Which of these amounts would you rather pay?

Are your clients or customers ever rude to you?

Would you like to encourage them to be politer to you in their dealings with you?

unhappy-coffee-drinerIf you do, then you may be interested in the approach that the La Petite Syrah coffee shop in Nice, France has adopted.

Their pricing policy is pretty unusual and the price you pay for your coffee there depends on how polite you are.

If you walk in and simply order “un cafe” (a coffee) it will cost you €7.

If however, you walk in and say “un cafe, s’il vous plait” (a coffee, please) then it will only cost you €4.25. The accountants amongst you will realise that this represents a cost saving of €2.75 just for saying please.

It gets better though.

If you walk into the coffee shop and say “bonjour, un cafe, s’il vous plait” (hello, a coffee, please) you will get your coffee for €1.40. So, just by saying “hello” and “please” you’ll save €5.60 compared to the €7 “rude” order.

There’s a history of friendly rivalry between the French and the English and I wonder whether this would mean that if you walked in and ordered a coffee in English rather than French it would cost you €10??

Either way, it’s certainly a novel approach to pricing and we wish La Petite Syrah the best of luck with it.

Man’s best friend as well as a money processor.

The bond between man and dog can be pretty strong. It’s difficult to be precise about when the relationship first started but common thought is that the grey wolf was domesticated 20 to 30 thousand years ago. Since then the relationship has strengthened.

dog eats moneyWhilst dogs can provide a range of working support to humans (e.g. guide dogs for the blind, search and rescue support, etc) the majority of dogs are simply loved by their owners for being their pet and a cherished member of the family.

Sundance, a 12 year old Golden Retriever, provided his owner with a unique challenge though and no doubt pushed the boundaries of love between man and his dog.

Wayne Klinel from Montana in America left Sundance alone in his car whilst he grabbed some lunch with his wife.

When he returned to the car he found that Sundance had also had lunch. Sundance’s lunch though was more expensive than his owners as the dogs lunch took the form of five $100 notes that Mr Klinel had left hidden in the car.

Alas for poor Wayne all that was left of the notes were small pieces of some $100 notes.

The U.S. Department of Treasury’s does in fact have a Mutilated Currency Division where people can apply to have mutilated currency replaced.

Now this would be an extremely easy “get rich quick” scheme if you could simply write to the Mutilated Currency Division and say that your dog had eaten some money and to request some replacement money.

Instead, you need some form of evidence to support your claim.

So, your dog has just eaten $500 and you need evidence. What would you do?

Well Mr Klinel decided to follow Sundance around and collect his, how can we say it but, collect his little “dog logs”.

Yes, in true dedication to the task, Mr Klinel collected the droppings of Sundance and using an old metal mining screen and a hose he separated out the bits of dollar notes from the rest of the matter.

After cleaning the bits of notes he assembled them as best he could and sent them off to the Mutilated Currency Division.

Despite no doubt being somewhat surprised by the unusual aroma coming from the envelope that the bits of dollar bills were sent back in, the Mutilated Currency Division did the honourable thing and sent Mr Klinel a cheque for the mutilated money.

Is this innovative or scary?

I’m not sure about this. Is it innovative or rather scary?

Over in Germany the media company Sky Deutschland has been working with the advertising agency BBDO Germany and they have developed adverts which people will hear “from inside their heads”.

clever-advertisingHearing voices inside your head promoting products probably opens up a big ethical debate but the technology that has been developed enables adverts to be transferred from train windows directly and (rather ominously) silently into train passengers heads.

The idea is that when a person starts falling asleep or resting their head against the window they will hear an advert urging them to download the Sky Go app. The surprising thing is that they will hear it but nobody else in the carriage will hear it (unless of course they are falling asleep against the window as well).

The science behind this involves technology in effect turning the windows into speakers and when a person leans against the window the vibrations in the window travel up the bones on their face into your inner ear and the sound is heard. Similar bone conduction technology is used in hearing aids and Google’s glass headset.

The video below shows more details but I wonder whether this will appear in other places in the future. Is it just a matter of time before you casually lean against the window in the office to hear an advert from your employer telling you how lucky you are to be working there and to stop looking out of the window and to get back to work.

This is how not to be a chairman.

Here’s a question for you – if you’re the chairman of one of the leading banks in the UK and that bank holds itself out to be the “ethical” bank what should you do?

chairman-drugsShould you fully take on the responsibility of being the chairman and lead the business forward?

Alternatively, should you buy crack cocaine and crystal meth drugs?

Mr Paul Flowers who used to be the chairman of the Co-Operative Bank was recently filmed buying these hard drugs.

Those of you that are studying finance or business will know that the role of the chairman would typically involve ensuring that the board of directors is effective in its task of setting and implementing the company’s direction. You certainly won’t find buying crack cocaine in any job description for a chairman!

Questions will no doubt be asked as to how 63 year old Mr Flowers managed to get the position of the chairman of such a prestigious bank. He had limited experience in the banking sector and his knowledge of the Co-Operative Bank itself seemed way below what a chairman would be expected to know.

Earlier this month he attended a meeting of the Treasury Select Committee and told the committee that the bank’s balance sheet had £3 billion of assets. The bank did in fact have £47 billion of assets. The chairman of the bank was only wrong by a “mere” £44 billion!

It’s unclear whether or not he was on drugs at the time he gave his answer.

Will this model mean you’ll drink less?

It’s one of the classic economic models. Changes in supply and demand can impact on prices but should you be interested in this model if you like to drink a glass of wine?

wineMorgan Stanley, the American financial services firm has released a report on global wine supply and demand. Assuming that you haven’t had too much wine to drink already today then it does make some interesting reading.

First of all, global wine consumption has generally been rising since 1996 and the current consumption is approximately 3 billion cases per year.

This consumption (demand) of 3 billion cases of wine compares to the current production (supply) of 2.8 billion cases of wine. Unless you’re now on your second bottle of wine of the day you’ll be able to work out that demand exceeds supply by 200 million cases.

The report by Morgan Stanley predicts that in the short term “inventories will likely be reduced as current consumption continues to be predominantly supplied by previous vintages”.

In other words, the shortfall between annual demand and supply will be satisfied by wines that were produced in earlier years.

Once this stockpile has been used though it will simply be a case of demand exceeding supply and we all know what happens when demand exceeds supply. Yes, prices will increase.

If you’re a wine drinker then you’re likely to be facing a more expensive drinks bill in the future.

Those budget review meetings can get rather exciting…

Companies have a duty to look after their employees in the workplace but what about looking after them whilst they are in bed?

broken-noseAn Australian government employee was visiting a regional office as part of the budget review process and was staying in a hotel room which had been booked by her employer.

It appears that there was nothing of any great interest on the TV that evening as rather than settle down and watch television and enjoy the hotel mini-bar she had sex with a colleague she had invited into the room.

Things took a turn for the worse though as during the throws of passion a light fitting was pulled from the wall and fell onto her face injuring her nose and mouth (as an aside it’s unclear who was responsible for breaking the light fitting as the court transcripts highlighted that the fitting was pulled from its mount by either the woman or her acquaintance).

The evening’s entertainment was brought to a sudden end by the broken light fitting though as the lady needed hospital treatment.

After she had recovered she brought an employee’s compensation claim against Comcare (the government’s insurer) and in December last year she was in fact granted compensation by the Federal Court.

Comcare was perhaps understandably upset about the decision to award compensation and appealed against the decision.

They were successful in their appeal as yesterday, the High Court reversed the decision of the Federal Court and passed a ruling that shows that in order to be eligible for compensation Australian workers must be “expressly or impliedly induced or encouraged by the employer” to undertake the activity which leads to injury.

There was no evidence that her employer, the Australian government had induced or encouraged her to undertake the activity that led to the broken light fitting.

Is Heinz a bitter taste for McDonald’s?

They’ve been together since the Second World War but going forward Heinz tomato ketchup will no longer be on the McDonald’s menu.

tomato sauceSo, what has caused McDonald’s to drop Heinz Ketchup?

It’s down to the intense competition that exists between McDonald’s and Burger King.

Earlier this year, Heinz was taken over by Warren Buffett’s Berkshire Hathaway and the Brazilian investment fund 3G in a $28 billion deal. The new owners of Heinz put Bernardo Hees, former chief executive of Burger King in charge of Heinz.

Earlier this week McDonald’s announced that “As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time”.

It’s interesting though as if you look deeper into the relationships you’ll find that as well as having a stake in Heinz, investment fund 3G also controls Burger King.

It arguably makes sense therefore for McDonald’s to drop Heinz as otherwise there would be the risk that by having Heinz as a supplier, McDonald’s would be increasing the profits of Heinz who in turn could remit those profits to 3G who could then use the funds to strengthen Burger King to win market share from McDonalds.

So there you go and the next time you’re munching on your Big Mac and realise it’s no longer Heinz Ketchup with it you’ll know why.

The Vatican Bank publishes its first set of accounts.

The Institute for Religious Works, or as it is more commonly referred to, “The Vatican Bank” has released its first set of published accounts.

The report comprises a hefty 100 pages and contains some interesting figures.

the-vatican-bankThe bank’s balance sheet total was €5 billion and it had a net profit of €87 million in 2012. This was more than four times the profit it had in 2011.

So, what has caused the increase in profit?

The report highlights that the banks economic performance was “driven above all by the development of interest rates in the Eurozone”.

Interest rates fell across the Eurozone in 2012 and the Vatican has nearly €3 billion in trading securities, most of which are government and index bonds. As interest rates have fallen in Europe, the value of the bonds they hold has increased.

A simple example to illustrate the increase in the value of their bonds as interest rates have fallen would be if they held a bond with a nominal value of €100,000 with a fixed interest rate of 4% they would be guaranteed to receive €4,000 of interest. If the market interest rate subsequently fell to 2% they would still be entitled to receive the fixed €4,000 of interest. The fact that interest rates are now only 2% means that the bond would have a market value of €200,000 (i.e. to get €4,000 of interest at a 2% rate you would need to invest €200,000)

As a result of the fall in interest rates the value of the Vatican’s fixed income holdings is up by in excess of €50 million.

The report also reveals the bank had €41 million in gold, coins and other precious metals, a stake in an Italian real estate company and it received two inheritance properties worth approximately €2 million.

If you’re interested in looking at the full report, here is a copy of the Vatican Bank’s published accounts.

Does it matter if the swimmers are naked or not?

During the summer holidays at university I was lucky enough to have a temporary job as a life guard at the local swimming pool. Thankfully there were no emergencies and the most exciting thing that happened was when a locker became jammed.

businessman-in-poolI graduated from university and now I’m an accountant. My job now involves looking at figures on spreadsheets rather than figures in the pool.

In Austria, the management of Vienna’s public swimming pools carried out a survey and found that bathers were consuming on average 5,000 litres of chlorinated pool water a day.

5,000 litres of water a day is a significant amount of water. Looking at this from a finance point of view this in turn means that this is a significant amount of cost in replacing the water. In addition, the authorities have to spend £20 per day to replace the chlorine that disappears with the water.

How come so much water is being lost? Surely the swimmers are not drinking the water and it would take an awful lot of splashing to lose that amount of water.

The answer is that apparently a lot of water gets removed from the pool via the material of the swim wear. When a person wearing Boardshorts for example leaves the pool 2.5 litres of chlorinated water is trapped in the material and is removed from the pool.

So, picture the scene. You’re an accountant at a sports complex and are attending a meeting to discuss cost saving initiatives for the year ahead.

Given the above findings then would a cost saving solution be to suggest that swimwear should be banned?

Now whilst this would save the cost of chlorinated water being replaced I think the number of swimmers would decline dramatically.

Importantly though I think they would save on the cost of your salary as you probably wouldn’t be in the job for much longer after that suggestion.

London cab drivers, “the knowledge” and mixed costs…

I think that London taxi drivers are brilliant. There’s never a dull moment and if you want a conversation you’ll certainly get one when you’re in a black cab. To be honest, half the time if you don’t want a conversation you’ll still get one.

london-taxiLondon cab drivers have to pass rigorous tests before they are licensed to drive a black cab. “The knowledge” is a term used for the exams that the drivers have to pass and ensures that they know their way around the streets of London without having to refer to satnav systems or maps.

My own personal view though is that “the knowledge” also refers to the fact that the drivers generally have a strong opinion on most things and seem to know everything about everything! To be fair I was quite impressed with the driver of the cab I was in last night. When he found out that I taught finance he went on to point out that the taxi fare I was about to pay him was classified as a “mixed cost” as it was partly a fixed cost (the minimum fare) and partly variable (the charge per mile traveled).

I’ll give him credit where it’s due as he was absolutely right. Fortunately for him though the journey came to an end before I could test him on other costing methods…

The Starbucks experience

I’m currently sat in a Starbucks coffee shop enjoying a nice coffee and making use of their wifi. It’s got me thinking about the Starbucks phenomena and what strategy they have adopted in terms of growing their business.

CoffeeIt’s an interesting approach and whilst it undoubtedly has been very successful there are commentators that would argue that Starbucks is caught between various approaches.

There are numerous areas of the syllabus which we can link with Starbucks.

To the man on the street, when Starbucks first opened it was different and arguably felt like a very “differentiated approach” (Porter’s generic strategies) to drinking coffee. It served great coffee in a relaxed atmosphere. Good music was played and it felt like a special treat to drink coffee in a select coffee shop.

Their growth plans largely involved a classic market expansion whereby they expanded an existing product into new markets. There are now over 15,000 stores in nearly 50 countries.

They have however had some problems. Last year, they announced that they would close 300 underperforming stores in addition to the 600 closures they announced the year before.

Some people have argued that the expansion of Starbucks resulted in it feeling less “special” and as a result consumers were less willing to pay a premium price for what many felt was a standard product. Was it a case of over-expansion? One memorable headline in the US magazine “The Onion” joked that “New Starbucks Opens in Rest Room of Existing Starbucks”!

Whatever the outcome of their strategy, one thing for sure is that their coffee is nice but not quite as nice as their muffins!

Ernst & Young ladies – are they good looking enough?

It just doesn’t matter how good-looking you are, if you work for Ernst & Young then you will never win this beauty competition.

So there I was spending a pleasant evening looking at the eligibility rules for people who want to enter Miss Texas, or to maybe clarify that a bit, the rules for those ladies that want to enter the Miss Texas USA beauty competition.

Now whilst this may be a prestigious beauty pageant where the winner could go on to become Miss USA and if all goes well then Miss Universe, what exactly does this have to do with finance and business? Or to be more precise, what has this got to do with Ernst & Young?

Well, if you look in the rules and regulations and look past the items which neatly ignore certain discrimination issues such as “must never have given birth to a child” and “must be a naturally born female” there is the phrase “No contestant or any member of their immediate family can be employed by ….  Ernst & Young, or any of its subsidiaries”.

There you go. It doesn’t matter if you’re the most beautiful lady in the world (or should I say most beautiful “naturally born female”), if you work for EY you’re just not going to win Miss Texas USA.

So, any ideas why EY ladies are not eligible to enter?

It’s nothing sinister and in fact it’s all very ethical. It’s down to the fact that EY are the official vote counters for the contest and to avoid any potential accusation of anything underhand such as deliberate miscounting, EY staff cannot enter the competition.

Looking on the bright side for EY staff though there must be some pretty happy gentlemen who have been selected to work on the Miss Texas USA account.

He certainly won’t be wearing Burberry or Hackett clothes for the next few years…

If you’re married with a child and you have a respectable job working as an accounts clerk at the fashion giant Burberry what would you do?

burberryWell, if you’re Victor Navarro from London, rather than work hard, try to build his career and enjoy time with his family, he decided to undertake what a judge referred to as “brazen and substantial offences”.

Navorro was earning £25,000 per year with Burberry when he defrauded the company out of £83,000 between August 2007 and July 2010. His theft from Burberry wasn’t found out at the time and he left the company to work at another world famous fashion house, Hackett.

He carried on with the approach taken at Burberry and took a further £66,153 from Hackett.

He used the stolen money to buy a Porsche Turbo 911 and two BMW X5s but unfortunately for him he won’t be able to enjoy the cars as his thefts were identified and he was jailed for 21 months. In an interesting twist he has now been ordered to repay £113,658 to the fashion giants or face a further 2 years in prison under the Proceeds of Crime Act.

It’s looking like Mr Navorro won’t be wearing any Burberry, Hackett or other fashionable clothes for the next couple of years and instead will be wearing a prison uniform.

Can you be fired for being too attractive?

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Picture the scene. You’re the boss. You’re married and you find your assistant very attractive. Your wife finds out about this and demands that you fire your assistant.

Do you:

a) Tell your wife that you don’t like your assistant and hope she believes you,

b) Admit it and then ask you assistant to leave and pay her a fair termination payment, or

c) Fire your assistant because she was an “irresistible attraction”?

Bizarrely enough, a court in the US state of Iowa has just unanimously ruled that it is legal to fire employees if they are seen as an “irresistible attraction” even if the employee hasn’t done anything wrong.

The background to the case was that lawyers for 53 year old Dentist James Knight argued that he fired his 32 year old assistant to save his marriage and that this did not represent discrimination.

In other words, he didn’t discriminate against his employee because she was good looking but rather it was in the interest of saving his marriage.

I can’t help thinking that maybe the dentist and his wife got the better deal out of this compared to his assistant as the background to the case was that the dentist had worked with his (attractive) assistant for 10 years but his wife only found out about some “personal texts” between the two of them towards the end of the 10 years.

After the texts were discovered the dentist then complained to his wife that he found his assistant’s clothing too tight and distracting (an interesting point to note here is that he didn’t complain to his wife about this for 10 years until his wife found the text messages but hey ho let’s just move on).

So, in summary a 53 year old man found a 21 year younger woman attractive. His wife found out and to save the marriage the younger employee had to go.

Rather than make a reasonable termination payment it was decided to fire the younger woman because she was too attractive!

The fired employee then took the case to court where in the opinion of probably a lot of people a bizarre decision was made by the court that this did not represent discrimination and was acceptable.

So, in Iowa it looks like it’s acceptable to fire a lady if she’s too attractive.

Oh and in case you’re interested, the decision was made by Iowa’s high court which contains only men and not women…

Surely everybody should get this benefit at work?

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Having a motivated team in the office is key to any business. As well as a salary component, a person’s remuneration package could include other benefits such as flexible working days, health insurance and access to an executive jet.

I mentioned access to an executive jet because surely all of you have got regular access to the company jet to whisk you off to exotic places??

Bloomberg has reported on a Philadelphia lawsuit by a former pilot of the fashion giant Abercrombie & Fitch’s corporate jet.

To cut a long story short, the 55 year old former employee is claiming that he was discriminated against when he was replaced by a younger man.

As will soon become apparent, my guess is that he may well have been replaced by not only a younger man but by a better looking younger man.

It’s been reported that according to papers submitted to the court, Michael Jeffries, the chief executive of Abercrombie & Fitch insisted that models were hired to work as stewards on the plane.

These models stewards had to be clean shaven and wear a uniform of Abercrombie & Fitch polo shirts, boxer briefs, jeans and flip flops.

As well as insisting on male models being stewards it also claimed that if Jeffries, his partner Matthew or any other guest made a request they should respond by saying “no problem”.

The other thing which I personally think should be a benefit provided to all employees is that Jeffries was also able to take his 3 dogs with him on the jet and there were even detailed instructions on the seating arrangements for his dogs when they travelled with him.

So there you go. The next time you’re discussing your annual review in the office feel free to say that as well as salary, healthcare, and flexible working arrangements you want access to the company jet with male or female models of your choice employed as stewards or stewardesses on the plane.

Oh, and don’t forget to insist on jet travel for your 3 dogs…

How would you answer this interview question?

The majority of you have no doubt attended an interview for a job at some stage. Some of you have also probably done the interviewing.

So, what do you think are reasonable questions to ask at an interview?

There are classic interview questions such as “What are your weaknesses?” (in my view the obvious answer to this question is that you work too hard) and “Where do you see yourself in 3 years time?” (avoid saying sat in a big chair, doing very little but getting paid a lot of money).

There could be a new question though that may be being asked in interviews if Mr Justin Bassett’s experience in America is anything to go by.

Mr Basset is a New York based statistician and according to the Boston Globe he had just finished answering some standard questions during an interview when the interviewer turned to her computer to look for his facebook page.

He had set up the privacy controls on his facebook page so she couldn’t read anything on his private profile. She then asked him for his login details.

So, what do you think?

Is it a legitimate question to ask at an interview? Does your future employer have a right to see a person’s facebook profile to see what sort of person they will be employing?

Or do you think that your facebook account is private and is only open to friends that you want to let see your private activities?

Mr Basset took the latter view and refused to hand over his login details. He withdrew his application and left the interview.

I’ve got a feeling though that his experience of being asked about his facebook account at an interview may well catch on with other people being asked a similar question.

This is a tough situation as whilst most of you probably think it’s wrong to give your login details if you are desperate for the job then you’ll probably provide the details.

As someone in the office pointed out though, surely the easiest way to deal with this is to set up a second “interview friendly facebook account” where you can post pleasant updates on your wall and leave your actual updates for your real facebook account?

To be on the safe side, let’s play football without a ball…

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A school in the UK where a number of top footballers went to when they were children has banned leather footballs for health and safety reasons.

Malvern Primary school in Liverpool where England and Liverpool player Steven Gerrard studied has just announced that in order to reduce the risk of injury to children whilst playing football at break-times leather footballs will be replaced by foam sponge balls.

Whilst health and safety is vitally important for both private companies and public institutions such as schools there will be a lot of people who will feel that maybe this is a step too far.

When I was a child I played football at school with a leather ball and I must admit that I never really felt overly threatened by the ball or exposed to personal danger as a result of (sometimes) being in the close vicinity of it.

Also, if I’m honest I was so bad that I would stumble over the ball whether it was leather or foam.

The argument by the school is that as there are children from the age of 4 to 11 present then there could be a risk of injury if one of the younger ones was hit by a leather ball.

There is also the other view that playing football with a foam ball will discourage children from playing and hence undertaking some form of exercise which as a result could increase the health and safety issues from obesity in children.

Looking on the bright side though, when the 2030 World Cup Finals take place with a foam ball at least England will have a chance of getting past the first round. That is of course as long as it isn’t raining during the finals in case by then they are not allowed to play in the rain.

How can you make $1bn dollars overnight?

The Chief Executive of Microsoft, Steve Ballmer has been in the news a lot recently. Yesterday, he announced that Microsoft had agreed a deal to buy Nokia’s mobile phone business for £4.6 bn.

From Nokia’s perspective it may be the case that Microsoft is the saviour of the company. After all, Nokia once had 40% of the mobile handset market but now is way behind Apple and the various Android devices.

microsoft buy nokiaShareholders in Nokia may have mixed feelings though as the Microsoft deal values the Nokia business at $7 bn whilst back in 2007 the business had a market capitalisation of $150 bn. As they say, it’s all in the timing when it comes to selling shares!

From Microsoft’s point of view the acquisition of Nokia highlights their desire to make sure they have a foothold in the expanding mobile market. They will also enhance their presence in the hardware business to compliment their software business.

As well as the announcement of the purchase of Nokia, Mr Ballmer made another big announcement a couple of weeks ago when he announced that he would be retiring from his job as Chief Executive of Microsoft.

He made his announcement in the evening after the stock market had closed.

Arrivals and departures of key executives of quoted companies is price sensitive information and share prices can move significantly as a result.

Depending on what markets and analysts think of the arrival/departure of the executive, share prices can go up or down.

So how did the market react to Mr Ballmer’s resignation?

When the market opened the day after his announcement Microsoft shares were up 10%.

In other words, investors were pleased with his announcement that he would be leaving!

Was Mr Ballmer upset at this reaction?

Only he knows the answer to this but one thing that softened the blow was the increase in his personal wealth as a result of his decision to leave Microsoft.

He owns 333 million shares in Microsoft and following the increase in the share price as a result of his departure, the value of his shareholding in the company increased by $786 million.

So, by making the decision to leave the company his wealth increased by $761 million.

Now, let’s be honest here. How many of you would “fire yourself” if you could make nearly $1 bn overnight?

How many deficiencies did KPMG and pwc have?

The Public Company Accounting Oversight Board (PCAOB) is the main “watchdog” of the US auditing profession. As part of their quality review procedures they look at samples of audits undertaken.

PCAOB ReportThey have just released their findings for their inspections on the work of KPMG and pwc in the US.

The results of their inspections may surprise some of you as they identified a pretty high number of deficiencies in the work undertaken.

The deficiencies identified were more than the occasional one or two.

In the report on audits performed by pwc for example, the PCAOB found significant deficiencies in 21 of the 52 pwc audits it inspected. That’s just over 40% of the audits sampled.

They inspected 48 audits undertaken by KPMG and found deficiencies in 17 of them (35%).

The PCAOB says that in many of the situations the firms had failed to obtain appropriate audit evidence to support their audit opinions.

For example, during one audit review they found that pwc hadn’t tested the valuation of some financial instruments sufficiently. These financial instruments represented a significant proportion of the company’s portfolio.

If you’re interested in reading the full reports they can be found here:

KPMG PCAOB Report

pwc PCAOB Report

The PCAOB did point out that that their inspections took place throughout 2012, so the fact that a deficiency was included in the reports didn’t necessarily mean that it remained unaddressed by KPMG or pwc.

Should you always agree with your boss?

Maybe the more important question I should have asked is “if you disagree with your boss would you tell him or her?”

My personal view is that whilst you’ll need to show a bit of “emotional intelligence” when it comes to disagreeing with your boss, in today’s business world there should be a certain amount of discussion and debate between all levels of the business.

Importantly though please don’t head straight to your boss’s office and start disagreeing with everything that he or she is saying as you may well not have a job for very long!

One such individual though that has taken the opposite approach when it comes to disagreeing with your boss is Australian politician, Mr Bill Shorten.

Mr Shorten was so extreme in his agreement with his boss, the then Australian Prime Minister Julia Gillard, that he agreed with what she said even though he didn’t know what she had said. I’ll repeat that in case you missed it but he said he agreed with her even though he didn’t know what she had said.

The video footage below shows Mr Shorten being interviewed on Sky News Australia. He was being asked for his (yes, his!) views over whether the Australian Speaker of the Parliament should return to his role whilst allegations of harassment and misuse of funds were being investigated.

Mr Shorten came up with the classic line that only somebody who wanted to stay in the “good books” of his boss could think of saying.

Namely, he said “I haven’t seen what she said, but let me say I support what it is that she said.”

The interviewer replied “Hang on, you haven’t seen what she said?”

Bizarrely, the politician then replied “but I support what my Prime Minister said”

The interviewer seemed a bit confused by all of this and asked “Well, what’s your view?”

Mr Shorten’s reply was “My view is what the prime minister’s view is.”

So, is this a case of an employee being 100% loyal to his boss or is it a case of an employee being afraid to say what he really thinks in case it upsets his boss and he gets into trouble.

Well my view is.

In fact, should I really say that my view is… the view of my boss?

Fancy nipping down the pub for a quick pint and maybe grab a latte and a croissant?

When I was in my teenage years, pubs in England were a very distinctive place; dark, smoky, slightly smelly, overwhelmingly male and mostly shut.

A legacy of previous societal norms meant that women rarely went into pubs unless they were with men.

A legacy of World War One legislation meant that drinks could not be served after 10.30pm or 11pm.  This generally meant a few hours of seriously intensive binging from about 8pm to 11pm, mostly on two nights per week.

croissantThis state of affairs was not great for earning a commercial return.  Pubs often occupy prime sites at expensive rental.  Trying to recover the operating costs of a business when the assets are only utilised for 10% of the time is a challenge and a half.

The first marketing innovation was to make pubs far more female friendly.

Curtains over windows were abolished in favour of plate glass windows.  Pubs started to sell a choice of wines.  The smoking ban came in.

Women were far now more likely to go to a bar with friends because the environment seemed less intimidating.  Unsurprisingly, where groups of young women went, groups of young men followed.

Doctors worried about the effects of all this on the nation’s health, but the tills kept ringing.

Laws governing opening hours were relaxed a few years ago, with some predictable, but probably transitional, issues of overindulgence, as a nation used to nanny closing the bar at 11pm now continued to serve, as people continued to drink at the, erm, efficient rate the previous law had dictated.

JD Wetherspoon runs a chain of bars in the UK, mostly in sites that previously were not bars. Car showrooms are a particular favourite choice of location because of the big windows that attract passing impulse customers.

They have started to open their city centre bars early in the morning, in an attempt to attract an extra crowd.

Some chains have slightly different staff uniforms in daytime and the evening; pseudo-Parisian coffee bar by day; unfussy drinking den by night.

The result is that JD Wetherspoon claims to sell 400,000 breakfasts per week (only McDonalds are bigger, with 600,000).

A recessionary environment means that customers have become open to the idea of hanging out in Wetherspoons with a cheap latte instead of a more expensive option in Starbucks.  It has achieved this growth remarkably quickly, as it only started to open for breakfast last year.

It’s a wonderful example of innovative business change, asset utilisation and absorption costing.

So, what’s this all about? Are things changing? Is it a load of bear or a load of bull?

The major stock markets around the world have been bear markets for the last couple of years but with the end of the recession looking like it’s here we should soon see a switch to a bull market.

Analysts around the world will be arguing one way or another on the timing of the recovery but where do the terms “bear market” and “bull market” come from?

There are two main views on the origin of these terms.

The first view is based on the methods with which the two animals attack.  A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.

The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.

Whatever the actual origin of the terms though I’m sure most people will be relieved when we return to a bull market.

What has Liverpool FC got in common with an American newspaper?

John W Henry is the principal shareholder of the Fenway Sports Group. The company owns the American baseball club the Boston Red Sox as well as the English football club Liverpool FC.

Liverpool Home KitIn addition to his interest in sports teams, Mr Henry has recently purchased another business. This business though is a far cry from the hallowed turf of Liverpool’s famous Anfield ground.

Mr Henry has just purchased the American newspaper, The Boston Globe for $70 million.

The Boston Globe is one of America’s best-known newspapers and Mr Henry purchased it from the New York Times Co.

Was selling it for $70 million a good deal for the New York Times Co?

It won’t come as too much of a surprise to most of you but the newspaper business has been hit hard by the rise of the Internet. Newspaper readers are now going online to get their news and in a lot of situations the news websites are free. Why should people pay for a newspaper when they can get their news free of charge on the Internet?

The end result for newspapers is that their readership has fallen dramatically over recent years and importantly their advertising revenue has also fallen. Advertisers are now moving their advertising spend elsewhere – for example, spending money on Google adverts rather than newspaper adverts.

Just how much has all of this impacted on the value of a newspaper?

To put it into perspective, last week the New York Times sold the Boston Globe to Mr Henry for $70 million.

20 years ago the New York Times acquired the Boston Globe for $1.1 billion.

In other words, the value of the newspaper has fallen from $1,100,000,000 to $70,000,000.

That’s a big drop in value and for those of you that like to visualise things, if you had a briefcase with $1 million in it, the value of the Boston Globe has fallen by an amount equal to over 1,000 briefcases full of a million dollars.

So, did Mr Henry get a bargain when he bought the newspaper?

Only time will tell but for any Liverpool supporter out there you’re maybe thinking that Mr Henry should have bought the Tottenham player Gareth Bale who is currently on the verge of moving to Real Madrid.

Then again, Mr Henry bought the Boston Globe for $70 million and Gareth Bale is reportedly valued at $135 million – nearly twice the value of the Boston Globe.

Would you do this to get a job with KPMG?

An accounting undergraduate in Australia called Meri Amber has done something pretty unusual when it comes to trying to get a job.

KPMG-songAs well as her skills as an accounting undergraduate she’s very talented when it comes to songwriting. In an attempt to get a job with KPMG she’s written her own song called “KPMG Audit Team – Love Accy” urging KPMG to “give her a call”.

She’s also produced the video below showing her love for KPMG.

It seems to have worked as KPMG’s national manager of graduate recruitment in Australia, Rebecca Jones, is reportedly in preliminary discussions with Meri.

Rebecca is quoted as saying “we think it’s a good song. It’s nice to see the industry portrayed in a quirky, unusual way that helps break the stereotypes. [The big four are] all looking for people who are well-rounded and we could definitely work with someone like Meri to show that KPMG is more than just an accounting firm.”

Here’s Meri’s video:

Good luck to Meri in her new career as an accountant or if it doesn’t work out good luck in her career as a singer songwriter.

24% of you may have to do things differently…

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According to our IT guys, over the last 3 months 24% of you that visited our website used the Mozilla Firefox web browser.

The other main browsers used were Internet Explorer, Google Chrome and Apple Safari.

Personally I use the Firefox browser and am very happy with it (well, to be honest as happy with an internet browser as any normal person should be…)

However, things may be changing and there probably are some very worried people at Firefox.

Whilst nothing public has been said I’m sure the senior guys at Firefox are scratching their heads trying to find a solution to a potentially massive problem.

The problem isn’t because their browser is weak. In fact, far from it as apparently a lot of IT specialists love the Firefox browser due to its various add-ons.

No, the problem lies in the fact that it’s a single product company and there’s currently a move away from computers to Smartphones. In terms of the product lifecycle the Firefox product is arguably at the maturity stage and heading towards the decline.

In the UK the number of Smartphones now being sold is greater than the number of computers. Today’s average Smartphone is now more powerful than the typical computer found on your desk only a few years ago.

So, why is this switch to using Smartphones to access the internet a problem for Firefox?

Well, last week’s announcement by Nokia of their new Lumia 800 and the Lumia 710 Smartphones showed that they have dropped their own operating systems and will be using Microsoft’s new Windows Phone 7.5 system.

This system will use the mobile version of Internet Explorer to access web pages on the move.

The other browser big boys already have their Smartphone relationships. Google’s Android system is on HTC and Samsung phones whilst Apple iPhones use the safari browser.

So, in terms of Smartphone romances there are:

HTC/Samsung + Android (Google Chrome)

Apple iPhone + Safari

Nokia + Microsoft (internet explorer)

Unfortunately for Firefox that leaves them desperately looking for the Smartphone love of their life and there aren’t too many potential partners out there looking for a date…

Who earns the most out of the Top Gear presenters?

BBC Worldwide has just published its latest annual report and for any fans of the TV programme Top Gear there are some interesting figures.

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Top Gear is an incredibly successful TV programme. The programme which is so loved by car addicts around the world is the world’s most widely watched factual television programme and is shown in 174 territories. That’s pretty impressive and shows what a global success the programme has become.

It stars Jeremy Clarkson, Richard Hammond (the Hamster) and James May (Captain Slow) but who earns the most out of the 3 presenters?

It will probably come as no real surprise to find out that Jeremy Clarkson received the most last year.

Interestingly though the majority wasn’t from his salary but rather from dividends and a sale of shares.

5 years ago a company called Bedder 6 was set up with the aim to exploit the commercial opportunities of the Top Gear brand.

Top Gear Magazines, live shows and DVDs followed.

So who were the original shareholders of Bedder 6 when it was set up?

Well, the BBC was a 50% shareholder whilst Top Gear executive producer Andy Wilman had a 20% stake and Jeremy Clarkson had a 30% shareholding.

Alas for poor Hamster and Captain Slow the other 2 presenters didn’t hold any shares.

The recently released BBC accounts show that the BBC bought out the shareholdings of Clarkson and Wilman.

How much did Clarkson receive in total from the BBC last year?

He received a salary of £1 million, dividends of £4.86 million from Bedder 6 and £8.4 million for selling his shares in Bedder 6 to the BBC.

In total, he received £14 million from the BBC.

That’s not a bad amount is it?

To be fair to the guy though he’s been instrumental in building the Top Gear brand into a global success with millions of viewers around the world so arguably he deserves the financial rewards that go with it.

With that amount of money hitting his bank account in the last year though one thing he can definitely do is to buy any car that he wants.

Congratulations to William and Kate but I bet Prince George won’t…

Congratulations to William and Kate on the birth of their son, George. Or to give the young Prince his full title, His Royal Highness Prince George of Cambridge.

All of us at ExP wish him a long and healthy life but I wonder whether he’ll ever use something which most of us use on a regular basis.

You’ve all used a computer and the “qwerty” style keyboards which are named after the first row of the letters of the top row of the keyboard are things that we currently take for granted.

product-life-cycle_sThe interesting thing though is that 20 years ago keyboards weren’t very common and my feeling is that in 20 years time they also won’t be very common.

This means that we are living in a small window of time where humans use keyboards. Our grandparents never used them and I’m sure that our grandchildren won’t be using them in the future.

Our grandchildren will no doubt ask why we were hunched over a strange machine with our hands like claws!

Switching to business terminology and you can argue that keyboards are at the maturity stage and fast approaching the decline stage of the product life cycle.

The reason I’m convinced the keyboards will soon be on their way out is that we’re currently trialing some voice recognition software in the office and it’s very impressive.

A few years ago I tried an early version of similar software but it wasn’t very good. The version we are trialing at the moment however is completely different and in fact I’m dictating this article with this software. It’s very hood good indeed.

So that’s my prediction. Keyboards are at the maturity/decline stage of the life-cycle and we will be the lucky few in the history of mankind that had the pleasure of using the keyboard.

Anyway, back to Prince George though and he’s got far more exciting things to think about in the next few years than worrying about the lifecycle of keyboards. There’s the small matter of learning to walk and talk first.

Have GlaxoSmithKline employees been bribing doctors?

GlaxoSmithKline (GSK) is one of the world’s leading pharmaceutical companies. Last year its global revenues were £26 billion and their net income £5 billion. Their drugs include the anti-depressant Paxil (worldwide lifetime sales to date over $12 billion) and the diabetes drug Avandia (over $11 billion).

gskIt seems that all is not well for the company in China though and they appear to have undertaken some less than honest business practices.

It’s just been reported that the company has allegedly been paying bribes and these bribes are pretty significant. Over £300 million in bribes to be precise.

They are accused of paying £323 million in bribes to doctors and other officials in China since 2007 to persuade them to prescribe GSK drugs to their patients. They appear to have paid these bribes in order to win market share and agree higher prices for their drugs.

The Authorities claim the transactions were disguised as payments to “travel agents” who were middlemen who organised “conferences” for doctors. Instead of this money being spent on conferences though it seems that it was given illegally as bribes.

The Head Office of GSK is understandably taking this pretty seriously and the head of their emerging markets department, Abbas Hussain was quoted as saying “We have zero tolerance for any behaviour of this nature.”

He went on to say “I want to make it very clear that we share the desire of the Chinese authorities to root out corruption wherever it exists. We will continue to work together with the [Chinese Ministry of Public Security] and we will take all necessary actions required as this investigation progresses.”

With a reference to their internal controls he said “Certain senior executives of GSK China who know our systems well appear to have acted outside of our processes and controls which breaks Chinese law”.

Somehow, I think GSKs internal control procedures need to be revisited urgently to make sure this doesn’t happen again.

One thing’s for sure though is that this is certainly going to cause a headache for the company and I’m not sure one of their headaches tablets will get rid of the short term pain of this.

You can remove this barrier to entry but it may well kill you…

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Any organisation that can create a barrier to entry which prevents new competitors entering the market can, in theory, keep prices high.

Economies of scale (think Airbus or Boeing), branding (think Apple) and distribution channels (think Coke) are all excellent examples of barriers to entry but one of the toughest barriers to break through are government licenses.

If a licence is needed to operate in that industry then that is the ultimate barrier. After all, without the license the company can’t operate.

Japan is the home of sushi and as you would expect some of the top sushi restaurants can be found in Tokyo.

Sushi is fish and we all know that fish is healthy for you. It may come as a surprise then that one particular sushi delicacy in Japan could end up killing you rather quickly if it is prepared incorrectly.

Certain parts of the poisonous blowfish are considered by many to be the ultimate in sushi. It tastes gorgeous although to be honest I’ve never tried it so I’m taking somebody else’s word for this.

I’ve never tried it because I’ve never had the opportunity although even if I did have the opportunity I would have a few doubts. The reason is that as well as the edible parts of the fish, some of the organs of the fish are filled with poison called tetrododoxin which is more deadly than cyanide.

Now, if you’re eating blowfish then one thing for sure is that you want the chef to know what he or she is doing. You don’t want them making a little slip of the knife and including by mistake some of the poison as before you have a chance to say “does this fish taste a bit funny to you?” you would be on your way to a quick death.

The Japanese government have therefore heavily regulated this part of the sushi industry and there are only a handful of locations that have a licence to prepare and serve blowfish.

In October though new laws are coming into place which remove the need for a licence (or to use business strategy terminology, remove a barrier to entry).

So the good news for anyone that fancies trying some of the blowfish is that it’s likely to become a bit cheaper after October. The question though is whether price will be the key decision making factor when people are deciding to eat a meal which if prepared incorrectly could quickly kill you…

Ernst & Young is no more.

For years I’ve referred to the company as Ernst & Young and I’ve known some great people who have worked for Ernst & Young but at the start of this month “Ernst & Young” ceased to exist.

EY London_newlogoNow before any of you that work for Ernst & Young start panicking there’s no need to be worried as it’s part of their recently announced rebranding exercise and from now on they will be known as EY.

Their name is not the only thing that has changed. They also have a new Global Chairman and CEO in 51 year old Mark Weinberger who was quoted as saying “It is a privilege to lead this great organisation in these dynamic times.”

Not content with getting a new name and a new boss they have also introduced a new logo and a new “purpose”. Their new purpose will also be their tagline and is:

“Building a better working world”.

Mr Weinberger went on to say that “Every day, every EY person is part of building a better working world – for our clients, our communities, and our families. We believe that everything we do – every audit, every tax return, every advisory opportunity, every interaction with a client or colleague – contributes to building a better working world.”

That’s a pretty ambitious target and good luck to Ernst & Young EY with implementing their new plans.

So, EY have gone down the same road as pwc and KPMG by abbreviating their name to their initials. Does this mean that Deloitte will soon announce a rebranding to “D”?

Did you see what Andy Murray was wearing?

On Sunday Andy Murray became the first British man to win Wimbledon for 77 years. He beat Serbia’s Novak Djokovic in an enthralling match but did you notice what he was wearing?

Now, I’m not talking about his shoes, shorts or top but rather something less associated with the sport of tennis.

Andy_Murray_wimbledonSponsorship is big business for the top sports stars and some commentators are speculating that Murray will be able to earn up to £100m in sponsorship deals and appearance fees as a result of him winning the Wimbledon Championships.

As well as being a good opportunity for top sports stars to add some nice figures to their bank balances it’s also a good opportunity for the sponsors to be associated with such winning stars (and of course with the hope that people will buy more of their products!)

He already has a number of sponsors including Adidas who supply his kit, Head who supply his tennis racquet and RBS (The Royal Bank of Scotland) who provide somewhere safe for him to keep his money.

Back to what he was wearing though and did you notice the watch that he wasn’t wearing during the match but was wearing when he was presented with the trophy?

Another of his sponsors is the Swiss Watch Manufacturer Rado and after Murray won the match he quickly put his £3,000 Rado Hyperchrome XXL onto his wrist before the presentation.

The end result was no doubt a very happy Rado company whose watch was on the front pages of all the newspapers.

Some great publicity for the company.

Will we see this trend for tennis players putting designer watches on before they are presented with a trophy expand to other sports?

Will we see the captain of the winning team at next year’s football World Cup in Brazil wearing a watch when he lifts the trophy??

Not the best time for your phone to ring.

Has your phone ever rung at an awkward moment when you were at work?

judgeIt’s always best to turn your phone off or onto silent mode if you’re in an important meeting but a judge over in America forgot to turn off his phone and experienced his phone ringing at a rather inopportune moment.

Judge Raymond Voet was listening to a prosecutor’s closing argument during a jury trial at Ionia County District Court in Michigan when his new smartphone started asking for voice commands.

To make it even more interesting for the Judge he had previously posted a policy at the court stating that any electronic devices which caused a disturbance during court sessions would be treated as a contempt of court and the person responsible would be cited with contempt.

So, imagine the situation. You’re the Judge and you’ve just introduced a policy that anyone whose phone caused a disturbance would get into trouble and lo and behold what happens but your own phone starts causing a disturbance.

What would you do?

Admirably Judge Voet was pretty ethical about it all and he actually fined himself $25 for contempt of court.

Is this segmentation or discrimination?

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The banking profession has had it pretty rough over the last few years. Whether you refer to it as the credit crunch, the liquidity crisis or the banking crisis it’s been tough for the banks and a number of banks have had to be rescued by government funds.

There’s also a lot of competition between the banks and a French based bank, Societe Generale, has attempted to win new customers by introducing an innovative product targeted at a particular segment of the market.

In simple terms segmenting the market is ….. wait for it ….. splitting it into ….. wait for it ….. segments (not the most detailed explanation in the world but hopefully it gets the point across!).

These individual segments can then be targeted using the marketing mix (the 4 Ps).

See if you can guess which segment of the market Societe General are targeting with their pink and gold coloured “Pour Elle” bank card.

First of all if you understand French then the name of the bank card may give you a few hints but if not then two of the main items within the “Product” component of the mix are:

1. Handbag theft insurance of up to Euro 200 and

2. A hotline where card holders can call out an electrician, locksmith or handyman free of charge twice a year.

Yes, the new bank card seems to be well and truly targeted towards French male accountants the female segment of the market.

A nice move by the bank but surely this is discrimination as what’s to stop a man wanting handbag insurance or being able to call out an electrician?

Well the good news for any men out there that are interested in these things then there’s no discrimination as the card is available to both men and women and in fact it’s been reported that approximately 5% of the holders of the “Pour Elle” bank card are men.

Would you have been quick enough to think of this?

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Sometimes people can be in the office and come up with a great idea. Whoever it was that came up with this idea at the Fiat office in Sweden should in my opinion get a bonus.

There are creative guys in many offices but my feeling is that what happened below was more of a “thought of on the spot” idea rather than a project that was planned weeks ahead.

The Google “Street View” website is a great site and enables people to (as the name suggests!) see the street view of many locations around the world.

The panoramic photos on the site are taken by special Google Street View cars that have roof mounted cameras on them.

Over in Scandinavia it looks like a creative individual at the Fiat offices in Sweden saw that a Google Street car was in the area and followed it before getting ahead of it and quickly stopping outside the main entrance to their rivals, Volkswagen.

Anyone who currently does a search on Google Street view for Volkswagen Sodertalje offices in Sweden will see an image of a lovely red Fiat 500 parked right outside the main entrance to the Swedish Volkswagen offices.

Brilliant! A great bit of creative thinking and guerrilla marketing by Fiat.

To be honest it’s probably pretty good for Volkswagen as well. After all, there are now no doubt more people who have seen the image of their offices in Sweden than would have been the case if a Volkswagen was parked outside instead of a shiny new red Fiat 500.

Momo is certainly a unique lady…

Discrimination in the workplace due to gender, race, religion or sexual preference is not only unethical but is also illegal in most countries.

police_dogImportantly though if an organisation does undertake discriminatory activities in for example deciding not to recruit certain people it can miss out on good quality employees from the “excluded segment” of the population.

Now whilst the following example isn’t covered by any discrimination legislation it does provide an interesting example of how an organisation would have missed out if this lady had been discriminated against and prevented from doing the job she loves.

“Momo”, or Peach in English is special for a number of reasons.

She has succeeded in what is an extremely competitive environment. Some would say that her work environment was a heady macho mixture of fitness and controlled aggression.

Most of her colleagues are significantly bigger and stronger than her but she has persevered so much so that she graduated with full honours and now is very much an equal with her male work colleagues.

Momo is special for another reason. She is the first police dog that is a Chihuahua.

Yes, Momo is a 3 kg (6.6lb) Chihuahua dog that has just passed her exams to become a police dog in the Japanese prefecture of Nara.

Now whilst most of her colleagues will be large powerful dogs, her employers didn’t discriminate against her and as a result have a tremendous resource.

She won’t be used for security roles but rather in search and rescue operations in disasters such as earthquakes where her small size will enable her to squeeze into small spaces to look for trapped people.

Had they discriminated against her they would have missed out on this skill set.

If you’re a single lady, should you get a red car?

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Despite car companies spending millions on R&D and new product launches one of the first questions people tend to ask if you say you’ve bought a new car is “what colour is it?”

Up until recently the most likely answer to that question would have been “silver”.

However, after 10 years at the top of the popularity car colour charts silver has fallen to the number 2 position.

The most popular car colour according to leading transportation coatings company, PPG Industries, is now white.

According to their figures 21% of this year’s new cars across the globe have been finished in white.

There are however some regional differences. Namely:

Asia/Pacific – silver 25%, white 23% and black 17%

Europe – black 26%, white 19% and silver 16%

North America – white 20%, silver 19% and black 18%

According to a PPG survey, more than 75% of car buyers said exterior colour was a factor in their purchase decision but as the above figures show though there doesn’t appear to be a huge variety in colours with the 3 main colours of white, black and silver dominating.

But what about the colour red though? After all, our ExP logo has a big red dot in the middle so we like the colour red.

Well, an interesting study in the European Journal of Social Psychology has identified that if a lady wants to make herself more attractive to men then she should consider wearing more red colours.

The study concludes that

“In two experiments, we investigate an analogous effect in humans, specifically, whether red on a woman’s shirt increases attraction behavior in men. In Experiment 1, men who viewed an ostensible conversation partner in a red versus a green shirt chose to ask her more intimate questions. In Experiment 2, men who viewed an ostensible interaction partner in a red versus a blue shirt chose to sit closer to her

No doubt the marketeers are already onto this so does this mean that we’ll now see car companies starting to promote red cars for single ladies?

Would it make the news if you lost your laptop and mobile phone? It would certainly be a risk…

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Some people have a lot of free time.  Some of them use it for recreational purposes and others use it to make requests to UK government bodies under the Freedom of Information Act.

An interesting Freedom of Information Act discovery that was recently published on, perhaps surprisingly, the BBC news website is that BBC staff lost laptops, mobile phones and similar devices last year to the value of £241,019.  That is really rather a lot of laptops.

The fact that somebody saw fit to make the request of the BBC shows how diverse the Corporation’s stakeholders can be and how surprisingly interested seemingly external or unconnected stakeholders can be.  Having to admit to losing property that ultimately belongs to the public of such a high value doesn’t do much for reputation.

Using the TARA (transfer, avoid, reduce, accept) framework for risk management much beloved of the ACCA Paper P1 examiner, an appropriate response to this risk might be to try to “reduce” it.  This is because it is something that is likely to happen, but would probably be assumed to have limited impact on the business.

However, if something changes, such as the introduction of legislation that allows the public to obtain answers to questions that the BBC would really probably prefer weren’t asked, the reputational damage risk may become greater.  This would then lift the TARA response to “avoid”, since the impact on the business would now be high and probability high.  This may mean that the policy changes from providing smartphones for staff to requiring them to buy their own and pay part of their bill in expenses.

It’s just a little illustration of how stakeholders can have surprising effects on a business.

So then, do you know where your laptop and smartphone are right now?  Go check.

Is it better to spend a penny or save a pound?

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Love them or hate them but low cost airlines such as Ryan Air and EasyJet are here to stay.

Since low cost airlines entered the airline industry 20 odd years ago they have shaken up the industry.

Easyjet for example now carry more passengers than any other UK airline and the Irish airline Ryanair long ago surpassed the Irish national carrier Aer Lingus in terms of revenue and passenger numbers.

These airline’s business models are classic no-frills low cost models where passengers don’t pay a lot but in return don’t get a lot.

In effect they only get the flight and they have to pay for everything else. Ryanair passengers for example that don’t print out their boarding card at home are charged the princely sum of £40 to have it printed at the airport.

There are reports though that Ryanair are considering taking the no-frills approach to a new level.

To keep the cost of training crew and maintaining spares at a minimum, Ryanair only have one type of plane – a Boeing 737-800. This model of plane has 3 toilets on board but Ryanair want to remove 2 of these toilets so that they can fit an extra 6 seats on the plane. This will then free up space for 6 more fee paying passengers.

Their existing capacity on their standard plane is 189 so removing 2 toilets will raise their passenger capacity by 3%.

Ryanair have reportedly said that the additional revenue generated by this extra passenger capacity could result in the average price of a flight ticket being reduced by £2. There would of course no doubt be extra profit for them as well from these extra passengers.

This extra revenue for them would be pretty good but if you look at it from another viewpoint there could be some uncomfortable logistical issues on board.

With 195 passengers and 6 crew all sharing the one toilet there could be a fairly long queue of people going down the aisle of the plane waiting for the toilet to be freed up.

The risk of a certain type of mid-air accident will no doubt increase although the real worry of course is if you see both pilots at the back of the queue hoping up and down with their legs crossed…

Look on the bright side. At least it smells nice…

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Have you ever dropped a cup of coffee at work? What about spilling a glass of water?

Maybe a more interesting question to ask a forklift truck driver that (currently) works for the Kerry Logistics in Australia is “have you ever dropped a container full of 462 cases of a customer’s wine that were worth £664,000 and all the bottles were smashed?”

Unfortunately for this unlucky forklift truck driver the answer is yes.

The container held 2010 Mollydooker Velvet Glove Shiraz bottles of wine produced by winemaker Sparky Marquis which sell for £122 each.

Mr Marquis told reporters that he was “gut wrenched” that the wine bottles had been smashed. The container held one third of his winery’s annual production and was destined for delivery to the United States.

There are two important business lessons to be learnt from this.

Firstly, always make sure that valuable items are insured. Sensibly the wine was insured so the winemaker won’t be out of pocket.

Secondly, there’s no harm in having a sense of humour.

Mr Marquis was quoted as saying that when the logistics company opened up the container “they said it was like a murder scene.” With a touch of classic Australian humour he added “but it smelled phenomenal”

Author Robert Louis Stevenson once wrote “Wine is bottled poetry”.

I can imagine the words that came out of the forklift driver’s mouth when the container was dropped were anything but poetry.

ACCA exam tips released. Will you have a great escape or a rubbish escape?

Those of you that are attempting the June 2013 ACCA exams will no doubt be feeling a mixture of emotions.

June-2013-ACCA-exam-tips-girlSome of you will be fully confident of passing although probably the majority of you are only hopeful of passing at this stage and are frantically trying to cram as much knowledge into your heads as possible by undertaking some last minute revision before the exams next month.

One of my students at a recent session was unfortunately ill during the run up to the exams and wasn’t feeling at all confident entering the exam hall. Pleasingly he managed to pass his exams and when he told me he the good news he referred to it as his “great escape”.

Hopefully you’ll be successful in your exams and won’t be relying on a “great escape” when you sit your papers but we’ve now released our ACCA exam tips for the June 2013 ACCA exams and the link to them is at the bottom of this blog post.

For those of you interested in seeing an example of a “rubbish escape” as opposed to a “great escape” the video below of two prisoners trying to escape from a New Zealand court makes nice viewing.

Good luck with your final revision and here are the June 2013 ACCA exam tips (after selecting this link, click on the paper you are interested in and the exam tips are on the right of that paper’s page).

There’s nothing fishy about this…

It’s an unfortunate fact of life that some suppliers at the beginning of a supply chain often do most of the work but tend to lose out when it comes to their share of the revenue.

fish-supply-chain-boatTake the supply chain for fish for example.

The fishermen go out in their boats in all weathers to fish, sometimes risking life and limb.

The price they receive for their catch is often a very small fraction of the final selling price when the fish is on the shelves of your local shop.

The reason for this is that various distributors, middlemen and not to forget the large supermarket chains are much more powerful than the small firms of fishermen and as a result they can negotiate a larger part of the “revenue pie”.

A recently launched online platform though has nicely cut out the middleman when it comes to the fresh fish supply chain.

Ilovebluesea.com in America has been set up to link smaller fishing boats with the end user and its brilliance lies in its simplicity. The benefit of the approach for all parties is nicely illustrated by the image below from the Ilovebluesea.com website.

fish supply chain525

The fishermen get a higher price and the end customers know that the fish he or she is about to eat is fresh from the sea.

If the end customer happens to be studying business or finance they will also no doubt appreciate that the fish on their plate is not only from a sustainable source but has travelled via a very short supply chain.

Bad news. You can’t buy a Ferrari because…

Do you drive a Ferrari?

Now whilst some of you may be lucky enough to say “yes” and some of you may be ambitious enough to say “not yet”, my guess is that most of you will answer “no” to that question.

ferrari-pricingIf you do however happen to be in the enviable position of being about to buy a Ferrari then I’ve got some disappointing news for you in that Ferrari has just announced that they will be limiting the sales of their luxury sports car.

Restricting sales of your product is a pretty unusual approach in business as most companies are keen to sell as many of their products as possible.

It’s quite a clever move by the Italian sports car manufacturer though as the reason they are scaling back on production is to limit the number of new Ferrari cars on the roads and to try to protect the Ferrari brand’s image of exclusivity.

The argument is that the more Ferraris there are on the road, the more common they will be so people won’t see them as prestigious exclusive items and won’t be willing to pay as much for them in the future. Limiting their production will enable Ferrari to keep their prices high.

The number of Ferrari cars sold in the first quarter of this year was up 4% with the company having a net profit of Euro 80m (an increase of 42% on the same period last year).

A very successful start to the year and in an attempt to continue the success the production will be limited to below 7,000 cars in 2013 compared to 7,318 in 2012.

So, sorry to break the news to all of you that were in the process of deciding what colour your new Ferrari was going to be but the good news is that they don’t appear to be restricting the number of Ferrari T-Shirts and baseball hats that are being sold.

Would you sue your son to get him out of the house?

For any business that leases or sub-leases a property it’s vital that a good legal agreement is in place.

Not only does the agreement clarify things for both the landlord and the tenant but it also provides opportunities for legal action should any problems occur.

man-upsetFor the tenant this could be when the landlord fails to maintain the property in appropriate condition and for the landlord this could be when the tenant fails to pay the lease rental.

Over in Italy though there was an interesting case involving the eviction of somebody from a property.

An elderly Italian couple have decided to take legal action to force their 41 year old son to leave home.

According to reports in Italian media, the unnamed Italian couple wash their son’s clothes and prepare his meals.

He’s got a job but despite requests from his parents he refuses to leave home.

Now, whilst I would have thought that maybe the first step for the parents would be to stop washing his clothes and preparing his food they have instead approached a lawyer who has written to the son informing him that if he does not leave home in 6 days he will face formal legal action to evict him from the property.

We’ve blogged elsewhere about an Italian man that took his mum on honeymoon but in this case the “41 year old soon to be evicted from home man” doesn’t have a girlfriend but no doubt will be looking for a suitable lady.

So, any ladies out there that would like to cook and wash for the soon to be evicted man please form an orderly queue. In fact you’ll probably need to meet him at his parent’s home so that you can carry his luggage for him.

CIMA Exam tips released but where can you find a millionaire?

Studying for a professional qualification is tough. Anyone who has been successful in obtaining a qualification will know that it involves hard work. There are benefits though and in some situations these benefits can be significant.

CIMA-exam-tipsIt’s not just the improved knowledge and clarity of understanding that you’ll get from your studying but if we’re blunt about things, one of the major benefits of obtaining a professional qualification is that it will improve your career options which in turn will improve your financial rewards.

I know that there is a saying that “money can’t buy you happiness” so I would urge you not to focus on the improved salary side of things as you progress through your career but instead enjoy the fact that you will be one of the few people that truly understands double entry bookkeeping.

If however you are particularly interested in money and wealth then you may like to know about some recent information from analysts Wealth Insight.

They’ve just released details of which city has the most multi-millionaires (a multi-millionaire is defined as an individual worth more than $30 million). Surprisingly, New York City is only fourth on the list with 2,929 multi-millionaires. In third place is Singapore (3,154) and Tokyo is in second place (3,525). Top of the list is London which has 4,224 multi-millionaires.

Now remember that these are multi-millionaires we are talking about. When it comes to those who are “struggling” to survive being mere millionaires (classified as having net assets of $1 million excluding their main home) Tokyo is in top position with 461,000 millionaires. New York City is second with 389,000 and London third with 281,000. On a country basis though the US has the most number of millionaires from any one country with an impressive 5,231,000 millionaires.

For those of you that are studying for a professional qualification then my feeling is that you are an ambitious lot so why restrict yourself to aiming to becoming a millionaire? In fact, why restrict yourself to becoming a multi-millionaire?

Instead, why not aim to put all those millionaires and multi-millionaires to shame and become a billionaire?

Now this is serious money and there aren’t that many billionaires in the world. If your aim is to become a billionaire, then you’re most likely to meet a fellow billionaire in New York where there are 70 billionaires. Second in the billionaire count is Moscow with 64 and third is London with 54.

For those of you that see the CIMA qualification as the first step to becoming a millionaire, multi-millionaire, billionaire or simply an expert in double entry and are sitting the exams that are fast approaching, here are our CIMA exam tips which we have just released (choose your paper and the exam tips are on the right of the page).

What has Ernst & Young found out about fraud?

Ernst & Young has just released their report on their 2013 Fraud Survey covering Europe, Middle East, India and Africa.

There were some interesting, and some would say disturbing findings.

bribery-rules20% of the employees who were surveyed were aware of financial manipulation in their own company in the last 12 months. If you move higher up the management chain the percentage becomes higher with more than 40% of board and senior manager level individuals who were surveyed saying that sales or costs had been manipulated at their company.

When it comes to the subject of bribery, 57% of all respondents feel that bribery and corruption are widespread in their country, which rises to 67% in rapid-growth markets.

One very interesting issue when it comes to bribery is that of a compliance perception gap between management and employees.

According to EY, “While the majority of respondents are aware that their company has an anti-bribery/anti-corruption (ABAC) policy, the survey shows many organizations have a significant perception gap between senior management and employees when it comes to the relevance and effectiveness of this policy. 60% of directors and senior managers believe that their company would support people who reported cases of suspected fraud, bribery or corruption, whereas only 34% of other employees agree.”

60% vs. 34% – quite a big perception gap!

The full EY report can be found here.

Would you be able to remember all these meals?

A lot of the readers of this blog are either studying finance or working in a finance job. A lot of you no doubt enjoy eating at a restaurant now and then and can remember some favourite places you’ve eaten in the past.

chinese-mealsI’m sure though that there aren’t many of you that have combined the classic spreadsheet skills of a finance person with the memories of the food you’ve eaten as well as Mr David Chan from the US has.

ABC News recently reported on Mr Chan, a 64 year old accountant based in the US who enjoys eating at restaurants or to put it more precisely, enjoys eating in Chinese restaurants.

“Enjoys eating in Chinese restaurants” is a bit of an understatement as over the last 33 years he has eaten at a pretty impressive number of Chinese restaurants.

In fact, he’s eaten at nearly 6,300 different Chinese restaurants! That certainly is a pretty impressive number of restaurants as visits to 6,300 different restaurants in 33 years works out at an average of nearly 4 new restaurants every week!

“But how does he know how many restaurants he’s eaten at” I hear you say?

Well this is where his accountancy training and his expertise in the use of spreadsheets comes in.

He’s actually got records of all the restaurants he’s eaten in since the 1980’s and keeps a spreadsheet with their details organised by name, street and year visited.

When his wife was asked what she thought of it she was quoted as saying she thought the whole idea was “silly”.

I must admit that I’m not sure that a lot of people will be rushing to look at that particular spreadsheet and it’s difficult to argue with his wife’s view.

Naked accountants…

Is this you? At a young age you decided that a career in finance was what you wanted. Whilst the other kids were running around dreaming of being football players or famous actresses you were busy dreaming about spreadsheets and calculators.

You then went to University and worked hard. After that you studied for a professional qualification such as ACCA or CIMA.

After all that hard work the end result is that you’ve now got a job as an accountant and you perform your job naked.

Woh, slow down. How did that last sentence end? Naked?

Yes, you read it correctly.

The Natural Cleaning Company which markets itself as “The Worlds only all-naked service co” is currently advertising professional services provided by various professionals including Accountants and Lawyers.

So, you can hire accountants that perform their service in the nude.

Now, if I’m honest, I’m not sure about this.

For example there could be some awkward scenes in the office reception when they turn up for a meeting wearing only a smile on their face.

In addition, and I’m not being rude to our profession here, but on balance there are probably more accountants I would prefer to see with their clothes on rather than with their clothes off.

Only time will tell whether the business model of The Natural Cleaning Company will stand up or not. It certainly is an unusual approach but we wish them well.

Oh, and before anyone asks I can’t remember what I was searching for when I came across their website.

Is it me or is this just nuts?

Anyone that suffers from an allergy knows full well that it can be a very unpleasant experience. One of the more common allergies is when people are allergic to nuts.

food-labelling-lawsAccording to Allergy UK, peanut and tree nut allergy is the most common food allergy in adults and children. The symptoms can range from mild reactions to more serious problems including difficulties in breathing.

It’s a vital safeguard therefore that food products are clearly labelled with their ingredients in case they contain items which an individual is allergic to.

The Food Standards Agency is an independent government department responsible for food safety and hygiene across the UK. They monitor food products and when for example the allergy labelling is incorrect they can force the food product to be withdrawn from sale or recalled to protect the consumer.

They have just issued an alert about some food that was being sold by the supermarket chain EH Booths.

If I’m honest I’m not sure what to say about the warning as by way of background the food that was being sold by the supermarket was bags of monkey nuts. Monkey nuts are peanuts with the shell on.

To quote from the alert:

EH Booths is withdrawing some batches of its Whole Hearted Roasted Monkey Nuts, because the presence of peanuts is not declared on the label. This makes the product a possible health risk to those who are allergic to peanuts.

Or in other words, the supermarket had failed to highlight that a bag of peanuts with their shells on would contain peanuts.

Now, I’m not an expert here but I can’t help thinking that the presence of peanuts in the bag could have been a bit of a clue that the product contained peanuts.

If by any chance you’re not allergic to peanuts but are allergic to milk then you should be ok as long as that carton of milk doesn’t contain any milk.

Would you have ridden this wave differently?

I’ve got a couple of friends who are keen surfers. If you speak to them they will tell you that successful surfing is all down to getting the timing right and catching the wave at the right moment.

billabongIt looks like timing is also an important issue if you happen to hold shares in one of the world’s largest surfing brands.

Billabong is Australia’s largest surfwear company and is currently the target of a takeover bid.

Billabong was set up by Gordon Merchant in 1973 when he started making surf shorts on his kitchen table and selling them to local shops.

The company rode the waves of success over the following 35 years and developed a strong following amongst fashionable surfers (as well as a strong following amongst people who had never been near the sea!)

Back in 2007 the company was valued at A$3.8 billion (approximately £2.5 billion at today’s exchange rate) but unfortunately for the shareholders the global recession bit and faced with increased competition from other fashion brands the sales of Billabong products fell dramatically.

Last February the shareholders turned down an offer of A$842 million (£560 million) to buy the company.

Earlier this year the company reported their largest ever loss after writing off most of the value of its main brand.

It’s not exactly smooth water for the company and they are currently in sale discussions with a consortium made up of a former director and a private equity company. The value of the offer on the table at the moment is A$287 million (£190 million).

£2,500 million to £560 million to £190 million.

As they say in the surfing community, it’s all in the timing.

An ex-partner of KPMG has been a bit naughty…

An ex-partner at KPMG has been a bit naughty. In fact, he’s been more than a bit naughty as he’s been accused of insider trading.

Insider trading is the illegal activity of using information which isn’t in the public domain to make a personal gain or avoid a personal loss.

insider-trading-examplesScott London was a partner at KPMG in the US and led their LA audit practice. Two of their major clients were the nutrition supplement giant Herbalife and the leading footwear company Skechers.

It’s been alleged that Mr London passed on price sensitive information to a golfing friend of his who then subsequently made more than $1.2 million in illicit trading of shares ahead of merger or earnings announcements (in other words, the golfing friend bought shares at a low price knowing that the share price would increase as soon as the information he was secretly given was released into the public domain).

The US Securities and Exchange Commission charged Mr London and his golfing buddy with insider trading on non-public information.

As soon as KPMG found out about this Mr London was fired and quickly became an ex-partner in the firm.

A statement from Mr London was published in the Wall Street Journal where he apologised “for any harm that results to KPMG”. He went on to say that “I regret my actions in leaking non-public data to a third party regarding the clients I served for KPMG”.

It’s not looking very good for Mr London as the authorities will no doubt come down heavily on him.

It’s unfortunate for KPMG as well as due to Mr London’s illegal activities their independence on the audits of Herbalife and Skechers had been compromised. As a result they have resigned as auditors of both Herbalife and Skechers.