The GAAPweb blog

Newly qualified and lacking direction? You’re not alone…

Ten years is a long time, but it’s almost that since I qualified with a ‘Big 6’ firm (the number of firms used in this description is inversely proportional to your age!) and I was recently reflecting on how little support there really is out there for a 24 year old who is coming to the end of their accounting contract.

At sixth form there’s a guide that tells you everything there is to know about your preferred university (down to female-to-male ratio) and in your third year you’re bombarded with career fairs and guides. But after three years of study, play and a bit of work as an auditor, where do you go?

You’re caught between a rock, a hard place and some other stony ground. Who do you approach:

1. You give in and eventually return that call to John at Best Jobs in the World and Partners. He’s got the best job ever. Great opportunity, loads of promotion prospects. £5k more. A car allowance! But it’s on an industrial park on the outside of the M25. two trains, one minibus and you’re there in less time than it takes to play a Premiership football match.
2. Do you talk to Henry who joined in your intake but left after a couple of years to join a start-up. Audit is boring, right? The real world is much more fun. Or maybe Susan, your audit senior, who went to work in M&A? No ticking and bashing for her. Ok, so they may (or may not) have done well for themselves but there’s always a tendency to rubbish those who stay. It’s often not an objective viewpoint.
3. You’ve got a Partner Mentor. No chance, she’s devoted her life to controls testing and audit opinions. Maybe that manager who’s always taking his team out for drinks. He’s cool. So he gives it straight. The grass is always greener. Ah, sadly he’s been brainwashed too, you think.

Hmmm. Maybe you’re lucky and you’ve got a big brother who’s got the t-shirt. But, if you are like me, you’ve got to try and see the woods for the trees and take a punt. 

My punt was a mistake. I ended up taking Option 1. I should probably have listened to Option 3 but I suppose I wouldn’t change things. You can’t have regrets.

Ten years on I’d give the same advice to anyone in my shoes. Use the internet, use your network, keep an open mind and think “what would make me really happy”. Don’t get rushed into any decision by your peers, your managers, or someone who calls you that you’ve never met! But, what I have learned is to make a decision because there’s very rarely a wrong answer, just different outcomes…

Colin qualified with Arthur Andersen in 2000, eventually leaving in 2002. After a brief stay at Centrica, he joined Carphone Warehouse and worked in assorted roles with Talk Talk and as Finance Director or Geek Squad. He’s now working with Mint Digital, a social media development agency based in Vauxhall.

Prepare for a changeable financial forecast

A recent walk through my childhood town’s shopping centre left me feeling a little unnerved. Signs were up in about a dozen shop windows bearing the simple notice: ‘Sorry, this shop is now closed’. The fact that no further explanation was given (or needed) suggests to me that we are inherently accepting the failure of businesses as a sign of the times. The forecast looks bleak. Or does it?

There seem to be a mountain of conflicting reports concerning the future outlook of the recession. On the one hand, there’s a feeling that we might be over the worst of it; on the other, we could have a fair few years to go until the economy has completely recovered.

But there has been doubt raised over the validity of these financial forecasts. According to recent news, Chief Financial Officers (CFOs) could be making fundamental errors by basing their predictions on annual budgets and out-of-date information. Only 37% of those surveyed claimed to be updating their forecasts on a monthly basis; the rest admitted to relying on annual reports to help them predict future trends.

If you’re the one in charge of predicting your company’s financial outlook, it’s hugely important that you analyse the most up-to-date information so that budgets can be planned appropriately. If you haven’t already, put a risk adjustment plan in place to help your business survive the downturn.

The status of the recession seems to be changing daily – it’s up to you to keep up with these changes and prepare for a brighter looking future…whenever that may be.

Green Crusade

With talk this week about the need to make many UK firms include details of their carbon emissions in their annual reports within the foreseeable future, it’s time that everyone joined forces to navigate a path to a greener future.

The climate change has been caused by the increased levels of greenhouse gasses in the atmosphere, in particular, carbon dioxide (C02). So what can today’s businesses do for the future of our planet?

The government’s Act on C02 campaign recently highlighted the need for the country to pay more attention to its carbon footprint. The Act informed the nation of how it can save money by becoming greener: from driving Smart, to purchasing appliances, to improving home efficiency.

Everyone – from multinationals to small businesses – is responsible for their carbon footprint and all can make a difference. Working with companies such as Carbon Passport and The Carbon Neutral Company, businesses can gain advice on how best to implement a carbon strategy, advice on carbon reduction and energy saving opportunities. They can provide carbon offsets for balance of greenhouse emissions, for example, by investing in wind farms. These companies can also assist in developing PR and marketing strategies to promote their green credentials.

This month, The Copenhagen Climate Council will discuss how firms can help to solve the climate issues; CEOs will discuss innovative business models, new partnerships and the development of low-carbon technologies. In addition to these issues, they will also address ways to remove barriers that are still in the way and create incentives to implement solutions in a post-Kyoto framework.  

The government has started to address the issue of carbon offsetting by setting up a quality assurance scheme. This is when you can compensate for your unavoidable emissions by paying someone to make an equivalent greenhouse gas saving. By marking their status as an approved carbon offsetter, companies can gain a marketing edge in this tough economic climate.

Leading by example are PricewaterhouseCoopers (PwC), who have taken accountability by tracking the carbon emission of their employees’ international travel and energy wasted. In response, they have installed £500m worth of videoconferencing equipment to reduce the need for carbon-costly air travel.

PwC offset all of their carbon emissions by funding green projects in India; these projects include generating renewable electricity and steam from local waste rice husks to supply the electrical needs of a textile mill. Back in the UK, they supply 20% of the total energy needed for the company by using solar water heating panels and are continually attempting to increase their efforts.   

If they haven’t already, each and every company nationwide can do their bit to help. This can be achieved by doing something as simple as making desk-side bins a thing of the past and encouraging employees to recycle more.

Social Enterprises rejuvenate the economy

With the economy continuing to struggle and the nation in need of a brighter-looking future, it’s time for the Third Sector to lift Britain’s communities out of the turmoil created during the recession.

Social Enterprises (or what the government refer to as the Third Sector) will play a pivotal role in the growth of the so-called ‘new economy’. In times of regeneration, the government need to turn to the likes of Phone Co-Op, who have thrived in a highly competitive market, retaining their ethical and environmental policies. They are committed to providing greener telecoms through a range of measures that include buying greener electricity from renewable sources, investing in wind power and offsetting carbon emissions. Another exemplary company is the Wise Group in Glasgow, who are helping unemployed people find jobs by supplying training and work experience programmes. Both of these prestigious companies were winners in the Enterprise Solutions Awards 2008.

Many businesses would consider themselves to be Social Enterprises. However, the true characteristics of Social Enterprises are to be found in those businesses that hold their social and/or environmental purpose central to the running of their organisation. This should be favoured over the importance of getting higher return to shareholders, which given our current situation can only be in the public’s interest. Social Enterprises have a close connection to the community that larger corporations can’t buy. According to the Social Enterprise Coalition they already contribute £8.4 billion to the UK economy, and of a survey of 2,000 people, 30% said they would rather work for a Social Enterprise over any other kind of company. 

With redundancies in 2009 at their highest since records began and unemployment reaching 2.2million (the highest figure since 1981), there is a serious need for extra help to get the nation back on its feet. Communities Secretary Hazel Blears and Work and Pensions Secretary James Purnell emphasised that the government recognises the important role that Social Enterprises will need to play by creating 15,000 positions for Britain’s unemployed. The government will help with funding through the £1b Future Jobs Fund.

The jobs created through the Future Jobs Fund have to be sustainable to put the economy back on track and produce social value. Third Sector organisations can help to generate this much-needed social value through innovating and unique programmes, such as the Merseyside Getting Out To Work. This programme offers intensive, one-to-one support to ex-offenders to help get them back into permanent employment. Working with The New Economics Foundation, they assessed their social value and the final study showed that for every £1 invested, it generated £10.50 of social value in relation to reduced welfare costs, reduced crime rates and an increase in tax contribution. This has been calculated by measuring the value of the benefits relative to the cost of achieving the benefits (net present value of benefits/net present value of investment).

As well as the Future Jobs Fund, the government is encouraging Social Enterprises to boost the economy by addressing issues such as assets, finance, working with the Public Sector and business support. All of these issues have been raised in a Social Enterprise Summit hosted by the Social Enterprise Coalition for cabinet ministers. The summit also looked over the short and long-term issues and barriers that are in place at the moment, and ways in which to maximise the involvement of Social Enterprises in the recovery of the UK economy.

The mutual benefits of aligning finance with marketing

The news last week that a new business model has been devised to cultivate the relationships between finance and marketing departments UK-wide must come as a relief to professionals in both sectors.

The innovative ‘Infinity Model’ was conceived in 2005 at a Direct Marketing Association conference, where it was bemoaned that there was little cohesion between the fact-based discipline of finance and the airborne creativity of marketing.

All too often, finance departments are struggling to explain to their shareholders why so much money is invested on marketing campaigns, while being unaware themselves of the true value that their marketing team can offer…and in some cases, being unaware of what they actually do.

Dr Robert Shaw (Honorary Professor of Marketing Metrics at Cass Business School) researched over 100 organisations to compile the Return on Ideas report, supported by industry heavyweights CIMA (the Chartered Institute of Management Accountants), the Chartered Institute of Marketing and the Direct Marketing Association (where the idea started).

The fact that there are two marketing associations on board and only one finance body is somewhat reflected in the breadth of research in the report (it tends to be more focused on the integration of marketing rather than finance); however, it’s still fairly comprehensive.

Predominantly, it addresses the financial value that marketing departments indisputably add to any corporation of any size. It also provides good practice guidelines that demonstrate how creativity and ‘imagination’ (a word frequently used in the report) nurtured in marketing can be fostered by finance departments. I suppose even finance professionals will agree that you can never have too much creativity and imagination in any organisation!

Such advice seems fitting at a time when financial departments are deciding where to cut costs and are actively seeking innovative, money-making ideas to keep their corporations afloat. Instead of ignoring the value-adding acumen offered by these traditionally ‘disjointed’ sectors, it’s time to get the balance right and embrace BOTH. After all, there’s nothing like a credit crunch to get everyone banding together.

Have a read through Dr Shaw’s findings, and you might just come out of the downturn alive. Or at least with some new friends in your marketing department.

A career in accountancy becomes more challenging in today’s climate

Last year the Association of Chartered Accountants' reported that accountancy jobs were set to become much more complex due to the increase in regulations and difficult business conditions that were on the horizon. 

As a Finance Controller I’ve definitely noticed an increase in the complexity of my role in this very different commercial environment, but I’d still consider the job enjoyable and challenging. What’s more, as my role has developed over the past year, I’ve become more connected to the business and the commercial decisions that are made at board level. 

The company I work for has obviously been affected by the current financial climate and many of my colleagues have unfortunately been made redundant. In order to help me to deal with the increased pressures of the work I do in financial analysis, the company has invested in my career by providing additional professional and personal training. 

My advice for candidates considering a financial career would be to go for it! Keep a look out for jobs at all levels too, such as financial management or executive jobs as these can often provide inspiration for where to take your career. In addition, make sure you review the professional training opportunities that come up frequently as it is very important to stay ahead in financial regulations and procedures. 

The current business environment maybe difficult, but if you apply yourself and take on all opportunities to add to your experience and skills, a job as an accountant is fulfilling, challenging and varied. I’d highly recommend a career in accountancy.

Mehul graduated in Actuarial Science from University of Kent following on to qualify as a Management Accountant.  He started his qualification at HotRecruit Ltd. Through the first 3 years the company acquired 13 other companies to become a large network of websites, in which Mehul's role was to ensure the financial systems were integrated along with all finance processes. 

In Oct-05 The Hot Group Plc was acquired by Trinity Mirror Plc and since has acquired further specialist job boards which are all now brands of Trinity Mirror Digital Recruitment Ltd. Mehul's role in these acquisitions was to carry out due diligence and model prospects of these businesses. As the Financial Controller of TMDR Mehul has the responsibly of budgets, forecasting and helping the business and the board find ways to continue expanding even in these challenging times.

Interim Results

Do you describe yourself as ‘results-orientated’? If so, being an interim could be right for you. Although the word interim means ‘temporary’, interim managers are much more than temps; they’re employed to get fast results and to help organisations effect change, sometimes in turbulent times.

In the finance and accounting world, this could mean project managing a computer system implementation, turning around the performance of an underachieving team or stepping in when a senior person leaves.

The potential rewards are high (with daily rates ranging from £300 to £1,000 for a senior director level interim), but so too are expectations. Interims are expected to hit the ground running and make a difference almost immediately – there is unlikely to be a ‘settling in period’ or any long induction. The expectation is that an interim understands the brief, creates a plan to achieve the desired result and executes it more or less flawlessly before leaving and moving on to the next role. And all this while remaining aloof from the politics and knowing both the end game and date.

This might sound insecure, and it is; interims who don’t get results can be terminated fast. Anyone considering becoming an interim should be confident that they can deliver and be happy to live without the security and benefits that come with a permanent job. Given that even the most seemingly secure permanent jobs aren’t secure in this economy, many finance and accounting professionals won’t see that as a downside. The Chartered Institute of Personnel and Development (CIPD) are predicting that more than 600,000 people will be made redundant in 2009, so a permanent job doesn’t necessarily provide what it says it will: permanence.

I have worked as an Interim Finance Manager on and off since 2003, and for me, the benefits outweigh any downside. My assignments have included improving the customer service provided by the transaction processing department of a large bank, temporarily managing a payments team for a well-known telecoms company and being a safe pair of hands for a forty-strong finance team in the travel industry. My next role is covering a manager’s maternity leave, and I’m looking forward to learning about a new industry and managing a new set of people and challenges.

If you like meeting new people, enjoy change and appreciate the freedom of leaving once a result has been achieved, then being an interim could be for you. Companies are usually looking for people with specialist knowledge or experience (mine is operational management of payables, receivables and payments teams) or experienced senior managers, usually those commanding a permanent salary of more than £50k. Interims are expected to employ an umbrella company such as Parasol, or to take specialist accountancy advice about setting up a limited company before starting a contract to legally maximise tax benefits.

Being an interim works for me. I enjoyed more than ten weeks off in 2008/9 after a year-long assignment (although it was, of course, unpaid), and I am now refreshed, recharged and looking forward to the next challenge. And when the next contract ends in December 2009, I’ll say thanks, well done, Happy Christmas and gladly move on.

Louise Graham spent five years working for The Walt Disney Company before taking a break to have her two children. Since then she has worked on an interim basis for Abbey National, First Choice and The Carphone Warehouse. She is about to start an interim role with a leading property management company.

If you would like to contribute to the GAAPweb blog, please send your submission to natalie.harris@tmdr.com and we will be pleased to publish it, subject to suitability.

Don’t overtax the issue, Gordon

Lurking in the depths of a Da Vinci Code-style vault, shrouded in Swiss secrecy, is a big bag of tax-free swag that costs the UK somewhere between £4 to 13 billion per year. Well, it’s something billion. Nobody’s really too sure. Either way, it sounds like a lot and Brown, Sarkozy, Merkel et al suddenly seem very eager to get it back.

President Obama’s legislation to stop offshore tax haven and tax shelter abuse (cannily entitled The US Stop Tax Haven Abuse Act) has shaken Swiss banking giants UBS to the core. It demands that they not only pay back tax deficits to the US, but that they hand over the fortified names of hundreds of their mysterious account holders, a fair number of whom I suspect are British.

With UK havens like the Isle of Man, Guernsey and Jersey under Obama’s spotlight, I can feel the reverberation from Brown’s knee-jerk reaction as he edges his toes out of neutral waters and decides to finally do something about tax avoidance. But is it too little, too late? And more importantly, is his assault on world greed targeted in the right place?

It’s no secret that the über-rich have been filtering their bonuses, mortgages and spousal ‘gifts’ in Switzerland, the Cayman Islands and Monaco for decades. It’s also no secret that the rest of us (particularly financial professionals) have been increasingly looking for work in other tax havens like the Middle East to avoid (note – not evade) paying that irksome amount that comes out of our pay packet each month.

Lumbering the offshore industry together into one, ‘tax haven’ package is essentially adding another layer of confusion to the already cloudy haze pervading tax avoidance. As soon as one tax loophole is sloppily patched up, another one opens.

I’d like to see the rules on tax avoidance made clearer through the implementation of an all-encompassing, general anti-avoidance rule (GAAR) – although this has already been dismissed a few years ago as being too ‘uncertain’. What, more uncertain than our current tax laws? Really?

With the G20 summit in London just around the corner, European leaders have already been discussing (without going into detail, naturally) how best to reform the European Union Savings Tax Directive and how to implement universal policies that will prevent the world’s rich from getting richer.

All very nice, but I can’t help but agree with the comments made by the Director of the European Centre for International Political Economy Fredrik Erixon after the recent mini G20 meeting in Berlin, in which he stated that “they couldn’t agree on something more substantial so they went for the easy targets: tax havens and hedge funds”.

I am not for a moment condoning unfair tax practices that engender a ‘one rule for us, another for them’ approach. Obama is perfectly correct when he outlines this issue as one of “fairness and integrity”.

But in UK terms, tax havens (and all associated complications) just seem like a rather obvious target, or worse still, diversionary tactic from other more critical financial issues. I can’t help wondering if Mr Brown’s attention is better spent elsewhere.

Why cash in the hand is worth holding on to

We as a nation like to think that we’re in control of our money. We like itemised credit card statements, shrapnel jangling around in our wallets, and our pension savings concealed safely under a mattress (possibly safer than a bank at this point). But how well can we control the money that we can’t physically see?

Death of the cheque

Having recently celebrated its 350th birthday, the cheque is irrefutably on the decline. I blame the escalation of internet banking, chip and PIN technology and the fact that they’re no longer accepted…anywhere. Bit of an issue really.

The reality is that the last time I tried to pay for something by cheque I received a pitying look reserved for those who write actual letters instead of emails. The cheque, in its paper form, doesn’t fit in the digital age and so is considered archaic.

I have to question if cash is also headed for the economic graveyard. By cash, I mean the tangible coin and paper offering, and not numbers floating around somewhere in cyber space. Most of us would admit to enjoying the feeling of holding a crisp tenner. The same amount on a screen somehow doesn’t feel so good.

Ascent of plastic

Debit and credit cards seem to be taking over the world. Ever tried making an electronic payment without one? Even if you don’t physically need the card, you’d be hard pushed to make a transaction without your card details.

In terms of our spending, the annual growth rate for debit cards in 2008 was 9.5%, while credit card growth limped in behind at a mere 1.9%. Of course, the credit card has a distinct disadvantage: its initials CC (credit card, interchangeable with credit crunch) are not the most popular acronym at the moment…or maybe credit just isn’t worth as much as it used to be. Thankfully, the decline of credit-lending is one good thing to come out of the recession.

Problems with plastic

Why are we so plastic-happy? I can’t remember the number of times I’ve heard, ‘Sorry, we don’t take cards for orders under five (and sometimes ten) pounds – it costs us too much to process’. Suddenly, I really miss that fiver.

And ever since chip and PIN has taken over, there seems to be an ease with which people blindly punch in their ‘unique’ 4-digit number (still so many birthdays out there – not quite as singular as the hand-written signature) without even so much as a cupped hand to shield it from that opportunistic person over their shoulder.

Privacy and control

With pennywise brands like McDonalds, Primark, Aldi, Cadbury’s and Ryanair on the up, I would argue that it’s much more efficient to use cash for nominal amounts. The average cash spend per transaction totals a mere £12: just about the right amount for a few choice deals.

With cash, you enjoy an increased sense of privacy because it’s much harder for other people to trace exactly what you spend your money on. I like that I can buy small, inconsequential items without my bank knowing exactly what they are.

Furthermore, in these strapped-for-cash times when everyone is watching what they spend, it’s comforting to know that I actually have something literal to watch. Withdrawing a tenner for lunch for the week helps me budget much better than if I pay on my card (where it’s harder to judge the limits). Having even a minimal amount of cash lends me a feeling of control that’s hard to replicate.

Cash culture

Maybe there’s still a bourgeois feeling attached to how we pay for things. Surely, paying for a Big Mac with AmEx is just plain wrong, in the same way that buying a Porsche with cash would be considered highly dodgy. We’re used to paying for small amounts with cash, not with swipe-and-go-data-chip-embedded-mobile-fingerprint-Oyster-voice-recognition technology (the hybrid cards of the future). And when it comes to our currency, Britain doesn’t generally approve of what it’s not used to (Euro, anyone?).

I like being able to leave a few coins as a tip in a restaurant or in a charity moneybox and paying with cash at a market stall. These types of transactions have less to do with monetary value than they have to do with benevolence towards someone else.

Descent of cash

As electronic payments, online account transfers and even mobile phone banking continue to grow in popularity, cash transactions are inevitably slowing down.

But before I start to adjust to the prospect of a cashless future, I can take some comfort from the fact that banknote circulation and cash machine withdrawals are still as high as ever  – perhaps testament to our basic need to check that the balance on the screen will actually churn out real money when asked.

If we do embrace a cash-free society where the emphasis is on speed (swipe-and-go) rather than control, gadgets rather than security (embedding a data chip in a flashy watch is surely asking for trouble), I can’t help but savour that feeling of money burning a comforting hole in my pocket with its very presence.

Maybe I’ll take a leaf out of Penny Millionaire’s GAAPweb blog and start holding onto my pennies…they’ll probably be worth something soon.

Your ticket to warmer weather?

If you’ve ever thought about moving abroad, now could be a great time to do so, with a freezing winter and economic uncertainty at home, and, temptingly, excellent opportunities for finance professionals on the rise in the far-flung locations of Australia, the Middle East, and the Caribbean, or somewhere closer to home in Europe. (There's an interesting article on Australia's debate regarding importing skills.)

Financial Services and Big 4 experience will certainly serve you well if you are thinking of applying for a role abroad, but local language ability is a skill increasingly in demand in some countries. So, if you want to brush up on your Mandarin or Cantonese, now’s the time to start!

Other key skills recruiters are looking for are US GAAP, IAS and Canadian GAAP, especially in the Caribbean and Bermuda.

Of course, securing a position abroad isn’t the only thing on the relocation “to do” list, and planning visas, accommodation, and schooling is just as important. You should also make sure you know your tax status before moving abroad so as not to be shocked by a colossal bill on your return.

So, how do you go about finding your job abroad?  You should start your research on the web and search GAAPweb Overseas for jobs anywhere in the world. You can also make the decision to start your job search when you’ve already arrived in your new country of residence. You could even be given the chance to work abroad by your present employer, in which case you will be known as a “posted worker”.

Spending time abroad could be one of the most fulfilling experiences of your career and could even turn into the adventure of a lifetime.