That’s an interesting question and I’m sure that along with most other professions there are people you can trust and people you can’t trust.
If I asked the question about trusting accountants to the rock band Deep Purple though I’m pretty sure what answer I’d get.
Dipak Shanker Rao looked after the accounts of Deep Purple for more than 20 years.
In fact, to be fair when I said that he “looked after” the accounts maybe I should have said that he siphoned off more than £2 million of the band’s money without their permission.
Mr Rao has admitted “borrowing” at least £2.27 million from two of the companies within the Deep Purple empire. HEC Enterprises and Deep Purple (Overseas) owned the copyright to a lot of the band’s songs but the companies went into receivership in 2016.
Out of the £2.27 million borrowed by Rao, only £477,000 has been recovered. Ian Gillan, Ian Paice and Roger Glover (members of the band) are suing Mr Rao for up to £4 million.
In the meantime, Mr Rao has been struck off as an accountant and banned from managing or controlling a company until 2028.
One of Deep Purple’s most famous songs is called “Mistreated” and I’m sure that they feel that way at the moment…
https://www.theexpgroup.com/wp-content/uploads/2018/02/Deep-Purple-Accountant.jpg477848Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-02-02 21:23:172018-05-11 07:39:33Can you trust an accountant?
KPMG UK released their results last month for their most recent accounting period and they showed a fall of 10% in pay for the KPMG partners when compared to the previous year.
Although the firm’s revenue rose by 5% to £2.2 billion, it’s profit fell to £301 million.
The firm wrote off a number of technology investments.
KPMG, like the rest of the Big 4, have invested heavily in technology companies in an attempt to stay at the forefront of technology.
Unfortunately for KPMG, not all of their investments were successful. Bill Michael, the Chairman of KPMG, highlighted one investment that hadn’t done so well – KPMG had committed £3 million to Flexeye, a tech company that analyses large amounts of data and it hadn’t proved to be the wisest investment.
Whilst profits fell, it hasn’t all been bad news for KPMG as their audit practice grew by 10%.
Back to the average pay of the KPMG partners though and although their average pay fell by 10% I’m sure that the partners will still be able to afford to buy a sandwich for lunch.
The average pay for the KPMG partners was £519,000 each.
That’s not too bad is it?
But how does it compare with the average pay from the partners of the remaining Big 4.
The most recent reported results show the following average pay per partner:
Deloitte – £865,000
EY – £677,000
pwc – £652,000
It looks like Deloitte partners will be having the more expensive sandwiches for lunch.
https://www.theexpgroup.com/wp-content/uploads/2018/01/KPMG-salaries-1.jpg476846Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2018-01-28 21:37:382018-05-11 07:41:46How much do Big 4 partners get paid?
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.
(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.
If by any chance you are in Australia then if I ask you this question in 5 years’ time, as a result of Ailira the answer may well be “no, as no-one works in tax”.
“Who is Ailira?” I hear you say.
Ailira is the brainchild of Adelaide based tax lawyer Adrian Cartland and stands for “Artificially Intelligent Legal Information Resource Assistant”.
Mr Cartland created Ailira to help people with their tax affairs and believes that she could eventually replace human tax agents.
He told the Australian Business Review that “Your tax agents will probably be gone within five years”.
What was interesting was that although to a certain extent Ailira functions like a search engine, you can ask it tax questions in the same way that you would ask a person who works in tax.
Mr Cartland said that “The one thing we had difficulty with is that people are so used to doing keyword searches that they struggle to ask a question as you would to another human.
“So we did some upgrades of Ailira’s interface to encourage people to treat Ailira like a human, more in plain English.”
That’s an interesting phase “plain English” as anyone who has worked in tax or studied tax will appreciate that it’s not always possible to explain tax in plain English as the tax laws can be pretty complex.
Still, good luck to Mr Cartland and importantly, good luck to Ailira who by the sound of things may well be doing a lot of work in the future.
“Don’t worry, it’s secured with cheese” isn’t the most common phrase you hear when discussing the bond markets but a €6 million bond issue may well change that.
When a company issues a bond, the investor is lending money to that company in exchange for the bond. When the bond matures the company will repay the money that was lent (together with interest).
If you put yourself in the shoes of the investor, then what type of company would you invest in?
The chances are that you would be looking for large, well established and financially secure companies to invest in. That means that smaller companies generally find it challenging to raise funds via bonds.
An Italian cheese manufacturer has found a novel way around this problem.
4 Madonne Caseificio dell’Emilia is a relatively small Modena based cooperative firm which produces 75,000 wheels of Parmigiano cheese annually (nearly 2% of the world production of the famous cheese). It has issued a €6 million bond offering an annual yield of 5% with the capital being repaid in 5 annual amounts starting in 2018 and ending in 2022. The funds raised will be used to support their commercial expansion plans.
The interesting thing about the bond issue though is that it is secured by Parmigiano cheese worth 120% of the bond value. This means that if the company fails to repay the money the investors can get Parmigiano cheese from the company.
€7.2 million worth of cheese – that’s a lot of cheese! Let’s hope the bond matures nicely without any problems.
A lot is the simple answer but some recent research by Deloitte’s has shown that the price of luxury items varies significantly around the world and foreign exchange movements play a big part in that valuation.
According to Deloitte, in US dollar terms London is now the “cheapest” city to buy designer and luxury goods.
Since the Brexit vote in June, at the time of writing the pound has fallen by more than 17% against the dollar (i.e. you need 17% more pounds now to buy the same amount of dollars you would have received back in June).
According to the research, on 7 October a Speedy 30 handbag from Louis Vuitton costs £645 ($802) in London, €760 ($850) in Paris and $970 in New York. China was the most expensive place to buy it with the handbag costing 7,450 Yuan ($1,115).
Nick Pope, fashion and luxury lead at Deloitte, told the BBC that “the trend in luxury pricing in the UK is being driven mainly by the depression on the sterling – thus making the same item more affordable in the UK than in any other luxury market”.
Of course, if your income is in British pounds then the cost to buy the handbag in London remains the same. If however your income is in another currency such as US dollars then it is $313 cheaper to buy in London than in China for example. If you are stocking up on your luxury handbags should you be planning a trip to the UK?
It’s not just the ladies from outside the UK who are buying luxury handbags who could be benefiting from the exchange rate movement.
Any male readers may be interested to know that a Brunello Cucinelli cashmere V-neck sweater now “only” costs £650 ($843) in the UK compared with $942 in France and $995 in the US.
$843 for a sweater?
Please form an orderly queue as you rush to the shops to buy one. Or maybe two…
https://www.theexpgroup.com/wp-content/uploads/2016/10/Louis_Vuitton_shop.png5751022Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-10-08 12:10:282016-10-08 12:10:28A good excuse to buy another handbag?
Greece has had a bad time of it over the last couple of years in terms of their finances but a recent announcement by their Finance Ministry may result in animals coming to the rescue.
When I say animals, I should be more specific and say that dogs will be helping out and not just any dogs but dogs who can sniff out money.
Let me explain a bit.
It’s been well documented that Greece has had a few financial problems. There were fears that they would crash out of the euro. Capital controls followed and there was a new international bailout for the country.
As a result, a lot of the Greek population perhaps understandably didn’t feel that confident in trusting the banks to look after their cash and a significant amount of money is being held outside of banks.
From November 2014 to July 2015 over 50 billion euros was withdrawn from the banks and It’s been estimated that between 15 to 20 billion euros is still being held by Greeks outside of the banking system.
That’s a lot of mattresses to be storing cash under and people are looking at avoiding capital controls and instead take the money out of the country without the authorities knowing.
Taking a suitcase of cash out of the country is seen as a safe option for a lot of people.
So, where do the dogs come in?
Well, a recent posting on a government website said that a team would be put together to assess tenders for the provision of dogs whose job is to detect cash. The dogs would be in place to sniff out significant amounts of cash being taken out of the country at border points.
Given all the money problems in Greece, one big advantage of this plan is that the dogs won’t be paid in cash. Instead, they will be more than happy to be rewarded with a biscuit or two…
https://www.theexpgroup.com/wp-content/uploads/2016/08/capital_controls.jpg8831569Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-08-26 18:37:352016-08-26 18:37:35It's a dog's life...
Everyone seems to be on their smartphone or tablet at the moment. After all, when was the last time you read a book? Or let me ask you a slightly different question, when was the last time you coloured in a colouring book?
“Coloured in a colouring book!? I’m not a child”, I hear you say but whilst most people will come to the conclusion that the last time they coloured in a colouring book was when they were a young child, things may be changing.
One of the latest crazes doing the rounds in the UK at the moment is adult colouring books where grown men and women are buying adult colouring books to colour in. A quick Google search of “adult colouring books” will reveal the vast variety of such type of books (as an aside make sure you include the word “colouring” when searching for adult colouring books otherwise you may get an unexpected search result).
It’s been reported that more than 3 million adult colouring books were sold in the UK last year which represented over £20 million worth of revenue for the publishing industry.
Now, whilst certain trendy people may well be rushing to buy colouring books, the tax authorities in the UK are also getting interested in the trend.
The reason behind the tax authorities interest is that colouring books are currently treated as children’s books and as such are zero rated for VAT purposes (in other words VAT is not charged on the books).
The tax authorities are currently in talks with publishers about plans to classify adult colouring books as uncompleted books which would then make them liable to VAT at 20% in the same way that diaries and notepads are.
The net result is that if the tax authorities do reclassify the adult colouring books then either the books will become 20% more expensive for the individual purchasers or if they remain at the same published price, the publishers will have to take the hit.
More expensive adult colouring books? It’s enough to make you throw your toys out of the cot.
https://www.theexpgroup.com/wp-content/uploads/2016/06/colouring-book-vat.jpg529941Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-06-01 18:33:522016-06-01 18:33:52You can't read this book...
The Financial Reporting Council (FRC) has just published its audit quality inspection reports for the 6 largest auditing companies in the UK. The job of the FRC’s Audit Quality Review (AQR) team is to monitor the quality of the audit work of those UK audit firms that audit public interest and large entities.
The AQR team have been busy over the last year and have now released lengthy reports for BDO, Deloitte, EY, Grant Thornton, KPMG and PwC.
Overall, the quality of the audits has improved during the last year with the number of audits that required “significant improvements” dropping from 10 to 2 for the Big 4. There were no audits that required significant improvements at BDO or Grant Thornton.
Unfortunately for KPMG though, they were the company that undertook the two audits that were highlighted by the FRC as needing significant improvements.
The FRC reviewed 22 KPMG audits and out of those there were 2 that required significant improvements.
The first one involved a change of systems and a 3rd party IT provider. The FRC identified that the KPMG audit team did not “design and perform procedures to obtain sufficient audit evidence in response to the migration risk”.
In the second audit where there were problems the FRC highlighted that insufficient audit work had been performed in relation to revenue and inventory.
Details of the scope of the reviews can be found here and are the full reports on the individual companies are on the following links:
Buying whisky or investing in whisky – that’s an interesting question and my guess is that most people who buy whisky are planning on gently pouring it into a glass and maybe adding some ice or a mixer before settling back to savour the flavour (before possibly waking up the next day with a headache…)
But should you be buying whisky as an investment rather than as a consumable item?
Most people are aware of the leading share indexes around the world such as the FTSE 100 and the S&P 500 (which show the index for the largest 100 and 500 companies quoted on the London and New York stock exchanges respectively) but there are also a number of other indexes out there.
These indexes measure movements and one of the more interesting ones is the Rare Whisky Apex 1000 which measures the price movement for rare scotch whisky.
It’s a significant market and last year there were rare whiskies sold at auction in the UK amounting to £9.6 million.
There was also a strong demand for rare whisky in Asia. In August last year a bottle of 1960 Japanese Karuizawa whisky was sold for over £80,000 which is a pretty significant figure for a bottle of whisky!
Back to the indexes though and the performance of the rare whisky index last year was impressive. It grew by 14%. Other indexes in comparison performed as follows in 2015:
FTSE 100 – down by 4.9%
S&P 500 – up by 0.7%
Gold index – fell by 10%.
So the increase in the Whisky index of 14% looks very good when compared to the major indexes but I guess there could be one problem.
Namely, if you’ve had a bit too much to drink and are looking for something to finish the evening off you’re more likely to drink some of your whisky investment than consume some of your share or gold investment.
https://www.theexpgroup.com/wp-content/uploads/2016/02/whisky-index.jpg9441678Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2016-02-15 19:08:112016-02-15 19:08:11Would you buy a bottle of whisky or invest in a bottle of whisky?
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