Sarah Ferguson, the Duchess of York and former wife of Prince Andrew, has been in the news for all the wrong reasons.
Evidence came to light last week of the former member of the British royal family accepting money in used bank notes to arrange access to her husband ($40,000 as an initial payment of an agreed total of £500,000). Many people were shocked as taking money to arrange access to people in influence could look like corruption.
The Duchess of York (no longer referred to as “Her Royal Highness” following previous run ins with the more senior royals) may be in greater trouble than the public relations mire and financial trouble that she admits to being in.
If the Duchess was not planning to include full and frank disclosure of the cash received (or what some people may call “bribes”), she appears to have been engaging in activity that could look like money laundering. Accepting payment in notes and coins is often fairly good evidence of wanting to disguise the origin of the funds.
Now whilst money laundering shouldn’t normally be an issue for an ex-Princess, money laundering is big news for professionals, especially professionals practising in the European Union. The EU’s third Directive on money laundering requires that all accountants and tax advisors are effectively trained in detection of money laundering.
Penalties for non-compliance with this can be severe. Money laundering, or facilitating money laundering, under UK law can carry a criminal sanction of two years’ jail time.
This could be an interesting bit of gossip to follow for students! Maybe the Duchess should use some of those used bank notes to engage the services of a good lawyer?
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-31 05:08:282010-05-31 05:08:28The “Princess and the Pea” is a famous fairy tale but should there be a new version called the “Princess and the Pound Notes”?
A mixture of intelligence, hard work and dedication are needed to ensure success in the exams. No training company knows for sure what will actually be in the exams next month but our tips identify areas which we believe you should have covered particularly well.
For those of you sitting audit, ethics or law papers the following case shows an individual who clearly didn’t show intelligence, hard work and dedication.
Organic and free range eggs are becoming more popular in the UK with a premium being paid as a result of the expense of feeding the chickens with natural produce and letting them roam free.
An individual by the name of Keith Owen was recently jailed for 3 years as a result of mis-describing eggs as free range when they were in fact battery hen eggs. The judge also made Owen surrender the £3 million profit he made and stated that it was “a carefully planned and executed fraud by false accounting” (false accounting by altering records to hide the fact that the eggs weren’t free range).
The scale of the fraud was phenomenal. He defrauded all the major UK supermarkets, including Tesco and Sainsbury, as well as numerous small shops by selling them approximately 100 million (yes, one hundred million) battery eggs as free range eggs.
The fraud started to come to light when it was noticed that the number of free range eggs sold by his company was more than could be laid in all the farms in the UK.
There were also complaints from a number of lorry drivers that would drop off consignments of battery eggs at his factory, be told to wait a few hours and then pick up some free range eggs to be delivered elsewhere. The free range eggs were suspiciously of a similar quantity to the battery ones that had been dropped off a few hours earlier with the only difference being a new label on the packaging!
Now, I don’t know whether Mr. Owen ever considered attempting the ACCA exams but in terms of “intelligence, hard work and dedication” then somehow I just don’t think so.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-28 09:27:582010-05-28 09:27:58ACCA exam tips released today but this individual won’t be running free range over the exams…
The “little black dress” is an evening dress that is simple, classic and fashionable. Its origins date back to the 1920s with fashion historians claiming that the first design of the little black dress was made by the designer Coco Chanel back in the 1920s.
The design has been worn by numerous women over the years. The most famous “little black dress” was arguably the one worn by Audrey Hepburn in the film Breakfast at Tiffany’s.
This is all very interesting but what has it got to do with a blog for finance students and in particular what has it got to do with the ACCA exams that are taking place next month?
Well, if I’m honest it actually has very little to do with the exams as I can’t imagine there will be a lot of people wearing little black dresses to the exams! What should be happening though is that everyone should be attending the exams with a “little black pen”.
The June 2010 ACCA exams will for the first time see all the papers marked using scanning technology. The scripts will be completed as normal by students but instead of the scripts then being physically sent to the markers they will instead be scanned and then marked by markers “on screen”.
It is important therefore that you use a black ballpoint pen in your exams. If you use other colour pens, pencils, fountain pens or highlighter pens then these are unlikely to be picked up by the scanning technology and as a result the marker may not be able to see your answer.
Put simply, it doesn’t matter how good your answer is but if it is not picked up by the scanning technology then you may well find that you miss out on passing the exam.
In summary, forget about wearing a “little black dress” to the exam but don’t forget your “little black pen”.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-24 03:34:022010-05-24 03:34:02The “little black dress” is a fashion icon but when you’re sitting your exams don’t forget to…
It seems that a certain volcano in Iceland is going off again.
At the time of writing, a number of UK airports have had to close because of drifting volcanic ash. This, it seems, is likely to be an ongoing problem, especially for more northern European countries.
I have a flight booked in a couple of weeks’ time. I am innately cost conscious and so booked a non-refundable, non-changeable ticket.
Under the Framework definition of an asset and a liability, the airline has received my money and the only obligation that they have is to incur the marginal costs of flying me there, which are likely to be fairly small. Using the logic of the Framework therefore (and the probable logic of the new accounting standard on revenue recognition that is likely to come through in a couple of years’ time), they would be able to book revenue at the time that the sale was made.
Under the approach of the extant accounting standard IAS 18, however, revenue can only be recognised when the service is provided. This means that none of my cash is currently in the airline’s profit or loss.
That approach has always seemed excessively prudent to me, as the chances of having to refund the money to the customer has always seemed remote. I’ve long believed that IAS 18 is in need of replacement with something that focuses more accurately on assets and liabilities.
Mount Eyjafjallajokull has made me wonder whether perhaps holding all revenue in deferred revenue as a liability until it’s sure that it’s no longer a liability might not be such a bad idea after all….
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-19 02:45:252010-05-19 02:45:25You may recognise this volcano but what about recognising the revenue?
The troubled US airline industry is going through a period of consolidation. Consolidation in the sense of companies getting together to reduce their fixed costs per transaction, not consolidation in the sense of producing group accounts.
This article, however, is about group accounts. The circumstances of the Continental/ United merger do make it look like it’s a voluntary merger and the stock market was conspicuously unsurprised at the news.
The problem is that IFRS 3 requires that for all new business combinations (a new business combination is one that doesn’t arise from a reconstruction of a pre-existing group), an acquirer and acquiree is identified. This company is then the parent. Often, a merger happens by a share-for-share exchange and the new parent chooses to change its name to a suitably “merged” sounding name. But as far as the rules are concerned, one must be the acquirer and the other the acquiree.
So a decision will need to be made about which company becomes the parent. It’s likely that this will be the company with the greater retained earnings. It’s also likely that formal merger will happen on the first day of the parent’s accounting period, so that a full year of “merged” profits is consolidated.
The group retained earnings of the new group will certainly be less than the sum of their individual parts, since the acquiree’s pre-acquisition profits will not be consolidated.
This may seem harsh if it’s truly a genuine merger, since the idea of pre-acquisition reserves should perhaps be restricted to where there’s a genuine acquisition. So why is this option not allowed? You can probably guess – it was subject to creative interpretation of what constituted a merger. The IASB stated that they believed genuine mergers would probably happen globally about once every five years.
Perhaps Continental/ United is one such genuine merger?
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-17 02:03:292010-05-17 02:03:29They’re merging with a competitor so surely it must be a merger? In fact it’s not a merger but…
The world uses Standard & Poor’s ratings fluently. But they’re not always as good as they sound.
In the days of getting grades for exam work, I was always happy with a B. A grade C was generally considered to be a pass and passing with a bigger margin than necessary has always struck me as a bit of a waste of effort!
So I’m personally “hard wired” to think of a B as good news. This means that when I hear that bonds issued by the Greek government have been graded to BBB-, my instinct is to think that this all sounds rather good, all things considered.
‘AAA’ Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’ Very strong capacity to meet financial commitments.
‘A’ Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’ Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘ Considered lowest investment grade by market participants.
‘BB+’ Considered highest speculative grade by market participants.
‘BB’ Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’ More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’ Currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial commitments.
‘CC’ Currently highly vulnerable.
‘C’ Currently highly vulnerable obligations and other defined circumstances.
‘D’ Payment default on financial commitments.
Of course, the higher the risk, the greater the return. This means that investing in Greek bonds at the moment can bring considerable returns. Of course, it does so at considerable risk also. It may feel that governments will never default on their borrowings, but remember Iceland.
There’s no generally agreed definition of what constitutes investment grade, but it’s generally seen as BBB. This means that when S&P graded Greek bonds to BBB-, it was a quasi-official statement that the Greek government was in serious trouble. The result is that yields on these bonds jumped to 15%. There’s money to be made from holding Greek government bonds, but only if you’re willing to take some risk of losing it.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-14 04:47:062010-05-14 04:47:06But surely getting a grade B+ is good. Isn’t it?
Lots of people have used the social networking site, Twitter.
On average there are reported to be somewhere in the region of 25 million “tweets” (entries) per day.
Paul Chambers, a trainee accountant in the UK made a tweet in January which resulted in him ending up in court this week after being charged with sending a menacing electronic communication. He ended up paying a fine and costs of £1,000.
Back in January of this year he was due to take a flight from Nottingham’s Robin Hood airport but the airport was closed due to snow.
He tweeted: “C**p! Robin Hood Airport is closed. You’ve got a week and a bit to get your s*** together, otherwise I’m blowing the airport sky high!”
It’s debatable whether the conviction was an over-reaction by the authorities or whether Chambers deserved the fine. Either way, he was fired by his employers and has lost his job.
He’s a trainee accountant and it’s not clear what accounting qualification he’s studying for but does a conviction mean that he will be prevented from qualifying as an accountant? The answer is, “not necessarily”.
If for example, you look at the ACCA’s rules on misconduct then a conviction in itself doesn’t automatically mean that he would be prevented from becoming a member of ACCA. It would all depend on the particular facts of each case that is considered.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-12 20:06:262010-05-12 20:06:2625 million entries per day, the airport, the snow, the tweet and the subsequent court appearance…
It happened so fast, you may have missed it: On 6 May the Dow (stock exchange) index lost 999 points in 15 minutes, the largest intra-day drop in the market’s history. USD 800 billion in share value was wiped out before recovering (in the next 15 minutes) by USD 600 billion.
So what happened? One trader suggested that the decline may have been triggered by a so-called “fat finger” trade, meaning that a transaction may have been entered incorrectly by human input. It was suggested that a “billion” may have been keyed in instead of “million”, with the result that some “big-name” companies, such as Procter & Gamble and 3M, experienced big (but temporary) falls in their share prices.
Whatever started the selloff, it was intensified by automated computer trading, which led to a cascade of “sell” orders. The authorities are checking whether exchange “circuit-breakers” worked properly (these are procedures to halt trading temporarily if prices drop too sharply). System safeguards may have to be tightened in order to protect markets which are already very nervous because of the Greek debt crisis.
So was it simply “human” error? A case of “operational” risk? Whatever the conclusions, it is clear that this event will prompt a re-examination of the markets from financial, regulatory and technological points of view.
All the news in the UK today was full of the election.
As the votes were counted this morning it soon became clear that Britain would have its first hung parliament since 1974.
A hung parliament is where there isn’t a single political party with enough votes to form a majority government.
In terms of a topical “political” within PESTEL analysis then it doesn’t get much more topical than this!
The markets didn’t react favourably to the news with sterling taking big losses against both the dollar and the euro. It was felt that a hung parliament would cause delays in tackling the UK’s economic problems.
The general feeling in the press seems to be that continued political uncertainty could result in further falls in sterling as well as potential downgrading of the UK’s credit rating.
If PESTEL comes up in the exam then don’t forget the topical “P”!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-07 14:14:072010-05-07 14:14:07The UK election, a hung parliament, sterling and your exams…
I met up with a good friend of mine the other evening. He was rather excited as he was in the process of choosing a new company car. As part of his remuneration package he’s lucky enough to be given a company car and this car gets replaced every 3 years.
He’ll shortly be provided with the use of an Audi A6 TDI SE company car. He’s obviously done his homework though as when another friend who was with us said that it must be nice to be given the free use of a car he rightly pointed out that there is a tax benefit in kind on the car and had worked out that the benefit for the tax year 2009/10 was £9,506.
His top rate of tax is 40% so the actual tax he will be paying for the use of the car will be £3,802 or £317 per month. He was right therefore in pointing out that although the car was provided for his use free of charge by his employer he would be paying something for it in terms of tax.
For any F6 (UK) or P6(UK) students out there who want to check his calculations then the list price of the car is £36,560 and the CO2 emissions are 179g/km (and don’t forget the 3% extra seeing as it was a diesel!)
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-05 13:49:532010-05-05 13:49:53Free use of an Audi A6? Not quite as don’t forget the tax on the benefit.
Tom, the postman that delivers letters to our street always seems to be happy and full of the joys of life. Whether it’s the middle of a cold and wet winter or during a hot summer (admittedly in the UK we don’t get a lot of hot summers but that’s another story!) he’s always smiling and ready for a quick chat.
I wonder whether he knows though that he is in fact part of the “Outbound logistics” of the Royal Mail’s Value Chain. Value Chain Analysis is a model by Michael Porter and provides a “bird’s eye view” of a business.
The postal service in Finland has recently announced that they will be running a trial where individuals can sign up for a pilot programme which would allow the postal service themselves will open the individual’s letters, scan them and then store them electronically on a password protected electronic mailbox.
Individuals who use this service will then be sent a text message or email telling them that they have received mail and they can then log on and decide whether the mail item should be shredded or sent to them via the postal system.
This is a novel way of changing the outbound logistics of the value chain. As well as potential costs savings for the postal service in terms of transport costs it would certainly enable people to reduce the amount of junk mail that they received.
There will be obvious issues to address such as confidentiality when the letters are opened and scanned but this is certainly a pilot programme which will be worth watching to see how it develops.
I mentioned to Tom about the pilot programme in Finland and he didn’t seem at all bothered by it – his view was that he’s getting older so the less junk mail he carries the better it would be for him!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2010-05-03 07:48:382010-05-03 07:48:38So, how will Tom be impacted by the scanning of the outbound logistics?
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