our field, and within our industry in order to attract the best people. Being an IT company, we have to consider our impact on the environment with regard to waste. While we don’t produce anything ourselves, we are a reseller of equipment and our clients rely on us to ensure we are adhering to environmental standards. As I said, I think large corporates are the ones who outwardly market their environmental standards, but that doesn’t mean small companies aren’t doing the same things.

Social factors are a big topic at the moment, as unemployment is low. Companies need to be clever with their staff retention and recruitment. Ensuring employees are looked after and happy in their work has been a big factor over the past 18 months, particularly with the big shift in work practices (ie. working from home). Everyone has had to adapt, and companies have had to spend a lot of time and resources on ensuring they are doing everything they can to help. While this may typically involve the HR department more than any other, it all relates back to financial success, and so the two departments would benefit from working very closely together.

As a finance function, governance will certainly be a big area to consider, as the financial implications of tax strategies, corruption, board diversity, etc, are directly within the remit of an FD and their team.

As an FD myself, I want to know exactly how much of our resource is spent on ESG and measure the successes and failures accordingly. That way I can help to plan for the future, and along with fellow Directors, ensure the company is heading towards a better future.

Our analysis supports ESG decisions

Sanjiv Bali, MAAT, Senior Project Accountant, A2 Dominion

Since we are a housing association, environmental and social factors are part of key elements high up on the radar. They form part of the key annual objectives to achieve.

We have specialist teams that discuss and look into these factors and issues and also communicate to the staff through various communication methods such as regular online staff essential newsletters, notifications on the intranet and roadshows and team meetings. Regular monthly meetings are held with Finance team members where they can get involved with these discussions and offer advice and suggestions.

ESG issues are important areas, so it is ideal for Finance to be involved in contributing and providing analysis to measure environmental and social goals. We have been providing factual advice and analytical reports with commentary, which has been part of a huge success around decision making. I believe as we are already in such a sector, the ESG issues will always remain a big part of the work involved that we carry out.

Finance should be the gatekeeper of sustainability issues

Farha Jamadar, FMAAT, Finance Manager, Todd Doors

Discussions around sustainability come from the top. As a timber company, we ensure that we are as green as possible and try to source as much as we can from sustainable sources and trackable timber supplies. We are involved heavily in the investigation and fact-finding of these projects and to see if they are financially viable, CSR is important to the business especially with the various environmental concerns today. 

While I don’t think this topic is on the front of our priority list, there is awareness. We think about any paperwork that is printed, vehicles that we lease and our electricity suppliers. We also perform investigations into green grants and solar panels. 

I think every department should be involved in ESG issues, but finance should be the gatekeeper and provide measurements. This should be produced at the board level so this can be monitored and implemented, and create discussion so decisions can be centred about being ethical and environmentally aware. 

It’s about being in the know, understanding your supply chains and where gaps and wastages are. It can be as small as ensuring our department limits printing to tracking the supply of our timber for our wood. I guess it starts somewhere and then builds as more visibility is shown. Initially, it’s difficult, as this aspect can be seen as not delivering the core needs of the business but it can easily be shown how one wrong move can be detrimental to business. 

I hope to have ESG issues at the forefront of our decision-making process as this should be everyone’s responsibility and businesses, small and big, should all do their part.

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How should businesses prepare for new climate impact disclosures?

Posted by & filed under Climate change, Members, Sustainable Business.

What can businesses do to prepare for the Chancellor’s new Sustainability Disclosure Requirements?

Chancellor Rishi Sunak recently announced new proposals that would require large businesses, along with investment and pension scheme providers, to disclose the environmental impact their business practices are having on the planet. Specific plans on reaching net zero will also need to be clearly set out.

The proposed Sustainability Disclosure Requirements (SDR) aims to combat ‘greenwashing’, where some businesses mislead investors or the general public into believing that their products, services and business activities are more environmentally friendly than they actually are.

The proposals and their specifics will be put to public consultation, after which it will become clearer how SDR will work in practice, including implementation dates and any potential penalties for non-compliance. 

Yet while there are as yet no legal obligations for businesses to disclose their environmental impact nor implement an Environmental Social Governance (ESG) framework, there is a clear business case to do so from both an ethical and business risk perspective.

AAT has recently issued new ethical guidance on sustainability which includes a checklist for businesses to follow. It includes:

  • Asking how your organisation and client base can help society and sustainability
  • Ensuring every new project or area of development is thoroughly explored and researched from a sustainability standpoint.
  • Measuring everything, from KPIs and targets to outcomes and deliverables.
  • Conducting regular risk assessments including supplies and third parties.
  • Setting science-based targets.

We asked several accountants for their views on the new proposals and how businesses should prepare for them.

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Start identifying key metrics, implement TCFD framework into business strategy and engage with stakeholders

Andrew Probert, accountant & Managing Director, Duff & Phelps’ A Kroll Business


The latest proposals build on commitments set out in the Green Finance Strategy in November 2020. It aligns with the current requirements of the Task Force on Climate-related Financial Disclosures (TCFD) Framework but also points towards the future developments of the newly-formed International Sustainability Standards Board (ISSB).

Given the nature of their work in measuring the financial impact of sustainability, accountants will play a critical role in preparing businesses for the new sustainability changes.

Next steps: There are several precautionary measures businesses can take now in advance of the enforcement of new climate regulations:

  • Businesses can start identifying how they will collate, analyse and benchmark climate-related metrics.
  • Businesses should also start embedding the TCFD framework into their organisations. Even though these requirements continue to evolve, the basic principles remain the same and therefore businesses can start preparing for how they are going to create appropriate governance structures, prepare clearly defined strategies, and build suitable risk management processes to help identify, assess and manage climate-related risks and opportunities.
  • Businesses should start engaging with their key stakeholders to understand what they believe is material from a sustainability perspective. 

Verdict: Accountants can support businesses in taking precautionary measures such as identifying key metrics, engaging with key stakeholders and starting to embed TCFD framework in business strategy.

Track progress towards TCFD guidelines and implement a plan to meet objectives

Bal Gora, Director, Diamond Accounts

Some large businesses in the UK will have to start disclosing their environmental impact under the new sustainability disclosure requirements. A company’s sustainability claims will have to be justified “clearly”, and their net zero transition plans properly set out in a statement that accompanies their annual report. They need to meet TCFD guidelines, specifically around governance, strategy, risk management, metrics and targets.

TCFD reporting should flow through to the company’s financial statements to meet these objectives.

Many companies will therefore face the challenge of integrating the relevant, material information into their annual report and accounts (ARA) for the next tax year. Accountants who offer advisory support can help by incorporating this information into a company’s plan, business model and strategy.

Next steps: Companies should start transparently addressing the progress on how they’re meeting the TCFD’s recommendations, the actions needed to start closing any gaps, and the plan for achieving this before mandatory reporting becomes effective.

Verdict: Keep track of progress towards TCFD’s recommendations and implement a clear plan for achieving it.

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5 ways to impress on your work experience placement

Posted by & filed under Students.

Government statistics show that 42% of those who undertake work experience placements are offered a job at the end.  But what’s the best way to turn a few days of tea-making duties into a golden opportunity? 

From researching the company thoroughly before starting, to showing initiative and being prepared to get your hands dirty, we highlight five ways to impress senior colleagues and boost your chances of being offered a more permanent role. 

1. Prepare for the role 

Find out as much as you can about the company you will be working at, and the team you will be in. Check out the company website for details about what it does and, where possible, its ethos. 

“Do your research to demonstrate a good initial level of engagement, and understanding of the company,” said Georgina Perry, a human resources expert at consultancy The HR Difference. 

If you know the name of the manager you will be reporting to, or the people you will be working with, you could also see whether they have a profile on the company website or on a social media site such as LinkedIn. Avoid, however, checking up too much on personal sites such as Facebook: you don’t want to come across as a stalker! 

Key takeaway 

  • Researching the company will give you some talking points and show you are motivated to do well 

2. Give a good first impression 

Dress smartly for your first day – it’s better to be overdressed than underdressed.  And make sure you turn up on time. Once there, smile and introduce yourself to everyone on the team.  You never know, the person you shake hands with on your first day of work experience could be your next boss. 

“A work experience placement is often short in length so establishing yourself on your first day as a professional and positive addition to the team is important,” Perry said.  “Being presentable, engaged and willing to learn are among the key attributes you should look to demonstrate.” 

Key takeaway 

  • First impressions count! So dress the part and don’t be late 

3. Be enthusiastic 

Embrace each new task you’re given, however menial, and do it to the best of your ability.   Once you’ve shown you can master the basics, you’re more likely to be offered more interesting jobs. 

When student Amy Taylor was on a placement at a financial services firm recently, she impressed her boss with an eye for detail. “I noticed a mistake while entering a client’s details,” she said.  

“I wasn’t sure whether to mention it at first, but I’m glad I did as my manager was very pleased and has now offered me a longer placement during the Christmas holidays.” Remember too that you are there to learn, so it’s ok to ask questions. Asking for clarification is a lot better than having to go back and start a task again because you misunderstood the instructions. 

Key takeaway 

  • Show willing, whatever you are asked to do, and try to learn as much as you can 

4. Be proactive 

It’s important to show initiative when you are on a work experience placement. So if you finish a task in a shorter time than you were given, ask what else you can do or offer to help a colleague with another job. 

Other ways to show an active interest include asking to sit in on meetings or accompany a colleague on a client visit. After a couple of days, you can also ask for feedback from your supervisors.  

This will show you’re keen to improve and give you the chance to prove you can act on the advice given. “I got some really useful pointers from my manager during my placement,” Taylor said.  “It’s advice that has already helped me with my studies too.” 

Key takeaway 

  • The aim is to show you can be a valuable member of the team, so help out wherever you can and take any feedback on board 

5. Make the most of networking opportunities 

There are lots of chances to network during a work experience placement.  Try to connect with as many of your colleagues as possible, even if it’s only by offering to make them a tea or coffee.  “Take the opportunity to introduce yourself to others,” Perry said.  

“In a busy day, colleagues may not always be able to do this themselves.” When you do speak to people, be friendly and open about your own ambitions. But only approach people when you can see they have the time to talk – nobody will appreciate you popping by for a chat when they are up against a deadline! 

Once your placement has finished, email the members of the team you worked with to thank them and connect with them on LinkedIn. And email the person who set up the placement to thank them too, and to flag up that you are interested in working for the company on a more permanent basis. 

Even if there aren’t any jobs going at the moment, they can keep your CV on record and let you know if and when anything suitable comes up in the future. 

Key takeaway 

  • Networking is one of the best ways to hear about any jobs that become available, so be friendly and stay in touch with any contacts you make on your placement 

In summary 

A work experience placement is a great opportunity to meet people and learn about a role. Even if you decide the industry isn’t for you, you can make valuable contacts and gain transferrable workplace skills. So make a good impression by researching the company, being professional, showing initiative, and working hard. 

For more work experience advice: 

How my apprenticeship shaped my career in accountancy

Posted by & filed under Apprentices.

In the first of a three-part series here we talk to two apprentices about how their apprenticeship journey has shaped their various careers in accountancy, what they’ve learned, and the tips they’d give for success.

How have the skills and behaviours (non-technical) elements of the apprenticeship helped you develop your career in accountancy?

Alice Humpston, Assistant Accountant in the audit and accounts department at BHP says completing the AAT apprenticeship with BHP, helped to develop her career by improving her time-management skills as a whole. “The skills I learnt on the apprenticeship programme have helped to increase my organisation at work – so I can manage my tasks and prioritise the most important ones,” says Alice.

For Nagina Mushtaq, Banking Audit Associate at KPMG, the skills developed in the non-technical elements of the apprenticeship proved to be constructive in both a personal and professional sense. “The process you undergo to demonstrate the skills and behaviour is deeply reflective and highly constructive, from celebrating success to setting goals”.

How to build a great career with an AAT apprenticeship

Have you considered an apprenticeship as a route to gaining your qualification and getting the skills needed to progress your career? Do you have unanswered questions about how they work, who they are for and what roles that can lead to? Look no further, hear from us, along with Network Rail and Whyfield Accounting Services, to find out the answer to these and many more questions.

Watch now

Any tips for balancing workloads and studying for a professional qualification?

“Try to keep on top of your study and don’t all your revision build up, try and tackle it in chunks – such as a chapter or so at a time. This can even be done by doing a couple of questions on your lunch break at work then it is always fresh in your mind” says Alice.

“I have found short evening sessions of questions practice/study post work to ensure consistency and settle into a routine. Diary management is crucial to effectively manage workloads and making your team aware of upcoming exams will ensure that you leave on time to study” says Nagina.

What value do you feel the AAT qualification brings to the Apprenticeship programme? 

“The AAT qualification that I have obtained has put me in good stead for the future, as this is a highly prestigious qualification that not many people get the opportunity to complete with such support and care from their employer,” says Alice.

“The AAT content introduced me to the building blocks of financial statements and taxes and allowed me to translate this into my day-to-day role,” says Nagina.

What advice would you give to Apprentices to help them develop a first-class portfolio?

“Try and get somebody at work to read through your EPA before submitting it to your talent coach for review. My manager at work read through my EPA and suggested areas which he thought I did well at work which I hadn’t already thought” of says Alice Humpston, Assistant Accountant at BHP. 

“Be open to any opportunities that come your way and more importantly express your interest, seize the initiative, and get involved if you are passionate about a cause or project. Equally, if you find yourself working on something a little less exciting you are still adding value and there is always something to learn” says Nagina Mushtaq, Banking Audit Associate at KPMG

Which resources in MyAAT did you use to help you prepare for EPA?

“I thought it was useful to always keep the AAT mark scheme on the EPA specification open when working on my portfolio then I could tick off when I had covered something and it makes it useful to see what areas need more detail adding to them,” says Alice.

“In conjunction with the excellent guidance from BPP, I found the real-life case studies on the MyAAT very insightful, and the green light tests a good dry run to check my understanding of the technical content,” says Nagina.

What did you find most difficult about developing your portfolio and how did you overcome this?

“I found it most difficult to complete the organisational chart for my firm, as there are several different departments, service lines, and branches of BHP which could be considered. After discussing this with my Skills/Talent Coach, we agreed that it would be better for me to just focus on the department which was relevant to my job and my apprenticeship” says Alice.

“The character limit was the only real difficulty in developing my final portfolio- I am a big fan of words and detail, the challenge lay in striking the balance. Multiple iterations and stringent review of what I was writing was helpful in navigating this” says Nagina. 

How to build a great career with an AAT apprenticeship

Have you considered an apprenticeship as a route to gaining your qualification and getting the skills needed to progress your career? Do you have unanswered questions about how they work, who they are for and what roles that can lead to? Look no further, hear from us, along with Network Rail and Whyfield Accounting Services, to find out the answer to these and many more questions.

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What was the best piece of advice you received from your Skills Coach or Line Manager when you were approaching End Point Assessment?

“My best piece of advice received from my Skills Coach was to add a witness testimony to my portfolio for my EPA, in order to strengthen my case and give us more to talk about in the EPA discussion,” says Alice.

“Feeling very satisfied after submitting a reflective statement in the build-up to the EPA, a skills coach very thoughtfully crossed out a number of sentences with a ‘you don’t need this’. In hindsight this drove me to focus on the substance of the reflective EPA element” says Nagina.

What are your top tips for Apprentices approaching their end point assessment looking at both the reflective and synoptic element of EPA?

“For the reflective discussion, I made sure that I did some additional research of BHP and any new projects/developments – so that I was up to speed with all of the latest events in the firm which would strengthen any points I made surrounding the firm,” says Alice Humpston,  Assistant Accountant at BHP.

“For the synoptic- question practice is paramount and the most influential factor in exam performance, so practice a lot of questions, mock exams and make a note of questions you struggled with to reattempt closer to exam time” says Nagina Mushtaq, Banking Audit Associate at KPMG. 

Any words of encouragement for Apprentices that are nervous about End Point Assessment?

“Remember that you can’t take a copy of your portfolio into your final discussion with the AAT examiner, so try and have a read through before you go in. However, it felt more like an ‘informal chat’ around my work-life as a whole. This helped put me at ease and the questions asked were both relevant to my work and to study, so don’t feel that you have to memorise your portfolio” says Alice.

“Just make sure you prepare well and give it your best shot,” said Nagina.

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AAT and accounting sector react to post-Covid budget

Posted by & filed under Members, News.

Chancellor Rishi Sunak’s first budget for the post-pandemic era has focussed on economic growth and higher public spending, including support for research and development (R&D) and hospitality – rather than the tax hikes anticipated to pay for Covid-19.

AAT  has welcomed the change on Capital Gains Tax (CGT) reporting from 30 to 60 days, and the inclusion of cloud computing in R&D tax relief – both measures it fought for.

But it is disappointed by the decision to reduce the duty on internal flights in the face of environmental arguments.

Leading practitioners in accountancy firms were likewise positive about some of the Chancellor’s announcements and underwhelmed by others.

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Common sense changes

A 30-day deadline for reporting qualifying CGT liabilities came in last year, causing concern to AAT members, especially AAT licensed accountants. After listening to representations, including those from AAT, the Government has altered the deadline to 60 days.

“AAT was convinced that the most effective solution to this problem would be to double the reporting period from 30 to 60 days,” said Adam Harper, Director of Professional Standards and Policy, AAT.

“That’s what we spoke to various stakeholders about and made representations to Treasury Ministers and provided a Budget submission on, so naturally we are very pleased that they’ve listened and acted accordingly. 

“We were also happy to see the confirmation that data and cloud computing costs will be included in qualifying expenditure for R&D tax relief, which we called for in our consultation response earlier this year, along with other measures to support small businesses. 

“Additionally, we welcome the planned increases to the National Living Wage – ensuring everyone gets a fair day’s pay for a fair day’s work – which was overwhelmingly backed by AAT members and the Government’s ongoing commitment to lifelong learning through expanding the Lifetime Skills Guarantee and increased funding for apprenticeships. 

Air Passenger Duty disappointment

However, the Government did not heed AAT’s arguments against lowering Air Passenger Duty (APD) on domestic flights, prioritising the economy over environmental concerns.

Adam Harper commented:

“The decision to cut APD for domestic flights flies in the face of a wealth of national and international evidence about just how environmentally damaging this will be and seriously undermines the UK’s credibility just a few days before COP26 begins. There can be no doubt that this contradicts and greatly weakens government policy on seeking to reach ‘net zero’ by 2050.” 

The Government has increased APD on long hall flights but according to Harper has “slipped in a reduction for domestic flights under the radar”.

He added: “It’s important to understand that domestic and other short-haul flights are the most carbon-intensive form of travel and emit more CO2 per person per mile than long haul flights.”

Clamp-down on unregulated accountants

As individuals and small businesses prepare for the tax changes announced in the budget, AAT continues to press the Government to make it mandatory for anyone offering paid for tax or accountancy services to be a member of a relevant professional body as part of its ongoing Accountable campaign. More information about this campaign, including the free consumer guide, ‘What you need to know before appointing an accountant’, is available here. 

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Accounting firms respond

Leaders of accountancy firms urged businesses to make the most of the fiscal incentives and reliefs to aid their recovery.

Chancellor Rishi Sunak confirmed that the Office for Budget Responsibility (OBR) has revised up growth forecasts for the economy, which it expects to return to pre-Covid levels by the turn of the year.

Instead of announcing more tax increases, the Chancellor has chosen to focus on increasing spending in areas that will drive economic growth in order to increase the tax take and re-balance the economy in the wake of the pandemic.

The Chancellor announced plans to proceed with reforms to the business rates system by ensuring rent re-evaluation takes place more frequently – every three years from 2023. From 2023, he also announced that businesses making property improvements will not pay anything extra in business rates for 12 months.

For retail, hospitality & leisure businesses, the Chancellor announced a new 50% business rates discount up to a maximum of £110,000.

Rebecca Wilkinson, Tax Partner specialising in the property and construction sector at accountancy firm, Menzies LLP, commented:

“These changes could help to kickstart the redevelopment of the high street as retailers in particular start to feel more confident about investing in improvements to their properties, without incurring a hefty business rates penalty for doing so.”

Incentives for capital investment and manufacturing

The Chancellor announced that the Annual Investment Allowance (AIA) will not drop to £200,000 at the end of this year and will stick at the much higher level of £1 million until March 2023.

“This gives businesses a bit more certainty so they can plan ahead to make investments over the next 18 months. It should also help to bolster confidence at a critical time when many firms are concerned about rising costs and supply disruption, ” said Richard Godmon, Tax Partner at Menzies LLP.

“Some businesses that had been planning to invest in new machinery and equipment before the end of the year had been worried about being able to complete them in time, due to the current supply shortages. This will allow them more time.”

Modest VAT changes fail to excite

Robert Marchant, VAT and Customs Duty Partner, audit, tax, advisory and risk firm, Crowe said “none of the VAT changes measures was particularly headline-grabbing but they will still be important to those impacted”

They include:

  • Confirmation that a new VAT penalty system will be introduced for VAT return periods starting on or after 1 April 2022.”
  • Potential changes to the VAT margin scheme to apply in Northern Ireland for motor vehicles sourced from Great Britain and introduction of a Second-Hand Motor Vehicle Export Refund Scheme for businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland.
  • Extension of a VAT exemption for imported dental prostheses.
  • A commitment to reviewing the VAT rules applicable to fund management fees.

“The VAT aspects of today’s announcements were more interesting for what was not covered, rather than what was included,” Marchant added.

He said the Government didn’t take the opportunity afforded by Brexit, to deviate from EU VAT law in making headline UK VAT rate changes, for example by reducing VAT on household energy bills, providing a zero rate for cladding works or incentivising green measures such as solar panels.

Should you be using Artificial Intelligence in the office?

Posted by & filed under Artificial intelligence.

AI can offer huge benefits to SMEs, but it also has pitfalls. How should small to medium sized accountancy practices be using it? What are the costs and opportunities, and how might it affect your workforce and the way you work?

According to the 2020 World Economic Forum Outlook Report, the time spent on current work tasks by humans and machines will be roughly equal by 2025. While Artificial intelligence (AI) offers huge potential benefits, it is also likely to change forever the way accountancy firms work. Accountancy and financial services are predicted to be among the industries that will experience the greatest level of transformation due to machine learning, AI and automation over the next decade.

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Embrace AI or see accountancy revenues fall

James Poyser, CEO of inniAccounts, believes that the future of accountancy will consist of two types of people: those who are technical A-players, and those who are technically competent, and have mastered soft skills.

He believes AI will change the skills accountants needs, and practices that don’t go embrace the change and look for alterative business opportunities will see their revenues fall.

He predicts that over the next ten years market consolidation and a new breed of accountant is likely to emerge – one that has technology at the heart of the business model. The new breed of accountant will be one who is able to manage AI but who uses their human skills to provide consultancy and strategy advice to businesses as well as doing the numbers. 

inniAccounts is a cloud-based accounting service with accountants on hand to help provide advice. It now helps thousands of self-employed people manage their accounts and tax, turns over £1million and is in the top 4% of accountancies by revenue. It recently won a Queen’s Award for Innovation for its real-time tax tool and has been recognised as a pioneer for its use of artificial intelligence at the Practice Excellence Awards. 

“We are pushing hard on developing AI,” he says. “We are trying to automate as many functions as possible. All functions which are just low-level work could be outsourced to AI to free up people and make better use of human talent. We have a strategy here in the office: For machines to do what they are best at and for people to do the work that they are best at.”

For example, he uses AI for VAT return checks, but overlays this with human checks to make sure items are being classified correctly. The programme then learns, makes suggestions and can change categories in the future.

Automation taking on repetitive work

“AI can do routine, repetitive tasks such as uploading personal expenses and categorising them. All that low-level entry level work will be automated in the future.” His prediction is that firms need to rethink their business model, because the majority of routine compliance work will in the near future be handled by technology.

“It is very likely that a technology vendor could enter the accountancy market and automate it, so accountants who rely on compliance work for revenue streams are going to see that disappear. They need to anticipate that they will have to write off that revenue stream within the next 10 years.”

The picture is not all gloomy, though. Humans can add value and divert their attention to more interesting tasks, such as strategic business advice, liaising with clients and helping their customers to build businesses. In addition to building automation into your five-year business plan, you also need to think about how you will upskill your staff so that they are able to embrace new ways of working which go beyond number-crunching.

“Your clients don’t appoint an accountant just for year-end results,” he says. “That is not where the added value will be. Instead, they are looking for soft skills – empathy and business advice. A good accountant would ask them what their goals were, what they’re trying to achieve and why, and help them achieve their goals. It’s not just about getting year end accounts filed on times.”

The challenge for smaller firms is that there is currently no single AI package that you can buy off the shelf to automate all functions and replace the low-level back office functions. While Zero and Receipt Bank do offer some of this functionality, James Poyser believes that there is still not the technology available to make AI affordable to the vast majority of practices.

Combining tech with human interaction

The solution is to combine AI with human interaction, says Professor Dr Mohammad Mahdavi, Programme Leader Data Science, AI, and Digital Business at GISMA Business School.

“One of the best collaboration models for AI and human beings is to imagine a “decision support system” role for AI, he says. The human agent is still the main decision-maker of the business but it is guided by AI-generated knowledge and insights.

“The AI-generated knowledge and insights can be directly translated to applications and services that enhance customer experience,” he says. “The most promising area of AI, which can build such intelligent services for almost any business including SMEs, is supervised learning. This branch of machine learning is related to build predictive models that can predict future events using past labelled data.”

By streamlining customer service and automating processes throughout the system, teams can focus on providing an excellent customer experience, says Dan Davies, CTO at Maintel, a cloud and managed services company.

Machine learning technology, such as Robotic Process Automation (RPA), has played a crucial role in the drive for efficiency, and RPA and machine intelligence will only grow in importance. “RPA is best for automating high-volume, repetitive, and rule-based computer interactions,” he says.

Cormac Ó Conaire is Chief Design Officer at Design Partners – a product design and innovation agency. He believes that while introducing AI is an important strategic step for businesses, it is essential to remember that your business is made up of staff, all of whom contribute to the overall success of the organisation.

“You often hear how AI can improve efficiency allowing organizations to reduce costs associated with mundane, repetitive tasks,” he says. “But instead of focusing on identifying these efficiencies and cost savings, look at the employees. Engaged employees are one of the greatest measures of sustained success. Employees are looking for purpose – people want to feel they’re making a difference. Find the areas that AI can augment your workforce and build from there. In the future human-AI collaboration will be commonplace in business.”

Accountability falls with the human

Humans will always be the gatekeepers and the providers of checks and balances, even when AI becomes a large part of business function, says Erick Galinkin, Principal Artificial Intelligence Research at Rapid7, which helps to automate functions and detect vulnerabilities in computer systems.”

“Humans who are enabled by artificial intelligences must treat those the same way they would treat a talented and eager, albeit junior co-worker,” he says. “Their guess may usually be right, but a more seasoned human is there to help catch the corner cases that they might not recognise.”

In an environment where machine learning is used alongside human judgment, the decision — and consequently, the accountability — ultimately falls to the human.

“It’s crucial that when we have a co-worker process, the machine is still only interpreting the data in the context of what it has been shown, and oftentimes that context is biased by the human decisions that have been made in the past,” he explains.

Further reading:

AI skills for members

AAT members can learn about AI, privacy, compliance risks and generative AI for accounting tasks in Learning Portal.

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How businesses can maintain good governance post-pandemic

Posted by & filed under Members in business.

The spotlight is even brighter on corporate governance and compliance at the moment. The pandemic has raised questions about some organisations’ ability to continue as a going concern. The Government has outlined how it might strengthen corporate governance, including changes to what classifies as a Public Interest Entity.

With auditors expected to put more focus on fraud checks in the next reporting season due to concerns around the exploitation of Covid-19 support measures.

https://www.aatcomment.org.uk/audience/members/members-in-business/members-in-business-maintaining-governance-post-pandemic/(opens in a new tab)

Finance teams have a big part to play in compliance and supporting good governance, from establishing strong systems and processes to investigating queries when they emerge. But like so many operations, teams have had to adjust their approach in response to the coronavirus.

Members of our panel share how they have maintained compliance and increased scrutiny in recent months.

We take a much more proactive approach post-pandemic

Farha Jamadar, FMAAT, Finance Manager, Todd Doors

In normal times, there are policies and procedures in place with systems that we would adhere to, ensuring we are compliant, that we have a handle on it and are aware at all times. This changed with Covid as it felt like a new policy or change was coming out every day. We didn’t have enough information and we were always in the middle of ensuring we utilised measures but were being compliant. Now it feels like, while the dust is settling, we’re trying to merge how we work with the new processes of working.

Our leadership team ensure morality stays with the company, honesty, hard work and being ethical is fundamental, and that is led from the top. I feel as it is deep-rooted in culture, it’s a part of all our decisions to ensure we are doing the best for all our stakeholders.

My team and I engrain this into our monthly close process so it’s a consistent check. In the past, this was a reactive process and only when an issue is raised was a loophole closed. Now we take a more proactive approach. While not all loopholes can be closed. we ensure consistency is kept and checks are done. This, coupled with our ethical culture, enables us to keep on top of it and significantly reduce fraud. We also rely on utilising technology to ensure checks are done.

As a manager, I feel like there is awareness and knowledge of what the process is if there is a discrepancy. The issue is researched quickly and presented to me. I will review and speak to a director so that action and issues concerned can be closed or sorted. While this has not happened in a negative way, but has alerted to system issues we can fix swiftly to not cause delays.

In the past, we have had what I would call seamless audits, where there were a few queries but processes were consistent. However recently, with the new processes, we have given auditors more information. With new systems like furlough, more questions have been asked. However, this is due to us having a lot more control. To anticipate this, we review the auditor’s process and then incorporate this into our close process – essentially making the auditors check into our close process.

A lot of adaptation comes down to staying informed

Björgvin Vigfússon, Finance Manager, Westmorland Linen Rental and Laundry

Our team, like in many businesses and departments, receives some internal pressure when it comes to governance and assurance. By being transparent and upfront on the reasons why certain things are reported the way they are, has helped us ease some of that internal pressure.

We have also seen some big changes in our business environment since Mid-February 2020, some of them have been for the better, with some ‘mixed feelings’ regarding others. By keeping one eye on the news, domestic and international, and following business news, such as AAT Comment, we have managed to prevent being caught off guard when it comes to future changes.

Within our team, we are so lucky that all members are qualified or doing their qualifications, so I feel confident that all members of the team know how to deal with discrepancies in the accounts. We then have the unwritten rule: “if you’re not sure, go ask or find the answer” then double-check with someone more senior. We also follow this rule when it comes to risk management.

Corporate Governance needs to continually advance in order to protect society

Clare Elliott, FMAAT, CFO, ILUX

Governance isn’t quite as intensive for SMEs as it is for big corporates, but that doesn’t mean we don’t have responsibilities. As a small company, we are lucky that we have qualified professionals internally, so we are highly aware of our governance responsibilities. Other SMEs might more heavily rely on external agencies, such as their accountants or other advisors. As an FD, and as part of the leadership team with other Directors, we collectively ensure each other are aware of our responsibilities and that the company is compliant.

We have very tight financial controls, ensuring processes and procedures are always adhered to. While this makes it difficult to be flexible, it ensures we are accountable for our actions and less likely to make errors as risks are reduced. This is where we benefit from having qualified and experienced professionals, as control mechanisms are tight and risks of large losses or fraudulent activities are reduced.

Everyone in the team understands their individual responsibilities, and how they feed into the team activities, and how that impacts the organisation. Deviances away from the norm must be authorised, and tight procedures are then implemented for those unusual circumstances. Errors and discrepancies are reported internally, which helps to build resilience even further through training and tighter procedures.

Governance responsibilities continually advance, but personally I still feel we have some way to go. There are frequent reports in the media where companies have neglected to meet their responsibilities, or have acted unethically or immorally. And when that happens there is always a negative effect on society. Organisations should be held accountable for their actions, and individuals must be held responsible. Too often good companies are left with financial losses after another organisation has failed to meet their obligations, and where large corporates fail that affects Government income, which in turn impacts us all. Corporate Governance needs to continually advance in order to protect society.

Accountants needed to fight fraud on construction projects

Posted by & filed under Ethics, Members.

A new report from forensic financial expert Crowe and the University of Portsmouth has highlighted the vulnerability of construction projects to fraud and called for a new role involving accountants to prevent abuse of public funds.

The study comes as the UK presses ahead with a large-scale infrastructure investment programme, making it vulnerable to waste and malpractice.

Problems in construction are nothing new, which is an indicator that fresh ideas are needed to make a difference.

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“Having seen in recent months increased focus and increased funding in the construction sector, now was an appropriate time to look at the sector more specifically,” said Jim Gee, Partner and National Head of Forensic Services at Crowe.

The report says that, as the United Kingdom embarks on a major investment in new infrastructure, it needs to put in place arrangements to get on top of fraud and obtain maximum value for money. It notes that fraudulent losses on HS2 alone could be £4 billion.

The authors say relying on law enforcement to “investigate and prosecute” is inadequate because it only addresses problems after they happen. Similarly, traditional audit is of limited benefit because it focuses on the financial accounts of a single entity in hindsight.

Instead, the report advocates a kind of ethics watchdog for projects, based on the US model of Integrity Monitors.

“This is all about having someone central. There will be a variety of people with different skills – this could consist of accountants, architects and a variety of construction and building experts. Someone will sit at the centre of them and form a team to look at the totality of the project, from inception all the way through to the last brick being laid,” said Gee.

Integrity Monitors examine the whole project, from inception and contract letting to completion. They also promote a culture of integrity and honesty to counter the culture of construction, which the report says can be a building site for fraud and bribery.

Accountants could bring their skills to bear by spotting unusual transaction patterns.

For example, on the extension of the New York subway under Grand Central Terminal an accountant could see 900 employees receiving $1,000 a day on the payroll, but there were only 700 identifiable jobs that needed to be done. The project was one of the most expensive in New York’s history at a cost of $3.5 billion per mile compared to the average of $1.5-$2.5 billion per mile.

The report identifies the following factors that make the construction sector susceptible to fraud and corruption:

  • Political and public pressure on projects – the job must be done
  • Lack of standardisation – no two projects are the same
  • Delays and overruns – unforeseen challenges can be exploited
  • Complex supply chains – many players and moving parts
  • Bid structuring – lowest bid award prompts profit to be sought elsewhere
  • Large costs – obscuring fraud and waste
  • Tough to scrutinise – quality of work can be concealed
  • Local autonomy – providing opportunities for leakage
  • Project management – inadequate supervision
  • Project location – remoteness difficulties
  • Regulatory burdens – red tape bureaucracy
  • Construction culture – corruption, bribes and cartel behaviour more common versus other sectors

The average cost of fraud was found to be 1.9%-10%. On this basis, HS2 fraud is likely to be £4 billion and could be as high as £7 billion.  Over the next five years, the total costs of fraud on infrastructure projects planned in the UK could be as high as £60 billion.

Meanwhile, Integrity Monitors are expected to pay for themselves by producing savings of at least 2% of project costs.