Six startling statistics about GDPR
In May 2018, a new European data protection law, the General Data Protection Regulations (GDPR) will come into force. The new law will see how personal data is managed and processed change for ever. Most, if not all businesses will be affected by this change.
A recent study sheds some light on how people are feeling (or not) towards GDPR.
- 44 per cent do not know what the GDPR is: so that’s just under half of HR and payroll professionals are not aware of GDPR. Ultimately, we can presume that those respondents are not be taking essential steps to prepare for the deadline.
- 77 per cent HR and payroll professionals believe they are liable. Although, 23 per cent either don’t think they are or are unsure as to their own liability.
Information required
- 83 per cent believe their internal HR team has the experience and information required to be GDPR compliant.
- 81 per cent think they will be fully GDPR compliant by the May 2018 deadline. 19% believe that either they won’t be fully GDPR compliant or are unsure. Shockingly, this means that one fifth of businesses are likely to not be compliant before the May deadline.
- Slightly over half (55 per cent) of respondents believe that GDPR is a risk to HR and payroll departments, with just under 40 per cent believing that GDPR is not.
- 71 per cent of people in the HR and payroll departments agreed that "improved data security" would be the biggest benefit from GDPR.
BrightPay is exhibiting at Accountex, Stand 430
What can UK accountants learn from Down Under?
I often get asked: "What are other firms doing?" It is an interesting question – is it about strategy in dealing with the client? Or the changing legislative environment – MTD and GDPR? Or is it about the dramatic changes happening in the software industry relevant to accountants? Or does the relationship of clients with their software vendors make accountants vulnerable?
In most cases I can look at the accountant I’m speaking with and understand what they are asking. But I always respond with “what type of firm are you”? Let me explain.
Aussie accountants are quick to embrace change
I love working with accountants and delving into their stories. It is a time of massive change, with more coming. And client expectations are rising – they want to do more, they are more knowledgeable, more business smart, and they want more specialised ‘fundamental’ business advice. But is the average accountant ready to take on that responsibility? Or can they? What tools are there to help them and how are they being educated to provide such an advisory role.
Before chatting about the UK, let’s see what’s happened Down Under and in the US, and whether those experiences are likely to play out here in the UK.
I personally think Australian accountants are now quick to embrace change. Two game changers in thepast 10 years have been Financial Planning and Xero. They were quick to become financial advisers (which has now been legislated to prevent poor advice). Once they worked out Xero was converting clients from under their noses, they quickly chose to get paid to sell Xero to them. But it wasn’t always that way! The incumbents MYOB and Sage Handisoft had the playing field to themselves for many years prior.
I remember talking with a colleague in the software industry (from one of those incumbents) and he was adamant Xero was going to fail and joked about their losses. He couldn’t understand what accountants saw in the product, nor about their plan to build a subscription model based on the value proposition to both the business owner and the accountant. His eyes were targeted only on the accountant. Not only was he wrong, he had missed the point completely.
Impact of Xero’s ‘bottom-up’ go-to-market strategy
It wasn’t the accountant influencing change, it was the end client and their contractor bookkeeper. Xero had gone to the accountant initially in its go-to-market strategy and it didn’t resonate well. The feedback was consistently, “Why should we pay per client, when I can pay for one subscription and put as many clients on our existing bookkeeping system?” and, “I don’t want the client doing the bookkeeping, I want to. You are diminishing my role and my fee base” so in other words … go away.
Xero’s approach moved from top down (i.e. dealing with the accountant to get to the client) to bottom up (dealing with the client and the bookkeeping to get to the accountant). Sharp and ‘Xero friendly’ accountants saw the change coming – the tail was starting to wag the dog. And it did. Birds of a feather flock together. And that is what small business did. They talked about Xero and moved to the accountant that supported Xero. Then Xero played its trump cards – giving the accounting firm practice management for free, and the functionality to do financial statement compilation for free. This struck at the hearts of MYOB and Sage Handisoft.
But what made Xero so appealing to the end client? It was the simple web-based landing page and simple bank feeds. Suddenly the mystic and magic that was once performed by the accountant was gone. It was like the magician’s secrets had been disclosed.
The benefits of cloud software put another nail in the coffin. The client or bookkeeper was now able to work on Xero from wherever, whenever and on whatever device they chose. Real-time transparency to the business owner and the accountant and the rest is history.
Traditionalist, Converter or Millennial?
I wrote a paper last year on Traditionalists, Converters and Millennials:
- Traditionalists are the older practices that don’t like to change their ways and offer a complete service suite including audit.
- Converters have a young partner or director that has been given the authority to drive change and they have converted 15-20% of their client base to cloud based bookkeeping systems and converting more as fast as they can.
- Millennials – well they are small one partner firms where all their clients are using cloud based bookkeeping systems, and work with 40% of their clients for a monthly, fixed fee. Millennials’ clients are also very sticky. Why? Simply because their staff have multiple touch points with their clients all the time. How? Because they have embraced technology and use it. I also call them ‘cafe accountants’ because they meet their clients at the coffee shop.
The rise of the app
This leads to the rise and hype of apps. Apps for this, apps for that, apps are everywhere. And causing great confusion to the conservative accountant who feels bombarded and confused by them. Yet apps are simply software tools that connect through integration (another buzz word) to other software to push and pull data.
‘Entrepreneurial’ Converter / Millennial firms are promoting themselves as App consultants (coming back to the point earlier of adding value) and offer their client fundamental business advice on how to improve their clients systems and processes, and driven to do so by the cloud industry heavy weights Xero and QBO (Intuit QuickBooks). In fact the influence of vendors ‘market place sites’ on their websites is now having a dramatic impact as they fight for dominance, particularly as Xero goes head to head with QBO.
Clash of the titans
How do you upset a giant? Go piddle in their paddling pool! And that’s what Xero has done to QBO in entering US territory. It woke them up, and QBO has been playing catch up ever since and are now playing in Xero’s own playpen offering free practice management, and shadowing them into Xero’s new territories such as South Africa.
Right, back to the UK.
It’s interesting watching the incumbents here in the UK jostling for position, and working out their strategies. CCH, IRIS, Digita, Sage are all now rushing to work with Xero and QBO on integrations.
But where will Xero and QBO be in three years? Where will Sage be? That’s a topic in itself. And the recent news (or fake news) of IRIS being put up for sale by HG Capital was good for gossip.
If it is fake news, it certainly got people chatting about where in the VC cycle IRIS is. Xero’s impact on MYOB in Australia was the reason IRIS acquired Kashflow but has that worked for them? And everyone is piddling in Sage’s paddling pool, surely, they must be fed up sitting in it? Watch this space I am told!
Be part of the change
So what is on the horizon? My thoughts you ask? Just look at the home territories of QBO and Xero – both offer practice management, financial statement compilation and tax return filing…and more. Do you think they will offer it here in the UK, in time for MTD? You can guess my thoughts. Add HG exiting and my imagine starts running wild!
Add something else to your thoughts:the incumbents have gone from protecting their client bases to now opening them up with integrations. So transparency and visibility of client names and information (lucky GDPR is coming in) of the incumbents’ clients to Xero and QBO, and vice versa. Should Xero and QBO release financial statements here, well look at the blood bath that MYOB and Sage Handisoft has endured in Australia. It’s on the cards to happen here.
Where does that leave the UK accountant?
But where does that leave you, the UK accounting firm? What are you doing? Are you promoting cloud bookkeeping systems to your clients and taking a click of the monthly ticket? If so, which one(s). What apps are you promoting? And do you really know how they work? And how are you managing client work and collaboration within your practice?
Here at MyWorkpapers, we are making that the nucleus for how accountants work, and what they work on, in their practice. With client bookkeeping data feeding into us, together with collaboration and workflows in practices makes us the industry leader in Australia, UK and now Germany (through our partner, Datev)
So grab your popcorn, and watch the landscape change in 2018. Be aware of what your competitors are doing, get familiar with the apps making noise, and focus on how you can establish your own new identity and give fundamental business advice
MyWorkpapers is exhibiting at Accountex 2018, stand 526.
Drivers for change in an accountancy practice
Many of us find change challenging. We rationalise our caution by saying, “If it ain’t broke, don’t fix it”, which provides an easy justification for personal and organisational inertia.
But sometimes, change is unavoidable. Here are the main drivers for change that affect modern accountancy practices.
The economy
There’s not a lot you can do to stop the economy nose-diving. Or expanding, for that matter. But there are things you can do to protect yourself against the worst effects of a slowdown and exploit the opportunities offered by an upturn. New attitudes, new working practices and new technology should be an important part of your response.
Laws and regulations
Laws and regulations have a profound effect on how accountants work. GDPR, Making Tax Digital and FRS 102 are just a few recent examples of this kind of change. Be prepared to change the internal procedures and workflows within your practice together with your software and other IT systems in order to keep up.
Client demand
Over time, new clients will make new demands on you. Even long-standing clients will expect you to offer them more services, or expect you to deliver those services differently. Online accounting; mobile access to financial data; secure client portals; a social media presence… What technology will you need to meet these demands?
Staff expectation
To be the best, you have to employ the best, so your practice needs to be able to hire and retain talent. As well as flexible working, better work / life balance and a range of interesting and challenging assignments, staff these days want to be able to broaden and deepen their technical skills. They also expect to have access to the latest technology to help them do their job. Better make sure you’re providing it!
Self-development
Your staff, partners and managers aren’t the only people who may look for opportunities to extend their technical and other skills. Over the course of a working life you will naturally look for new challenges, both to develop your career and to explore your own potential. This kind of self-generated pressure can be an important driver of change.
Competitive pressure
Imitating your competitors is not always a winning strategy (“Tax returns for a fiver” anyone?) but neither is ignoring genuine competitive pressure. How will you respond if another accountancy practice offers something that you don’t, or can’t? These days, technology is often the key to unlocking new markets and opportunities and getting back your competitive edge.
Technology
As soon as any new technology becomes available, someone somewhere will exploit it to their advantage to do new things, or to do existing things better, more quickly, more cheaply or some combination of the three. The most radical technologies reshape the way we see the world – the iPad, for example, grew from a desirable consumer novelty to become a valuable business tool. What paradigm-shifting technologies await accountants in the near future?
Growing your practice
Even if you don’t want your practice to get any bigger, you need to continually take on new clients just to replace those you lose. To expand, you’ll need to take on even more, perhaps by employing more staff or by working more efficiently. To increase fee revenue, you’ll need to charge existing clients more for the work you already do, or get them to buy additional services from you. Better software can help you pursue these growth strategies.
For tax and accounting professionals, change is a constant fact of life. At some point – for any one of the reasons described above or a combination of many – the pressure for change in your accountancy practice will become irresistible. Your best chance of success in periods of rapid transition is to find a technology partner who shares your vision of future success.
Wolters Kluwer will be at Accountex 2018 on Stand 960.
How women can thrive in the digital era
As we marked International Women's day recently, I thought it would be a good time to reflect on the world we live in ... especially in terms of women in the workplace.
In my opinion, the digital age is by far the most exciting and fast-paced of all time. There is more opportunity for women than ever before. For instance look at the thousands of software companies launching their latest innovations almost daily.
The internet has been a key driver for changing society over the past decade, with bloggers and YouTubers sweeping the nation - and millions capitalising on the opportunities provided by this new 'profession'. So how can we as women take advantage of this?
Drive, ambition and desire
Here's a few thoughts... Believe in your ideas and dreams. If you have the drive, ambition and that burning desire to succeed, then you will!
Your voice is the most powerful tool you have, so never be afraid to use it. You’re your own personal brand; people buy from people; use social media as your base, build up followers, fans ... and be heard!
The beauty is that you could be sat on a beach sipping a cocktail anywhere in the world and publish a blog, a Facebook or LinkedIn post or a picture. You can communicate with the world 24/7!
Research your industry
Also, enhance your knowledge, research your industry, attend courses, and generally engross yourself where your passion lies.
I find it fascinating to read about all the success stories on LinkedIn and Facebook, and it just makes me want to succeed even more than I have already.
So, grab every any opportunity with both hands - and never doubt the woman you are, or the woman you’re going to become! Be inspired, connect, embrace, excel and be the best version of you possible!
Has my blog made you think about your career, or what you as a women would like to achieve?
Feel free to comment below and don't forget to check out Accounting Insight News's Women in Accountancy section, and the new group on LinkedIn.
What to do if you've missed the pension deadline
In October 2017 The Pensions Regulator (TPR) introduced step by step guidance for employers that have missed their duties start date (staging date).
First, they need to clarify what their automatic enrolment duties are and comply with them immediately. The actions required by the employer depend on how late they are in setting up a pension scheme.
If the employer is less than six weeks after their duties start date...
Postponement can be applied to delay the assessment of the workforce and there is no need to backdate contributions. Postponement can for a period of up to three months from the duties start date, giving extra time to meet legal auto enrolment duties if needed. In this case, the employer must issue communications to all employees informing them about auto enrolment and detailing what their rights are.
Alternatively, the staff can be enrolled into the workplace pension scheme. The employer may choose to backdate their employees scheme membership to the day that they first met the age and earnings criteria to be put into a scheme and to backdate contributions as well.
If the employer is more than six weeks after their duties start date...
The employer will need to pay any contributions that they should have made back to the duties start date. The employer will need to work out what these contributions are and backdate them.
Backdating contributions
- When the pension scheme is set up, the employer should tell the pension provider that they need to backdate the contributions.
- The employer will need to work out how much they will need to backdate and from when.
- The employer should re-run their payroll process for the period back to when employee first met the criteria for automatic enrolment, this will provide the employer with the contribution amounts that need to be backdated.
- The employer must pay any unpaid employer contributions and give the option to their staff to pay their own – unless employer decides to pay it for them.
- The employer needs to pay staff contributions into their chosen scheme on an ongoing basis, each time they run their payroll.
BrightPay will be exhibiting at Accountex 2018, stand 430
Cyber criminals target HMRC
The National Cyber Security Centre (NCSC) has published a report stating that HMRC was the most targeted government website in 2017 with 16,047 internet imposters found and removed.
Active Cyber Defence (ACD) was launched last year as part of the National Cyber Security Strategy to improve matters by disrupting cyber attacks that affect the UK.
Key points from the NCSC’s report include:
- The UK’s share of global phishing attacks dropped from 5.3% (June 2016) to 3.1% (Nov 2017)
- 121,479 phishing sites hosted in the UK were removed and 18,067 worldwide spoofing UK government
- Takedown availability times for sites spoofing government brands down from 42 hours to 10 hours
- A significant drop in scam emails from bogus ‘@gov.uk’ accounts (total of 515,658 rejected)
Much cyber security work to do
It is clear from the results of the report that the ACD is helping to combat cyber crime but there is still much more work to do.
The world is changing and cyber criminals are adapting. Ransomware and data theft attacks are becoming more frequent and the cost to the victims in these situations is mounting.
Despite the threat of a cyber attack, many companies are not prepared. It is crucial for businesses to stop ignoring these security threats. A good starting point for companies would be a secure cloud backup facility.
BrightPay now offers a secure cloud backup to save your payroll information. BrightPay Connect is built using a design structure that maximises payroll data security.
Each user will have their own login details and password. BrightPay Connect utilises the Microsoft Azure platform, which gives customers reliability and security updates. BrightPay Connect also offers an automatic backup feature which additionally allows users to restore payroll information.
BrightPay will be exhibiting at Accountex London 2018 on stand 430.
Guidance and Demonstrably Practical Recommendations (GDPR)
If you've heard about GDPR you are probably fed up with the hype. If you've not heard of it then you are at risk of playing catch up.
GDPR really stands for the General Data Protection Regulation which comes into effect on 25 May 2018 and applies to all of us who are processing personal data.
If you're in practice then you almost certainly are processing personal data - whether for clients, staff, website visitors, prospects or influencers.
Processes and procedures
The size and nature of your practice will affect the processes and procedures you will need to put in place to evidence your compliance with GDPR.
We will only be able to show we are compliant (as is required by GDPR) if we prepare adequately ahead of the deadline.
Last year I was asked to raise awareness of the topic during the ICAEW autumn practice roadshows. That meant researching things so that I could highlight the key points. I made clear then, as I do here, that I don't claim to be an expert and I'm certainly not a lawyer.
Genuinely practical guidance
More recently I am aware that many people are offering summaries of the background to GDPR, of the legal position and are explaining in great detail how it will impact accountants and their clients. On the other hand, there hasn't been much in the way of genuinely practical guidance.
One key reason for the dearth of authoritative practical guidance for accountants has been that we are still waiting for formal guidance from the Information Commissioner's Office (ICO) on key topics. Until this is received some GDPR experts are advising extreme caution.
Four things we can all do
I'm hopeful the reality won't be quite as bad. In the meantime there are four things we can all do:
- Register as a data controller with the Information Commissioner's Office (www.ico.org.uk), if you've not already done so. It costs £35pa and is NOT a new obligation!
- Audit your systems and processes so you are clear about how you obtain, use and retain personal data. You need to be clear and to keep a record as to how you obtain all personal data you hold, where it is held, who has access to it, who you share it with, how long you retain it, how you keep it uptodate and how secure it is (in all the various places it can be accessed).
- If you have staff, brainstorm the issue with them as they will need to be aware of the new obligations too. They will need training in the obligations imposed by GDPR just as they need to understand their obligations under the anti-money laundering legislation.
- Start to plan what you will do to evidence your compliance with GDPR as of 25 May. I have created a list of the most common documents most firms of accountants will need to prepare. You can get a copy here
How to ensure your VAT clients provide happy returns
It’s a situation that's far from ideal for most accountants - preparing a VAT return from a bag of receipts, or trying to reconcile a client’s bank account only to find dozens of transactions that have no matching paperwork.
Chasing a client eats up precious time that could be spent on other work. And it can be stressful when you’re working to multiple deadlines, even causing longer-term issues when it comes to preparing financial statements.
So how do you get encourage clients to keep and provide good VAT records?
Be clear, be concise
Remember, clients will often engage an accountant to manage their affairs because they only have a loose understanding of accounting and the tax system - they rely on your expertise to help guide their business. This gives the accountant some room to let the client know how best to organise their VAT records.
Accountants all have preferred styles and methods and it’s important to communicate clearly with your client as to how you work best:
- Prepare a sheet of general VAT guidelines to hand out to your clients. All clients have their own internal bookkeeping systems but laying out concisely what documents you need and how best to organise them can help the client work their system to your needs too.
- If something isn’t working, let the client know. It could be your client’s sales are being recorded in a confusing way, or they pay suppliers by cheque and don’t keep a record of who they have paid. Whatever the issue, discuss it with the client early so it doesn’t become habitual and harder to change down the line.
- Keep discussing! Nothing is set in stone, your clients will often change areas of their businesses, find new revenue streams and new suppliers with different standards. Do a quick assessment of the VAT records provided each quarter, and let the client know how to best adapt their record keeping to changes in their business.
Explain the benefits
Even after trying to communicate how to best provide good VAT records, there isn’t always incentive for the client to do so – they’re paying you to handle this sort of thing after all!
Make sure your client knows why their records are important - they won’t want to pay more tax than necessary and VAT records often provide the cornerstone for a business’s entire accounting system.
Poor documentation can lead to lost VAT claims, problems in preparing end-of-year accounts, higher corporation tax bills and difficulty preparing regular management accounts for the client.
Finally, don’t be afraid to be open with the client when it comes to calculating your fees. Accounting fees are normally time-based and, by letting them know by eating up your time can lead to a higher fee, they will often become far more receptive to your recommendations.
By focusing on the benefits to the client, whether that’s in accounting fees, tax savings or reporting, you’ll find a greater willingness to provide you with proper records. They are in business to make money and they understand that you are too.
Making tax digital
As part of the government’s Making tax digital strategy, the VAT return process is the first area that HMRC is aiming to digitise in April 2019. Making tax digital aims to improve compliance by making VAT Returns more transparent via the requirement of digital records for VAT transactions and receipts.
While this may prove a challenge for some businesses, it should hopefully improve the quality of VAT records provided as digital images of invoices and receipts will be required via a paperwork solution such as Receipt Bank.
This will make it far easier for accountants to read records – saving yourself time – but should also be sold to the client as positive too! After all, finding space for six years-worth of VAT records can be a challenge and by encouraging your clients to go digital both of you can benefit from improved records and less paperwork to store!
You can find more on Making Tax Digital here.
Welcome to Accountex Summit North and the first edition of Daily Insight
Good morning everyone, and welcome to today's launch of Accounting Insight News, a content platform for accountancy and finance professionals. More specifically, welcome to Daily Insight, your update on what's fresh and, we hope, engaging in the world of finance and accounting.
Let's get straight to it ... nearly. But first this: We're live at Accountex Summit North in magnificent Manchester. So do stop by the Literature Lounge and say hello, if you can.
OK, on with the show. Today's headlines. As we're in my home town of Manchester, I may as well kick off with another subject that is close to my heart, the Daily Mirror. The newspaper/media group where I worked for 15 years in its not-quite halcyon days, has bought the Daily Express and renamed the group 'Reach'. I really don't know what to say about that, but, fortunately the Financial Times does.
Staying on the subject of costs, the ICAEW is worried about audit regulation. It says rising costs are causing some audit firms to question the value of staying in the public interest entity (PIE) market.
"In its response to the FRC’s consultation on the 2018/21 strategy and levy proposals, ICAEW points out that the FRC’s operation and audit quality review levies are ultimately a cost to UK business and affect competition in the audit market.
Vernon Soare, ICAEW’s chief operating officer, says he is disappointed that the FRC does not view addressing the burden of the cost of oversight and regulation as a priority.
“There is a point at which high regulatory costs will impair market fundamentals and negatively impair outcomes, particularly if regulatory costs cause participants to drop out of the PIE market,” he says.
Finally for today, as I know many people are busy at Accountex Summit North, there seems to be an interesting debate bubbling about whether or not accountants should charge for fixing people's bookkeeping errors. Check it out on accountingWEB.
Personally, I can't help thinking it might be a bit too much and a little too late, what with MTD and all that. Anyway, see you tomorrow!
Accountants: you don’t have the right skills
If you attend accounting conferences or peruse accounting websites, certain topics will come up again and again. Is AI going to make me redundant? Regulators are at it again; what’s the latest change?
How can we make better decisions under extreme uncertainty? What about really big problems like climate change? How can accountants be part of the solution?
These are the types of issues future industry leaders must be prepared to deal with.
But how do we currently train accountants?
Rigorous exams
The path to a career in professional accounting typically requires passing a series of rigorous exams,and acquiring relevant work experience. This is a good thing! It ensures that a professional accountant has a baseline mastery of financial reporting, managerial accounting, audit, tax, etc.
But there is a gap between this type of training and the skills required to lead a team, an organisation, and a profession through the uncertainty, ambiguity, and complexity that seems to be increasing.
Where are accountants going to get these skills? Continuing professional development requirements? In-house corporate training? Online courses?
Gap persists
These can be good resources, but the gap persists.
Universities are in a unique position to meet this need. How? Ideally, a university should:
- Immerse students in relevant knowledge, relationships with peers and faculty, and the culture of the university
- Aggregate experience by bringing the best experts in the university and the world into the classroom, in person or virtually
- Bring together an international group of students for a truly global experience
- Explore all sides of a complicated issue from a neutral perspective
Global accounting leadership
The Cambridge Master of Accounting integrates these strengths in a global accounting leadership programme for professionals who want to bridge the gap.
Our curriculum encompasses three broad topics:
- Change leadership: What are the shortcomings in current systems and processes related to financial reporting, audit, and governance? How can they be improved? How can the choice of “what gets measured and how” change an organisation, or even society? How will technologies like blockchain and AI change the industry?
- Decision making under uncertainty: How can you apply cutting-edge data analytics tools to answer crucial questions? How can you effectively interpret and persuasively communicate your results?
- Interpersonal dynamics: How can you develop and refine relationships and interpersonal skills necessary to lead change? How do you navigate power dynamics in an organisation?
Our programme features eight quarterly residential weeks in Cambridge over two years, with robust online engagement between visits.
Successful candidates will demonstrate a track record of impact in an organisation, an interest in preparing for leadership roles in the field of financial information, and ability to perform academically at a high level.
The Cambridge Master of Accounting (MAcc)