Deloitte’s IASPlus has mentioned, here, that the European Financial Reporting Group (EFRAG) has issued two ‘Short Discussion Series’ (SDS) papers on (1) equity method and how it can be considered as a measurement basis, a one-line consolidation or a combination of the two and (2) the implication for standard setting of the academic literature review. The EFRAG has initiated the ‘Short Discussion Series’ in order to promote debates that address topical and problematic issues in financial reporting among European and other constituents. For more information, see the press release and the Short Discussion Series paper on the EFRAG website.
The Institute of Chartered Accountants in England & Wales (ICAEW) published some guidance on the Money Laundering Regulations. It says that the 2007 Regulations require a risk-based approach to money laundering procedures. Is this demonstrated in your money laundering documentation?
The article “What QAD found when they reviewed firms in 2012” in August 2013 issue made very clear that many firms do not have a money laundering risk assessment for all clients. What about your firm?
There are three levels of risk assessment:
• a generic risk assessment for the firm;
• an initial risk assessment for new clients, determining how much due diligence evidence is required;
• an ongoing risk assessment determining the level and frequency of ongoing monitoring.
It’s worth reading this paper, details here. Soon, once the new 4th Money Laundering Directive is implemented, the Government will be required to prepare a risk assessment for the UK, and filter it down to the regulated sector to use when producing their own firm-wide risk assessment.
For further information see ICAEW’s previous articles:
· Assessing risk for money laundering purposes: part 1
· Assessing risk for money laundering purposes: part 2
· Assessing risk for money laundering purposes: part 3
· Assessing risk for money laundering purposes: part 4
Disclosure rules push up fraud cases in finance
Tighter regulations have led to a spike in reported fraud in financial services firms and in money laundering, research out today claimed. Overall reported fraud fell from £1.37bn in 2012 to £1.05bn last year, marking the second consecutive year of falling total values. However, the figures are likely to underestimate the overall level of fraudulent gains in Britain, as many cases go unreported or fail to make it to court, said BDO, which conducted the research. Details are here.
Auditors believe companies are losing battle against cybercrime
A KPMG report reported on in Accountancy Age shows that audit committees believe poor quality data is hampering cyber protection efforts across businesses. The number of auditors with concerns about cyber security has doubled in the last year and businesses are losing the battle against cybercrime as a result, Accountancy Age’s sister title Computing reports. The survey of audit committee members found the quality of information provided to auditors is becoming increasingly unsatisfactory, raising fears that cyber safety has taken a step back and making the task of minimising risk much more difficult. Details are here.
Accountants to investigate RBS
We’ve all heard about banks going over their customers’ figures when they’re worried. Now, the boot is on the other foot. Mazars are to investigate RBS, the ICAEW reported in Economia. Under the spotlight is RBS’ treatment of small business customers in financial difficulties and the allegations of poor practice set out in the Tomlinson report. RBS has been appointed, together with Promontory Financial Group, by the Financial Conduct Authority to carry out an independent skilled persons report under s166, Financial Services and Markets Act 2000. Details are here.
Older accountants take note
Apparently, older accountants approaching retirement are increasingly concerned about their options thanks to a range of changing work and financial options and pressures, says the Chartered Accountants’ Benevolent Association (CABA). Details are here. CABA reports that it is receiving an increasing number of calls from accountants aged between 55 and 70 who are looking for guidance in a wide range of areas. CABA provides a series of resources for those of retirement age on its website, caba.org.uk, and has recently held “Preparing for Retirement” courses in conjunction with ICAEW.
ICAEW and CABA have also teamed up to provide a website where volunteers can search for roles and where not-for-profit organisations can look for volunteers.
What’s happening in the USA?
One of the indicators of a reviving economy — the purchase and sale of small businesses — is picking up steam. According to the just released BizBuySell Insight Report, the number of business exits by small business owners in the USA was up 49 percent in 2013 compared to 2012. In 2013, 7,056 US small business sales were reported by brokers, a large spike over the 4,730 transactions reported in 2012. The report reflected the improved business performance as the median revenue of small businesses rose 13 percent to $405,905 and median cash flow grew 9 percent to $97,000. Strong financial improvement, in turn, helped push the median sale price up 13 percent to $180,000.
What’s your price?
Of all the issues that impact on practice profitability, pricing has the biggest effect, says an article from ICAEW in advice for Members in Practice: Increasingly, clients expect fixed fees quoted in advance. For a specific assignment, assuming the price is accepted, every additional pound quoted (and recovered) goes straight to profit. Every pound of discount given comes straight out of profit.
Please take the time to read this article, here. Perhaps the best tip is about pricing for preparing tax returns. This introduces premium pricing for clients who bring their books in late. While the dates and percentages vary a lot, a typical structure might be:
– 100% of normal fee if the books are received before 31 October;
– 110% if received during November;
– 120% if received during December; and
– up to 150% if received during January.
The case of the disappearance of lawyers following “mass cull”
The Solicitors Regulation Authority confirmed on 17 January that 136 firms of lawyers were forced to close because they could not obtain professional indemnity insurance. The firms had entered the Extended Policy Period after 1 October and were given 90 days to secure cover, or face immediate closure on or before 29 December. Could this ever happen to accountants? The story is here.
But generally, law firms continue to rebuild profitability as the economy recovers and they enter a ‘settling-down’ phase, according to a respected annual bellwether of the sector’s financial health: the Financial Benchmarking Survey, published by the Law Society’s Law Management Section (LMS) and covering the 2013 accounting year. Practices are also upbeat about their immediate prospects, forecasting a small year-on-year increase in their rate of growth in 2013/14. The story is here.
HMRC sets new record for asset seizures from self-employed
City A.M. report that HM Revenue and Customs (HMRC) set a new high of 1,488 asset seizures over the last year from self-assessed taxpayers who could not pay bills. Tax officials took a harder line than ever, said finance firm Syscap, adding that the majority facing penalties were self-employed professionals such as accountants and solicitors. HMRC increased the use of its power of “distraint” against self-assessment tax debts by eight per cent from the 1,376 cases in 2011-2012. The tally more than doubles the 730 seizures of 2010-2011. The story is here.
Barclays ends free banking for most SMEs
Some 40% of your SME clients who bank with Barclays won’t feel too happy today. Barclays is moving more than 500,000 business customers onto a new set of accounts over this year, to consolidate its SME (small and medium enterprise) operations. Around 60 per cent will be better off or pay no more than £1.50 per month extra, the bank said. But that leaves 40 per cent, around 220,000, paying more. The story is here.
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