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Cash is king but jewellery looks nicer…

Before cash came along, people used to barter. Somebody who had grown vegetables would exchange potatoes they’d grown with a baker who’d baked bread. A farmer would exchange a cow with someone who had grown rice. And so on…

This was all very well if you had lots of vegetables or lots of cows but exchanging 1,000 kg of potatoes for the latest Xbox or taking a cow with you to pay for cinema tickets was never going to work.

As a result, along came cash.

The Lydians (now part of Turkey) are widely believed to be the first Western culture to make coins and their first coins came in to existence way back around the time of 700 BC.

Since then things have developed.

Bills of Exchange were introduced in Italy in the 12th century (Bills of Exchange are paper documents which enable traders to buy and sell goods without having to carry cash).

The Bank of England introduced printed cheques in 1717.

The first credit card in the UK was issued in 1966.

Online banking was launched in the late 1990s.

Through all of this cash has remained and there are now 180 currencies recognised as legal tender by the United Nations member states.

Things are changing though and earlier this year Apple and Samsung both launched their contactless payment systems whereby money is loaded onto an app on your phone and payment can be made by scanning your Apple or Samsung phone at a contactless terminal.

The company Ringly are taking things a step further though and have announced a partnership with MasterCard which will enable you to pay for items with the tap of a ring.

The rings that Ringly sell (including the ring shown in the photo above) cost between $195 and $260 and use technology to link the ring to your phone to access the Ringly app. The app will then enable payment to be made. This is pretty impressive given that all the technology has to be fitted onto the surface of the ring.

The end result is that you will be able to purchase items via a contactless terminal by simply tapping your ring without getting your wallet or purse out.

What do you think?

Is this a genuinely useful idea or just a “gimmick”? After all, you’ll still need your phone with you to make a payment.

Either way, it’s a nice excuse if you were thinking of buying a new ring.

Oh, and if you are going to buy one, don’t forget to take your wallet or purse with you…

Improving productivity or big brother surveillance?

Is this a clever way to improve productivity or a big brother surveillance system creeping into corporate life?

Humanyze, a technology company, produces devices which monitor the activity of employees and one of the more well known companies that has used it recently is Deloitte in Canada where volunteers in their St John’s, Newfoundland office wore the devices which are like oversized ID cards.

According to Humanyze their “social sensing platform” uses a variety of sensors and is capable of capturing face-to-face interactions, extracting social signals from speech and body movement, and measuring the proximity and relative location of users.

They combine these with other data sources such as electronic communications, objective productivity metrics, and spatial analysis to provide insights on how complex work gets done in the modern organization.

CBC Canada reported that the Deloitte team in Newfoundland were changing from a traditional cubicle office layout to an open concept space and the Humanyze badges were used to measure how well employees were performing in the new layout.

The participation by the Deloitte staff was optional and they were provided with contracts that made them the owners of the data.

All the information was collected anonymously and the employees were given personalised dashboards that showed their performance benchmarked against their colleagues.

Silvia Gonzalez-Zamora, an analytics leader at Deloitte said that “The minute that you get the report that you’re not speaking enough and that you don’t show leadership, immediately, the next day, you change your behaviour. It’s powerful to see how people want to display better behaviours or the behaviours that you’re moving them towards.”

So, is this a clever use of technology or the first step towards big brother monitoring?

Either way, I guess it may help identify the office winner of the “who spends the most time in the toilet award”…

How much would you really take?

How much holiday would you take in a year if your boss said you could take as much as you liked?

If it were me, I’d become a virtual stranger in the office given the number of days I would be lounging about on holiday.

In reality though the few companies who are offering their staff unlimited time off are actually finding that their employees are taking fewer days holiday when they are given the option of taking as many days off as they like.

Bloomberg has reported that Grant Thornton, the 6th largest accounting firm in the US has just announced that they will be offering their US staff unlimited time off.

GT has launched a video of some of their staff being told the news and perhaps unsurprisingly they seem happy (possibly also, a little unsure as to whether the person behind the video camera had been drinking and was making the whole thing up…)

Bloomberg reports that When it comes to the Big 4 accounting firms in the US, KPMG LLP offers a maximum of 30 days, Deloitte LLP has a maximum 35 days and PwC has a maximum of 22 for management level staff, according to the companies. EY has a minimum of 15 days with additional days added with years of service.

GT though are no doubt hoping their new holiday policy will make them a more attractive employer and Pamela Harless, chief people and culture officer for GT said “This is a modern move for an industry where these types of benefits aren’t really common”. GT are “convinced it will help us to be far more attractive in retaining talent as well as attracting talent.”

What is perhaps surprising though is that for the very small percentage of companies who already offer their employees unlimited holiday entitlement, their experience has been that the number of days taken as holiday as actually fallen since unlimited time off was introduced!

Haje Jan Kamps, the founder of Triggertrap identified this problem and highlighted that “Because we weren’t explicitly tracking, people felt guilty about taking time off. It also turns out that there was a difference in the patterns for how people took time off: Some were taking a week here and a week there, but others were just taking the odd day.

The problem with the latter is that it seemed like they were always away. That’s OK, of course, but if other members of the team feel as if someone’s taking the piss, that’s bad for morale all around.”
In summary though, an interesting development for GT and well done to them for launching such an initiative with the aim of incentivising and motivating their staff.

One interesting final question though – if you could take as much time out of the office as holiday without it affecting your career prospects, how much would you take?

Is it a load of bear or a load of bull?

The major stock markets around the world have had a rough ride this last week. The drop in share prices has been driven by the heavy falls on the Chinese stock market. At the time of writing the Shanghai Composite index (a stock market index of all stocks that are traded at the Shanghai Stock Exchange) has fallen by nearly 16% over the last week.

If you read the financial press words such as “bear market”, “bull market” and “correction” are being used a lot.

What do these phrases mean and where do they come from?

A bear market is where share prices are falling and is commonly regarded as coming into existence when share indexes have fallen by 20% or more. A market correction is similar to a bear market but not as bad (a market correction is where there is a fall of 10% from a market’s peak).

A bull market on the other hand is where share prices are increasing.

So, where do the phrases bear market and bull market come from?

There are two main views on the origin of these terms.

The first view is based on the methods with which the two animals attack. A bear for example will swipe downwards on its target whilst a bull will thrust upwards with its horns. A bear market therefore is a downwards market with declining prices whilst a bull market is the opposite with rising prices.

The second view on the origin is based around the “short selling” of bearskins several hundred years ago by traders. Traders would sell bearskins before they actually owned them in the hope that the prices would fall by the time they bought them from the hunters and then transferred them to their customers. These traders became known as bears and the term stuck for a downwards market. Due to the once-popular blood sport of bull and bear fights, a bull was considered to be the opposite of a bear so the term bull market was born.

Whatever the actual origin of the terms though I’m sure most people will be hoping for a bull market rather than a bear market.

They are outside but still inside.

You don’t have to be working inside a company to be charged with insider dealing.

Insider dealing is where a person uses information which is not in the public domain to make money out of share price movements.

A typical example of insider dealing would be where an individual works for a company whose shares are quoted on a stock exchange. The individual becomes aware that the financial results of the company which are about to be released to the public are better than expected. Before this information is made public though the individual buys shares so that he or she can sell them for a profit when the unexpected good news about the financial results is made public and the share price increases.

In other words, the individual is making a financial gain by “dealing” in shares using information which is “inside” the company and not available outside of the company. Hence the name “insider dealing”.

Insider dealing is illegal and action taken by the authorities against individuals involved in insider dealing is normally taken against employees of the company in question who are undertaking the insider dealing and / or their friends or associates who may have been involved in the insider dealing activities.

Recently though there was an unusual case where it was announced that federal investigators in the US had broken an insider trading gang who had a rather different approach.

Their unusual approach was that rather than working for the organisation who were about to release their results the gang instead hacked into the systems of financial newswire services to get hold of press releases of companies who were about to release their financial results.

The key thing though was that by hacking into the systems of the newswire services they got hold of these press releases before they were made public and used the information in the press release to purchase shares before these shares increased in value once the results were made public by the press release.

This was a pretty sophisticated criminal activity as it was reported that more than 100,000 press releases were stolen and as a result over $100 million of illegal profits were made by the gang.

The gang was said to have been run from Ukraine and 32 people have been charged in connection with the offence.

In conclusion therefore, you can be outside the company and still be charged with insider trading.

A very forward thinking leader…

She is the first female boss of a major accountancy company in the UK and Sacha Romanovitch is doing things differently.

At 47, Sacha who heads up Grant Thornton in the UK is one of the youngest leaders of a major City firm and has certainly got some innovative views in terms of how she plans to run Grant Thornton.

She has just announced a profit share scheme for the whole business which could boost salaries by 25%. She will oversee a “shared enterprise” scheme which will allow future profits to be shared between all of its 4,500 staff instead of being restricted to the most senior staff.

Ms Romanovitch was quoted as saying “The benchmark that we are working to is that in great organisations that do this, it ends up being between 10 and 25 per cent of a person’s salary. That is what they can potentially earn as a profit share. John Lewis [a prestigious UK department store] does it, Arup [an engineering firm] is the other one that does it really well.”

She has also announced plans to “crowd source” new business ideas and to consider allowing lower ranked staff to join board meetings.

In a move which will no doubt endear her to the team at Grant Thornton she has also agreed to cap her own salary. She has stated that her salary will be limited to a maximum of 20 times the average salary in the company.

This is an admirable move, especially when you consider that bosses of FTSE 100 firms (the largest 100 stock exchange quoted companies in the UK) have on average a salary which is 149 times the average salary in their respective firms.

In a recent newspaper interview Ms Romanovitch, who is a married mother of two and who works from home in the beautiful county of Devon on Fridays, said she was a fan of social media and thinks firms that restrict staff use of social media are wrong.

She said “A lot of firms don’t let their people use social media because they’re worried that they will say something they shouldn’t.

I find that a bit scary. I employ great people. If I was worried that they were going to say something on social media that they shouldn’t, I’d question whether I should employ them at all.”

Congratulations on a great start Sacha and if you’re interested, the marvellous photo of Sacha at the top of this article is from her twitter page which can be found here.

Who audits the auditors?

It’s a great life being an auditor. You visit your clients and can ask as many questions as you like.

After all, your job is to confirm the accounts are showing a “true and fair view” or to be more precise, your job according to “International Standard on Auditing (ISA) 700, Forming an Opinion and Reporting on Financial Statements”, is to “form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.”

So, that’s the job of the auditors.

Who checks the quality of the audits though?

In the UK, the Financial Reporting Council (FRC) undertakes annual quality inspections of the largest auditing firms in the UK including Deloitte, EY, KPMG, pwc and a number of mid tier firms.

The latest annual report has been released and whilst there has been an improvement in the performance compared to previous years with 67% of all audits inspected in 2014/15 being assessed as either good or only requiring limited improvements, 33% of the audits inspected fell below the highest standards set by the accounting regulator and were classified as either requiring improvements or significant improvements.

Let’s just pause there for a moment.

What this is saying is that one in every three audits undertaken by the leading accounting companies in the UK have been classified as needing improvements or even worse, needing significant improvements.

Three of the more common issues identified in the report were:

  • Insufficient scepticism in challenging the appropriateness of assumptions in key areas of audit judgement such as impairment testing and property valuations.
  • Insufficient or inappropriate procedures being performed. This is common to many areas including revenue recognition.
  • The failure to adequately identify the threats and related safeguards to auditor independence and to appropriately communicate these to audit committees.

The FRC do however appear to be trying to improve things and have introduced various initiatives.

For example, they now “require firms to develop action plans to address the weaknesses identified in individual audit engagements and firm-wide procedures”. In conjunction with the development of these action plans they now require firms to undertake a detailed rootcause analysis of the factors contributing to the issues arising from the inspections and those action plans together with the related analyses will then be subject to follow-up inspections.

A copy of the report can be found here.

The FRC also prepared individual reports for the Big 4 and they can be found on the following links:

Deloitte

EY

KPMG

pwc

Is it clothing or a blanket?

If you’ve just had a baby the concept of taxation is probably one of the last things on your mind but for anyone who has purchased a SnuggleBundl for their baby there is an interesting link to taxation.

blog-Snugglebundl-268x275According to the manufacturers the SnuggleBundl is “the world’s first lifting wrap for babies. This beautiful multi-award winning hooded baby garment ties at the front and the soft, strong handles on this wearable wrap let you lift and lay your baby so gently that they’ll stay sleeping”.

It seems that they have been selling very well and there have no doubt been lots of parents, babies and possibly very small adults who are extremely pleased with the warmth and comfort of the SnuggleBundl.

The tax authorities though had different things on their minds. They were more concerned as to whether the SnuggleBundl was baby clothing or was a blanket.

And the reason the tax authorities were so concerned about the classification was because of?

Well, the reason was all down to VAT. As is the case in a number of countries, the UK tax authorities do not levy VAT on children’s clothes. They do however levy VAT at 20% on blankets.

The tax authorities claimed the product was a blanket whilst the company claimed it was clothing.

The simple difference was that if it was classified as clothing it would be sold for £34.99 whereas if it was classified as a blanket it would be sold for £41.99 (£34.99 plus 20% VAT of £7).

This difference in price would have a major impact on the number of SnuggleBundl’s sold as it’s a big difference for a parent if they have to pay £34.99 or £41.99 for the item.

Given that in both of these cases the company would end up with the same amount of money, it was obvious why the company wanted it to be classified as clothing (if the item was classified as a blanket and sold at £41.99 the £7 VAT would need to be paid over to the tax authorities by the company leaving them with £34.99).

In what no doubt caused a huge sigh of relief the company (plus a few happy gurgles by some babies) the company won the case and the courts found that the product was in fact clothing and not blankets.

The directors of the company can sleep peacefully now…

The Vatican Bank releases their results.

The Institute for Religious Works, or as it’s more commonly known “the Vatican Bank”, has just released its latest set of accounts and they show a sharp increase in profits.

blog-vatican-262x275The bank has just reported net profits of €69.3 million for 2014 which compares very favourably with the corresponding figure of €2.9 million in 2013.

So what has caused the turnaround?

The bank has reported that the improved figures were as a result of a fall in operating expenses together with higher income from trading in securities.

Last year, the management of the bank was replaced as part of a clean up ordered by the Pope to remove corruption in the bank. The reforms also involved the bank bringing in anti-money laundering experts to screen all the accounts to ensure they comply with international laws governing the banking sector and the bank’s new standards for clients. Over 4,000 accounts have now been closed since 2013 and whilst the majority were dormant accounts, 554 accounts were closed because they did not meeting the bank’s new standards.

President of the Board of Superintendence, Jean-Baptiste de Franssu said that “The long-term, strategic plan of the Institute revolves around two key objectives: putting the interests of the clients first by offering appropriate and improved services and by de-risking the activities of the Institute”.

In summary, the bank seems to be doing much better now. If you are interested in opening an account with the bank though it’s worth noting that the use of the bank is limited to clergy, Vatican employees and staff at its embassies. There are now reportedly over 15,000 clients on the banks books.

More details on the Vatican bank’s accounts can be found here.

You don’t want everyone to know about it…

We all do it every day at the office but I’ve never heard of anyone publicising it in the way this gentleman did.

blog-mic-275x275Everything at the city council meeting in Georgetown, Texas was completely normal and serious until Mayor Dale Ross broke away from the meeting for a bathroom break.

Nothing unusual there I hear you say.

Unfortunately for the mayor though, during his haste to go to the bathroom he forgot that he was wearing a wireless microphone.

Thirty seconds after leaving the panel and just as Rachael Jonrowe was talking about friends and family members who had contracted antibiotic resistant diseases, the Mayor can be heard urinating and then flushing afterwards courtesy of the microphone which he left on.

It’s a valuable lesson for all of us if we were ever to wear a wireless microphone at an event and it was too much for Ms Jonrowe who despite her best efforts couldn’t control her laughter.

What was also interesting was that there was no sound from the microphone of the Mayor washing and drying his hands. Maybe he was so keen to rush back to proceedings that he simply forgot to wash its hands??

Mistakes happen but unfortunately for Mayor Ross the meeting was being streamed over the Internet.

This though was not the type of “live streaming” that anyone was expecting.

The video of the event can be seen below.