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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…

Diversity champion leaves…

If you are the diversity champion of an organisation with approximately 20,000 employees it’s probably best if you’re not bullying staff.

Deloitte’s (now ex) deputy chief executive and diversity champion Dimple Agarwal has resigned from her role after allegations of bullying by her were received from several staff members.

The British newspaper, the Telegraph first reported Ms Agarwal was facing multiple complaints from staff over inappropriate working practices.

Distressed staff alleged she was aggressive towards them on calls and in emails as well as demanding they work long hours including joining calls before dawn and late at night.

Before her resignation, Ms Agarwal had said that the physical and mental wellbeing of the firm’s employees during lockdown is a priority for Deloitte.

Deloitte UK boss Richard Houston reportedly said “I cannot comment on any of the allegations contained in the article. But, as I have consistently made clear, I’m absolutely committed to ensuring that everyone in our firm is treated with respect, and I will not tolerate behaviours or actions that are inconsistent with our global shared values.”

Ms Agarwal isn’t the only senior executive from the Big 4 to leave due to some awkward behaviour.

Last month, the UK chair of KPMG resigned from his role after telling staff to “stop moaning” about their working conditions during the pandemic and claiming unconscious bias was “complete crap”.

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

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

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

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

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

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

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

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

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

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

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

Given the size of the payments involved there’s a lot of tax at stake and no doubt the tax authorities will be looking closely at these schemes.

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

The 3 person honeymoon and Belbin team roles…

Picture the scene. It’s the first night of your honeymoon. You’ve just married a beautiful Italian Signorina called Marianna. You’re Italian and Italian men have a reputation for being some of the most romantic men in the world.

Now, even though some may say this reputation has largely been self created, there are still certain things you should do on your honeymoon and certain things you should definitely not do on your honeymoon.

Due to Italian privacy laws the individuals concerned can only be identified by their Christian names but what did Stefano do on his honeymoon that led to his new wife divorcing him one month into their marriage?

From a project management point of view there are various tools and techniques that can be used to ensure a project runs smoothly. One of these is to ensure that the team is made up of the right type of person as well as the appropriate number of people.

A well known theory behind what makes a good team is Belbin’s team role models.

In simple terms, Belbin’s theory says that people are born with certain characteristics. Belbin gave names to the different types of people. For example, a “plant” is a person that likes to come up with ideas and is usually quite creative. A “Monitor Evaluator” is somebody with a logical eye who can make impartial judgements.

Back to the one month marriage though and Stefano decided that rather than the traditional 2 person project team that goes on the majority of honeymoons he would make his a 3 person team.

To his wife’s understandable annoyance, Stefano’s 3 person honeymoon team included himself, his new wife and his mother.

The project team first started showing signs of a split when the mother-in-law turned up at the airport for the flight to the honeymoon destination of Paris.

A honeymoon in Paris sounds great until you realise that your mother-in-law is staying in an adjoining room at the hotel you’re staying at and accompanying you to every meal and romantic boat trip along the Seine.

One month after the wedding and Marianna left the marriage home they shared in Rome and returned to her home town of Naples leaving the 39 year old Stefano without a wife.

Maybe Marianna is more of a Belbin’s “Completer Finisher” than Stefan and his mum may have thought.

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…

Who are you sat next to?

If you’re in the office at the moment take a look at the person next to you. Would you say that he or she is a “good worker” or a “toxic neighbour”?

A recent bit of research by economists from Harvard Business School has shed some light on the type of person you should be sitting next to.

If you’re an “average worker” and you sit next to a hard working and diligent person then your performance is likely to improve.

Unfortunately though the opposite is true and if you’re an average person who sits next to somebody who isn’t very good at their job then that badly performing person could well take you down to their level.

The researchers studied data from seating plans and reports from over 2,000 employees. The performance of these employees was rated based on the time they spent to complete a task as well as quality and effectiveness. Their efficiency was based on how often they had to ask for help.

One of the interesting bits of the research was finding out whether when a person sat next to a high performing individual that person’s performance improved because they learnt from the better performing individual or they were inspired by him or her.

When the research team split these people back up again the average worker’s performance reverted back to the average level rather than stay at the high performing level. This implied that the improvement was not due to learning new skills but instead was due to being inspired by the good worker.

When it comes to sitting next to a “toxic employee” who doesn’t perform, the bad news is that the negativity rubs off on the good employee almost immediately.

So it may well be worth trying to sit next to the stars of the office rather than the toxic ones

A quick word of warning though and if the person you sit next to has recently asked their boss to move away from you asap then the chances are that you aren’t the star of the office but instead are…

A bitter coffee taste…

Anyone that has studied hard for their exams will almost certainly at one time or another utilised the services of a strong coffee.

Whilst desperately trying to cram that last bit of knowledge into your brain before the exams there is often a temptation to grab a strong coffee late in the night to keep your mind awake.

For years students around the world have been utilising the caffeine in coffee to help get that extra mark or two.

Coffee is said to originate from East Africa where legend has it that a 9th century Ethiopian goat herder by the name of Starbucks Kaldi noticed that after his goats had ate some coffee beans they started bouncing around like teenagers at the local disco.

This started the journey of coffee and associated caffeine hits so loved by students around the world.

Over in China, one coffee chain has been in the news for all the wrong reasons.

Luckin Coffee was only set up 3 years ago but had lofty ambitions.

They described themselves as “a pioneer of a technology-driven new retail model to provide coffee and other products of high quality, high affordability, and high convenience to customers” and had vowed to overtake Starbucks as China’s biggest coffee chain.

They grew quickly.

Very quickly in fact as within 3 years they had 4,500 outlets around China.

They were also one of the small number of Chinese organisations to quote their shares on the US Nasdaq market.

Things weren’t all they were made out to be though as in April their shares were suspended on the Nasdaq market after the company revealed that they had uncovered $310 million in fake transactions.

It appears that some people in the organisation were so keen for the growth of the company to continue that they created fake sales so as to give the impression that their revenue was growing quicker than it was in reality.

The company announced the discovery and warned the market that investors could no longer rely on previous financial statements that showed rapid growth.

The ongoing financial investigation by the company has resulted in the chief executive and the chief operating officer being fired yesterday and six other employers have been suspended whilst investigations continue.

The shares are currently suspended on the Nasdaq.

You can’t McFlurry Love

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

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

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

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

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

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

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

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

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

I never emailed you…

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

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

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

The fraud itself is fairly simple.

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

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

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

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

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

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