PQ magazine June 2020 www.pqmagazine.com / www.pqjobs.co.

uk
INCORPORATING NQ MAGAZINE

THE VOICE
OF ALL PQs

WHERE’S THE P40

REMOTE? AAT GOALS
PQ recommends some great
telly while lockdown keeps Professional stars
us all indoors P52 look to AAT to
secure their future
COVID CLASS
OF 2020 P10

REMOTE EXAMS
BREAD AND P16
BUTTER P36 HAVE ARRIVED FINAL WHISTLE
How a forensic examination Most professional bodies have
of an exam paper can help Whistleblower
you get that pass now put plans in place for lands an £8.6m
BECOME AN sitting exams remotely settlement from
INSOLVENCY SEE INSIDE Big 4 firm
EXPERT P34 FISCAL POLICY IN A POST COVID-19 WORLD, AS
ENVISIONED BY TAX GURU RICHARD MURPHY
DOUBLE UP
WITH ACCA P24
You’re sitting two papers next
time – but how do you decide
which ones? P18

Award-winning AAT courses

and apprenticeships
Flexible learning to suit your lifestyle
mindful-education.co.uk/students

IN THIS ISSUE
News
04ACCA initiative Remote
exams to be launched in June;
and a message from the Editor
05AAT extension Association
extends membership renewals
for its students
p4
06ACCA exams Association
pushes back some June exam
sittings into July
08CIMA case study Don’t take a
scattergun approach to the
Operational case study, the
examiner warns students
09IR 35 Proposed changes are
flawed and unfair, says
Parliamentary committee
10The jobs market Youth
unemployment could hit the
million mark, think tank warns
12Tech news Grant Thornton
launches ‘digital accountant’
pathway for trainee intake; and
Sage upgrades with AutoEntry
Features, etc
14Your career Baffled by bitcoin
and confused by crypto
currency? Then e-Careers has
the right free course for you
15Mind your Ps&Qs Lockdown
is driving me crazy and I want to
vent; confusion over ACCA
exams; and the best of PQ’s
social media
16Ethics Whistleblower lands
£8.5m settlement from EY
p24
To subscribe go to www.pqmagazine.com
17A post Covid-19 world ACCA
has come up with a 10-point
plan for your business
18Analysis Tax guru Richard
Murphy explodes some myths
about what tax will look like in a
Post Covid-19 world
20CIMA exams Recently
qualified Brent Holden has
some top advice for CIMA
studiers striving for that pass
21AAT exams Mike Kirkham
explains how you can best
prepare for and pass your Level
3 Synoptic Assessment
22Online study Ten top tips on
how to make your online
studying more effective
24ACCA exams If you’re going to
sit two papers in one sitting then
certain combinations work while
others don’t. We explain all…
26Look to the future Deloitte has
gazed into its crystal ball to see
p12
what technology will look like in
the year 2030
28CIMA exam initiative You
can now complete your exam
journey from the comfort of your
own home
31ACCA SBR exam Tips to
improve your technique, which
is vital if you’re to pass Strategic
Business Reporting
contents PQ
June 2020
p20
32Your career Online interviews 48ACCA ATX exam A recent
can be tricky, so Hays has some Advanced Tax exam question is
top advice on navigating your dissected by Neil Da Costa, who
way though them points to where mistakes might
have been made
34Insolvency qualifications
We guide you through the 50Home working #2 Are you are
various options through which workaholic, daydreamer or a
you can become a licensed
insolvency practitioner
36ACCA AAA exam Top tutor
Paul Merison descontructs this
paper, pointing out how and
where you can score marks
38The Troubleshooter #1 Test
yourself in our multiple choice
quiz on variance analysis
39Home working #1 How to
work productively at home while
maintaining your sanity
40AAT spotlight Meet the
footballers who are looking to life
after soccer by studying for the
AAT qualification p42
recluse? Robert Walters has the
answer
52Watch with PQ Our guide to
what to watch on the telly over
the lockdown period
p28 53Careers Life at the University
of Lincoln; be kind to your your
eyes; and our Book Club Review
42The Troubleshooter #2 Philip 54Fun stuff – and our giveaways
Dunn explains that when it
comes to making budgeting
decions you really need to know The columnists
the limiting factors Robert Bruce Pandemic provides
44CIPFA spotlight How the food for thought 6
institute is helping its students Prem Sikka Government bailouts
and members with their mental must come with conditions 8
wellbeing
Zoe Robinson Be positive and look
46Tax Zahid Ahmed helps you get forward – not everything in the world
a better understanding of the has changed 10
mechanics behind pensions Mike Day The importance of
contributions wellbeing 12
PQ news

GRAHAM
HAMBLY
Breaking the
news that
matters
ACCA has confirmed that from July it
will pilot remote exams for the
Applied Skills papers. The number for
this first session is set at 600 as it
wants to make sure the process is as
smooth as possible. It is working with
the learning providers to support
students towards this as “they can
support their students in the
preparation, but also ensure they have
the set-up at home – ensuring the
students runs the diagnostic test,
prepare their room at home to meet
the requirements, etc.” We would love
to hear from anyone out there who
has volunteered.
Meanwhile, in early May CIMA
delivered its first-ever at-home OT
exams. PQs in more than 70 countries
have now booked to sit the exams
remotely, and students in over 40
countries had sat exams by the
middle of May. We can report all is
going well, but you don’t have to
believe me, here’s what Siemens’ Dan
Ralls said: “The experience was fairly
good and the online invigilator was
very easy to contact to ease some of
my concerns. I didn’t feel
disadvantaged by sitting my exam at
home and I’m really pleased to be
able to continue with my studies to hit
the targets I had set myself.”
AAT has now announced it is
working to delivering some of its
assessments remotely by August (see
opposite). It has also taken the bold
step of extending students’
memberships by three months. And it
has promised to monitor the situation
and could even extend the extension.
So enjoy this jammed-packed issue
– 55 fun-filled pages for you.
Graham Hambly is Editor and
Publisher of PQ magazine
and NQ magazine
ACCA remote exams by June
ACCA is introducing remote exams, checks involving biometrics,
some of which will be up and Alan artificial intelligence and recording.
running by June. Students will be Hatfield ACCA has also revealed that it
able to sit exams at home, or in will be increasing exam fees from
another location, all watched over the December 2020 sitting. The
by a remote invigilator. current changes will not affect
It is targeting June for the September exam entry prices and
introduction of remote invigilation students are still able to take
exams for its on-demand exams advantage of the reduced rates by
(Applied Knowledge and booking the early entry deadline.
Foundation level exams). ACCA’s Alan Hatfield said: “Exam
ACCA will then offer remote Professional exams, and updates entry is open for September and we
exams taking for the session-based have been promised soon. know students are already planning
Applied Skills exams from The new exams, when for this session. We advise students
September (see commentary, left). introduced, will be overseen by a to book exams in their local centre
ACCA said it was still exploring live invigilator. ACCA also stressed as usual and we’ll provide updates
the situation for Strategic there is a thorough system of if circumstances change.”
CIMA February case study results
The CIMA February case study are familiarising themselves with
results are out, and as CIMA says new topics and study materials.”
they are a bit lower than normal. He revealed that, overall, CIMA
There was the option to resit the has seen an increase in exam
case study under the 2015 registrations under the new
syllabus, or to take the new-look syllabus.
2019 syllabus. Those taking the This means that “students
2019 syllabus did substantially continue to progress their journeys
better than the resit candidates. study exam pass rates for February towards becoming CIMA-qualified
The OCS 2019 syllabus pass 2020 are a bit lower than they have management accountant”.
rates was 55%; MCS 57%; and previously been. With the CIMA CASE STUDY – PASS RATES
SCS was 59%. The 2015 syllabus launch of the new CIMA
Feb 20 Nov 19 Aug 19 May 19
retakes pass rates were 34% for professional qualification 2019/2015
OCS; 45% for MCS; and 52% for and the introduction of the Operational 55%/34% 68% 46% 59%
SCS. new content in the syllabus, Management 57%/45% 66% 64% 70%
CIMA’s Stephen Flatman told PQ this is something we
Strategic 59%/52% 64% 64% 65%
magazine: “We can see the case expected to see as students
‘Bailouts should go in the annual accounts’
UK-registered companies that access emergency should begin for any accounting period after December
bailout funding need to record that fact in their next 2019. For listed companies, it should start from any
and subsequent annual accounts, according to financial statements issued after 31 March.”
financial journalists at Private Eye. So how would this work? Private Eye suggested a
This needs to happen until any taxpayer funds have section in the directors’ report could record any
been repaid, it said. The ‘In the City’ report also support provided in terms of guaranteed loans and
stressed that justification for the support should also be staff or property costs. More detail could then be
stated, along with its use. It went on: “For listed provided in the specific notes to those accounts
companies, the larger the support, the more detail to relating to staff costs, creditors, borrowing, contingent
be recorded. For private companies, this reporting liabilities, and post-balance sheet events.

In brief
Transforming the FRC
Primary legislation to create
the Audit Reporting & Governance
Authority (ARGA) may still be
required, but the Financial
Reporting Council said it making
progress towards the
transformation. A formal plan is
now in place to streamline the
governance of the FRC. A two-tier
system will replace the current
three tiers of committees and
councils. More of its decision-
making will be led by the
Executive. The number of Board
members has been reduced, and
will be refreshed through natural
changes in rotation, producing
leaner decision-making and
oversight arrangements. This new
governance structure is due to be
implemented in January 2021.
CIPFA June exams
CIPFA has confirmed students
will be able to take the June exams
at home, or can choose a private
setting other than their home – but
no exams will be offered either at
workplaces or CIPFA venues. The
institute is hoping the new exams,
arrangements will alleviate which
students’ concerns about the risk launched
of delays to their studies as a result on 4 May.
of Covid-19. The remote exams will You can
be supervised by an online check
invigilator through ProctorU, and them out
exams will be monitored through at: https://tinyurl.com/y97qmsem
the computer’s webcam and Stephen Flatman, CIMA’s VP,
microphone. exams, gives an introduction to the
exam, he then goes through your
CIMA online exam videos top Q&As. There is also a guide to
CIMA posted some ‘short & support resources and finally an
sweet’ videos to help students (and explanation of how to use the
us) understand the new online whiteboard.

4 PQ Magazine June 2020


Covid-19 pandemic
forces Deloitte to
cancel internships
Deloitte’s summer internship
scheme has been ‘cancelled’ at
UK offices, due to the ongoing
Covid-19 pandemic. The 350
candidates will be handed a
£500 goodwill payment and will
be encouraged to join an online
training programme. The
training, which is totally
voluntary, takes the form of a
four-week virtual mentorship
programme.
Deloitte has insisted that
safety was its priority when
making the decision.
Over at PwC its 400
undergraduate students on its
internship scheme have been
offered guaranteed positions on
the autumn 2021 graduate
training programme. That means
they enter their final year of
university knowing they have a
guaranteed job at the end of
their studies, in what could be a
challenging environment for new
graduates.
• There are more Big 4 stories
on page 10.
PQ Magazine June 2020
AAT remote exams by August
AAT has announced that it is
working towards making remote
invigilation for some of its
assessments available from August
2020.
Assessments will
be offered in a
phased approach,
and it explained it
will also publish a revised synoptic
schedule for impacted assessments
in due course. AAT is targeting the
following assessments:
• Advanced Diploma in Accounting
– Level 3 (Level 6 Scotland).
AAT has granted membership
renewals to students who are close
to completing their AAT
qualification. A three-month
extension has been granted to:
• Students studying short
qualifications.
• Students studying the AQ
qualification who have either one or
two assessments remaining and are
due to renew between 1 April and
1 June 2020.
• Students who have purchased a
separate End Point Assessment
(EPA) that is due to expire by 30
September 2020 have been given
news PQ
• Financial Accounts Preparation remote invigilation cannot work.”
(FAPR). AAT has also revealed that it will
• Management Accounting: Costing be calculating results for students
(MMAC). who could reasonably have been
• Professional Diploma in expected to complete the following
Accounting – Level 4 (Level 8 qualifications this summer:
Scotland). • Foundation Certificate in
• Professional Diploma Accounting – Level 2.
Synoptic Assessment (PDSY). • Foundation Diploma in
Other assessments will follow. Accounting & Business – Level 2.
AAT said: “Unfortunately, not all These calculated results will be
assessments can be taken via issued on 13 August 2020. AAT will
remote invigilation for security shortly be contacting all tuition
reasons and we are continuing to providers who have students that
investigate possible solutions where are eligible for calculated results.
Three-month’s membership
extension for all AAT studiers
an extension to is essential. This will
31 December protect our organisation’s
2020. future and ensure we
AAT CEO Mark can continue to support
Farrar (pictured) them after this crisis
said: “Managing subsides.”
the renewals of That said, Farrar
our members in a emphasised AAT is
fair and monitoring the situation,
considered way and if it feels it
during this appropriate to offer extra
challenging time extensions it will.
5
PQ news
ROBERT
BRUCE
Pandemic
provides
food for
thought
Sitting in lockdown we have noticed
how small businesses have been
astonishingly speedy at transforming
their businesses. The traders at New
Covent Garden, the wholesale fruit
and vegetable market, are a good
example. Most of their high-quality
produce went to restaurants. Then the
restaurant trade, by and large,
vanished overnight. The wholesalers
could have gone into hibernation –
but they didn’t. They turned their
business models upside down and
within days were supplying the public
at a point where supermarkets were
struggling with demand.
Their delivery networks changed
direction. And suddenly the Bruce
household found crates of fruit and
vegetable being dropped off on their
doorstep. The quality was revelatory.
We haven’t had such fine fruit and
veg before. It is but a small example.
But everywhere you look you find
that businesses, small local ones in
particular, have found that
enthusiasm, the technology that is
now available, and a desire to find
turnover in an utterly changed world,
has paid off. It is remarkable.
We need to see such enterprise in
more staid sectors of the economy. In
early May, the Financial Reporting
Council put out a review of audit
quality indicators. It found that audit
firms, bizarrely, mostly monitored the
quality of their audits after they had
been completed. Anyone with any
sense would be monitoring them at a
point before or during an audit when
they could be transformative. A small
thing. But change, as we now know,
is easy to bring about very swiftly.
Robert Bruce is an
award-winning writer on
accountancy for The Times
Picture Sam Akhter
perfect
Kathryn Stringer
Looking good: Premier Training, the award-winning online college, is celebrating 22 years of success. It asked its AAT students to send selfies of
how they study. What Luke is doing in the cupboard we will never know! We think he was self-isolating before it got trendy
6 PQ Magazine June 2020
June’s ACCA exams
moved to early July
ACCA has decided to delay the
June exam sessions in mainland
China, Hong Kong (pictured),
Macau, and Taiwan until July. It
said that exams will now take place
over one or two weeks, from 6 July.
ACCA believes this will reduce
the risk of it having to cancel the
exams due to the ongoing
pandemic. Students who have
already booked will be told the
exact dates and timings of the new
sitting closer to the sessions.
Exams in Vietnam have also been
delayed until 6 July. ACCA said that
results from these exams will be
Mindful Education comes to AATs’ rescue
Mindful Education’s online
resources have come to the rescue
of thousands of AAT studiers
determined to progress their
studies. The latest AAT insights
shows that over 5,700 new and
existing AAT students have been
referred by their training provider to
Mindful’s site.
Oldham College’s Deborah Seed
Three is the magic number for ICAEW sitters
Some 2,944 PQs sat the March
ICAEW Professional level exams,
but only one sat four papers.
That individual failed them all.
As is usually the case, those
who sat three papers were the
most likely to pass them all.
Some 78.5% of March sitters
who opted to sit three papers
passed them all, with another
12.3% passing two out of three.
The problems come with
those opting for just one paper.
While 76.6% passed, that
means 23.4% left the March
Natalie Bottcher
with candidates on 31 July.
June exams in the Middle East
will not be running in Bahrain,
Egypt, Iran, Jordon, Kuwait,
Lebanon, Oman, Qatar, Saudi
Arabia and UEA. However, ACCA
confirmed June exams are
currently scheduled to take place in
Japan, Mongolia and South Korea.
In Africa, ACCA said it has now
cancelled exams in Botswana,
Mauritius, South Africa and
Zimbabwe. They are still running
elsewhere – in Nigeria, Tanzania,
Sierra Leone and Uganda, to name
but a few.
said: “Mindful Education resources Mindful, a PQ magazine award-
have been a fantastic in our winner, works in partnership with
transition to online learning.” She over 30 colleges from Glasgow
said from a tutor’s point of view the Clyde to Bournemouth Poole.
reports are invaluable as a way to As the lockdown entered its
be able to track students’ progress. second month AAT revealed
But, perhaps more importantly, registration for distance learning
“students love it, either to work rose 20% in the week to 23 April
through at their own pace, or in a 2020, compared with the same
virtual classroom with a tutor”. week in 2019.
Professional Level March 2020
All First
sitters attempt
Audit & Assurance 84.6% 87.1%
Financial Accounting
& Reporting (UKGAAP) 76.2% 100.0%
Financial Accounting
& Reporting (IFRS) 86.1% 89.3%
sitting with no passes – that’s Tax Compliance 84.1% 85.3%
389 sitters. Business Planning: 71.8% 75.7%
In all, 470 ACA PQs failed all Taxation
the papers they sat at the spring Business Strategy 86.9% 92.8%
sitting, and will have to wait until & Technology
September to make amends. Financial Management 80.8% 84.0%
Irina MireLa
Dumitrache Luke Westwood Angela Patrick
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PQ news
PREM
SIKKA
Bailouts
must come
with caveats
Capitalism has been partially
suspended for a few weeks and the
much-maligned state is acting as the
insurer and ultimate underwriter.
Businesses are queuing for reliefs and
bailouts. However, such support has to
be structured and strategically used.
The first port-of-call for any
distressed business has to be its
shareholders. After all, they receive
dividends from risks. Some £400bn
was paid in dividends and £61bn of
cash returned to investors in share
buybacks between 2011 and 2018 by
the FTSE 100 companies. If they are
not willing to invest, then the business
entity effectively passes to secured
creditors. They can take over the
business and convert their loans to
equity. A bail-in by bondholders will
also improve corporate cash flows and
survival prospects as distressed
entities will not have to pay interest on
their debt. In the final analysis, an
insolvency administrator can seek
buyers for the business. If that option
does not materialise then liquidation
and piecemeal sale of assets beckons.
But some selected business bailouts
would be needed. Government support,
whether in the form of loans or an
equity stake, must come with stringent
conditions to improve social welfare.
To prevent a spike in unemployment,
recipients must give undertaking not to
cut jobs for the next 12 months. They
should be required to reduce carbon
emissions and gender/ethnicity pay
gap, increase boardroom diversity and
accept curbs on executive pay and
dividends. They must not indulge in tax
avoidance and a pay fair share of tax.
Prem Sikka is Emeritus
Professor of Accounting at
the University of Essex
Taxwatch
Choose your status
AAT is calling on the Office of
Tax Simplification to allow
taxpayers to elect to be either
employed or self-employed. This
would create improved tax certainty
for employees and employers,
while simultaneously addressing
the issue of employment status and
rights. AAT said it would help
HMRC identify fraud more easily if
both the employer/engager and the
individual taxpayer was required to
report. It would also remove the
need for the controversial IR35
8 PQ Magazine June 2020
Don’t take scattergun to
CIMA’s case study exam
Simply reproducing rote-learning
answers or pure knowledge of a
topic area will score few, if any,
marks, says the CIMA Operational
Case Study examiner.
Similarly, taking a scattergun
approach to an issue and
commenting on everything that you
know about it from a theoretical
point of view will score poorly.
ICB first for sitting all exams at home
ICB became the first
accountancy body to
successfully offer all its
exams in a home setting
during the pandemic. With
the help of a new tech
partner, ICB exams now
provide remote invigilation
via ‘virtual’ eyes and ears in
the room.
ICB exam chief Peter Stewart
explained that there is full flexibility
to take the exam whenever it suits
the candidate best: “ICB exams are
available weekdays or evenings,
morning, noon and night.” He
stressed there is now no need to
worry about availability at your
Exam initiative from ICAEW
ICAEW is running its Certificate
Level exams temporarily via
Pearson Vue remote invigilation.
legislation, along with the CEST tool
that is currently required for
employment status determination.
PapVAT scrapped on ebooks
Plans to scrap VAT on e-books
and e-newspapers has been fast-
tracked in a boost to readers and
publishers during the coronavirus
outbreak. The Chancellor Rishi
Sunak said the zero rate of VAT will
now apply to all e-publications
immediately – seven months ahead
of the original schedule. Sunak
said: “We want to make it as easy
The examiner pointed out that
writing “this improves decision
making”, “this graph is essential”,
or “planning is enhanced” is not
enough to gain any marks.
The markers want to see the
‘how’ and ‘why’ this is the case. A
simple “because of…” at the end
of a sentence can improve
explanations.
preferred centre – you are the boss!
Candidates do, however, need to
ensure they can guarantee a space
where there will be no interruptions
for the duration of the exams and
their internet connection will be
stable for the same duration.
ICB’s first students went through
OnVue remote invigilation will
enable students to take their
exams at home while being
continuously monitored by
an offsite invigilator.
ICAEW, however stressed
that for remote invigilation
exams to run successfully
students will need the
equipment required to meet
the tech specifications.
There are five key requirements
to use this exam delivery method:
as possible for people across the
UK to get hold of the books they
want while they are staying at
home and saving lives.”
‘No help for offshore firms’
Some senior figures in the UK
clergy have said that companies
registered in offshore tax havens
should be refused corporate
bailouts. In a letter to The Times
they say: “We welcome the
decisions of the Danish, Polish and
French governments to refuse
bailouts for corporations registered
Thinking you ‘remember’ the
stuff you learnt from the OTQ
exams could also mean you are
skating on thin ice. The examiner
feels you need to revise the
technical material, because if you
don’t have the knowledge then you
can’t score well.
Having awareness of the industry
the case study is set in will help
you in the exam hall, as it will make
you think of the wider marketplace
issues that might impact on
decisions you could be asked to
comment on.
their final M8 exam on 22 April, to
qualify as professional
bookkeepers, and the reports are
things are ‘running smoothly’.
Stewart was obviously ‘delighted’.
Check out ICB’s qualifications at:
https://www.bookkeepers.org.uk/
Study--Qualifications
1. Students need a reliable
computer or laptop with a webcam
and microphone, which meets the
minimum tech requirements.
2. A quiet room with a closed door
(no one else is allowed in the room
during the exam).
3. A clear workspace.
4. A mobile phone to upload during
the check-in process.
5. A strong internet connection.
Exam sitters will not be able to
take a break during the exam, can
only use the on-screen calculator,
and are only permitted to use the
on-screen whiteboard.
in tax havens.” They go on to say
that some large corporations
continue to avoid their social
responsibility, making huge profits
yet hiding their wealth in tax
havens. The church leaders point
out that at least $8 trillion sits
offshore, with its wealthy owners
hiding from their tax and social
responsibilities. They say when the
pandemic ends we cannot go back
to business as usual, and are
calling on the UK government to
foster a fair tax system that serves
the common good.

Qualification Variant
exams available in
September – ACCA
ACCA has confirmed that it will
be offering its Qualification
Variant exams this September,
using the planned June 2020
syllabus.
And it is reminding students
that variants, which are offered
four times a year, will still be
available as scheduled and will
continue to follow the standard
syllabus.
Additionally, the Foundation in
Accountancy, FFM, all DipFR,
Russian Language and TRS
exams have been cancelled for
the June session. These exams
will also be offered at the
September 2020 exam session.
Student exam entry for these
papers opened on 5 May 2020.
• The AA RUS exam will not be
available in September 2020.
PQ Magazine June 2020
news PQ
IR35 ‘is flawed and unfair’
The government must address
IR35’s inherent flaws and
unfairness, says the House of Lords
Economics Affairs Finance Bill Sub-
Committee.
It feels the government should
use the Covid-19 pandemic to
“completely rethink this legislation”.
It goes further, and said it now
believes the government has not
sufficiently analysed the
unintended behavioural made them ‘zero-rights employees’, riddled with problems, unfairness,
consequences of the proposed with none of the rights of being an and unintended consequences. The
reforms. Contractors are already employee or the tax advantages of potential impact of the rules on the
being laid off, despite the reform’s being self-employed. wider labour market, particularly the
delay. Committee chair, Lord Forsyth of gig economy, has been overlooked
Many witnesses also told the Drumlean, said: “Our inquiry found by the government. A wholesale
Committee that the rules have these off-payroll working rules reform of IR35 is required.”
Early warning systems are needed
Tools for flagging signs of poor-quality audits need to audit firms accountable for achieving high-quality
be used more effectively, so corrective action can be audit. The worry is few audit committees and investors
taken, according to a major new review of their use by interviewed by FRC for the report were even aware of
the Financial Reporting Council. published AQIs. That is because publicly-reported AQIs
The problem is, however, that most monitoring of are not easily accessible or comparable across firms.
audit quality indicators (AQIs), in large audit firms at The FRC’s David Rule said: “Public reporting of a
least, only takes place after audits are completed! consistent set of audit quality indicators is required to
The watchdog said that consistent public reporting of provide companies and investors another window on
AQIs can help audit committees and investors hold audit quality.”
9
PQ news

ZOE
ROBINSON
Be positive:
not
everything
has changed
Although a lot has changed since last
month, some things remain the same.
We are now a lot clearer as to what is
happening with the exams, with most
being rescheduled or remote
proctoring solutions on offer. The vast
majority of tuition providers have
successfully moved their classroom
training into the virtual world,
providing live tuition for students to
access in the safety of home.
It’s a different learning experience
but it’s still learning; how you learn
remains the same. However, you may
need to become more self-motivated
and develop a positive mindset. It’s
important not to confuse a positive
mindset with a belief that everything
will be fine. Positivity is forward-
looking; it’s action based, with a
focus on what you have achieved
rather than what you haven’t. Studying
from home brings practical
challenges, finding somewhere to
work for example, but if you’re not in
the right frame of mind whatever you
try to do will be less effective.
This is where a positive mindset
can make a big difference. Don’t think
about how many chapters you have to
learn but about those already covered
and how many you will complete
today. However, be careful, this is a
technique to improve learning not
make you feel better about doing
nothing.
The mental side of studying at the
moment, when it’s harder to talk to
friends and colleagues, shouldn’t be
underestimated. In fact, it may well be
the one of the biggest challenges
students are facing right now.
Zoe Robinson is Learning and
Programmes Director at
Kaplan Financial
Corona Class of 2020
Youth unemployment could
increase to over one million in the
coming months, as the Covid-19
recession punishes the ‘Corona
class of 2020’ with fewer jobs and
lower pay, according to the
Resolution Foundation.
As many as 600,000 more 18-
24-year-olds could become
unemployed over the next year, on
top of the 400,000-plus in this age
group who are already out of work.
As firms look to lay off staff and
freeze hiring, 800,000 school
leavers and graduates are entering
the UK jobs market. Current
estimates of a 6% rise in
unemployment is twice as large as
the rise following the financial crisis.
The report found that the
CIPFA launches UN training programme
CIPFA is launching a new training
programme, in partnership with the
United Nations International Fund
for Agricultural Development
(IFAD). The aim is to support and
strengthen IFAD-funded projects in
communities facing hunger and
poverty.
The new Achieving Project
Excellence in Financial
LSBF launches free ACCA ‘masterclasses’
LSBF has launched new free
‘accounting masterclasses’, aimed
at providing ACCA students with
additional online support during the
Covid-19 outbreak.
The masterclasses are a series of
short webinars hosted by LSFB
tutors, focusing once a week on
each ACCA paper. The schedule
will run throughout May from
Monday to Friday, with two or three
sessions every day lasting 30
employment rates of graduates
entering the jobs market during this
crisis are projected to be 13%
down. Graduate pay is predicted to
drop 7%.
One suggestion to help is the idea
of a job guarantees for young
people. Resolution Foundation’s
Management (APEX) programme
has been developed to improve the
FM practices among key finance
personnel, including the adoption
of international accounting and
reporting standards.
CIPFA CEO, Rob Whiteman, said:
“There is a clear and direct
correlation between good financial
management, effective project
Kathleen Henehan said: “A new
maintenance support scheme could
help thousands stay in education
and build up their skills, while those
entering the labour market for the
first time should be supported by a
job guarantee offering critical
employment experience.”
management and achieving better
outcomes.”
CIPFA will deliver bespoke APEX
courses in-person and via distance
learning to 250 key staff in English,
French, Spanish and Arabic. The
two-module course will run for
three years. Locations for in-person
training include Senegal, Kenya,
Panama, Istanbul and Vietnam.
minutes each.
These can be accessed through
Zoom and are open to LSBF
students and anyone else looking to
expand their knowledge during the
lockdown. Among the topics are
‘The 3 snakes of APM’, ‘How to
become a Tort Master’, and ‘Why
students fail AA’.
The full calendar of the
masterclass series can be found at
https://www.lsbf.org.uk/events

Women in work
The top three countries in
PwC’s latest Women in Work
2020 Index are Iceland,
Sweden and Slovenia, while
the UK remains in 16th place.
The research shows that if the female
employment rate across the OECD countries
matched Sweden’s, OECD GDP would be
boosted by more than £4.5 trillion. Top
performing UK regions were the South West,
Northern Ireland and Wales, with all regions
except Scotland improving their absolute score
since last year. London performed the poorest
on the index due to poor female labour force
participation and a high female unemployment
rate. It fell three places to 12th.
NMC Health audit investigation
The UK’s accountancy watchdog has opened
an investigation into EY’s audit of
the NMC Health plc financial
statements for the year end 31
December 2018. The investigation
will be conducted by the FRC’s
Enforcement Division under the
Audit Enforcement Procedure.
Tech predictions for 2030
A tenth of UK households will have at least 50
connected cameras in 2030, and smartphones
will boast an average of six lenses. These are
just some of the predictions made by Deloitte
at its recent Media & Telecoms 2030 & Beyond
conference. Among the other predictions are
that 6G will have been finalised and 8k will be
the default resolution for TV sets costing over
£500. See our feature on
page 26.
The EY promise
EY has said that its
partners will do everything
possible to navigate
through the Covid-19
situation with no redundancies among its
17,000 UK employers, no people furloughed
and no reduction in employee salaries. EY
promised it will also continue its apprenticeship
programmes for graduates and school leavers.
It said it expects to recruit 1,000 graduates and
apprenticeships this year.

10 PQ Magazine June 2020

^ƚƵĚLJŝŶŐĂƚ,d&dWĂƌƚŶĞƌƐŚŝƉǁŚLJǁŽƵůĚLJŽƵŐŽĂŶLJǁŚĞƌĞĞůƐĞ 

Think ACCA, think HTFT

We have a full suite of ACCA Applied Skills and Strategic Professional courses for September 2020 exams
With our ACCA courses you get:
 Membership of our vibrant Online Learning Community and a dedicated tutor
 HTFT Partnership student notes and ACCA authorised study text, exam kit and pocket notes
 Recordings of HTFT tuition sessions to develop your knowledge
 Live online invites for join our new Motivation huddles and tutor-led Boost sessions
 Scheduled ‘live online’ revision sessions – recorded, downloadable and playable on all devices
 3 x HTFT mock exams, marked, with answers and video debriefs
 HTFT’s innovative Exam Simulation day and live debrief
For more information visit www.htftpartnership.co.uk/courses/acca/

Study CIMA, choose HTFT

CIMA remote exams are here, and our HTFT live, HTFT on-demand and HTFT play resources are all here to help you
prepare for, and pass, your exam.

HTFT live: join our expert tutors live online for interactive Masterclasses, designed to support your application of
syllabus knowledge

HTFT on-demand: drive your learning, with full flexible resources that you control

HTFT play: Boxsets of topic recording and Proficiency exam-style practice assessments

For more information visit: www.htftpartnership.co.uk/courses/cima

A moment for reflection:

A great number of our clients/students are key workers: working in the NHS, care
sector, food supplies etc, and we want to take the opportunity to THANK YOU for all
that you are doing during these challenging times.

tŚLJǁŽƵůĚLJŽƵŐŽĂŶLJǁŚĞƌĞĞůƐĞ

&ŽƌŵŽƌĞŝŶĨŽƌŵĂƚŝŽŶĞŵĂŝůŝŶĨŽΛŚƚĨƚƉĂƌƚŶĞƌƐŚŝƉ ĐŽ ƵŬ
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PQ tech news
MIKE
DAY The
importance
of wellbeing
This month I want to focus on
wellbeing during these unprecedented
times. I have been working for 40
years and I have certainly never felt
this way before.
We should all recognise that stress
is a very real thing, a chemical
reaction in fact. There is no reason
why we should be feeling 100% right
now and so don't be surprised if you
are not.
I am not sleeping all that well at
the moment, but I know just how vital
sleep is in feeling able to cope,
mentally and physically, and so it’s an
area of focus for me.
I always try and thrive on ‘eustress’
(the beneficial kind of stress), things
like leading up to presenting in
public. I certainly haven’t mastered it
after all these years, but I have
coached myself to recognise it and
use it. But at the moment it does feel
more like distress (the harmful kind).
And so it’s a cliché, but physical
health plays a big part for me in times
of distress, and so I
have upped the dog
walking.
I have also made
sure I am doing
something for
myself; a new hobby
or a new skill. In my case it’s an
electro-acoustic guitar and it’s already
working.
In case it helps, Xero has launched
a Business Continuity Hub
(tinyurl.com/ya6op8so), including
advice on how to get help for your
business, run your business remotely
and looking after yourself and your
team (the wellbeing bit).
Mike Day, Director, UK
Education Sector, Xero
Tech briefs
5G misinformation
Conspiracy theories which
place the current pandemic at the
door of 5G are now the most
common piece of misinformation
on social media, according to
Ofcom. A survey of 2,000 people
since lockdown found that more
than half had seen false
12
Creating digital accountants
Grant Thornton has launched a
new ‘digital accountant’ pathway for
its trainee intake.
The pathway will incorporate five
new digitally-focused modules,
alongside its traditional ACA
accountancy qualification
programme. The new modules
have been specifically designed to
develop technology, process, and
data audit skills.
Delivered by BPP, the modules
will cover:
• Big data.
Virgin and O2 merge
The owners of O2 and Virgin Media
have sealed a £31bn ‘mega-
merger’, according to the latest
news. The deal will see four
directors from each company on
the main board, with the chairman
rotated every two years.
It is estimated that the combined
company will have 34% of the UK
market, with some 46m television,
broadband and mobile customers.
information about the links
between 5G and Covid-19.
Paying the nation
Did you know that 50% of
businesses in the UK pay their
people with Sage Payroll? This
equates to over 8 million
employees and 140 million
payslips processed a year. Sage is
now inviting you to put your
knowledge to the test to see if you
can pay people on time! Check
here to play the game:
https://paythenation.sage.com/
• Data analytics and visualisation.
• Cyber security.
• Digital innovation and disruption.
• Ethical and legal matters.
The idea is to help
address the digital skills
gap in the audit market –
although PQ magazine is
not sure what this says
about the state of the
ICAEW’s current
syllabus.
The modules will
be in place for
VAT compliance for
digital marketplaces
Deloitte and Taxamo are to launch
a new tax compliance service for
digital marketplaces and their
online sellers.
From January 2021, the
European Union is introducing new
VAT reporting requirements, and
the new service will enable the
marketplaces and sellers to register
for VAT, automatically determine the
correct VAT treatment of sales,
submit VAT returns and remit
payments of VAT to tax authorities.
The service will be fully
automated, underpinned by
The new entity would also leapfrog
BT to become Britain’s biggest
operator.
Potential savings from the tie-up
have been estimated at £6bn.
Telefonica, O2’s Spanish owner,
has said that the deal will be a
game-changer in the UK.
The Competition and Markets
Authority now has to approve the
deal for it to go ahead.
Scale of data hack ‘unknown’
Hackers got into the
University of Warwick’s
administration network last year in
an attack which was kept secret,
according to Sky News. The illegal
access occurred when remote-
viewing software was installed by a
staff member, allowing the hackers
to steal personal information on
students and staff. The security at
the university was so poor that it
couldn’t identify what data had
been stolen. In response, a new
chief information and digital officer,
September’s 2020 intake and will
be mandatory for all graduate and
school leavers studying the ACA
qualification in audit and tax.
Grant Thornton’s head of audit,
Fiona Baldwin (pictured), said:
“Our updated, bespoke
accountancy trainee
programme will provide our
people with a qualification that
incorporates relevant digital
skills alongside the traditional
requisite technical
accounting knowledge.”
Deloitte’s tax compliance solutions
and Taxamo’s technology platform.
Deloitte’s Matt Ellis explained:
“Nine months from now hundreds
of thousands of online sellers will
have new obligations to account for
VAT in the EU on their sales.
European VAT rules have the
potential to be complex to
administer for these global
businesses.”
With online marketplaces jointly
and severally liable for the VAT due
from sellers, the Deloitte service will
allow them to manage this risk.
who will report directly to the vice
chancellor, has been hired.
Apple flaw
A flaw in Apple’s mobile
operating system could have left
millions of iPad and iPhone users
open to attack from hackers.
Research by ZecOps, a mobile
security firm, found that a bug in
the Mail app made the devices
vulnerable to sophisticated attacks.
It even suggested that the bug has
been used to exploit at least six
high-profile victims.
PQ Magazine June 2020

Bye bye Bo
Royal Bank of Scotland is closing
Bo, its new digital bank, after only
five months. RBS said it needed to
focus on lending to customers
struggling to cope with Covid-19.
Commentators were predicting
Bo’s prospects looked gloomy after
the departure of Mark Bailie in
January. He had set up the digital
lender at the cost of tens of millions
of pounds. At the time RBS felt that
Bo was a more cost-effective way to
go digital, rather than buying an
independent financial technology
company.
Launched last November using
social media influencers, Bo’s bright
yellow card was aimed at attracting
younger customers. However,
reviews weren’t great as critics said
its functionality was not as good as
rivals Monzo and Revoult.
PQ Magazine June 2020
Sage unveils latest updates
Sage has announced its recent
technology acquisition AutoEntry
has now been embedded into Sage
Accounting to “eliminate time-
consuming, repetitive and error-
prone manual data entry tasks”.
Meanwhile another acquisition,
CakeHR, will be made available as
an option for customers.
Facebook buys stake in Joi Platforms
Facebook has made its largest-ever
overseas investment, buying a $5.7
billion stake (10%) in Joi Platforms,
the Indian mobile network.
Joi Platforms is owned by
Reliance Industries, a conglomerate
controlled by Mukesh Ambani,
India’s richest man.
The all-cash deal will help
Reliance reduce debt and at the
same time strengthen the social
media’s company’s presence in its
largest market. Facebook has 250
million users in India, and its
messaging app WhatsApp has
around 400 million users, making
India its biggest market.
The last big deal by Facebook
was when it paid $22 billion for
technews PQ
Sage is extending too the customers to quickly and easily find
automation capability within its core and correct errors. Another update
product through the release of new broadens industry coverage, with
features such as Bank Rules and Construction Industry Scheme
Recurring Invoices. compliance capability.
The software provider says that Finally, the new Sage Accounting
providing users with enhanced Plus tier will have multi-currency
features such as ‘correct
transactions’ will also allow
and inventory management
capabilities.
WhatsApp back in 2014. The since it was set up just four years
company is currently valued at ago.
$520 billion. India is seen as having real
The Reliance Joi Infocomm’s growth potential, as out of a
mobile network offers fast data population of 1.3 billion only
plans at discounted rates. Its around 560 million had access to
subscriber base has grown rapidly the internet last year.
Get a step
ahe
ead with
Xero
r Advisor
Certificati
t on
Having a sound knowledge of cloud accounting
software is invaluable in a competitive job market.
Get the Xero Advisor Certificate and stand out
from the crowd.
To get starte
t d, speak to one of the education
providers or accounting bodies – ACCA, ICAEW,
AAT, ICB, IAAB, Kaplan, Avado, Premier Training,
First Intuition, The Career Academy or Reed.
13
PQ financial markets

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14 PQ Magazine June 2020


HAVE YOUR SAY
Can I have a moan?
I am one of the lucky ones who is
still working, albeit from home.
Some of my friends have been
furloughed, but their chartered
firms all seem to be topping up
their salaries to 100%. Which is
good. However, I know from Zoom
chats many are itching to get back
to work, as they have exhausted
their Netflix accounts!
Silly me, I thought this would be
an ideal time to get some real
study done. I have been putting
off that ACCA ethics module for
an age, and thought this would be
the perfect time to start. It only
takes 20 hours. Unfortunately, I
forgot about the kids, dogs, cats
and husband! They (he) don’t
Our star letter writer wins a fantastic ‘I lovePQ’ mug!
ACCA pilot confusion
I have just been on Facebook and
one of the tuition providers is
claiming that ACCA is offering
home exams to the Applied Skills,
AFM and SBL papers in July.
When students asked to sit these
exams they were told (by the
provider) only those who had paid
for the ‘premium’ service would be
allowed to go forward for what is
being described as ‘a pilot’. But is
it true? PQ magazine, can you do
your stuff please, and find out what
is going on? I know in June the
Applied Knowledge and Foundation
level will have remote invigilation,
but the latest from the ACCA says
that it will be September before
Applied Skills papers will be offered
to all students. If the ACCA is
running a pilot how is it deciding
who can sit? Surely it is not leaving
it to the private tuition companies!
A leading independent tutor, name
and address supplied
The editor says: We understand
that the ACCA has approached its
Platinum providers to help with a
pilot to test remote sitting for the
Applied Skills exams. It wants 600
students sitting exams each day in
early July. It seems sensible to us
that the ACCA pre-tests in realtime
home exams before they go live.
Remember, students who put
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seem to know where anything is
and continually interrupts me, just
as I find a quiet time to sit down
away from the madness. The kids
Sorted, thanks
to pqjobs.co.uk
themselves forward for this are in
effect guinea pigs, and are helping
with the future success of this
programme.
Come on, AAT
Everyone seems to be moving over
to home invigilated exam sittings.
Published by PQ Publishing Ltd © PQ Publishing 2020
email graham@pqaccountant.com PQ
are kids, and that’s great, but they
are now jumping off the walls.
Sorry I know I am moaning. It’s
my life and I love it, but getting
ACCA qualified will mean so much
to me and my family, and I know
it will be worth it all in the end.
Oh, and thank you PQ for being
there. Always a bright light in the
often-dull world of accountancy –
sorry, but it can be a bit boring.
Have you seen the AAA syllabus!
Jenny, Hull
The editor says: I love this letter –
a PQ mug is on its way to Hull,
Jenny! It shows a real-world
insight into the lives of PQs. As
you say being ACCA qualified will
make a massive difference to your
future and that of your family.
That’s what ACCA can do for you.
Everyone that it except AAT! I have
now officially had enough of
studying for assessments when
there doesn’t seem to be any end
date in sight. I just can’t get
motivated anymore. Come on AAT,
tell us what you are planning.
Name and address supplied
social media
ROUND-UP
As PQ magazine went to press,
the AAT was the only body to
announce that it was reducing
membership fees for some of its
AAT students. It has granted a
three-month extension for
students close to qualifying. Some
PQs were confused: “I assume
when they say 1 or 2 remaining
they mean at level 4, and
therefore for people close to
completing the qualification and
not level 2 and 3. They are not
going to please everyone, but I
personally agree with the solution
they have in place.” Another said:
“Think they should extend across
the board”. However, Georgia
said: “I’m level 2 with only
synoptic left and I have
extension.” So, if you are level 2,
3 or 4 and due for renewal within
the specified dates you get an
extension. Well done, AAT.
There was lots on social media
too about multinationals who take
out loans but don’t pay their fair
share of taxes. This hit a note
with many. The former head of the
UK parliamentary public accounts
committee, Dame Margaret
Hodge, said all multinational
companies that avoid paying tax
in the UK should be made to
repay their pandemic bailout. She
also said these companies should
not be paying any dividends until
the money has been repaid. Lots
of you agreed. How these loans
are recorded in annual reports is
also important.
We also picked up on the fact
that many ACCA PQs are planning
to sit two exams come September,
to ensure they keep on track for
qualification. Which two papers
you take is key. The experts
suggest sitting one numerical and
one more descriptive paper.
Timothy said he was sitting AFM
and SBL. “Seems a good mix of
calculations and theory. It’s a
nice balance instead of two heavy
calculation papers or two
theoretical papers, which may
turn out to be boring.” Spot on
Timothy, that’s the way to go.
PQ whistleblowing
Whistleblower wins £8.6m
in damages from EY
E
Y has been ordered to
pay $10.8 million (£8.6
million) in damages to a
whistleblower who said the firm
had been covering up evidence
of a client in Dubai suspected
of money laundering and gold
smuggling.
Auditor Amjad Rihan sued EY
after the firm forced him out of his
job in 2014. Rihan had led an audit
where he felt money laundering
was taking place. However, EY
decided not to report the activity to
the relevant authorities.
In a High Court ruling, Mr Justice
Kerr found that the accountancy
firm had breached its professional
duties in its handling of the
2013 audit of Dubai-based Kaloti
Jewellery International.
He said EY bosses were
“responsible for suggesting to the
company involved that it should
draft its compliance report in a
manner that masked the reality of
the Morocco gold issue”.
16
The managing partner at the time
was accused by Justice Kerr of
never having read the International
Federation of Accountants’ ethical
code, which sets out the standards
expected of the profession.
Rihan was awarded $10,843,941
and £117,950 in damages. He
said: “Almost seven years of agony
for me and my family has come to
an end with total vindication by the
court. My life was turned upside
down as I was cruelly and harshly
punished for insisting on doing
my job, ethically, professionally
and lawfully in relation to the gold
audits in Dubai.”
He went on: “I really hope EY use
this judgement as an opportunity
to improve, and avoid such events
happening in the future.”
EY told the press that it
will appeal the ruling. It said
that its assurance team had
“uncovered serious irregularity
and reported them to the
proper authorities”.
Have you booked
your exams for
September 2020 yet?
Find out more:
accaglobal.com/bookexams
PQ Magazine June 2020

Dealing with disaster
ACCA’s global survey provides businesses with a 10-point plan for
the post Covid-19 world, says Jamie Lyon
T
he coronavirus crisis has caused a
systemic shock to the global economy.
There is even talk of a ‘Pre-Covid-19’
and ‘Post-Covid-19’ world, and this is the world
in which PQ readers will need to navigate from
now on.
ACCA’s global research Covid-19 global
survey: inside business, impacts and
responses looks at the impact of Covid-19 so
far on organisations and the global business
community, and it’s clear from the findings that
this is only the start of the story. Over the coming
weeks and months different regions of the world,
countries, businesses and organisations in all
sectors will seek to navigate a way through the
crisis, using different strategies and interventions
to respond to the crisis in what will be a
continuously and fast-changing situation.
ACCA’s report provides advice for
organisations in how to respond based on the
‘3As’ (the capacity to adapt to, anticipate and
absorb climate extremes and disasters).
1. Think ‘people first’. Pay attention to the
physical and mental health of employees and
develop appropriate plans for the resumption
of work. Put in place a communications
plan that will engage and update employees
regularly and human resources policies that
address crisis measures.
2. Accept the short-term focus and demonstrate
true leadership. Timelines and targets will
need to be refocused on near and mid-term
horizons. Senior leaders in organisations need
to accept a change of focus from strategic to
tactical.
PQ Magazine June 2020
ACCA & Covid-19 research PQ
3. Recognise the needs of your customers and
other stakeholders. Make sure you do not
miss the opportunity to respond to those
changing needs. Understand the impact on
your supply chains, and wider relationships
with stakeholders and partners.
4. Use a crisis-management team with
communications skills and establish a resilience
plan. Oversee major issues, formulate business
contingency plans, coordinate and align
implementation across different departments,
and ensure speedy responses and decision-
making. Initiate resilience planning to ensure
activities across the organisation are connected
in response to an event and broader business
integrity is protected.
Follow the data
5. Model scenarios and plan for resumption.
In a crisis such as Covid-19, organisational
scenarios are not constant and require regular
review. It is important to understand how using
analytical capabilities to assess both external
and internal data can put the organisation in
a stronger position and help it understand the
operational and financial impact of different
scenarios that may arise. Information insight
is also critically important for business
resumption planning, which aims to get the
organisation back up and running properly,
planned in manageable phases. This requires
analysis of the resources and assets that the
organisation needs to safeguard in order to be
able to resume.
6. Review government and fiscal policies
that may be of benefit. Monitor the relief
measures and policies introduced by the
government and seek to use the benefits
fully. Take a lead role and communicate the
needs of your industry (leveraging on data
insights) to relevant government agencies for
appropriate policy formulation, refinement or
implementation.
7. Remember: ‘Liquidity is the lifeblood’.
Organisations should review their lines of
credit and renegotiate their debt financing
obligations. Payment periods, for example,
may well be extended in the immediate
term as businesses recover. Strong focus on
cash management and liquidity should be in
place to bridge different business scenarios,
accepting that recovery to full liquidity is
likely to be a long process.
Anticipate & innovate
8. Look for opportunities to innovate.
Organisations should consider opportunities
for short or medium-term innovation.
This could involve product and
service development or thinking
innovatively about partnerships.
It could mean ensuring that
employees have new opportunities
for producing innovative ideas
or looking again at how the
organisation is deploying
digital and technological
innovations.
9. Review company strategies.
Re-examine business models.
Explore new channels to market,
supply-chain diversification, new
approaches to customer services, and
opportunities to grow.
10. Don’t forget: fundamental business risks
remain. Don’t lose sight of the fundamentals.
Even in the face of Covid-19, the
organisation will still face not only existing
risks (e.g. cybersecurity), but also different
ways of working, and strategic reactions
to Covid-19 could change these risks or
introduce new ones.
ACCA’s global research with over 10,000
finance professionals identifies a wide range of
financial challenges facing organisations of all
sizes and across all sectors. To read the report
in full go to
To read the report in full go to:
https://www.accaglobal.com/gb/en/professional-
insights/global-economics/Covid-19_A-Global-
Survey.html
• Jamie Lyon is ACCA’s Head of Business
Management
17
PQ ACCA & Covid-19
Tax after
coronavirus
Richard Murphy explodes some myths about how
many think fiscal policy will look in the ‘new normal’
economy
E
veryone keeps
saying that
nothing will
be the same when
coronavirus is over. The
claim assumes that we will get over coronavirus:
I am not sure we will, but I will ignore that for
now because whatever happens what I am quite
sure of is that tax will not be the same. There are
three reasons.
First, the amounts of tax that we will be
expected to pay might change after coronavirus,
but not necessarily as most people might expect.
Second, our logic about why we tax will I think
change, because what we will have learned from
this crisis, again in ways most people might not
expect.
And third, we could end up with a quite
different tax system as a consequence.
How much tax will we pay after coronavirus?
There is a widespread feeling that because
the government is spending more as a result
of coronavirus taxes are bound to rise as a
result. I have good news on this: I think that is
exceptionally unlikely. Instead, if anything, I am
expecting tax decreases over the next year or
two.
That is because there is a very real risk
that once furlough is over there might be up
to eight million unemployed people in the
UK. If that is the case then the overall level of
demand in the economy will be suppressed. If
any lesson was learned from the 1930s, when
we last faced a problem of this scale, it is that
to increase tax in this situation is to make the
problem worse. This is, of course, because
1 https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy
18
taking tax from someone reduces their capacity
to spend. And if we reduce the capacity to
spend when the economy is already facing a
massive downturn, we just make things worse.
So, right now do not expect any tax increases
and instead anticipate cuts.
Do not, however, expect this to last forever.
By the time the economy begins to recover (and
one day it will) I think it likely that we will have
realised that things like social care, the NHS,
strong education systems, better funded public
services, and much more, are still important
to us, then at that time we will have to begin
paying for them. I then expect taxes to rise.
But that may well be some time off. And what I
cannot stress strongly enough is that taxes will
never have to increase to pay for the deficits that
we are now incurring. That is because, quite
literally, they are imposing no cost on us. This
needs explanation.
What taxes really do
Most people think that tax pays for government
services. That is not the case in countries like
the UK. In practice, it has always been the case
that the UK government has been funded by a
mix of tax and borrowing, meaning that there
was never a dependence upon tax alone. Those
options have now been extended. In addition
to borrowing, government funding can now
include both quantitative easing (QE), which
now amounts to about £635 billion in the UK,
or nearly 30% of total supposed UK government
debt, and direct monetary funding (DMF) of
government spending by the Bank of England,
which simply means the government runs an
overdraft with the bank it owns, and need not
pay interest on it in effect, because the money
comes straight back to it.
Both QE and DMF represent the
government funding itself. What this means
in practice is that the government’s own
bank (the Bank of England) creates new
loans to the government to fund its spending
and never expects to have those loans
repaid. And since, like all bank loans, those
from the Bank of England to the government
are made out of entirely new money created
for this purpose tax is never involved in
this process. There is, incidentally nothing
novel about this: no new bank loan ever
recycles depositors’ funds now, which is a
fact acknowledged by the Bank of England1
in April 2014. And, despite all the claims
that are often made that this will give rise
to inflation of the type seen in the Weimar
Republic and Zimbabwe, inflation has
struggled to reach the 2% government target
that has been set for the past few years. In
addition, given that governments around the
world, plus the European Central Bank, are
all doing this when they can, no one is at risk
of exchange rate crises as a consequence.
What this does mean though is that tax does
not need to fund the coronavirus crisis, just
as government borrowing did not, because of
quantitative easing, fund government deficit from
2010 to 2013, and there is absolutely no risk of
inflation as a result.
Nor, come to that, will the cost of this
borrowing, if interest is paid, be excessive: the
UK government can borrow at less than 1% at
present. This is a negligible interest cost, while
because most borrowing is over quite long
periods, when inflation is taken into account
just 37p might, on average, be repaid for every
£1 borrowed as long-term debt at present. In
effect, those who are queueing up to lend to
our government right now (and they are) will be
PQ Magazine June 2020
 ACCA & Covid-19 PQ

paying for this crisis and taxpayers never will.
In that case, the role of tax is quite different
from that which most people expect. The reality
is that, as one of the members of the Bank of
England’s Monetary Policy Committee admitted2
in April 2020, whenever the government spends
the payment is not made out of tax revenue. It
is, instead, made out of money made available
to the government by the Bank of England. The
reason why tax is charged in that case is to
reclaim that money from the economy to prevent
excessive inflation arising. Tax does not, then,
fund spending. Tax does instead cancel the
inflation consequences of that spending.
This radical reappraisal of the role of tax in
our economy is part of a school of economic
thinking called modern monetary theory (MMT)
that is rapidly gaining credibility, simply because
governments are, as a matter of fact, subscribing
to the patterns of behaviour that it describes.
But, as I have shown in my work as a professor
of political economy, this gives rise to radical
new way of thinking about tax3 .
has come to engage in a systematic evaluation
and overhaul of the UK’s system of allowances
and reliefs.
That is because these reliefs cost the
government money and at the same time
undermine tax’s anti-inflationary potential by
interfering with the integrity of the spend and tax
cycle, while providing little verifiable benefit in
many cases. As a result we are suggesting radical
redesign of the tax system, not to raise more tax
(because it is not as yet clear that is needed) but
to actually make the tax system fairer.
And that greater fairness is possible and
probably necessary is apparent. When the
combined value of income and increases in
wealth – averaged over a seven-year period – are
compared with the taxes paid on income and
wealth in 2017/18 and the result is plotted by
decile (which process simply splits taxpayers into
ten groups of equal size, starting from the lowest
income group and going up to the highest) this
chart can be plotted 7:
that case. But not in the way most people expect.
In recent work, we created a framework for
assessing ‘tax spillovers’ or the vulnerabilities
and weaknesses within tax systems posed by the
pursuit of tax competition. From a modern money
theory perspective, such a system of evaluation
can help to identify weaknesses that might
impair a taxation system’s aggregate ‘cancellation
function’ and suggest reforms to rectify that.
Such tools will be essential in the post Covid-
19 world, if governments are to assess whether
their tax systems are delivering ‘cancellation’
effectively. The framework also enables a more
precise appreciation of how specific reliefs can
undermine the redistributive integrity of tax
systems as a whole.
In the emerging Covid-19 economy, the
challenge is to overhaul tax systems so that they
are no longer weighted towards the wealthy, but
redistribute towards those whose precariousness
has been exposed by economic shut down, while
becoming more effective in relieving potential

New approaches to tax

For a start, this thinking suggests that equating
government spending with ‘taxpayers’ money’
make little sense in this context.
It also shatters the myth that balanced
budgets are necessary. In fact, it says that if
inflation is too low (and that is now the tendency
in the UK) then deficits should be run.
And what that implies is that governments can
run deficits without having to apologise for doing
so, which has been the pattern for so long.
But perhaps most important of all is the fact
that if tax is not funding the government then it
assumes a different role in society, apart from
just cancelling inflation. Sources as apparently
unlikely as the Financial Times have suggested
this. They suggested in April this year 4 that the
coronavirus crisis requires the reversal of the
policy trends of the past four decades and a
revamp of the UK’s social contract. Among the
ideas it promoted were greater equality and the
taxation of wealth. Understanding how that might
work requires a better understanding of how tax
works now.
Working with Prof Andrew Baker of the
University of Sheffield, I have developed a
method for doing this called tax spillover The lowest earners in the UK have the highest inflationary pressures. Government has both the
analysis5. Using this, it is easy to see that effective tax rates, and the highest earners the spending and monetary levers to take the larger
the current UK tax system is far from socially lowest effective tax rates. role in the economy demanded by the current
neutral. Over £400 billion of tax reliefs and The Financial Times is right to call for emergency and called for by the Financial
allowances are given away each year and 81% wealth taxation and a radical overhaul of our Times. But a lasting, more resilient social
of UK wealth is held in heavily tax incentivised tax system. And if those on low pay, who we contract requires an accompanying rethink
assets6. In addition, the UK’s system of clap each week because many of them are and reassessment of both the macroeconomic
allowances and reliefs has a substantial what we now call our essential workers, are to and social policy roles of tax. The qualified
redistributive effect, subsidising the already get a better deal as a result of their work on application of MMT to questions of tax reform
wealthy. When, as the new understanding of Covid-19 then their taxes need to fall and the and imbalances we offer provides a starting point
banking that modern monetary theory delivers, wealthy might need to pay more. And for those for that.
and which the Bank of England has endorsed, in the middle? There is no reason to worry: it’s • Richard Murphy is Professor of Practice in
makes clear that savings are not required to unlikely much will change there. International Political Economy, City University,
fund investment in the UK economy, the time Tax should look different after coronavirus in London

2 https://www.bankofengland.co.uk/speech/2020/gertjan-vlieghe-speech-monetary-policy-and-the-boes-balance-sheet
3 http://www.paecon.net/PAEReview/issue89/Murphy89.pdf and https://www.cambridge.org/core/journals/social-policy-and-society/firstview
4 https://www.ft.com/content/7eff769a-74dd-11ea-95fe-fcd274e920ca
5 https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.12655
6 https://www.cambridge.org/core/journals/social-policy-and-society/firstview
7 https://www.taxresearch.org.uk/Blog/2020/04/22/tax-after-coronavirus-tacs-there-is-significant-room-for-wealth-taxation-in-the-uk/

PQ Magazine June 2020 19

PQ CIMA case study
A case(study)
of believing
Recently qualified CIMA student Brent Holden offers some hope and
encouragement to those trying hard to study during these uncertain times
L
ike a lot of students, I was
pleasantly surprised about
CIMA’s announcement to make
case study exams available from home
during the Covid-19 crisis.
20
Since hearing this news I received
my strategic case study exam results,
which I sat in February 2020 – and
I passed. So I’m ending my CIMA
journey without needing to take a
Registered Tuition Provider
‘home exam’, and it struck me how
fortunate students are to be able to sit
the exam and not wait for an update,
and do it in the comfort of their own
homes.
I must admit I was extremely jealous
on reading this news as I had to endure
Pearson Vue’s strict, almost military
conditions in some cases. I was feeling
50/50 on the outcome of my case study
result, so the prospect of a home exam
was like a dream.
I hope that students sitting exams at
home are able to utilise the advantage of
being in familiar surroundings, avoiding
the stress-free travel to the exam
centres, and not sitting in a booth next
to a persistent cougher. This will help
them pass and relieve nerves.
I have noticed an increase in negative
responses from students in recent PQ
editions who seemed at their wits end
with CIMA, and the lack of progress is
down to meaningless exam feedback
and poor communication with the body.
While personally I had to conquer my
own CIMA demon’s, namely the OCS
and F3, I can say that I never relied on
exam feedback from CIMA. I tried to
use advice from my training providers
on mock exams to its greatest effect, as
they are also qualified accountants and
specialise in exam techniques and exam
pitfalls.
I urge all students really struggling to
use their tutors as effectively as possible,
even when all avenues seem exhausted,
because they too will have been sat in
your position, thinking the impossible.
As in most things in life, two pairs of
eyes are better than one.
Students can begin to feel that the
qualification is a huge burden in their
life, a problem that’s getting in the way,
like a ball and chain around their ankle.
Try to see the positive aspect, that you
have a fantastic opportunity to qualify
in a highly regarded field. True, your
friends are out having fun, while you
study, but remember there will be other
sunny days to come.
I hope all my fellow calculator-
wielding CIMA warriors will soldier on
through the tough times and come out
at the other end better off. There is light
at the end of that long gloomy tunnel
and, if I can pass I believe you all can.
Self belief is the key!
PQ Magazine June 2020

The magnificent seven
Mike Kirkham explains how you can best prepare for and pass your AAT Level 3 Synoptic Assessment
O
ne of the best things about being an
AAT trainer is you get to see first-hand
where people are struggling and can
provide help, tips and solutions instantly, in
a virtual or classroom setting. I love helping
students understand concepts they were
previously finding difficult.
Something I’ve noticed, time and time again,
is that students struggle with preparing for, and
passing, their AAT Level 3 Synoptic Assessment.
To help you understand what’s required to pass
first time (and prepare you to take, and pass
your Synoptic Assessment), I have outlined
seven tips to help you get through this section of
the course:
Tip No. 1 – Ensure you have gone through the
course materials in full and understand the
principles, topics and techniques.
Tip No. 2 – Practise as many mock exams as
you can. This will help familiarise you with layout
and exam question style, which is especially
helpful when reporting OAR and inventory
calculations.
Tip No. 3 – Make sure you understand, and are
comfortable with Goal Seek, VLOOKUP, Absolute
Reference and can use pivot charts and tables.
You will also need to familiarise yourself with
PQ Magazine June 2020
the steps required to make an Appropriation
Account.
Tip No. 4 – You need to ensure you’re confident
with calculations for margin of safety and break-
even. For the Synoptic Assessment you’re likely
to receive this data in the form of charts, or even
just part of the information. If you have prepared
and understand the formulas, you’ll be fine with
this section.
Tip No. 5 – Make sure you can comfortably
write about limited companies (such as the
definition, pros and cons, and the good points
and bad points about them).
Tip No. 6 – Ensure you’re aware of the format
of the AAT Advanced Diploma in Accounting
Synoptic Assessment (AVSY). This assessment is
split into two parts:
• Part 1: the time allowance is 75 minutes,
during which you’re required to complete
three equally marked tasks of 15 marks
each. Each task should take approximately
25 minutes.
• Part 2: the time allowance is 90 minutes, in
which you should complete two tasks worth
55 marks. Task 2.1 is worth 25 marks in this
section, suggesting that you should allow
approximately 40 minutes for your answer.
AAT exams PQ
Task 2.2 is worth 30 marks, which gives you
around 49 minutes to complete.
Tip No. 7 – Finally, take the time to understand
what you will be asked in each section, in order
to be better prepared to answer questions
on any of the concepts you may face in the
assessment.
As an example, for Task 1.1 the
recommended reading is:
a. Fundamental principles, safeguards and
threats
b. Principles versus threats in professional
ethics
c. Conflict of interest
If you have completed the recommended
reading, you will be prepared to answer the
questions surrounding that topic.
I wish everyone preparing to take their AAT
Exams and Assessments good luck. If you have
put in the time and effort, you will have success.
If you have not yet started your qualification
for AAT Level 3 or 4, or you would like to
embark on the CIMA route, e-Careers offers
a range of courses for both AAT and CIMA
qualifications. Explore our full accounting course
range today.
• Mike Kirkham is an AAT trainer at e-Careers
21
PQ home learning
Take the
bull by
the horns
Paul Merison has 10 top tips to help you study more effectively online
T
he coronavirus outbreak has resulted
in face-to-face campus education
being banned in many countries for the
foreseeable future. If you want to study right
now, it is going to be online.
I have been involved in providing online learning
to students worldwide for 12 years. In addition, all
of our UK campus students have had additional
free access to our online classes for many years.
As a result, our college has experienced both the
positives and negatives of online education and we
have learned from the process.
Here’s my advice to students.
1. It can be too convenient
Many students like online because they can
study on their own anonymously, whenever they
like, wherever they like. Lots of flexibility and
no embarrassment if you say or do something
wrong as nobody knows who you are. Nice.
However, in a classroom you get to hear what
others are thinking, discuss your concerns with
fellow students and as a result you have a better
feel for how you are progressing.
22
Learning is not meant to be a comfortable
process. The more comfortable you feel, the less
you are learning. Anonymity might feel good, but
it is not helping you.
2. You need to be disciplined
Going to a campus class, same time every
week, forces you into regular organised learning.
Online is different. Whatever structure your
online provider gives you, it is a lot easier not to
do it and to fall behind and then defer or drop
out completely.
Set yourself some personal deadlines on top
of whatever the tuition provider sets.
3. It can be dull
What would you rather do – watch football on
tv, or go to the actual game? Watching anytime
anywhere is certainly convenient. But choose
a provider who has thought about keeping you
engaged, and who is not simply lecturing at you.
4. Talk to your tutor and other students
Online, nobody knows who you are, your
problems, your worries. Engage with your tutor,
so they can understand you and what is best to
make your studies successful. When your tutor
asks or emails, reply, and aim to get some back
and forth going. Use the student discussion
forum – even if only one or two others do, the
opportunity to test your understanding and
approach with peers is invaluable.
Learn by discussing.
5. Be active not passive
Many students now expect information to be
delivered to them via their Twitter feed or similar.
Your provider will have an online platform loaded
with useful content. So does the professional
body whose exams you are sitting.
Go explore, do not wait for it to be delivered
into your lap.
6. Demand more from your provider
Many tuition providers seem to have just taken
classroom lectures and added a camera. Many
have taken the tutor’s face (and therefore
enthusiasm) off the screen entirely, and what
you are left with is a slow painful death by
Powerpoint.
Use a provider who adds face-to-face
mentoring sessions, and whose tutors are on
screen and asking students, not just telling
students.
7. Choose the best provider,
not the funkiest website
To learn, you need good tutors who help you to
construct your own understanding. The online
technology is a support for the tutors, not the
other way around.
Poor quality tuition does not become fabulous
by putting it online.
8. Go for live and interactive,
not just recordings
Recorded classes put online will no doubt be
cheap. But then so is a second-hand textbook
on eBay.
Learning is an active process. Your brain
needs to be challenged and you should be
asking questions and getting immediate
answers, so you can ask more questions.
Recordings, like study manuals, are meant
to be a back-up to studying, not the primary
source.
9. Don’t just dismiss online learning
as ‘not for me’
Many theorists believed that each person has a
preferred learning method that works best for
them. This has been totally disproved in recent
years. You might think you prefer classroom
over online, or pictures and diagrams over
words, but all the research shows that everyone
learns best using a variety of all approaches.
Don’t miss out.
10. Use the current situation to
explore your options
All of us are having to rethink how we do things
under the current restrictions. If you have never
looked at what providers are offering online, now
is the perfect opportunity.
Your learning experience will be changed
forever.
• Paul Merison is Director of ACCA courses at
LSBF
PQ Magazine June 2020
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PQ ACCA exams
Dynamic duos
When it comes to ACCA exam combinations, Grace Hodgetts
explains how you can choose the subjects that sit best together
A
CCA allow you to sit up to four subjects
in one exam sitting and a maximum
of eight per year. Squeezing in eight
exams a year is optimistic for many students, but
the impact of coronavirus on our social lives or
ability to go on holiday may mean you are now
considering whether you have time to study for
an extra exam.
If you do plan to sit two subjects together at
the next available exam sitting, which two should
you pick?
ACCA have always prided themselves on the
flexibility they offer to students, so there are no
rules as to the order you have to complete the
exams in each level. However, there are some
rules about moving through the levels and some
sensible approaches to consider to ensure you
have the best chances of exam success.
ACCA guidance
If you are sitting an exam from the Applied Skills
level, you can only combine this with a Strategic
Professional exam if the Applied Skills exam
is your last subject in this level. Otherwise you
will need to choose another Applied Skills level
subject to study instead. This is referred to as
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fake, and all the news is real!
24
‘Modular Order’ rules on the ACCAglobal website.
ACCA recommend you complete the Ethics
and Professional Skills Module before attempting
Strategic Professional level to give you the best
chances of exam success, but you can do this at
any time, so it may be worth doing this along with
your current studies. This is an online module
that you access via your MyACCA portal and
should take approximately 20 hours.
Connections between subjects
In addition to the ACCA advice, there are some
important connections between subjects that you
should consider when choosing a second exam
to sit:
1. If you are sitting Taxation (TX) maybe pick up
Financial Reporting (FR), especially if you are
in a tax role at work as you will see financial
statements during your day-to-day tasks, so
this exam should help your understanding.
2. You should have a good understanding of the
financial reporting rules before you attempt
to learn how to audit a set of accounts. So if
you’re studying Financial Reporting (FR), why
not pick up Audit and Assurance (AA) at the
same time?
3. Similarly, you could sit Strategic Business
Reporting (SBR) at the same time as
Advanced Audit and Assurance (AAA).
4. There is some overlap between the skills
and knowledge you will gain in Advanced
Financial management (AFM) and Advanced
Performance Management (APM) with
Strategic Business Leader (SBL), so if you
have chosen one of these as your option
subjects you could pick up SBL too (subject
to the next point).
One final important point to remember: if you
are a Level 7 apprentice, please be aware it is
compulsory to do Strategic Business Leader
(SBL) as your last exam, as this is your End Point
Assessment for your apprenticeship.
Overall, most combinations in each level are
fine, but there are a couple of combinations it
would be best to avoid.
With Performance Management (PM) and
Financial Management (FM), some of the
syllabus areas in FM build on some quite
technical PM knowledge, so students often find
studying these together more difficult.
For a similar reason you should avoid sitting
any Strategic Professional subject at the same
time as its corresponding Applied Skills subject.
So avoid sitting FM and AFM, PM and APM,
FR and SBR, TX and Advanced Taxation (ATX)
or, finally, AA and AAA at the same time. If you
intend to sit these exams in the same sitting they
are scheduled on the same day so you wouldn’t
be able to do both exams anyway.
• Grace Hodgetts, Kaplan Financial’s ACCA
product manager
PQ Magazine June 2020
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PQ technology

Your tech come 2030

Deloitte gets out its crystal ball and predicts 6G, connected cameras enabling a degree of 3D manipulation of the
image.”
and 8K TV sets are all coming your way…

D
eloitte has announced its predictions
for the media and telecoms sector in
2030. It has said that technology will
be a ferocious, disruptive whirlwind over the
next 10 years. It will also be relied on to grow
economies, raise living standards and may even
remedy historical challenges.
So, what are the main predictions for 2030?
Here they are:
One in 10 households will have at least 50
connected cameras, while smartphones will
have six cameras
Deloitte predicts that over the next decade
UK households will install multiple connected
cameras in homes and vehicles, and will
purchase an array of appliances and
devices with integrated cameras. One
in 10 households are expected to have
at least 50 connected cameras by
2030.
Currently, usage of dedicated
connected cameras in the
home is low. According to
Deloitte’s Mobile Consumer
Survey, just 7% of UK
adults own a smart
home security camera
or connected video
doorbell, and 2%
own a pet camera
or monitoring
system.
Over the next
decade, better
networks, cheaper
and better cameras,
easier installation and the growing use of
neighbourhood social media communities will
drive the deployment of security and monitoring
cameras.
Meanwhile, Deloitte predicts that by 2030
smartphones will have an average of six cameras,
with depth sensors enabling 3D images.
Paul Lee, global head of technology, media
and telecommunications research at Deloitte,
said: “The 2030s will likely be the decade of
machine vision. Cameras will be used in our
homes for monitoring, as well as in our home
appliances to supervise their performance.
Digital eyes in our ovens will perfectly time
our roasts, and lenses on vacuum cleaners
will ensure a thorough cleaning of the
carpets. Televisions may even come with
in-built cameras, to monitor viewers’
temperaments, measure their
reactions to the content
they are watching and
improve their advertising
experiences.
“An average of
six cameras on every
smartphone will also perfect
the ‘super-selfie’ with every
pore, blemish and
beauty spot caught
and corrected
with precision.
By 2030, it is
likely that one
or more of the
cameras may
be a depth
sensor,
UK consumers to set up 200 million accounts
for video-on-demand services by 2030
Deloitte predicts that by 2030, the average
UK household will use 10 video-on-demand
(VOD) services. Five per cent of households will
have registered for 20 video-on-demand, video
streaming or broadcaster catch-up services, with
85% having access to at least one subscription-
based service. Two-hundred million logins will
be set up in the UK to access these services in
2030, more than double the number predicted
for 2020 (about 95 million).
Growth will be driven by an increased supply
in major VOD services, the spread in demand
among all household members and the rise of
advertising video-on-demand (AVOD) services.
In 2019, 55% of UK adults said they had
access to at least one paid-for video-on-demand
service, up from 48% in 2018, according to
Deloitte data. Forty-five per cent of adults had
access to more than one paid-for subscription
service.
Lee continued: “Over the past decade, video-
on-demand platforms and broadcast catch-up
services became mainstream.
“Currently, only a handful of platforms offer a
blend of compelling content and reliable delivery
at a cost. This makes it easy for households to
pick and choose which one or two subscriptions
to pay for.
“Over the next decade, due to the launches of
new platforms, we expect to see a surge in the
number of paid-for video on demand services
offering must-watch content. This should elicit a
sharp rise in new sign-ups.
“There is no specific limit on the number
of services households will sign up to – the

26 PQ Magazine June 2020

 technology PQ

constraint will be money, not time.”

The UK will be reaching the limits of 5G,

readying for 6G and contemplating 7G
By 2030, 5G will have proven to be
transformative to business, but its limits may
have been reached and plans for the launch of
6G will be in development.
Deloitte predicts that more than 1,000
companies worldwide will be evaluating or have
deployed 5G in industrial environments such as
factories, ports and logistics centres by the end
of 2020.
Lee said: “By 2030, 5G will have benefited
consumers indirectly, in the form of better
products and services. More flexible factories
enabled by 5G will shorten waiting times for
customised goods. Infrastructure, from railway
tracks to suspension bridges to pipelines,
should also be better maintained, thanks to
5G transmitting 8K video to machine vision
capabilities that are trained to identify fissures hours of content per day on a television set. Lee added: “A decade from now people will
and cracks early on. Viewers will still prefer larger TV sets and continue to seek-out high production value
“Millions of homes may be connected via more households will be able to afford these content, and will still want to watch this on
5G, as well as fibre, in 2030 and 6G will have as TV set vendors will offer screens at a lower large screens, up to 100 inches in size.
been designed to address the next decade’s price in exchange for the authorisation to share “Living rooms will be designed to
connectivity needs.” viewers’ watching habits. Deloitte predicts that accommodate ever larger screens, and more
by 2025 over a third of TVs will be sold at a households will be able to afford larger TV
More than one in three TVs will be sold at a low gross margin in exchange for monetisation sets as manufacturers will offer a cheaper
lower price, in exchange for monitoring the happening post-sale. price for the authorisation to share people’s
owner’s viewing habits This shift in the business model will help stoke viewing habits with advertisers. Many will have
Deloitte predicts that, in 2030, the average demand for 8K TV sets, which will be the default accepted the trade-off for their data in order to
viewer will continue to watch an average of four resolution for TV sets costing over £500 by 2030. get a better quality screen.”

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PQ Magazine June 2020 27

PQ CIMA exams initiative
Home sweet home
You can now complete your CIMA journey from the comfort of your own
home, says CIMA’s Stephen Flatman
W
e are experiencing
unprecedented times. As
the coronavirus outbreak
continues to disrupt the world,
governments, businesses and individuals
alike are feeling its impact and need to
find a – albeit temporary – ‘new normal’.
There’s still a lot of uncertainty around
how it will affect the world in the long
term, but it is probably a safe bet to say
that we have a rocky road ahead in the
short term.
The pandemic has, rightly so, led
many test centres to close to ensure
everyone’s safety and wellbeing in line
with official guidance. However, this
also means that many of our students
around the world have had their studies
interrupted and were prevented from
Exam dates
CIMA Professional Qualification – Case Study exams
Exam window remains the same as initially scheduled
UK Apprenticeships L4 and L7 EPA1
New exam date for L4 EPA 1
Certificate in Business Accounting and CIMA Professional
Qualification – Objective Test exams
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28
sitting their Objective Tests and Case
Study exams as planned.
As a global organisation with members
and students in 179 countries, we are
fully committed to supporting your
professional development and our priority
is to continue assisting our community
through these tough times.
To this end, we focused all our efforts
on working with our testing partner
to provide a suitable online testing
solution for our students to allow them
to resume their professional journey and
become Chartered Global Management
Accountant (CGMA) designation holders.
As a result, starting in May 2020,
students are able to take the Objective
Tests and Case Study exams from their
home the first time and with minimal
Operational Case Study: 13, 14 and 15 May 2020
Management Case Study: 20, 21 and 22 May 2020
Strategic Case Study: 27, 28 and 29 May 2020
L4 EPA 1: 2 June 2020
L7 EPA 1: 27, 28 and 29 May 2020
Remote testing began on 4 May 2020
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$&&$$7;$$$ ZZZIPHOHDUQRQOLQHFRPST
disruption amid the coronavirus outbreak.
You will be able to book your exam the
usual way through My CIMA. This applies
to students for the CIMA Certificate in
Business Accounting, CIMA Professional
Qualifications and UK Apprenticeships.
If you have an existing booking for a
test-centre based exam you will need to
cancel this, get a full refund and then
schedule your new exam.
Prior to scheduling your exam, you will
need to test your internet connection and
run a system test on the IT equipment
you plan to take your exams on. The
exam format will stay the same, but the
presentation is very slightly different.
Once you have scheduled your exams,
take a look at one of the free practice
tests on our testing partner’s website and
familiarise yourself with their look and
feel. We will continue to maintain the high
levels of security, reliability and fairness of
our exams by using an online invigilator.
We understand that your study plan
might have gone slightly off track as
you juggle professional and personal
priorities. Make sure you make the
most of the CIMA Study Planner, which
allows you to create a personalised study
plan that fits around your other
commitments, keep study notes and
track your progress. Now more than
ever it is essential to plan, organise and
prioritise personal, study and professional
activities to make everything more
manageable both at a practical and
emotional level.
We believe that remote testing offers a
viable alternative to sitting exams in a test
centre for the majority of our students
under the current circumstances, but
it is important that you to ensure that
the remote testing solution works for
you from both a practical and personal
standpoint.
I can’t stress enough that as we all
navigate these difficult times, we are
here to support you to help keep your
career moving, and help you transform
uncertainty into opportunity.
For more information, please visit
https://www.cimaglobal.com/Studying/
Student-Coronavirus-COVID-19-exam-
FAQs/
• Stephen Flatman, Vice President,
Examinations, Management Accounting,
The Association of International
Certified Professional Accountants
PQ Magazine June 2020
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PQ sponsored content
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PQ Magazine June 2020

Play it like Kaka
Martin Jones explains the challenges of the Strategic Business
Reporting exam, outlining a technique that will improve your
chances of passing
I
n a football world before Messi and
Ronaldo there was the elegant Kaka. Let’s
see what he can teach us about SBR.
The March 2020 SBR exam was the usual
mix of the impossible and the accessible. There
was enough technical content to keep a team of
expert auditors busy for three weeks, but there
was enough accessible content for a well-drilled
student to turn out a pass within three hours…
provided that student knew the tricks. So, let
us look at the tricks in the context of the first
requirement in the exam which was on foreign
currency translation. Here is the question with
the background followed by the requirement:
Background
Hummings Co is the parent company of a
multinational listed group of companies.
Hummings Co uses the dollar ($) as its
functional currency. Hummings Co acquired
80% of the equity shares of Crotchet Co on 1
January 20X4 and 100% of Quaver Co on the
same date. The group’s current financial year
end is 31 December 20X4.
Crotchet Co: functional currency
The head office of Crotchet Co is located in a
country that uses the dinar as its main currency.
However, its staff are located in a variety of other
locations. Consequently, half of their employees
are paid in dinars and the other half are paid in
the currency of grommits. Crotchet Co has a high
degree of autonomy and is not reliant on finance
from Hummings Co, nor do sales to Hummings Co
make up a significant proportion of their income.
All of its sales and purchases are invoiced in
grommits and therefore Crotchet Co raises most of
its finance in grommits. Cash receipts are retained
PQ Magazine June 2020
in both grommits and dinars. Crotchet Co does
not own a dollar ($) bank account. Crotchet Co is
required by law to pay tax on its profits in dinars.
Required:
Draft an explanatory note to the directors of
Hummings Co, addressing the following:
(1)(a) how the functional currency of
Crotchet Co should be determined.
(5 marks)
Here is a suggested answer:
Functional currency
The functional currency is the currency of the
primary economic environment. This means
that the functional currency is the currency that
dominates the functions.
Determination
So, the functional currency is determined by
looking at the functions and the currencies
of those functions. This means looking at the
currencies the entity uses with its customers and
suppliers.
Dollars
Subsidiary functions are sometimes dominated
by their parent. This does not apply to Crochet.
Crochet has independence from its parent and
does not even have a dollar bank account. The
functional currency is not the dollar.
Dinar
Most entities function in the currency of their head
office. But this does not apply to Crochet. Half the
salaries are in dinars and some receipts are held
in dinar. But everything else happens in grommits.
The functional currency is not the dinar.
ACCA SBR exam PQ
Grommits
The sales and purchases and finance are in
grommits. Grommits dominate the functions. The
grommit is the functional currency of Crochet.
(5 marks for 5 points)
If you read the question and then the answer
like reading a story then that probably looked
fairly easy. But don’t be fooled. Actually,
delivering an answer like the above in the exam
within the exam time is a real challenge. Let’s
look at the two principle tricks at play:
Points
Probably the most conspicuous feature of the
answer is the layout. The examiner refers to
these packages of heading followed by sentence
followed by sentence as ‘points’. It is a style he
has recommended for years, but now his advice
is explicitly given in the articles under the button
‘Exam Technique’ on the ACCA SBR webpage.
The idea is that for a five marker like this you
slap down five points; thus meaning that for SBR
your role for the three hours of the exam is to be
a mechanical point slapper.
KAKA
Less obvious in the answer above is the mix of
knowledge and application. All SBR answers
must include relevant knowledge and that
knowledge must then be applied to the scenario.
This applies to all the requirements in the whole
exam. This requirement is repeated fervently
in the ‘Exam Technique’ articles referred to
above, but the message is further reinforced in
examiner’s comments. Often answers following
this advice will result in a metronomic rhythm
of knowledge then application then knowledge
then application. This is why I refer to this
examination technique as ‘KAKA’. But there is
no need to flip backward and forward between
knowledge and application. Whacking down the
knowledge in full and then applying that to the
scenario also often works well and that is the
rhythm used above. Can you see it now? The
first two points are relevant knowledge and the
subsequent three points apply that knowledge.
So stick to the point and play it like Kaka.
• Martin Jones is a tutor at LSBF
31
PQ your career
The perfect
remote
interview
Remote interview coming up? Karen Young offers her top tips on
how to best prepare for it
R
emote interviews are now part and
parcel of many hiring processes now
that so many of the UK workforce is
working from home. It’s easy to see a phone
interview as more casual because it isn’t
face-to-face, or to be anxious about a video
interview because of the perceived lack of real
interpersonal interaction. But with the right
preparation you’ll be able to nail your remote
interview and make a positive first impression on
a recruiter or hiring manager.
Gearing up before the interview
Prepare as you would for a face-to-face
interview: Skipping out obvious steps like
32
packing a bag and planning out your journey,
you should take the time to prepare for a remote
interview just as you would a face-to-face one. At
a minimum this should include:
• Setting aside plenty of time in your diary for
the interview – I’d recommend clearing in an
hour either side of the anticipated interview
time.
• Researching your potential employer and the
interviewer.
• Reading the job and person specification
thoroughly and identify what you can bring to
the role in terms of skills and experience.
• Practicing answering common interview
questions, particularly competency-based
scenarios.
• Preparing questions to ask the interviewer at
the end.
Doing this preparation will take a remote
interview from a potentially awkward chat to an
opportunity for you to impress, demonstrate your
skills and professionalism and move on to the
next stage of the hiring process or get offered
the job!
Perfect your verbal communication skills:
Your interviewer may find it harder to read you
in a remote interview, compared to a face-to-
face interview where they have the benefit of
interpreting your body language. This means
that any unprofessional habits are likely to stand
out. Be aware of things like speaking too quickly,
mumbling, covering your mouth, looking around
the room or using filler words such as “um”,
“like” and so forth. I’d recommend running a
practice interview with a friend and recording
yourself to give you the chance to practice
coming across confidently though your voice
and facial expressions. You also need to be
mindful of where your camera is on the device
you are using. You may think you are making
eye contact if you are looking at the person, but
you also need to look at your camera, so try and
practice with someone on this, too.
What to do on the day
The power of a positive mind-set: Take a few
moments to gather your thoughts and get in the
right frame of mind. Try to calm your nerves and
give yourself a pep talk if it helps, reminding
yourself of all of what you have achieved and
all you can bring to the role. I would also
recommend visualising positive outcomes, such
PQ Magazine June 2020

as being offered the job. This will remind you of
your end goal, motivating you to give your best
performance during the phone or video call.
Put everything in place: Check that you have
a signal, full battery on your device, a glass
of water and something to write with. Have
the hiring manager and recruiter’s name and
number saved on your device as well as on a
notepad and that you are clear on who is calling
who, and at what time. Be ready for the call
15 minutes before, ensuring you are in a quiet
space and can talk. If you are doing a video
interview, remove anything distracting from
your background or even choose a pre-made
background which you can do in some tech,
and dress formally as you would for a physical
interview, unless any other advice is provided.
During the interview itself
Answer the call in a professional manner:
Whether you’re being called over a computer or
phone, pick up within two to three rings, and
answer in a professional manner, for instance,
“Hello, Alex speaking”. Maintain this professional
tone throughout the interview.
Have all the information you’ll need to hand:
Keep your CV, bullet points of your key skills and
achievements, plus any headline information
about the company in front of you in case you
get stuck. Remember not to read these notes
word for word and be careful not to shuffle the
paper too loudly and give the game away! It is,
however, a definite benefit to remote interviews
PQ Magazine June 2020
that you can more easily refer to a couple of
succinct notes in front of you.
Keep your body language natural: Even if
you’re interviewing over the phone, getting your
body language right can make all the difference
to how you sound and come across. Sitting up
straight or standing when answering questions
will improve how confident you come across
both visibly and through your voice, as will
smiling and gesticulating.
Speak at a steady and even pace: It is harder
to appreciate just how fast we speak over a call,
especially when we are nervous. If yours is a
phone interview, sometimes walking around can
help you to regulate your speaking patterns and
feel more at ease – obviously this isn’t possible
over video interview, so try simply pausing
and taking a deep breath. As in a face-to-face
interview, having a glass of water handy is a
good idea, not just in case you need it, but it can
also make a very natural pause to an interview
and buy you valuable seconds of thinking time
on your answer, without a long unnatural pause
or silence in the discussion.
Remember your manners: It goes without
saying that you should avoid anything that could
be perceived as bad manners, such as eating or
chewing gum. You can be sure it will be noticed
by your interviewer and put them off. You also
shouldn’t do anything else that could potentially
distract the interviewer (and yourself), such as
scrolling through social media on your phone or
clicking around on your computer.
your career PQ
Be aware of not interrupting as well, which
unfortunately is more likely to happen during a
remote interview due to you not being able to
read the interviewer’s visual cues as accurately,
so you can judge whether they have finished
talking. Avoid interrupting the interviewer by
pausing for a second once you think they have
finished speaking, before you start responding.
You could also take a sip of water before you
answer to allow some space in-between talking.
Conclude as you would a face-to-face
interview: Remember to thank the interviewer for
their time, and state that you enjoyed learning
more about this opportunity. Reiterate your
interest in the role and why you feel you are
suited and clarify the next steps if the hiring
manager hasn’t already done so.
Again, just because this isn’t a face-to-face
interview, doesn’t mean you can’t leave a strong
last impression with the interviewer.
Wrapping things up
After the interview, if you are still interested in
taking this opportunity further, I would advise
that you follow up just as you would a face-to-
face interview. Phone your recruiter straight
after the interview to give your feedback and
send a thank you note to the interviewer via your
recruiter, affirming again just how interested you
are in this opportunity. Remember to keep your
phone close by in the coming days.
• Karen Young, Director of Hays Accountancy
& Finance
33
PQ insolvency qualifications
Time to restructure your
qualification portfolio?
PQ magazine takes a look at how you can become an insolvency practitioner
U
nfortunately, one thing is certain in these
uncertain times, there will be a growing
demand for skilled people to help
businesses who need saving.
As in many areas you need a special
qualification to act as a liquidator, administrator,
voluntary arrangement supervisor, or bankruptcy
trustee. Only an insolvency practitioner can
undertake these roles, and to become a licensed
insolvency practitioner you must sit and pass
the Joint Insolvency Examination Board (JIEB)
exams (https://www.jieb.co.uk).
These exams are held just once a year,
normally in November, and there are two papers:
‘Corporate Insolvency’ and ‘Personal Insolvency’.
At the moment, and given the fact that the exams
are not until November, the JIEB is proceeding on
a ‘business as usual’ basis, and is hoping “that
these challenging times will have settled down
by then so the exams can proceed as normal”.
You don’t have to pass these exams at the same
sitting either, and you only need to pass one exam
to obtain a partial licence. Each paper is three
hours long with half-an-hour allowed for reading
time. All JIEB exams are computer-based, so
getting to know the software before your exam is
essential. There are webinars and practice exam
software to help you here.
The JIEB stresses that its exams are a
practical test of the knowledge and skills that
insolvency practitioners use in their working
lives. You can check out what has been recently
been tested by looking at the past papers. The
examiner’s report also gives you an idea of the
sort of thing they expect to see in answers.
The main tutorial organisations for JIEB
are BPP (https://www.bpp.com/courses/
insolvency) and Neil Taylor Insolvency (https://
34
www.ntinsolvency,com). Looking at the costs
of studying you can pay anything from £395
(for the manual) to £7,000 for both papers.
Insolvency at the top level doesn’t come cheap.
And, once you have passed the JIEB exams
you will need to be licensed by one of the four
recognised professional bodies (RPB), or by the
Department of the Economy in Northern Ireland.
There are three types of insolvency licence:
a full licence, and partial licences in respect
of either companies or individuals. The RPBs
also offer a non-appointment taking licence.
That means you can work as an insolvency
practitioner, but you would not be able to accept
appointments.
The RPBs are CAI, ICAEW, ICAS and the
Insolvency Practitioners Association (IPA). You
do not have to be a member of a particular body
to apply for an insolvency licence. The ACCA
had been an RPB until 31 December 2019. It
decided to relinquish its status and has now
entered a collaboration agreement with the IPA.
The application processes vary between the
RPBs, but typically JIEB says you will need to:
• Acquire a minimum number of hours of
insolvency experience.
• Demonstrate that you are a fit and proper
person.
• Comply with the RPBs regulations, the law,
the SIPs (Statements of Insolvency Practice)
and the Insolvency Code of Ethics.
• Be monitored by the RPB.
• Pay a fee, including the levies payable to the
Insolvency Service, the Department of the
Economy and the Complaints Gateway.
You will also need to have a bond and
professional indemnity insurance. And, if you
are a member of an accountancy body, you will
probably have to have a practising certificate
as well.
There may, however, be some better first-
steps you might want to take, to see if insolvency
is for you. There are the Certificate of Proficiency
in Corporate Insolvency (CPCI), the Certificate of
Proficiency in Personal Insolvency (CPPI), and
last but not least the Certificate of Proficiency
in Insolvency (CPI). These are all offered by
the Insolvency Practitioners Association, with
exams held in June and December. To sit the
CPI, for example, you will need to become an
IPA student member. The IPA explains this is an
established intermediate exam for those wanting
to specialise, and ideal preparation for JIE. CPI
can also lead to membership of the IPA and to
entitlement to use its designatory letters MIPA.
The registration and subscription fees come to
just over £350 and a distance learning course
around £700.
The ICAEW also offer a Certificate in
Insolvency, so you might want to opt for this
one. What about the costs and time here?
Well, the ICAEW say it will take less than 12
months to obtain the certificate. There is an
initial registration fee of £140 plus VAT (no
fee for ICAEW members and students) and
an assessment fee of £300 plus VAT. The
last online learning classroom live sessions
with BPP kicked off on 17 April with the
introductory module ‘Legal & Regulatory
Framework for Insolvency’. The 30 hours
of lectures cost £1,865 plus VAT. You also
receive free membership to the Restructuring
& Insolvency Community while you are
studying. Check out https://www.icaew.com/
learning-and-development/academy/specialist-
qualifications/certificate-in-insolvency
PQ Magazine June 2020
 of Excellence
where quality trainings & practical work placements take place

Carlton Cottages,
AAT 12 New Cross Road,
ACCA ACA London, SE14 5BE
0207 252 9331
FREE Apprenticeships: admin@thetrainingplace.org
@Training_Place
07496141960
PQ AAA exam
Know your
bread and
butter
Paul Merison deconstructs March’s AAA exam, explaining where the
points are to be picked up – and how you can achieve this
F
or students who will soon sit Advanced
Audit and Assurance in their ACCA exam
journey, here are my learning points
from the AAA March 2020 paper.
This was a very typical paper:
• 24 marks of audit risk.
• 6 marks audit procedures (tests).
• 8 marks for criticising an audit report.
• 6 marks of pre-acceptance issues.
• 9 more marks for procedures (tests).
• 10 marks on ethical and professional issues.
• 10 marks for commenting on the audit
strategy of another audit firm, plus ethics.
That is 73 marks of what should be bread
and butter to a well-prepared student, and if
you are not scoring at least 45 of those marks
there is something very wrong with your exam
preparation, or understanding, or both.
Add on the easy professional marks, and you
should have passed with 23 marks still left to
have a go at.
Those 23 other marks
In Q1, joint audit came up for the first time in
years. You had to discuss it in the context of the
story, but to be frank stating a few points from
your memory would get a pass on this easily.
Of course, if you had no idea what a joint audit
is, you would probably kiss goodbye to all six
marks.
In Q2, a requirement that always seems to
confuse students is – implications for completing
the audit. If I said it is raining, what are the
implications for you finishing your walk in the
park, you would say “I will get wet”.
All you have to say in the exam is what will
happen on your audit as a result of a fraud
36
being discovered, which is usually going to be:
• Assessing if more of this fraud could have
happened (in which case, tests needed).
• Reporting it to those charged with
governance, as with anything important.
• Assessing how material it is to the financial
statements.
• Reducing reliance on any evidence provided
by any of the suspects.
• Considering the need to report to an external
authority.
The above is common sense to those who
understand auditing.
But there is a tougher requirement, needing
thought. For two accounting issues, how good
is the evidence collected so far, and what
additional tests are needed? (There are no marks
for giving tests that the story says have already
been done, or which do not address the issue
in hand.)
This is a very important exam question for
assessing how prepared you are for AAA, as
the answer cannot be memorised in advance.
Weaker students cannot hide.
Q2 has 17 tough marks, compared with the
rest of the paper.
However, the 23 marks analysed above
are not the key to passing AAA. It is the 73
marks listed at the start of this article, plus
the professional marks, which are predictable
requirements that come up over and over
again, where a solid technique from repeated
practice (and tutor feedback on your answers)
gets you a pass before you even begin the more
challenging bits.
Be good at the core questions, which always
come up, and you pass.
Some achievable marks in Q1
• Three professional marks for Briefing Notes
format, a short introduction, headings and
paragraphs.
• Two marks for spotting RPT (from
requirement 1b) under-disclosure is a risk,
as CEO might hide it.
• Four marks for easy tests on RPT (sales
invoice, board approval in board minute,
read proposed disclosure note, ask CEO to
confirm intention to pay).
• Two marks each for spotting:
– component auditor increases detection
risk and explaining why.
– risk of legal case not being accounted
for properly (provision, contingency) and
why.
– risk goodwill overstated as no impairment
being recognised.
– incentive scheme leads to manipulation.
– risk the post y/e acquisition might not be
disclosed properly (EARP).
– revenue being recognised early, as the
company sells a subscription service so
will bill in advance.
• Four marks for materiality calcs on any four
of the above risks.
Note that more than two marks are available
on most of these risks, but I am showing you
what is achievable for you, not the perfect
answer.
This is 25 marks and a pass for Q1 – I have
not even looked at 16 marks of the question
here – and those 25 marks have not involved
doing anything at all difficult. If you are not
scoring well on these core question types, you
are not going to pass AAA, so focus on the
bread and butter!
• Paul Merison is Director of ACCA courses at
LSBF
PQ Magazine June 2020
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PQ variance analysis

Time to test
9. Calculate the direct material cost variance.
a. £36240 Adverse
b. £36240 Favourable
c. £23040 Adverse
d. £23040 Adverse

yourself
10. Calculate the direct material usage
variance.
a. £19200 Adverse
b. £19200 Favourable
c. £32400 Adverse
d. £32400 Favourable

11. Calculate the direct material price

variance.
a. £3300 Adverse
Philip Dunn has set you b. £3840 Adverse
some multiple choice c. £3840 Favourable
d. £3300 Favourable
questions on the much-
examined topic of variance 12. Calculate the fixed overhead variance.
a. £5400 Favourable
analysis. The answers are at b. £5400 Adverse
the foot of the page c. £5200 Favourable
d. £5200 Adverse

H
awsker Feeds Ltd is an SME
based in North Yorkshire. 13. Calculate the fixed overhead expenditure
It produces a single animal variance.
feedstuff that sells at £210 per tonne. a. £2700 Favourable
Its budget and actual activity for January b. £2700 Adverse
X20 showed the following. c. £2500 Adverse
d. £2500 Favourable
Budget Actual
Output (Tonnes) 1500 1600 14. Calculate the fixed overhead volume
Standard labour hours per tonne 0.75 variance.
Actual direct labour hours worked 1250 a. £1800 Favourable
b. £1800 Adverse
Actual cost of direct labour £12750
c. £2700 Favourable
Standard usage of direct material per tonne of output 1.1 tonnes. d. £2700 Adverse
Standard direct material cost per tonne £120.
Actual cost of direct material £234240 15. Calculate the fixed overhead capacity
Actual usage of raw material 1920 tonnes variance.
Budgeted fixed overhead £40500 a. £4500 Favourable
b. £4500 Adverse
Actual fixed overhead £38000
c. £9000 Favourable
Tasks: 5. Calculate the capacity ratio for the month. d. £9000 Adverse
a. 111.1%
1. Determine the standard hours produced in 16. Calculate the fixed overhead efficiency
b. 96%
the month. variance.
c. 104.2%
a. 1250 a. £2700 Favourable
d. 106.7%
b. 1125 b. £1800 Adverse
c. 1200 6. Calculate the direct labour cost variance for c. £1800 Favourable
d. 1162 the month. d. £2700 Adverse
2. Determine the budgeted hours in the a. £510 Favourable
month. b. £750 Adverse • Dr Philip E Dunn is a freelance author and
c. £250 Adverse technical editor for Kaplan and Osborne Books
a. 1200
b. 1500 d. £1250 Adverse
c. 1125 Answers
7. Calculate the direct labour rate variance for
d. 1250
the month.
3. Calculate the efficiency ratio for the month. a. £225 Adverse (16) B (8) D
a. 90% b. £240 Adverse (15) A (7) C
b. 111.1% c. £250 Adverse
c. 104.2% d. £250 Favourable
(14) C (6) B
d. 96%. (13) D (5) A
4. Calculate the activity or production volume 8. Calculate the direct labour efficiency (12) C (4) B
ratio for the month. variance. (11) B (3) D
a. 93.7% a. £750 Favourable
b. 106.7%
(10) A (2) C
b. £750 Adverse
c. 90% c. £1250 Adverse (9) C (1) C
d. 111.1% d. £500 Adverse

38 PQ Magazine June 2020


Routine is everything
So how’s the homeworking
going? Our friends at Mindful
Education have some solid
advice on being productive while
staying sane at the same time
W
hile many have welcomed the
opportunity to work from home
during the coronavirus outbreak,
it has proven a challenge for families with
young (and not-so-young) children who are
also at home as a result of school and college
closures.
The once-distinct line between work and
home has become blurred, with kitchens, spare
rooms and living rooms across the country now
serving
pq jobsas makeshift
ad 193 x offices
74 and classrooms.
16/3/10 08:30
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PQ Magazine June 2020
This can be particularly confusing for younger
children, who are used to having their parents’
full attention when they’re at home.
Here are a few tips to help you stay
productive at work, and keep the kids happy.
Get into a routine
Perhaps the most touted working from home
tip, setting a routine is particularly important
when children are involved.
There is plenty of advice out there about
how to set the perfect routine, but they’re
rarely suitable for everyone, so you may have
to devise your own. Aim for a routine that suits
everyone in your household and try to stick
to it as best you can – though allow enough
flexibility to enable that last minute conference
call with your boss, or your toddler’s refusal to
nap on
1 demand.
Sorted, thanks to
pqjobs.co.uk
home working PQ
Get the kids involved!
While you don’t want them running the next
client pitch, getting your children involved in
your work may help them understand that
you are in work mode. Simple indicators
such as having your work notebooks out, or
even what you’re wearing can help children
recognise that you are not available to play
until you’ve tidied away and changed into
your jeans.
If you’re lucky enough to have your own
office space, you could ask younger children
to help you to make a sign (red/green for
example, or a clock showing the time that
you’ll be finished for the day) for the door
that shows them when you can and can’t be
disturbed. Getting them involved in the sign’s
creation will help them better understand its
meaning and take it more seriously.
Communicate with your colleagues
With much of the country currently working
from home, hopefully your colleagues are
understanding of the challenges that being a
WFH parent can pose. It may be stressful for
you, but chances are, your colleagues won’t
mind at all when your child appears in your
meeting asking for ice cream.
To avoid any conflict, make sure you
communicate any changes to your working
hours, or when you expect to be away from
your desk. Of course, even the best laid
plans can quickly be undone by children, so
try to allow flexibility in your schedule where
you can.
Teamwork
If your partner (or other adult you live with)
is also working from home, make sure
you let them know if there is a period of
time during the day (such as an important
meeting or strict deadline) that you need
to remain undisturbed. Knowing that they
will be on hand to deal with any toddler
meltdowns or home-schooling queries will
alleviate some of the stress. Keep the lines
of communication open, and make sure you
return the favour!”
• Thanks to Mindful Education for this
article
39
PQ AAT spotlight
Football first,
AAT second
Footballers’ careers are often short, so when looking beyond the
game the AAT is an obvious next career choice for some
D
uring the summer of 2019, Leah
Williamson’s profile grew dramatically.
The Arsenal centre-back was part of an
England squad that made it to the semi-finals of
the World Cup, falling agonisingly short against
eventual champions USA, before eventually
finishing fourth after defeat in the third-place
play-off to Sweden.
With Arsenal winning the Women’s Super
League in 2019, and current England manager
Phil Neville saying about Williamson, “you get
some players who are born to captain England.
She’s a leader,” it’s clear that her football career
has taken off.
But, of course, this year is very different to
previous ones, and with no football taking place
Williamson is one of a number of footballers
studying for the AAT accountancy qualifications.
Whether it’s to provide them with an alternative
career should football not work out, give an
40
England Footballer
and AAT studier
Leah Williams
option as to what to do when they retire from the
game, or to work alongside football, it appears
that accountancy is a strong career of choice for
many footballers.
Here’s three others who have taken or
who are in the process of taking accounting
qualifications:
Sam Cosgrove
Sam had an outstanding season in the Scottish
Premiership last season, with his 11 goals in
21 league matches propelling his side to fourth
place. Sam was named player of the month in
December 2018 for his superb contribution to
the team, scoring seven goals in Aberdeen’s
eight league games despite also being on the
receiving end of a red card at Rangers.
On the side however, Sam is combining his
professional career with his love of numbers,
through studying an Advanced Diploma in
Accounting with AAT.
“I started my studies mainly as a back-up
plan, in case my aspirations of being a footballer
should ever fail,” says Sam, who has been
studying for the past year. “Accounting was an
area I was interested in, and it could open up a
wide area of job potential.”
This isn’t the first time Sam, who studies his
accounting courses from home via distance
learning, has shown an aptitude for gaining
skills outside his first love of football. During
his scholarship at Wigan Athletic, Sam studied
for an A-Level in marine biology – a move that
prompted Gregor Rioch, Wigan’s academy
manager, to comment: “Sam was clear that
football as a career can be a short one, and
we were happy to support his planning for the
future, be that in the short-term or at the end of
his career.”
With Cheshire-born Sam banging in the goals
for Aberdeen mid-way through his second year
playing north of the border prior to the Covid-19
outbreak, a short career in football hardly seems
likely barring the obvious threat of serious injury.
However, he recognises that there are greater
benefits from his course than simply gaining
qualifications as a potential back-up career.
“The most rewarding part of my studies
is knowing that I am using my spare time
productively, in order to gain new and important
skills within accountancy,” Sam adds. “It can be
a challenge, after a full day at a physically and
mentally demanding job, to find the time and
motivation to sit down and learn new content.
“But, at the same time, learning allows me to
switch my mind away from the stresses of my
job, therefore allowing me to concentrate even
more when on the training ground.”
Sam is also quick to recognise the
encouragement that The Professional
Footballers’ Association Scotland provides, not
Sam Cosgrove
Age: 23
Position: Striker
Current club: Aberdeen (65 games, 28
goals)
Previous clubs: Wigan Athletic, Barrow
(loan), Chorley (loan), North Ferriby
United (loan); Carlisle United
PQ Magazine June 2020

Reece Styche
Age: 30
Position: Striker
Current club: Hereford (22 games, 3
goals)
Previous clubs: Hednesford Town,
Bromsgrove Rovers (loan); Grantham
Town; Coalville Town; Shepshed
Dynamo; Chasetown; Forest Green
Rovers, Wycombe Wanderers (loan);
Kidderminster Harriers, Tamworth
(loan); Macclesfield Town; Gateshead,
Nuneaton Town (loan); Tamworth;
Darlington; Alfreton Town
only to him but to all professionals in the country
who wish to improve their skillsets outside of
football.
“The PFAS has a vast network of support,
ranging from 24/7 careers advice to putting on
free skills sessions, such as the IT course I am
currently taking,” Sam says.
There doesn’t appear to be an immediate
hurry for this well-grounded young individual
to put his accountancy skills to the test in a
professional environment. But Sam is safe in
the knowledge that should things not work out
there’s a career in accountancy waiting for
him once he has completed his qualifications.
Although marine biology isn’t totally dead in the
water, either…
Reece Styche
Reece’s footballing career is still going strong,
but he now combines his on-pitch career with
semi-professional Hereford, who he joined
in May 2019, with a new-found role in the
accounting industry.
To date, Reece has played for 16 different
clubs, most notably in the Conference with
Forest Green Rovers (now a Football League
club), with his strong goal scoring record leading
to a loan spell in League Two with Wycombe
Wanderers.
But towards the end of his time at Forest
Green, Reece took the opportunity to learn new
skills in order to give him a career option once
his professional playing days came to a close.
“I started studying my AAT qualifications in
2014,” says Reece. “Football gave me some
spare time around training, so I decided to
PQ Magazine June 2020
study, starting with Level 2.”
Reece no longer plays full-time, and he works
as an Accounts Assistant at Safety Technology
International, a manufacturer of fire safety
products. It’s a role he’s been in since early
2017, during which time he has played for
Tamworth, Darlington and Alfreton prior to his
signing for Hereford.
“I enjoy everything about my job,” adds
Reece. “It has given me a solid foundation, and
I get involved in every aspect of the finance
department. I was also able to gain a pay rise
when I completed my AAT studies and became
a MAAT (member of AAT).
“That, in turn, allows me to continue playing
football both locally and internationally – I have
five caps for Gibraltar and am hoping to build on
that total.”
And Reece is quick to suggest that other
footballers similarly consider what they might do
when their professional playing days are over.
“People should have the courage and the
drive to learn something different, especially with
how short a football career is,” he adds.
“Accounting was perfect because it was
something I was interested in. I’m quite an
advocate of people continuing their education
whilst in football, but most players don’t think
like that, unfortunately.”
Rebecca Fay
Rebecca’s in her second spell with Cambridge
City Ladies, who she has captained for the past
three seasons. She was named AAT Apprentice
of the Year in 2017.
“I started playing competitively with
Burwell Tigers when I was 11, before
moving to Cambridge City at the age of 16,”
explains Rebecca. “I then spent two years
with Cambridge United before returning to
Cambridge City for the start of the 2016/17
season. We won promotion to the FA Women’s
National League at the end of last season.”
Rebecca Fay
Age: 24
Position: Centre-back
Current club: Cambridge City (74
games, 3 goals)
Previous Clubs: Burwell Tigers,
Cambridge City, Cambridge United
AAT spotlight PQ
Alongside her football training, Rebecca has
worked hard at her accounting career. Initially
doing a Level 2 apprenticeship with a property
investment firm, she moved to accountancy
practice Streets Chartered Accountants, working
in their Cambridge branch, and completed her
AAT studies at Professional Diploma level.
Rebecca has since begun her ACCA studies,
and is currently two exams away from becoming
a chartered accountant.
“I was able to almost immediately implement
the skills I had learned in my day-to-day role in
the workplace, and I was earning while I was
learning on the job,” Rebecca says. “I certainly
have no regrets about not going on to university,
and this allowed me to do my studies and play
football for my local club.”
She adds: “Although studying to further my
career prospects took priority, I also believe
downtime is important. By sticking to my study
plan I ensured I had time to both play football
and socialise.
“Having my accountancy career is something
I can work in alongside my football, and it will
still be there when I retire from playing.”
It’s not just footballers who are gaining support
from their clubs for their future careers outside
of football – many top football clubs are also
providing support through their community
foundations.
Current European champions Liverpool FC
are one of six sides delivering the Leadership
Through Sport and Business (LTSB) programme
through their community foundations (the others
being Aston Villa, Chelsea, Manchester City,
Tottenham Hotspur, and West Ham United).
Successful applicants learn transferable sports
coaching skills that they put into practice with
the foundations, as well as gaining accounting
skills, starting with AAT’s Foundation Certificate
in Accounting. This leads them towards paid
18-month apprenticeships, which in turn takes
them down the path to full employment.
Patrick Edison-Graham is one of LTSB’s
recent successes. He took part in the LFC
Foundation’s employment programme with
LTSB, achieved his accounting qualifications,
and is now working as a junior accountant for
Mazars – one of the largest accountancy firms in
the country.
“I knew that I needed to improve my CV and
make myself more appealing to employers, in
order to gain access to a career in accounting
and finance. I had support from LTSB and
the LFC Foundation to help me with careers
coaching and interview practice, while I also
supported the Foundation’s coaches on various
schools projects in Merseyside,” says Patrick.
“Achieving my AAT qualification, along
with gaining work experience and personal
development definitely helped. It gave me plenty
more skills to include in my application, while I
felt much more confident during the interviews.”
The LTSB programme helped 232 bright
young people from disadvantaged backgrounds
find employment in the finance industry during
its first five intake years (2012-16). Some 68%
of participants came from BAME backgrounds,
while 52% lived in the most deprived 30% of the
country. And 87% of those who have completed
the programme remained in full-time paid
employment at least six months on.
41
PQ the troubleshooter

The use of the marginal cost model

in decision making
The function of the decision making process is
the selection of a future course of action from a
number of alternatives. It is recognised that some
costs are common to every alternative and in the
evaluation process they will have no direct bearing
on the ranking of the alternatives. It is often the
case in the decision making process that the fixed
costs are disregarded as they are by definition
insensitive to changes in volume of activity.
It is because of the nature of fixed costs and
their behaviour that marginal costing techniques
are applied.
The strategic objective of management is to
select that course of action which will obtain
from the resource base, the maximum amount
of contribution, profit and thus return on
investment.

Case Study
Hockeyskill have planned the following activity
for March 2019:
Products HI H2 H3
Budgeted Selling Price £90 £80 £72
Volume 1200 1100 1200
Direct Labour per Unit £36.00 £31.50 £27.00
Labour hours per Unit 4 3.5 3
Direct Material per Unit £15.00 £14.00 £13.00
Variable overhead recovery rate per standard hour £2.77
Fixed Costs for the month £36000

Early in the first week of the budget period

March 2019, a machine in the primary
preparation area, suffers a major breakdown and
a replacement part from an overseas supplier
and will not be available until the month end.
This will effect operating hours adversely by
10% in the budget period.
It will however not effect the employees’ basic

Know your limits

working week as the original plan for the month
included some overtime working.

The capacity in direct labour hours required to

produce the original plan was:
Philip Dunn explains all you need to know about decision making Products H1 H2 H3

and the limiting factor Standard hours/unit 4 3.5 3

Production and sales 1200 1100 1200

I
n the structure and outline of CIMA P1
Management Accounting there is reference
to costing to support budgets and decision
making, and this includes the concept of limiting
factors. It is generally accepted that businesses
have one or more limiting factors or, as the late
Professor John Sizer states: “a factor in the
activities of an undertaking which at a particular
point in time or over a period will limit the
volume of output”.
Within the planning stage of the budgetary
cycle it will be apparent that there will
be a factor or factors which will limit the
organisational activities. This is often referred to
as the key factor or principal budget factor, and
its effects on the organisational plans must be
fully assessed.
Such factors are often referred to as scarce
resources that limit volume and may include:
• supply of skilled labour.
• supply of materials.
• factory space.
• finance – working capital availability.
• plant capacity.
• market demand.
It is often the case that a business may
face a single constraint situation; however,
others may experience a multi-constraint
scenario. Budgetary plans are usually set
some months prior to the period to which they
relate. Circumstances alter and situations often
arise where limits are placed on a resource or
series of resources after the plans have been
formulated. Where resources can limit capacity,
in the short run, a business must decide on
the product mix which will secure maximum
contribution (and therefore maximum profit).
This is the decision making process faced
by the finance team in which the marginal cost
model often features.
Standard direct labour 4800 3850 3600
hours
= 12250 direct labour hours
The limiting factor is direct labour hours
and there will be a shortfall of 1225 hours and
capacity will be reduced to 11025 hours.
The business must therefore make a short-
term decision, which will result in the most
favourable course of action to minimise the
effect of this shortfall in capacity.
The business needs to revise its budget and
product mix, so that in the short run, it can
secure maximum profit.
The decision making process involves the
following steps:
• determine the contribution per unit of output/
product.
• determine the contribution per limiting factor
– the labour hour.

42 PQ Magazine June 2020

 the troubleshooter PQ

Limiting Factor Analysis:

• rank the products per the contribution per Revised Operating Statement March 2019
limiting factor, to consider the alternatives. Products H1 H2 H3
• revise the production and sales mix. Products H1 H2 H3 Total
• revise the budget. Contribution per Unit £27.92 £24.80 £23.69
Standard hours per Unit 4 3.5 3 Contribution per £27.92 £24.80 £23.69
Firstly, let us consider the original plan.
Unit
Contribution per labour £6.98 £7.09 £7.90
Products H1 H2 H3 Total hour Volume 893 1100 1200
£ £ £ Ranking Contribution / 3 2 1
Contribution 24933 27280 28428 80641
Selling Price 90.00 80.00 72.00 Labour Hour
NB: The ranking per limiting factor differs from Fixed Costs 36000
Variable that of ranking per contribution per unit of
Costs output. Revised Profit £44641
Direct Labour 36.00 31.50 27.00
Revised Production and Sales Mix Profit shortfall £53212 – £44641 = £8571
Direct
Revised hours available 11025 Shortfall of 307 units of H1 x £27.92 = £8571
Material 15.00 14.00 13.00
Ranking 3600
Variable (1) H3
Overhead 11.08 9.70 8.31 Conclusion
1200 units @ 3 std hrs
62.08 55.20 48.31 7425 The revised production and sales mix is
viewed only from a financial perspective.
Contribution Ranking The business may decide to consider
per Unit 27.92 24.80 23.69 (2) H2 alternative strategies to avoid loss of
1100 @ 3.5 std hrs customer satisfaction in not being able to
Volume 1200 1100 1200
3850 meet the demand for H2. They may in the
Contribution 33504 27280 28428 £89212 short run be able to buy in a substitute or
Available for production of H1 3575
Contribution £89212 contract out the work. However, they may
3575 hrs decide to spread the shortfall across all
Fixed Costs £36000 products to minimise the adverse effect on
/
4 std hrs per unit
= 893 units the customer perspective.
Budgeted
• Dr Philip E Dunn is a freelance author and
Profits £53212 A shortfall of 1200-893 = 307 units
technical editor for Kaplan and Osborne Books

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PQ Magazine June 2020 43

PQ CIPFA health moves
Keeping you
in mind…
Alison Sweeting explains how CIPFA is helping its students and
members look after their mental wellbeing
W
e have been in lockdown for
more than a month now, and
it is certainly normal to start
feeling a bit fatigued. Days can start blending
together, and it has been weeks since many
of us have seen our friends and colleagues
44
face-to-face. Special attention to mental
health and wellbeing is essential for staying
motivated at this time
CIPFA had been piloting wellbeing
sessions with students in the South East
region as part of a plan to support students
across all our regions. Covid-19 brought
the need for emotional and mental health
support into sharper relief and our response
has included setting up a series of six live
web classes themed around different aspects
of wellbeing. These have been delivered
by a CIPFA associate trainer who is also a
qualified mental health first aider.
Alex Wakeham, the trainer who is
facilitating and delivering the webinars, said
he would like to help students learn how
to cope with an unprecedented situation
through adopting new habits and honest
discussion.
He commented: “In the three years that I
have been working with CIPFA I have seen
first-hand the culture of kindness that exists
towards both staff and students. Through the
webinars, my hope is that we can all begin to
look kindly on ourselves even when we don’t
get it right all the time.”
The content of the webinars ranges
from emotional intelligence and empathy
to improving sleep and work-life balance.
Students can attend the live sessions and
can watch the recordings if they were
unable to join the live webinar, through their
MyCIPFA learning account.
The sessions have been well attended
by students, and feedback so far has been
excellent. Students particularly appreciate
the focus on work-life balance, as many are
struggling to manage their time with work,
family responsibilities and their studies. They
also enjoy the sense of community gained
through interacting with other participants
who are experiencing similar challenges in
their daily lives.
“I am certainly appreciative that CIPFA
is making the effort to support its students
at this remarkable time,” one participant
said. “In general, the content of the sessions
has underscored key factors that affect our
quality of life, such as how important it is to
keep work and relaxation mentally separate
and to try our best to live harmoniously with
those around us. I have been mindful of
both things since attending these sessions
and have tried to turn the words into
reality.”
Another CIPFA student and participant
noted that the timing of the wellbeing
webinars before the next round of exams was
particularly welcome.
“I have now attended two sessions and
have found them invaluable. Alex Wakeham
is a calming influence and has some
fabulous tips. The sessions are interactive,
and it is a relief to know that I am not the
only person struggling.”
After the six sessions are delivered, CIPFA
will continue to plan how we can provide
support to our students in the future.
At CIPFA, we have worked hard to ensure
that we are able to maintain business as
usual even amid the uncertainty presented
by the Covid-19 pandemic. Our spotlight on
mental health and wellbeing is just one way
that we are providing our students with the
best tools to succeed.
• Alison Sweeting is CIPFA’s Training
Delivery Manager
PQ Magazine June 2020
PQ tax

Pensions explained
Zahid Ahmed helps those studying tax get a better understanding of the mechanics behind pension
contributions

T
here are two types of pension schemes that you need to be aware
of: occupational and personal. Let’s look at these two in more detail
to understand how these schemes operate.

Occupational pension scheme (OPS)

The scheme is only available to employees and is set up by their
employers. Both employees and employers make contributions to this
scheme.
Should an employee pay into an occupational scheme, their contribution
is deducted from their employment income, as such it reduces their
employment income and income tax.
Let’s look at an example:
• Sufyan has employment income of £50,000
• He contributes to his occupational pension scheme run by his employer Step 1
• In the tax year 19/20 he contributed £5,600
How much income tax is saved if Sufyan makes the contribution?

PPS
Step 1:
Individual contributes
£8,000
Step 3:
HMRC top up the PPS
with the difference -
£2,000
Step 2

Step 2 - HMRC
The £8,000 is treated
as it were made net
of 20% income tax –
as such the Pension Step 3
provider can recover the
amount of tax which is
deemed to be deducted
at source from HMRC

Step 2 - Payment to
Pension provider
As you can see, Sufyan will save £1,120 (7,500 - 6,380) in income tax; The £8,000 is referred
another way of looking at it is a saving of 20% of the contribution.
to as a ‘net’ contribution.
Personal pension scheme (PPS) HMRC would gross this
These schemes are run by pension providers and open to individuals, such up:
as sole traders, and employed staff. 100/80 x 8,000 =
When an individual pays into a personal pension scheme the payment £10,000
is treated as if it was made net of 20% income tax. Let us consider an
individual who contributes £8,000 physically into their PPS:

46 PQ Magazine June 2020

 the PQ

As you can see, an individual would only need to contribute £8,000 into
their pension scheme for the pot to have a value of £10,000.
If you’re a basic rate taxpayer there are no further income tax
implications. However, if you’re a higher or an additional rate taxpayer then
your basic and higher rate bands are extended by the gross contribution
(amount paid x 100/80).
Let’s look at an example:
• Daaniyaal has employment income of £80,000
• He makes a net contribution to his personal pension scheme of £8,000
• He has no other income in the tax year
How much Income tax is saved if Daaniyaal makes this contribution,
and what is his income tax liability?

Daaniyaal will save £2,000 worth of income tax should he make a net
contribution of £8,000. The savings can also be expressed as 20% x
£10,000 (gross donation)
• Zahid Ahmed is a lecturer at LSBF

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PQ Magazine June 2020 47

PQ ACCA ATX exam
I taxation
Neil Da Costa puts a recent Advanced Tax Exam question under the
microscope, pointing out where mistakes might have been made
I
n this article I will be taking you through
a technical debrief of Emma, which
was question 2 of the Sep/Dec 2019
Advanced Tax Exam. You can download
the question from the ACCA website under
past exams. Overseas aspects for individuals
feature regularly in the Advanced Tax so it is
crucial for you to master this.
In this scenario, Emma is a non-UK
domiciled individual who is becoming a UK
resident and needs advice about overseas
rental income possibly being remitted to the
UK. Emma is also planning on making a
gift of shares in a UK family company, Vyc
Ltd. Finally, she is also planning on selling a
commercial property in Manchester.
As a tax advisor in a multicultural country
like the UK, it is important to understand
the tax implications for non-UK domiciled
individuals who are UK resident.
This was a very tricky question, as many
of the tax benefits generally available do not
apply in this question, so I recommend you
carefully read the question and think about it
before looking at the solution.
a. Rental income in the country of Falgar
Emma has a domicile of origin in Falgar, but
will be treated as deemed UK domiciled if
she has been UK resident for at least 15 out
of the past 20 years.
Emma was UK resident from 6.4.96 until
1.2.17, which was 20 tax years. She then
moved to Falgar from 1.2.17 until 1.5.20,
or three tax years. Emma then resumes UK
residency in 20/21.
For the tax year 20/21, Emma has been UK
resident for at least 15 out of the past 20 tax
years so is deemed to be UK domiciled.
As she is UK domiciled, she is subject to
income tax on her worldwide income. This
means that her rental income from Falgar
is taxable in the UK even if the income is
not remitted to the UK. This is because
the remittance election is only available to
individuals who are not UK domiciled.
Her rental income will be taxed in the UK
at 40% as she is a higher rate taxpayer. She
can claim double tax relief for the 26% tax
in Falgar even though there is no double
tax treaty between the UK and Falgar as
unilateral relief is available.
Double tax relief is the lower of UK and
overseas tax so will be 26% and the net tax
payable will be 40 - 26 = 14% tax.
(Note: If Emma was not UK domiciled,
she could make the remittance election and
by avoiding remitting the income to the UK
to escape paying income tax on the rental
48
income in the UK. However, in so doing she
would lose her personal allowance, annual
exemption and be subject to the remittance
basis charge.)
b. Gift Of Shares In Vyc Ltd
Circumstances Resulting In The Maximum
Inheritance Tax Liability (IHT)
The gift of unquoted shares to Edward will
be a PET and IHT is payable if Emma dies
within seven years. The IHT liability will be
reduced by the following:
• Unquoted trading company shares in
Vyc Ltd owned for two years by Emma
are eligible for 100% BPR. However,
if Edward sells the shares before
Emma dies then no BPR is available
on death. Alternatively, the shares
may not be relevant business property
due to a change of trade to trading in
investments.
• Emma’s nil rate band is £325,000.
However, Emma has made another PET
of £280,000 to Lily on 1.10.15 which
will consume part of the NRB if Emma
dies within the next seven years (before
1.10.22). The remaining NRB available
for the PET of shares would be
325,000 - 280,000 = 45,000.
• The tax on death will be reduced by
taper relief as long as the gap between
the date of the gift (1.7.20) and the
date of death is at least three years.
Consequently, if Emma dies before
1.2.23 then no taper relief is available.
As a result of these three factors, if Emma
dies by 30.9.22 then a maximum IHT liability
will arise as £280,000 of the NRB would
already be consumed and no taper relief
would be available on death. In addition, no
BPR is available on death if Edward sells the
shares before 30.9.22 and does not replace
them with relevant business property.
A gift for IHT is computed based on the
loss in value to the donor. Emma and her
husband Bill are related parties and her
unquoted shares will be valued based on a
combined holding considering Bill’s shares
as well.
This means that, before the gift, Emma’s
shares will be valued as part of a 54%
holding, so each share is worth £19. After
the gift of 10,000 shares Emma’s shares will
be valued as part of a 44% holding, so each
share is worth £13.
The value of the PET is (35,000 x 19) –
(25,000 x 13) = 340,000
Annual exemptions of £3,000 for 20/21
and 19/20 are both available which will
be deducted before the remaining NRB of
45,000.
Maximum IHT liability will be
(340,000 - 6,000 - 45,000) x 40% =
£115,600
Is CGT gift relief available on the gift
of unquoted shares?
While unquoted trading company shares are
a business asset for gift relief, gift relief is
only available if the donee is UK resident for
the tax year at the time of the gift.
Edward has been travelling in Asia so
is not UK resident and the gain cannot be
postponed under gift relief.
(In order for gift relief to apply, Edward
must be UK resident. In addition, both Emma
and Edward must make a joint election within
four years from the end of the tax year in
which the gift took place 5.4.21 + 4 years =
5.4.25.)
c. Sale of industrial property In
Manchester, England
Emma is a temporary non-UK resident for
CGT purposes because:
1. She was UK resident for at least four
out of the past seven years immediately
preceding the tax year of departure
(16/17).
2. Emma’s period of non-UK residence
is less than five years.
Emma is returning to the UK within five
years, so is liable to CGT on disposals of all
assets while she is abroad, if the asset was
owned prior to her leaving the UK.
Emma owned the Manchester property
before she left the UK so even if she sells it
while she is in Falgar, the gain will be taxable
in the year she returns to the UK. The gain of
£330,000 will still be taxed in 20/21.
If Emma sells the property while abroad,
this will result in a CGT liability of (330,000
- 12,000) x 20% = 63,600. The after-
tax proceeds will be 330,000 - 63,600 =
266,400.
If Emma sells the property once she
returns to the UK, the gain will still be
taxable, but she will be able to increase the
sale proceeds by £60,000.
This would result in a CGT liability of
(390,000 - 12,000) x 20% = 75,600.
The after-tax proceeds will be
390,000 - 75,600 = 314,400.
There is no benefit in selling the property
before returning to the UK so to maximise
the after-tax proceeds, Emma should sell the
property in Manchester once she returns to
the UK, yielding extra after-tax proceeds of
314,400 - 266,400 = 48,000.
• Neil Da Costa is a senior tax lecturer at
Kaplan Financial
PQ Magazine June 2020
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PQ home working
Are you a workaholic
or a daydreamer?
Which remote worker are you – workaholic, daydreamer or recluse? Recruiter Robert Walters provides
you with a daily schedule to keep you on track
T
hree personality types have
emerged from our extended
period of remote working,
according to global recruiter Robert
Walters. So, which one of the following
best describes you?
1. The workaholic: works compulsively
or over the hours required, and at
the cost of their sleep, family time
or personal life. A workaholic in
this period is someone who enjoys
their work and sees it as structure
or differentiation to their day, or feel
compelled to do it to prove there has
been no change to productivity since
home working has been introduced.
The biggest threat to a workaholic is
burnout,
2. The daydreamer: is easily distracted
from tasks by activity in the home.
Daydreamers find themselves in
a cycle of an unfocused and then
refocused mindset multiple times a
day. The natural wandering of the
mind can often mean that projects or
work is delivered differently to how
mangers may have expected. Job
satisfaction for a daydreamer can
often be quite low as a result.
3. The unwilling recluse: is victim to
the extreme comfortableness of the
home setting. The ability to stay in
the same ‘hoodie’ for days, avoid
small talk with colleagues, and hide
behind emails as your main form
of communication, can lead remote
workers down a slippery slope of
isolation.
The workaholic
Sam Walters of Robert Walters says: “No
coffee or lunch breaks, lack of personal
time, and minimal human interaction
can be dangerous combination for
workaholics heading towards burnout.
As we navigate through this period
and most of us have little choice but to
working in our living room or kitchen,
it is important to redefine the lines
between work and home life.”
Robert Walters has even created a
suggested daily schedule:
THE WORKAHOLIC SCHEDULE
50
Avoid starting a new task if it’s likely to
be complicated or take a long time to
complete
17.30 Flag any new emails for actioning
in the morning
18.00 Finish work – put your laptop
away or shut your study door. Go for a
walk, switch on the TV or play a game
to unwind
The daydreamer
When it comes to daydreamers, Walters
says: “While working from home can
present great opportunities to eliminate
some of the typical distractions we
face at the office, for many people the
sudden lack of structure actually inhibits
their productivity.”
The daydreamer needs a reason to
get out of bed! Substituting the commute
with a quick morning jog or living-room
pilates could help set daydreamers on
the right track.
THE DAYDREAMER SHEDULE
7.00 Wake up
7.15 Have breakfast and check your
emails or catch up on the news
7.00 Wake up
7.15 Try out some yoga or light excise
7.45 Shower and get dressed
8.15 Have breakfast and catch up on
your emails
8.45 Set out your daily tasks in priority
order
9.00 Start work
11.00 Make a coffee or healthy snack
and have a catch-up with someone from
your team
11.45 Back to work
13.00 Lunch break – get up and get
away from your working area. If it’s
safe to do so, go outside for some fresh
air; otherwise, stay indoors and read,
prepare a nutritious lunch or work on
a hobby. Take a full 30-60 minutes to
give your brain and body a chance to
recharge.
14.00 Back to work
15.30 Take a tea break, message a
colleague or take a few minutes to load
the dishwasher or fold laundry
15.45 Back to work
16.30 Start to wind down for the day.
PQ Magazine June 2020

7.45 Exercise
8.15 Shower and get started
8.45 Start work – set out your daily
objectives and categorise them by
urgency or importance. Highlight any
tasks or deadlines that you absolutely
cannot miss
10.30 Make a coffee or healthy snack
and have a catch-up with someone from
your team
10.45 Back to work
12.15 Take a step back – revisit
your daily objectives and assess your
progress. If you are off track, adjust your
afternoon schedule to get yourself back
on track
12.30 Lunch break – get up and get
away from your working area. If it is
safe to do so, go outside for some fresh
air, otherwise, stay indoors and read,
prepare a nutritious lunch or work on
a hobby. Take a full 30-60 minutes to
give your brain and body a chance to
recharge
13.30 Back to work
15.30 Time for a break – make a tea
and get up to stretch your legs. If you
have been using a computer all day,
try not to look at any screens, including
your mobile phone
15.45 Back to work – the final stretch!
Revisit your daily objectives to assess
your progress. Focus on getting your
PQ Magazine June 2020
home working PQ
most urgent tasks done before the end
of the day
17.15 Start winding down for the day.
Finish off any remaining urgent tasks,
and perhaps look at re-prioritising any
uncompleted tasks for the following day
18.00 Log off and shut down your
computer (or, at the very least, your
work emails). By giving your workday a
definitive end, you can help improve your
focus during the day and avoid working
late into the night to finish tasks you
should have completed during normal
business hours
The unwilling recluse
When it comes to the recluses, Walters
explains: “Social butterfly or not, long
periods of isolation can bring any one
of us down. Don’t underestimate the
power of small talk, and stay in touch
with furloughed workers and use this
opportunity to arrange training and
upskilling for yourself.”
It really is worth ditching emails and
chat messages for video and phone
calls for anything that takes more than a
couple of messages to explain.
You may also need to embrace
solitude. It can help you re-position your
mindset and help you find opportunities
to be productive when you have just got
yourself for company.
51
PQ watch with PQ
Where’s that remote?
With the lockdown still in place, you may be getting tired of re-watching
comedy shows or blockbuster films. Here’s some more serious stuff…
L
ast time out we reviewed
some great programmes
to watch, which had
accountancy themes. This month
PQ magazine gives you some
non-fiction picks to add to your
‘favourites’ list:
Dirty Money
This Netflix original series, now
in its second series, focuses on
corruption and immoral practices
in the financial world. The episodes
cover a vast array of topics, from
the Volkswagon emissions scandal
to Donald Trump’s dodgy business
approaches.
There are a few episodes that
will be of particular interest to
PQ readers, such as the episode
‘Cartel Bank’, which chronicles
the discovery of HSBC’s money
laundering for several Mexican drug
cartels.
In the episode, it explores how
HSBC knowingly allowed bank
accounts to be created and used
by criminal organisations, and how
they failed to properly staff their
anti-money-laundering teams to
tackle the issue.
Dirty Money is an incredibly
in-depth series, with thought-
out interviews with experts and
individuals at the heart of the story.
Even the less accountancy-
52
centred episodes make for great
watching with regards to general
ethics, and will help any PQ with
getting a greater understanding of
the moral landscape of the modern
business world.
The UK Gold
This 2013 documentary is currently
available on Amazon Prime,
and is a rare programme among
streaming services that offers a
distinct UK perspective on the
financial world, unlike many of the
other US-centric programmes.
The documentary focuses on tax
avoidance in the UK, and the links
between Britain and tax havens in
territories such as Bermuda, the
Cayman Islands, and the British
Virgin Islands.
It follows various people and
their experiences of the effects
of tax avoidance, from poverty
in the London Borough of
Hackney in London, to African
governments being denied millions
in tax revenue from British-based
companies operating on the
continent.
Featuring interviews from
leading experts and figures in the
accounting world, including PQ
Award’s Personality of the Year
and contributor Richard Murphy,
this programme is a must-watch
for anyone wanting to learn more
about the dubious practices of
British finance.
The Accountant of Auschwitz
This harrowing documentary
follows the trial of Oskar Gröning,
the man dubbed ‘the accountant
of Auschwitz’.
The 2018 film on Netflix
documents the discovery,
investigation, and eventual trial
of Gröning. With interviews
from survivors of the holocaust,
legislators and historical experts,
the documentary explores the
idea of whether people who were
involved in the holocaust (but
not directly killers) were just
as complicit in the horrendous
crimes as other Nazis.
Gröning was one of the few
Nazi death-camp workers to
openly admit what was happening
in the camps during an interview,
but insisted he should not be
prosecuted as he was simply a
bookkeeper.
Although the film is dark and
upsetting, it serves as a very
important and stark reminder of
the horrors that took place during
World War II.
A heavy film to watch, but one
that should be a reminder to
everyone of their moral duty to
others no matter what their job
description.
Crash Course
This YouTube series is the
brainchild of best-selling author
John Green and his brother,
Hank.
With over 10 million subscribers
and a billion viewers, this series
is a giant of the world’s biggest
video-sharing website.
The channel produces short
videos, of usually around 10
minutes in length, that explain
and educate viewers on a number
of different topics, including
world history, science and even
accountancy.
The videos feature simple
and understandable narration
accompanied by fun and colourful
illustrations.
Although the videos are
designed for the casual viewer
(watching the accountancy videos
may be a little underwhelming for
most PQs), they are entertaining
and a productive alternative to
television shows and films.
They even have videos
relating to exam technique and
writing structure, that some
may find useful in preparation
for exams.
PQ Magazine June 2020

The eyes
have it
You only get two, but most of us
take our eyes for granted. Are you
doing enough to look after them?
TAKE A BREAK
If you work long hours in front of a
screen in artificial light you increase
your chances of becoming short
sighted, according to some experts. So
take regular short breaks away from the
screen – to rest your eyes and exercise
your thighs! One thing that will help is
to have a proper lunch break away from
your desk and computer entirely.
Like the rest of your body your eyes
get tired. The 20-20-20 rule is the way
to keep them in shape. Make sure you
look up from your screen every 20
minutes, and focus on something else
20 feet away, for 20 seconds. By
looking into the distance you are
helping your focusing muscles to relax,
helping to reduce fatigue.
KEEP YOUR FEET COLD AND BLINK!
If the weather gets hot make sure your
fan/air conditioning is facing your feet
and not your eyes. Dry air from air-
conditioning sucks moisture out of your
eyes, which makes them vulnerable to
infections and even ulcers.
If you do become too obsessed in the
work you must remember to blink.
Apparently, the normal person blinks
between 12 and 18 times a minute.
Once we turn on our screens this
plummets to six times a minute. Experts
have suggested you start consciously
blinking every minute you are reading
online.
DIET HELPS
Eating oily fish also helps prevent dry
eyes. There is even such a thing as dry
eye syndrome, which is common in
older people. If mackerel isn’t your
thing then it’s ok to go for supplements.
SMOKING DOESN’T HELP
Macular degeneration of the eyes is on
the list of things bad things that
smoking does to you. Cigarette smokers
are in fact four times more likely to be
blinded by AMD compared to none
smokers!
PQ Magazine June 2020
Life at the University of Lincoln
James Wright, 28, is a senior lecturer/programme leader, in his fourth academic year.
He has a first class degree in Accountancy and Finance from the University of Lincoln
and is looking to start a PhD to research the impact of environmental accounting
What time does your alarm
clock go off on a working
day? 7:30am, or 5:30am if I go to
the gym or running before work.
What’s the first thing you do
when you get to your desk?
Ask how my colleague Thakur is –
we share an office and have a
coffee to start the day.
What’s on your desk? Plants,
fruit, vegetables – and every
accountant has a calculator,
surely?
What’s the best thing about
where you work? The work/life
balance and working in a very
rewarding role helping students.
No two days are ever the same.
Where’s your favourite place
to go for lunch? I usually make
my lunches fresh to keep healthy
and to help recovery if I have
been out training in the morning.
No vegan sausage roll fan here!
What can you see when you
sit at your desk? Sadly no view
of the lovely Lincoln cathedral or
In brief
Putting in a shift
Bosses worried about home
workers becoming too distracted
by home schooling and daytime
TV can relax – a survey has
found that Britain’s productivity
has generally held up since the
lockdown. The survey, by Willis
Towers Watson, found that 22%
of employers felt that there had
been no impact on productivity,
or a positive impact. However,
15% reported a significant fall in
productivity, and a further 22%
noted a small negative impact.
The PQ Book Club: books you should read
The Price of £ootball by Kieran
Maguire, Agenda Publishing,
£9.99
The price of football is all about
understanding the influence of
money on the game. Which
lover of football doesn’t want to
know what happens in the
accounts if that multi-million-
pound centre forward, signed a
year ago, turns of to be rubbish?
Maguire says this may be of
particular use to any fan who
has had Andy Carroll play for
their team in recent few years!
This book is all about
Brayford, only of the student
Tower Bar.
Which websites are your
favourites and why?
MoneySavingExpert.com is always
an interesting read with Martin
Lewis’ tips and I admire his
presentational skills.
Which websites do you use
for work? ACCA, it has such as
variety of resources for members
and students.
How many hours a week do
you spend in meetings? On
average I would say five hours a
week. Be wary of the meetings
with a free lunch, though…
What time do you leave the
office? It varies. Some days very
late if we arrange student
engagement events but there is
flexibility around classes and
overall my role is very rewarding.
How do you relax? Marathon
training, gym, planning trips to
new countries, reading new books
and catching up with family and
Willis Towers Watson said: “The
pandemic will accelerate the shift
to more flexible ways of working,
especially for companies whose
staff produced as much at home
as they did in the office. This
trend could reverberate across
the economy.”
Get your P87 ready
The taxman has been
‘inundated’ with claims from
employees working from home
during the pandemic. They are
apparently looking for tax relief
understanding football club
finance, and you quickly
understand this as chapter one
explains how to read the
balance sheet, and chapter two
looks at the club’s profit and
loss accounts.
By chapter eight we reach
financial fair play, where the
author explains that governing
body UEFA’s aim is not to make
all clubs equal in size and
wealth, but to encourage clubs
to build for success rather than
continually seeking a ‘quick fix’.
But the reality is very different
careers PQ
friends for drinks.
What’s your favourite tipple?
Ale all the way, easy question
being a Camra member!
How often do you take work
home with you? Very rarely. I try
to keep the workplace a working
environment and home
somewhere I can relax and
unwind. Dealing with isolation has
been a challenge.
What is your favourite TV
show? The original Top Gear/The
Grand Tour – the ultimate job!
Summer or winter? Summer no
doubt, BBQ and beer garden
weather is underrated.
Pub or club? Pub, where all the
best ideas are discussed.
Who is your hero? My Dad.
Hard-working, loving, caring,
inspiring and always willing to
offer advice.
If you had a time machine,
where would you go? 30th July
1966, Wembley Stadium, London.
We all know what happened next!
on items such as office desks,
furniture, and printer ink. Anyone
who is employed and has
expenses up to £2,500 needs to
submit a P87 form, which can be
downloaded on the Government
Gateway website. Accountants at
Blick Rothenberg are advising
you claim online to save time. If
successful HMRC will pay you by
cheque or adjust your tax code.
You don’t have to submit receipts
with the P87, but keep them in
case HMRC wants to check them
at a later date.
from this noble
intention. Instead,
it has fixed the
playing field in
favour of the same
old names.
The final chapter
looks at the things
that every football fan should be
worried about – late accounts
filing, complicated club
structures and footnote
disclosures.
PQ rating: 5/5 Maguire shines a
light on the machinations of our
national sport.
53
PQ got a story, funny or serious, you want to share? Email graham@pqmagazine.com
PQ got a story, funny or serious, you want to share? Email graham@pqmagazine.com

Looted money returned with strings

Some £250 million of cash stolen from Nigeria by former military
dictator Sani Abacha has been returned by banks in the US and
Jersey. The money returns with one proviso – that it is spent
on the public good. The Nigeria government, which refer to the
monies as ‘Abacha Loot 3’, have pledged to use the cash to build
roads. The money was first laundered through the US banking
system before being held in Jersey by the Doraville Properties
Corporation. This company is registered in the British Virgin
Islands and is held in the name of Abacha’s son Mohammed.
Branson offers island retreat
What would you do to save your company? Well, Sir Richard Branson recently pledged
to put up his luxury island resort as collateral to help get a UK government bailout for his
stricken Virgin Atlantic airline. In an open letter to staff the billionaire explained he was
not after a handout, just a commercial loan of around £500m. Some critics have said
instead of asking the UK taxpayer for aid he could draw on his own wealth, which is put
at £4bn. The news came as Virgin Group’s airline in Australia entered administration.

Laziness is key A coffee with Garry?

How do you tell the difference
between a bot and a real person?
While machines can imitate
humans, they haven’t learnt to
impersonate one common human
flaw – laziness! Apparently, we start
off all enthusiastic on social
media, but end up
retweeting cat pictures,
and our messages get
shorter and shorter.
We are friendly but
lazy. Meanwhile, the
bots stay engaged at
all time. Scientists say
the differences makes
it easier to spot fake
accounts. As we speak, no
doubt some programmers are already
teaching their bots to be a little less
enthusiastic.
The Institute of
Certified Bookkeepers
Bags v gold
is one professional If you are thinking
body that has stepped of investing your
up to the mark during savings (if you
the pandemic, with its have any left), then
innovative updates via maybe you should
ICB TV. At 3pm most look to designer
days ICB’s co-founder bags rather than
and president, Garry the stock market
Carter, sits down or gold. While the
with a coffee, and FTSE 100 index
often a guest, to gained 12% last
help bookkeepers year, Hermes Birkin
understand the latest announcements. As it says in the handbags increased
blurb: “There’s no waffle, just practical advice”. Viewers in value by 13%. This is much better than other
are also encouraged from the start to ask questions, and collectable items such as art, watches and whisky.
this has helped guide what resources ICB then puts up It’s not a one-off, either. The Art Market Research
on its YouTube hub. tracker said that over the past 10 years the FTSE
Check out the recording at: https://www.youtube.com/ 100 and gold have increased by 39%. Birkin bags
playlist?list=PLImn8ERsTSbXnvQjFt6EVH7Hr987HUhnF grew in value by 108%

’
WEV E GOT THE L OT
The price of £ootball
Top accountant Kieran Maguire teaches the Football
Industries MBA at the University of Liverpool
Management School. He is the go-to man for television
and radio, commenting on all matters relating to
football clubs. And, now he has a book out – ‘the price
of £ootball’. True the book might need a new chapter
now, but if you are looking for a football fix then this
is it.
We have three copies of this fantastic book up for
grabs. Email giveways@pqmagzine.com, heading it ‘Price of Football’.
And, three readers will be sent Maguire’s book.
Soothe your mind
We have three copies of ‘Relaxing Colouring’
up for grabs this month. You can colour lots of
beautiful illustrations from elephants to complex
patterns. It really will help you get into the
moment and forget your troubles. It’s time to
sharpen your pencils and get ready for some
scribbling.
To get the chance to win this great book
email ‘Relaxing colouring’ to giveaways@
pqmagazine.com. Remember, we need your name and address so we
know where to send the prize.

Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries
must be received by Friday 8 May. The main draw will take place on Monday 11 May 2020.

TO ENTER THESE GIVEAWAYS EMAIL GIVEAWAYS@PQMAGAZINE.COM

54 PQ Magazine June 2020
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