Daily Insight: Grant Thornton audit role; X-ray vision for accountants!
First, Happy Easter from Daily Insight's resident chick (above)! Now to the serious stuff...
Leading UK accountancy firm Grant Thornton is pulling out of the big-group audit market. It has decided to stop bidding for listed-company contracts because of the big four's dominance in the area.
Deloitte, EY, KPMG and PwC don't want regulators to intervene in the market. But this move looks unlikely to help matter for them. Probably quite the reverse. According to the Financial Times, "the big four’s share of FTSE 350 auditing has increased from 95 per cent to 98 per cent over the past five years". This is in spite of efforts by the EU and UK to reform the landscape.
Sacha Romanovitch, Grant Thornton chief executive, is quoted in the FT as saying: "Structures in the [FTSE 350] market make it impossible for us to continue to succeed in it. If this space is dominated by four players and there does not seem to be market appetite to change, let’s focus on areas where we can [succeed]. You have to have that strategic clarity.”
Accounting women in Finance
And that leads us nicely into the Women in Finance feature by Accountancy Age because Sacha is at number 10 on the list. And it's no surprise really, having been with the firm for 27 years and rising to the top.
"Early into her tenure as CEO she implemented the shared enterprise business model in the style of the John Lewis partnership – sharing ideas, responsibility and profits across the entire workforce of the organisation and capping her own salary at 20 times the firm’s average. The decision was supported by 99 per cent of partners in a vote.
"She also introduced Grant Thornton’s Vibrant Economy initiative, which has seen the firm holding forums across major UK cities to cultivate growth and communication across sectors," says Accountancy Age.
HMRC adopts a Northern Powerhouse
HMRC is heading to Manchester. The government has agreed to lease a building at the city's New Bailey development. It will house servants from 2022.
Steven Boyd, of the HMRC says: ‘The New Bailey development will provide HMRC with a state-of-the-art facility fit for a modern tax authority. Signing the lease is a significant, long-term commitment to the Greater Manchester region."
An X-ray vision for accounting
So I came across an interesting article in the Harvard Business Review yesterday. And it leads me to ask this question. What is the common factor linking radiologists and accountants?" Well it's a worry about artificial intelligence taking their jobs in the future...
But here's the deal... "The only radiologists whose jobs may be threatened are the ones who refuse to work with AI. There are substantial medical and productivity benefits to be gained from integrating AI with radiological practice," says the article.
"The productivity improvements may even mean that radiologists can spend more time doing what many of them find most fulfilling: consulting with other physicians about diagnoses and treatment strategies."
So there you have it. Have a great weekend ... and a great future!
FreeAgent RBS deal is a sign of interesting times
Interesting times in the world of cloud accounting, especially in Scotland. And particularly if you're FreeAgent. CEO Ed Molyneux's small business accounting app group looks certain to be snapped up by Royal Bank of Scotland for £53 million.
This is a profitable deal for the company that floated on Aim in 2016 and that has about 50,000 users.
The board is recommending that shareholders accept the takeover offer. It prices the shares at 120p, a 40 per cent hike on the IPO and an 86 per cent bump on Monday's close.
Free access to its software
RBS had already been working with FreeAgent, giving its small business customers access to its software. The latest development's significance is definitely more than financial. Molyneux says it makes good financial and strategic sense and is a "game changer".
[fve]https://www.youtube.com/watch?v=GezvhI_vJKA&t=10s[/fve]
"The lines between banking, accounting and tax are becoming increasingly blurred. And there are new opportunities for a more integrated experience between banks and accounting software that we believe will benefit businesses," he tells the company's Twitter followers.
"This offer provides us with a unique opportunity to progress towards our vision that we set out in 2007 when the company was founded."
Improve core product
"As part of a larger organisation we want to accelerate our growth ambitions in the micro-business and accountancy practice space, as well as significantly improve our core product," says Molyneux who will be a keynote Accountex speaker in May
"Olly, Roan and I - along with the rest of the executive team - will continue to lead the company and we’re more excited and committed than ever about the possibilities ahead."
RBS chief executive Ross McEwan says: "We believe that a technology-enabled solution for our business banking customers will make it easier for our customers to build their businesses safely and securely."
Who's in the Accountex 2018 speakers stellar line-up?
Accountex, the UK’s premier event for the accountancy and finance profession, is unveiling a stellar speaker line-up for 2018.
Industry leaders who'll be sharing their expertise in the main keynote theatre on 23-24 May at London's ExCeL are:
- Theresa Middleton, director of the HMRC's Making Tax Digital for Business programme;
- Dominic Allon, VP Europe at Intuit QuickBooks;
- Jennifer Warawa, Sage’s executive VP of partners, accountants and alliances;
- Alan Laing, MD of Sage UK & Ireland;
- Damon Anderson, Xero’s director, partner.
Changing face of accountancy
Returning speakers include:
- Justin Urquhart Stewart, of Seven Investment Management (7IM), on how to "afford a thoroughly disgraceful retirement";
- Ed Molyneux, of FreeAgent, on ‘Fintech buzzwords’ and how to cut through the jargon;
- Steve Checkley, of TaxCalc, updating practitioners on the latest MTD news;
- Glenn Collins, of ACCA, who'll lead a panel debate on the changing face of the accountancy practice and technology.
And among the new names for 2018 is Rebecca Benneyworth, chair of the Digital Advisory Group advising HMRC on MTD. She will be discussing ‘Making Tax Digital work for you’, including how to start converting clients to digital records, plans for the VAT implementation in 2019 and the income tax pilot (2pm, 24 May).
Must-be-at event of the year
“If there’s one ‘must-be-at’ event, surely Accountex is it,” says philanthropist Paul Dunn, chairman of B1G1: Business for Good. He’ll be providing "major pointers" on how to make a real impact on the lives of clients in his show debut on 24 May.
“In this time of amazing shifts occurring at breakneck speed, here is everything in the one place for you to gain the information and insights you need to create the kind of firm you’ve always wanted – one that’s highly profitable and irresistible from a client perspective,” he says.
Opportunity that should not be missed
And Compleat Software’s CEO Neil Robertson agrees: “Accountex will make you aware of what is now possible and ensure that neither you, nor your business, starts to suffer because you fall too far behind your competitors. It is an opportunity that should not be missed. Because you will learn a great deal in a short period of time. What you do with that information is up to you!”
Compleat will host two sessions in the Keynote Theatre as sponsors. The first will explore how the transformation of the accounts payable role can have a positive impact on businesses. The second will outline best practices for CFOs looking to delegate their budget and project financial management.
So for further details, please visit Accountex . The 2018 event has more than 180 CPD-accredited Keynotes, seminars and workshops. Full line-ups are now available for six of the show’s 16 theatres.
And further seminar speakers are set to be announced soon.
Daily Insight: will VAT be abolished after Brexit? And other important tax questions
So the big question is: Will VAT be scrapped? Because today's Daily Insight is all about tax inquiries - three of them to be precise. The first is by the Treasury and it will be into the aformentioned VAT, which, by the Treasury's own admission, is "notoriously complex and burdensome for business to cope with".
It will look at Brexit implications, the burden on business, dispute handling and how to improve VAT policy making in general. Oh and the estimated £12.6 billion that the HMRC failed to collect last year. Pretty broad-ranging.
Conservative MP and Treasury committee chair Nicky Morgan says: "The reasons for why VAT is so vulnerable are somewhat opaque, so the committee will examine how this might be addressed."
Abolish VAT completely
"Brexit may provide both opportunities and challenges to the UK’s approach to VAT. The government may choose to stick to a broadly similar structure to what currently exists, change it, or abolish it completely." Hang on, did she say abolish it completely? (Yes).
"HMRC collected around £124bn in VAT last year – over a fifth of the UK’s total tax take – and failed to collect around £12.6bn in VAT," she adds.
"We’ll examine the chief concerns for HMRC and businesses going forward, and what impact Brexit will have on HMRC’s efforts to reduce the VAT element of the tax gap."
Tax avoidance and evasion
Our other two tax probes will be conducted by the Treasury sub committee. They will look at tax avoidance and evasion, and tax inquiries and disputes.
Labour MP John Mann, chair of the committee, says tax avoidance is of "serious public concern". "HMRC has been given additional funds in recent years to address the issue, yet the tax gap for avoidance and evasion is still billions of pounds.
"We’ll be pressing those who seek out loopholes to get out of paying tax and the organisations that help them to give answers to Parliament about the revenue that we are all losing out on."
Is the HMRC acting fairly?
The second inquiry will assess whether tax inquiries and dispute resolution are up to scratch. Simply put, is the HMRC acting fairly in the way it does business? It will also look at "‘sweetheart deals" for large companies.
Mr Mann adds: “The committee often receives representations from people who feel that HMRC’s inquiry process treats them unfairly. Some have accused HMRC of offering more advantageous terms of settlement to big business than small businesses or individual taxpayers receive.”
All inquiries are inviting comments. Get writing everyone!
Clients demand more from accountants amid big AI take-up
Research confirms a big shift in client expectations as accountants latch on to automation and AI to reduce repetitive tasks, freeing them to provide advice.
Cloud tech group Sage spoke to 3,000 accountants globally for its Practice of Now study. And it found that 42 per cent of clients expected their accountant to provide business advice.
Nearly half, 49 per cent, would like to automate number crunching, data entry, email and diary management. About 66 per cent say they would invest in AI to automate mundane, repetitive work.
Kriti Sharma, VP of AI at Sage, says: “Accountants are seeing AI as purely an automation tool.
"But the number of accountants who’d invest in AI will increase over the next two to three years as they start to see the true value of intelligence services.
"For example, accountants will be able to scale their operations by using AI to review millions of transactions that would have traditionally taken hours to do manually.”
Cloud technology benefits
A majority (67 per cent) believe that cloud technology makes their businesses more successful. Client collaboration and improved service offerings were seen as beneficial byproducts of embracing technology.
It is, however, clear that there is a need to learn new skills, anticipate the future and reorient thinking to put their firm ahead. All while adapting to the increasing needs of clients and offering competitive services.
Key UK findings
- 83 per cent of clients are demanding more today than five years ago.
- 42 per cent of clients expect business advice.
- 67 per cent of accountants believe that cloud tech makes their role easier by enabling collaboration with clients.
- 53 per cent of accountants have already adopted a cloud-based practice management solution.
- 45 per cent of UK accountants describe themselves as early adopters, which is above the global average of 39 per cent.
- Over half of UK accountants (63 per cent) say that practice revenue has increased in the past 12 months (compared with the global figure of 56 per cent).
More than two in three accountants are turning to artificial intelligence to:
- Improve interactions with clients.
- Improve the services they offer.
- Reduce time wasted on repetitive tasks.
- Avoid mistakes.
Jennifer Warawa, EVP of Partners, Accountants and Alliances at Sage, says: “Accountants have been distracted by the suggestion that offering additional services could take away from their core accountability of offering taxation services and advice.
"But as the cloud has become mainstream, accountants are realising there’s more opportunity than there is risk. Those prepared to embrace new ways of working and evolve their business model really are reaping the benefits.”
Daily Insight: digital newspapers and VAT; women in finance; and church cards
When is a newspaper not a newspaper? When it is digital, perhaps? Well, yes, actually. News Corp, owners of Sunday Times and the Sun etc, tried to argue that their digital editions were basically the same as their paper versions and, therefore, should be VAT zero-rated, as are all newspapers.
My untrained eyes can see the logic, given that newspapers, books and magazines are tax-exempt because of their educational value. However, the HMRC saw things differently, arguing that digital offerings were not newspapers because of the absence of newsprint.
The case went to appeal at a first-tier tribunal. But that came down of the side of the HMRC. So there you have it. Digital newspapers are not newspapers, for the purposes of VAT.
Does this mean that when tax is made digital it won't be a tax?
Women in Finance
Accountancy Age has revealed the first five of its Top 20 Women in Finance. Chosen by its readers, the list "spotlights influential women across various sectors, including government, business, finance and accountancy, who are all leaders, trailblazers and transforming their respective fields".
At 20, is Eileen Burbridge, partner at Passion Capital; at 19 is Jayne-Anne Gadhia, CEO of Virgin Money UK; number 18 is Carolyn Fairbairn, director-general, CBI; at 17 is Carolyn McCall, CEO 0f ITV; and at 16 is Barbara Judge, former chair of the Institute of Directors.
Judge resigned from the IoD this month over claims of bullying and racism. She has denied the allegations, vowing to contest the claims. “I continue to strongly refute the allegations made against me and remain deeply disturbed by the gross and conspiratorial mishandling of the process which has led to the damaging circumstances in which I and the Institute are now placed,” she said in her resignation letter.
Making religion cashless
As we approach the Christian spring-time festival of Easter, it seems like an appropriate time to take a quick look at the latest financial goings-on at the Church of England.
When I was growing up, I attended church every Sunday... each service complete with a collection for cash to help finance the church.
Coins (and, for the better off, envelopes containing presumably large-denomination notes) were dispatched into wooden boxes that were passed around the congregation. Well all that's changing.
Over 16,000 churches, cathedrals, and religious sites will now have access to card readers, accepting chip and pin and the likes of Apple P(r)ay.
Five ways accountants can learn to love social media
Accountants have tended to stick to word of mouth, traditional marketing methods, and professional or business networks such as LinkedIn. A 2014 survey in the US by Social CPAs found that few organisations advertised on social media and many had no social media policies.
Things have probably changed a bit since that survey. But it's slow progress. However, accountants are realising that social media platforms offer cheaper, better, and more efficient methods of keeping in touch with clients. And keeping on top of industry trends.
Here are five ways you can make sure you are making the most of your social media marketing potential.
1. Create a simple social media marketing plan across multiple platforms
Even the least tech-savvy people know that social media is crucial to a business. But they may not know how to use it effectively. A scattergun approach to tweeting or an infrequently updated Facebook page isn’t going to be any use when it comes to marketing. Spending several hours a day glued to social media is going to stop you getting any work done. So how can you use social platforms efficiently while getting the best results?
- Post frequently without wasting time by using an automatic scheduling tool such as Buffer or Hootsuite.
- Create a social media marketing plan. This simply means creating objectives and goals for social media and seeing them through, without resorting to hiring an expensive marketing expert. Try this simple 6-step planrecommended by Hootsuite.
- Post varied content on each platform. “Pushing” the same content from just one platform makes you look lazy, and often the same content doesn’t perform well on different platforms. Make sure that what you’re posting is compelling and adds value — quotes and inspirational messages do well on Twitter, whereas LinkedIn has seen a lot of traction come from storytelling-type content.
2. Blogging: shareable content is king in social media
Google values fresh, unique social content much more than a static website and will reward those that share frequently with a higher place in search rankings. Studies have shown that business blogging leads to 55 per cent more website visitors.
However, your blog shouldn’t just be an afterthought tacked onto your website to appease Google. If you’re offering genuinely valuable content that your audience cares about, this will have a very positive impact on your business. How can you make your blog the one that people keep returning to?
Sharing your blog on social media and opening it up to the wider business community is a great way to make the most of blogging and social media in one fell swoop. Maximize content ROI and keep your time spent on advertising to a minimum.
- Learn the basics of SEO. Search engine optimisation is the art of making your site valuable to Google and bumping it up the search rankings. If you’re a total novice, don’t worry — there are many guides out there with helpful advice, and blogging platforms often have in-built SEO tools
- Position yourself as an expert. If you consistently share knowledgeable, valuable content, people will automatically turn to your blog as a trusted source of information. Spend some time learning about what makes a good blog post and track how well yours do using web analytics.
- Share, share, share! Great content will give your social media marketing a massive boost, especially if it is original and valuable to your audience. Share across all your social media platforms to demonstrate your expertise as an accountant.
3. A picture is worth a thousand words
If you’re a regular social media user – and most of us are – you’ll know that visual content is huge, and will only grow bigger: it is estimated that 84 per cent of communications will be visual in 2018. Photos, memes and infographics are crucial to your social media marketing strategy. Studies have shown that posts that include images produce a 650 per cent higher engagement than text-only posts!
You don’t think accountancy lends itself to the visual culture of social media? Think again!
- Share a few memes, funny pictures, or cartoons to keep your followers entertained. Don’t go overboard – it’s good to maintain a professional image, but showing a flash of humour and personality will make you memorable.
- Make your visuals valuable and shareable. Just like blog content, people love visual content that is of genuine value to them and their network. A picture post reminding people of tax return deadlines, say, is useful. And it gives you the opportunity to mention your services. Creating a custom image and adding your logo only takes a few moments. Plus there are plenty of online tutorials to show you how.
The Bench team shares beautiful visual images on their Instagram that vary from tax deadline reminders to client stories and people profiles.
4. Social media advertising: the direct approach
As well as using social media to share content, you can also pay for advertisements that will target the specific audience that you want to reach.
Facebook remains the most widely used social media platform among all age groups, with 64 percent of people using it. Facebook enables you to target your adverts to particular groups of customers based on different factors such as age, gender, and location, and you will be able to get results based on any budget.
- Drive specific actions. Are you looking to acquire new customers, or do you want to up-sell current ones? Facebook ads can be tailored to specific groups using different demographics, or even be set up based on your own data.
- Target a “Lookalike Audience.” Lookalike Audiences help you to target potential clients by finding people who are similar to those you are already connected with.
- Use analytics and testing. Facebook Ads Manager allows you to track how well your ads are performing. It measures sales, audience, brand outcomes, and performance. So you can test how well a particular advertisement is doing. And you can experiment with different approaches until you find an ad format that gets you clients on a regular basis.
5. Get personal
Social media is a much more personal approach to marketing than more traditional tactics. It lends itself to a more human approach. But you should always err on the side of professionalism. But sharing a few details about the person, or people, behind your company can give your brand more personality. That's something that works in the world of social media.
- Let people know what you’ve been doing. If your company has been on a team-building day, to an awards ceremony, or held a social event, post a picture and a brief description.
- Involved in a charity or non-profit organization? Tell people about it. Clients will like your involvement and it also gives your charity a nice publicity boost.
- Connect with your audience. Social media provides an easy way to talk directly and personally with current or potential clients.
- Positive testimonials and client storiesare an awesome way to include other people’s successes within your content strategy.
So these few simple steps will quickly give you an awesome online presence. Getting to grips with SEO and social media tools will enable you to find your ideal audience. And help convert your new followers into paying clients.
This article was originally posted by our friends at Accountex USA.
Understanding tech trends is a key to survival for accountants
Accountancy trends are driven by technology. So future-proofing your practice means staying on top of these accounting trends and understanding how they’re disrupting and shaping industry best practices.
So, what are some of the key trends that accountants and bookkeepers should be aware of in 2018 (and beyond)? Let’s take a closer look.
1. Automation enables high-value advisory services
Advances in machine learning and AI are rocking the world of accounting. Intuit QuickBooks and Xero have both introduced machine learning projects over the past couple of years.
These developments have enabled accounting firms to automate document collection, data entry, and other compliance-related tasks.
But automation is not making the role of accountants obsolete. It’s arming them with two items that are essential for becoming proactive advisers. More time and more data.
It’s up to accountants to leverage their available time and data to provide more proactive advice (and, consequently, more value) to their clients.
2. Client experience is a key differentiator
It is predicted that customer experience will take over price and product/service as a key differentiator for most B2B businesses by 2020. Adopting cloud accounting technology is proven to help increase practice efficiency, improve the client experience, and supercharge your practice.
However, firms should not rely on the use of cloud accounting tools as their only differentiator. Standing out as an adviser requires going above and beyond with all client interactions.
Consider every possible interaction (from client onboarding, to optimising your workflows, to reporting). Figure out how you can increase client engagement. In turn, increasing client engagement will improve client retention.
3. Advisers will require a deeper expertise of the growing tech landscape
In March 2017, Accountex reported that the accounting technology ecosystem had doubled in size over the previous year. As exciting as it is to explore all of the cloud accounting solutions that exist, it can also be confusing.
Feeling exhausted and overwhelmed by the sheer number of available apps is a phenomenon known as “app fatigue” – and it can impact a firm’s productivity in more ways than you might think.
Accountants with “shiny object syndrome” might go overboard and select too many apps, creating redundancies in their accounting technology stack. Or, conversely, they might feel intimidated by the app ecosystem and avoid exploring new solutions altogether.
Navigating the accounting app landscape and being able to help clients understand which tools will work best for their business will be a valuable skill as the ecosystem continues to grow. Moreover, overcoming app fatigue and understanding where automation can improve your workflows (and, more importantly, how it can improve your client experience) will help to future-proof your firm.
If these three trends point to one thing, it’s the importance of becoming a devoted adviser to your clients. In order to effectively advise (and future-proof your firm), it’s critical to stay on top of trends and adapt to best practices that are in your clients’ best interests.
HubDoc will be on stand 863 at Accountex London 2018 on May 23-24.
Daily Insight: PwC's blockchain deal; the search for MTD clarity!
Last week Daily Insight dipped its toes into the world of blockchain and cryptocurrencies, saying that accountants of the future would need to be well versed in both.
You'd expect the Big Four accountancy to firms to be well along the way in their preparations to offer their clients blockchain technology. And, if PwC's US operation is anything to go by, they are.
Things seem to be accelerating a bit though. At the end of last week PwC struck a blockchain technology partnership deal with Northern Trust, a Chicago-based asset management group.
Private equity audits
The ICAEW reports that the deal will allow PwC to access to fund data and carry out private equity audits using blockchain.
"This new private equity system gives firms access to their own 'blockchain node', which will allow for the audit of events in real time using the emerging distributed ledger technology.
"The technology grants PwC Channel Islands and other firms in Guernsey access to the fixed and unchangeable record of the fund data, which they can then transfer into their own applications to audit specific events as they happen." Interesting times.
The quest for MTD clarity
The quest for closure over Making Tax Digital continues. Will it ever end? AccountingWEB's global editor John Stockdyk makes his latest foray into area with a piece entitled "Software companies push for clarity on MTD."
The big groups had a catch-up last month with Mel Stride, financial secretary to the Treasury. Stockdyk reports that Stride's position was the same as it was last July when MTD for income tax was delayed. "He would not make any decision on extending MTD until the government had a chance to assess how well the VAT for MTD transition worked during its first year.
"That would mean that MTD for income tax will not get the green light until 2020 at the earliest. The government would need a year to lay the groundwork, and current protocol would suggest another consultation cycle would be needed to finalise the details and give businesses time to prepare for the move. That timetable would put the likeliest start date back to April 2022."
Push back the deadline
The VAT pilot will start next month with 14 software developers expected to be on board. The article quotes Sage vice president of product management Adam Prince. “We’re concerned about whether the regulations will change... we heard about a possible extension to the Brexit transition period and there’s always the possibility of a general election. There are lots of things that could be disruptive to business and push back the deadline.
“Two weeks ago the government launched a consultation on changes to the VAT threshold. That means you have to think about what a really small business would need to do too keep up with the VAT record keeping requirements. Sage wants to wait until there’s more clarity. We don’t want to come out and say anything until we know it’s mandated.”
Is the road to accountancy revolution paved with gold?
It's an accountancy revolution. Cloud technology, MTD and your clients’ increasing expectations set you and your accounting firm up for unheard of success. But are you ready? Fees, profits and capital value gains are all within your grasp. But only if you take action.
So how do you turn all this financial potential into hard cash for your firm?
Step 1: Get yourself familiar with what technology is available. Because technology is one of the biggest drivers of change, you run a risk by not being knowledgeable about what’s available to you and your clients.
ACT NOW: Get yourself registered for Accountex in London on 23-24 May to see what’s being used by other firms, what could HELP YOUR CLIENTS (and make you some money) and what could HELP YOUR FIRM do more in less time.
Step 2: When you’re registered for Accountex, work out which speakers you want to see to inspire you and provide you with the practical guidance on running a better 21st century accounting practice.
ACT NOW: Register for Accountex, book your train ticket or hotel (if you’re going for two days) and make sure you PLAN YOUR VISIT rather than free-wheeling around the event. Instead diarise your day(s) around the stands you want to see and the speakers you want to see.
Step 3: Get as many of your people involved in Accountex as you can. You want your team to help you with the changes in your firm. Use Accountex to inspire them and drive them to be part of your solution.
ACT NOW: Decide who should attend as well as you attending.
April 2019 is the start of the MTD revolution. The cloud accounting revolution is already under way.
In May you have the opportunity to inject insight and renewed motivation into your firm’s future. And to work out the practical next steps so that you get your share of the financial rewards that comes with the inevitable changes racing towards you.
I’ll see you there hopefully – I’ll be speaking and we have a small stand launching my new book – The Business Growth Accountant. If you want a pre-release copy you can order a copy at www.paulshrimpling.com.
ACT NOW: Register for Accountex (for free) here.