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Out of this world advertising…

Getting professional photos taken for advertising can be expensive but this particular photo shoot for Estee Lauder is expensive.

Very expensive in fact.

4 hours of photography will cost USD 128,000.

That certainly is expensive for 4 hours of work but to be fair it’s a very unusual photoshoot as it will take place inside the International Space Station and the photographers will be the astronauts.

In what will be a first for advertising, Nasa is charging Estee Lauder USD128,000 for Nasa astronauts to take photos and to film some shots of Estee Lauder’s Advanced Night Repair serum face cream in various locations around the space station.

The total fee includes the astronauts’ time at USD17,500 per hour (which is a pretty impressive charge out rate!).

A Nasa spokeswoman said that Estée Lauder was “paying for the astronauts to be the photographer, not to use the product, not to put the product on themselves, not even to open the product”.

Estee Lauder obviously think that the advertising will pay off but some people will no doubt argue that the cost of such photoshoots ultimately has to be recovered by the company and the way they do that is in the price of their products.

The counter argument to this though is that it’s more than just being about the photos in the adverts. The general publicity that Estee Lauder will get from being the first cosmetics business to have their products in space will also be valuable for the company.

Flying high with creativity.

Sometimes a little bit of creative thinking can go a long way. This bit of creativity though went a very long way indeed.

Creativity can add value to all types of businesses and this particular project involved technology and one of the largest sea birds.

There are 22 species of the albatross bird. With a wingspan of up to 3.5 metres, the wandering albatross species has the largest wingspan of any living flying bird. Importantly for this project though, they are also capable of flying long distances out to sea.

Illegal fishing by trawlers can seriously impact on fish levels. Organisations tasked with protecting fish levels can find it almost impossible to prevent this illegal fishing. In simple terms, the ocean is very large and the boats are pretty small so keeping track of them and what they are fishing for is very difficult.

In an innovative project led by the French National Centre for Scientific Research, 169 Albatrosses have been equipped with sensors. If the birds are in the vicinity of a boat, these sensors are able to tell whether the boat’s Automatic Identification Systems (AIS) are switched off.

Having the AIS systems switched off on a boat is common when the boat is fishing illegally.

The beauty of this project is that the albatrosses can cover huge areas and when the sensors identify boats with their AIS switched off, the enforcement boats can head to that location to investigate further.

The initiative is currently being trialled off the coast of New Zealand and over the last 6 months the birds have located 353 boats, 37% of which were not emitting the AIS signal.

The Captain was sober, the First Mate was drunk. Was that true? Was that fair?

I’ve been a qualified accountant for a fair few years now.

I had the pleasure of bumping into my first auditing lecturer recently. It was at a business mixer event and even though it was a long time since we last saw each other he really hadn’t changed that much.

We got talking and I reminded him of something that he told me that I’ve remembered ever since and to me is a great way of explaining what is meant by “True and Fair”. Those of you that have studied financial reporting papers will be aware of the importance of “True and Fair” in connection with financial statements.

In summary, financial statements should provide what is generally understood as a true and fair view of the reporting entity’s financial position, performance and changes in financial position.

I always remember my lecturer telling me the story of the ship’s captain that was having a problem with his first mate who was always drunk. In the end the captain wrote an official entry in the captains log saying “Today, the first mate was drunk.”

The first mate was upset about this and the next time he took charge of the ship when the captain was asleep, he wrote in the log that “Today, the captain was sober”. This of course implied that on other days the captain wasn’t sober as he was drunk.

Now, the statement “today, the captain was sober” was clearly true but I’ll leave it up to you to decide whether or not it was fair!

A bitter coffee taste…

Anyone that has studied hard for their exams will almost certainly at one time or another utilised the services of a strong coffee.

Whilst desperately trying to cram that last bit of knowledge into your brain before the exams there is often a temptation to grab a strong coffee late in the night to keep your mind awake.

For years students around the world have been utilising the caffeine in coffee to help get that extra mark or two.

Coffee is said to originate from East Africa where legend has it that a 9th century Ethiopian goat herder by the name of Starbucks Kaldi noticed that after his goats had ate some coffee beans they started bouncing around like teenagers at the local disco.

This started the journey of coffee and associated caffeine hits so loved by students around the world.

Over in China, one coffee chain has been in the news for all the wrong reasons.

Luckin Coffee was only set up 3 years ago but had lofty ambitions.

They described themselves as “a pioneer of a technology-driven new retail model to provide coffee and other products of high quality, high affordability, and high convenience to customers” and had vowed to overtake Starbucks as China’s biggest coffee chain.

They grew quickly.

Very quickly in fact as within 3 years they had 4,500 outlets around China.

They were also one of the small number of Chinese organisations to quote their shares on the US Nasdaq market.

Things weren’t all they were made out to be though as in April their shares were suspended on the Nasdaq market after the company revealed that they had uncovered $310 million in fake transactions.

It appears that some people in the organisation were so keen for the growth of the company to continue that they created fake sales so as to give the impression that their revenue was growing quicker than it was in reality.

The company announced the discovery and warned the market that investors could no longer rely on previous financial statements that showed rapid growth.

The ongoing financial investigation by the company has resulted in the chief executive and the chief operating officer being fired yesterday and six other employers have been suspended whilst investigations continue.

The shares are currently suspended on the Nasdaq.

KPMG partners cheated in exams.

Ethics are pretty important if you’re a partner in an accounting firm. Unfortunately for these guys though they weren’t the most ethical of people as they were involved in cheating in exams.

The cheating was uncovered by the SEC (Securities and Exchange Commission) in the US. They were initially investigating claims that KPMG had altered previously completed audit work after receiving stolen information about what inspections would be conducted by the Public Company Accounting Oversight Board.

During that investigation however they also found that numerous KPMG audit professionals cheated on internal training exams by sharing answers.

Cheating at exams by sharing answers? Surely that would be a junior member?

Actually, no.

The key people involved were (now former) KPMG audit partners.

The investigation stated that former partners Timothy Daly, Michael Bellach, and John Donovan were involved in the cheating.

They had obtained images of questions and answers to the tests from subordinates and then shared them with members of their team.

The tests which were taking place were in connection with ensuring that KPMG audit staff understood certain accounting and auditing principles.

KPMG themselves became aware of potential cheating on the exams and began an investigation. They sent a document preservation notice to all KPMG staff (this basically means not to delete or destroy any potential evidence).

The ex-partners however ignored this preservation notice. They deleted various text messages and denied any wrongdoing to KPMG investigators.

KPMG were obviously not happy with the situation when the truth emerged and the partners soon became ex-partners of KPMG.

The three individuals were also suspended from appearing or practicing as an accountant before the SEC (although they can apply for reinstatement in the future).

KPMG had a pretty bad time of it last year in terms of the stolen PCAOB information and the exam cheating and had to pay a penalty of $50 million.

Steven Peikin, co-director of the SEC’s division of enforcement, said: “Audit professionals play a critical role in the integrity of the financial reporting process and the protection of investors. These actions reflect our commitment to hold these gatekeepers responsible for breaches of their professional obligations.”

A KPMG spokesperson said “We are a stronger firm as a result of the actions we are taking to strengthen our culture, governance and compliance program.”

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.”

Would the real Hugo Boss please stand up?

Joe Lycett is a British comedian. In fact, I should say that Joe Lycett used to be a comedian because although the person still exists his name doesn’t.

This sounds all very confusing and also, what has it got to do with the leading fashion house, Hugo Boss?

Like most large companies around the world, Hugo Boss defends it’s name when it feels other businesses are using similar names which could cause confusion in the eyes of the consumer.

If for example you decided to set up a clothing brand called “Hugo Bass” I’m pretty sure Hugo Boss would take legal action against you.

Hugo Boss was involved in a high-profile case involving a brewery in Wales called Boss Brewing and in particular two of the beers that it made called Boss Boss and Boss Black.

Hugo Boss took legal action against Boss Brewery but it was held that there was no need for the Brewery to change it’s name.

That was all very well for the Brewery but it cost them a significant amount of money in legal fees to defend the issue in court and for a small business that was challenging.

Joe Lycett wasn’t happy about this and decided to legally change his name as a protest.

His new name is… yes, you guessed it… Hugo Boss.

He tweeted a picture of the official confirmation of his name change and wrote

“So @HUGOBOSS (who turnover approx $2.7 billion a year) have sent cease & desist letters to a number of small businesses & charities who use the word ‘BOSS’ or similar, including a small brewery in Swansea costing them thousands in legal fees and rebranding.

It’s clear that @HUGOBOSS HATES people using their name.

Unfortunately for them this week I legally changed my name by deed poll and I am now officially known as Hugo Boss.

All future statements from me are not from Joe Lycett but from Hugo Boss. Enjoy.”

In what could have been a bit of bad PR for Hugo Boss (the company), they responded well to the new Hugo Boss (formerly Joe Lycett).

They released a statement saying: “We welcome the comedian formerly known as Joe Lycett as a member of the HUGO BOSS family.

As he will know, as a ‘well-known’ trademark (as opposed to a ‘regular’ trademark) HUGO BOSS enjoys increased protection not only against trademarks for similar goods, but also for dissimilar goods across all product categories for our brands and trademarks BOSS and BOSS Black and their associated visual appearance.

Following the application by Boss Brewing to register a trademark similar to our ‘well-known’ trademark, we approached them to prevent potential misunderstanding regarding the brands BOSS and BOSS Black, which were being used to market beer and items of clothing.

Both parties worked constructively to find a solution, which allows Boss Brewing the continued use of its name and all of its products, other than two beers (BOSS BLACK and BOSS BOSS) where a slight change of the name was agreed upon.

As an open-minded company we would like to clarify that we do not oppose the free use of language in any way and we accept the generic term ‘boss’ and its various and frequent uses in different languages.”

Fancy working for the Queen?

I’m not sure where you work or what your office is like but my guess is that it’s not as historic as where you would work if you were successful in applying for this job.

The Royal Family has advertised for a new Management Accountant to look after the “Privy Purse” (the British sovereign’s private income). The job is based at Buckingham Palace.

Candidates for the job need to be qualified and should have “outstanding problem-solving skills”. They will need to produce management information and financial accounts and the advert promises that “no two days will be the same and the deadlines we work to will stretch you. Yet in all that you do, you’ll rise to the challenge and deliver faultless accuracy and a first-class service to this unique organisation”.

It’s not just a solid knowledge of figures that they require as the advert goes on to say that candidates need to demonstrate that they are “as good with people as you are with numbers, which is crucial given the customer focussed nature of this role”.

Now let’s get down to the exciting part and how much are they prepared to pay for this position?

According to leading recruiter Robert Half, the average salary for a Management Accountant in London is currently £58,100.

The salary that is being offered for the Royal job is £40,000.

An unexpected ending…

A lot of you may have been on business trips but I bet your trip wasn’t as exciting (and tragic) as this gentlemen’s trip was.

What was also surprising was that his employer was found liable for his death as it was classified as an industrial accident.

The exact cause of death was a cardiac arrest whilst he was having sex with a stranger he had met on the business trip.

Now, whilst having a heart attack during sex with a stranger probably wouldn’t meet most people’s definition of an “industrial accident” a French court found otherwise. The court stated that the employer was responsible for any accident occurring during a business trip and ruled that his family were entitled to compensation.

The man who died on the job, named as Xavier X, was working as an engineer for TSO, a railway services company based near Paris and his employer had perhaps quite reasonably argued that he was not carrying out professional duties when he got into an extra marital relationship with a total stranger in his hotel room.

This opinion though wasn’t accepted by the court and they upheld the view that sexual activity was normal, “like taking a shower or a meal”.

As a result of it being classified as a normal activity on a business trip, the death was considered to be an industrial accident and under French law, partners or children of industrial accident victims receive up to 80 per cent of their salary until what would have been the person’s retirement age, with pension contributions paid from then on.