The Big 4 don’t appear to be happy about this…

, , , , , , , , , , , , , , , , , , , , , , , ,

We blogged earlier this year about Michel Barnier, the EU internal market commissioner announcing plans to issue new laws which would dramatically impact the “Big 4” (namely Deloitte, Ernst & Young, KPMG and PwC.)

Well, these changes have now got a bit closer as the draft law has just been released.

In an attempt to reduce conflict of interest and to introduce more competition into the industry the main proposal of the draft law includes the requirement for the Big 4 firms to separate their auditing and consulting divisions in the EU.

This is a pretty big issue as in simple terms if the law becomes final it could prevent the Big 4 “audit firms” from providing any non audit related services such as consulting, providing tax advice or running training courses.

This could see a major restructuring of the audit profession.

Other provisions in the draft law include banks being banned from insisting that a company uses a Big 4 firm if they are to be lent money by the bank (at the moment a number of banks make it a requirement for a company to be audited by a Big 4 firm before they will release significant loans.)

There is also a proposed requirement for audit firms to be rotated every 6 to 12 years.

Perhaps unsurprisingly the Big 4 are reported to be against any changes to the current rules (after all as the saying goes, “how many turkeys would vote for Christmas?”).

I’m pretty sure though that the “mid tier group” of auditing firms that are below the Big 4 in terms of size such as BDO, Grant Thornton and Mazars would maybe take a different view to the Big 4 and be in favour of Mr Barnier’s views as this could open up a number of opportunities for them.

Before everyone that works at a Big 4 company starts rushing to rearrange the office furniture though it’s worth noting that the law at the moment is only draft and the EU states and the European Parliament have to provide the final sign off before the law becomes a reality.

Will passing your ACCA or CIMA exams make you slimmer?

, , , , , , , , , , , , , , , , , , , , , , , ,

According to a report released yesterday by Eurostat, if you’re in the UK and you’re speaking to a woman then there is a 24% chance that she is obese (or to use less technical terminology, she is very fat).

At the other end of the “fat scale” are ladies from Romania who have the privilege of being the “slimmest nation” in the EU with only 7% of Romanian ladies being classified as obese.

So nearly 1 in 4 ladies in the UK are obese. From an environmental analysis point of view this increase in the number of fat people over recent years is a classic movement in the “Social” part of PESTEL analysis.

As well as having serious implications for the health of those individuals that are overweight the movement towards “fat nations” can have serious implications for businesses over the medium to long term.

In the private sector, Airlines for example will need to invest in bigger seats and spend more on fuel costs to move all this heavier weight around the world.

The public sector will also be impacted with for example hospitals needing to have stronger and bigger beds.

One interesting thing I noticed within the Eurostat report though was the following statement:

The share of obese persons also varies according to the educational level. For women, the pattern is again clear: the proportion of women who are obese falls as the educational level rises in all Member States.

Wow – this is interesting as surely it means that the cleverer you are, the less likely you are to be fat?

So does this means that all your hard work spent improving your educational levels by studying for ACCA and CIMA not only helps your career but also reduces your chances of being obese??

This must be an additional incentive for studying and it also provides a great excuse for any gentlemen that are reading this.

After all, if your wife or girlfriend happens to catch you looking at a slim lady then all you have to say is that you were simply “admiring her intellectual ability”…

ACCA exam tips released today but don’t do what this person did…

, , , , , , , , , , , , , , ,

There’s a saying that studying for professional exams is a marathon and not a sprint.

In other words, it’s a long hard journey to reach the exam finish line and not just a quick sprint to exam glory. Anyone that has qualified as an accountant will fully appreciate that it’s hard work and certainly feels more like a marathon than a sprint!

So qualifying as an accountant can be compared to a marathon race although one thing for sure is that you shouldn’t adopt the approach that Mr Rob Sloan took when he recently ran the Kielder Marathon in the UK.

Mr Sloan was 20 miles through the 26 mile race when he decided to give up because he was feeling tired. He then got on a bus and headed home.

As luck would have it though his bus home went near the finish line and he jumped off just before the finish line. He then hid behind some trees and came back to the course when he thought no one was looking and then sprinted to 3rd place.

Mr Sloan was awarded the medal for 3rd place but luckily for the honest runners in the race, his cheating was eventually found out and he was disqualified from the race and is now facing a ban from his running club.

It’s only the examiners that know for sure what’s in the December 2011 ACCA exams but we’ve put together a list of subject areas that we’d personally make sure we knew pretty well in the run up to the exams.

We launched our Facebook page yesterday and the December 2011 ACCA exam tips can be found at www.facebook.com/theexpgroup

We’ve also added to our free ACCA and CIMA courses by launching free online training courses on Facebook towards ACCA’s Foundations in Accountancy (FIA) qualifications and these courses can also be found at www.facebook.com/theexpgroup

Good luck to those of you that are studying for the exams and I hope the final sprint goes well and you’re not forced to “get on the bus” half way through…

Are the young ones always smaller?

, , , , , , ,

I’m willing to bet that nearly all of you have used a Microsoft product. Probably an equally high proportion have used Google and a reasonably significant number of you will own an Apple product.

What about LinkedIn? Most of you have no doubt heard of it and a number of you will be registered with the website.

But did you know that Microsoft currently has one of 9.40, Apple has one of 13.61, Google has one of 20.30 and LinkedIn has one of well, … well, you’ll just have to wait a moment to hear the figure as it’s rather impressive.

So, what figures am I talking about?

The figures mentioned above refer to the PE ratio or the Price Earnings ratio.

In an attempt to astound you with my knowledge, the Price Earnings ratio measures… (wait for it)… the ratio of Price to Earnings (a round of applause please for that brilliant explanation).

In other words, the share price of Microsoft for example is such that the market is currently prepared to pay 9.40 times the earnings to own it.

The PE ratio is also sometimes known as the “price multiple”, “earnings multiple” or simply “multiple” and whilst share prices can be affected by a number of different things, a high PE ratio generally implies that the market is expecting earnings to rise in the future.

If we round up the PE ratios of the companies above we get:

Microsoft: 9

Apple: 14

Google: 20

That other tech giant on the market, LinkedIn currently has a PE ratio of 1,498 (yes, 1,498).

Wow – that’s not bad is it?

So hang on. A PE ratio this high implies that the market has factored in an expectation of significant growth in earnings for LinkedIn.

This really is an expectation of pretty significant growth as at the moment for every $1 of current earnings an investor gets he or she has to pay $1,498.

So, for the sake of the LinkedIn shareholders let’s hope that in the future more people become linked in.

Was this as easy as 1,2,… (now what was the next one)?

, , , , , , , , , , , , , , , , , , , , , , , , ,

There’s a well known technique in public speaking of batching topics in groups of three.

The general idea is that it helps with the flow of the presentation and it’s easier for the audience to remember.

Unfortunately for US presidential hopeful Rick Perry, three topics were one too many when he spoke last night at the live presidential nomination debate for the US Republican candidate.

The speakers at the debate were all candidates to lead the Republican Party in next year’s US Presidential election against President Obama.

Mr Perry was in the process of listing the three US government departments he would abolish if he was elected president when he forgot what the third one would be.

His exact words were:

“I will tell you: It’s three agencies of government, when I get there, that are gone: Commerce, Education and the….. what’s the third one there? Let’s see….. OK. So Commerce, Education and the…..the third agency of government I would…..I would do away with the Education, the….. Commerce and…..let’s see….. I can’t. The third one, I can’t. Sorry. Oops.”

Now, we all make mistakes at one stage or another when speaking in public so is this really something for Mr Perry to worry about?

After all, the debates are only seen as one of the key deciders in whether somebody will win the nomination or not and they were only seen live on primetime TV across America. The press and TV in American are also only talking about it all the time.

Now, any of you studying professional exams will appreciate that two out of three is 66.67% and I’m sure that if you got 67% in your exams you’d see that as a success.

A potential future president of America only being able to remember 2 out of 3 of his proposed policies though probably isn’t so good.

The video of Mr Perry’s performance can be found here and get ready to cringe with embarrassment.

Was this the deal of the day?

, , , , ,

Last Friday Groupon raised $700 million in its initial public offering (IPO).

Some of you may have heard of Groupon. It’s done remarkably well in the 3 years since it started in 2008 and now has over 100 million users.

It’s a daily deal site whereby people sign up to get daily “special offers”. The business model of Groupon is such that when people buy a “special offer voucher” to use on a deal, Groupon shares the revenue with the service provider that is providing the special offer.

Interestingly enough their arrangement is such that if somebody buys a special offer voucher but then subsequently doesn’t use the voucher then Groupon keep all the revenue.

In simple terms an IPO is where the owners of a private unquoted company offer a proportion of their shares to the general public.

Let’s look at some of the figures.

A relatively small proportion of the company was offered in the IPO (just over 5%) but $700 million was raised. This values the company at nearly $13 billion. Not bad for a business that started just over 1,000 days ago.

In the past, other tech companies that have undertaken an IPO include Google who raised an impressive $1.7 billion back in 2004. Since then Google has gone on to become a $200 billion company but will Groupon grow to such heady heights?

To me it seems that whilst the Groupon business model has so far been successful it’s a fairly limited business model.

After all, it’s simply offering discount vouchers and the business model would surely be easy to copy and if one of the tech big boys such as Google or Facebook decided to really push a similar voucher scheme Groupon could have real problems.

One of the challenges the Groupon business model has is that the suppliers that sign up to offer discounts on Groupon are doing so in the hope that their classic their discount voucher will be a classic “loss leader” and will result in repeat purchases by the bargain hunter customers.

Figures are not available as to how many of these bargain hunters do more than simply purchase the discount voucher and then never undertake a second purchase from the supplier but my guess is that it could be a fairly significant number.

So, in summary, a business model that is relatively easy to copy and has limited barriers to entry combined with a customer base who are always looking for the next bargain (which may well be with another discount voucher company). This seems to me to be a risky investment.

Luckily for Groupon a lot of investors took a different view to me and at the close of the first day of trading the share price had risen to $26 from a launch price of $20.

Only time will tell though whether the IPO was indeed a great daily deal…

Surely this is the best “out of office notification” ever?

, , , , , , , , , , , , , , , , , , , , , , , , ,

I recently visited Cardiff for a few days of work. Cardiff is the capital of Wales and one thing you notice as soon as you enter Wales is that the road signs are written in both English and Welsh.

This reminded me of a production error which was reported a while ago which to me must rank as one of the funniest results of an out of office notification.

If used properly the out of office notification is a great tool as it lets the sender of the message know if you’re away for a while and who to contact in your absence.

The error here though involved Swansea Council in Wales who required a road sign saying:

“No entry for heavy goods vehicles. Residential site only”

They emailed their in-house translation service with a request for a translation of this phrase into Welsh and a reply came back with:

“Nid wyf yn y swyddfa ar hyn o bryd. Anfonwch unrhyw waith i’w gyfieithu”

They then produced the sign with both the English and Welsh text on it and put it in the required place by the side of the road.

It was a while later that some Welsh speakers noticed the road sign and it turned out that instead of telling drivers of heavy goods vehicles that they couldn’t drive down that particular road the Welsh text on the road sign actually said:

“I am not in the office at the moment. Send any work to be translated”

It’s just not tennis to leave your phone on at work is it?

, , , , , , , , , , , , , , , , , , , , , , , , ,

We’ve all been there. Sat in a meeting when suddenly somebody’s mobile phone starts ringing and there’s a mad rush by that person to grab the ringing phone and turn it off.

It’s often the case that the person with the “cheesiest” ring tone is the one that forgets to put their phone on silent.

When the phone rings there’s usually a mumbled apology along with a slightly embarrassed look but then the meeting carries on.

Whilst half the people at the meeting may well be thinking something along the lines of “what an idiot”, the meeting will normally continue with the ring tone soon becoming a distant memory.

There are certain jobs though where it really isn’t advisable to take your phone with you to work. For example, I’m not sure that a surgeon or classical musician should really have their phone with them when they’re working.

The video below shoes an interesting situation when top tennis player Caroline Wozniacki is about to serve against her opponent, the French tennis player Alize Kornet.

As a professional tennis player you need to remain focussed and concentrated at all times. Miss Wozniacki’s concentration though is broken by the ring tone of a phone belonging to none other than her opponent…

Sorry to break the news to you but Christmas is cancelled…

, , , , , , ,

3 years ago in the middle of the financial crisis when some of the best known banks in the world were on the verge of collapsing, the Royal Bank of Scotland (RBS) was rescued by the British tax payers to the tune of £45 billion.

Since then the bank has been under a lot of scrutiny. Not just from the point of whether it would survive but also when it would turn things around so that the business became profitable and the tax payer would start to get their money back.

Along with lots of other companies that have suffered in the crisis, RBS has undertaken a cost cutting exercise over the last couple of years.

Chris Kyle, the CFO of the Investment Banking division of RBS yesterday announced some additional cut backs to his staff.

An internal memo to his staff told them amongst other things that:

– No-one will be given a new Blackberry phone or other handset.

– There will be no magazine or newspapers subscriptions (I guess this now means that they won’t be able to do the daily FT crossword over morning coffee in the office)

– People working late in the office will not be able to claim a taxi expense to take them home unless they are working past 10pm (it used to be a 9pm cut off)

The bank has also banned all staff entertaining for the rest of the year so there will be no bank funded Christmas party for the RBS investment bankers and instead the bankers will have to pay for their office Christmas party themselves.

Now, whilst some people will think this is good cost control some others may feel that this is just “window dressing” to give the impression that the investment bankers’ excessive remuneration and benefits are being stopped.

Some of the RBS employees may well be a bit upset about having to pay for their Christmas party but last year over 300 key staff within the bank reportedly shared a bonus pot of £375 million which equals an average bonus of over £1.1 million each.

I guess these particular individuals are quite relaxed about buying their own Christmas drinks…

Is it easier to become a partner if you’re a man or a woman?

, , , , , , , , , , , , , , , , , , , , , , , ,

Not so long ago the finance profession was predominantly a male one.

At the risk of showing my age, when I first entered the world of work the senior roles in the company I worked for were completely dominated by men.

Things are rightly changing though and in most countries around the world the younger generation that are now entering all business functions appear to be more evenly balanced between the two sexes.

This opening up of opportunities to both men and women can only be a good thing. Any form of discrimination whether it’s discriminating on the basis of race, gender or religion is not only morally wrong but can also result in valuable parts of the working population being overlooked for jobs.

KPMG is one of the top firms in the world and they appear to be getting their gender equality sorted out.

Despite being in the finance and consulting industry which in previous generations was dominated by men, their latest set of promotions indicate that woman are “fighting back”.

KPMG in the UK has just announced the appointment of 29 new partners and 88 new directors.

Prior to their announcement the proportion of female partners working for KPMG in the UK was 14%. Out of the new promotions though, 24% of the new partners and 30% of the new directors are women.

Richard Bennison, CEO of KPMG in the UK, said:

“We are also very pleased to be able to improve the gender balance amongst our partners. We are genuinely committed to enabling more women to reach senior positions.”

So, whilst the number of female partners is still in the minority the percentage is starting to get more balanced.

Congratulations therefore to KPMG on this and it does of course raise the question of how long will it be before the balance is completely reversed and 14% of the total partners are men and 86% are women?