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Would a good liar make a good accountant?

Do you have children? Have they ever told you a lie? Even a small teeny weeny lie?

Well, if they have then although you may not be particularly pleased with them, it may actually mean that they have good memories and excellent thinking skills.

Psychologists at the University of Sheffield tested 135 children and found that those children that lied performed much better than the honest children in the group.

The children in the study were aged between 6 and 7 years old and during the study they were given a trivia game. The answers to the trivia game were on the back of the card which they had been given. Initially, each child was in a room accompanied by one of the researchers but the researcher then left the child alone with the card with the answer on the back.

Before leaving the room the researcher told the children not to look at the answer but what the children didn’t know was that when they were alone in the room there were hidden cameras which were monitoring whether they would look at the answers on the back.

25% of the group subsequently cheated and looked at the answers on the back of their cards but claimed that they hadn’t cheated when the researcher returned to the room.

At a later stage, all of the children had to perform a separate memory test and the research found that the children who had lied performed significantly better than those children who didn’t lie.

Dr Tracy Alloway, project lead from the University of North Florida was also involved in the research and said that “this research shows that thought processes, specifically verbal working memory, are important to complex social interactions like lying because the children needed to juggle multiple pieces of information while keeping the researcher’s perspective in mind”.

This has got me thinking as a lot of the readers of this blog are accountants or studying to be accountants.

“Thought processes”, “verbal working memory”, “juggling multiple pieces of information” and “keeping other people’s perspective in mind” are all skills which many accountants need.

Does this mean that you would make a good accountant if you were a good liar when you were a child?

Whatever your answer is, I’m not sure I would believe you…

Would you do this with your job?

If a company outsources jobs, in some situations it can be seen as good business practice but if an individual outsources his own job then what is that seen as?

Outsourcing is where a company gets another organisation to undertake a job or business function that would have previously been completed in-house. This is often done for cost saving reasons and an illustration of outsourcing would for example be getting another organisation to maintain your payroll.

A while ago there was the first example I’d heard of an individual outsourcing his own job.

Verison is one of the leading telecoms companies in the US and their security team provided details of a case study where an employee by the name of “Bob” who was a top developer had actually outsourced his own job to China without his employers knowing about it.

In other words, he had received his salary from his employers but had personally paid for somebody else to do his job at a cheaper rate without his employer knowing about it!

He was paid in excess of USD 100,000 for his job and yet he was paying a Chinese consulting firm less than 20% of that to do the job for him.

According to Verison a typical day for Bob was:

9:00 a.m. – Arrive and surf Reddit for a couple of hours. Watch cat videos (!!)
11:30 a.m. – Take lunch
1:00 p.m. – Ebay time.
2:00 – ish p.m Facebook updates – LinkedIn
4:30 p.m. – End of day update e-mail to management.
5:00 p.m. – Go home

Despite not actually doing any of the work himself his performance reviews were excellent and he had been regarded as the best developer in the building.

So, in summary – he was paid a pretty good salary and all he did was play around on the internet.

All his real work was outsourced by him to a Chinese company. He paid them whilst his employer paid him 5 times the amount that he had paid the Chinese company.

Bob lost his job but it does raise an interesting debate as when a company outsources it’s seen as a clever move but when an individual outsources their own job they end up losing that job.

Anyway, whilst you’re thinking of that particular point I’d like to mention that the next blog article will be written by a Chinese company but please don’t tell my employer.

Meanwhile I’m off to watch some cat videos…

Don’t put your foot in it…

If you look at the finance side of running a bar then things should (in theory) be quite simple. Revenue is what your customers pay for the drinks they buy and the main expenses are the amount you pay to the brewery for the beer, staff wages and property costs.

Over in Belgium though some bars have faced a unique problem which is causing unwanted expenses but it looks though that they have come up with some ingenious solutions.

Belgium is famous for its beers. Monks from local Abbeys started brewing different types of beer in the 12th century and nowadays some of the bars in tourist areas in Brussels and Bruges stock several hundred different types of beers.

Each of these beers has their own particular glass which it is served in. These glasses come in all shapes and sizes and are nice looking objects.

Unfortunately for the bar owners they are also very collectable in the eyes of certain tourists. As a result, lots of these glasses go missing as tourists take them for a souvenir.

This can involve a significant number of glasses. Tens of thousands of glasses a year are stolen in Belgium and replacing these glasses represents a significant cost.

Some of the bars are coming up with innovative ideas to stop the thefts.

The Bruges Beerwall café had 4,000 glasses taken in one year and has now introduced security alarms which are attached to each glass. If a glass is taken past the scanner at the door an alarm sounds.

A slightly less hi-tech solution to the problem (but arguably as effective) can be found at the Dulle Griet bar in the Belgium town of Ghent.

The bar stocks over 500 different types of beers and has some very attractive glasses in which these are served. If you want to have a drink though you have to hand over some security to make sure you don’t steal the glass.

The security is a shoe.

And not just any shoe but one of the shoes you are wearing. You hand it over and it is put in a basket which is then pulled up to the ceiling so that you can have a drink knowing that your “security shoe” is safe in the basket.

A great idea by the bar to keep the thefts of their glasses to a minimum and it has proved so successful that it has now become a bit of a tourist attraction with people popping in to look at the basket and have a drink.

One thought does spring to mind though and with 500 tasty beers on the menu I wonder how many customers have had one too many drinks and woke up in the morning with different shoes on each foot….

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, IBM have worked in conjunction with the Memphis police department in America to develop 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 rollout of this software reportedly 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…

An awkward mistake.

Have you ever sent an email to the wrong person by mistake? What about posting something on social media which, with hindsight you’d wished you hadn’t?

We all make mistakes and it’s not the end of the world but I’ve got a feeling that Magnús Örn Hákonarson will be remembering his recent mistake for a while to come.

Magnús is in charge of his employer’s social media activities and recently what was supposed to be a private message was posted on his employer’s Facebook page.

Magnus works for The Landsbjargar’s Accident Investigation Company in Iceland and he accidentally posted an invite to a party to all the followers of the company. To add to the excitement, this wasn’t a normal party but was an invite to all the followers to take part in a bondage party with a fetish dress code.

The invitation highlighted the dress code as fetish or alternative and included information about safe words, leather masks and whips. Members of the BDSM society Magnus was a member of were able to buy the tickets for 1,000 ISK (£7) whilst non-members had to pay 3,000 ISK (£21).

As soon as he realised his mistake he removed the party invitation from the company’s Facebook page.

Whether or not his colleagues knew about his hobby is by the by. They certainly do now and the nice thing about it is that his employers realised it was a genuine mistake and have been very supportive.

Given his interest in BDSM he might have been slightly disappointed that he wasn’t punished but instead his employers issued a statement saying “There are many people with different backgrounds and interests within the volunteer group. People are engaged in all kinds of sports and hobbies and the rescue team’s board of directors will not distinguish these interests, as long as they are legal.”

All in all, nothing to beat yourself up about.

Nicely said Mr Musk

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.

More Change Please

Homelessness is a growing problem in a lot of countries but coffee company “Change Please” has come up with a brilliant business model that could help.

They’ve brought together the problem of homelessness with people’s love of coffee and have created a radically different coffee company that is now looking to expand around the globe.

Their whole focus is on helping people whilst at the same time providing an excellent cup of coffee to the end customer at a fair market price.

When it comes to suppliers, the coffee beans they use are from farms that support local communities. For example, one of their suppliers from Peru helps victims of domestic abuse and a supplier from Tanzania helps people injured by landmines.

Once the coffee beans arrive in the UK, the people who roast them and serve them are people who have been homeless and sleeping on the streets. They are trained as baristas and work at one of the company’s locations. They are paid the Living Wage of £10.20 per hour and are given help in terms of opening bank accounts and finding housing.

Whilst the big coffee chains such as Starbucks and Costa Coffee are discussing introducing recyclable cups, Change Please has beaten them to it as all of their cups are 100% recyclable.

All profits are being invested in helping reduce the level of homelessness.

Things are going well for the organisation and they are planning on expanding the number of locations they operate from in the UK. They are also in talks to open in Australia and America with the same ethos of helping homeless people get back on their feet via a well and truly ethical cup of coffee.

They have also signed agreements with 2 big supermarkets, Sainsburys and Ocado, to stock packets of Change Please coffee beans.

It’s a common sound on the streets of cities in the UK to hear people asking if you have any “Change please”. With this fantastic business model for a coffee company, hopefully it will soon be a common sight to see the request for “Change please” replaced by coffee outlets called “Change Please”.

How much do Big 4 partners get paid?

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.

How do you feel?

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%).

Sam Allardyce and José Mourinho

As England’s football manager there are certain things that you should do and certain things that you shouldn’t do.

Winning a major tournament is a thing that you should do for example whilst looking to receive large amounts of money to advise people how to get around football transfer rules is something you shouldn’t do.

Alas for Sam Allardyce he did the latter and not the former and is now no longer the England football manager.

There are plenty of ways that football managers can make money in a legitimate and ethical way and maybe Mr Allardyce should have followed the example of the current Manchester United boss Jose Mourinho.

In addition to the £12 million wages Mr Mourinho receives from Manchester United he also does pretty well from various other activities.

Hublot watches, Adidas, Jaguar, BT Sport, Lipton Tea and EA Sports all pay a significant amount of money to Mr Mourinho to endorse their products. They see him as an internationally recognised figure with global appeal.

The latest big name to sign him up is Heineken. They reportedly will pay him £4 million for a 2-year deal to be Heineken’s global football ambassador.

That’s a pretty nice sum of money to receive and it got the accountant in me thinking about the financials from Heineken’s point of view. How many additional litres of beer would Heineken need to sell to cover the cost of appointing José Mourinho?

Heineken’s latest set of published accounts show revenue of €20.5 billion with an operating profit of €3.4 billion. In 2015 they sold 18.8 billion litres of beer. Ignoring various accounting items such as contribution and fixed costs it follows that each litre of beer generates approximately €1.09 of revenue and €0.18 of operating profit.

To cover the £4 million (approximately €4.6 million) cost of José the company would need to sell an additional 26 million litres of Heineken!

This clearly shows the challenges involved when an organisation is deciding whether or not to undertake any form of sponsorship or increasing brand awareness as it is virtually impossible to accurately place a financial value to the benefits achieved. The marketing guys would argue that the value is more than purely an increase in immediate sales revenue.

The fact is that it is extremely difficult to directly link an appointment of a brand ambassador to an increase in sales. There are numerous other items which can impact on the sales of a product. For example, a sudden heatwave would increase the amount of cold beer that is drunk and not even Jose Mourinho could claim to be able to impact the weather.

Back to Mr Allardyce though and whilst I doubt that many companies will be approaching him to sign him up as a brand ambassador, at least he can claim to be the only England manager who won all of the games where he was in charge (even if it was only for one game…)

What’s in a name?

The Indian car manufacturer Tata Motors, part of the Tata Group, one of India’s largest conglomerates recently skilfully averted what could have been a major international marketing mistake.

Tata motors, who also own the Land Rover and Jaguar brands, are about to launch a new small hatchback car. They debuted it at the recent 2016 Auto Expo as the Zica (short for Zippy Car) but following the rapidly spreading Zika virus which has infected over a million people in Latin America and which was declared an international health emergency, they decided to change the name to avoid any unwanted links between the two names.

The car will now be launched as the Tiago and the change was impressively dealt with by the company. They reacted quickly to the similarity and ran a competition via social media for the public to choose the new name. Over 30,000 names were put forward in the competition but Tiago was selected by the public as the winner.

However, if you look up the definition of Tiago in the Urban Dictionary the top two definitions are firstly, “Tiago is a great Portuguese king” and secondly “Tiago is a sex God who is…”.

I’m not sure the Tata marketing guys looked at the Urban Dictionary before agreeing to Tiago but in any case, if you see a man driving a Tiago then surely he’s either the Portuguese king or a sex God…

Would a good liar make a good accountant?

Do you have children? Have they ever told you a lie? Even a small teeny weeny lie?

Well, if they have then although you may not be particularly pleased with them, it may actually mean that they have good memories and excellent thinking skills.

Psychologists at the University of Sheffield tested 135 children and found that those children that lied performed much better than the honest children in the group.

The children in the study were aged between 6 and 7 years old and during the study they were given a trivia game. The answers to the trivia game were on the back of the card which they had been given. Initially, each child was in a room accompanied by one of the researchers but the researcher then left the child alone with the card with the answer on the back.

Before leaving the room the researcher told the children not to look at the answer but what the children didn’t know was that when they were alone in the room there were hidden cameras which were monitoring whether they would look at the answers on the back.

25% of the group subsequently cheated and looked at the answers on the back of their cards but claimed that they hadn’t cheated when the researcher returned to the room.

At a later stage, all of the children had to perform a separate memory test and the research found that the children who had lied performed significantly better than those children who didn’t lie.

Dr Tracy Alloway, project lead from the University of North Florida was also involved in the research and said that “this research shows that thought processes, specifically verbal working memory, are important to complex social interactions like lying because the children needed to juggle multiple pieces of information while keeping the researcher’s perspective in mind”.

This has got me thinking as a lot of the readers of this blog are accountants or studying to be accountants.

“Thought processes”, “verbal working memory”, “juggling multiple pieces of information” and “keeping other people’s perspective in mind” are all skills which many accountants need.

Does this mean that you would make a good accountant if you were a good liar when you were a child?

Whatever your answer is, I’m not sure I would believe you…

Let’s not run this up the flag pole…

Most of us have been there. Sat in a meeting when somebody decides to use “management speak” or “corporate jargon” to make something sound more impressive than it is.

You’ve probably heard of the phrase “think outside the box” but what about “let’s not boil the ocean”?

Michael Sugden, chief executive of the advertising agency VCCP, recently put together a list of the most irritating metaphors used in the corporate world.

He wrote in Marketing Magazine that the increased use of corporate jargon in recent years has resulted in meetings degenerating “into a quagmire of nonsensical verbal piffle”.

He put together his top 10 of the most annoying phrases and in reverse order the results are shown below.

Oh and in case you’re “not singing off the same hymn sheet” I’ve translated the “management speak” into English in the italics below the phrase.

10. Think outside the box
– come up with new ideas…

9. I may have a window for you
– I can see you on…

8. Content is king
–  first used by Bill Gates in 1996 to indicate that content would drive the success of the internet. It now appears to be used for random purposes in meetings…

7. Let’s not boil the ocean
– let’s not make this too complicated…

6. Level playing field
– keep things equal…

5. Let’s workshop this
– let’s spend far too long talking about this in a meeting…

4. Shift the dial
– to be honest I’m not 100% sure but possibly means talk about something else. Either way it sounds very dramatic in a meeting…

3. Let’s socialise this
– let’s talk about this…

2. Fail forward
– when something doesn’t work but we try to learn from it (if we still have a job after the error of course…)

1. Growth hacking
– again, I don’t think anyone is 100% sure what it means but it does sound very impressive…

So, there you go. A list of 10 phrases to [impress / annoy – delete according to how you feel about the phrases] your colleagues at meetings.

Don’t upset your web developer.

Cash flow can be a real challenge for businesses. Smaller ones especially can find it very tough to get paid on time and bigger organisations can sometimes dominate the relationship.

After all, if for example you’re an individual freelancer and are negotiating with a large company for work you will find it tough to get short settlement terms. Also, if the big company is late in paying it’s very difficult for the smaller party to “force payment”. Going to court for payment of a relatively small amount of money isn’t cost effective as the legal fees would far outweigh the money owed.

Reddit user absando is a freelance web designer and recently posted a great illustration of how he dealt with things when a big company “forgot” to pay him.

He posted that ‘I used to do freelance translating work a few years ago and I finished a 1,200 word technical manual for an Indian client that had good reviews on their industry profile. Normally payment for freelance transitions can range between 30 to 60 days, and under my contract they had 60 days to pay the amount.’

Straight away we can see that absando has a tough time as 60 days isn’t a particularly short payment term.

Things got worse for him though.

He continued explaining ‘Fast forward to the 65th day since I delivered the project and I didn’t hear anything from them. After multiple phone calls, e-mails and Skype messages, I received no word from the client so I decided to give up, write a negative review and move on.’

Whilst a lot of people in that situation would have had to write off the debt, absando was lucky.

Six months later the same company got in touch with him and obviously forgot that they hadn’t paid him last time. This time the project was for some web design work and he played it really well as rather than ask for the money he was owed, he kept quiet about it and got on with the project.

In a stroke of genius though he completed the project on time but didn’t send it all in. Instead, he changed the lock screen to the fine piece of artwork shown above.

He continued: “Surely enough a couple of hours from the deadline the translation company was frantically trying to reach me, sending emails and even trying to call my American number. They were freaking out because the project was due for their client on the very same day, and if they didn’t get it they’d lose their business with them.

I gladly responded, saying: ‘Hey remember that freelancer you stood up 6 months ago, yeah that’s me. I have your project ready to go, but you need to pay me for my previous work PLUS interest.”

Needless to say the cash was deposited into his account within 30 minutes.

Nice work!

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.

Should you be able to get this benefit at work?

How much do you get paid? My guess is it’s not as much as the chief executive of WPP.

Sir Martin Sorrell (pictured) is chief executive of the advertising business WPP and his annual pay has just been revealed in the company’s annual report.

blog-sirmartinsorrell4-275x275His total pay was £42.98 million. In case you think that’s a typo – it’s not. He received nearly £43 million in pay.

As well as being the chief executive, Martin Sorrell is the founder of the company.

The company has grown significantly since it was founded in 1985 and it is now quoted and part of the FTSE 100 (the largest 100 companies on the London stock market).

As a result of being quoted there are numerous corporate governance requirements which need to take place. One of these is the disclosure of the directors’ remuneration policy in the published accounts. 

Following the publishing of his remuneration package in the accounts it became apparent that one element of his package was very unusual.

Included within his remuneration package of $43 million is a payment to him in respect of his wife’s travel expenses. Now his wife’s travel expenses which were paid by his employer were pretty significant and definitely amounted to more than the occasional taxi journey. In fact, they amounted to £274,000!

That’s not a bad amount for travel expenses is it?

So, should you suggest to your boss at your next salary review that you should receive a travel allowance for your husband or wife?

My guess is that if you do, the response to your request would be fairly brief and probably include a rude word or two…

This is one way to lose your job…

Let’s be honest now. Have you ever played around on the Internet whilst at work?

Most of us will probably have had a quick look at websites such as Facebook or news sites but it’s worth bearing in mind that most organisations have a policy which restricts looking at non-work related websites.

dog with computer2Some people will mistakenly think that if they delete the browser history it will remove all traces of what sites have been visited but the IT savvy people amongst you will realise that the history is stored on servers.

Three judges in the UK obviously didn’t realise their browsing history would be tracked and following an investigation they were fired as they had been viewing pornographic websites on court computers.

The court cases they were presiding over obviously weren’t exciting enough and they took matters into their own hands to liven up their days by viewing adult websites on the court computers.

One of the judges who was fired was called Timothy Bowles. In a bizarre coincidence there is in fact another judge in the UK with the same name.

You have to feel sorry for the innocent one of the two.

Imagine the scene, the innocent Timothy Bowles is sat at work when word goes around amongst his colleagues that Timothy Bowles has lost his job because he was looking at porn during working hours.

A frantic clarification was issued by the Judicial Conduct Investigations Office stating “that District Judge Timothy (Paul) Bowles who sat at Romford County Court and has been removed from office should not be mistaken for the High Court Chancery Master Timothy (John) Bowles. There is no connection between the two.”

So, in conclusion three judges have lost their job due to watching pornography on court computers.

There is an important lesson to be learnt from all of this and that is, if you’re going to look at pornographic websites in the office it’s best to do so using a colleague’s computer rather than your own…

A pretty unusual team meeting for all to see.

Professionalism and confidentiality are two important features which should be present in today’s business environment.

Unfortunately for two individuals working at Marsh Insurance in New Zealand they undertook some activity in the office which was neither professional nor confidential.

cheeringA married manager in his 40s was working late with a junior colleague in her 20s when one thing led to another and before you could say “how do we record this on the timesheets” they were getting down to let’s just say some “activities which would be difficult to record on a timesheet”.

Whilst people having relationships with colleagues in the office maybe isn’t that unusual, what was unusual about this situation was what they got up to and also that they left the lights on and the blinds in the office were open.

This, together with the fact that the Marsh offices were directly opposite the Carlton Bar and Eatery which at the time of the “short term intimate team building exercise” was hosting a live band playing a concert with over 50 people in attendance.

This meant that the “teambuilding exercise” was viewed by all of the people in the pub with a number of them filming the action and subsequently posting it on facebook and YouTube.

Despite the cheers and encouragement from the pub the two office workers didn’t notice that their indiscretions were on view for all to see. When they finished the “teambuilding” the band in the pub across the road even struck up a rendition of King’s of Leon hit “Sex on Fire” but the couple were still unaware that their indiscretions had been recorded and proceeded to get dressed and head out of the office back home to their respective partners / homes.

With the viral power of the internet, word soon got around and my guess is that there was a fair amount of explaining needed both at home and in the office regarding their professionalism at the office.

It’s not been reported what the colleague whose desk was used for the “teambuilding” thought of the matter.

Would you have refused to accept this?

Let’s be honest here. Would you have done what Rick Holley did?

Who is Rick Holley I hear you say?

ethics in businessMr Holley is head of Seattle based Plum Creek Timber, a company that manages forest land as well as energy and mineral extraction, and he did something which is extremely unusual.

He was awarded a bonus worth $1.85 million but he refused to accept it as he didn’t feel comfortable accepting the bonus.

According to the terms of his contract he was entitled to receive the bonus but he wasn’t comfortable accepting the bonus as he felt it wasn’t the right thing to do given that the shareholders returns in the company were down 10%. He stated that the results of the company he was running didn’t show the strong performance he believed was deserving of a bonus.

I can’t imagine many other people refusing to accept a bonus worth $1.85 million.

Cynics may point to the fact that he still received over $8 million in remuneration during the year but even so it’s an honourable thing for him to do and I’m sure the vast majority of the stakeholders were impressed by his actions.

Now, hands up who else would refuse a bonus of $1.85 million?

This idea by Levis is certainly a good fit.

The first pair of blue jeans to be made in the world were made by Levi Strauss in 1873.

levi jeansSince then, the company Levi Strauss has gone on to sell millions of pairs of jeans and their turnover last year was $4.6 billion.

Interestingly the shares of the company are not publicly traded as the company is a private company owned by the descendants of the family of Levi Strauss.

As well as being a company with an 141 year history it is also leading the way in terms of the ethical treatment of its suppliers.

It has recently announced that it will start offering low-cost working capital to its suppliers who meet certain environmental, labour and safety standards.

It was announced that the company will provide loans with progressively lower interest rates to those of its 550 suppliers who perform well in terms of their environmental and safety standards.

This is an admirable move by the company.

Their suppliers are often from developing markets such as Bangladesh and to encourage their suppliers to adhere to better ethical conditions they will provide loans to them at interest rates that get lower the better the suppliers perform in terms of their environmental and safety standards.

A great idea and will we see other companies introducing similar schemes to encourage ethical approaches to their supply chain?

This EY partner has been a bit naughty.

Well it seems like an EY partner was working late with a client and it was more than the audit files that they were reviewing.

office relationsNew York stock exchange quoted Ventas Inc has announced that it has removed EY as their auditor due to an “inappropriate personal relationship” between a (now former) EY partner and Ventas’s (now former) Chief Accounting Officer and Controller, Robert Brehl.

It looks like discussing the audit files wasn’t exciting enough for both of them and one thing led to another and before you could say “prudence concept” they were ripping each other’s clothes off having inappropriate personal relationships.

Now, as any self-respecting finance professional will know, a core characteristic of auditing should be “independence”.

[Words deleted so as not to upset people of a sensitive nature] with the Chief Accounting Officer when you’re an audit partner is clearly not a characteristic of independence.

KPMG have now replaced EY as the auditors of Ventas and my guess is that both the ex-EY partner and Mr Brehl will soon get a reminder of what independence means as if they are married their husband/wife will soon be independent of them.

Husband hides money in oven and then wife decides to…

There’s a saying that “money makes the world go around” and as finance professionals we should all have a good solid understanding of the importance of cash flow and treasury functions.

With the recent history of banks failing and the turmoil that is currently taking place in certain European countries there is also the question as to how safe is your money.

Both companies and individuals should therefore make sure that their money is kept in a safe place.

Now, this doesn’t just mean ensuring your bank account is with a reputable bank. No, it also means don’t try and hide your money in a pretty stupid place…

As an illustration of where not to “invest” your money, according to press reports in Australia, a gentleman in Sydney stored his money in what must rank as one of the most stupid places to store money.

Due to the slowdown of the building industry that he was working in, the unnamed individual had been forced to sell his sports car to pay various bills and mortgage obligations.

The individual had just sold his Toyota Supra for AU$15,000 and when he was looking for a place to hide it until he could get to the bank the following day he decided that the best place would be to put the cash into the kitchen oven.

Now let’s just stop for a moment and think. Was this a good idea? Was there any chance that the oven could get turned on, become very hot and as a result the cash become pretty worthless??

Yes, you guessed it.

His wife came home and decided to preheat the oven so that she could cook some chicken nuggets for their children.

20 minutes later and as she went to put the nuggets in the oven she found a pile of melted money (interestingly, Australia has plastic banknotes which last longer than the traditional paper banknotes although not if baked to 200°C).

The gentlemen went to the bank the following day to see if they would replace the damaged money. In some countries the central bank will replace damaged bank notes with new bank notes but it’s unclear how much if anything the individual got back in this case.

So, the moral of the story is if you’re going to put your cash in a safe place then make sure it is safe.

Instead of hiding it in the oven then why not try hiding it in the trash bin…

An easy mistake to make?

You may laugh but would you really be able to spot the difference between a fully grown 180 kg gorilla and a middle aged man dressed in a gorilla suit?

gorillaNow, whilst most of you are probably thinking to yourself that yes, you would be able to tell the difference, unfortunately for an employee of Loro Parque Zoo on the Spanish Island of Tenerife, the Zoo vet didn’t spot the difference.

Any business should ensure that procedures are in place to minimise danger to members of the public. In the case of zoos this includes having practice drills to ensure that if an animal escapes the staff know what to do and have practiced it beforehand.

The zoo started a practice drill where a 35 year old zoo employee was dressed as a gorilla. He then “escaped” from an area of the zoo and the alarms were raised. Unfortunately for the “man dressed in a gorilla costume” the zoo had told all the people involved in the emergency drill that it was a practice except the zoo vet who as soon as he heard the alarm sounds grabbed his tranquiliser gun and proceeded to shoot the zoo employee with a tranquiliser which had been designed to knock out a 180 kg gorilla.

The zoo employee was rushed to hospital where he was treated and fortunately made a full recovery.

Somehow I doubt whether he will volunteer to dress as a gorilla at the next practice.

Getting the wrong measurements can be expensive.

In any project it’s important to take a step back and check that important things haven’t been missed.

The French train operator SNCF has just discovered that 2,000 new trains it had ordered are too wide for some of their platforms. The trains cost €15 billion.

The error arose because the national rail operator RFF gave the wrong platform dimensions to the train company SNCF. The national rail operators measured a number of platforms but all the platforms they measured were built within the last 30 years.

Unfortunately, they didn’t measure any platforms which were built more than 30 years ago as these were designed for slimmer trains and are too wide for the new trains to pass through.

It must have been a stressful day in the office when the mistake was identified and the solution to the error will be far from simple. Over 1,000 platforms will need to be adjusted before the new trains can become fully operational.

The total cost of amending the platforms will be more than €50 million.

The Chief Economist or the Chief Escaper?

It looks like whoever was in charge of recruitment at this Museum didn’t do their job properly. The end result is that the museum is now worse off by $500,000.

cheif economistWhen the National Agriculture Museum in the Czech Republic was looking for a new Chief Economist they interviewed Vladimir Prokop. The interview obviously went well as Mr Prokop was offered the job and accepted it to become the new Chief Economist of the museum.

One of the key things that should always be done when recruiting people is to ensure that suitable references and background checks are made.

It looks like in this situation though the reference checks weren’t done properly as Mr Prokop had applied for the job with a fake name and far from having a perfect background for a career as a Chief Economist, his background was that he was a convicted fraudster who was on the run from prison.

He had in fact escaped from prison last year whilst he was serving a sentence for stealing 10 million Czech crowns from the Evangelical Church of Czech Brethren.

He continued this approach to life in his new job and stole $500,000 from the museum.

That was not part of the job description of a Chief Economist.

In fact, far from being a Chief Economist he was more of a Chief Escaper as when the police came to arrest him at his office he managed to avoid arrest by running through the museum exhibition halls, jumping down an emergency exit staircase and then hailing a taxi before escaping.

My guess is that when the museum looks to recruit the next Chief Economist they’ll pay more attention to getting the proper references.

After 118 years Barclays are saying farewell to pwc.

After getting to know each other 118 years ago in 1896 it’s looking like pwc’s relationship with the Barclays banking group is coming to an end.

barclaysBarclays has just released their 2013 Annual Report and the Report highlights that they are putting their audit out to tender and pwc will not be invited to tender.

They put this down to several reasons including being “mindful of investor sentiment regarding external audit firm tendering and rotation” and the fact that “2014 is likely to see new regulation in this area both from the UK Competition Commission (implementing its decision to mandate tendering at least every 10 years) and the European Union (requiring audit firm rotation at least every 20 years).”

Barclays is one of pwc’s major clients and the fees received by pwc were pretty significant.

In 2013 the total audit and non-audit fees paid to pwc by Barclays amounted to £45 million.

Interestingly, the non-audit fees paid to pwc represented 28.5% of the audit fee.

Allowable non-audit services are pre-approved up to £100,000, or £25,000 in the case of certain taxation services. Any proposed non-audit service that exceeds these thresholds requires the specific approval from the Chairman of the Audit Committee before pwc can be engaged.

Barclays said that during 2013 the Chairman of the Audit Committee scrutinised all such requests for approval, particularly those that concerned taxation-related services, and two requests for approval were declined.

Whilst losing the Barclay’s audit is no doubt a £45 million disappointment to pwc, it’s fair to say that the other accounting companies are looking forward to the opportunity of tendering for a £45 million audit.

The Vatican Bank publishes its first set of accounts.

The Institute for Religious Works, or as it is more commonly referred to, “The Vatican Bank” has released its first set of published accounts.

The report comprises a hefty 100 pages and contains some interesting figures.

the-vatican-bankThe bank’s balance sheet total was €5 billion and it had a net profit of €87 million in 2012. This was more than four times the profit it had in 2011.

So, what has caused the increase in profit?

The report highlights that the banks economic performance was “driven above all by the development of interest rates in the Eurozone”.

Interest rates fell across the Eurozone in 2012 and the Vatican has nearly €3 billion in trading securities, most of which are government and index bonds. As interest rates have fallen in Europe, the value of the bonds they hold has increased.

A simple example to illustrate the increase in the value of their bonds as interest rates have fallen would be if they held a bond with a nominal value of €100,000 with a fixed interest rate of 4% they would be guaranteed to receive €4,000 of interest. If the market interest rate subsequently fell to 2% they would still be entitled to receive the fixed €4,000 of interest. The fact that interest rates are now only 2% means that the bond would have a market value of €200,000 (i.e. to get €4,000 of interest at a 2% rate you would need to invest €200,000)

As a result of the fall in interest rates the value of the Vatican’s fixed income holdings is up by in excess of €50 million.

The report also reveals the bank had €41 million in gold, coins and other precious metals, a stake in an Italian real estate company and it received two inheritance properties worth approximately €2 million.

If you’re interested in looking at the full report, here is a copy of the Vatican Bank’s published accounts.

To be on the safe side, let’s play football without a ball…

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A school in the UK where a number of top footballers went to when they were children has banned leather footballs for health and safety reasons.

Malvern Primary school in Liverpool where England and Liverpool player Steven Gerrard studied has just announced that in order to reduce the risk of injury to children whilst playing football at break-times leather footballs will be replaced by foam sponge balls.

Whilst health and safety is vitally important for both private companies and public institutions such as schools there will be a lot of people who will feel that maybe this is a step too far.

When I was a child I played football at school with a leather ball and I must admit that I never really felt overly threatened by the ball or exposed to personal danger as a result of (sometimes) being in the close vicinity of it.

Also, if I’m honest I was so bad that I would stumble over the ball whether it was leather or foam.

The argument by the school is that as there are children from the age of 4 to 11 present then there could be a risk of injury if one of the younger ones was hit by a leather ball.

There is also the other view that playing football with a foam ball will discourage children from playing and hence undertaking some form of exercise which as a result could increase the health and safety issues from obesity in children.

Looking on the bright side though, when the 2030 World Cup Finals take place with a foam ball at least England will have a chance of getting past the first round. That is of course as long as it isn’t raining during the finals in case by then they are not allowed to play in the rain.

How can you make $1bn dollars overnight?

The Chief Executive of Microsoft, Steve Ballmer has been in the news a lot recently. Yesterday, he announced that Microsoft had agreed a deal to buy Nokia’s mobile phone business for £4.6 bn.

From Nokia’s perspective it may be the case that Microsoft is the saviour of the company. After all, Nokia once had 40% of the mobile handset market but now is way behind Apple and the various Android devices.

microsoft buy nokiaShareholders in Nokia may have mixed feelings though as the Microsoft deal values the Nokia business at $7 bn whilst back in 2007 the business had a market capitalisation of $150 bn. As they say, it’s all in the timing when it comes to selling shares!

From Microsoft’s point of view the acquisition of Nokia highlights their desire to make sure they have a foothold in the expanding mobile market. They will also enhance their presence in the hardware business to compliment their software business.

As well as the announcement of the purchase of Nokia, Mr Ballmer made another big announcement a couple of weeks ago when he announced that he would be retiring from his job as Chief Executive of Microsoft.

He made his announcement in the evening after the stock market had closed.

Arrivals and departures of key executives of quoted companies is price sensitive information and share prices can move significantly as a result.

Depending on what markets and analysts think of the arrival/departure of the executive, share prices can go up or down.

So how did the market react to Mr Ballmer’s resignation?

When the market opened the day after his announcement Microsoft shares were up 10%.

In other words, investors were pleased with his announcement that he would be leaving!

Was Mr Ballmer upset at this reaction?

Only he knows the answer to this but one thing that softened the blow was the increase in his personal wealth as a result of his decision to leave Microsoft.

He owns 333 million shares in Microsoft and following the increase in the share price as a result of his departure, the value of his shareholding in the company increased by $786 million.

So, by making the decision to leave the company his wealth increased by $761 million.

Now, let’s be honest here. How many of you would “fire yourself” if you could make nearly $1 bn overnight?

You can remove this barrier to entry but it may well kill you…

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Any organisation that can create a barrier to entry which prevents new competitors entering the market can, in theory, keep prices high.

Economies of scale (think Airbus or Boeing), branding (think Apple) and distribution channels (think Coke) are all excellent examples of barriers to entry but one of the toughest barriers to break through are government licenses.

If a licence is needed to operate in that industry then that is the ultimate barrier. After all, without the license the company can’t operate.

Japan is the home of sushi and as you would expect some of the top sushi restaurants can be found in Tokyo.

Sushi is fish and we all know that fish is healthy for you. It may come as a surprise then that one particular sushi delicacy in Japan could end up killing you rather quickly if it is prepared incorrectly.

Certain parts of the poisonous blowfish are considered by many to be the ultimate in sushi. It tastes gorgeous although to be honest I’ve never tried it so I’m taking somebody else’s word for this.

I’ve never tried it because I’ve never had the opportunity although even if I did have the opportunity I would have a few doubts. The reason is that as well as the edible parts of the fish, some of the organs of the fish are filled with poison called tetrododoxin which is more deadly than cyanide.

Now, if you’re eating blowfish then one thing for sure is that you want the chef to know what he or she is doing. You don’t want them making a little slip of the knife and including by mistake some of the poison as before you have a chance to say “does this fish taste a bit funny to you?” you would be on your way to a quick death.

The Japanese government have therefore heavily regulated this part of the sushi industry and there are only a handful of locations that have a licence to prepare and serve blowfish.

In October though new laws are coming into place which remove the need for a licence (or to use business strategy terminology, remove a barrier to entry).

So the good news for anyone that fancies trying some of the blowfish is that it’s likely to become a bit cheaper after October. The question though is whether price will be the key decision making factor when people are deciding to eat a meal which if prepared incorrectly could quickly kill you…

Would you have ridden this wave differently?

I’ve got a couple of friends who are keen surfers. If you speak to them they will tell you that successful surfing is all down to getting the timing right and catching the wave at the right moment.

billabongIt looks like timing is also an important issue if you happen to hold shares in one of the world’s largest surfing brands.

Billabong is Australia’s largest surfwear company and is currently the target of a takeover bid.

Billabong was set up by Gordon Merchant in 1973 when he started making surf shorts on his kitchen table and selling them to local shops.

The company rode the waves of success over the following 35 years and developed a strong following amongst fashionable surfers (as well as a strong following amongst people who had never been near the sea!)

Back in 2007 the company was valued at A$3.8 billion (approximately £2.5 billion at today’s exchange rate) but unfortunately for the shareholders the global recession bit and faced with increased competition from other fashion brands the sales of Billabong products fell dramatically.

Last February the shareholders turned down an offer of A$842 million (£560 million) to buy the company.

Earlier this year the company reported their largest ever loss after writing off most of the value of its main brand.

It’s not exactly smooth water for the company and they are currently in sale discussions with a consortium made up of a former director and a private equity company. The value of the offer on the table at the moment is A$287 million (£190 million).

£2,500 million to £560 million to £190 million.

As they say in the surfing community, it’s all in the timing.

An ex-partner of KPMG has been a bit naughty…

An ex-partner at KPMG has been a bit naughty. In fact, he’s been more than a bit naughty as he’s been accused of insider trading.

Insider trading is the illegal activity of using information which isn’t in the public domain to make a personal gain or avoid a personal loss.

insider-trading-examplesScott London was a partner at KPMG in the US and led their LA audit practice. Two of their major clients were the nutrition supplement giant Herbalife and the leading footwear company Skechers.

It’s been alleged that Mr London passed on price sensitive information to a golfing friend of his who then subsequently made more than $1.2 million in illicit trading of shares ahead of merger or earnings announcements (in other words, the golfing friend bought shares at a low price knowing that the share price would increase as soon as the information he was secretly given was released into the public domain).

The US Securities and Exchange Commission charged Mr London and his golfing buddy with insider trading on non-public information.

As soon as KPMG found out about this Mr London was fired and quickly became an ex-partner in the firm.

A statement from Mr London was published in the Wall Street Journal where he apologised “for any harm that results to KPMG”. He went on to say that “I regret my actions in leaking non-public data to a third party regarding the clients I served for KPMG”.

It’s not looking very good for Mr London as the authorities will no doubt come down heavily on him.

It’s unfortunate for KPMG as well as due to Mr London’s illegal activities their independence on the audits of Herbalife and Skechers had been compromised. As a result they have resigned as auditors of both Herbalife and Skechers.

What type of fine do you get for cheating?

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McLaren are one of the top Formula One motor racing teams. They are not only experts at ensuring cars are driven fast around racing circuits but they are also experts at ensuring that £34m fines are tax deductible…

Back in 2007 McLaren were fined £34 million pounds because it “had possessed and in some way used proprietary information belonging to Ferrari, and had thereby breached the rules of the FIA’s International Sporting Code to which McLaren was contractually bound”.

Or to put it another way, they had cheated by photocopying an 800 page technical document belonging to Ferrari that detailed the designs of the 2007 Ferrari cars.

Formula One’s governing body, the Federation Internationale de L’Automobile (FIA), weren’t happy about McLaren taking this approach and ordered McLaren to pay a £34m fine which they duly did.

The interesting thing though is that in their UK company tax return McLaren claimed a tax deduction for the fine.

In the UK as well as most countries around the world, fines are not tax deductible. This means that the expense does not reduce the level of profits on which tax is calculated.

McLaren argued though that this particular fine was tax deductible (i.e. the expense could be used to reduce the level of profits on which tax was applied). They said that it wasn’t a statutory fine for breaking the law (which would be non tax deductible) but instead was a fine imposed by their governing body and as such was a genuine business expense incurred in their trade which should be tax deductible.

The UK tax authorities understandably didn’t agree with this viewpoint and the argument went to an independent tax tribunal who surprisingly agreed with McLaren and said that the fine was tax deductible.

A surprising decision and there’s no truth in the rumour that the head of the independent tax tribunal is currently driving around in a McLaren…

Who do the Big 4 want to win the US election?

It hardly seems like 4 years ago that President Barak Obama became America’s 44th president but here we are with just a few weeks to go before the next US election takes place.

Whilst there will be plenty of arguments for and against each candidate over the next couple of months I came across an interesting website which summarises the political donations made by companies in America.

The website opensecrets.org was created by the Center for Responsive Politics which tracks money in politics.

After quickly using the search function on the site it was straightforward to identify the amount of money that the Big 4 have donated to the election campaigns for President Obama and his Republican opponent Mitt Romney.

The donations as at the time of writing are:

Donations made to Barack Obama / Mitt Romney by the Big 4:

Deloitte (Obama: $291,056; Romney: $286,110)

Ernst & Young (Obama: $38,350; Romney: $158,925)

KPMG (Obama: $24,498; Romney: $67,250)

PwC (Obama: $55,033; Romney: $266,650)

Total (Obama: $408,937; Romney: $778,935)

I’ll leave it up to you to perform your own analytical review on the above figures and to decide who the Big 4 appear to want to win the next US election and of course it’s probably got nothing to do with Barack Obama’s plan to increase the marginal rate of tax on high earners and Mitt Romney’s proposal to reduce taxes for high earners…

Should this former Deloitte accountant become a doctor?

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One of the key attributes of finance and business people should be ethical behaviour. Note that I say “should be” as not everyone seems to agree with this approach.

Former Deloitte UK employee Nahied Kabir seems to have a slightly different view of what is acceptable in terms of ethical behavior.

Here’s a quick multiple choice question for you to see how ethical you are compared to Mr. Kabir.

Question – You’re struggling a bit with your professional exams and your employer’s policy is that if you don’t pass your exam within 2 attempts you’ll lose your job. Do you:

a) Focus your efforts on passing your exams. Or,

b) Focus your efforts on forging two doctor’s certificate.

Now, in my opinion (and hopefully in your opinion as well!) the correct answer is (b) (a).

Alas for former Deloitte employee Mr. Kabir he chose option (b).

In summary, Mr. Kabir failed an exam twice and at a meeting to discuss terminating his employment contract with Deloitte he produced a forged doctor’s note.

Deloitte let him sit the exam again and he passed this time. He then had a further 3 exams to sit and you guessed it he failed all 3.

At the next meeting to discuss things with Deloitte he claimed that he failed due to the ill health of his mother. He then produced a second forged doctor’s note from another doctor claiming his mother was suffering from ill health.

Proving that as well as being a pretty rubbish accountant he was also pretty bad at forging letters, the forged letter from the second doctor was exactly the same as the forged letter from the first doctor with the exception of only 4 words!

It’s probably no surprise to you that Mr. Kabir is now no longer working with Deloitte and the accounting body he was sitting his exams with (ICAEW) have published their report on the disciplinary action they took against him.

Again, it’s probably no surprise that he was “declared unfit to become a member of ICAEW”.

There’s no news yet whether Mr. Kabir is planning a successful career as a bank note forger…

Good and bad news for PwC…

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If you work for one of the top firms of accountants in the world and you’re an audit partner it must be [a refreshing change/really annoying – delete as appropriate] when you yourself are audited.

Well in the UK this has just happened for some of the major accounting companies.

The Professional Oversight Board is one of the bodies that works towards improving the quality of audit work and audit firms. They have just published their 2011/12 inspection reports and there were some interesting findings.

Their public report on their inspection of PwC for example commented on a number of items including PwC’s “audit transformation programme”.

The POB said that

“During the year, the firm launched its Audit Transformation programme, the stated objective of which is to enable audit teams to focus on key judgment areas, standardise the firm’s approach and improve audit quality. However, the guides issued to date under the programme appear to focus on improving audit efficiency by reducing audit hours.”

The Report then went on to say that

“The programme also includes increasing the use of the firm’s off-shoring capability, now through two overseas centres, one in India and the other in Poland. Work performed in 2011 by these centres accounted for about 4% of the firm’s core audit hours and is expected to increase to 6% in 2012.”

The POB work was quite thorough as they also looked at PwC’s “staff performance evaluation” forms where interestingly they found that “approximately a quarter of the appraisal forms and objectives for the following year were signed off after the due date.”

The good news for PwC was that the vast majority of the 14 audits that were examined by the POB were either performed to a “good standard” or an “acceptable overall standard”.

Unfortunately for them though there was one audit which was singled out as requiring “significant improvement”.

In case any of you are interested in reading the reports on PwC and some of the other major accounting companies, they can all be found here.

Somehow though I don’t think the partner responsible for the “significant improvement required audit” will be showing all his friends a copy of the report.

I’d love to invite you to lunch but…

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Have you ever been to lunch with a colleague?

My guess is that unless (a) you work by yourself, (b) nobody likes you , or (c) you have a serious body odour problem then the chances are that you have had lunch with a colleague.

Now let me guess. What did you talk about over lunch?

Was it by any chance “work”?

Yes, we all do it. If we go out for lunch with a colleague then a lot of the time we’ll probably end up talking about work. Now, this could be the latest racy gossip about Mr X and Mrs Y but the chances are it may well just be about some project you are currently working on.

So is this a problem that you are talking about work over lunch?

Tech giant Apple seem to think that there could be some issues over talking about work whilst eating your lunch. They have just announced plans to open a restaurant which is reserved solely for employees.

This isn’t an on-site canteen or cafe. No, it is a two-storey building that will be located several streets away from Apple’s headquarters in Cupertino, California.

Apple already run a restaurant called Caffe Mac but this restaurant is open to non-Apple employees as well as Apple employees. An obvious concern of this is that if all the Apple people are chatting away about projects they are working on such as the iPhone 28 then who knows if Mr Samsung, Mrs HTC or Miss Nokia are sitting at the next table pretending to read a newspaper.

The new “Apple only” restaurant will be a separate stand-alone restaurant exclusively for Apple employees who will be free to talk as loud as they like about the latest project they are working on.

I wonder though whether the waiters and waitresses will be using Samsung or HTC phones…

Which is more important to you – the first or last bag?

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It never ceases to amaze me. You’re at an airport, you check-in and then wave goodbye to your luggage. When you arrive at your destination you expect your luggage to arrive on the luggage carousel at the same time you.

I met an old friend last week who was telling me about a situation he faced a few years ago when working on a project at an airport.

The aim of the project was to improve the business process of unloading the bags from the plane and getting them onto the luggage carousel.

This is something we take for granted but the logistics involved are not always that simple and passengers can quickly get frustrated if they don’t get their luggage within a few minutes.

One of the Key Performance Indicators (KPI’s) in place to measure the efficiency of the process was the time it took to get the first piece of luggage from the plane to the luggage carousel.

Now whilst this may sound like a sensible KPI, it was also used to determine the bonus that the luggage handlers would get (the quicker the luggage was delivered the higher the bonus).

Unfortunately for the management of the airport it was also open to abuse.

It may seem obvious now but what was happening was that the baggage handlers were getting the fittest member of their team to literally grab a bag from the hold of the plane and run to the carousel so that the time between landing and the “first luggage on the carousel” was minimal.

Meanwhile, all of the remaining pieces of luggage would be unloaded at a much slower pace.

The end result was happy baggage handlers but unhappy passengers!

Needless to say management soon identified this and the KPI was changed so that it was now the time taken to unload the last bag rather than the first bag that was important.

Hello and goodbye to the CEO of Deloitte Netherlands…

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It’s been a mixed year for Piet Hein Meeter the (former) chief executive of Deloitte in the Netherlands.

It started well for him as he was appointed as the new CEO of the Dutch operations of Deloitte on the 1st of January this year.

However within a few months his fortunes have changed dramatically.

Deloitte recently announced that Mr Meeter had resigned from his position due to “infringement of independence rules which surfaced following a routine internal compliance review arranged by Deloitte”.

The background to this is all about auditor independence.

In order for auditors to be able to do their job of “checking the books” of clients they have to be independent. After all, if an auditor is not independent from the company he is checking then there’s a risk that he or she may give a biased or incorrect opinion on matters.

In the case of Mr Meeter it seems that he had shareholdings in some of the clients of Deloitte Netherlands and hence broke independence rules (i.e. he headed up an audit company that checked the accounts of a company which he part owned).

It does seem rather strange that Mr Meeter held these shares as it’s a fundamental independence issue for senior staff and partners within accounting firms not to hold shares in clients.

It may well have been a simple but extreme case of oversight by him as there was no evidence of him benefiting from his shareholding and position (the investigation by Deloitte pointed out that “Meeter had no involvement in any of the audits of the applicable companies and that Deloitte’s independence as audit firm of these clients has not been impacted).

Deloitte quite rightly acted quickly though to avoid any potential problems and Mr Meeter is now no longer with Deloitte.

We wish his successor, Mr Peter Bommel, the best of luck in his new role.

Mr Bommel is currently the interim CEO of Deloitte Netherlands and no doubt has recently reviewed his personal investments very carefully to ensure that there is no repeat of Mr Meeter’s error.

Liverpool win after an own goal by Adidas.

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Forget about the rivalry on the pitch between Manchester United and Liverpool. Forget about Luis Suarez refusing to shake hands with Patrice Evra at the game on Saturday.

No, the key question is who has got the biggest kit sponsorship deal in the world.

Manchester United’s kit is sponsored by Nike and until recently it was the largest kit sponsorship deal in the world. Liverpool however has just announced a new kit sponsorship deal which exceeds the Nike deal and makes it the biggest football shirt sponsorship deal in the world.

Liverpool’s kit used to be sponsored by Adidas but Adidas lost out in the new bid for sponsorship to American Sports Group Warrior Sports (who own the New Balance sports brand).

Adidas felt that Liverpool’s form over the last few years in the English Premier League hadn’t been that good and as a result didn’t bid as much for the sponsorship deal.

Warrior Sports though seem to have taken the view that Liverpool is a global brand as opposed to merely an English football club.

Liverpool FC has immense brand power overseas. Especially in Asia and the sales of their replica shirts are estimated to be nearly 900,000 a year.

There’s also an interesting observation in that their main sponsor of the shirt (as opposed to the kit supplier) is Standard Chartered.

The Standard Chartered bank isn’t present in the UK and therefore the bank’s sponsorship of the Liverpool shirt clearly isn’t aimed at the UK market but rather at the Asian, African and Middle Eastern markets where Liverpool have a strong following and Standard Chartered have a strong presence.

So, well done Warrior Sports for seeing the global appeal of the Liverpool brand.

As for Adidas, have they just kicked the ball into their own net?

Just forge the signature and it will be fine…

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Direct Line and Churchill are two of the UK’s largest and best known insurance brands.

Unfortunately though, despite being in the “premier League” of insurance companies they have been a bit naughty and were recently fined £2.2 million.

The Financial Services Authority (FSA), which amongst other things oversees the insurance industry, told the companies that they would be undertaking a review of their closed complaint cases.

These were files where customers of Direct Line and Churchill had complained and the aim of the FSA was to ensure that the procedures for dealing with these complaints were adhered to.

In preparation for the FSA review the two firms asked a major accountancy firm to do a sample review which found that 28 per cent of the 110 files reviewed failed the assessment.

It seems though that Direct Line and Churchill decided to do their own spot of cleaning up after receiving the accountants report as when the FSA subsequently visited the Firms’ offices at short notice they found that “27 of the 50 files had been altered before they were sent to the FSA, and seven internal documents were found to contain staff signatures forged by one member of staff”.

Not very good is it? The review by the accountancy firm identified the errors and then more than 50% of the files that were sent to the FSA were amended before they were sent and seven documents had forged signatures!

For those of you in the UK that have seen the Churchill TV adverts with Churchill the dog, then I guess the adverts need changing to include the question “Churchill, do you forge signatures?”

The answer of course is “Oh yesssssss”.

Which companies do you think are most likely to bribe?

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Here’s a quick question for you:

Companies from which of the following countries are most likely to bribe when doing business abroad?

Is it China, Netherlands, Russia or Switzerland?

My feeling is that a lot of you will probably be able to guess the correct answer but in case you’re struggling to identify which ones are most likely to make illegal payments then according to a survey of 3,000 business executives undertaken by Transparency International, companies from Russia and China are the most likely to pay bribes when doing business abroad.

Transparency International Chair, Huguette Labelle said “It is clear that bribery remains a routine business practice for too many companies and runs throughout their business dealings, not just those with public officials. And companies that fail to prevent bribery in their supply chains run the risk of being prosecuted for the actions of employees and business partners.”

At the other end of the honesty scale are companies from the Netherlands and Switzerland. Companies from these two countries were found to be the most ethical when it came to bribes, or rather not making bribes.

It’s not just the countries that the companies are from that can have an impact on the likelihood of bribing but also the industry sector that they are working in.

Bribery was most likely to happen when public sector works and construction contracts were involved.

Agriculture was reported as being the least likely industry to find bribes.

So in summary, the purchases of unmarked brown envelopes which would fit a wad of cash in are likely to be significantly higher by a Russian construction company than a Dutch agricultural company.

We’ve got some good news for you. We’ve just found 55 billion euros…

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Sometimes things go missing. You search high and low and if you are lucky enough to find them again then you can be pretty happy.

Germany though has just found something that it didn’t even know was missing.

It’s not as though it’s simply some keys that have dropped down the back of the sofa. No, Germany has just found €55 billion.

This is a pretty significant amount and the “find” came about due to spotting an accounting error.

In October last year, FMS Wertmanagement was created when toxic loans and securities with a face value of nearly €175 billion were transferred to it from HRE bank which was nationalised in 2009.

In other words, a so called “bad bank” was created out of the insolvent parts of HRE bank whereby the bad parts (the toxic debts) of the HRE bank were moved to a separate bank (FMS Wertmanagement).

Moving the toxic debt to the “bad bank” meant that what stayed in the nationalised HRE bank was non toxic and the nationalised HRE bank became solvent. This would in thoery help ensure that HRE bank would make a full recovery.

The German Finance Ministry today announced that there had been a double booking of debt and that staff had inadvertently subtracted funds when they should have added them.

The end result is that the reversal of this accounting error means that German debt, as a percentage of GDP reduces from 83.7% to 81.1% – i.e. debt has fallen by 2.6 percentage points.

So, in summary some good news for the German economy.

I should also mention that if the person that made the initial accounting error is by any chance reading this then we do run a wide variety of training programmes including our introduction to finance range of courses…

It doesn’t make a good photo if you’re fired does it?

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30 years ago he joined the British subsidiary of Olympus, the Japanese camera and optical giant, as a salesman. He slowly worked his way up through the ranks of the company until last month he became the first western CEO of the Olympus group.

Unfortunately for Mr Michael Woodford his new position lasted for only 2 weeks before he was fired from his position as CEO and according to media reports was told by the Olympus board to “get a bus to the airport”.

A western CEO of a Japanese company is extremely rare and a CEO being fired after only 2 weeks is probably even rarer.

According to the Olympus board, Mr Woodford was fired for “causing problems for decision-making”.

Mr Woodford didn’t hold back from giving his version of the story and he claimed that he was fired for in effect being a high level “whistle blower”.

After his appointment as CEO he started asking questions about payments Olympus had made to financial advisers for Olympus’s acquisition of Gyrus, a British medical equipment company, for $2bn.

The interesting thing was that advisory fees of nearly $700m were paid to a Cayman Islands registered company called AXAM whose owners were not identified by Olympus.

The really interesting thing though was that the advisory fees paid were equal to nearly 33% of the total acquisition price. This figure of 33% seems a tad high when compared to the industry average for such acquisitions of between 1% and 5%.

The really, really interesting thing though was that AXAM disappeared from the trade register 3 months after receiving their final payment from Olympus.

Now, I’m not a detective but there are some fairly chunky corporate governance issues in this one and a payment of $700m to an “anonymous” Cayman Islands company which has since disappeared probably does warrant a bit of a debate to say the least.

Mr Woodford won’t be involved in those debates though as his position as CEO was abruptly ended after 2 weeks.

The Olympus share price fell nearly 50% in the days immediately after the announcements.

Olympus has denied any wrongdoing.

Sorry to break the news to you but Christmas is cancelled…

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3 years ago in the middle of the financial crisis when some of the best known banks in the world were on the verge of collapsing, the Royal Bank of Scotland (RBS) was rescued by the British tax payers to the tune of £45 billion.

Since then the bank has been under a lot of scrutiny. Not just from the point of whether it would survive but also when it would turn things around so that the business became profitable and the tax payer would start to get their money back.

Along with lots of other companies that have suffered in the crisis, RBS has undertaken a cost cutting exercise over the last couple of years.

Chris Kyle, the CFO of the Investment Banking division of RBS yesterday announced some additional cut backs to his staff.

An internal memo to his staff told them amongst other things that:

– No-one will be given a new Blackberry phone or other handset.

– There will be no magazine or newspapers subscriptions (I guess this now means that they won’t be able to do the daily FT crossword over morning coffee in the office)

– People working late in the office will not be able to claim a taxi expense to take them home unless they are working past 10pm (it used to be a 9pm cut off)

The bank has also banned all staff entertaining for the rest of the year so there will be no bank funded Christmas party for the RBS investment bankers and instead the bankers will have to pay for their office Christmas party themselves.

Now, whilst some people will think this is good cost control some others may feel that this is just “window dressing” to give the impression that the investment bankers’ excessive remuneration and benefits are being stopped.

Some of the RBS employees may well be a bit upset about having to pay for their Christmas party but last year over 300 key staff within the bank reportedly shared a bonus pot of £375 million which equals an average bonus of over £1.1 million each.

I guess these particular individuals are quite relaxed about buying their own Christmas drinks…

Goodbye to a visionary and creative genius.

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Born to an unmarried interracial couple, adopted at a young age, dropped out of college and fired from him first major job. Steve Jobs went on to build two billion dollar businesses.

Unfortunately, the iconic face behind Apple lost his battle with pancreatic cancer on Wednesday and the world lost one of the true business greats.

In terms of his impact on business as well as people’s everyday lives, his legacy will be right up there with the likes of other great visionaries who introduced “life changing technology” such as Henry Ford and the mass motor car.

Steve Jobs taught the world many things and whilst there have been, and no doubt will be, lots written on his business methodologies one particular approach of his stands out as far as I’m concerned.

His creations really encase the concept of providing great products but importantly offering real “value” for these great products.

By “value” I don’t mean that they are the cheapest. In fact, they are far from the cheapest but what Apple do provide are excellent products which customers will pay a premium for as they perceive that this additional value the products offer is worth paying for. In classic Michael Porter terminology this could be referred to as “differentiation”.

Steve Jobs had an uncanny ability to spot the next great thing that customers would want and then to develop a product which although relatively expensive would create such “value” that customers would purchase it instead of cheaper options.

If Apple had competed purely on price then there would always be another company which would come along and offer a similar product for a lower price.

As well as the innovative Apple products that have hit our shelves, Steve Jobs will also be associated with the black St. Croix Collection turtleneck sweater that he would wear at product launches.

Since his death there has been a run on people wanting to buy these sweaters and the company that manufactures them, US based Knitcraft Corp has reported a surge in orders in the last 24 hours. Despite a total order run of between 4,000 to 5,000 sweaters many St Croix stores have now run out of stock.

Rest in Peace, Steve Jobs.

Can I have a skinny latte, a blueberry muffin and a corporate loan please?

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One of the real challenges facing a lot of companies at the moment is access to funds.

The economic turmoil over recent years has led to the loan markets largely drying up and without access to suitable cash reserves a number of firms have hit cashflow problems and have gone out of business.

Similarly, a lot of businesses that have wanted to start up in the recession haven’t had access to loan funds to enable them to do so.

The end result is that jobs have been lost.

The global coffee chain Starbucks though think that they may have an answer to some of the funding problems.

They have just launched a campaign to try to stimulate job growth in America by launching a “Create Jobs for the USA” initiative.

They are partnering in this initiative with Opportunity Finance Network (OFN), a group of private financial institutions that provide affordable loans to certain parts of the American population including low-income people and communities.

As well as donating $5 million to get the project off the ground Starbucks are also covering the admin expenses of OFN as well as paying for the manufacture of wristbands which will be given to any of their customers who donate $5 in one of their coffee shops.

Starbucks Chairman and CEO Howard Schultz said “Small businesses are…employing more than half of all private sector workers – but this critical jobs engine has stalled. We’ve got to thaw the channels of credit so that community businesses can start hiring again.”

100% of the donations made will go to OFN to help fund loans to community businesses including small businesses, microenterprises and nonprofit organizations.

Starbucks themselves though have also been a victim of the recession with several hundred stores being closed in the US alone in recent years and some sceptics may argue that this is just a PR initiate by them.

My personal view though is that if this initiative helps to create jobs then it can only be a good thing.

Would you fire somebody if they drank the last drop of milk in the office?

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In today’s work environment the pace of life seems to be getting faster and faster. Work and study pressures can all increase the amount of time that we spend at work.

I must admit that I need a coffee in the morning before I’m fully up to working speed.

That kick of caffeine always seems to help get my brain into gear.

Over in the States though it’s been reported that Keith Zakheim, the president of multimillion dollar PR firm Beckerman PR, was a little upset when he got into the office early only to find… (in fact this is so bad that I’m finding it difficult to write)… but he found that there was… wait for it… no milk left in the fridge to go with his coffee.

He was so upset that he sent the following email to his staff

From: Keith Zakheim
Date: September 27, 2011 8:20:21 AM EDT
To: Beckerman Staff
Subject: I don’t know what else to do…

I have repeatedly requested until I am blue in the face that the person that finishes the milk must replace the milk. Its not complicated and is a simple sign of respect for fellow employees.

So, imagine my chagrin this morning when I stumbled in at 715 … only to find that the skim milk in the refrigerator had three drops of milk left. Literally 3 drops, an amount that would maybe fill the tummy of a prematurely born mouse. The person that did this is either incredibly lazy, obnoxiously selfish or woefully devoid of intelligence – 3 traits that are consistent with the profile of FORMER Beckerman employees.

As you can tell from the tenor of this email, I am not happy and at my wits end … and I have repeatedly beseeched you to replace the supplies that you consume – whether its pencils, paper, or MILK. This costs you nothing – I pay for it! Yet, it is still repeatedly ignored.

So, I am gravely serious when I write this – if I catch someone not replacing the milk, or at least, in the case where the downstairs store has close already, not sending an email to the office so the first person that arrives (usually Christa or me) can pick one up upon arrival – then I am going to fire you. Im not joking. You will be fired for not replacing the milk, and have fun explaining that one to your next employer. This is not a empty threat so PLEASE don’t test me.

99% of this office consists of great people that work hard, treat their employes with respect, and understand that they are part of something that is bigger than them. However, there seems to be a small element that doesn’t understand this. So its time that they do or else they should start refreshing their resume.

For those of you who have worked for me for years, you know this is not my style so PLEASE take this seriously!

Thank you for your cooperation.

KZ

KEITH ZAKHEIM | CEO
BECKERMAN
ANTENNA GROUP

It’s not been reported what happened when Mr Zakheim subsequently went to the biscuit tin and found there were no biscuits in it.

If the pilot and flight attendant take their clothes off is it good marketing?

Sometimes great advertising campaigns are down to timing.

Unfortunately for these two crew members of Cathay Pacific they took their clothes off at the wrong time.

Cathay Pacific, the Hong Kong based airline, is reportedly considering delaying a global marketing campaign following the publishing on the internet last week of some photos of two members of their staff who were, how shall we put it, in a compromising position in the cockpit of one of their planes.

According to various reports the 2 members of staff that starred in the photos were a female flight attendant and a male pilot.

They have both lost their jobs with the Airline and Cathay Pacific is adamant that the photos were not taken whilst the plane was airborne.

There was therefore no danger to any passengers and also no risk of the pilot’s intercom inadvertently being left on during the festivities.

Back to Cathay Pacific’s advertising campaign that will be delayed though and the company was planning on launching the second part of a major global marketing campaign in mid September.

So, why the decision to postpone the marketing launch?

Well, with all the publicity on the internet and in newspapers in Asia surrounding the photos of the team in action in the cockpit, the prominent lead tagline of their planned advertising campaign maybe isn’t the most appropriate at this moment.

Their planned tagline was:

“Meet the team who go the extra mile to make you feel special”.

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Which is worse. A $3 billion fraud or taking $100 and giving it back the next day?

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Taylor Bean & Whitaker were one of the largest privately held mortgage lenders in the US.

Paul Allen was their CEO and involved in all the key areas of the business. Unfortunately for a lot of people Mr Allen also became involved in the fraud which led to the Taylor Bean business being closed down with 2,000 people losing their jobs.

The fraud also contributed to the collapse of Colonial Bank in the States after they purchased hundreds of millions of dollars of Taylor Bean mortgages.

Two major European banks also suffered as BNP Paribas and Deutsche Bank lost nearly $2 billion as a result of buying various corporate paper from Taylor Bean which was not suitably backed up by collateral.

A $3 billion fraud with thousands of people losing their jobs. Clearly a serious crime.

The end result was that Mr Allen was jailed for just over 3 years.

Meanwhile at the other end of the spectrum in terms of crime against financial institutions and the financial amount involved, a teller at Capital One bank in the States was approached by Roy Brown who put a hand under his jacket, claimed it was a gun and demanded money.

The teller handed Mr Brown 3 piles of money but he only took one $100 bill.

Mr Brown then had a change of heart and the next day handed himself into police and told them that his mother didn’t raise him that way.

He was homeless and told police that he needed the $100 to attend a detox centre.

Despite Mr Brown’s dramatic change of heart he was subsequently sentenced to 15 years in prison for the robbery.

So in summary, $3 billion and 3 years vs. $100 and 15 years…

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