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Rolling in it…

Here’s a question for you – what do you think the average age is of somebody who buys a new Rolls-Royce?

Perhaps surprisingly the average age has dropped significantly over the last decade.

The company has just reported their sales for 2019. Despite the majority of the global car market facing falling sales, Rolls-Royce have bucked the trend.

They have reported their best ever sales with a 25% increase in cars sold compared to the previous year.

In terms of Michael Porter’s generic strategy model, their strategy is a clear differentiation approach. In the words of chief executive Torsten Muller-Otvos, the brand is “rare and exclusive”.

They have also made a concerted effort to appeal to younger drivers (it’s fair to say that these are younger extremely wealthy drivers with their bestselling model the Cullinan starting at £264,000).

The Cullinan was launched in 2018 and it was a radical change for the company. Rolls-Royce had a history of luxury saloon models and the Cullinan was their first SUV 4×4 off-road car.

Mr Muller-Otvos said the increase in sales was in part down to the introduction of “black badge” versions of its cars, where the car was black inside and out.

He was quoted as saying

“This is a cooler, darker, more menacing, edgy proposition, [aimed] especially towards younger clients.”

“Many smart kids around the world building platforms or whatever making a fortune early in their life are coming to us to start investing in a Rolls-Royce”

In total Rolls-Royce sold 5,125 new cars in 2019 of which the Cullinan amounted to 40% (nearly 2,000 cars).

Oh, and in case you are interested the average age of a Rolls-Royce buyer is now 43.

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.

Would you send a photo?

Picture the scene. You’re one of the largest supermarket chains in the Netherlands employing more than 100,000 people. You’re planning on introducing a new staff uniform. Do you ask people what size uniform they are or do you ask them to upload semi-naked photographs of themselves to an app so that it can work out the sizes?

Yep, you guessed it. The supermarket chain, Albert Heijn asked staff at their Nijmegen branch to upload photos of themselves in their underwear or tight-fitting sports gear.

It was supposed to be a trial to see how it worked before rolling it out to the whole organisation.

Apparently, the idea behind it was that it would be more efficient to load up 100,000 images to an app to analyse the sizes rather than receive 100,000 emails.

Whoever came up with the idea failed to appreciate that not everyone would be keen to load up a half-naked photo to an app run by their employer.

It was not only the staff that thought this was a bit strange as the Dutch Data Protection Authority described it as bizarre saying the company had “no grounds whatsoever to require its staff to do this”.

The news was first reported by the Dutch newspaper NRC who highlighted that a poster had appeared in the staff canteen at the Nijmegen supermarket saying “Wear underwear or tight-fitting sportswear so the contours of your body can be measured as accurately as possible. And ask someone to help you take the photos”.

Now, whilst the person that came up with the idea probably thought this would be an efficient way of getting the sizes, it does remind everyone to always take a step back and ask yourself “is this ok?”

A spokesman for the company said “We have cancelled the pilot and apologised to all involved”.

Ericsson fined $1 billion for bribery.

The Swedish telecommunications group Telefonaktiebolaget LM Ericsson (or Ericsson as most people refer to it as and how my spell checker prefers) is an incredibly successful organisation.

The group provides services, software and infrastructure in information and communications technology.

Oh, and they were also recently fined $1 billion to settle bribery charges.

The company was founded in 1876 by Lars Magnus Ericsson and now employs nearly 100,000 people and operates in around 180 countries.

Not all of these employees were ethical though and Ericsson’s Egyptian subsidiary recently pleaded guilty to conspiracy to violate the anti-bribery provisions of the US’s Foreign Corrupt Practices Act.

This bribery had been taking place for 17 years and was reported to have netted the group business worth more than $400m.

US attorney Geoffrey Berman was quoted as saying “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that money talks.” He went to say “Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

The bribery took place in a number of countries. It appointed agents and consultants to bribe government officials in Djibouti, China, Vietnam, Indonesia and Kuwait.

One example of the techniques involved was in Kuwait where an Ericsson subsidiary agreed a payment of approximately $450,000 to a “consulting company”.

No consulting actually took place but a fake invoice for the consulting services was issued to Ericsson.

As a result of this payment, inside information about a tender for the modernisation of a state-owned telecommunications company’s radio access network in Kuwait was obtained.

The end result was that the modernisation contract, which was valued at $182m, was awarded to an Ericsson subsidiary. In return Ericsson paid the $450,000 to the consulting company and improperly recorded it in its books as consulting fees rather than as a bribe.

IRS Criminal Investigation head Don Fort was quoted as saying that “Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity. Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records. We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

Exams for sale….

One of the five fundamental ethical principles is Integrity.

Being straightforward and honest is a vital characteristic of being a professional accountant.

Most people who are studying for their professional exams have one thing on their mind. Namely, to pass their exams but four students who were studying for their ACCA exams had other things on their minds and at the same time, were not the brightest individuals out there.

What they planned to do was to register for some Computer Based Exams (CBEs) and then whilst sitting the exams they would use their mobile phones to take photos of the computer screen showing the questions. They would then sell these photos with the questions on them via the internet.

The four individuals involved, Chen Yiyun, Hiujiao Ru, Zehui Gong and Ziying Wang decided to sell the questions on Taobao Marketplace, a Chinese shopping website.

They no doubt thought that this was an extremely clever way of making some money. What could possibly go wrong by taking photos of the questions and then selling them online?

One of the other fundamental ethical principles is that of Professional Competence.

Now, if these individuals had even a minuscule amount of Professional Competence, they would have reviewed the photos before selling them.

Alas for them they didn’t review them.

If they had reviewed them, they would have seen at the top of the computer screen in the photos their ACCA student registration number and the exam centre.

ACCA were made aware of the questions being for sale and made a test purchase on the Taobao Marketplace. Given the student registration numbers were on the screen, they didn’t need a team of top detectives to identify the individuals involved.

Unsurprisingly, the four individuals are now ex-students of ACCA having been found guilty of misconduct and they were ordered to pay costs ranging from £3,500 to £7,000.

You can’t McFlurry Love

Until recently, Steve Easterbrook was the boss of McDonalds. He had been with them for a long time having started working for them back in 1993 as a manager in London.

Mr Easterbrook no doubt had a lot of affection for the company he ran but it turned out that he also had a lot of affection for a colleague as he had started dating a lady who also worked for McDonalds.

Although the relationship with his colleague was consensual, it didn’t go down too well with McDonalds.

According to the company, Mr Easterbrook had “violated company policy” and shown “poor judgement” (by “poor judgement” I assume that refers to him having the relationship rather than the choice of who he had the relationship with).

Now, whilst some people may say that it was a consensual relationship between two adults so let them get on with it, the key thing here is that it was against company policy and the two people involved had agreed to the company policy when they joined the firm so it’s a straight forward case of a breach of that policy.

More and more companies are having either outright bans on any relationships or are requiring individuals to disclose any relationships (I’m not a legal expert here but it does raise some interesting questions as to what is the definition of a relationship and how quickly after reaching that definition you need to notify your employer – is it minutes, hours, days…).

Mr Easterbrook won’t be short of funds to carry on wining and dining his new love as the termination package is pretty significant. He earned nearly $16m last year and will receive 26 weeks of pay on his departure.

Bloomberg estimate that his total leaving package which includes previously granted shares will be in excess of $37m.

That should buy a few romantic meals at Burger King for the two love birds.

Don’t sweat your exams

Most people enjoy it when the weather gets warmer. Sunny weather often makes people happier but some recent research indicates that a heatwave may not be good news if you’re taking an exam.

Researchers from Harvard Chan School of Public Health found that students who were exposed to hotter temperatures did significantly less well in cognitive tests than those students who lived in a temperature-controlled environment.

The research involved a group of students who had already been allocated accommodation on campus. Half of the rooms had air conditioning and half didn’t.

The students were followed during a 5-day heatwave where temperatures exceeded 26C.

Before, during and after the heatwave, the students had to perform a number of cognitive tests which measured the speed they processed matters as well as their working memory. The results showed that the scores of these students in the hotter accommodation fell by 13% compared to their colleagues in the air-conditioned temperature stable environment.

The researchers said that it was not clear what was behind the drop in performance during an increase in temperature. It could have been because the brain was working harder on maintaining critical body functions such as thermoregulation or it could have been due to a poorer quality of sleep due to the heat.

Either way, let’s hope it’s not a heatwave the next time you sit an exam…

How to impress over a business lunch…

Picture the scene. You’ve got an important business lunch coming up. You want to make a good impression on the person you are meeting with. What should you eat for lunch?

A recent study published in the Journal of Consumer Psychology has some interesting findings which indicate that if you have an important business lunch, there are various benefits to ordering the same food as the person you are trying to impress.

Scientists from the University of Chicago studied nearly 500 people to identify whether eating the same food helped them agree in negotiations.

The researcher’s conclusion was that people who are served the same food are more likely to trust each other, smooth out problems and make deals.

As part of the study, participants in the research were told to imagine they were “investors” who had to decide whether to invest in funds operated by their “fund manager” eating partners. The researchers found that those people who were served similar food invested more money.

Another interesting finding in the study was the link between food consumption and the effectiveness of advertising. The authors said that “consumers are more trusting of information about non-food products – e.g. a software product – when the advertiser in the product testimonial eats similar food to them”.

Back to the business lunch though and although the research found that there are benefits to ordering the same food as the person you are trying to impress, I’m not sure that if you’re wearing a nice clean white shirt to the lunch meeting you should necessarily follow the other person in ordering that “tricky to eat tidily spaghetti with the sloppy tomato sauce”…

I never emailed you…

Sometimes it’s the simple scams that can cause the most damage.

We hear all the time about ignoring scam phishing emails where fraudsters are pretending to be banks to get online bank account log in details but there’s a new scam involving email which is costing some people a lot of money.

The Art Newspaper reported that at least nine art galleries and art dealers have been caught up by the fraud. The amounts lost to the fraudsters have been significant with amounts ranging from £10,000 to £1 million.

The fraud itself is fairly simple.

The fraudsters hack into an organisation’s email system and look out for emails sending invoices to clients.

For example, if an art dealer has made a sale of a piece of art and then emails the invoice through to the customer for payment, the fraudsters send another email straight after the original email.

This second email looks like it’s come from the art dealer and includes an identical invoice with the only exception being it has a different bank account on it for payment of the invoice. Yes, you’ve guessed it but the bank details on the second invoice are not those of the art dealer but instead are details of a bank account in the name of the fraudsters.

The customer innocently pays the invoice as it looks genuine and as soon as the money is received the fraudsters withdraw the money, close the bank account and are never heard of again.

As far as the art dealer is concerned they are waiting for the payment to be made but the customer has already paid the money but to the fraudster. By the time the fraud is discovered it is too late.

There’s a fairly simple solution to this and ensuring that anti-virus programmes are up to date and email passwords are changed regularly will go a long way in preventing this sort of fraud.

Will auditors become more like Tom Cruise in the future?

Gone are the days when auditors were manually checking and ticking lots of pieces of paper. Today’s auditing techniques involve significant use of computers.

But how far can this computer use go? Will they be able to predict when accounting fraud is going to take place as opposed to tracking transactions that have already occurred?

The film Minority Report starring Tom Cruise was based around software that could predict when a crime was going to happen and the culprits would be arrested before they actually committed the crime. Although this film seemed well and truly within the realms of science fiction, two police forces in the UK have undertaken trials of a sophisticated computer software package which aims to predict where and when future crimes are likely to occur.

The software is known as Crush (Criminal Reduction Utilising Statistical History) and is used to identify potential crime hotspots based on a variety of data including crime reports, offender profiles and strangely enough even weather forecasts.

Once these upcoming crime hotspots have been identified then the police can allocate resources accordingly.

The system is produced by IBM and the UK tests are based on a successful roll out of the software in the US by the Memphis police force which resulted in a reduction of serious crime by 30%.

Back to auditing though and will the next step be predicting when a fraud is likely to occur using statistical analysis based on industry, profit movements, director’s personal life and spending habits (plus the weather of course)?

Given the reliability of some computers though, one thing for sure is that if you happen to live in a town called “Syntax Error” then you may have a surprise visit from a Tom Cruise lookalike with a briefcase and a calculator…