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Coronavirus timeline: reactions from the accountancy profession

Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.


 

07 July 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Martin Sharp, Executive Director, DFK International on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

Zoya Malik: How many webinars has your firm conducted over lockdown?

Martin Sharp:  As an association, DFK International has held more than 20 webinars to engage with members at a global level. We also held regular regional “round table” events to share experiences. In additional, our national groups in Canada, USA, Mexico, UK & Ireland, France, Germany, Italy and Australia & New Zealand have held regular webinars and round table discussions. Member firms have also held events to engage with their clients and potential clients.  Additionally, through our relationship with ACCA, we have provided members with details of ACCA sponsored webinars on a range of professional topics.

ZM: What has been the focus of the webinars?

MS: The DFK International webinars have included the following:

DAC6 - EU Mandatory Disclosure Regime – a description of the Reporting obligations of cross-border arrangements based on the EU Council Directive 2018/822 (DAC 6)

Tax Aspects of the US CARES Act – a description of the tax changes stemming from the Act and insights as to how the changes may impact clients as they look for liquidity to ride out the pandemic

Communicating through uncertainty - practical hints, tips and advice to help shape your communications

Practical Tips when working from Home - practical hints, tips and advice on making the most of IT, including teleconferences

Transfer Pricing- Intra Group Services – an update from leading experts in the field

Transfer Pricing- Updated Guidance for Pricing Financial Transactions – practical insights and suggestions to support clients with cross-border financial transactions

 

Inflo Introduction- Collaborating Digitally with your clients - how firms can easily move towards a structured, transparent and accountable client collaboration process

How to do Business Development from Home - insight into opportunities into how to protect relationships when working from home

Accounting & Assurance Q&A (3 regional-based sessions) –an open discussion on accounting and audit implications of the global pandemic

Tickmark Audit Software – presentation on cloud-based audit software that offers a safe, secure, and easily accessible framework for conducting audit engagements. The presentation also offered an introduction to Tickmark and explained the benefits of using Software as a Service audit management solution

Achieve more with Microsoft 365 - an introduction to the training available to assist member firms to make the most of MS 365

ZM: What has been the objective of the events?

MS: The object of each event was to share topical information with members so that they could ensure that they continue to provide exemplary service to their clients.

ZM: How many attendees?

MS: Numbers attending varied from 20 to 50 attendees and included partners and other professionals from member firms.

ZM: Any new initiatives and partnerships that have resulted from this event?

MS: We have continued to build on and deepen our relationships with other bodies, including the ACCA, consultants and vendors.

ZM: What has been the value/ have been takeaways that need action going forward?

MS: The webinars have proved to be a valuable way to share information between members, but it is clear that the level of engagement is below that we achieve with in-person meetings. So while we will continue to provide webinars on technical topics, we also plan to resume holding in-person meetings when this is practical /achievable.

ZM: List and times of webinars over July and August.

MS:  We will be holding further meetings, including our AGM, by teleconference in July and August, but we will be taking a break from webinars until the autumn and reassess the need/appetite in the meantime.

 

 

07 July 2020

Zoya Malik, Group Editor International Accounting Bulletin spoke to Julio Gabay, President and CEO Abacus Worldwide on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

Zoya Malik: How many webinars has your firm conducted over lockdown?

Julio Gabay: Abacus Worldwide has traditionally held 1 virtual meeting per month (pre-Covid-19) as part of our strategic efforts to connect members in a virtual setting.  Post-Covid-19, we continue with our strategic approach of offering virtual meetings, but have increased the offering to 3 virtual meetings per month. None of this is limited to lockdown and will continue into the future for the benefit of members.  

ZM: What has been the focus of the webinars?

JG: We have held webinars on a number of topics and themes:

Vantage Worldwide: This series takes place on the 1st Tuesday of each month and highlights each of our member countries with a "doing business in" style discussion.  The series is recorded and packaged (video and podcast) for members to send to clients, providing added benefit to our members in promoting their Abacus membership and global network to clients. 

Knowledge You Can Count On: This series takes place the 2nd Tuesday of each month and focuses on Abacus members sharing knowledge and expertise within the network. From M&A to International Tax Matters from Litigation to Contract Law, Abacus members are experts in their industries and services and this series will allow us to tap into that knowledge. 

Balanced Perspective: This series takes place on the 4th Tuesday of each month led by external speakers covering topics of practice management and soft skills.  These sessions allow Abacus members to hear from industry experts, top tier consultants and thought leaders in the legal and accounting profession, providing educational content and offers ample time for discussion.     

ZM: How many and types of attendees?

JG: There are around 20-30 attendees at each event to include members of Abacus and Partner, Director and Manager level attendees. 

ZM: What are the upcoming events?

JG: July 7th – 10AM EDT US – Vantage Worldwide: Brazil Edition

July 14th – 9AM EDT US – Knowledge You Can Count On: Outsourcing

July 28th – 11AM EDT US – Balanced Perspective: Future Readiness - A Practical Approach for Accounting & Law Firms

 

 

 

06 July 2020

Zoya Malik, Group Editor International Accounting Bulletin spoke to Græme R Gordon, CEO-Praxity on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

Zoya Mlaik: How many webinars has your firm conducted over lockdown?

Graeme R Gordon: At least one a week.

ZM: What has been the focus of the webinars?

GRG: The affect of Covid-19 in a G20 country highlighted that week. The objective of events has been to cover the tax changes and implications, the impact of trade and the impact of business and consumer activity in each country.

ZM: How many attendees and what were the activities?

GRG: Between 25 and 70, dependant on the topic with professionals from within Praxity participant firms.

ZM: Any new initiatives and partnerships that have resulted from this event?

GRG: We also have a Covid-19 data repository, where we have not only all these webinars to view, but an e-booklet of the high level governmental actions in the G-20 on Covid, articles and thought leadership features on working during lockdown and similar and access to specialist webinars on Covid-19, by our Participant firms.

ZM: What has been the value/ have been takeaways that need action going forward?

GRG: That we will retain regular webinars post lockdown, along with much of the technological solutions “forced” on us by lockdown. They are proving very popular and effective.

ZM: Kindly list and times of webinars over July and August.

GRG: Every Wednesday at 13:00 GMT for maximum global coverage. We have 12 more planned to cover the full G20. We will also be considering if we need to expand the geographical exposure.

 

29 June 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Tendai White, Executive Director of INPACT Global Accounting Association on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

Zoya Malik: What was the starting point for webinar delivery?

Tendai White: With the cancellation or postponement of physical events, we realised we needed to act fast to ensure that our members remained supported during these difficult times.

Initial events focused on bringing members together to share experience, discuss common issues and find comfort in solidarity.  They also allowed us to gain member feedback and explore future needs. As a result, we established a comprehensive schedule of online webinars and meetings to provide training and development in leadership, practice management and business development, as well as industry/sector specific events and opportunities for collaboration and networking.

ZM: What has been the focus of the webinars?

TW: Early events focused on:

Collaboration and mutual support

With firms spread across 65 countries, our members were at different stages in the timeline – some already well into lockdown, or beginning to emerge from lockdown, whilst others still in the early stages. 

The challenges of the pandemic for member firms are wide and varied, from home working and staff health and safety, to client support and cash-flow issues.  Through our online meets and webinars, members come together to collaborate, share ideas and offer mutual support, as well as gain valuable advice from external specialists.

Remote working

For some of our member firms this was a first foray into the world of remote working and the need for early practical advice was essential. We brought in external advisers to lead webinars on: Working from home with Office 365 & Teams; Techniques for secure and efficient remote telework; Connecting with clients on camera.

Once we had overcome the initial crisis management period, we introduced a broader range of events covering topics such as:

Leadership, change management & business development

Unprecedented times call for an unprecedented response. We have engaged external experts in transformational leadership and business development to run a series of webinars on:

  • Unprecedented leadership - requiring new thinking and different solutions
  • Unprecedented Teams - focusing on communication, transparency, compassion and vulnerability.
  • Staying grounded to thrive -taking control of your mind, emotions and experiences.
  • Business Development - choosing the right strategies and approach to take advantage of the new normal.

ZM: What initiatives have sprung from the webinars?

TW: For our business development, we set up INPACT MARKETPLACE meetings. Whilst responding to client need has been essential for our member firms, we are conscious that they must reach out beyond their client base if they are going to continue to grow and thrive. Winning new business in a socially distanced world presents its own challenges. In addition to webinars involving external experts in this area, we have set up INPACT Marketplace meets which run on a fortnightly basis. Member firms share investment, referral and business development opportunities and put clients together for mutual benefit.

ZM: What has attendance been like?

TW: We have been pleased with the level of engagement so far and this is building with each event. It has been wonderful to see increased participation from many member firms as well as reengagement from firms who had not attended a physical event for a while.

More members of staff from each firm can join the virtual events, thus allowing increased participation without increased cost. This means we can also reach the ‘future leaders’ of member firms and start building relationships among that group.

ZM: What has been the value of the events?

TW: It is clear from the feedback we have received that members find the sessions invaluable. They have gained comfort from knowing they are facing the same or similar challenges, as well as welcoming the opportunity to gain practical advice and skills from leading experts.

We have engaged with a broader range of members and this is helping to strengthen existing relationships and build new ones – even at a time when face to face meetings are not viable.

 

 

26 June 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Stephen Hamlet, CEO, Russell Bedford International on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

Zoya Malik: How many webinars has your firm conducted over lockdown?

Stephen Hamlet: Up to now, over 20.

ZM: What has been the focus of the webinars?

SH: Our webinars started addressing immediate effects of Covid-19 (communication to staff and clients, business planning and impacts, immediate action for accountants and tax advisers, tips for navigating through uncertain times, how to work virtually but effectively, how to run remote teams). We then moved onto looking into the future and at the potential post-Covid environment; with webinars including looking at savings now for long-term strength, the possible long-lasting effects on accounting firms, ensuring the combination between people, and that both processes and technology are right for the long-term and business continuity plans.

As a network of similar sized practices with similarly minded people, we felt the online sessions that were less technical but more focused on ‘people’ were delivering the greatest value. We have, for instance, recently launched a new online Health & Wellbeing course for employees of all Russell Bedford firms.  At a time when many of us are still very much restricted, having little physical contact with others, and needing personal support more than ever, we felt this was something that could add particular value to colleagues across all levels of the practice, as they struggle with personal challenges as much as business ones.

Finally, but by no means of any less importance, we have now held two ‘Happy Hours’, the most recent where we polled participants on their sentiments and thoughts about the future. It was most enlightening and very refreshing; to hear from people all around the world, going through very similar issues and sharing those concerns with each other. It’s what makes global networks like us so very special and essential.

ZM: What’s been the objective of the events?

SH: All of our events have the overriding objective of bringing people together; especially our own-run Happy Hours and web conferences. The external training ones are more for listening and taking note of ideas from experts; but I personally find the greatest value is where we open the ‘virtual floor’ to interaction amongst our members. We have online Q&A sessions and we hear how people have handled the same problems and challenges in very different parts of the world.

ZM: How many attendees and what were the activities?

SH: Our full web conference for International Tax and Business Development attracted over 200 people from 60 countries. This is the biggest number we have ever had at one of our events. And I suppose that is one big silver lining to all of this. A virtual event, with no travel or cost involved, can reach so many more people within our member firms. It was fantastic to see new faces, albeit on a computer screen!

Our Happy Hours generally attract around 70 people, across all 4 regions, but particularly well attended by Latin America!

ZM: What are particular topics for which you have found solutions?

SH: The most useful topics are about how to manage people, keep them engaged and motivated, when their daily routine (their daily life!) has dramatically changed. So, for instance, problems around new leadership challenges, how to effectively manage the ‘new virtual practice’ and how to take advantage of the opportunities available, are ones that we have tackled. The solution is always to ensure effective and regular communication, looking after your most important asset: your people; and to proactively offer help to your clients. The firms that have been doing that are the ones that will not only stay afloat in this situation, but will come out better for it.

ZM: Any new initiatives and partnerships that have resulted from these events?

SH: As part of a newly launched Russell Bedford Professional Development package, we now have a number of external providers featuring on our online, members’ only platform, offering both constantly accessible content or regular webinars and events. We have also negotiated a number of discounted products for our members.

ZM: What has been the value of the webinars and what action will be taken going forward?

SH: I personally believe that accountants need to continue to be adaptable and flexible; and this situation has forced them into being so, but I have been seeing this happen with great success. Looking after people, being more open-minded to flexible working patterns (in terms of hours and location), finding new ways of servicing clients, facilitated by modern technology, having more of a commitment to social responsibility, but with a greater resilience and agility. These are things that have made me feel extremely positive and optimistic about the future of our profession.

ZM: Any upcoming webinars we can look forward to?

SH: We have our online Asia Pacific conference at the start of July 2020, where we will be incorporating some technical content, with sessions covering tax, automation, marketing and future-proofing your practice) but, as I have said previously, the greater value are the more interactive sessions where we will hear from each of our firms about their practices, how they have coped in the current situation, challenges and opportunities, including their plans for the next 12 months.

We are constantly adding more content to our new online platform and we have a number of future webinars coming up, covering several topics including recession strategies, looking forward into recovery and more on technology.

 

 

 

25 June 2020

CBILs could stop future company borrowing

UK companies which use a Coronavirus Business Interruption Loan (CBIL) to fill a gap in funding could have major problems in the future, suggests tax and advisory firm Blick Rothenberg.

A business advisory partner with the firm, Richard Churchill, said: “This rush for CBIL scheme lending could have serious ramifications for business in the future land businesses should consider other sources of finance to plug immediate funding gaps.

“Interest rates for CBIL loans are often more expensive than conventional lending but with this cost and capital repayments deferred for 12 months many business owners have not considered the full impact of the loans they have taken out and the impact on cashflow in the future.

“Existing borrowings could consume so much of the free cashflows generated that additionally borrowing is simply not possible. Any decision to move banks will require the current CBIL lending to be refinanced, that may well prove difficult when banks are required to submit a fully supported credit application as opposed to relying upon an historical assessment of affordability as permitted under the CBILs scheme.”

He added: “One of the limiting factors for CBIL lending is that the maximum term for a loan is 6 years. As businesses’ reassess their business models and consider the future it may well be more appropriate for businesses to access funding spread over the longer term to invest in their business and also fund any structural deficit in their finance caused by the pandemic.”

 

 

24 June 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Clive Viegas Bennett, CEO MGI Worldwide with CPAAI on the nature of webinars that the organisation has conducted over the lockdown period, to knowledge share and support its member firms and their clients.

 

Zoya Malik: How many webinars has your firm conducted over lockdown?

Clive Viegas Bennett: We have conducted over 40.

 

ZM: What has been the focus of the webinars?

CVB: In the first three weeks we focused on dealing with the lockdown:

  • supporting clients
  • looking after staff, including a guest psychologist dealing with mental health issues
  • managing the practice and business
  • technological challenges
  • The effects on audit and financial reporting

We then continued with the following streams aimed at entertainment and technical and practical business advice.

  • Star speaker series, focusing on the post pandemic world – well known speakers (journalists, futurologists, economic pundits, academics)
  • Technical issues – new technologies,  audit, business niches etc.
  • Marketing – adjusting marketing and communications to the new reality
  • Personal productivity software support – getting the most of Microsoft 365, Teams, Zoom, etc.
  • Virtual meetings and regional “get togethers”

 

ZM: How many attendees and what were the activities?

CVB: Attendance ranged from over 200 for some of the star speaker series to as few as 20 for some of the other more specialised webinars. We are significantly reducing the volume of webinars in the summer. We will resume the star speaker, marketing and new technology streams in September 2020, as well as other occasional webinars on specific issues and some larger virtual meetings.

 

ZM: What has been the value of the webinars and what action will be taken going forward?

CVB: Members hugely value these webinars. At the beginning, they received insights into how to deal with the difficult and novel situation, confirmation that everyone was facing similar problems and feeling solidarity from fellow members. The webinars have brought merger partners closer together. We also found a much broader audience than for our face-to-face meetings – trainees in Cape Town, marketing staff in Sydney, managers in Dubai and so on.

Members are entertained and intellectually challenged by the star speakers, with exciting and innovative ideas about the wider context of the pandemic, the global economy and politics and the future of the human condition.

They also pick up a lot of practical ideas and techniques, such as the automatic translation facilities of PowerPoint,  the finer points of Caseware audit software, communicating in groups and individually, business development and marketing during the pandemic in preparation for coming out of it, legal HR issues about staff, practice management, getting access to government programmes.

At a time when we cannot meet in person, we have probably proved the network to be more useful to members by using the technology and investing in excellent speakers at all levels of discourse, to add to their knowledge, skills, well-being and collaboration.

 

 

 

17 June 2020

How are organisations planning to move employees from country to country in the future? 

Sharan Kundi, PwC Global Mobility Partner reflects in PwC's weekly briefing

Many organisations have been forced to adopt remote and virtual working arrangements not just for the immediate, but possibly longer term. Those employers who embrace virtual working are likely to tap into a broader global talent pool, possibly at lower costs, with the ability to move work more fluidly across borders.

But for others, physical travel is a fundamental requirement to achieve growth and to address skills imbalances and labour market demands.

In our survey on the impact of COVID-19 on global mobility, 44% of 350 global organisations said that they will seek to return to ‘business as usual’ as soon as possible and will continue with the same number of international moves as before.  Four out of 10 (41%) said that strategic global projects requiring mobile employees would remain a priority.  For those organisations, knowing how borders will be managed over the coming weeks and months is critical to be able to plan and execute moves.

The survey clearly shows that, despite the current disruption, strategic mobility projects remain a priority for the majority of companies, and many are using the pause in their activities to reassess their governance over business travel and examine mobility-related spend, the kind of packages they offer, and whether they can arrange for virtual deployments while travel restrictions are in place.

 

 

16 June 2020

Review on future tax hikes – what will it mean?

Graham Lamont, CEO Lamont Pridmore offers a comment on an increase in taxes (as reported in The Telegraph) and options open to the Government to recover the financial cost of COVID-19

Graham Lamont suggests that the the cost of the pandemic for the Government will be considerable but comparing it with the alternative of mass unemployment and a huge drop in consumer spending which accounts for 60% - 70% of GDP, our view is that the grants and reliefs put in place was the right course of action to minimise the economic downturn.

“As the Chancellor has recently stated it now seems that the cost to the Treasury is far higher than originally planned but he did say on several occasions ‘I will do whatever it takes to support jobs and livelihoods’.

“The true economic impact on the business sector will not be known until after 1 August when the Furloughing % will fall from 80% to probably 60% and then lower as people come back to work and are paid more of their salary by their employer. We fear a second wave of redundancies if in that particular sector their market place has not returned to full health.

“Taxes to pay for this size of government expenditure will need to be spread over many years because, despite the grants provided by the Government, the Tax deferrals of VAT, PAYE and self-employed taxes together with the Bounce Back Loans and CBILS Loans will all need to be paid back with deferred taxes by 31 March 2021 and loans over a six-year period starting in May 2021.

“Many businesses are having to borrow £500,000 plus to survive until October 2020 and that is with maximum furloughing so monthly repayments on these loans in some cases are £8,000 per month which will certainly squeeze their cash flow for the six years from 2021 - 2027 risking another downturn in investment in their businesses and trading performance.

“The choice of taxes to raise will need to be carefully considered because as Gordon Brown discovered and recent HMRC figures of the number of top taxpayers shows there are not enough of these high earners to yield all the taxes needed. It is the large number of PAYE taxpayers and those paying VAT on their consumer spend that yields the most.

“Tax relief at the top rate on Pension Contributions is another valuable source of revenue but you do not want to deter entrepreneurs from reducing their activities and net profitability to avoid what they perceive to be unfair high taxes on their earnings. So increasing the top rate of Tax may not yield as much additional revenue as Gordon Brown found with Labour’s high tax rates in previous years.

“My vote, if I were Chancellor, would be for basic rate tax to go up 2%, National Insurance 2%, Directors Dividend Tax going up to 12% and Class 4 NIC on the self-employed up to 12%.

 

“IHT being changed is another old favourite but it feels very unfair to wealthy individuals who have paid 40% income tax on creating the wealth and then another 40% on death! But it is only the beneficiaries who complain. Turning it into a gifts tax would in my view be a regressive step.

“Public Sector Pay freezes are a good way of reducing Government deficits but the political fallout of ‘I thought that we were out of austerity measures’ would have to be a key consideration.

“Not moving tax bands up with Inflation is another good stealth tax trick and does not have the same negative impact of a tax rise.

“The timing of the tax and expenditure changes could not be achieved in the near future until the true economic impact of the coronavirus is known and the repayment of deferred taxes and loans have their impact in 2021.

“The general public will need to understand and feel the pain of these costs first before they will be willing to pay the price of what they might see in 12 months as a Government having made serious mistakes at the very start of this pandemic, which could have significantly reduced the impact and the cost of the pandemic.”

 

 

12 June 2020

Monthly corporate and individual insolvency statistics R3 response 

Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3, comments on today’s publication of the Government’s monthly corporate and individual insolvency statistics for May.

“Today’s figures show corporate insolvency numbers declined between April and May of this year, while the number of individual insolvencies increased, largely driven by a rise in the numbers of Individual Voluntary Arrangements (IVAs).

“The corporate insolvency figures show the Government COVID-19 support measures appear to be helping many businesses that may otherwise have struggled during this period of economic disruption. This, in part, explains the drop in the number of businesses entering an insolvency process. There are also operational and logistical factors – such as the partial closing of the courts at the end of March – which also continue to play a role.

“On the personal insolvency side, while the numbers of Debt Relief Orders and bankruptcies have fallen, both compared with last month and with the same month last year, there was a sharp rise in IVAs. However, as the Insolvency Service a note, this increase has been strongly affected by technical issues around registering IVAs, so today’s figures might not represent a true picture of personal insolvency levels.

“While these statistics provide another snapshot of how the pandemic is affecting businesses and consumers, they still do not provide a full account of the impact it is having on levels of insolvencies.  

“Indicators over recent months suggest that an increase in insolvency numbers is coming, but this has not yet materialised. We are potentially in the period of calm before the storm, as indicated by the unprecedented 20.4% fall in GDP in April, published on 12 June 2020.

“For the first couple of months of lockdown, the insolvencies which took place were mainly those of companies which were already in financial trouble. It may not be long before this changes, however, and insolvencies of companies which would be viable under normal circumstances are initiated due to the lockdown and the effects of the pandemic.

“It’s clear that we’re set for a period of economic turbulence. In addition to today’s shocking GDP figures, research also shows consumer spending and consumer confidence – which are indications of both the health of the nation’s personal finances and of how businesses will fare going forward – fell significantly between March and April, and many businesses will face a rocky road until this improves. The rent quarter day, which occurs in the fourth week of June, will also put extra pressure on many businesses.

“It’s also worth noting that job vacancies were also significantly lower in April than in March, according to the Government’s own figures, and businesses are not optimistic about their abilities to resume hiring again in the short term. This is bad news for anyone whose finances have taken a hit, and indicates that the return to pre-pandemic economic conditions may take a long time.

“On the consumer side of things, debt repayments have actually increased since lockdown, but research is also showing that some people are falling behind on paying rent, bills and mortgages, which is definitely cause for concern.

“The longer lockdown continues, the more damage the economy will sustain. Yet easing restrictions on trading prematurely could lead to a wave of new infections and an even greater danger to business and personal finances. The Government has a difficult job in balancing these considerations as it plots a path forward.

“Given the continuing uncertainty around how the country returns to ‘business as usual’, anyone worried about their personal or business finances should seek advice as soon as possible from a professional and reputable source. The earlier they do, the wider range of potential solutions they’ll have open to them, and the more considered a decision they’ll be able to make about their next move.”

 

 

08 June 2020

Corporate expense billings under Covid-19 reality

Business travel and expenses app Rydoo studied the expenses of 850 companies in the UK, including over 12,000 submissions that revealed the changing areas where Brits are claiming expenses as many get to grips with working from home to stop the spread of Covid-19.

Across the UK millions of office workers have been told to stay at home to help stop the spread of Covid-19, and seemingly overnight the world of business travel and expenses was a distant memory. Life working from our kitchen tables, via Zoom calls and dodgy wifi, has meant businesses are now seeing a change in expense categories from their teams, as IT equipment replaces office lunches. 

Rydoo, a travel booking and expenses app, studied the expenses of 850 companies in the UK, including over 12,000 expenses, and found:


Expense for software has seen the biggest rise during lockdown with a 28% increase as work teams sign up to Slack, Zoom, Skype and Dropbox

  • Expenses for remote working IT equipment has risen by 18% including working from home accessories 
  • Office equipment expenses has seen a drop by nearly half (45%) as workers set up at home

Overall, the UK has seen a 20% reduction of expenses being logged, with the biggest category drop affecting food delivery services such as UberEats and Deliveroo, as lunchtime treats, client meetings and late night dinners are no more.

With social distancing measures expected to continue throughout the summer, companies across the UK must ensure the processes they use remotely are no longer paper based but digitised as our ways of working change forever. 

“The new working reality changes not only what is billed as expenses, but the process involved”, commented Rydoo CEO Sébastien Marchon. “Employees who work from home must be able to submit expenses digitally to ensure the processes are efficient and error-free. Digital billing ensures prompt reimbursement and supports the finance team with automatic category assignment, the implementation of company-wide accounting guidelines and agile adaptation to new working environments."

Rydoo reinvents travel and expense management with no more manual input. The streamlined app and desktop system lets you scan your receipts and submit with just a few clicks, as well as verify your flight information, and check-in and check-out in seconds. Designed to let finance teams approve expenses in real-time with its central billing system, a single invoice made up of all business travel-related expenses is also shared at the end of each month.

 

 

 

 

 

05 June 2020

Cross-border workers at risk of double taxation

UK workers who work across international borders may be subject to double taxation if the Government does not act, suggests tax and advisory firm Blick Rothenberg

Robert Salter, a director in the firm’s global mobility unit, said: “International workers, those who work partly in the UK and live work / partly in another country on an ongoing basis, have historically been subject to a well-established tax double taxation scheme between countries like France and Ireland which ensures that workers do not pay tax twice – now that is at risk

“The problem is that the network of Double Tax Agreements and EU regulations are not suitable for dealing with the challenges caused by Covid-19. For example, there is confusion over what should now happen from a tax perspective, if a UK-based employee who lives in Ireland has been furloughed?  Should the furloughed salary continue to be UK taxable whilst the individual remains at home in Ireland?  Or should Ireland, the permanent home of the employee have the only taxing rights on this income?”

He continued: “The Government (in co-operation with other countries such as Ireland), needs to ensure that clear positions are publicly agreed as a matter of priority.  If the Government doesn’t agree clear positions as a matter of priority, individuals and their advisors will face significant problems from an ongoing payroll and / or tax return perspective.

“HMRC would usually tax cross-border workers based on their actual workdays in the UK, there is no real precedence for the furlough scheme historically.  IF the UK were to continue taxing these payments, what would happen from an Irish perspective?  Would Ireland, for example, accept the UK taxes paid on the furlough wages as a ‘tax credit’ against the Irish taxes due?  Or would the Irish Revenue refuse to allow the tax credit relief, on the basis that the time had been spent in Ireland and hence result in actual double taxation for the affected individuals? Similar issues could arise with an Irish legal employee who is now at home in the UK and who is benefiting from Ireland’s Temporary Wage Subsidy Scheme.

“The Covid-19 lockdown creates similar issues for those workers who remain active – but simply working in a different country (i.e. working from a home office in a different country rather than their regular workplace in the ‘other jurisdiction’).  For example, the rules around where employee / employer / self-employed Social Security is due for such individuals (which are governed by EU / EEA regulations), could easily change.”

 

03 June 2020

Employer confidence slowly picks up in finance industry

Employer confidence rose in the UK finance industry last month as lockdown restrictions eased, with job vacancies rising by 22% month-on-month, according to UK job board CV-Library.

Applications for jobs in the finance sector rose by 11.2% in May, while online CV registrations rose by 12.8%.  When compared to May 2019, the application to job ratio increased by 191.7% last month, suggesting an increase in competition for roles.

While applications increased, data from CV-Library showed that salaries for new finance jobs fell by 4.2% month-on-month. However, across the UK as a whole, average pay dropped by 23.1%.

CV-Library founder and CEO Lee Biggins said: “As lockdown restrictions begin to ease, the market is starting to show signs of recovery and it’s promising to see job numbers picking back up. However, there’s still a long way to go and we cannot expect figures to return to normal overnight, especially when businesses are under a lot of financial pressure.”

 

02 June 2020

Evaluation is key: five tips on reassessing plans to survive Covid-19

Phil Mills, head of food and drink at accountants Old Mill, comments that while government schemes are welcome on the whole, this is the time to reflect and reassess plans, as there is no one-size-fits-all approach

Covid-19 has impacted virtually all businesses in the UK in some way. While some have shut their doors – possibly permanently – others are enjoying the sort of seasonal demand only ordinarily experienced with the promise of a big chap coming down your chimney in a red suit.

The government has launched numerous support schemes, which on the whole have been good, but they will not be able to support everyone, and there is no one-size-fits-all because no business is the same.

 

1: Evaluate your opportunities

That might sound like madness coming from an accountant and during a state of national emergency/lockdown, but if you start here then your thoughts will not be constrained by a balance sheet – that does not mean that you can ignore the financials: see below – and you might just start to develop ideas that you could not have conceived otherwise. Think Tarquin’s Gin making hand sanitiser!

 

2: Evaluate your financials

You will get a range of views on this from ‘experts’ in this area but here are my tips:

Understand your numbers. If you do already then great, skip this step and move onto Tip 3. If not, then start with your last set of accounts and go through the detailed pages at the back.

Understand how many sales you make, and look at what it costs you to make those sales. Go through the administrative expenses and sense-check each of them. Then mark up each number as either: has or will change (out of your hands), could be changed (in your hands), and will not change. There may also be some new numbers that you are expecting, such as rent charges for new premises: note these down.

Understand your cash flow. Taking each figure above start to build a picture of what will be happening to your cash each week and month. Understanding this for a year is great, but nobody has a crystal ball, so aim for three months – life could be quite different three months down the line. Have you thought about any grants you are eligible for? Have you thought of any one-off payments you will need to make? Or interest payments from any new lending?

Start to model some different scenarios. What would happen if you go after one of the opportunities you have identified? Do you need to increase your marketing spend? Could you share a distribution network with somebody else? What will happen when you change some of the numbers in your control? How will you fund the investment required?

3: Make a decision and get behind it. And, if relevant, shout about it

Do not underestimate the power this could have for you and, if you have one, your team. We are all emotional beings, and making a clear decision in uncertain times is huge.

If you have decided you are going to deliver locally as a retail offering, then get the message out there. If you are doubling production to cope with demand, tell people. If you are changing your product line – think Burberry’s production of PPE – then let others know. This is a chance to inspire and make your team proud.

 

4: Revisit Steps 1 to 3 weekly

Do they still make sense? Do you need to adjust your plan? Does it need a complete change? If required, make the decision again!

 

5: Pause and reflect

What might be the future in, say, a year or three years? And what are you learning now that should be embedded into the business in the long term?

Making a decision is important and saves you from drifting into the future without a plan. I am pleased to say that the majority of people I have spoken to have sought to understand the immediate help available to them and are tackling cash-flow planning, which is great, but only part of the picture.

 

 

 

29 May 2020

Data from cyber breaches made public with rise of ‘leak sites’ during pandemic

Kris McConkey, Cyber Threat Operations Lead Partner at PwC said, “There’s been a rise in the number of public high-profile cyber security incidents, with the majority being ransomware attacks involving exfiltrated data being leaked. In most such cases, initial access to networks is typically established well before the attacks are made public or identified by the victim organisation.

Analysis by the PwC Threat Intelligence team shows that recent cyber breaches have come at a time when threat groups are increasingly setting up ‘leak sites’ specifically to post stolen data. By 20 May, over 150 organisations globally have had compromised data published on leak sites; the majority of these (60%) have occurred after 11 March, when the World Health Organisation declared the COVID-19 outbreak to be a pandemic. Of these, the overwhelming majority (80%) were leaked after 23 March, when lockdown began in the UK.

There are several reasons why we're seeing an increase in cyber-attacks becoming public but primarily it is due to organised crime groups likely seeing this time as a way to target organisations in desperate situations. We know that cyber activity can be as varied as opportunistic reconnaissance missions to identify vulnerabilities, such as the increase in remote working, to more sophisticated organised crime affiliate programmes, triggering a growth in the number of demands and revenues, which then encourages others to enter the market. Despite this, organisations can protect themselves, and their immediate focus should be how to reduce risk. Firms should make sure that their employees are supplied with updated guidance on what suspicious activity looks like and how they might be targeted, while ensuring that their current security posture is fit for purpose.”

 

 

26 May 2020

 Zoya Malik, Group Editor, International Accounting Bulletin spoke to Tendai White, Executive Director, INPACT   on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik:  Has your organisation set up a special consultancy team to support Covid-19 related advisory?

Tendai White:  We continue to work closely with an external marketing agency and have added support from leading consultants in leadership, business development and online event management to enhance our service to members and their clients. We are ensuring that we bring the right minds together to provide a flexible and fast response to members’ emerging and changing needs.

ZM: What objectives have you set for Covid -19 special consultants? How are these consultants contributing to strengthening member firms’ confidence at this time?

TW: We have members across the globe at different stages in the pandemic timeline and with different needs. We are using consultants in the right disciplines to ensure our members have access to the right support at the right time. Our aim is to help members deal with their current issues and also to plan ahead for the future. This includes providing alternatives to physical meetings; helping ensure they can service client needs effectively; seeking out new business opportunities; fostering business development in a remote working world; providing leadership training & development; forward planning/budgeting in an uncertain world; sharing experiences as countries emerge from lockdown.

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions?

TW: Whilst concerns vary from firm to firm, there are many common threads:

  • Employee safety, health and welfare, physical and mental;
  • Ensuring that home/remote working is working effectively;
  • Supporting and responding to clients effectively on all accountancy matters
  • Business development – how to win new business in a remote working / social distancing
  • world
  • Cash-flow issues and forward budget planning in uncertain times
  • Preparing for a new ‘normal’ as firms emerge from lockdown

ZM:  What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?

TW: INPACT’s admin team has worked remotely for many years, with members in UK, Spain & Hong Kong. We are a strong team with clearly defined roles, but flexibility has been key to ensuring we offer a rapid response to members’ changing needs. For some of our members, working from home has been a new experience, so we have been able to share our own insights, experience and ideas.

My management style is very collaborative and I really value personal contact. Through increased use of video conferencing and personal member contact, we have been able to reconnect with members who may not have attended recent events and establish new contacts.

In summary, the main management attributes I have reaffirmed:

Flexibility – being able to adapt quickly and effectively to changing needs

Collaboration – sharing ideas and experiences; working with the right people with the right expertise at the right time

Strong communication – encouraging and supporting team members; ensuring members continue to feel part of the INPACT ‘family’  

Positivity and energy – looking at how we can add benefit for members and help them find the positives not just deal with the challenges

Having a clear vision – looking for the opportunities not just dealing with the difficulties; we know how valuable it is to be part of an international association at this time and we need to ensure we communicate this message.

 

 

 

 

19 May 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Ted Verkade, CEO Baker Tilly International on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory?

Ted Verkade: Covid-19 affects many aspects of our clients’ businesses and the way we communicate with our clients. Our member firms take a multi-disciplinary approach that is tailored to the specific needs of each client. In our network, where personal relationships are at the heart of our success, personal communication is the most powerful way to work together. In this rapidly evolving crisis, it is essential to have easy access to information on economic measures and tax relief that is available globally. From the initial outbreak of COVID-19, we established communication mechanisms relating to COVID-19 measures and the distribution of information to both our member firms and their clients.

 

ZM: What objectives have you set for Covid -19 special consultants? How are these consultants contributing to strengthening member firms’ confidence at this time?

TV: Our main goal is to move quickly and to maintain open lines of communication with our people on the impacts of COVID-19 to their businesses, and those of their clients, and the emergency actions implemented. Our approach is based around working in partnership with our firms to learn from others who are ahead of the curve, and to build confidence amid the uncertainty. We have personally spoken, one-on-one, to all managing partners across our network and have introduced frequent regional and sub-regional managing partner video-calls. Sharing ideas and experiences, and speaking to others in the same situation, is vital in times like this to provide reassurance, build confidence and keep spirits high.  

 

ZM: What areas / practice lines are they advising on?

TV: We have adopted a three-phased approach to drive our activities and support to members. The current situation is unprecedented. Our member firms and us here at the Global Office all find ourselves in uncharted territory, in which it is not possible to define a roadmap in advance. We have to find our way as we progress. To structure our approach, we have divided the journey in three phases: Now, Next, Tomorrow. Dealing with the now, and ensuring we plan for the future. This framework is defining how we structure our activities and support during and after the pandemic.

Much of the “Now” phase focused on initiating resilience planning: formulating business contingency plans; dealing with remote working challenges, accelerated digital transformation, audit and financial reporting implications, changing clients’ needs, worst case scenario planning and cash flow management. As we move into the “Next” phase, we are working with member firms on mapping out the future path of their firm, including providing scenario planning toolkits to enable them to plan for all angles of the upturn (“Tomorrow”).

A key part of our communication with our member firms has been around this “new normal” we find ourselves in and putting our people first. Paying attention to the mental health of our people, many of whom are working from home for the first time in their lives. Communications that engage our people and show the lighter side of this new normal. Our latest campaign centres around “ApartButNotAlone”. Being part of our network is now more powerful than ever – we are a community. A community that can support and inspire each other and work side-by-side to get through this difficult time. A community with whom we can share our creative ideas, collaborate and learn from.

 

 

15 May, 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Howard M. Rosen CEO, BKR International on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory?

Howard M. Rosen: Although we have not set up a special consultancy team to support COVID-19 related advisory, we have instead encouraged our regional Executive Directors to tailor programmes specifically for their regions. As an association, it is the duty of our members around the world to formulate their own response in accordance with their respective national requirements and regulations.  We have provided different forums to encourage the exchange of ideas among our members.  In addition, we have sponsored webinars, gathered COVID-19 information and links from a variety of sources and have ensured this is available to all of our members.

 

ZM: What objectives have you set for Covid -19 special consultants? How are these consultants contributing to strengthening member firms’ confidence at this time?

HMR: Our objective has been to provide a mechanism for members to receive the appropriate information that will allow them to make the well formulated decisions for their firms in dealing with the crisis.

 

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions?

HMR: There are several interrelated concerns affecting our members:

-How to deal with the crisis internally.  Making sure their team can work from home in an efficient and secure manner.  

 -Effectively meeting the challenge of the changing needs of the firm's clients and developing new services to meet these needs.

 -Translating what is learned during the crisis into part of the fabric of the firm as they go forward and look to the "new normal".

-Securing the safety of all members of the firm.

 

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?

HMR: I do believe in the importance of flexibility.  It was critical that we not only be ready to answer questions and address issues as they arose, we needed to anticipate the needs of our members and to coordinate a plan among all three of our regions, to respond as quickly and completely as possible.  We encouraged members from outside a particular region to attend webinars hosted by the other regions.  We shared resources and programmes among all of our regions.

 

 

 

 

13 May 2020

 

CIMA: Furlough scheme extension provides glimmer of hope

Following UK Chancellor Rishi Sunak’s announcement of an extension to the furlough scheme, which sees the UK government support job retention by subsidising up to 80% of an employees’ wage, to October, Chartered Institute of Management Accountants (CIMA) chief executive of management accounting Andrew Harding said: “We welcome the extension and increased flexibility of the Government’s Job Retention Scheme until the end of October.

“This will provide a lifeline for many companies and employees as they begin to scale their operations back up in a new, ever-changing environment.

“While we recognise that the furlough scheme cannot go on forever in its current form, we are concerned that some sectors (e.g. hospitality, leisure and travel industries) will not be able to go back to work within the Government’s estimated timeline. Therefore requiring businesses to pay a portion of their employees’ salaries while they have no income will lead good businesses to fail and trigger mass redundancies across these sectors. This is why in the future we would like to see the Job Retention Scheme adopt a sector by sector approach, the Government should continue to provide support to businesses and people most impacted by the crisis and unable to resume to ‘business as usual’.

 “Additionally, the Government should allow greater access to the Coronavirus Self-employed Income Support Scheme and Coronavirus Job Retention Scheme for SME business owners so they can get some much-needed financial support for themselves and their families. It should ensure that it truly reflects their earnings over the past three years by allowing them to have their dividends considered alongside their PAYE using the definition of ‘Close Company’ (five or fewer participators) in the Corporation Tax Act 2010.

 “Should new lockdown measures need to be imposed in the future, we hope that the Government will continue to stand behind businesses and people by adapting its approach to the new economic reality.”


 

 

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Marco Donzelli, CEO HLB International on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory?

Marco Donzelli: n the early days of the outbreak, our priority was to support HLB member firms with their business continuity planning. We assembled an internal taskforce made of HLB influencers representing different service lines and key markets. This task force has been led by our Global Advisory, Assurance and Tax leaders, supported by our Global Chairman and coordinated by the head office and has been advising member firms on working with their clients and their staff under the lockdown circumstances.

 

ZM: What objectives have you set for Covid -19 special consultants?

MD: The overarching aim has been to help the network with both practical and moral support through the current crisis, so that business operations can continue as much as possible and the to mitigate the impact on our workforce and our clients. In some respect, the objectives in relation to the crisis fit perfectly into their existing objectives across the dimensions of our network strategy, with more attention to the following ones:

  • People and talent
  • Advisory
  • Technology
  • Commercial attitude

In fact, we believe that COVID-19 has accelerated certain trends such as the adoption of digital collaboration platforms and a cultural shift towards advisory across all our service lines. These were already in place as we built our Shaping our Shared Future Strategy, with horizon end-of-2023 which we launched just six months ago. It is how the team has been delivering their objectives which has changed, not the objectives per se.

 

ZM: How are these consultants contributing to strengthening member firms’ confidence at this time?

MD: Their contribution has been delivered primarily through video conferencing with managing partners and staff from different levels across different locations, webinars, COVID-19 specific actions within the existing planning framework of our regional, specialty and industry groups and internal thought leadership pieces and dedicated help-desk for HLB firms. In addition, they contributed to the production of COVID-19 related Thought Leadership for clients and the general public, within our COVID-19 resource centre on the HLB global website. Such inward and outward looking activity has required extensive coordination with other HLB leaders across specific regions, functions, specialties, and industries. Even more joint effort will be put for our virtual audit, tax and advisory conference – dedicated to our managers and partners globally – which will take place in July 2020 and which will be entirely focussed on “new normal”.

 

ZM: What areas / practice lines are they advising on?

MD: Their activity has been mostly focussed across assurance, tax and government incentives, financial reporting, HR administration, people management, firm technology, technology services, advisory services especially within treasury, disaster recovery and business continuity, data analytics and cybersecurity services.

 

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions?

MD: Our firms’ main concerns have been about how to reduce the impact of COVID-19 on their own operations and staff, and about helping our clients get through this crisis in a successful fashion. Our COVID-19 team have been advising on business continuity and disaster recovery, for the benefit of both our member firms and clients globally. Similarly, the challenges and opportunities of remote working and preparing our people for the months to come have been predominant in their activity. Furthermore, the team has been consulting on remote audits and audit in time of crisis; government measures across the globe and how to make the most of them; opportunities in advisory (especially cybersecurity advisory).

 

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?

MD: My major takeaway has been that during times like this, there is no risk of over-communication. I have been more present than ever across our communications especially at internal level. At the same time, I have also learned how delegating responsibilities to other leaders within the organisation is even more effective in times of crisis. As a result – within the boundary of our strategic direction – I have been encouraging my team to be more proactive and entrepreneurial than usual, this being the best way to pivot fast throughout uncertainty.

 

 

 

12 May 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Dr. Christian Gorny CEO, ETL Global on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

ZM:  Has your organisation set up a special consultancy team to support Covid-19 related advisory?

Dr. C. Gorny: Throughout all member firms, certain individuals were identified to follow up on specific Covid-19 related measures and to provide their colleagues with the respective information they need for their particular clients. In some larger organisations, dedicated technical teams are regularly providing analyses on new legal developments, with respective processes in place that have already existed before Covid-19. However, given the massive flood of information required at this time, they have had to concentrate on this subject alone for a few weeks. In order to make our consulting advice widely available, we are continuously gathering information from our members and are publicising this on our global and local web presences.

 

ZM: What objectives have you set for Covid -19 special consultants? How are these consultants contributing to strengthening member firms’ confidence at this time?

CG: The only objective set was to provide for the best and most comprehensive information possible. The better everybody feels informed, the bigger the confidence.

 

ZM: What areas / practice lines are they advising on?

CG: The areas we are advising on include Personal Income Tax, Corporate Income Tax, Payroll tax & Accounting, Labour law, Compliance & Application Management regarding subsidies and state aids.

 

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions?

CG: All member firms’ main concern was to keep their own teams healthy and to find ways of keeping a well-functioning organisation which remains in reach of clients, while protecting them from the impact of the virus. ETL Global’s clear advice was to

-          distribute and follow the hygienic rules as advertised by the WHO,

-          avoid personal contacts with clients and business partners wherever possible,

-          use modern means of communication such as telephone calls, e-mails, chats, video conferencing or virtual meeting rooms,

-          cancel or postpone business related travel plans,

-         show flexibility for the needs of colleagues (i.e. regarding childcare) where necessary.

 

At the same time, from the member firms’ commercial perspective, the main concern was related to the cash situation against the background of potential insolvencies threatening the client base. So far, however, all monthly results and cash flows have been according to plan. ETL Global’s advice to member firms is to monitor the situation closely and to refrain from unnecessary cash-outs for the time being.

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?

CG: The most important thing to keep motivation up, to be open for the needs of each team member and to offer support in finding solutions for each individual situation. Regular telephone/video conferences grow the team spirit and give space for each person to report on developments in his/her surroundings.

 

 

 

7 May 2020
 

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Kevin Arnold, CEO Nexia International on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms


Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory?
Kevin Arnold: We have set up a special consultancy team, which consists of internal members of staff listed below, external agencies and consultants (including technology providers, service line specialists and people related coaches) and key members firms.

  • Chief Operating Officer & Global Head of Quality
  • Chief Digital and Information Officer
  • Chief Collaboration Officer  
  • EMEA Regional Executive Director

ZM: What objectives have you set for Covid -19 special consultants? How are these consultants contributing to strengthening member firms’ confidence at this time?
KA: Key objectives for the consultants have been to:

  • Identify what support members require during this time and set a strategy to provide this support.
  • Facilitate the sharing of knowledge and material relating to COVID-19 between members within the network.
  • Identify and implement collaboration methods that do not rely on physical meetings.
  • Share technology best practice with members including successful remote working and cyber security considerations.
  • Facilitate collaboration between members specifically at sub-regional levels and between different service lines and industries.

ZM: What areas / practice lines are they advising on?
KA:  We are advising on the following areas:

  • Audit services - going concern, subsequent events, and other considerations and
    financial reporting impacts of COVID 19: IFRS Implications.
  • People management - how to manage remote working and maintaining the health and wellbeing of teams and clients.
  • Technology - providing information on the different types of technologies to use for employees and clients and the effectiveness of each as well as guidance around cybersecurity and managing IT vendors.
  • Strategy and operations - how different firms are managing in terms of improving cash-flow, business continuity plans, managing suppliers, customers or clients and firm health checks.

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions?
KA: Members main concerns have been around looking after their staff, audit matters and what technologies to best utilise for employees and clients.

Nexia has responded by delivering a number of initiatives for its members, including:

  • Resource hub on the external website
    Provides members with access to articles from different member firms from across the globe, on how countries are dealing with COVID-19. This gives members an idea on what is happening in other countries, helping them to prepare in their jurisdictions and assist their global clients.
  • Resource hubs on the intranet
    Provides useful tools and guidance on key areas, for which members require information. This includes tips and challenges of remote working and a number of external providers have provided training webinars, documents around cybersecurity, user guides, demos, and guidance on setting up successful live events.
  • COVID-19 webinar series
    Live and recorded webinars on remote working, looking after employees, audit related matters, what effective technologies members can utilise and panel sessions from different members on how they are navigating COVID-19 within their firms, to help share knowledge and best practice.
  • Regional meetings via Microsoft Teams
    Each Regional Executive Director (REDs) has set up panel sessions with their Boards and member firms to help facilitate collaboration and information sharing between member firms.
  • Sub-regional collaboration meetings via Microsoft Teams
    The REDs have set up a programme of collaboration meetings at sub-regional levels for different service lines.
  • Virtual conferences
    Replacing the conference programme with virtual conferences.

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?
KA: I have re-learned the importance of communication, transparency, delegation, and trust. Regular team meetings fulfil a key role, but in themselves are not enough.  To bring people together, I encourage regular, personal communication with and between staff. And especially with our members. 
It is not enough to deliver for them - we need to be seen to do so too. Everyone is fully aware of the context within which we are operating and clear about what we need to achieve and why.  Remote working makes over control impossible and it becomes essential to delegate as much as possible.  Our team have thrived on the additional responsibilities this has brought them and really risen to the challenges presented. 

 

 

 

 6 May 2020

 Zoya Malik, Group Editor, International Accounting Bulletin spoke to Martin Sharp CEO, DFK International on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory? 

Martin Sharp: No, we are using existing structures (global, regional and national group) to manage our response. This has worked well, proving timely support to members with people that they trust on hand when needed.

 

ZM: What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions? 

MS: The main concerns are: 

-Maintaining support to clients, with heavy demand from clients for advisory services

-Ensuring safety and well-being of staff

-Maintaining effective and secure communications with remote working

-Evaluating and commentating on ‘going concern’ and ‘subsequent event disclosures’ for audit and assurance clients

-Ensuring adequate cash-flow – for both clients and own business

-Reorganising and positioning for the “new normal”

 

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements?

 MS: The crisis has reminded us of the key tenets of leadership:

-Staying calm under pressure to ensure clear thinking

-Articulating a clear vision to give confidence to the team

-Consulting, listening and then decision-making

-Acting decisively, but being ready to change direction if needed

-Communicating, often, and with purpose and clarity

-Genuinely caring for the team and ensuing their well-being so that they work because they want to rather than they have to

-Recognising achievements and showing gratitude for the extra efforts being made

-Being ready to learn lessons to do better next time

 

 

5 May 2020

Zoya Malik, Group Editor, International Accounting Bulletin spoke to Tim Wilson, CEO MSI Global Alliance on gathering a consulting team to provide Covid -19 rapid response advisory for their disaster management support to member firms

Zoya Malik: Has your organisation set up a special consultancy team to support Covid-19 related advisory? 

Tim Wilson: We have previously worked with an HR consultancy and a marketing consultancy that have provided outsourced advice and support to the MSI Office.  With Covid-19, we decided to additionally engage with an IT consultancy to advise us on virtual platforms and remote working for the MSI Office and to offer advice to our members too.   We have also been using other consultants for webinar delivery, on a number of topics.

 

ZM: What objectives have you set for Covid -19 consultants team? How are these consultants contributing to strengthening member firms’ confidence at this time? 

TW: The critical objective has been to create relevant material for MSI to provide direct support to our member firms. 

ZM:  What have been member firms’ main Covid-19 related concerns and how has your organisation advised them across particular geographies and jurisdictions? 

TW:  We have been immediately supporting on Firm management (in particular financial and people), client support and reach out.  We have surveyed firms, and held virtual meetings and webinars to enable discussion and are sharing our learnings on these key issues.  

ZM: What have you learnt about your management style, in how you are encouraging your team in re-gearing for rapid response to member firms ‘changing requirements? 

TW: I believe collaboration and communication are key.  Also there is a need for empowerment of team members and showing empathy to their needs and circumstances.  In order to respond rapidly, it is important that, “the perfect does not become the enemy of the good”; rather encouraging and demonstrating flexibility and open mindedness, are crucial. 

 

 

 

28 April 2020

CPA Australia calls for reassessment on Tax Measures to build a healthy society
Given concerns over the state of the economy and job insecurity created by COVID-19, 53 per cent of accounting professionals believe that the Hong Kong SAR Government should not increase tax revenue at this time.

However, respondents to CPA Australia's latest survey favour the SAR Government - at an appropriate time in the future - introducing further measures to support the economy and society, including tax measures aimed at improving public health and supporting medical services, to improve the environment, and to encourage innovation. This should include preferential tax treatment for innovation and technology and greater digital delivery of services by the Inland Revenue Department.

The survey was conducted from 3 to 17 April, with 151 responses from Hong Kong-based accounting and finance professionals working in a variety of different industries and with 67 per cent working in senior leadership positions.

Tax revenue and the proposed imposition of a global minimum tax rate
Anthony Lau, CPA Australia's Divisional President of Greater China 2020 said, "The COVID-19 pandemic has dealt an unprecedented and severe blow to the global and Hong Kong's economy. The government has introduced appropriate relief measures amounting to some $310 billion, equivalent to over 10 per cent of gross domestic product. Faced with challenges such as fiscal deficits in the coming few years, as well as an ageing population, a wide income and wealth gap, and challenges from fast changing international tax rules, it is essential to consider how to stabilise Hong Kong's revenue in the long run."

When asked whether Hong Kong SAR Government needs to increase tax revenues, 53 per cent of respondents chose no, while 44 per cent said yes.

Lau explained, "With the economy in need of support and stimulus at this time, it is not surprising that most do not favour raising tax revenue.

"However, the 44 per cent of respondents who believe that the Government should increase revenue are probably concerned with the sustainability of Hong Kong's finances in the longer term, given the Government's reliance on a narrow and volatile revenue base. In 2018/19, non-tax revenues, including from land sales, accounted for 34.9 per cent of total government revenue, which is well in excess of other jurisdictions like Singapore and the United Kingdom. 

"When the economy recovers, the Government should begin considering options to reform the tax system to support the sustainable development of the city. The best way to do this is through a public and comprehensive 'root-and-branch' review of the tax system.

"One of the more immediate tax concerns for Hong Kong is the impact of the fast - changing international tax environment such as Base Erosion and Profit Shifting (BEPS) from the OECD and the review of our foreign source income exemption regime by the European Union this year. A quarter of respondents believe the proposed global minimum tax rate will weaken the competitiveness of Hong Kong's tax system due to factors such as additional operating costs for multi-national corporations in Hong Kong and the possibility of impacting Hong Kong's simple tax system, which is one of the city's core competitive advantages."

Measures to build a healthier and forward-looking society

In the past few months, the pandemic has changed the way we live, work and conduct business. This may have shifted public sentiment, with the survey results indicating that there is strong support to use the tax system to help build a healthier and forward-looking society. Many respondents (48 per cent) believe that the Government should consider increasing duty on tobacco, alcohol and hydrocarbon oil if it is to broaden the tax base within the next three years, while 37 per cent selected the introduction of an environmental protection tax as the second highest option.

Respondents also supported using the tax system to provide incentives to companies to take environmental action. When asked what profits tax measures the Government should introduce, respondents were most likely to choose incentives for environmental action (33 per cent).

Lau explained, "Having learned the lessons from the enormous impacts the pandemic has on society and the economy, accounting and finance professionals have the foresight to build a better and more sustainable environment for current and future generations. A healthier city may also help to reduce the growth in public and private health costs and improve our competitiveness."

 Another significant change brought about by the pandemic is the growing adoption of technology and digital services since daily physical contact has been disrupted. Accountants expect that Hong Kong's tax administration can be improved, with 43 per cent of respondents wanting to see more services by the Inland Revenue Department digitalised and made more mobile-friendly. Further, the top industry that respondents believe is most in need of preferential tax policies is innovation and technology with 38 per cent of respondents selecting this industry.

"Viewed through the lens of history, epidemics and pandemics are key factors in transforming societies. I believe that the current health crisis is similar to the ones in the past and as a result, an increase in the awareness of societal health and wellbeing, utilisation of technologies and innovation solutions to adapt to changing living conditions, will push our society forward," Lau said.

 

 

27 April 2020

Voicing concerns to chancellor for ‘forgotten’ small business and self-employed

A group of membership bodies, representing around 300,000 members ranging from optometrists, osteopaths and physiotherapists to market researchers and accountants, has joined forces to call for financial support for their forgotten members who have been overlooked for Government support.  These self-employed professionals and small businesses provide important services which have been badly impacted by the COVID-19 pandemic but are struggling to access any of the existing schemes.

Each one of the seventeen organisations has spent the weeks since lockdown speaking with its members and voicing their concerns at the highest levels within government.  However, although the disciplines involved are diverse, the core issues affecting these small businesses are the same and the solutions for government relatively straightforward. The groups have decided therefore to join forces to send a strong and united message to the chancellor.

The letter sent on 27 April, 2020 calls for the Government to allow directors of small businesses access to either the Coronavirus Job Retention Scheme (CJRS) or Self-Employed Income Support Scheme (SEISS), to expedite the process of delivering funds under SEISS before it is due to go live in June, and to make the process of accessing Coronavirus Business Interruption Loans (CBILs) a smoother one.

“The letter references our many thousands of members that face acute challenges in keeping their businesses afloat. Behind these businesses are hard-working people supporting their families, paying taxes and contributing to the wider economy.  The impact of their disappearance would hit the country hard when it begins to emerge from the current pandemic.

“Collectively the groups have welcomed the existing support and acknowledge the breadth of businesses these schemes already support but there are some very worrying gaps. The chancellor promised he would do “whatever it takes” yet, sadly, too many businesses are being left behind. For many small businesses, June is simply too late while other business owners who pay themselves minimal salaries need to have dividends treated differently.

“We hope this diverse coalition of voices can use our collective strength to convince the chancellor to be true to his word and amend the existing schemes to cover and support all of these vital businesses and services that need it.”

  • Andrew Harding, Chief Executive, Chartered Institute of Management Accountants
  • Henrietta Alderman, Chief Executive, Association of Optometrists
  • Oliver Coburn, Registrar, British Association of Sport Rehabilitators
  • Catherine Quinn, President, British Chiropractic Association
  • Martin Woodrow, Chief Executive, British Dental Association
  • Carey Trevill, Interim CEO, British Promotional Merchandise Association
  • Daniella Dos Santos, President, British Veterinary Association
  • Alastair McCapra, CEO, Chartered Institute of Public Relations
  • Karen Middleton, Chief Executive, The Chartered Society of Physiotherapists
  • George Dunn, Chairman, College of Podiatry
  • Chris Combemale, CEO, Data and Marketing Association
  • Marian Stefani, CEO, Independent Print Industries Association
  • Stephen Mann, CEO, Institute of Faculty and Actuaries
  • Maurice Cheng, Chief Executive, Institute of Osteopathy
  • Jane Frost CBE, CEO, Market Research Society
  • Karen Lay, Chairman, Physio First
  • Graham N. Smith, Chairman, The Society of Sports Therapists
     

 

 

24 April 2020

Offset covid-19 expected losses in order to cut tax bill

Businesses suffering lower revenues due to the coronavirus crisis may be able to offset their expected losses for this year against last year’s taxable profits in order to help reduce their tax bill, says accountants and business advisors, Moore.

Income for many companies has been severely impacted by the coronavirus outbreak and it is therefore essential that businesses find ways to improve cashflow in the coming months, if they are to survive.

Moore adds, many SME companies will be needing to make corporation tax payments in the forthcoming months, that are based on previous year’s taxable profits. However, if the business is expecting to make a significant loss in the current year, one option would be to consider offsetting these losses as soon as possible in order to reduce tax liabilities and to help with cashflow.

This is one option that a business may wish to look at, as an alternative to entering into an agreement with HMRC to delay their tax payments, known as a Time to Pay agreement. There have been substantial logistical issues in arranging Time to Pay agreements as HMRC has been swamped by enquiries.

Moore explains SME companies will need to pay their Corporation Tax liability within nine months and one day after the end of their annual accounting period. For example, a business with a year end of 31 December 2019, will need to pay their tax bill by 1 October 2020. 

Moore adds, if the company was able by September 2020, to have a reasonable estimate of their 2020 annual taxable losses, then this information could be included on the 2019 tax return, thereby using the losses as soon as possible to reduce the tax due in October 2020. When the actual losses have been established, an amended return can be submitted. One note of caution would be if the estimated losses are too low, then the additional tax would need to be paid, and HMRC may charge interest on the balance.

Lucienne Parry, Partner at Moore says, “Right now, one of the key items that matters for many businesses is preserving cash. Reducing your corporation tax payments is one way to do that.”

“For those businesses which have prepared management accounts and have a good understanding of their financial position, this can be a really simple way to improve cashflow. We are receiving more and more queries from clients about this.”

“It is crucial for businesses to be aware of all the different options available to help strengthen their financial position during this coronavirus crisis. Offsetting losses, Time to Pay agreements, and applications for emergency government loans should all be considered.”

 

AICPA provides recommendations on state and local taxes during Covid-19 pandemic

The American Institute of CPAs (AICPA) has provided recommendations for administrative, filing and payment relief for state and local taxes (SALT).

AICPA senior manager for tax policy and advocacy Eileen Sherr said: “To assist state CPA societies in advocating for fair, reasonable and administrable tax rules, the AICPA has developed a list of recommended administrative, filing, and payment relief for state and local taxpayers. AICPA also continues to maintain its state tax guidance chart as a resource for taxpayers and their advisors.”

Below are some of the recommendations:

  • Permit businesses to adhere to work locations for state and local tax purposes during the pandemic and allow businesses the option to use these employees’ work locations for payroll withholding, nexus, and apportionment purposes while such telework requirements are in place. 
  • Permit electronic fund transfers for payments with no additional fees (instead of paper checks).
  • Permit electronic images (scanned or photographed) of signatures (instead of wet signature requirements).  
  • Permit electronic filing and email transmission of documents and returns (including allowing an email of a PDF of a return).
  • Suspend any requirement to send items and returns via certified mail.
  • Provide taxpayers with extensions until 90 days after the end of the Governor’s declared state of emergency in the state for audit, exams, appeal deadlines, protest matters, refund claims for previous years and stop during the pandemic all enforcement type activity and automated notices as many of these situations require time sensitive response. 
  • Provide an exemption from sales and use tax for donated products, including donations of Personal Protective Equipment (PPE), to a charity or governmental entity.

 

 

22 April 2020

CIMA: UK’s CIBLS support must be accelerated to increase business survival rate

The Chartered Institute of Management Accountants (CIMA) has called on the UK Government to address the shortfalls of its Coronavirus Business Interruption Loan Scheme (CBILS) to help improve the survival rate of SMEs in the short- to medium-term.

CIMA chief executive – management accounting- Andrew Harding said: “The UK Government has already announced a number of generous, efficient measures to support individuals, businesses and the economy as a whole. However, we are now clearly seeing that some of the mechanics do not work.

 “With just only 12,000 loans approved under the Coronavirus Business Interruption Loan Scheme, many financially-viable UK businesses are still unable to access the urgent financial support that they need to survive this crisis.

 “Banks, which a decade ago were at the centre of a global crisis, now need to step up their game by speeding up their loan application processes and redeploying staff from other areas to deal with the high volume of enquiries. Efficient and effective delivery of financial support to struggling businesses should be the norm, not the exception.”


 

 

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Jean Stephens, CEO, RSM International on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Jean Stephens: The COVID-19 pandemic is a global phenomenon, but its impact is being felt at a local level. Clients are facing growing uncertainty; the safety of our people remains a top priority and economies are under immense strain. The immediate response, therefore, must be led on the ground by our excellent advisers in every market.

But, like so many of the most important challenges we face today, many of the longer-term solutions to the challenges COVID-19 poses will be reached by collaborating across borders and learning from one another. With the pandemic at different stages around the world, our focus is on the big picture, helping firms who are yet to see the peak of their outbreak to learn from those who are now starting to come through the other side. 

Working closely with our global leaders, we are pooling best practices and insights into a global resource centre so that every member firm, large and small has the tools they need to respond in their country.

 ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

JS: It’s important we maintain social distancing to keep our clients, colleagues and our communities safe. Consequentially, we have adapted quickly to remote working conditions and now conduct all our meetings digitally. Whilst this won’t replicate the benefits of a face-to-face meeting, it is a situation that RSM and clients are adjusting to readily and it hasn’t seen an impact on our productivity or ability to collaborate and share knowledge and insights with each other.

Further to this, we have made the decision to find alternative arrangements for all our global and regional events in 2020, such as training courses, conferences or leadership meetings. Operating these digitally has posed some interesting challenges around creating opportunities for interaction and maintaining engagement levels. Our global focus on innovation and digital technology has been made all the more important over the last couple of months – particularly to ensure we continue to remain agile, work together, meet client expectations and build on our strong culture.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

JS: Most of our members are experiencing some form of social distancing restrictions. This has made remote working a priority and has engendered a change in working habits across the network. Fortunately, digital technology and cloud systems have advanced significantly in the last decade and accountants have been in the vanguard of this adoption. Not only does digitalisation enable flexibility, but it also creates plenty of new tools and opportunities to illuminate data and information in new ways – this is becoming more apparent than ever as we maintain social distancing measures.

Over the past few weeks, the global leadership team has also been in communications with RSM innovation leaders throughout our member firms, looking at the different ways we are adapting to the COVID-19 pandemic. Our research has led us to look at market trends, and from that identify several key issues and services that are critical for RSM to collaborate on. These priorities will help us increase our capabilities so that we can better serve clients in both the short and long term.

ZM: What channels are in place to knowledge share amongst member firms in terms of the impact of Covid-19 on their business and their response plans for continuing to serve clients?

JS: We’ve recently partnered with Inflo, in an exciting new relationship, to launch a global collaboration portal, in order to assist member firms in remaining close to clients whilst working effectively to provide seamless audit, compliance and advisory services, both amidst the current environment and beyond.

Our intranet was already a hive of activity, but we have also stepped up the level of updates we are providing, as well as opening a dedicated Covid-19 resource centre. This all helps our leaders navigate the complexities of the pandemic and we intend to keep these resources running for as long as they are needed.

The Global Executive Office has also been working with internal and external thought leaders to provide insights on ‘Leading through change’. These insights are being shared in ‘Ted Talk’ style webinars and additional articles, covering topics as diverse as remote working and resilience, to decision making and crisis management. This content is being updated weekly both externally and internally.

 

 

17 April 2020

UK extends Job Retention Scheme

Following UK chancellor Rishi Sunak decision to extend the Job Retention Scheme (JRS) by one month to the end of June, Blick Rothenberg partner Nimesh Shah suggests the cost of the scheme could cost over £50bn ($62.6bn).

Shah comments: “This is another great move by the Chancellor, Rishi Sunak, and gives workers comfort around their financial position for longer.  But the increased cost to the Government is alarming and questions need to be asked as to how this will be funded in the years to come.

“The JRS has been the cornerstone of the Government package of support during the COVID-19 crisis.”

“When the scheme was first announced, the original cost estimates were around £10bn. With the take-up of the scheme being higher than expected, with almost 9m workers being placed on furlough,  that cost estimate was revised upwards to £30 - £40bn. With the extension to the scheme until the end of June, the total cost will be in excess of £50bn.”

 

 

AGN FIRMS FOCUS ON PRACTICE LEADERSHIP AND SUPPORTING CLIENTS IN VERY UNCERTAIN TIMES

In a global survey of AGN’s member firms (Global Business Voice’ special report London and New York April 16, 2020), it appears that a cool head, leadership and communication are the immediate concerns of senior partners. Cash flow and the cost of bad debts is a worry across the board, but the bulk of members are expecting this to impact within 3-6 months.

Malcolm Ward AGN CEO says, “Right now AGN member firms are throwing their arms around clients, and prioritising helping them through the crisis. But it’s not a naïve ‘survive now – pay us later’ strategy, and most are concentrating on those that can pay, with keen eye on the potential costs of bad debt and irrecoverable WIP, hitting them within the next three months”.

“Today’s emphasis is on leadership and communication with both clients and people, with nearly everyone increasing remote working and dealing with the technology and communications aspects of making this a success. But interestingly, and unlike the approaches of some larger competitors, most see cost reduction as a longer-term issue when work volumes and the attrition of clients also come into focus. It’s notable and encouraging that a significant minority of members remain optimistic. They are busy helping clients, and almost half of members think revenue dips from last year will be 10% or less”

Note: A special edition of the ‘AGN Global Business Voice’ reports on members’ changing work practices, the steps they are taking to mitigate COVID-19’s impact on their own business, and their vision for when AGN members  can see a resumption of ‘business as usual’. The survey covered nearly 50% of AGN member firms. The average size of firm polled comprised of 66 people.

 

CIMA comments on Coronavirus Business Interruption Loan Scheme

Chartered Institute of Management Accountants (CIMA) chief executive - management accounting - Andrew Harding says banks need to 'step up their game' to help support businesses through the Covid-19 pandemic:

“The UK Government has already announced a number of generous, efficient measures to support individuals, businesses and the economy as a whole. However as we are now entering the implementation phase, we are seeing that some of the mechanics are not adequately functioning.

"With just over 6,000 loans signed off in three weeks under the Coronavirus Business Interruption Loan Scheme, many financially-viable UK businesses are still unable to access the urgent financial support that they need to survive this crisis. Banks, which a decade ago were at the centre of a global crisis, now need to step up their game and accelerate their processes to deliver this much-needed financial relief to struggling businesses in their time of need.

"Additionally, the Government should allow greater access to the Coronavirus Self-employed Income Support Scheme and Coronavirus Job Retention Scheme for SME business owners so they can get some much-needed financial support for themselves and their families. They should ensure that it truly reflects their earnings over the past three years by allowing them to have their dividends considered alongside their PAYE using the definition of ‘Close Company’ (five or fewer participators) in the Corporation Tax Act 2010.

"Letting good businesses fail now will only slow down our country’s recovery.”

 

16 April 2020

AICPA urges additional funding for PPP

The American Institute of CPAs (AICPA) has urged for swift approval of additional funding for the US’ Paycheck Protection Program (PPP), an initiative which has the aim of providing relief for small businesses and their employees.

AICPA noted that with some reports suggesting that the PPP’s initial $349bn pool of funds will be fully subscribed as early as today, quick and decisive action by Congress is needed.

AICPA president and CEO Barry Melancon said: “This programme was rolled out with remarkable speed and while there have been some bumps along the way, small businesses view the Paycheck Protection Program as a critical lifeline.  We need to extend that support so we can protect workers and ensure our economy can rebound quickly once restrictions are lifted.”

Beyond additional funding,  AICPA suggested allowing greater flexibility, with some appropriate restrictions on who is allowed to have this flexibilityon timing of the PPP’s eight-week payroll support cycle.

 

 

14 April 2020

IMA cancels 2020 Annual Conference and Expo

The Institute of Management Accountants (IMA) has cancelled its 2020 Conference and Expo (ACE2020).

Originally scheduled to be held 21-24 June in Atlanta, the event will not be held due to the Covid-19 pandemic.

IMA president and CEO Jeff Thomson said: “The wellbeing of our members, staff, accounting and finance professionals, and everyone around the world is our highest priority. For that reason, we made the difficult decision to cancel our conference. In this challenging time, though, IMA remains committed to serving the management accounting profession by providing valuable content and educational resources.”

IMA is making a number of  education and networking resources available free of charge to non-members for 90 days. Available resources include a variety of live webinars and online courses, including IMA’s Inside Talk webinars, the new IMA Data Analytics & Visualization Fundamentals CertificateTM, and the IMA Strategy and Competitive Analysis Learning Series.

The next IMA Annual Conference and Expo will now take place in Scottsdale, Arizona, 13-16 June 2021.

 

 

BDO Business Trend survey reports Covid-19 impacting decline in business sentiment

Business optimism across the UK fell by its largest ever margin in March 2020, according to figures from the latest BDO Business Trends report. The scale and speed of the decline is unprecedented for a single month over the past 15 years and is similar in magnitude to the cumulative falls throughout 2008.

BDO’s Optimism Index provides a comprehensive snapshot of business sentiment by weighting macroeconomic data from the UK’s main business surveys confirming a fall by 21.69 points in March to 79.95.

The fall came as governments around the world reacted to the Coronavirus outbreak by placing economies into lockdown at large scale. This follows a strong rise in optimism in February, as the political and economic uncertainty of 2019 began to subside enabling the UK economy to find its feet.

Resilience in the employment market also saw a sharp decline with BDO’s Employment Index falling by 26.89 points to 85.97. The drop, the first since November 2012, has put an end to the steady growth in the UK job market which has been seen since the financial crash.

Notwithstanding government provisions for furloughing staff, which many companies have taken up, there has been a rise of 950,000 claims for universal credit in the final two weeks of March. The rise suggests that the unemployment rate could be ready to increase from 3.9% in the three months to January, to more than 6% as soon as next month.

Commenting on the results Kayley Crossthwaite Partner at BDO LLP said, “Covid-19 represents a significant threat on many fronts. It is only in the coming weeks and months, as the immediate public health threat passes, that the true scale of the economic impact will be clear, but these early indicators suggest it will be widespread and severe.

“The speed of the decline across all indices reveals how the economic crash caused by Covid-19 is different to the 2008 financial crisis when the fall was spread across multiple months. Businesses have had to act nimbly to make decisions in an unclear timeframe about how to adapt and survive a severe economic shock.

Download BDO’s Business Trends New Economy report : www.neweconomy.bdo.co.uk 

 

 

9 April 2020

Office of National Statistics (ONS) report released on 9 April on the impact that Covid-19 is having on UK businesses, reveals that only 44% of firms are reporting abnormally low turnover because of coronavirus, comments Mark Tighe, CEO of business tax relief specialists CATAX

“This flash survey of UK businesses shows the country is on a war footing and less affected by coronavirus than feared. 

“It’s actually heartening to hear that only 44% of businesses are reporting abnormally low turnover due to Covid-19. Given the near total shutdown in many sectors, and the productivity implications of so many people being forced to work from home and juggle childcare and homeschooling, it could have been a lot worse. 

“Unsurprisingly, the accommodation and food service sectors have been worst hit while millions of people adjusting to working from home in the professional services, IT and scientific industries have been least affected. 

"Exports are one area that could have been knocked over by a quarantine of such jaw-dropping scale. However, 40% of UK exporters report they are confident they can continue to operate during the pandemic. It’s a similar picture among importers. 

“All this evidence lends some credibility to the way stock markets have been rallying relatively robustly over the past couple of days. This positive sentiment will be reinforced by statistics that show it’s business as usual for a surprisingly high proportion of companies.”

The full Coronavirus, the UK economy and society, faster indicators: 9 April 2020 publication is available here

 

08 March 2020

Mid-tier market support addressed as funding gap closed

Chancellor Rishi Sunak MP’s 3 April announcement that financial support for the vital mid-tier sector is now available for businesses with up to £500m turnover should be welcomed, according to Duff and Phelps.

David Fleming, Managing Director, Restructuring Advisory stated, “When assessing the government’s recent announcements, there were initially two levels of support. For small and medium-sized enterprises (SMEs) with a turnover of up to £45 million, there was the Coronavirus Business Interruption Loan (CBIL) guarantee scheme. Then the Coronavirus Corporate Financing Facility (CFF) for triple A credit rated large enterprises, there was a promise to buy unlimited short-term IOUs.”

“However, there was a huge gap between those businesses with a turnover of up to £45 million and the listed multi-billion-pound, credit worthy corporate giants. The critical mid-tier UK corporate sector looked like it would fall between two stools.”

“This new initiative will see the introduction of the Coronavirus Large Business Interruption Loan Scheme (CLBILS), ensuring a government guarantee of 80% to enable loans of up to £25 million for firms with a turnover of between £45 million and £500 million, thus addressing what we believed was a huge funding hole for the vital mid-tier market in the UK.”

The government also announced a ban on banks demanding personal guarantees on loans under £250,000 and a major expansion of the Coronavirus Business Interruption Loan Scheme (CBILS) to speed up access to loans for ‘viable’ small businesses.

Fleming added, “Since the outbreak of COVID-19, we are continuing to assist companies with strategies in avoid insolvency. This could be help with Time To Pay arrangements with HMRC, the Coronavirus Business Payments Support Service or help and guidance on the furloughing of staff and the Coronavirus Job Retention Scheme.”

“The challenge now for government is the speed at which many of these schemes are implemented, and how they reach UK businesses facing imminent cash flow difficulties.”

The team at Duff & Phelps recognises challenges being faced by accountancy firms and businesses experiencing challenging trading conditions in the face of COVID-19.

 

 

 

6 March 2020

 

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Julio Gabay, President and CEO, Abacus Worldwide on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Julio Gabay: Our first and foremost concern has been and will continue to be the safety and wellbeing of Abacus members and staff.  We are following CDC guidelines and communicating as such to our members and we made a decision last month to cancel two events in April and May, as a precaution.  Abacus Worldwide has always made it a point to consistently communicate with members and find ways to connect, engage and foster knowledge sharing between members.  However, since covid-19, the level of our communications to and between members has increased with a greater focus on disseminating pertinent business-related information.  The aim of Abacus has been to create a forum to discuss issues and threats but with a focus on solutions and opportunities for our members and their clients.  We try not to be seen as just another news source, rather a resource for members and their clients, to assist in navigating through covid-19 and back to normality.   

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

JG: Since Abacus launched in 2012, we set out to be a future-ready association offering members a minimal number of in-person meetings, with an increased virtual meeting offering.  Even back then we realised that migration to a more technology driven platform would be key to future interaction and engagement, not just for members but also for their clients.  Now covid-19, I believe, has pushed the needle further and we are going all-in on technology and virtual capabilities for members to connect.  We will not completely do away with in-person meetings, as there is much value in meeting face-to-face, but again we plan to offer it on a smaller scale compared to our virtual programmes. As an example of this, Abacus has scheduled virtual meetings in April such as “Remote Workforce Risks, Privacy Laws and Solutions" – led by Rebecca Rakoski which is open to members and their clients; “How to be a Better Business Partner - What are firms doing to support clients in the midst of COVID-19” – led by Joe Rotella, which is meant for members to discuss covid19 issues and opportunities; and “Leading Ladies” – led by Jessica Levin, which is intended to be a forum for women leaders within our member firms.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

JG: Many of our members are located in lock-down markets throughout the world and all see the safety and wellbeing of their people to be the number one priority.  A vast majority of our members have capabilities to operate remotely/virtually and they are doing so.  Many of our members have reported an increase in client advisory and legal matters due to covid-19 and we are seeing an increase throughout Abacus of international referrals and knowledge sharing.  There is no doubt that there will be opportunity for firms to advise clients on a myriad of issues such as employment/labour law, taxation issues, M&A, insolvency, corporate finance, small business loans and I believe much more as regulations change and adjust to accommodate the rapidly changing markets.  The difficulty, I believe, will be the short term cash flow issues that many clients may be facing.  The hope is that the rebound to good health and normal business is quick.

ZM: What channels are in place to knowledge-share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients?

JG: Abacus uses a virtual meeting platform that allows members to communicate via video and phone using a simple internet connection.  In addition, our website’s Members Only section allows members the ability to find a firm or individual, using our database searches by geography, specialisations and industry expertise. Since Abacus Worldwide members are both accounting and legal firms, we receive very good information from a legal perspective as well as a financial perspective.  We are encouraging our members to share presentations and sessions they are involved in and as an example our law firm member in Boston – DeMoura Smith – gave a presentation to their local Bar Association on “Breach of Contracts During a Pandemic,” which we are sharing with our members.  We also use WhatsApp for several Abacus groups to communicate as well as through our social media pages.

 

 

 

 

6 April 2020

AICPA calls on the profession to support Paycheck Protection Program

Following the US Treasury Department and Small Business Administration’s (SBA) launch of the Paycheck Protection Program (PPP), the American Institute of CPAs (AICPA) has called on the profession to help with its implementation.

The $349bn PPP focuses on small businesses impacted by the Covid-19 pandemic. It offers any eligible business or charitable non-profit with less than 500 employees a grant of up to $10m, if the business keeps its workforce intact and uses the funds for eight weeks of payroll costs, mortgage interest, rent and utilities.

AICPA president and CEO Barry Melancon said: “This is a huge undertaking that requires close coordination among five players: small businesses, the government, lenders, payroll processors and CPA firms.

“Treasury and the SBA have done their part by implementing the program and issuing interim rules. It’s now up to the nation’s 44,000 CPA firms, the banking sector and the payroll processing industry to mobilize and help get funds quickly into the hands of small businesses so they can protect their employees.”

AICPA’s business and technology arm, CPA.com president and CEO Erik Asgeirsson said: “There’s an urgency now to move to implementation. We are working with firms, payroll providers and lenders to drive consistency in the interpretation of guidance.

“Small business owners need support in the application process. The critical piece of information for obtaining PPP funds is the payroll data. We are working with our coalition and discussing with lenders the best way to deliver this. It’s a critical time for us to work together.”

 

 

3 April 2020

Purbeck advises accountants on changes to impact CBILS loan scheme

 The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses (SMEs) across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

Following news from the Treasury that personal guarantees will not be required on CBILS loans up to £250,000, Purbeck Insurance Services, the UK’s provider of Personal Guarantee Insurance, which has been mentoring distressed small business policyholders around the clock says the turmoil experienced by the owners of small businesses across the UK could have and should have been avoided.

Todd Davison, MD of Purbeck Insurance Services said: “The move yesterday was a necessary step in order to make CBILS loans more attractive to borrowers.  As soon as the scheme was announced this move was inevitable but it should have come a lot sooner. 

“Purbeck’s mentoring and support team has been speaking to the owners of small businesses over the past fortnight, since the lockdown, who felt they literally had nowhere to turn, family firms which saw their custom disappear overnight.  We are used to supporting businesses in financial distress – this is part and package of the insurance we offer - but this has been off the scale not just in terms of the volume of firms needing help but the level of anguish small business owners have been going through. 

“Personal Guarantees are not something any business owner should enter into lightly yet many firms felt they had little option – and at a time in their existence when the risk of the Personal Guarantee being called in was so high given none of us can know how this is all going to play out.  It was an impossible position and while we support The Government’s measures to support small businesses, this clarity around Personal Guarantees should have been in place at the start.  Time is of the essence in saving many of the UK’s small businesses so speed of access to finance is absolutely crucial right now.”

Purbeck works with accountants providing regular updates and insight into the trends surrounding business finance, personal guarantees and insolvency. Its dedicated Business Relationship Managers are helping accountants to engage with their clients to bring the issues around personal guarantees to the fore, enabling them to provide value-add insight and services to their client base. Accountants are uniquely placed as trusted advisors as small businesses, helping to navigate their clients through the disruption and uncertainty caused by COVID-19.

 

 

3 April 2020

CIMA: UK SMEs shouldn’t be caught between government and banks

Yesterday, UK Chancellor Rishi Sunak announced reforms to the Coronavirus Business Interruption Loan Scheme which will allow more businesses to access funding in an effort to help alleviate the financial cost of the Covid-19 pandemic.

Commenting on the announcement, Chartered Institute of Management Accountants chief executive – management accounting – Andrew Harding said: “We welcome the Government’s announcement to reform its support package for SMEs to ensure that all struggling businesses get access to the Coronavirus Interruption Loan Scheme. However, many of our members are reporting that SMEs are now only weeks, if not days, away from failing as they have not been granted access to the financial support they need.

“We have had a wasted week. It is about time we throw SMEs a lifeline they can really hold onto, and ensure that they get immediate access to some much-needed cashflow to keep afloat. They should not be caught between the banks and the Government. Additionally, it is nonsense in an environment where the Bank of England has now cut is base rate to 0.1% not to be able to access cheap money. High-street lenders should be supporting good businesses in their time of need, not hiding behind bureaucracy and red tape. It is time to take responsibility and act.”

 


Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Michael Reiss von Filski, Global CEO, GGI on Covid -19’s impact on business operations

 Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Michael Reiss von Filski: At GGI, we are of course assessing the situation very carefully, several times a day. As we are based in Switzerland, we follow the directives of the Swiss Federal Government. Some of our staff is working from home; others are coming to the offices and strictly practising social distancing. We cannot suggest anything else other than to observe directives of the governments, where our members are based.

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

MRF: For the time being, nobody really knows when conferences and meetings can take place again. Due to the different development of Covid-19 in various parts of the world, even if some countries go back to normal, this doesn’t mean that it will be safe or allowed for members from other parts of the world to attend. We need to be patient and flexible. In the meantime, a series of additional webinars will help to overcome the gap, offering professional input, personal exchange and the possibility of preparing for the time after Covid-19.  

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

MRF: Most of Europe, the US, India, and many other countries are operating under lock-down. We are aware that most of our member firms are operating remotely, from home, through email, phone and social media. Many of our members have confirmed that, despite the lock-down, they are very busy advising clients on a broad array of urgent matters. Clients need to have interim accounts ready, they require tax advice, legal advice, they need to file for Government aid where applicable, they need to take strategic decisions and require permanent professional support.

ZM: What channels are in place to knowledge share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients?

MRF: GGI uses all channels available to ensure our members stay connected. From traditional phone, email, videoconference to special LinkedIn groups of our Practice Groups, to webinars, internal platform of our website to social media. Special, focused newsletters have been put together and more of them are to come. We are very proud that many of our members are in permanent contact with one another and work, albeit remotely, on joint client files.


 

 

 


Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Howard Rosen, CEO BKR International on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Howard Rosen: BKR International sent out our first COVID-19 update to members on March 13. It provided a list of advice for members to respond to the pandemic, including travel policies and setting up tele-work operations, health guidelines and dealing with business interruptions. 

 

ZM: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

HR: We continue to send updates regularly via email and social media to keep our members informed. We also have guidelines available through our members’-only portal.

 

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

HR: BKR International has always offered meeting capabilities via teleseminar or web conferences. Members can also participate virtually at our annual regional meetings since last year. We continue to share knowledge through our Worldwide Bulletin newsletter and email briefings. We are currently establishing alternative dates for our in-person regional meetings, with hope that we can reschedule outside of the current COVID-19 pandemic timeline.

 

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

HR: With members worldwide, our members are certainly experiencing lock-down situations as everywhere globally. However, many if not most firms already have remote work and tele-work capabilities and are operating within those secure systems to continue to serve clients without disruption.

 

ZM: What channels are in place to knowledge share amongst member firms in terms of the impact of Covid-19 on their business and their response plans for continuing to serve clients?

HR: Participating in an association with exclusive business representation means that members can help each other to serve their clients. They have established relationships and can communicate easily via email or phone to support one another. We also have an electronic member forum open to any members, to ask questions and get multiple answers back from similar firms.

 

 

 

2 April 2020

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Tim Wilson, CEO, MSI Global on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

Tim Wilson: We have established a message board through a professional messaging app which enables our firms to share how they are advising clients and responding within their firms, to the virus.  With both law firms and accounting firms in MSI, this has been useful from both a global and regional perspective.  We have also initiated a series of webinars, open to all members.  The first of these is entitled “Sharing leadership and management solutions to the challenges of Covid-19”.  This is being followed up with other webinars in which we will encourage firms to share thoughts and ideas on other aspects and include past speakers too.  The key is to stay connected and to ensure we continue to collaborate.    

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?  

TW: We are placing a focus on virtual meetings.  We will be augmenting the webinar series with additional specialist interest groups and using our professional messaging app and newsletters to share knowledge.  Perhaps the virus will push for more virtual meetings in the future?  Covid-19 + Carbon footprint challenges + recession = the perfect storm for a refresh of the conference programme?

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate? 

TW: Most are now in lockdown, increasingly so.  Remote working is the modus operandi – the question is how sustainable will this be?

 

 

1 April 

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Tim Wilson, CEO, MSI Global on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

Tim Wilson: We have established a message board through a professional messaging app which enables our firms to share how they are advising clients and responding within their firms, to the virus.  With both law firms and accounting firms in MSI, this has been useful from both a global and regional perspective.  We have also initiated a series of webinars, open to all members.  The first of these is entitled “Sharing leadership and management solutions to the challenges of Covid-19”.  This is being followed up with other webinars in which we will encourage firms to share thoughts and ideas on other aspects and include past speakers too.  The key is to stay connected and to ensure we continue to collaborate.    

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?  

TW: We are placing a focus on virtual meetings.  We will be augmenting the webinar series with additional specialist interest groups and using our professional messaging app and newsletters to share knowledge.  Perhaps the virus will push for more virtual meetings in the future?  Covid-19 + Carbon footprint challenges + recession = the perfect storm for a refresh of the conference programme?

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate? 

TW: Most are now in lockdown, increasingly so.  Remote working is the modus operandi – the question is how sustainable will this be?

 

1 April

Blick Rothenberg: Directors being left behind by the Government

While the UK Government has provided considerable support for the employed workforce and some of the self-employed in response to the COVID-19 pandemic, owner-directors have fallen between the cracks, says tax and advisory firm Blick Rothenberg.

Blick Rothenberg partner Richard Churchill said: “The Institute of Directors estimate that there are over two million limited companies in the UK employing between 0-9 employees, and such companies include some of the UK's most enterprising and creative firms. Protecting these owner-director microbusinesses now is essential if we want to ensure our economic recovery once this crisis is over.

“There is not yet enough support for these businesses. In the first instance, we welcome more clarity around enabling directors to apply for furlough through the Job Retention Scheme (JRS), while continuing their statutory duties. That said, the monetary support through the JRS is likely to be minimal because owner-directors usually pay themselves a small salary (typically up to the National Insurance Contribution (NIC) threshold) and then receive the majority of their income through dividends."

He added: "We urge the Government to expand the income support available for owner-directors, putting them on par with the grants available for employees and the self-employed. This could come in the form of a grant; the lower of £2,500 per month or 80% of their 2018/19 salary plus company dividends (pro-rated to a monthly amount). The payment can be administered in the same way as JRS, via payroll and subject to tax and NIC.”

 

 

31 March

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Dr. Christian Gorny, CEO, ETL Global on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Christian Gorny: We are sending out internal mailings with information on how to behave and act in order to reduce risk. Moreover we have internal update calls. The most important is however, to lead by example. Personal meetings, travel and conferences have been postponed, cancelled or replaced by online alternatives. We promote very much the possibility of teleworking from each individual’s home office. Moreover, as a network of firms with a common shareholder, we try to help our partners financially with loans to cover temporary shortages in cash flow, wherever necessary.

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

 Again, some events are only postponed, others have been cancelled completely. Modern communication technologies are used for knowledge sharing.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

CG: Meanwhile most European countries have locked-down, so it has become a more and more common situation. Most colleagues are working remotely from home. Some have even taken this crisis as an opportunity, either to improve their internal structures and processes with regards to digitalisation or to engage with their clients proactively, act as their trusted advisor and strengthen the client relationship.

ZM: What channels are in place to knowledge share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients?

 CG: As mentioned above, we are holding update calls and virtual meetings in this context. Members who cannot participate in calls or virtual meetings will find continuously updated information on our intranet solutions for network members. Member firms are informing clients through e-mail newsletters, LinkedIn posts, pop-ups on their homepages and similar.

Our knowledge sharing is working very well amongst our network firms. We have now also set up a public central platform for clients and business partners: https://etl-global.com/covid-19-updates/

In respect of business and operations we hold weekly update calls on both, country and network levels. Feedback is the same from every direction: There is a lot of demand for advisory services at the moment, in particular tax and payroll/HR related questions and advice on subsidies/government grants and loans as well as financial management in general. Accordingly, all our offices are extremely busy at the moment and do their best to meet their clients’ requests remotely. At the same time, all colleagues are facing a growing risk in respect of receivables collection and cash flow management the impact of which will however only show with a little time lag.

 

 

30 March 2020

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Liza Robbins, CEO, Kreston International on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

Liza Robbins: We have consulted a Business Continuity Expert and shared his advice with member firms. We have arranged facilitated (with the business continuity expert) a telephone meeting for our member firms to share best practice.

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share? 

LR: For meetings (a small number of people) we are using technology (Teams, Zoom, Skype, etc), but conferences are being postponed due to the high number of attendees. Kreston has a developed a training programme (including webinars), which allows us to continue to best -practice sharing with our member firms.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate

LR: It is a changing situation, but the first was China, then Italy, then Spain, etc, many now with government “work from home” directives in place. Many of our firms have smart (flexible) working in place, so in many cases employees can relatively easily continue working.

 

27 March

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Michael Scott, Director, Kudos International on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

Michael Scott: A Technical factsheet has been produced and issued on 18 March on Considerations for auditors under COVID-19. Members are being invited to Zoom Meetings regionally, to discuss developments and share ideas on how to help both clients and fellow member firms.

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share?

MS:  We have had to cancel our annual conference in Miami which was due to be held in June. This has been pushed back to November 2020. This will be replaced by an increased number of technical webinars and regional Zoom meetings.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate? 

MS: UK, Ireland, Cyprus, Malta, Argentina, Lebanon. All are operating with staff from home and using online tools. In other countries where the office is still open, no clients are allowed to visit and all meetings are conducted by SKYPE or Zoom Meeting or similar.  

ZM: What channels are in place to knowledge-share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients. 

MS: We are using Zoom meetings, Linkedin groups, ordinary e-mail for general matters. We have as mentioned produced Technical factsheets and Technical Webinars to address technical matters.

 

 

AAT responds to UK measures to help self-employed

Yesterday evening, UK Chancellor Rishi Sunak announced that the government would provide 80% of profits for self-employed workers, capped at £2,500 ($3,058).

Association of Accounting Technicians (AAT) tax policy expert Brian Palmer comments: There is huge complexity in arranging a scheme of this type, particularly in such a short time period, and on balance what is on offer from the government is very generous indeed, particularly as those eligible will be able to continue working and yet receive the grant.

"However, there are still many pressing concerns for those who do not qualify due to being self-employed for less than a complete tax year and have not yet filed a tax return, therefore having no profits to average. Without the prospect of a direct grant from government, they risk being left to the mercy of an overstretched UK benefits system. Additionally, the three-month wait for funds for those who qualify will leave many in an increasingly precarious position.

"What’s more, when this is all over the Chancellor has warned that the self-employed will be left facing the promise of a 'levelling of the playing field' that will inevitable result in raising self-employed people's tax and National Insurance payments to match those on PAYE.

"Finally, there were also no crumbs of comfort for those who are self-employed from every perspective but provide their services through a limited company, many of whom draw a low salary and top up their income with dividends. They will not qualify as self-employed or for a significant payment from the Coronavirus Job Retention Scheme. Instead, they risk dropping through the cracks. In a time when large numbers of people - both self-employed and those working for larger firms - are already struggling financially, and with the situation likely to worsen over the coming weeks and months, we must ensure that everyone gets the support they need to stay afloat and that the UK economy is able to not only recover, but also to thrive in future."

 

CIMA exams to be taken remotely

The Chartered Institute of Management Accountants (CIMA) has announced that from May 2020, CIMA students will be able to take their exams remotely for the first time.

This comes as the coronavirus pandemic has forced many test centres to close, preventing the delivery of CIMA Objective Tests and Case Study exams to students around the world.

The Association of International Certified Professional Accountants (the Association), the unified voice of CIMA and the American Institute of CPAs (AICPA), has been working closely its testing partner to come up with a testing solution since the beginning of the pandemic.

The Association vice-president examinations – management accounting Stephen Flatman said: “We are living in unprecedented times and over the past weeks we have seen, rightly so, the majority of test centres close around the world to ensure everyone’s safety and wellbeing.

“As a result, our students have had their studies interrupted and were prevented from taking their exams. We are happy to share the good news today that CIMA students will be able to take their Objective Tests and Case Study exams from their homes and with minimal disruption.”

 

26 March

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Marco Donzelli, CEO, HLB on Covid -19’s impact on business operations

Zoya Malik: What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk?

Marco Donzelli: In response to the growing Covid-19 pandemic, on 12th March, HLB took the decision to close the Executive Office and now all our staff are working 100% remotely. While remote working has always been a part of the Executive Office’s infrastructure, the safety of our employees was and remains our priority. With good IT infrastructures and digital collaboration platforms already in place, remote working has also been a part of our members’ work practices for several years, so this situation has not seen a significant loss in productivity or ability to be there for their clients.

ZM: Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

MD: While most of our firms have now closed their physical offices, they remain fully operational and available to seamlessly service their clients. Of course, there are some regions where remote working is less common, so the pandemic has presented some challenges, but we are not receiving any alarming messages from firms about their ability to adapt to a change in circumstances.   

ZM: What channels are in place to knowledge-share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients?

MD: We are actively using technology to collaborate, service clients and communicate with members. A network wide communication was sent on 16th March informing them of our business continuity plans. We created a dedicated intranet hub space which is constantly being kept updated with links to guidance and best practice on areas such as remote working and business continuity planning. It is also a place where members can share their insights and offer resource to each other. In addition, we published a statement on our website and communicated this to our external stakeholders through our social media channels. Our collaboration platforms keep members updated on the latest developments they need to know. 

ZM: What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge-share?

MD: We have taken the decision to postpone all our upcoming conferences and are exploring the option to deliver our conference programme virtually to our members, as travel bans prevent us from meeting in person. The development of our talent pool remains a priority for us, so in addition to hosting these conferences virtually, we are investigating how to award CPE credits for attending them. Our ability to knowledge-share with our members will continue through our e-learning platform with content from internal members as well as our external strategic partners. While these are unprecedented times, HLB and its firms are well-placed to meet the challenges ahead. 

 

 

AAT calls for decisive action on late payments

The Association of Accounting technicians (AAT) has called on the UK government and large employers to take stronger action on payment of suppliers on time, to help support SMEs during the COVID-19 pandemic, ahead of the UK Chancellor’s announcement on measures to support the self-employed.

AAT is encouraging larger organisations to speed up payments to SMEs who may be struggling to deal with the ongoing financial risk posed by the crisis. This will help to reduce the negative impact of the crisis on small business and speed up their recovery.

“Small businesses are likely to be among the worst hit by the Covid-19 pandemic and, although there has been a significant package of support introduced by the government in recent days to help them cope – including Statutory Sick Pay relief, a 12 month business rates holiday for the hospitality and leisure sectors, small business grant funding and a new Business Interruption Loan Scheme - we’re disappointed this hasn’t been extended to addressing the issue of late payments. Resulting cashflow issues have a huge impact on the health and success of small businesses, causing almost a quarter of small business insolvencies. Even for firms that can absorb late payments, this can lead to stunted growth, damaging productivity and innovation, and ultimately stifling their opportunity to expand.”

“That’s why we’re calling on all large businesses to do the right thing and ensure that they pay all their small suppliers within a 30-day limit. This will increase the number of small businesses who are able to stay afloat during the pandemic and enable them to bounce back more quickly in the coming months. Small businesses are the lifeblood of the UK economy and reducing the negative effects of this unprecedented event through prompt payments will ensure that many more of them are not only able to weather the storm of Covid-19, but also support the UK’s economy and help protect jobs during the recovery period.

“We’re also encouraging small business owners that may be struggling to cope with the sudden loss of business due to Covid-19 to reach out to customers and let them know the challenges they are facing, if they haven’t already done so. Additionally, they may also wish to talk to their landlords about taking a rent holiday or accepting reduced payment and check their business interruption insurance to see if they’re covered for this situation.”

 

 

25 March

Covid-19 and contractual obligations: Where will the costs fall?

As the human tragedies of coronavirus spread throughout the world, the economic consequences are not far behind. Chris Robinson, specialist corporate lawyer at Excello Law suggests that businesses everywhere are beginning to look at their supply chains and their contracts, and assesses who will bear the inevitable costs and losses  

Orders for goods or fixed-price contracts for services that are not going to be needed, consumer bookings for untaken holidays or season tickets, excessive stocks of clothing or shortages of groceries – all are causing anguish and are going to land someone with a bill.

Ideally every business would know its supply chain and its routes to market, and structured contracts would allocate risks appropriately and minimise risks. In practice, supply chains are long, complex and often mysterious, stretching across the world. Where the loss falls may, in practice, be almost random. Often it will be a man-in-the-middle operating on thin margins who catches the full liability, because he has a mismatch in contract terms between his customer and his supplier. His customer is allowed to cancel orders or return goods; but the supplier does not accept returns and demands payment. Consumer-facing businesses are particularly vulnerable – consumers may be entitled to cancel and demand refunds or compensation, but the B2B contracts with suppliers will not have the same rights. Meanwhile your landlord, employees and utilities all need to be paid.

In English law there is no general relief from liability for problems outside your control. You can still be in breach of contract if you cannot perform your obligations. In that case, you might have a liability to compensate the other party – which might be a much bigger sum than you would have made from the contract.

What should your clients be thinking about as they review their contracts?

  • Which law applies? The laws of other countries are very different anyway, and the responses to the coronavirus pandemic will be varied.
  • Do you have to modify your services because of legal restrictions, such as closing retail premises? You must obey the law, even if that puts you in breach of contract.
  • Do you have business interruption insurance, or any other relevant cover?
  • Do your contracts contain a force majeure clause? Force majeure clauses are common in contract terms and standard conditions. They each depend on their own wording, but often they allow a party to suspend complying if it cannot perform for reasons outside its reasonable control. Often there is a list of examples, which might include epidemics. Labour shortages, transport disruption or supplier default may be force majeure events, though they would have to be the main cause of the disruption. If the service is suspended, so too is the payment for it. Sometimes there is also a right to terminate. Usually the affected party must notify the other to activate the clause – do it now!
  • Has the contract been frustrated? Frustration occurs when an unforeseen event renders performance illegal or impossible, or changes the obligations so fundamentally that it is no longer the same contract. That is rare, but a contract to provide an event or service – a party or a restaurant business – could well have been frustrated by illegality. If the contract is frustrated, neither party is likely to be entitled to any compensation. The contract comes to an end. Expenses incurred are recoverable, and advance payments are refundable. Long-term contracts are not usually frustrated by short-term obstacles.
  • What steps can you take to reduce your losses? Often there will be a duty to mitigate loss if you want to make a claim against another party. Is there scope for co-operation in the supply chain to reduce total loss?
  • What government money is available to the parties that may help? The UK employee “furlough” scheme is particularly significant – if workers can be withdrawn from a service and laid off on the scheme, most of the cost is transferred to the government. That may need co-operation amongst the parties. Government schemes may provide broadly-targeted help – co-operation might allow it to achieve its intention and reach the right place, without anyone getting double-payment or missing out on claims.
  • What further government measures are likely? Things are changing all the time, and often there is a delay between statements of intention, and the actual detail of a package.

 

 

IRBA: COVID-19 presents opportunity for audit profession to demonstrate resilience

South Africa’s Independent Regulatory board for Auditors (IRBA) has issued guidance in relation to the implications of the COVID-19 outbreak on audits and auditors.

IRBA CEO Bernard Agulhas said: “This outbreak presents an opportunity for the audit profession to reflect on the recognition of its public interest responsibility, and to demonstrate its independence and resilience to external factors. Auditors should continue to apply the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.”

Some of the key areas of the guidance include:

  • The COVID-19 outbreak may disrupt the business operations of entities and the financial reporting process may also be impacted. Auditors should proactively discuss these matters with clients to understand whether there is an impact on the client’s reporting timetable and the audit processes.
  •  With the COVID-19 outbreak, auditors may need to reassess the risks of material misstatement of the financial statements, as the information on which the initial risk assessment was based may have changed. For audits in progress, auditors should evaluate the impact and may need to revise their risk assessments and modify further planned audit procedures in accordance with ISA 315 (Revised).
  •  Due to the travel restrictions and various working arrangements, auditors may have difficulties with accessing client premises to perform audit procedures; and/or may not be able to obtain the sufficient appropriate audit evidence.
  • For group audits, component auditors in affected countries may encounter difficulties in obtaining sufficient appropriate audit evidence, which may cause significant delays in the completion of component audits. In addition, the group engagement team members may not be able to travel to affected countries to review the work papers of significant components. The group engagement team is, however, responsible for obtaining sufficient appropriate audit evidence to form the group audit opinion. The group engagement partner is responsible for the direction, supervision and performance of the group audit engagement.

In addition to the above areas, auditors may also consider the implications for the auditor’s report.

A dedicated COVID-19 webpage has been added to the IRBA website. This will form a central repository of information that has been released both locally and internationally in relation to the outbreak and the implications on audits and auditors.

 

23 March

South Africa’s IRBA assists government with containment

South Africa’s Independent Regulatory Board for Auditors (IRBA) has put in place a number of containment measures since South African president Cyril Ramaphosa declared a National Disaster on 15 March.

IRBA CEO Bernard Agulhas said: “As an entity reporting to the Ministry of Finance it is important that we are aligned in our approach with regards to staff and stakeholders to achieve the level of containment which government seeks and whereby we can play our part in limiting community transmissions as quickly as possible.

“The leadership of IRBA met on Monday to discuss how we would respond. During Tuesday we agreed the parameters of our COVID-19 Safety Protocol and at close of business on Tuesday we briefed staff on the short-term measures we intended to take in the period to April 14. Staff were asked to stay home and we instituted a remote working policy which will be in effect until April 13.

“We have documented our COVID-19 Safety Protocol, including how it will be implemented in line with all IRBA’s other policies and procedures.  Communication will be circulated to all our stakeholders on how to interact with our IRBA staff in this period.  The IRBA will continue to operate virtually.”

Agulhas concluded: “We are also engaging regularly with the auditing profession as well as accountancy bodies and other stakeholders to align responses to the current situation where it is possible. These are challenging times and as the restrictions from government continue to change we will update our safety protocol to ensure that we remain aligned to government’s approach to containment.  The sooner the majority of us are staying at home and limiting movement, the sooner transmission will slow down and this will enable government to focus on getting adequate resources into place to assist the vulnerable in society. 

 

UK’s FCA requests companies to delay announcement of preliminary financial accounts

The UK’s Financial Conduct Authority (FCA) has strongly requested all listed companies to observe a moratorium on the publication of the preliminary financial statements for at least two weeks.

The FCA said that due to the events surrounding the spread of COVID-19 over the last few weeks, the basis on which companies are reporting and planning is changing rapidly and that it is important that due consideration is given by companies to these events in preparing their disclosures.

The regulator noted that listed companies and the audit profession are facing unprecedented practical challenges due to the pandemic. The FCA believes the practice of issuing preliminary financial statements in advance of the full audited financial statements is adding unnecessarily to the pressure on companies and the audit profession at this moment.

The FCA is currently in talks with the Financial Reporting Council and the Prudential Regulation Authority about a package of measures aimed at ensuring companies take the necessary time in these uncertain times to prepare appropriate disclosures and address current practical challenges and the three bodies intend to announce details shortly.

 

 

20 March

Additional financial support announced by UK Government

The UK Chancellor Rishi Sunak has introduced measures to provided additional support to businesses who may face making redundancies due to the spread of COVID-19 by offering to subsidise up to 80% of employees’ wages.

Sunak also said that VAT payments have been deferred until the end of June for businesses of all sizes and business interruption loans would be interest free for 12 months, an increase from the six month interest free period announced on Monday (16 March).

The Chancellor announced the measures following Prime Minister Boris Johnson’s call for all pubs, clubs, restaurants, theatres and other hospitality and leisure venues to remain closed after closing tonight. Johnson said that this measure will be reviewed on a monthly basis.

 

 

COVID 19 - Accountancy CEO question time

International Accounting Bulletin group editor Zoya Malik put some quick fire questions to DFK CEO Martin Sharp on Covid -19’s impact on business operations

What is your network/ association doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

We are encouraging and assisting members to share best-practice in their communication with clients and HR.

What is the plan to meet member firms and clients due to cancelled events? What is replacing events and how do you intend to knowledge share? 

We are setting up webinars covering both technical and practice management topics.

Which of your member firms' markets are currently operating under lock-down? How are they managing to operate?

This is changing by the day! Most have implemented remote home-working and greater use of online conferencing and portals.

 

 

What channels are in place to knowledge share amongst member firms in terms of the impact of Covid -19 on their business and their response plans for continuing to serve clients? 

These will include members’ websites, list-serve and webinars.

ICAEW makes changes to its exam schedule 

Th Institute of Chartered Accountants in England and Wales (ICAEW) has announced cancellations and changes to its June and July examinations because of the global challenges posed by coronavirus.

The June ACA professional level exam has been cancelled, and ICAEW is exploring several options to accommodate students who have been affected, including larger exam sittings.

The advanced level ACA exams due to take place in July have been postponed until the end of August.

The decision reflects the guidance and restrictions implemented by the UK government and other affected countries in response to Covid-19.

ICAEW executive director, learning and professional development, Mark Protherough said: “While we appreciate this decision will disappoint a number of our students, their health and wellbeing is our main priority.”

 

AAT suspends all assessments from 22 March

The Association of Accounting Technicians (AAT) has suspended all assessments from 22 March due to the spread of COVID-19 and government advice.

AAT continues to be fully operational in all other respects, including the portfolio reflective element of apprenticeship End Point Assessments, which will be conducted remotely. All support services remain available to its students and members.

 

 

How to make the most of working from home

Following the UK Government’s latest advice on Covid-19, many of us will soon be working from home for the foreseeable future, comments CABA learning and development manager Laura Little.

For those who aren’t used to working remotely, this can be a particularly disruptive experience and may require some time to adjust. Some people initially enjoy the idea of not having to leave the house in the morning, but may soon find the comforts of home distracting, leading to a loss of productivity.

Despite the initial teething issues, studies have found that over 77% of professionals say they feel more productive when working remotely, and an additional 30% feel as though they accomplish more in a shorter period of time.

So, what is the best advice for people working from home?

Create a work environment of your own

In order to get into a ‘work’ frame of mind when you’re at home, it’s important to have a space set aside which is designated for working. This helps to create a clear distinction between ‘work’ and ‘play’ and trains your brain to be more productive during work hours. Not only does this allow you to concentrate more on the task at hand, it also makes it easier to switch off at the end of the day.

If you don’t have a study you can use, the kitchen or dining room table is often a good place to set up. If you share the space with other people, make sure you communicate clearly to them that you are working and set clear boundaries around your work schedule.

Finally, avoid the temptation to work from your bedroom or the couch, as these can trigger the brain into thinking it is time to sleep or relax.

Avoid those distractions

In your own home it can be so easy to get distracted by your surroundings. This makes it difficult to switch off from household chores or slipping into weekend habits.

If you find yourself getting distracted on a regular basis, it can help to set yourself a clear list of deadlines and hold yourself to account for meeting them all. Avoid switching on the TV, and instead put on the radio or a calming playlist. This will provide some background noise for those who don’t enjoy the silence.

Combat the loneliness

If you’re the only person working from home, the long hours by yourself can often leave you feeling isolated and lonely. Whilst instant messaging apps mean you can communicate to your colleagues whenever, it’s never the same as having face-to-face interaction.

If you can, try using video calls with colleagues and clients wherever possible, as this provides a more social experience than sending emails or texts. This will play a key role in tackling feelings of isolation over the next few months as many people could be working from home for the foreseeable future.

But be aware that faulty technology can sometimes lead to lagging and frustrating meetings, so make sure you give yourself enough time to set up and get ready before the call.

Cultivate compassion for yourself and others around you

For those self-isolating or working at home with a partner, your family, or your housemate, it’s important to be mindful of your own needs and the needs of others. Spending long periods of time in a shared space can be tricky, but there are ways around this that will make it easier to maintain healthy relationships. Talk to each other, be open and honest, and make a plan together that takes into account everyone’s needs. You're less likely to experience feelings of resentment if you’re communicating clearly.

By talking to one another and addressing any issues as they happen, you can express how you feel and talk about the challenges you may be facing. If you need more space to work or think, explain why this is important to you, and work on a solution together. It might help to start by telling them how much they mean to you and reminding them that you care.

It can be difficult to maintain a work-life blend when the lines between work and home are blurred into one. Make sure you stick to your working hours and try not to let work infiltrate your evenings or weekends. It might sound silly but having a good morning routine and wearing ‘work’ clothes, or just not your pyjamas, can help to create a professional mind-set. Ultimately, you need to find a way of working that serves you and results in the least amount of disruption. Be kind to yourself while you find a new rhythm and allow yourself enough time to adjust.

 

19 March

Bank of England cuts interest rates to lowest level in history

The Bank of England (BoE) has cut interest rates to 0.1%, the lowest level in history, in response to the COVID-19 pandemic.

In a special meeting held today (19 March) the monetary Policy Committee unanimously voted to increase the BoE’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1%.

 

Call for HMRC to immediately pause tax collections

The spread of COVID-19 has caused much uncertainty for businesses around the world, with many fearing for their future stability. Many governments have detailed a range of measures to help keep businesses afloat and to protect the economy. However, it is still unclear if these measures will go far enough.

Accounting and tax advisory firm Blick Rothenberg partner Alex Altmann has called for the UK’s HMRC to immediately pause tax collections to keep businesses liquid. He said: “Supply and demand are the core principles of a working economy, which are now heavily disrupted by Governments responses globally to tackle the crisis. The announcement by the UK Government to provide £330bn in loan guarantees will play an essential part of a long-term rescue package, but no one knows today how this money will get out of the door. What we need now are quick and direct cash injections into the economy.

“The Government’s announcement for a 12-months business rate holiday is a first step. However, businesses pay large amounts of VAT, PAYE and Corporation tax on a regular basis as well. Pausing tax collections now is existential for businesses to maintain their liquidity and provides the necessary relief to pay workers and keep the business running.

“At this stage it does not make sense to collect large amounts of taxes from businesses, which are often based on assessments and assumptions made earlier in the tax year. If the Government wants to achieve a fast and unbureaucratic way to keep businesses liquid, it should follow the measures introduced by other European Governments this week and pause the collection of direct taxes, like Corporation Tax or PAYE, for the foreseeable future.

He concluded: “For example, the German Government announced on Tuesday, with an unprecedented package of measures, that it would pause any tax collections on application and provide for fast-track tax refund processing. We need to help businesses in the same way as otherwise they will run out of cash very quickly, which risks losing hundreds of thousands, if not millions, of jobs."

 

 

18 March 

Reactions to UK’s IR35 delay

Following the announcement by the UK government yesterday that IR35 is to be delayed, TA has covered some of the reactions below.

Association of Accounting Technicians tax policy expert Brian Pamer said: "Whilst this delay to the implementation of off-payroll working rules may help to reduce the impact on individuals whose businesses and careers have been adversely affected due to coronavirus (Covid-19), for many it simply comes too late.

“However, as we have previously commented, we hope that there will still be a 'soft landing' period following the implementation in April 2021 and that the government will take this into account as part of the changes to implementation following a review as announced in the Budget last week.

“This would provide much-needed reassurance to employers or contractors who have taken reasonable steps to comply but get something wrong, as well as those recovering from the effects of Covid-19, that HMRC will not be pursuing them with fines and penalties at what is likely to be a particularly difficult time."

BDO UK partner and head of employment tax Stephanie Wilson said: “This 12 month delay will be viewed as a blessing to some and a potential frustration to others but the government have made it clear that this is a deferral in response to COVID-19 intended to help both businesses and individuals, not a cancellation.

“Work undertaken to date by businesses is not wasted and many businesses will still choose to make a policy decision to implement changes and review their contractor population before April 2021, now with some additional time to revisit and refine. For those behind the curve, a panic response is no longer necessary: there is time to pause, reconsider and plan to get it right at the first time of asking."

 

R3 view on UK Chancellor’s COVID-19 measures

Duncan Swift, President of insolvency and restructuring trade body R3, responds to the measures announced on March 17 by the Chancellor of the Exchequer, Rishi Sunak MP, to support businesses during the COVID-19 outbreak:

“The Chancellor’s ‘Whatever It Takes’ strategy is the right one, but businesses do need help now, and other types of help are needed alongside the additional access to finance.”

“Feedback from our membership is that otherwise healthy businesses are already experiencing a cash flow crisis. Many businesses will face insolvency without significant creditor forbearance or direct help from Government to bridge the gap in their finances. It’ll be expensive, but Government intervention is needed to weather the storm. As well as additional money going in to businesses, payment holidays for businesses on things like PAYE, NICs, or other taxes will help manage outgoings, too. The focus on loans could store up problems later: these loans will need to be paid back. Grants for small businesses will help, but larger businesses aren’t immune to the impact of COVID-19.”

“The first step any business in difficulty should take is to seek professional advice. There are options out there. Speaking to creditors will also be key, and the earlier businesses do this, the earlier they may be able to rearrange payment terms.”

 

COVID 19 - Accountancy CEO question time  

Zoya Malik, Group Editor, International Accounting Bulletin put some quick fire questions to Graeme Gordon, CEO, Praxity on COVID-9’s impact on business operations 

What is Praxity doing to assess new Covid-19 developments to advise member firms to help them reduce risk? 

We are remote working whenever and wherever possible, but with offices manned by one individual, or on a rota basis, and we are antiseptic cleaning at least twice a week. Individuals are carrying in their own antiseptic wipes for personal use daily.

What is the plan to meet member firms and clients due to cancelled events? 

We will be deferring where possible, and cancelling meetings where not. 

What is replacing events and how do you intend to knowledge share? 

Nothing is viable for the size of our events, but the use of systems like “Zoom” and Microsoft Team, allows collaborations to progress.

Which of your member firms' markets are currently operating under lock-down? 

Most are under remote working, thus “lock-down”

How are they managing to operate?

It’s difficult as it’s the unknown, with various different ways in which governments are dealing with the problem.

What channels are in place to knowledge-share amongst member firms in terms of the impact of COVID -19 on their business and their response plans for continuing to serve clients?

We are using electronic interaction. So far this is working for us.

 

 

17 March

CABA to take ‘business as usual’ approach in relation to COVID-19

CABA, a UK charity which supports the wellbeing of accountants and their families, is to take a ‘business as usual approach’ in relation to the spread of COVID-19 and will continue to provide its support services.

To ensure the safety and wellbeing of its staff and members, CABA has introduced several preventative measures to mitigate the risk of infection. This includes postponing face-to-face training and conducting services online or over the phone.

CABA has urged all members experiencing anxiety related to COVID-19 to contact the charity. It has also encouraged small business owners looking for financial or wellbeing advice to get in contact for support.

CABA services director Kelly Feehan said: “Amid all of the change and uncertainty caused by Covid-19, here at CABA we want to reassure our members that we are open, and we are here to provide as much support and advice as possible.

“The spread of the virus has undoubtedly stirred up a lot of emotion, and even financial stress. Therefore, it’s completely natural to feel anxious and concerned for yourselves and your families, and your business - so our dedicated team is on hand 24/7.

“We strongly urge anyone experiencing anxiety to get in contact with us. Even if you’re having to self-isolate - you’re not alone, we’re just at the end of the phone.”

BDO UK urges UK Government to act as insurer of last resort for leisure sector

Following the UK Prime Minister Boris Johnson’s press conference yesterday which advised the public to avoid pubs, restaurants, and theatres, BDO UK has called on the Government to consider acting as the insurer of last resort for the leisure sector.

While Johnson announced the need for more social distancing on a voluntary basis, he did not call for a complete shutdown of these type of businesses.

BDO corporate finance partner Peter Hemington said: “While the measures announced in the budget to help businesses through the COVID-19 emergency were welcome, they did not go nearly far enough. Very few businesses have cash reserves available to get through a likely two to three month shutdown, so the majority will struggle severely unless drastic action is taken”.

“The government has a tried and tested role as an insurer of last resort. It must adopt that role now by offering businesses impacted by the coming Coronavirus shutdown insurance against their reasonable losses incurred in the coming months.”

 

IFRS Foundation makes changes to upcoming meetings

Due to the spread of COVID-19 in the UK, the IFRS Foundation’ March CMAC meeting is to be held remotely for all participants.

The Foundation has already made a number of its upcoming meetings available remotely. Updates to scheduled meetings and events can be found here.

The Foundation has also closed its London office and all staff are to work from home, following advice given by UK Prime Minister Boris Johnson yesterday instructing UK workers to work from home were possible.

 

16 March 

UK’s FRC provides updated guidance in relation to COVID-19

The UK’s Financial Reporting Council (FRC) has updated its guidance in relation to the COVID-19 pandemic.

COVID-19 has caused much uncertainty for many companies’ future operations which in turn has consequences for those proposing to report results in the coming months, as well as for their auditors.

Some companies and auditors are facing practical difficulties in preparing accounts and carrying out audits. Given restrictions on travel, meetings, and access to company sites in some jurisdictions, audit firms may need to consider developing alternative procedures to gather sufficient and appropriate audit evidence.

The FRC has expressed its concern that the current situation should not undermine the delivery of high-quality audits and has said audits should continue to comply fully with required standards.

However, the regulator noted that additional time may be required to complete audits and it is important that this is taken, even at the risk of delaying company reporting.

Auditors will need to consider the impact of COVID-19 on:

How they gather sufficient, appropriate audit evidence, recognising that the planned audit approach may need to change and alternative procedures developed;

How the group auditor proposes to review the work of component auditors;

The auditor’s assessment of going concern and the prospects of an audited company;

The adequacy of disclosures made by management about the impact of COVID-19 on the company;

  • The need for the auditor to reassess key aspects of their audit as a result of the fast-changing situation, which may require management to provide further evidence.
  • Auditors will need to engage with the entities they audit to ensure they set clear expectations as to the level of disclosure they expect to see in annual reports to communicate the impact and risk of COVID-19 on the company.
  • Companies also need to understand that it is vital auditors have sufficient time and support to carry out their work to a high standard, including reassessing work done to reflect changed circumstances. In some cases, companies may need to reconsider their reporting deadlines.

FRC executive director of supervision David Rule said: “Given the growing impact of coronavirus on the global economy and the high degree of uncertainty, high-quality audits are vital to ensure users of financial statements are properly informed.

“In many instances, auditors will need to consider developing alternative audit procedures to gather sufficient, appropriate audit evidence.

He concluded: “The FRC remains in close discussions with the largest audit firms to ensure any issues are being appropriately managed.”

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