ACCA P6

Nicely said Mr Musk

Published on: 17 Apr 2018

We’ve all been there haven’t we? Long boring meetings that don’t seem to be going anywhere.

Maybe you’ve tried to give the impression of being interested in what was being said but in reality the meeting wasn’t relevant for you and your mind was wandering to other more interesting things.

Well, if you’re not a great lover of excessive meetings then you are not alone. In fact, you share the thoughts of an incredibly successful and admired business person. Namely, Elon Musk.

Mr Musk’s current business interests include Tesla and SpaceX.

In the past he founded x.com which later became PayPal. Paypal was subsequently bought by eBay for $1.5 billion.

He currently has a net worth in excess of $20 billion.

But what does he think about meetings?

In an email to his staff that was leaked to the electrek website there were a few productivity recommendations:

In the words of Mr Musk, these include:

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

– A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

– In general, always pick common sense as your guide. If following a “company rule” is obviously ridiculous in a particular situation, such that it would make for a great Dilbert cartoon, then the rule should change.

Nicely said Mr Musk.

She did what for a living?

Published on: 09 Feb 2018

Businesses can pay significant amounts of money for celebrities to endorse their products.

For example, the American singer and actress Selena Gomez is reportedly paid USD 550,000 per post that she promotes to her 133 million Instagram followers. Cristiano Ronaldo, the Portuguese footballer on the other hand “only” receives USD 400,000 per promoted post to his 120 million followers.

But not everyone is happy for famous people to be associated with a product.

Charles de Cazanove is a Champagne house that was founded by Charles de Bigault de Cazanove way back in 1811.

The Cazanove brand is now owned by the GH Martel Group and they have launched their latest Champagne vintage in a promotion with Clara Morgane. The champagne is imaginatively called “Le Champagne by Clara Morgane” and sells for €50 a bottle.

So, do you know who Clara Morgan is?

If you don’t and you’re a lady then ask your husband or boyfriend if he knows who Clara Morgan is.

If he does know who she is then there is probably another question you should ask him as Ms Morgan is famous as an adult movie actress.

Although Ms Morgan now performs with her clothes on (she’s a singer), it’s not good enough for a descendant of the founder of the Cazanove brand.

Count Loic Chiroussot de Bigault de Cazanove, who apart from needing a very long business card, isn’t happy that his family’s name is being associated with an adult movie star.

He reportedly said that “I am truly shocked. It’s simply scandalous. How could anyone associate the name of my illustrious family to that of Clara Morgane? It’s inconceivable.”

Although the family sold the brand back in 1958, the Count has been reportedly getting lawyers to try to remove his family’s name from the Clara Morgane vintage.

Either way, with all this publicity I’m sure the GH Martel Group are drinking to the success…

Does this help you concentrate?

Published on: 10 Sep 2017

The Journal of Consumer Research published the results of five experiments into how the level of background noise can impact on performance when someone is working on creative tasks.

The  results are interesting and in simple terms found that a moderate level of ambient noise is better for enhancing performance on creative tasks than both low levels and high levels of ambient noise.

Or put another way, people are more likely to be able to work creatively if there is a medium level of ambient noise compared to where there is silence or loud noise in the background.

So, what lessons can we learn from this if we’re studying?

Whilst the optimum situation and level of background noise is very much a personal preference the science behind it could indicate that we should head somewhere with a mid level background noise.

Now, where could we find such a place?

Well, the local pub around the corner has a great mid level background noise as far as I’m concerned but there are some liquid distractions that will harm studying.

What about a coffee shop or cafe? Again, there would be some great mid levels of background noise but you’ve got to get there and what happens if you don’t find a seat. All of this will dig into your valuable study time.

Well, up step the fantastic website coffitivity.com which enables you to play background coffeeshop noise on your computer whilst you’re studying.

You can’t order a Cafe Latte or Cappuccino but in my opinion it’s a great tool for those who like to study with a non intrusive background noise.

It’s also excellent for people who don’t have any friends to go to the coffee shop with.

Remind me – what was I going to buy?

Published on: 22 May 2017

Do you wish you had a better memory? Perhaps you do but you can’t remember whether or not you do.

If this is the case then help may be at hand.

University researchers have recently suggested a simple technique which could improve your memory.

Dr Mark Moss from Northumbria University led a research study which found that students studying in a room with the smell of the herb rosemary (in the form of essential oils) achieved 5% to 7% better memory results than students undertaking similar studying in a room without the smell of rosemary.

Dr Moss reported that the sense of smell in humans is highly sensitive and sends messages to the brain which can set off reactions and responses.

In the case of rosemary, the smell could well result in a better memory.

This view isn’t new though as ancient Greek students used to wear garlands of rosemary in their exams and Ophelia, the young noblewoman in Shakespeare’s play Hamlet said “There’s rosemary, that’s for remembrance.”

So, in conclusion, the next time you are studying hard for an exam it may be an idea to buy some rosemary essential oils to help your memory.

That is of course, if you can remember to buy some in the first place…

(Details of some of the work done by Northumbria University can be found here).

KPMG fires unethical partners

Published on: 18 Apr 2017

Picture the scene – you’re the senior auditing partner of KPMG in America with more than 30 years of experience serving some of KPMG’s most prestigious clients. There are over 9,000 KPMG people in the US who look up to you as the boss.

You receive some leaked information about which of your audits the US audit watchdog is going to examine as part of their annual inspection of how well KPMG perform audits.

Do you:

(a) Disclose this unethical breach immediately, or

(b) Try to keep things quiet and make sure that the audit files of the audits selected are perfect?

Unfortunately for Scott Marcello, the (now ex) head of KPMG’s audit practice in America, he didn’t choose option (a).

The background to the issue is that every year the US audit regulator, the Public Company Accounting Oversight Board (PCAOB) selects a sample of audits to inspect and ensure they have been performed properly.

A former employee of the PCAOB had joined KPMG. A friend of his who was still working at the PCAOB tipped him off about which audits would be selected for inspection this year.

The confidential information was then passed up the KPMG hierarchy until it reached Mr Marcello.

We can only guess what Mr Marcello and 4 other KPMG partners were planning on doing with the leaked information but one thing was for sure and that was they didn’t disclose the leak.

Whilst the 5 partners clearly weren’t very ethical, KPMG as an organisation acted quickly once they found out about it.

The 5 partners were fired and Lynne Doughtie, the chairwoman and chief executive of KPMG was quoted as saying “KPMG has zero tolerance for such unethical behaviour. Quality and integrity are the cornerstone of all we do and that includes operating with the utmost respect and regard for the regulatory process. We are taking additional steps to ensure that such a situation should not happen again”.

The PCOAB publish the results of their inspections and the previous results of the KPMG inspections perhaps give a reason for why Mr Marcello was keen for any help, whether it was ethical or unethical.

In 2014 and 2015, KPMG had more deficiencies in their audits than any of the other Big 4 in America.

38% of their inspected audits in 2015 were found to be deficient whilst in 2014, 54% were found to be deficient.

I’m not kicking a ball, I’m being looked at.

Published on: 11 Apr 2017

Professional footballers must have a great life. Playing football and earning significant amounts of money. Oh, and using some very clever tax advisers…

There are serious amounts of money being paid to some of the top footballers. Payments of in excess of £200,000 per week are fairly common (over £10 million per year).

This income doesn’t simply go into the tax return as salary. No, there are far more sneaky/clever [delete as you feel appropriate] ways of minimising the tax liability (or should I say maximising the after-tax income).

One of the methods used to minimise the tax is to make two types of payments to the player.

One would be for playing football whilst the other would be for “image rights”.

“What are image rights?” I hear you say.

Well, the basic idea is that the player would agree to let the football club use his image in any sponsorship or TV deals that the club has.

Without going into too much technical detail, the key difference from a tax point of view is that the payments made to the player for playing football would be classified as employment income and would be taxed at 45%.

Payments for image rights on the other hand would in effect be rental payments for an intangible asset. Players would assign their image rights to a company (where they could be the 100% shareholder) and the company would only pay corporation tax of 19% on the income.

With the globalisation of the Premier League, there are now numerous players who are not tax domiciled in the UK and if their image rights were channelled through a non-UK company they could potentially escape tax altogether.

Given the size of the payments involved there’s a lot of tax at stake. The Treasury in the UK has just initiated a project on players’ image rights and government technical experts will visit all English Premier League, Championship and Scottish Premier league clubs to review matters.

In the meantime, most of the readers of this blog are not professional footballers but instead undertake far more interesting finance and accounting activities in an office. Why not suggest to your boss at your next pay review that you’d like image rights instead of a pay rise so that you can receive more tax advantageous rental income from an intangible asset via your personal company…

Not the brightest fraudster

Published on: 06 Apr 2017

There are clever frauds and there are not so clever frauds.

Both are morally wrong but this gentleman’s attempt at fraud clearly showed that he wasn’t the brightest individual. It’s also resulted in him receiving an 8 year jail sentence.

Mohammed Shareef from Harrow in the UK ran a number of ice-cream shops and thought that an easy way to fraudulently obtain money was via his VAT affairs.

If somebody is registered for VAT they have to charge VAT on their sales but they can offset any VAT on eligible expenses. If the VAT on their sales is greater than the VAT on their purchases, they pay the balance to the tax authorities. If VAT on their sales is less than the VAT on their purchases, they can reclaim the excess VAT suffered from the tax authorities.

This is where Mr Shareef’s grand plan originated.

His plan was to submit false VAT repayment claims and to do so he needed some false VAT expenses.

Mr Shareef’s plan went to his head though as instead of small amounts, he submitted false VAT repayment claims amounting to £1,669,463 over a number of years.

These claims came to the attention of the authorities and they investigated the expenses. They found that Mr Shareef clearly didn’t have the greatest criminal mind in history.

Ignoring the shops he actually owned, he instead submitted invoices for shops that didn’t even exist.

He also claimed he had no knowledge of certain documents but they were all found on his computer and investigators proved he was the author of the documents.

He also created fake bank statements but these statements were obviously fake as they had spelling errors in them. He also had fake 2012 statements where he had mistakenly put transactions in with a date of 2011.

He was found guilty of cheating the public revenue and sentenced to 8 years in jail.

Should you employ good-looking men?

Published on: 18 Mar 2017

That’s an interesting question and unless you’re a modelling agency then the answer for most jobs should be that looks aren’t important and it’s the ability to do the job that counts.

Research from Aarhus University in Denmark though has raised some interesting observations which could have an impact on fast food restaurants.

The study found that women were more likely to order healthy options such as salad instead of unhealthy options such as chips when they were in the company of a good-looking man. The research found that a woman was more likely to go for low calorie items when they were with a handsome man.

This healthy eating wasn’t present though when a women was eating with a good-looking woman.

Men on the other hand, tended to spend more on expensive food and drink when they were with an attractive woman.

Whilst we can probably guess that a woman doesn’t want to be seen as somebody who could eat a whole restaurant on a date and a man wants to be seen as wealthy and able to afford expensive food, Tobias Otterbring, the author of the study puts it nicely when he says “this research reveals how, why, and when appearance induced mate attraction leads to sex-specific consumption preferences for various food and beverages.”

He went on to say that “the most valued characteristics men seek in a female mate are beauty and health, whereas status and wealth are the top priorities for women.”

He also said that the study findings suggested that fast food chains should consider whether to employ good-looking men in case it encouraged women to look elsewhere for healthy options.

Somehow though, I can’t see many fast food restaurants saying that “good-looking men should not apply” in their job adverts.

How do you feel?

Published on: 04 Mar 2017

It’s an unfortunate fact of life that people get sick. In the winter months especially, there can be a lot of cold and flu bugs going around.

But what percentage of working hours do you think are lost to sickness?

The ONS (Office of National statistics) in the UK has just released details of the number of sick days in 2016. The number of hours lost to sickness as a percentage of working hours was 1.9% or to put it another way, about 137 million working days were lost due to illness in the UK last year.

This may sound a lot but of the number of sick days taken has fallen over the last few years. Last year the average number of sick days per worker was 4.3 whereas when records began in 1993 it was 7.2 days per worker.

It looks like the fall in sick days could be down to a number of factors.

The economic downturn in the late 2000’s arguably caused people to “struggle on” through an illness rather than risk losing their job. Companies are also more flexible nowadays when it comes to letting people work from home. If someone isn’t feeling 100%, a lot of employers will let them work from home and even if they are not up to full speed at least they will be doing some work.

The details also show that there’s a difference between the public sector and the private sector. The percentage absenteeism in the public sector is 2.9% compared to 1.7% in the private sector.

The most common reasons for missing work last year included minor illnesses such as colds (25%), musculoskeletal problems such as back ache (22%), mental health problems including stress and depression (11.5%), stomach upsets (6.6%) and headaches and migraines (3.4%).

Your new (waggy tailed) baby

Published on: 28 Feb 2017

It’s a busy time for new parents when a baby comes along. Lots of employers give maternity and paternity leave for the new mums and dads but what about when your “baby” has 4 legs and a waggy tail?

Artisan Brewers BrewDog are a Scottish beer company who are very successful and sell their craft beers around the world.

They are also pretty unusual. They have grown from having two staff and two investors in 2007 to a current global team of in excess of 500. It has broken crowdfunding records with more than 32,000 shareholders.

More recently though, they became the first major company to offer their employees a week off if they get a new puppy. This will enable the humans to bond with their new pets without worrying that their work will suffer.

Founders James Watt and Martin Dickie, who themselves founded the company with their dog Bracken, said in a company statement that ‘Yes, having dogs in our offices makes everyone else more chilled and relaxed – but we know only too well that having a new arrival – whether a mewling pup or unsettled rescue dog – can be stressful for human and hound both.

‘So we are becoming the first in our industry to give our staff help to settle a new furry family member into their home,’

If any employees are thinking of getting a new puppy, then they won’t be the first in the company with a dog.

As well as providing time off for new dog owners, BrewDog also allow their employees to take their pet dogs into the office and there are currently over 50 employees at their head office alone who take their dogs to the office every day.

The ExP Group