Published on: 28 Feb 2014
Handmade cosmetics company Lush sells some great products such as the Rose Queen bath bomb and the Happy Hippy shower gel. Their latest product range though has a less glamorous name. It’s called the “Christopher North” range of toiletries.
So, who is Christopher North?
Mr North is in fact the MD of amazon.co.uk.
This unusual cosmetics name arose as a result of a dispute between Lush and the internet giant, Amazon.
If you search Amazon for “Lush Cosmetics”, you are redirected to other products which are not “Lush” products but instead are described as lush.
The cosmetics company doesn’t sell via Amazon and claimed the internet giant was misleading customers into thinking they were buying genuine Lush products.
Lush were upset about this and asked Amazon 17 times to remedy it but they refused. Mark Constantine, one of the co-owners of Lush, was quoted as saying “after a while you realise you’re being bullied”.
The matter went to Court and the Court held in favour of Lush. Amazon has refused to accept the decision though and are considering appealing against the decision.
Mr Constantine however was quoted as saying he was not going to put up with Amazon’s “bullying unpleasantness” anymore. As a result we could soon see a promotional push on the new Christopher North range of toiletries. Lush has said that any profits on the North range of products would be donated to charity.
Lush has been pretty creative on the packaging of the products.
The packaging for the Christopher North bright pink shower gel for example has some funny quotes aimed at Amazon’s claimed tax avoidance schemes.
The tagline for the Christopher North shower gel is “rich, thick and full of it”.
Published on: 20 Feb 2014
Facebook has just bought a 4 ½ year old company for $16 billion.
That’s a lot of money but Facebook clearly thinks it’s worth it.
Facebook will pay $12 billion in Facebook stock and $4 billion in cash for WhatsApp, an instant messaging service that charges nothing for the first year of use and after that only $1 per year.
It’s a great app for users as it enables instant messages to be sent over their phone without having to incur expensive SMS charges that the traditional mobile phone companies charge.
It raises some interesting business valuation issues though as it’s clear that the valuation hasn’t been based on the traditional multiples of the profit or revenue figures. Instead, it seems to be a case of a company buying out another company that sooner rather than later could become a threat to Facebook.
There are few companies in the world with as impressive a set of growth figures as Facebook but WhatsApp beats Facebook on several key metrics.
Around 450 million people around the world use the WhatsApp instant messaging service each month. Currently approximately 1 million new users are signing up for the service every day. One of the key things that no doubt attracted Facebook to the acquisition wasn’t just the impressive growth in the number of users but the engagement with the users themselves.
More than 70% of their monthly users use the application daily. Mark Zuckerberg of Facebook fame has referred to WhatsApp as “the only app we’ve ever seen with higher engagement than Facebook itself”.
So will we see a surge of tech acquisitions which are valued on the number of users and engagement as opposed to the profit and revenue figures?
WhatsApp also have an unheard of “developer to active user ratio”. Out of a current staff headcount of 50 employees there are only 32 engineers. Each individual WhatsApp engineer therefore supports 14 million active users. The app clearly works very well as otherwise I’d hate to think what the response time to their help desk queries would be!
Published on: 16 Feb 2014
Rihanna is one of the bestselling music artists of all time. She has sold over 30 million albums and 120 million singles worldwide.
Her former accountant though is probably not thinking about how good her music is as Rihanna has just won a $10 million settlement against him and his company for bad advice which resulted in the singing star becoming “effectively bankrupt” in 2009.
Rihanna, whose real name is Robyn Fenty, was suing accountant Peter Gounis and his firm for $35 million but according to the New York Post has reached an out-of-court settlement for $10 million.
The background to the case is that Gounis and his firm advised the singer that she had sufficient money to buy a $7 million house in California and described it as a “good investment”. The only problem was that after buying the house Rihanna had to spend more than $1 million to cure water and mould damage and then eventually sold the property for $2 million less than she had bought it for.
It was claimed that Rihanna lost $9 million over the year and was left with just $2 million at the end of 2009.
It won’t come as any relief for her ex-accountant but Rihanna fans may be relieved to know that her financial position is now considerably stronger.
A series of successful albums and tours has resulted in a significant increase in her earnings.
According to Forbes magazine her earnings in the year to June 2013 were $43 million.
It may seem obvious that auditors sell audit opinions. But that’s like saying top restaurants only sell calories.
Published on: 10 Feb 2014
I was having an interesting discussion with a group of students on Friday about a previous blog entry concerning “truth and fairness”.
It’s important to remember that an auditor does not make an absolute promise of accuracy.
The existence of audit risk means that a competent auditor will occasionally issue an audit opinion that proves to be inappropriate; most frequently because an unqualified opinion has been given when a qualified opinion would have been more appropriate.
We stake our reputation as a profession on perceived failures being very rare. This means that we need to make sure we’re using tools that are up to the task.
In order to state whether financial statements give a true and fair view, it is necessary to have a system of GAAP that adequately defines truth and fairness. It appears that the spectacular failure of Lehman Brothers in the USA happened as a result of window dressing financial statements, but which complied with US GAAP.
In a highly globalised market for audit services, perhaps we need to more explicitly state true and fair as true and fair (EU) and true and fair (USA)? This is attempted already within ISA 700 by stating “..true and fair view in accordance with…[insert system of GAAP]”.
However, reputational damage happens to the profession globally as a result of perceived weaknesses in one nation’s system of GAAP.
Maybe we need to amend the wording of the audit opinion to make this clearer?
Published on: 06 Feb 2014
…wear a tie.
Japan is famous for the long hours that some of their office workers undertake but there is now an invention that will maybe ease things a little bit for hardworking office staff.
A new tie called “Nemuri Tie” is now on sale in Japan.
Nemuri Tie means pillow tie in Japanese and if the advertising is anything to go by it will enable hard pressed office workers to grab a quick sleep at their desk.
It’s a relatively simple design in that it’s a normal looking tie but it’s got an inflatable pillow in it which can be blown up to provide a handy place to rest your head when you fancy a nap.
It can be inflated when the user is wearing it so there’s no need to keep on taking your tie off and putting it back on every time you fancy a sleep.
The Sleep Tie is currently on sale for just under £20.
It’s not clear whether the tie is stain proof for anyone that dribbles in their sleep.
Published on: 03 Feb 2014
My new year’s resolution was to get back into jogging. My friends never believe me but a couple of years ago I even managed a half marathon but unfortunately work and my like for food meant that the weight went on and the exercise took a back seat. On 1 January this year I made a resolution to get back to exercise. It’s nearly the end of February and the good news is that I’ve kept it up so far!
So much so in fact that I’m in need of some new running shoes. I’ve used Asics shoes for years but this evening had a quick look at the Nike site to see what was there.
Being an accountant though I couldn’t resist having a look at the site for some other information rather than just the latest products.
Back in the 1990s Nike was in the news for a number of wrong reasons. There were reports that some of their suppliers were allegedly paying their employees a pittance and some were working in sweatshop conditions. A BBC report also uncovered child labour practices at one of their suppliers in Cambodia.
Supply chain management is key to any successful business. Nike, as one of the world’s leading brands had to act fast to ensure that their brand wasn’t damaged by the bad publicity. They acted quickly and by all accounts resolved any issues that may have been present with their suppliers.
What is interesting though is that in today’s business environment the supply chain is no longer “hidden away” but is now arguably used to prove “best practice”. Nike have not only ensured compliance with best practice but have an “open book” policy on their website where you can find out comprehensive details of their CSR activities. Have a look here and there’s all you’d want to know about Nike’s CSR policies.
Now of course, I should really get off the computer, stop eating biscuits and get out there running…