Time up for Swiss watches?

Switzerland has a reputation for being the home of some of the most prestigious watch manufacturers.

Omega, Tag Heuer and Breitling are just three if the many famous brands of Swiss watches that produce extremely high-quality timepieces.

But things are changing though and there’s a modern-day challenger to their dominance.

That modern-day challenger is Apple.

Last year Apple sold more watched than the entire Swiss watch industry.

A recent report by Strategy Analytics estimated that Apple sold 30.7 million smartwatches last year (an increase of 36% on the 2018 figure).

Estimates for the entire Swiss watch industry showed sales of 21.1 million units last year (a 13% fall on the 2018 figures).

This is a difficult time for the Swiss watch industry as they face a number of challenges.

The younger generation especially are keen on the tech side of watches and these are very much in fashion.

Although some Swiss watch brands such as Swatch and Tissot are launching their own smart watches, their competencies and skills are very much based around the mechanical engineering of watches compared to software engineering which is needed for smart watches.

Another major challenge is their distribution channels and where they are sold.

Swiss watches are typically sold in jewellery shops whereas smart watches such as the Apple watch are sold in phone shops and Apple stores.

Certainly a challenging time for the Swiss watch industry.

Will these Swiss watch brands survive?

Only time will tell…

How much for a speech?

The salary of Boris Johnson, the current UK prime minister is just over £150,000. I’m sure that most Prime Minsters don’t do the job for the money but there can be some pretty significant financial benefits when they move on from being the prime minister.

As the PM, Mr Johnson can’t do any other work whilst in his job but other MPs can. Theresa May was Boris Johnson’s predecessor but now is back to being a standard MP.

According to the government’s register of interests though she’s doing quite nicely on the financial side of things.

PwC for example paid Mrs May in January to do a speech. The total time involved including preparation and travel was 12 hours.

So, how much do you think PwC paid Mrs May for this?

Go on, have a guess.

She received approximately £96,000 for the speech.

Now, that’s not bad for 12 hours work.

As well as receiving £96,000 from PwC she also received money from other organisations for speeches delivered during the first quarter of 2020. These were:

Approximately £115,000 from Dubai Women Establishment for a speech in February (19 hours, including preparation and travel).

Approximately £115,000 from the Structured Finance Association for a speech in February (25 hours, including preparation and travel).

Approximately £115,000 from Brown University, Rhode Island, USA. (14 hours, including preparation and travel).

Approximately £115,000 from Trinity University, Texas, USA. (14 hours, including preparation and travel).

Over £500,000 for 5 speeches in 3 months.

Not bad work if you can get it.

According to a statement by Mrs May in the Register of Members’ Financial Interests, these payments “are made to the Office of Theresa May Limited and used to pay employees, maintain my ongoing involvement in public life and support my charitable work.”

KPMG fined £700,000.

KPMG in the UK has been fined by the Financial Reporting Council for what only can be described as pretty poor auditing.

The situation behind the fine involves professional scepticism, or to be more precise, a lack of professional scepticism.

Professional standards define professional scepticism as “an attitude that includes a questioning mind, being alert to conditions that may indicate possible misstatement due to fraud or error, and a critical assessment of audit evidence.”

Or to put into simple words, to question and challenge what the client is saying and not to simply accept what they are saying at face value.

KPMG were fined £700,000 (which was reduced to £455,000 for early settlement) and reprimanded former senior partner for Manchester, Nicola Quayle for a “failure to apply sufficient professional scepticism”. Nicola was also fined £45,000 (reduced to £29,250 for early settlement).

The reason for the fine was because the FRC held that KPMG had failed to obtain and document sufficient audit evidence in relation to supplier-funded rebates.

These were “complex supplier arrangements” and KPMG should have been on alert to pay particular attention to “these types of complex supplier arrangements.”

Claudia Mortimore, deputy executive counsel to the FRC, said: “This is a measured and proportionate package of sanctions, which balances on the one hand the limited nature of the breaches, which did not call into question the truth or fairness of the financial statements, with the fact that auditors should have been on alert to pay particular attention to these types of complex supplier arrangements. Professional scepticism remains at the core of an auditor’s duty and the FRC will take appropriate action where it has been lacking, as in this case.”

This event took place back in the 2015/16 financial year and KPMG in the UK released a statement saying:

“We regret that specific aspects of our audit of this company for the 2015/2016 financial year did not meet the required standards.

As the FRC makes clear, there is no question as to the truth and fairness of the financial statements. Audit quality is of paramount importance to our firm and we have updated our audit processes and procedures to address the areas of concern.”