PMag

PQ magazine
July 2014
www.pqmagazine.co.uk / www.pqjobs.co.uk
Meet our guest editor

The AATs Tania Hayes is
in the hot seat for our
ethics special issue
CIMA
exam
review
inside
PROFESSION OPENS
UP TO ONE AND ALL
magazine
EXCLUSIVE
PQ
Partners at the Big 4

accountancy firms are no
longer from the privileged
classes; in fact, the firms are
engines of social mobility,
claims new research.
There is a downside, however,
with modern partners becoming the
embodiment of commercialism.
This ruthless pursuit of sales is
compromising the integrity of the
profession, claim the research
authors, and you can forget the
notion of partners working in the
public interest!
Warwick Business Schools
Crawford Spence and Chris Carter
of the University of Edinburgh
interviewed 32 partners, aspiring
partners, retired partners and even
those who had failed to make
partner in the Big 4 firms. Their
study, Being a successful
professional: An exploration of who
makes partner in the Big Four,
Spence: profession
more meritocratic
but commercialisation
could cause problems
explains that the background of the

Big 4 partner used to be the welltrodden path from private school to
elite university. This created a
gentlemans club, where what
school you went to was the most
important element of making it to
the top.
Professor Spence says that,
today, making partner is more
meritocratic than in the past,
adding that social ties and family

background are less important than
what you can do for the firm.
The professor pointed out that
partners in elite law firms still tend
to come from privileged
backgrounds and elite universities.
This is not the case with partners
from the Big 4 accountancy firms,
he stressed.
Continued on page 12
ACCA exam
feedback
It as all quiet in the first few days of

the ACCA exams, which were
ongoing as PQ magazine went to
press. F5 was the first exam sat, and
although some hated question 2,
they also felt that this exam was
easier than past ones. Time
management was a common gripe.
Many PQs complained that it is
almost impossible to turn off after
exams. I just calculate over and over
again how I can get to 50%, said
one sitter. P7 candidates felt it was a
strange paper especially Q1 (ratios)
and Q4 (ethics). F6 was described as
good, but a bit on the long side. For
P4, Q4 was the killer question. There
were lots of me too comments about
this question being a disaster.
F7 was a Marmite paper where
was the cash flow question, asked
many sitters. Time management was
again paramount here.
For loads more more feedback go
to www.pqmagazine.co.uk.
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contents PQ
CONTENTS
News
08Getting ahead Be yourself,
says Wilkinsons finance chief
10Virtual conference Innovative
ACCA announces pilot scheme
to offer more exam sittings
12ACCA study materials New
approved providers named
Features, etc
06Have your say Crunchie
muncher put me off my exam;
where are the women?; and the
best from Twitter and LinkedIn
14CIMA exam feedback Our
experts run the rule over the
latest set of CIMA exams
16International standards An
IFRS update from Martin Jones
19Analysis What it takes to get to

partner level at a Big 4 firm
22ACCA P2 paper The Corporate
Reporting paper is a tough one:

we tell you how to get a pass
23Ethics specia1 report Our
five-page special kicks off with an
exclusive interview with CIMAs
ethics guru Tanya Barman
24Code of conduct The AATs
July 2014
30Technical focus Standard
costing and direct materials

variance: our concluding article
31Careers #1Lisa Dendle on why
you need a step-by-step career
plan to help achieve your goals
32Careers #2 Generation Y and
new workplace expectations
33Careers #3 Life at the AAT with
our guest editor; taking the
moral path; and our Book Club
38Fun time Mind the GAAPweb;
PQ magazines latest fan; and
more great giveaways
The columnists
Robert Bruce A robust ethical
approach will pay off
08
Prem Sikka Competition does not
lead to a fairer society
10
Carl Lygo LinkedIns grand plans
could spark a revolution
12
Subscribe to PQ Magazine
Its FREE see page 37 or go to
www.pqmagazine.co.uk
ABC July 2012June 2013
32,463
guidance can help you
26Money laundering How the
money laundering regulations

work and how they affect you
27The moral maze ACCA puts
ethics at heart of the qualification
28ICAEW and ethics Online
assessments help students to

focus on the ethical issues
Publishers statement: We have a

digital issue of the magazine which
is sent to 9,561 requested readers
Pause for thought

Im delighted to have been invited to guest edit this months
PQ magazine, which with Graham's approval we have

packed with articles focusing on the theme of ethics. I have
drawn the conclusion that ethics is the 'Marmite' of the profession, with
a divide between those with a taste for it, and those for whom it is a
necessary evil, full of accountancy vitamins but not as interesting as the
number crunching and analysis.
As Head of Conduct and Compliance at AAT, ethics is a key part of
my role. Of late, during the course of
my travels and various meetings
attended, Ive been taking stock of
ethical history in the accountancy
profession. Looking at the likes of the
GEC/AEI scandal and, more recently,
Enron and Bernie Madoff (pictured),
the benefit of hindsight is wonderful
at pointing out the pitfalls of their accounting practices. But reflecting
on these scandals in the context of our own worlds, every unethical
action we take creates our own micro Enron. Enron was not an
unethical company. It was a company full of unethical individuals who,
when they reflected on their actions in isolation, did not view them in
the context of the beast they were to become, and history they were to
make, until it poked them in the eyes.
In this edition we present the AATs top tips for SMEs on acting
ethically, as well as food for thought for you in identifying your ethical
compass. Graham has been out to interview Tanya Barman, Head of
Ethics at CIMA, and Tim Pinkney, Director of Professional Standards at
AIA, has looked at ethics in the context of what we can learn from the
media, along with a host of other contributions from the other
professional bodies.
If reading this gives you a taste for ethics, more ethical resources are
available on AATs ethics site www.aatethics.org.uk.
Happy reading.
Tania Hayes, Head of Conduct & Compliance, AAT (Tania.Hayes@aat.org.uk)
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PQ have your say
email graham@pqaccountant.com
Food for thought
I would like to know what the

rules are concerning eating in the
exam hall. I recently sat a CIMA
exam and I was surrounded by
people chomping away while I
tried to concentrate on passing
the paper. The invigilators dont
seem to care at all. One sitter
even got out a Crunchie bar, and
the whole hall could hear him eat
it. Cant some people go for three
hours without food? Rant over.
Name and address supplied
The editor says: Well,
we asked CIMAs
Graham Eaton for an
answer. He promptly
This is getting ridiculous!
sent over CIMAs Exam Rules and

Regulations. Section 6b states
that eating, unless for medical
reasons, is not permitted in the
exam room. Oh, and 6c says that
smoking is also not permitted!
You can, however, (section 4c)
bring a bottle of water into the
exam hall. In the case mentioned
here, it appears that the
invigilators were not doing their
job properly.
Another CIMA student told PQ
magazine recently that an hour
into their exam a tea lady brought
the invigilators tea and cake. We
couldnt find anything in the rule
book about this one, though.
The writer of the star letter each month wins a fantastic I PQ mug!
Women trouble
As a female PQ I was shocked to

read your story Gender pay gap just
gets wider (PQ, June 14). Can that
pay differential figure of 50,000 be
real? I did notice recently also in
PQ that the ICAEW has had
difficulty attracting women into the
profession as well. My body, the
ACCA, seems much more open,
with 50% of our student intake of
the female persuasion. Around 45%
of our membership is female, so
what is the ICAEWs?
Name and address supplied
The editor says: According to the
Financial Reporting Councils Key
Facts and Trends in the
Accountancy Profession you are
indeed right. To answer your
question, the ICAEW membership is
74% male/26% female. It also has
the lowest female student intake.
Some 38% of the ICAEWs study
body in 2012 was female, this
compares with 49% for the ACCA.
Sorry for PER trouble
At ACCA, we were really concerned

when we read of the problems Mr
Lines and his mentor had
experienced while trying to update
our system for his Practical
Experience Requirements (PQ,
June 14, Letters).
After reading the article we got in
touch with Mr Lines directly to offer
him our sincerest apologies for the
inconvenience he faced in what is,
LSBFS NEW
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normally, a straight-forward
process. While this was an isolated
incident, we know how pivotal this
PER process is to becoming an
ACCA member. It is important this
is hassle free and we have
investigated, internally, what
caused the problem and are taking
steps to make sure that there isnt
a repeat of the same issue.
If any customer experiences
difficulty with this or any other
process we would invite them to
call our contact centre (we are

open 365 days a year, 24/7), where
one of our advisors will be able to
help and advise on any question or
problem.
If we cannot resolve the issue
over the phone then we will ensure
that any problems experienced are
escalated and a return call made to
the customer to help progress any
issue to solution.
Gillian Carlin, Head of Operational
Improvement, ACCA
Hot & Tweet
Our top tweet this

month explained
the confusion of
CIMA exam sitters: P3 sitters
have been perplexed about the
case of the stolen clarinet and
the failure to need a calculator
in todays exam.
We also tweet out the best
jobs from www.pqjobs.co.uk

usually on Fridays and
Mondays. One recent post was
for a bookkeeper in Dundee
(18,000 22,000). Another
PQ role in North West London is
paying 50,000 65,000. So
there really is something for
everyone at www.pqjobs.co.uk
As usual PQ has been out
and about this month. We
arrived a bit early for the recent
ACA prizegiving ceremony, and
got a great snap of the prepresentation photo call (above).
We now have 1,498 followers,
just two short then of our next
target of 1,500. Thanks
everyone and keep retweeting
@PQmagazine
One LinkedIn
discussion
asked: when
are you a PQ?
We have a rule
of thumb here
you need to have passed a
professional exam and be
working in accountancy. PQ
thinks both are necessary to be
able to put PQ on your CV. The
issue of AAT qualified members
calling themselves qualified
accountants was another
discussion point. Can a
technician be an accountant? We
think not, but you may beg to
differ. Remember, anyone can
call themselves an accountant
it isnt a protected designation.
PQ Magazine Fourth floor, Central House, 142 Central Street, London EC1V 8AR | Phone: 020 7216 6444 | Email: graham@pqaccountant.com
Website: www.pqmagazine.co.uk | Editor/publisher: Graham Hambly graham@pqaccountant.com | Advertising manager: Polly Thrasivoulou polly@pqaccountant.com
Associate editor: Adam Riches | Art editor: Tim Parker | Subscriptions: dom@pqaccountant.com | Contributors: Robert Bruce, Prem Sikka,
Carl Lygo, Tony Kelly, Phil Gammon, Jo Daley | Origination and print services by Classified Central Media
If you have any problems with delivery, or if you want to change your delivery address, please email dom@pqaccountant.com
Published by PQ Publishing PQ Publishing 2014
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PQ news
ROBERT
BRUCE
A tough
approach
to ethics
The career of Stewart Hamilton, who

sadly died recently, tells you all you
need to know about ethics. An
exceptionally fierce Scots CA, he
ended his career as Emeritus
Professor of Accounting and Finance
at IMD in Lausanne, one of the finest
business schools on the planet. For
over 30 years he taught thousands of
students how to run businesses
properly through learning from his
case studies of fraud and business
disasters.
But he always harked back to the
start of his career at an Edinburgh
audit firm. There he learned that

ethics and integrity were about being
blunt, tough and tenacious. He would
recall the time when, as a young
man on the audit of a large company,
he reported something dodgy back to
the partner. And then he sat in on the
meeting where that partner told the
client, important though he was, that
if he did go ahead with what he had
proposed then he would personally
take his ******* audit and stuff it up
his **** and ensure that no other CA
firm in Edinburgh would touch it.
The partner then asked the client
if he had made himself clear. The
client replied: Yes, sir. And Stewart
came away from the experience
having learned all he needed to
know about the importance of ethics.
Robert Bruce is an
award-winning writer on
accountancy for The Times
BE YOURSELF IF YOU CIMA sitters

by P3
WANT TO GET AHEAD baffled
question
It is important that on your
Needham: honesty vital
way to the top you be you
and be known, according
to Wilkinsons head of
finance, Clare Needham.
The keynote speaker at
the recent ICAEW prizegiving ceremony (see page
10), Needham admitted
that when she was at
KPMG she once went to a
party dressed as an ice
maiden. She also likes
feathers and wore them a
lot. Partners ended up
nicknaming her Feathers
and she got noticed.
Ratcliffe was also on hand. He
Needham told the packed hall
reminded the prizewinners that
that it is also important to
they were joining a profession. This
remember to smile. People like
could mean that at times your
happy people, she explained.
integrity and objectivity may be
For her honesty is vital, too. That
questioned. But he stressed that
means telling the truth and telling it
being a chartered accountant is not
early. So if you make a mistake own
a popularity contest. Ratcliffe
up and then go about rectifying the
pointed out: It may mean doing
problem. The quicker you catch a
something that is not in your selfmistake the quicker you can put it
interest putting public interest
right, she said.
ahead of self-interest is at the very
ICAEW Vice President Andrew
heart of what we do.
JOB
PQ ACCA or ACMA
financial accountant
of the
Chichester, West Sussex
MONTH
(car required)
12-month maternity cover
30,000 33,000
International manufacturing subsidiary of a US parent company,

with a brand which is recognised and admired across the globe.
A wonderful opportunity to apply your financial accounting
experience and group reporting knowledge in a corporate
environment which offers the absolute best in terms of innovation
and systems. Are you the PQ that they are looking for?
Find out more at www.pqjobs.co.uk for this and other great posts.
EARLY WARNING SYSTEM
London South Bank University is

investing more than 14m in IBMs
Exceptional Student Experience,
which acts as an early warning
system to identify failing students.
The new system uses a mix of
analytics, mobile, social and
security solutions built on cloud
infrastructure to monitor the
academic progress of individual
students. LSBUs Pro Vice
Chancellor, Phil Cardew, said the
key benefit of the programme is
8
that it will allow the college to

identify students who require
support to complete their studies.
For the introduction of the

programme LSBUs entire IT
environment will move to SoftLayer,
an IBM company cloud computing
platform. This will allow students
and tutors to contact each other,
and access the internet, email,
social networks, and the LSBU
library.
It is envisaged that virtual tutor
groups will be run though the portal
and students will have access to
tutors 24/7.
If cash flow question are not your

strongest suit then the May F1 and
F2 CIMA exams werent for you!
Many PQ sitters were quick to admit
they only had themselves to blame,
but some at F1 felt the cash flow
question wasnt as straightforward
as in past papers. Tutors agreed
that F1 was a real challenge this
time around.
E3 what a car crash, discuss
is how one CIMA student described
this summers exam. The big
complaint was interpreting the
questions. Tutors backed up
students concerns here. Top tutors
at LSBF said that the exam was of
mixed quality and the incidence of
poorly phrased questions
suggesting that this paper wasnt
properly moderated.
Meanwhile, P3 sitters were
concerned that they had to spend
three-and-a-half pages arguing
about a stolen clarinet while their
calculators stayed firmly in its case.
How is a question about a
misplaced clarinet going to help test
my knowledge of the P3 syllabus?
asked one mystified sitter. Students
ventured that perhaps a new
examiner had written this paper,
hence the different feel. Another PQ
felt he just had to waffle too much:
26 pages today after 24 yesterday,
dont know if my arm can take
much more.
For all our Exam Review Board
feedback go to page 14.
Never too
old to learn
Accountancy PQs are getting older.

Figures released by the Financial
Reporting Council show that some
74% of current students are aged
under 35, compared with 77% in
2008.
In all, 29% of all accountancy
trainees are aged under 25 some
146,854 worldwide. That leaves
45% of the student population aged
between 25 and 34 years old.
The chartered bodies (ICAEW,
ICAS and CAI) have the highest
proportion of students aged 34 and
under 95%, 91% and 81%
respectively.
The bodies with the highest
proportion of mature students (aged
35 or over) are CIPFA and the AIA,
with 52% and 39% respectively.
PQ Magazine July 2014
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PQ news
PREM
SIKKA
When
competition
undermines
fairness
During the past 50 years or so,
competition has assumed a central
place in society. It is not just TV
cookery or talent shows, but nation
states, local communities and
individuals who compete against each
other. The worth of an individual is
increasingly defined through the prism
of wealth and consumption.
Competition is valued as it
enhances choice of products/services
and provides value for money, but
there is also a darker side. In pursuit
of profits and high executive pay,
some organisations pay low wages.
Corporations manufacture deadly
diseases, such as those relating to
smoking and obesity. Some food
producers have mis-sold horsemeat as
beef. Supermarkets indulge in fake
sales and discounts to entice
customers. The financial industry has
regularly fleeced customers by misselling payment protection insurance,
mortgages and pensions. Auditing
firms make profits by appeasing
company directors and selling tax
avoidance schemes. Senior personnel
have been sent to prison for insider
trading. Life has become a giant
market in which accountants, lawyers,
legislators and public institutions are
available for hire to the highest bidder.
No society can flourish without
some notion of fairness and ethical
conduct. This requires consideration
of others, but competitiveness and the
urge to accumulate as much wealth as
quickly as possible has eroded the
space for consideration of the social
impact of decisions and policies.
Prem Sikka is professor
of accountancy at the
University of Essex
Dutch boss quits

The chief of
KPMGs Dutch
business, Jurgen
van Breukelen,
has resigned
over allegations of a multimillion- pound tax fraud
linked to the building of its
headquarters there. The
Dutch public prosecutor has
been investigating a joint
venture between KPMG and a
property developer over claims
of tax evasion, forgery and
false invoicing in 2009 and 2010.
10
ACCA virtual conference
The ACCA will run a pilot exam in September

2015 before moving to four sessions a year for
most of the fundamental skills and professional
level exams from 2016, according to a unique
virtual conference for tuition providers.
ACCA programme director Judith Bennett
opened the conference in early June. She
explained in a Q&A session that these new,
more regular exams will take place on the first
monday of the month in March, June,
September and December. The exact exam and
results release dates will be made clearer at the
end of this summer, she promised.
Bennett also revealed that after the change the
results will come quicker, being released in five weeks
rather than the current seven. Students will still be
restricted to sitting four exams a session and eight
exams in one year. This will not include resits.
Bennett stressed that despite extra exam sessions
there will be no change in the amount of study and

effort needed to pass ACCA exams.
ACCA students are positive about the changes. One
survey showed 67% of PQs would take more exams over
the year; 26% said they would use the additional sessions
to spread out their exams, although they planned to take
the same number of papers over the year.
Success rates
hold steady
Heading for the top: students from across the globe were honoured for
their achievements at the recent International ACA Prizegiving ceremony
Top award the Peat prize went to Deloittes Marc Kusicka (Birmingham)
Record recruits for big firms

A record 5,500-plus accountancy
graduates will be recruited by the
Big 4 accountancy firms this year.
KPMG has confirmed that it is
hiring around 1,000 graduates, a
30% increase on 2013. The firm is
also hiring around 150 schoolleavers.
Deloitte recruited some 1,658
students into entry-level jobs in
2013, and it confirmed it is
expecting to sign up similar
numbers of graduates this year.
All abuzz at KPMG

KPMG is claiming another first
becoming the home of Canary
Wharfs first-ever colony of honey
bees. Some 40,000 bees have
taken up residence in two
specially
constructed hives
on the roof. A
beecam is being
installed to keep
staff up-to-date
on their activity
and a competition
is under way for
staff to name the queen bee.
Meanwhile, PwC plans to take on

a record 1,532 graduates and 143
school-leavers. That is up from
1,220 recruits in 2013.
EY has even bigger plans. Back
in November 2013, PQ magazine
reported that EY was planning to
recruit thousands more people to
deal with the growing demand for
business advice. Of the 3,700 new
recruits, some 1,350 were trainees.
Last month it added 500 jobs in
Belfast alone.
EY launches new grad scheme

EY has announced that it is to
recruit 20 graduates and five
school-leavers to its fraud
investigation and disputes
team in September. The team
investigates fraud and other
financial activity, including
tracing and recovering stolen
assets, preparing evidence
for court cases and
developing anti-corruption
programmes. In addition, they will
also be involved in helping
businesses fulfilling risk,
compliance and regulatory needs.
AAT pass rates for the CBA exams

are holding steady at 81.4% in the
UK, according to the latest stats.
PQ magazine was recently sent
the success rates for the year
ending 31 December 2013. The
lowest pass rate remains Credit
Management (and debt control)
with a pass rate of 62.4%. This is
up from the last set of results,
where the pass rate for this
assessment was just 53.3%.
The old tough Level 4 papers,
Financial Performance and
Financial Statements, saw a rise in
their success rates, to 69.4% and
70.2% respectively.
Two other Level 4 papers,
Personal Taxation and Cash
Management, now have worse pass
rates. Some 65.3% of sitters passed
Cash Management and 66.7%
Personal Taxation during 2013.
See next months PQ magazine
for the pass rates in full.
London is top city
London has claimed top spot as a
centre for business, finance and
culture for the first time, according
to Cities of Opportunity,
PwCs sixth annual
index of 30 major
international cities. The
report found that the
city is technologically
on top of its game,
leaping to joint first place with
Seoul for technology readiness.
London also gets top ranking for
software and multimedia
development and design.
Make exam nerves a

thing of the past.
Study CIMA with LSBF
Visit us at an Open Day to nd out about our

exible study options, access to online lectures
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PQ news
CARL
LYGO
LinkedIns
big plans
could start
a revolution
I was a guest of the World Bank at its
recent annual conference on private
education, held in San Francisco.
Speakers from Silicon Valley joined
leading private education providers
from around the world to discuss
Rethinking Education Shaping the
Future. The central theme of the
conference was to showcase
innovation and technology in
education delivery and results
measurement.
The high point for me was meeting
the co-founder of LinkedIn, Reid
Hoffman. He is one of the big beasts
of Silicon Valley and gave an
interesting insight into how he thought
the traditional university model would
be blown away by the development of
free access online education backed
by employers via LinkedIn. Central to
his idea is that the big data LinkedIn
has means they can analyse the
actual skills sets claimed by people
who hold a particular job title. He
believes that LinkedIn can create rival
certifications to the University sector,
provide online skills training approved
by employers, and therefore enable
employees to get career-relevant
skills training and certification online.
I am aware that at least one large
professional body is working on the
idea of using the open source
platform of LinkedIn to deliver its
professional qualifications training
and certification (so it is not such a
flight of fancy).
Reid believes that this approach
could reduce the debt that students
incur in studying, create courses that
are more relevant to the work of
ordinary people and begin a
revolution of providing unbundled
content. You heard it here first the
revolution is coming!
Professor Carl Lygo is
chief executive of BPP
ACCAs approved
providers named
ACCA has made big changes to its
content approval programme. Gone
is the Platinum and Gold stamp of
approval on study materials,
replaced by one single level of
accreditation. The new approved
providers are Becker Professional
Education, BPP Learning Media
and Kaplan Publishing.
At a meeting with director of
education development Alison
McHugh and learning provider
relationships manager Nicola
Parkes, PQ was told that the new
set-up covers all material for CBE
from 1 September 2014 and paperbased exams from December
2014. PQ also understands it is a
three-year deal.
McHugh explained that to gain
approval the providers needed to
show they have a global footprint,
with a presence in at least three
key regions. The study materials
also have to cover the syllabus and
provide opportunities for question
practice. She added: The ultimate
aim of the programme is to improve
access for our students to quality

learning materials, and other
publishers can apply for this
approval.
McHugh also promised that the
new approval programme will not
stifle innovation. Our current
providers take different approaches
in the material, she explained.
There are changes to the format of
the F papers this December, so
studying with the right material is
paramount. If students are in any
doubt about the material they are
using they should contact their
content providers.
Daffy approach
to getting a pass
in your exam
More than one in five UK university

students admit to taking smart
drugs to help them stay awake and
study longer, according to a recent
poll. The study by The Tab, a
student publication, found the drug
of choice was modafinil, which is
normally prescribed for suffers of
chronic sleep condition narcolepsy.
In its story The Tab suggests the
pressures of being at the countrys
top university must be getting to
Oxford students, as 26% of
Oxonians have used daffy. They
are the top users.
Across the country 21% of
maths and law degree students
admitted to using the drug for
support. There were no figures
available for accountancy courses.
Last October, PQ magazine
reported concern that graduates
will be taking their drug-taking
habits into the accountancy exams,
and might even be using them
when under pressure at work.
Profession is now open to all
Continued from page 1

Instead, there was a preponderance
of provincial university graduates
from relatively modest backgrounds
aspirational working or lower
middle class. Spencer said that they
were generally state educated with
parents who were unlikely to have
had the luxury of higher education.
By way of contrast, the children
of accounting partners are privately
educated and attended or were
planning to attend elite universities.
Importantly, he explained: At the
Big 4 all walks of life are welcome as
long as they are able to generate
sufficient levels of economic return.
Spence felt that this leads to a

paradox for the firms: the focus on
making money opens the doors to
more meritocratic promotion
structures; on the other hand, this
growing commercialism could lead
to future conflicts with the
industrys role as auditors and
independent reviewers of the
finances of companies.
Those who rise to partner are the
revenue generators who have
deepening relationships with
clients.
The research found these
partners often do not do any
accounting themselves as they are
Whitehalls first CFO

Qualified accountant Julian
Kelly (right) is to take on the role
of Director general of public
spending and finance at HM
Treasury. The new job merges the
role of head of public spending
with the head of the government
finance profession for the first
time. The creation of this new
position was a recommendation of
the Financial
Management
Review,
launched at
Spending
Round 2013,
led by Sharon
White, second permanent
secretary to the Treasury, and
Richard Douglas, head of the
government finance profession.
too busy working new commercial

angles. Spence felt that technical
partners who were accomplished
accountants and were
commonplace in the past are now
an anachronism. He said: The
pursuit of sales potentially
compromises the integrity of the
professional service offered and is a
conflict of interest with the role of
the accountant as acting on behalf
of society in ensuring the accounts
of a firm are accurate.
Spence felt that any notion of
working in the public interest was
entirely absent from the interviews.
See analysis, page 19
In brief
How ethical are you?
CIMA is planning to
investigate the differences in the
ethical approaches between the
generations. Strategic level PQs
will be asked a series of questions,
which will be compared to the
answers of members who have
been around a little longer. If you
are a strategic level student expect
to be contacted later this year.
12
Accountants the winners

The great recession wasnt
so bad for accountants, say the
National Institute of Economic and
Social Research. Along with
lawyers and bankers, accountants
positions and wages rose during
the recession. Since the end of
2008 the accountancy workforce
has grown by 13.3% and salaries
have risen by 8% on average.
Evening Classes commence:
MONDAY 1st SEPTEMBER 2014

Timings: 6:15pm to 8:45pm
Speak to a personal
course advisor on
020 7400 6772
or enrol with us on-line
www.lca.anglia.ac.uk
TUESDAY 12th AUGUST 2014

t COME ALONG AND MEET OUR LECTURERS
t ENROL ON OUR OPEN DAYS AND
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PQ CIMA exam feedback
SOUNDING O
What was good, what was bad,
and what was just plain ugly? Our
panel of experts spill the beans
valuations, weighted average cost of capital and

investment appraisal were all well represented
and candidates should have been able to
accumulate decent marks in these tasks.
LSBF
P1: This was a tough exam. A deeper than

usual understanding of syllabus areas was
required, rather than a robotic use of
standardised techniques.
P2: Time pressure may have been an issue, but
in fairness this examination was straightforward
and passable with method and clear layout,
even if the mark allocation on some
requirements could have been surprising. The
biggest surprise was the absence of transfer
pricing. All questions were sourced from the
core areas of the P2 syllabus. In this exam, P1
was barely drawn upon, and the periphery of P2
was not examined. For this reason it would be
reasonable to expect a significant jump in the
pass rate, unless an easier exam is to be
accompanied by more stringent marking.
P3: Overall, the CIMA P3 exam paper was fair.
It had some easy parts and some hard parts, but
a well-prepared student should get a pass mark.
Q1 in particular shows how essential assumed
knowledge can be, where topics much lower
down the pillars can be examined right up to the
highest level. Business acumen and common
sense may have had to replace any lack of
retained knowledge, and students must
remember not to rely too heavily on their
textbooks for all the answers at strategic level.
E1: Overall, this was a fair paper covering all
syllabus areas. The style and standard was
similar to previous sittings. A well-prepared
candidate should have been able to score a
good mark in sections A and B, but some
candidates may have struggled to add the
required level of depth, or to use the scenario
effectively in section C.
E2: Overall, the paper was well balanced
between the syllabus areas and was fair in terms
of the subject matter covered. Some students
may have struggled with Q7, as they would not
be comfortable with PRINCE2 and would have
struggled with the negotiation requirement in
part (b). However, well-prepared students should
have managed most of the questions in this
paper with not too much difficulty.
E3: Overall this was a fair exam, with few
surprises. The models and topics covered were
(for the most part) core and regularly examined.
However, there was scope for students to give
generic answers and fail to apply their answers,
which would have significantly reduced their
marks.
F1: A really good paper compared with recent
sittings, although still a little too wordy for some.
Students should not have found it too time
P1: This paper is another in a stream of very

good examinations and did not produce any
surprises or unfair questions, apart from a
couple of issues. In Q2, it was a little unusual to
see the over-emphasis on budgets. Q3 was ABC
and absorption costing with variances mixed in.
But it ensured the syllabus was covered.
P2: Overall, the examiners style has evolved,
but is pretty much one of rewarding students
who have good syllabus knowledge. This exam
was fair and well-crafted. Again consistent with
previous papers, this exam required analysis
and discussion not just number skills.
P3: Enough straightforward marks to pass here.
The key to success is careful reading and
planning. Q1, for instance, referred to the
information systems of P and its suppliers rather
than to the business risks of a decision.
E1: The paper adopted a contemporary theme,
addressing social networking, guerrilla
marketing, virtual teams and social marketing;
areas of the syllabus that should certainly be
borne in mind ahead of future sittings.
E2: The paper reflected the previous
examination format where all the three areas of
the syllabus were examined and fairly mirrored
their weightings. The five questions in section A
covered all three areas of the syllabus. Students
who did a lot of practise on past papers would
be able to offer reasonable answers.
E3: The exam content was fine, but the
incidence of poorly phrased questions suggests
that this wasnt moderated properly. Past exams
have suffered with this poor phrasing, but only
to a minor extent and it hasnt mattered. With
this paper, candidates whose English is their
second language will struggle to understand
what is required of them.
F1: The challenge was in section B. The
operating segments were very tricky as it
required the application and explanation of
reportable segments. Students who are easily
thrown would have panicked at this stage.
F2: This paper was another in a stream of very
good exams and did not produce any surprises
or unfair questions. The large group question
was cash flow and a good question. Students
will have scored well on this if they had
practised past questions.
F3: This paper provided candidates with a very
good opportunity to succeed, despite the
surprise inclusion of the issue of goodwill
impairment, which is at best assumed
knowledge from F2. The core topics of
14
Kaplan Financial
consuming to complete. Students would have

found Q4 more difficult than the group question
that has appeared in previous exams, but should
not have been shocked to see it again.
F2: This was a fair paper in line with previous
sittings, containing the usual mix of
predominantly core/standard topics with a few
extras here and there. Well-prepared students
should achieve a comfortable pass.
F3: The examiner continues to set tough but
fair papers, covering core syllabus topics in a
consistent style. A well-prepared student should
have been able to score enough marks on this
paper to achieve a pass.
T4: In line with recent trends and, in particular,
the March exam, there were many calculations.
Students would have needed to keep a cool
head, allocate time carefully to prepare their
calculations, and then use them in their
evaluation and assessment of the key issues.
Linkages between the issues depicted required a
calm logical approach working methodically
through the information provided to establish
priorities, develop a structured response and
then getting on with writing the report. As always
time management would have been challenging
for many students.
OFF
BPP
E1: This paper was a bit more straightforward

than in recent sittings. As ever, the students who
provided specific answers directly applied to the
scenario will be the ones who do best. Those
who continue to write lots about theory but with
no application will struggle.
E2: A fairly typical E2 paper, with the examiner
helping out in several questions by stating which
model/theory was under consideration. The main
challenges were in Q4, which looked in detail at
how the resource-based view is used (as
opposed to what it is, which is a question with
which students will have been more
comfortable), and Q5, which relied on a strong
understanding of terminology.
E3: The inclusion of an NPV requirement within
section A should have presented candidates
with a clear and familiar basis with which to deal
with the requisite numerical element.
Requirements on PESTEL and Porters Generic
Strategies in section B should have been
popular, although the presentation of a Strategy
Map may have been more obscure.
P1: NPV, variances and ABC in section C
should have been good news for most students
as these are the usual suspects (although not
CIMA exam feedback PQ

usually all three in one exam!). Sections A and B
contained a couple of tricky questions that could
have caused time management problems for
students not strict enough with themselves to
move on.
P2: This exam was not as straightforward as
November 13 (but no real surprise there), with
some quite unusual section B questions that
may have caught some students out. Q6
focused on pricing, and Q7 on performance
measurement, but no chunky requirements
involving transfer pricing (which may in fact
have been good news from some students).
Section A was OK, but time management would
have been very important.
P3: Overall, this was a fairly standard P3 paper.
While very few numerical elements were tested
(none in the optional section) candidates
needed to display sound discursive skills when
addressing financial risk. Q1 expanded on the
issue of virtual warehousing from the pre-seen
and students were tested on interest risk
exposure by comparing and contrasting P with a
competitor, before considering a proposal to
merge the companys two divisions, notable for
the requirement being longer than the detail
presented in the unseen. Q4 on currency risk
was likely to be the most challenging section B
question.
F1: As in the November 2013 exam, section C
did not include a question on the preparation of
financial statements for a group but instead
examined the statement of cash flow. This in
itself is likely to make this a tricky sitting for a lot
of students. That said, sections A, B and Q3
were all fairly reasonable, so overall this was a
passable exam.
F2: The financial analysis questions were more
challenging than usual but the rest of the paper
was in line with previous sittings. In section A,
the calculation of the ratios in the interpretation
question was simple, but the analysis was
challenging because no narrative information
was provided. In section B, Q7 was different to
previous papers as it required comparison of
actual to forecast. As a full forecast statement of
financial position was not given, this limited the
amount of ratios that could be calculated on the
forecast figures. However, the narrative
information in the scenario was helpful.
F3: This paper had a harder compulsory
question and easier optional questions. Q1 saw
the first time that an impairment of goodwill
charge has been tested in F3, so there would
have been a shock factor. However, the required
approach was clearly stated (a 10-year NPV
based on a WACC +2%) and this was
straightforward if candidates kept their focus.
Half of the marks were available for easier
discussion of strategic factors and the potential
use of surplus cash (an issue that had been
flagged in the pre-seen). Q2 (valuations) was
probably the most challenging in section B.
T4: Although the T4 exam is never a stroll, this
looks to be an easier exam than the March
paper. The four main issues (new oil field, cash
flow issues arising from three new licences,
analysis of a farm-out, and analysis of a reward
structure) were clearly identified, as were the
ethical issues. None of the issues were
unexpected, and although the exam paper
contained a lot of numbers there was usually
clear signposting about what candidates were

expected to do with them. The main challenge
arose from analysing and comparing the two
farm-out arrangements. The main point here
was that one provided an annual fee over 10
years and the other provided a one-off fee at the
end of year one; so a comparison of the NPV
and the cash flow implications of the two
proposals was expected.
First Intuition
E1: Section A was as expected nothing that

should have caused any problems for anyone
who had done the work. Q2 would have caused
some students difficulty if they did not make
their answer specific to why operations
management may benefit a hospital and listed
out generic points. In section C, one of the
questions weighted quite heavily on marketing,
but was tested in a standard way. The other
question was weighted towards the HR elements
of the syllabus. Overall, a very doable paper.
E2: Q1 was a straightforward question on
culture, which provided a clear structure for
students to follow. Q2s rational planning forms a
key area of E2 and as such this should have
provided no surprises. However, the three parts
to the requirement may have been missed by
some students. Q3 had slightly unusual wording,
which may have caught out some in that you
were asked to explain the importance of
activities within the project lifecycle rather than
just to identify them. Q4 required application to
score well. The other questions were fairly
standard for this paper.
P2: Section A contained the usual mix of
variances, learning curves and performance
measures (balanced scorecard). Unusually, a
linear programming question appeared in
section A, the main difference to normal being
that no graph drawing was required. Pricing and
divisional performance were covered in the two
section B questions, with optimum pricing
numbers featuring along with some simple
discussion on skimming and penetration pricing.
ROI and RI would have been expected in Q7.
Overall, a fair exam with no more than a few
marks here and there deviating away from core
topics.
F2: A very fair paper. Candidates can have no
complaints about the contents here. Q3 might
have caused problems for candidates who
struggle to come up with reasonable
explanations for movements in investor ratios
and, I suspect, would have been quite low
scoring.
F3: The main context of the compulsory
question was the valuation of part of the
business and this had been flagged clearly in
the pre-seen as a possibility. A discounted cash
flow valuation would not have been a surprise so
in the main this was a very fair question.
Students might have been a little surprised to be
asked how a goodwill impairment may affect
performance measures and share prices, but
using a bit of common sense would have
enabled sensible answers here. Q2 covered
valuation and financing around an MBO; Q3 was
on theoretical ex-rights prices and share price
reactions; and Q4 covered foreign investment
appraisal. Overall, as usual, a fair test of the
syllabus. PQ
15
PQ international standards
WHATS IN A NAME?
Martin Jones
has heaps of
good advice
for PQs
ploci. It is a beautiful Icelandic

fishing village with chocolate-box
houses. I am joking. It is both a
wonderful acronym and an admission of
defeat. The letters stand for Statement of
Profit or Loss and Other Comprehensive
Income. It is the new name for the
former Comprehensive Income
Statement. The former name worked for
me. It was punchy and it revealed intent.
The IASB had been endeavouring to
wean us off our obsession with profit; an
obsession that drives our strategies and
dominates our financial reporting. You
see the next step from a Comprehensive
Income Statement envisaged by the
IASB was the Performance Statement,
communicating the performance as
simply the categorised growth in position
from one position statement to another.
This statement would be unconcerned
about measuring a single profit and
would present a holistic picture of
performance across broad fronts. That
was the intent. But no longer. The idea of
a Performance Statement appealed to
the believers but appalled the markets.
Move away from profit? Not on your life,
the markets told the IASB. And the title
SPLOCI is the admission of defeat, the
white flag waving over the ivory towers of
the IASB. Ok. You can keep profit, say
the IASB and what is more you can call
your profit statement The Statement of
Profit. or Loss to reinforce the profit
focus.
But what exactly is profit? Everybody
knows what it is until they come to define
it. Indeed, the chairman of the IASB,
Hans Hoorgervorst, asked the question:
Defining profit or loss and OCI... can it
be done? in the title of a recent seminar.
I missed it it was in Japan. But reading
between the lines it is clear the answer
from the urbane Mr Hoogervorst was
probably not. He noted that the big
16
Scenic: the lovely

Icelandic village of
Sploci possibly
brains at the Accounting Standards

Advisory Forum had a bash at defining
profit. He described their attempt as a
courageous effort, but noted with a wry
smile that there was very little
consensus on the meaning of profit. He
is smooth, our chairman.
But one thing he did say was that most
commentators agree that profit is the
bottom line of the Statement of Profit or
Loss. So profit is no more than the sum
of the stuff pumped through the p/l for
the year. And most stuff does go through
the p/l. But some stuff is not allowed
through p/l because it is not profit and
so has to be pumped through a dumping
zone called Other Comprehensive
Income. I use a silly little mnemonic to
help me remember the five gains and
losses that are banned from p/l and
languish in the OCI. It is as follows:
H: Hedging cash flow hedge gains.
E: Exchange on subs forex gains on the
retranslation of foreign subs.

A: Actuarial remeasurement gains in
pensions.
P: PPE revaluations gains on occupied
properties.
S: Strategic equity gains on financial
assets classified FVOCI.
Heaps get it? The heaps heaps at
the bottom of the p/l in a heap. Very
funny, Mr Jones. But why are these
things driven from the p/l. What did they
do wrong? Just about any argument you
put forward can be shot down by
example. The classic argument is that p/l
items are near cash and OCI items are
far cash. But that argument is shot down
by pointing out that a PPE revaluation
gain on a property that you will sell next
year goes through OCI and an investment
property gain on a property you will keep
for a hundred years goes through p/l.
Another classic argument is that the p/l
items are realised and OCI items are
unrealised. But that fails because there
is no definition of realised or unrealised.
The IASB make some progress by using
phrases like bridging items,
mismatched remeasurements and
transitory remeasurements to describe
the OCI items. But in the end the IASB
rather dolefully admit that this is little
more than fancy labelling for stuff we put
through the OCI because we do.
The IASB seem to have concluded that
the split between p/l and OCI is
necessarily arbitrary and are currently
suggesting that the following best
describes the mangled logic:
Profit or loss provides the primary
source of information about the return an
entity has made on its economic
resources in a period.
To support profit or loss, OCI should
only be used if it makes profit or loss
more relevant.
But this in itself is an admission of
defeat as, of course, it must be the IASB
that dictate what must go through the
OCI in order to make the profit or loss
more relevant.
And then there is recycling dont
get me started on recycling. PQ
Martin Jones lectures at LSBF
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The Institute of
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analysis PQ
Hunters, killers
and skinners
How do you get to become a

partner at a Big 4 firm? After
exhaustive research, Chris
Carter and Crawford Spence
explain all
artners are at the apex of

private practice accounting
firms and form the elite of the
profession. Our research investigates who
makes it to partner and the process of
getting there. Our focus is on the Big 4
accounting firms, although we are sure
that there are parallels with other smaller
firms. An accountant will typically
become a partner in their late thirties or
early forties, a little later than it was a
couple of decades previously. It is a long
haul that requires a mix of political skill,
social skills, technical expertise and
sheer hard work.
It is worth noting that in terms of social
class the Big 4 are very open: partners
tend to be drawn from a range of social
classes. It was not, as we initially
expected, restricted to those drawn from
the rarefied atmosphere of elite private
schools and Oxbridge. In fact, only one of
our interviewees came from this
background. This is an important finding
as it challenges the assertions of the
Milburn Report into social mobility, which
lumped accountants in with elite law
firms as being the preserve of the
privileged.
Where are the women?
.
The Big 4 in that regard are admirably
meritocratic. However, while they might
be good on social class, they fall down
badly on gender and ethnic diversity.
Simply put, around half of all trainees are
female, whereas at the level of partner
males outnumber females by about
seven to one. Equally, ethnic minorities
are badly represented at partner level. To
be fair, the Big 4 firms recognise that this
is a problem, the question is whether
they are able to develop effective
programmes to put this right.
So what is the path to partnership?
Almost all of the interviewees in our study
stated early on that my career was
different. Over the course of 40
interviews in the UK and Canada, we
were able to discern the following

patterns:
Importance of Mentorship: Almost all of
our interviewees highlighted the
importance of having a partner who was
a really effective mentor to them. This
played out in a number of ways: the
partner could advise them informally
about the politics of the organisation; the
partner could act as an advocate for
them when they were being discussed at
partner meetings; the partner could
ensure they get put on the right client
accounts.
Not messing up: To be a partner is to be
an owner of the business. To be
entrusted with this position, the partners
have to trust that you wont undermine
the partnership in anyway. The Big 4
firms are particularly cognisant of this
following the collapse of Arthur
Andersen, following its ill-fated role in the
Enron debacle and the criticism of their
role in the financial crisis. Most of our
interviewees acknowledged that everyone
made mistakes from time to time but it
was how you dealt with them that
mattered. Did people learn from them? It
was pretty clear that while technical
mistakes could be overcome, mistakes
attributable to character cast a long
shadow over someones career.
Client focused: Accounting firms do not
produce things, rather they make
Professor Chris
Carter is Chair in
Strategy &
Organisation,
Edinburgh
University.
Crawford Spence
is Professor of
Accounting,
Warwick Business
School
calculations, write reports, meet with

clients. They are, in essence, clientfacing organisations. People who made it
to partner were those that were good at
engaging with clients, anticipating their
needs, handling difficult situations and
having relevant conversations. This
means a lot more than pressing flesh,
waving business cards and eating
lunches: it goes to the heart of
understanding complex relationships and
how they work.
Entrepreneurial behaviour: Partners need
to be able to win business, period. A
partner role has parallels with an
entrepreneur who builds a business and
generates capital; its largely about
bringing business in rather than
delivering it. One of our interviewees
described a partner as a hunter, killer
and skinner: you have to go out and find
work, win it ahead of your competitors
and then be able to deliver it (although
the latter is largely done by
subordinates). So really, being a hunter
and a killer is more important than being
a skinner. This is interesting because
technical partners used to be much
more common. They are a dying breed.
Being a partner in a Big 4 firm is a
multifarious, demanding role. In many
ways, Big 4 partners do not really see
themselves as accountants, but as highhitting players in the business world. PQ
19
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READY
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As one of the worlds largest educators, we have undertaken extensive research to

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At Kaplan, we believe that the key to delivering this is through the design of the course.
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study courses will include
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PQ ACCA P2 paper
Corporate reporting:
beat the P2 examiner
P2 is a real tough one, so make
sure you are fully briefed on the
requirements, says Danny Neusch
Pass rate: 49% (December 2013)
Technical difficulty: 10/10
Weighting of calculations: 40-50%
Weighting of discursive elements:
60-50%
Exam technique: 8/10
The syllabus .
.
P2 is aimed at improving knowledge of detailed
financial reporting requirements and ensuring
that this knowledge can be applied to a range of
entities. It stresses the importance of the
accountant as both a professional steward, as
well as an advisor. There are
eight key syllabus areas:
The professional and
ethical duty of the
accountant: Students must
have an awareness of the
importance of ethics when
preparing corporate reports,
and the consequences of
unethical behaviour. There
have been six-mark questions
on ethics within the compulsory
section of all recent exams.
Despite this, the examiner has
noted that many students do not
attempt the ethics requirements.
The financial reporting
framework: The P2 exam
may include transactions or
scenarios that students are
unfamiliar with. A strong
knowledge of the Conceptual
Framework is therefore essential.
Moreover, the framework is a
useful tool for critiquing existing
accounting standards, something
which is regularly tested in section
B of the exam.
Reporting the financial
performance of entities:
Accounting standards studied at F7
will be tested to a much higher level
in P2, particularly in the areas of
financial instruments and deferred
tax. A number of additional standards
are also introduced at P2, such as
IFRS 2 Share-based payment and IAS 19
Employee benefits. The questions in section B of
the exam generally require few calculations,
meaning that rote learning is of limited use.
Students must instead make every effort to gain
a strong understanding of the full range of IFRSs
so that they can apply them to real-life

accounting situations and scenarios.
Financial statements of groups of entities:
The compulsory question always involves
the production of consolidated financial
statements. This might be a statement of
financial position, a statement of profit or loss
and other comprehensive income, or a
statement of cash flows. These questions often
involve complex groups, as well as changes in
the group structure during the year. Students
must also be prepared to answer discursive
questions on groups within section B of the
exam.
Specialised entities and specialised
transactions: It is expected that students
will be able to apply their
22
knowledge of IFRS to entities

that operate in a range of sectors, such as local
government organisations. An exam question
could also centre on an entity that accounts
using the IFRS for small and medium entities.
Finally, students are expected to have knowledge
of entity reconstructions.
Implications of changes in accounting

regulation on financial reporting: Students
should know the requirements of IFRS 1 Firsttime adoption of IFRS. Furthermore, students
must be aware of the issues and deficiencies
that have led to a proposed change in an
accounting standard.
The appraisal of financial position and
performance of entities: At P2, it is
expected that students can analyse and interpret
both financial and non-financial performance.
However, this part of the syllabus is more
commonly tested through the requirement to
identify suitable accounting policies for an entity,
as well as to highlight accounting treatments that
are unsuitable.
Current developments: Knowledge of
current developments is most likely to
be tested in question 4 (the essay style
question). Questions here could focus on the
weaknesses inherent in existing financial
reporting standards and practices, or the
content of proposed accounting standards.
Students should also be aware of the
increasing importance of forms of nonfinancial reporting, such as social,
environmental and integrated reporting.
Sitting the P2 exam

.
The P2 exam requires a thorough
knowledge of accounting standards, an
ability to apply these standards to
sometimes unusual scenarios, as well as
strong exam technique:
The P2 examiner has regularly noted
that many students over-run on the
consolidation question, meaning that they
score poorly in the rest of the paper.
Time management is therefore crucial to
success.
Outside of the compulsory
consolidation question, recent exams
have asked for surprisingly few
calculations. Make sure that you fully
understand the accounting standards
that you have studied otherwise you
will struggle to apply them to the
scenarios within section B of the
exam.
Students are more likely to score
well in the essay-style question if
they read widely. Make sure that you
read recent articles written by the examiner that
are published on the ACCA website. Also, try to
keep up-to-date with the projects that the
International Accounting Standards Board is
working on. Details can be found at
http://www.ifrs.org/ PQ
Danny Beusch is the P2 Content Specialist
at Kaplan Financial
ethics special PQ
LETS GET ETHICAL

PQ magazine recently caught up
with CIMAs head of ethical
behaviour, Tanya Barman (below)
IMA recently launched a new ethics

e-learning tool to help support its
students (see PQ, June 14).
CIMA says that as a student you are required
to comply with the Code of Ethics and to adopt
the fundamental principles to your working life.
Failure to do so could mean you face disciplinary
action if you are found in breach of the Code.
All fine on the face of it, but Barman explained
that the examiners were worried PQs were
struggling to understand basic business and
ethical situations in their exam questions. She
has been told that students seem to throw words
like integrity into their answers, without being
able to really explain what they mean by it.
Whistleblower: Michael Woodford, former Olympus CEO, stood up against corporate corruption
She stressed that if PQs can think about how
ethics work and explain that in their answers
then they will get marks for that. So
understanding ethics is a really positive thing in
more than one way. The latest tool differs from
what has come before, said Barman. It is a case
of back to basics, starting with what is ethics?
The idea here is to focus on laying out the
current landscape from the start of the journey.
When Barman was writing the content she
became aware that she needed to counter the
idea that just because everyone does it, does
not mean it is right.
She said the acid test remains: are you happy
to tell everyone what you do? She also felt that
you have to ask yourself what would be your
defence for your actions if you were taken to
task. If they dont add up, then you know the
answer!
The student tool is a natural progression from

the work CIMA has been doing in the CPD
arena. A lot of PQs were using what CIMA was
providing and asked for something more for
them. To her credit Barman was ready to act.
The student support e-resource is a bit more
sexy than what has come before its more
interactive and has videos and self-tests. For the
exam-focused PQ there are lots of examples of
how ethics is examined.
Barman feels that it will also help you explore
yourself and really help with those tough conflict
of interest dilemmas.
So, finally, heres a quick test for you. You
come out of a shop and find you have been
given extra change. Would you return it? The
answer, of course, is yes isnt it?
You can find the tool at www.cimaglobal.com/
studentethicstool PQ
MAKING CODES OF ETHICS EFFECTIVE

GOOD PRACTICE
Root the code in core values, eg trust,

integrity.
Give a copy to all staff.
Provide a way to report breaches in a
confidential manner.
Set up a board committee to monitor the
effectiveness of the code.
Report on the codes use in the annual
report.
Make conformity to the code part of a contract of employment.
Make the code available in the language of those staff located
overseas.
Make copies of the code available to business partners, including
suppliers.
Make a named individual responsible for code implementation.
Review the code in light of changing business challenges.
Make sure senior staff walk the talk.
from Developing a Code of Business Ethics, IBE, 2003

BAD PRACTICE
Just pinning the code to the notice board.

Failing to obtain board commitment to the
code.
Leaving responsibility for the codes
effectiveness to HR or another department.
Failing to find out concerns of staff at
different levels.
Failing to feature the code in induction
training and management development
activities.
Having no procedure for revising the code regularly.
Making exceptions to the codes application.
Failing to follow up breaches of the codes standards.
Unhelpful examples by corporate leaders.
Neglecting to have a strategy to integrate corporate values and
standards into the running of the business.
Treating the code as confidential or purely an internal document.
Making it difficult for staff to have direct access to the code or the
person who is responsible for it.
23
PQ ethics special
BE AN ANGEL
Caroline Warburton looks at the AATs code of conduct with an example to demonstrate how it can help you
n the film Hot Fuzz, the great and the

good of a small rural community resort to
murdering local residents who dont fit in
with the villages rustic aesthetic. They do this,
they say, for the greater good. It just goes to
show how peoples moral principles as to what is
right or wrong differ. The hero of the film is good
cop Nicholas Angel, who at one point in the film
opines on the nature of police work: Most
importantly, it is about procedural correctness in
the execution of unquestionable moral
authority.
Back to accountancy. The AAT level 3 ethics
paper challenges the students ability to produce
written answers whilst testing their ability to
reason. Ethics is all about doing the right thing
but in whose eyes?
Accountants are bound by legislation and
regulation. Students must demonstrate
knowledge of the legislation that affects the
working environment the Bribery Act, money
laundering regulations, health and safety issues
and the Data Protection Act, for example.
Accountants have a duty to serve the public
interest. Accountants create, interpret, present
and audit accounting information information
relied upon by the public when making
decisions. This calls for high values and
consistent behaviour across the profession.
The crisis in the finance industry has left the
public wondering just why events were allowed
to happen, why they were not protected from
poor decisions (all while some of those thought
responsible continued to lead lavish lifestyles).
Recent fines in the energy sector for misleading
the public also highlight the issue of ethical
behaviour.
To influence accountants decision making
and conduct the AAT has a set of ethical
principles. They are:
Professional behaviour.
Integrity.
Professional competence and due care.
Confidentiality.
Objectivity.
Principles, unlike rules, allow a greater degree
of flexibility and try to ensure that accountants
evaluate the situation they face to determine the
most appropriate course of action while also
24
considering stakeholder needs. The AAT ethics

paper requires students to approach an ethical
dilemma in logical steps. One such sequence of
steps widely used is provided by the American
Accounting Association, and goes as follows.
Facts (what are the basic facts of the case).
The ethical issues raised.
Norms and values what are the ethical
principles that should be followed?
Alternative options.
Selecting the option most consistent with the
principles.
Consequences of all alternatives.
Decision.
A DILEMMA .
.
Ian Tegrity, an accounting technician at Prestwell
Engineering Ltd, has concerns over his manager,
Alan Shifty. There has been a recent change in
supplier. As a result prices of components have
increased markedly. When asked about this Alan
told Ian not to concern himself with it. Its my
decision and mine alone to choose suppliers, I
have known the MD at this supplier for years,
he said. You pay for quality Ian, now get back
to work if you know whats good for you. Alan
recently bought himself a new sports car and is
planning a lavish holiday with his wife. Senior
managers at Prestwell are concerned about
excessive spending on materials.
Facts: Costs have risen as a result of switching
supplier. Alan has sole responsibility for the
decision and is dismissive of the situation.
Ethical dilemma: Suspicion over the justification
for the change in supplier. Was it a legitimate
business decision? But why is Ian so dismissive?
And what about his recent personal spending?
Suspicion of fraud? Should Ian challenge Alan
further, take his suspicions to other senior
managers or just turn a blind eye?
Norms, principles, values professional
behaviour: Ian should follow the AAT code of
ethics; professional behaviour means he should
be aware of the principles of the code, but also
any regulation that covers the situation. Ian
cannot condone any unethical or unlawful
behaviour. If he does then this could challenge

the values of the whole profession.
Integrity: Ian should be honest and trustworthy
any fraudulent behaviour is dishonest, depriving
the owners of the business of what is rightfully
theirs.
Objectivity: Ian cannot be distracted by self
interest, threats or intimidation. Alans comments
were threatening, and Ian may fear for his
position or chances of future development if he
challenges the decision.
Professional competence: Ian should be
satisfied as to the nature of transactions. The
management of Prestwell relies on his abilities to
explain issues reported in the accounts.
Alternatives: Ian could turn a blind eye. He
could challenge Alan further. Or he could report
to another senior manager.
Best action: If he isnt satisfied, Ian should
escalate his concerns to another senior manager.
This is consistent with his ethical obligations.
Consequences of alternatives: Turn a blind eye,
and Ian may be condoning fraudulent behaviour
which is illegal. Alan will continue to take profit
away from the management of the company.
Challenge Alan, and the problem here would be
that Alan is alerted to the danger, which could
lead to him covering his tracks and so jeopardise
any potential criminal investigation. Reporting his
concerns would be the best option. Ian will have
taken the ethical route; management can then
choose to investigate.
Decision: Ian decides to report his concerns to
senior management.
So there it is, is a rational approach to making
a proper and professional evaluation of a
dilemma. What was that quote at the beginning?
Procedural correctness in the execution of
unquestionable moral authority. Maybe Sgt
Angel has a point. PQ
Caroline Warburton is AAT Course Manager
at iCount Training
Accountancy
isnt as easy as 1-2-3
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PQ ethics special
BREAKING BAD: COULD THE

MLRs SNARE WALTER WHITE?
Tim Pinkney explains the intricacies
of the money laundering regulations
and how they affect you
K money laundering regulations (MLRs)

require all accountancy service
providers (ASPs) to be registered with a
professional accountancy body that has
supervisory status, or with HMRC, the default
regulator for ASPs. This also applies to money
service bureaux, high value dealers and trust
and company service providers (TCSPs).
Professional bodies, HMRC and the
Consultative Committee for Accountancy Bodies
(CCAB) provide accountants with guidance
designed to help all sizes of firms comply with
the regulations, from sole practitioners to
national companies. But would the regulations
have helped spot and stop Walter White?
Walter White is the central character in the hit
US drama Breaking Bad. A chemistry genius
who worked as a teacher in a New Mexico high
school, his life drastically changed when he was
diagnosed with terminal lung cancer. Given only
a short time left to live, and to ensure his
disabled son and his pregnant wifes financial
future, Walt uses his skills to create and sell the

worlds finest crystal methamphetamine. To
distribute his signature blue meth he teams up
with Jesse Pinkman, a former student. The meth
makes them very rich, very quickly, but it
attracts the attention of the Drug Enforcement
Administration (DEA). As Walt and Jesses status
in the drug world escalates, Walt becomes a
dangerous criminal and Jesse a hot-headed
salesman. The DEA is always hot on his tail,
forcing Walt to come up with new ways to cover
his tracks, including ingenious plots to launder
the proceeds of his criminal life.
Professional enablers
HMRC and the National Crime Agency (NCA)
suggest laundering proceeds of crime on this
scale are often facilitated by professional
enablers, although I would challenge the notion
that these people are professional. I recently
attended a seminar where SOCA (now NCA)
referred to professional enablers as corrupted or
complicit professionals, including accountants,
solicitors, financial advisers and stockbrokers,
who facilitate money laundering through their
knowledge of legislation, business, finance and
commercial structures, adding credibility to
Smile for the camera: our author with Breaking Bads Walter White and Jesse Pinkman
26
transactions and obscuring audit trails. Their

corruption may take the form of a willingness to
accept additional payments for activities they
know or suspect to be criminal, ignoring or
facilitating illegal activity.
In one of the early episodes of Breaking Bad,
Walt hires attorney Saul Goodman because, in
the words of his business partner, you dont
need a criminal lawyer... you need a criminal
lawyer. In Breaking Bad, it would be hard to
argue that the lawyer employed was anything
but criminal and would appear to fit the NCA
definition of a professional enabler; however, the
actual process of laundering the dirty money
through a legitimate business fell on the
shoulders of a bookkeeper employed internally
by a legitimate business. In this case, Walt
purchased a car wash, via his corrupt lawyer,
and appointed his wife as manager and
bookkeeper. She then proceeded to launder
some of Walts illicit gains through the business.
Due diligence
The UK MLRs basically require accountants to
appoint a responsible officer to monitor, and
where necessary, report suspicions to the NCA.
Suspicions that have arisen from continually
conducting risk assessments and due diligence
on each of the firms clients and their activities,
as well as a knowledge of controlling interests
and source of funds. It is extremely unlikely that
Walts car wash would have engaged the
services of an external accountant (assuming it
remained below reporting thresholds) and
internal accountants and bookkeepers are not
included in the regulated sector, as defined by
the MLRs and are not subject to the scrutiny
that ASPs are. So who would spot the
bookkeepers illegal activity?
As one of the money laundering supervisors
listed in schedule 3 of the MLRs, AIA is required
to monitor its members to ensure they have
suitable systems and controls in place to either
spot (and report) or make it as hard as possible
for criminals to launder proceeds of crime, as
well as to ensure the firms subject to supervision
are not themselves complicit.
What Breaking Bad highlights is that the issue
of professional enablers does not lie solely with
ASPs, as portrayed by HMRC and NCA, but
could well be more prevalent with nonprofessional enablers embedded inside
legitimate businesses, who are not subject to the
same MLRs supervision and controls as the
regulated sector.
The regulations in their current form would
not have caught out Walter White, and while
loopholes exist in the law, criminals and
unethical professional enablers will always find a
way to exploit them. PQ
Tim Pinkney is Director of Professional
Standards at the Association of International
Accountants
ethics special PQ
THE MORAL MAZE

Gareth Owen explains how the
ACCA aims to put ethics at the
heart of the qualification
eveson; Plebgate; PPI mis-selling; Libor

rate fixing; MPs expenses all these
issues have something in common and
that is ethics or, more precisely, a lack of
ethics. These recent scandals have all called for
an improvement in ethical standards from
journalists, police, MPs, bankers and the
possible introduction of new ethical codes of
behaviour.
The accountancy profession already has a
code of ethics, as do most other professions. For
accountants, the International Ethics Standards
Board for Accountants (IESBA) publishes the
Code of Ethics for Professional Accountants. The
IESBA code was previously issued by the Ethics
Committee of the International Federation of
Accountants (IFAC), and so was commonly
referred to as the IFAC code. And as for ACCA,
we have our own Rulebook for members and
students, based on the IFAC Code that we
strongly support and promote.
This sets out, in the Code of Ethics and
Conduct, a set of principles that follow those in
the IFAC Code.
This is very much a principles-based
framework, which calls on all accountants to
recognise and aspire to fundamental behavioural
standards in all the professional work they do.
However, it is often recognised that significant
pressure or threats can build on a person to act
in a less than ethical way, and it can be very
difficult to refuse to breach a fundamental
ethical principle when someone is being
threatened with serious consequences.
I confess that I am no expert in the philosophy
of ethics, but as an accounting educationalist
and academic, I do have a professional interest
in ethics and ethical behaviour.
ACCAs own commitment to ethics was further
strengthened in 2007, when we re-launched our
qualification to place ethics and professionalism

at its heart and to provide our students and
members with the necessary safeguards against
threats to ethical behaviour.
A new professional exam paper, now called
Governance, Risk and Ethics, was introduced
and ACCA also launched a unique online ethics
module that presents students with challenging
real-life ethical dilemmas.
All ACCA students are required to complete
this module before they can be admitted to full
ACCA membership.
Ethics needs to be relevant

To be effective, ethical practices need to be
relevant to the way each business operates,
woven into the culture of each and, crucially,
adopted by individuals of integrity within the
organisation.
The lead for this process must come right
from the top, through the tone set by the CEO
and from the Boardroom. It needs to be linked
to the companys governance, internal control
systems and risk strategies.
Businesses, and where appropriate regulators,
should seek to ensure that they commit
themselves to recruiting and developing staff,
especially senior executives, directors and
financial staff, who have a strong ethical
compass.
This process should aim to go beyond aiming
to merely stay within the law or to comply with a
code, and to develop a business that actively
operates in accordance with an agreed ethical
framework. Therefore, the importance of
addressing any threats to those fundamental
principles needs to be appreciated.
In an ideal world, a member would not be in a
situation where any of the fundamental
principles are being threatened.
However, section 3.3 of the ACCA Rulebook
assists members in identifying situations that
need to be managed, and dealing with any such
threats should they arise.
The five fundamental principles set out in the
ACCA code are:
Integrity: being straightforward and honest in

all professional and business relationships.
Objectivity: not allowing bias, conflicts of
interest or undue influence of others to override
professional or business judgements.
Professional competence and due care: having
a continuing duty to maintain professional
knowledge and skill at a level required to ensure
that a client or employer receives a competent
professional service based on current
developments in practice, legislation and
techniques.
Confidentiality: respecting the confidentiality of
information acquired as a result of professional
and business relationships; and not disclosing
such information to third parties without proper
and specific authority unless there is a legal
duty or demand to disclose. And not using
confidential information acquired as a result of
professional and business relationships for ones
personal gain or for the gain of others such as
family and friends.
Professional behaviour: complying with
relevant laws and regulations and avoiding any
action that discredits the profession.
Any system of regulation must have the
protection of the public interest as its overriding
objective, over and above the interests of the
members of the profession.
This issue of the public interest brings me
onto a related issue that of public value.
For ACCA, this means three things: to act in
the public interest, to promote ethical
businesses and grow economies. This is where
we see the profession as demonstrating the real
value it can bring to business, and economies.
But at the heart of this value is the need for
the professional to act ethically at all times. This
may be difficult, it may be challenging and we
cannot be complacent about the future. But if
there is one profession that tries to guide their
members with a moral compass, it is the
accountancy profession and ACCA certainly
plays its part in this. PQ
Gareth Owen, Qualifications Development
Manager, ACCA
27
PQ ethics special
KEEPING THE WOLF...
The ICAEW qualification is

designed to produce ethical
accountants, says Cath Gowthorpe
ets be clear from the outset: it has been

and continues to be a priority that all
ICAEW members and students conduct
their professional lives with a high standard of
ethical behaviour. Many ethical problems have
arisen in business in recent years, and
sometimes chartered accountants have been
implicated in them. Some of those reading this
article will have to face ethical dilemmas,
whether as students or qualified members,
which may prove very difficult to resolve in
practice.
The ethical curriculum content of the evolved
ACA should provide you with a solid grounding of
knowledge that will equip you to act ethically
where such problems arise. The curriculum
content should also help to emphasise the point
that ICAEW professionals are not alone when they
face ethical problems; they have a profession
behind them that will help and encourage them to
reach the appropriate solution.
By the time you qualify as an ICAEW
chartered accountant, you will have reached an

advanced level of knowledge and understanding
of professional ethics. This reflects the fact that
ethics is central to the role of ICAEW
accountants and to the position of the profession
in society. The general public and business
people rightly expect that ICAEW accountants
should have high ethical standards and should
behave impeccably. The evolved ACAs
curriculum in ethics helps to ensure the
perpetuation of these high standards.
There are three principal strands to the
development of ACA students ethical
capabilities:
1. Learning about the ICAEW Code of Ethics:
Clearly, members and students can comply with
the Code only if they have sufficient knowledge
of it. A new online learning programme has been
developed which comprises six modules:
Introduction to the ICAEW Code of Ethics.
The fundamental ethical principles.
Threats and safeguards to the fundamental
ethical principles.
Conflicts of interest.
Considerations for professional accountants in
practice.
Considerations for professional accountants in
business.
NEED HELP?
28
The programme includes plenty of scenarios

and self-test features. It leads to a devolved
assessment; a tool that helps employers assess
their students ethical progress. It is a 60-minute
assessment containing 30 multiple-choice
questions that test both knowledge of the ICAEW
Code of Ethics, and the ability to apply that
knowledge to straightforward scenarios. The
target score for the devolved assessment is 70%.
The assessment is taken online and each
attempt made is logged on your training record.
You may make an unlimited number of attempts
at the assessment; the questions will vary at
each attempt.
2. Practical applications of ethical conduct and
decision-making: This strand involves discussion
of a range of scenarios that are available via
webinars. Each webinar relates to a module
within the ethics learning programme. The
scenarios provide context and example for
discussion in the workplace, either in groups or
at each six-monthly review.
3. Formal examination assessment in ethics via
all 15 modules of the ACA: There is an ethics
element in each examination at Certificate,
Professional and Advanced Levels. At
Professional and Advanced Levels, the ethics
component is usually incorporated into a
question scenario; one of the question
requirements is likely to be to explain the ethical
dimensions and the actions that should be taken
by the individuals featured in the scenario. The
depth of coverage of ethics in individual modules
varies, according to the published syllabus,
between 5% 20% weighting. Greater weighting
is given in, for example, the Audit and Assurance
syllabus than in the Financial Management
syllabus. But be assured: some element of ethics
is always there.
Variations: employers own schemes
All ACA students must pass all of the 15
modules of formal assessment. However, in
respect of the ethics learning programme,
employers may opt to replace the ICAEW
scheme with their own scheme that has been
approved by the ICAEW.
Such schemes are closely monitored to ensure
that they address the same issues, and reach
the same level of attainment as the ICAEW
scheme. PQ
Cath Gowthorpe is ICAEWs Ethics Moderator
Our professional tutors provide individual answers to

all your questions, online and free of charge!
http://opentuition.com/askthetutor
The University for

World-Class Professionals
Have you heard about the new CIMA

qualification syllabus changes?
Wednesday 16th July 2014
5.00pm 7.00pm
Wednesday 20th August 2014
5.00pm 7.00pm
Come along to one of our events
Find out how the changes will affect

you
Talk to a CIMA representative
Ask any questions you have about

your specific study route
For more information and to book your

place please go to
www.cimasyllabus.eventbrite.co.uk
PQ technical focus
COUNT THE COST

In the final part of her three-part series, Mary Ofili
looks at standard costing and direct materials variance
STANDARD DIRECT MATERIALS
The standard cost of direct materials is made up of:
The quantity of materials expected to be used; and
The unit cost of materials
Material cost
Unit price
16.00
Quantity
If the actual cost is less than the standard cost, then the variance will be
favourable and if the actual cost is more than the standard cost, then the
variance will be adverse. This will mean that;
ACTUAL COST > STANDARD COST = ADVERSE variance
ACTUAL COST < STANDARD COST = FAVOURABLE variance
The total direct materials variance can be split into the following two
variances:
Direct materials price variance
Direct materials usage variance
Where there is a favourable direct material variance, it indicates to
management that there was some efficiency either in the unit price or in
the quantity of materials used for the production or both; and where there
is an adverse variance it indicates that there was some inefficiency either
in the unit price or in the quantity of materials used or both; which has
contributed to the total material variance.
An example is as below:
If the standard cost of materials for a product called Product F is as
below:
Quantity
3.2yards
Cost per yard ()

16.00
ACTUAL QUANTITY
66,560
76,860
DIRECT MATERIALS VARIANCE

.
This is the difference between the standard total cost of materials for the
actual level of production and the actual costs of materials incurred in the
production.
This is simply measuring the difference between what the materials
should have cost for the actual level of production and what it actually
cost.
Notice that we use, the standard cost of materials for the actual level of
production, this is in line with comparing like with like and flexing
budgets, so that we check the budgeted amount to be spent at a level of
production against the actual amount we spent at that level of production.
Standard total material cost

X
Actual total material cost
X
Total material cost variance
X
1 unit of Product F
Materials
SOLUTION
.
STANDARD QUANTITY
4,160 yards
18.30
4,200 yards
Total materials variance at 1,300 units of production:

Standard total material cost
(3.2 yards x 1,300 units x 16)
66,560
Actual total material cost
76,860
Total materials cost variance
10,300 Adverse**
This means that in making 1,300 units of Product F, the materials should
have cost 66,560, but it cost us 76,860, thereby resulting in an
overspend of 10,300, which is adverse to the business.
NOTE THE FOLLOWING AS WELL:
Materials price variance:
Standard cost of actual quantity used
(4,200 yards x 16)
Actual cost of actual quantity used
Materials price variance
67,200
76,860
9,660 Adverse
Materials usage variance:

Standard quantity required for actual production at
standard price (3.2 yards x 1,300 units x 16)
66,560
Actual quantity used for actual production at
standard price (4,200 yards x 16)
67,200
Materials usage variance
640 Adverse
CHECK THE OVERALL POSITION .
The accuracy of the computations can now be checked by ensuring that
the sum of the materials price variance and the materials usage variance
add up to be the same as the total materials cost variance.
Materials price variance
Materials usage variance
Total materials cost variance
9,660 Adverse
640 Adverse
10,300 Adverse**
This means that the adverse direct materials variance of 10,300 is as a

result of some level of inefficiency in the unit price of the materials bought
and the quantity of the materials used during the production process. So
the actual unit price was higher than budgeted and the quantity of
materials used to produce 1,300units was more than budgeted as
well. PQ
Mary Ofili is a director of The Training Place
Total cost per unit ()

51.20
4,200 yards of materials which cost a total of 76,860 was used for the
production of 1,300 units during the month. What will be the direct
materials variance?
30
careers PQ
ow that the recession and

exams are mere memories, it
is conceivably time to focus on
what is in store for the future. An
extravagant celebration, a dream
vacation, the World Cup? Or perhaps a
change of scenery and a new job?
Without doubt the market has been
quite inhospitable for PQs over the past
few years with very few organisations
willing to assume responsibility for
training and development, preferring
instead to hire experience and know-how
short sighted, but true. But as you sail
through your studies it is equally
important that you focus on gaining the
right practical experience to complement
the theory.
First stop time to review your personal
and professional development plan: Is it
on track? Do your real life skills tally with
the competencies required at each level
of theoretical assessment? If not, prepare
your case and take it to the person in
your business that is most likely to be
able to influence your progress within the
company. This might be your direct line
manager, mentor or coach or possibly
human resources. Be clear on what you
need to achieve and where you feel there
are gaps in your skills set and make sure
that the timeframe you have allowed is
realistic for both you and your employer.
Aim high: Think about advancement
beyond the next stage of your
development. Where would you expect to
be in, say, two or even five years, and
consider whether or not your current
employer is likely to be able to
accommodate your ambitions post
qualification? Is there a succession plan
in place and, if so, are you part of it?
Make sure that you understand the
objectives that you would be required to
meet in order to make the grade and that
you feel comfortable that they are
realistic, if a little challenging.
Be flexible: The best way to purloin fresh
skills is to put yourself out a bit. Volunteer
to cover other duties or step up in the
absence of a senior manager; be
prepared to go the extra mile if you can
see reciprocal advantage. Building your
CV as you go along can only be a positive
and will serve as a gauge of success as
you work toward your professional
dreams.
Manage your expectations: Naturally you
are ambitious, and justifiably so, but with
Managing your
CAREER
As the market improves, you need a step-by-step career plan, says Lisa Dendle
all the best will in the world your employer cant

conjure up promotions that simply do not exist in
the current structure. Similarly, you should not
anticipate a pay rise each time you take on
additional responsibilities; make sure that there is a
bit of give and take. Remember that, as you add
tools to your tool box, you will enjoy greater job
satisfaction in addition to subtlety making yourself
more marketable should the need arise.
On the other hand, do not allow yourself to be
taken advantage of. Stepping up to the plate on a
short-term basis can be mutually beneficial and
highly rewarding, but filling in on an ongoing basis
without commensurate pay and reward is
exploitation. If you do find yourself in this
unfortunate situation, be prepared to negotiate, but
make sure you have a cast-iron case before
submitting your proposal for a raise.
If, having considered all of the above, you still feel
that your future lies elsewhere, now is not a bad
time to explore greener pastures. A recent
ICAEW/Grant Thornton UK Business Confidence

Monitor (BCM) predicts almost half a million private
sector jobs will be created in the next 12 months
which can only be good news for PQs. The finance
and accounting market is now booming, with
vacancies up on last year by over 25%, and rising
month on month in 2014, with part qualified
appointments on the ascent at last.
While salaries for PQs are not exactly rocketing
just yet, there are substantial roles out there offering
valuable training and career development as
businesses take on board the fact that the
apprentice of today is the manager of tomorrow and
demonstrate a greater willingness to invest.
By planning ahead and applying the simple rules
above you can reinvigorate your
career and your aspirations now
and for the future! PQ
Lisa Dendle is Managing Director
of recruitement company Walker
Dendle
Check it out now the all-new NQ!

NQ magazine is an e-mag for newly
qualifieds who want to get ahead
It's packed with articles from industry experts that will help you do your job better
Sign up today via the PQ magazine website www.pqmagazine.co.uk

31
PQ careers
WHAT MOTIVATES GEN Y?

Hays Karen Young explains how workplace expectations and aspirations are changing with Generation Y
ur career expectations and

aspirations are changing, with
the 11.3 million UK workers
catagorised as Generation Y leading the
way. Gen Y, born between 1983 and
1995, has different expectations from
their employers than previous
generations, and increasingly looks
beyond financial reward for job
satisfaction. To find out more about the
motivations of this emerging generation
of business leaders we surveyed over
1,000 18 to 30 year olds to find out their
views on work.
A job for life is no longer an ambition
for the majority of Gen Y employees.
More than a quarter expect to have at
least seven employers throughout their
careers and one in 10 predicts theyll
have over 10 employers. Together with
changing career expectations comes a
new definition of job satisfaction. For Gen
Y, financial rewards rank third behind
varied and interesting work and feeling
valued at work in influencing job
satisfaction.
Part qualified accountants taking their
exams this month wont be surprised to
know that the findings show that learning
For Gen Y,
financial
rewards rank third
behind varied and
interesting work
and feeling valued
at work
and development opportunities are a key

priority for this generation. Over half of
Gen Y employees say that training and
development is the most important factor
when deciding on a potential employer
and a quarter rated this as a the top
factor that impacts their job satisfaction.
As a generation Gen Y has a thirst for
knowledge and wed expect this figure to
be even higher for accountants studying
for professional qualifications.

Gen Y workers also communicate in
different ways from previous generations.
The ability to be in constant contact
means Gen Y employees can struggle
with finding a balance between their work
and social life, with consequences for
both. Almost a third of Gen Y workers say
they look at work emails while on holiday
and 28% blamed constant connectivity
for not being able to switch off over the
weekend. While at work, over half (57%)
of Gen Y say that social media is
distracting and two-thirds (62%)
concurred that technology is blurring the
lines between their work and social lives.
Employers are gradually adapting to
the expectations of Gen Y, and doing
more to emphasise the opportunities for
varied and rewarding work when
recruiting. However, this is not the case
across the board, so employees must
also take responsibility for prioritising
their own career aspirations and ensuring
their employers recognise what this
technologically-savvy, ambitious
generation has to offer. PQ
Karen Young, Director, Hays
Accountancy and Finance
For those sitting exams in May and June,

we hope they went as well as possible and
you enjoy a well deserved (if brief!) respite.
Results matter, and were
proud of ours...
ICAEW
93
% pass
rates*
CIMA
100
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rates**
ACCA
100%
pass
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Book now for ICAEW Advanced

Stage dedicated July retake courses
01608 674 224
Optional full board residential facilities provided at very competitive rates.

Free lunch and parking for ALL students. ALL exam results published
on our website. Download our course brochures. Discounts apply,
see website for details.
* FAR, TAX, FM, BS December 2013 are based on rst time students attending full link courses. ** T4 March 14, F1 & P3 November 13 papers Based on students attending tuition, revision & QBD
days per paper. F4, F6 & F8 papers December 2013 Based on students attending tuition, revision and QBD day. Bursaries available for ACCA and CIMA fees for employees of UK charities.
All prots are covenanted up to Reed Educational Trust Limited which is a registered charity. Reg. No. 328347
The Manor, Little Compton, Nr Moreton-in-Marsh, Glos GL56 ORZ

rbs.reed@reedbusinessschool.co.uk
www.reedbusinessschool.co.uk
32
careers PQ
The PQ Book Club
Life at the AAT
EVERY MONTH WE REVIEW THE

BOOKS YOU SHOULD BE READING
Tania Hayes is head of conduct and compliance at the association, where she has worked
for over five years. She has a law degree from the University of Sheffield and is studying
for an MBA at the Open University. Her claim to fame? Guest-editing this issue of PQ!
The Numbers Game: Why Everything

You Know About Football Is Wrong by
Chris Anderson and David Sally
(Penguin, 12.99)
So who is the most important person
at a football club? The manager? The
chairman? The star striker? Actually
none of the above its the
accountant! Anderson and Sallys
exploding of football myths throws up
this fascinating proposition (one of
very many). They say a manager has
only a 15% influence over where a
club finishes in the league; the
What time does your alarm

clock go off on a working
day? 5.40am.
Whats the first thing you do
when you get to your desk?
Turn my computer on and make a
coffee while it boots up.
Whats on your desk? A phone
and a keyboard we have a clear
desk policy, but my iPad makes
an appearance pretty early on too.
Whats the best thing about
where you work? Most certainly
the people I get to work with.
Wheres your favourite place
to go for lunch? Itsu.
What (or who) can you see
when you sit at your desk? My
lovely colleagues we dont have
our own desks at AAT, so who I
see depends on where Im sitting.
Which websites are your

favourites and why? Google,
and AATs ethics website of course
see www.aatethics.org.uk!
Which websites do you use
for work? ifac.org; hmrc.gov.uk;
hmtreasury.gov.uk; www.bbc.co.uk
How many hours a week do
you spend in meetings? Too
many!
What time do you leave the
office? I try to leave by 5.30pm
I have a lengthy daily commute to
contend with.
How do you relax? Running,
cycling, rowing and studying,
coupled with housework and
cooking for good measure.
Whats your favourite tipple?
Im partial to a glass of
champagne or Prosecco.
How often do you take work

home with you? I never switch
off from work, but as a general
rule will do my prep work outside
work hours.
What is your favourite TV
show? Coronation Street is my
guilty pleasure.
Summer or winter? Summer
provided the weather is good.
Pub or club? Pub.
Who is your hero? Good
question
If you had a time machine,
where would you go? The
future I want to see how it pans
out. Im nosey.
If you hadnt chosen
accountancy, where might
you be right now? Regulating
another profession, Im sure
The workplace: take the ethical path

Here are guest editor Tania Hayes
top tips for SMEs on acting ethically
accountants influence is 85%. The

authors extensive analysis of the
league tables from 2002 to 2011
shows that wages and league position
go hand-in-hand; namely, the higher
the clubs wages relative to the
league average over the course of the
decade, the higher up the table the
club finished (this is very good news
for Manchester City fans). So its all
about the money after all!
This book is packed with equally
interesting theories. Bringing on
substitutes in the 58th, 73rd and
79th has maximum effect on the
result; substitutions made after the
79th minute rarely influence the
outcome. Or how about this one: a
teams second goal is the most
valuable it can be directly
translated into more wins and points.
And we like the stat that top-flight
teams who score at least one goal in
every game never get relegated it
translates into 43 points and Premier
League safety.
So when youre watching the World
Cup this summer you can quote the
authors assertion that its more
important that your weakest player is
better than your oppositions weakest
link, regardless of how many
superstars they have. The research is
all there, folks!
PQ rating: 5/5 A joy for fans of
football and numbers alike
1
2
Develop a code of ethics: This sets out your

organisations ethical values to the world.
Get people involved: Your staff can contribute to
the development of your values, but they also
need to understand how they should apply your
organisations values in their role.
Designate an ethics champion:
This person can be a point of
contact for colleagues who need to
seek advice on ethical dilemmas.
Regularly engage with staff on
ethics: Any new employee
should be aware of the ethical
values you have enshrined in your
code during their induction. In the
same way, existing employees
need to be reminded of these
values on a regular basis through staff meetings or
workshops with real-life examples where people are
asked to give their input. This is a good exercise to
put employees training in ethics to the test.
Remember that customers will judge your
organisation based on your ethical values: It takes
a lifetime to build a good reputation in the market. It
only takes one ethical failing for customers to lose
trust and confidence in your organisation.
3
4
If you work with unethical suppliers, your

organisation will be judged for this: Your supply
chain is as much of a reflection of your organisation
as your employees are. Working with suppliers with
values at odds with your own can undermine the
credibility of your ethical stance.
Consider business ethics when planning: When
planning new ventures, consider the ethical
implications in light of your values and if there are
any ethical risks. This will help
prevent ethical problems occurring
in each activity the business does.
Highlight the impact of your
organisations ethical approach
to the market: New clients are
drawn to work with organisations
demonstrating integrity. If youre
doing this tell the world you are!
Remember, ethical companies
are sustainable companies:
Preparing your organisation to
survive in the future is no easy process. But we have
seen large corporate entities fail on the basis of
ethics dont let this happen to you.
An ethical culture needs to be led from the
top: Make sure your chief executive or
managing director lives the values of your
organisation, and expects the same of the senior
management team. Staff will expect to be led by
example.
8
9
10
In brief
Make networks count
To ensure a successful
career you must manage your
networks, says Professor Julia
Hobsbawm. Her research Fully
Connected: a look ahead to
working and networking in 2020
for EY found that one in four
professionals dont do any
networking! Interestingly, she also
found that 68% of junior level

professionals value networking
face-to-face above online.
Early birds catch eye
Scientists at the University
of Washington have discovered
that those who arrive at work the
earliest are most likely to get a
pay rise regardless of
performance and total time

worked! Many managers appear
to suffer from morning bias,
confusing starting time with
conscientiousness. So be warned
if you like a lie in and work
flexitime. If you turn up late and
leave the office last no-one cares
it seems, and you are more likely
to be overlooked for promotion.
33
SUITABILITY
AT WALKER DENDLE WE HAVE MANY DIFFERENT ABILITIES.

THE SUITABILITY OF OUR JOBS SETS US APART.
Walker Dendle Financial Recruitment has become established as a leading
recruiter of professional permanent and temporary nance staff in Surrey and
the surrounding area for over 12 years, lling a diverse range of part qualied
nance and accounting roles across nancial and management accountants to
commercial accounting and analysis to nance business partnering.
We continually focus on adapting and rening our service to suit you, offering sound and
knowledge based careers advice to part qualieds seeking their next, all-important job move.
For more information about the range of career openings available though Walker Dendle
Financial Recruitment, please contact:
Permanent Division perms@walkerdendle.co.uk
Temporary & Contract Division temps@walkerdendle.co.uk
Walker Dendle Financial Recruitment
Swan House, 51 High Street, Kingston Surrey KT1 1LQ
020 8408 9999

www.walkerdendle.co.uk
Find us on Facebook, Twitter and LinkedIn
Your jobs board

I need to find
pqjobs.co.uk now!
PQ jobs pqjobs.co.uk
YOUR JOURNEY AHEAD

MAKING THE RIGHT CHOICE
Heres to wishing you the best of luck on your
upcoming accountancy exams.
They are soon to be behind you and once youve gained your newly qualied status,
youll need to think about the next steps in your career path.
There are a number of things youll need to consider and to arrive at the decisions
that are best for your career, its crucial to equip yourself with accurate, up-to-date
market intelligence.
Our Journey Ahead Guide ofers practical advice on how to approach your career
progression, the range of career paths available and how to meet your aspirations.
If youre starting to think about your next steps as you work towards becoming
a qualied professional, we have the tools and advice you to help you make
the right choice.
hays.co.uk/journey-ahead
Copyright Hays Specialist Recruitment Limited 2014. HAYS, the Corporate and Sector H devices, Recruiting experts worldwide, the HAYS Recruiting experts worldwide logo and Powering the World of Work
are trade marks of Hays plc. The Corporate and Sector H devices are original designs protected by registration in many countries. All rights are reserved.
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PQ A
MUST
READ
MIND THE GAAP PQ magazine recently took a tour
PQ met up with the AATs

new CEO, Mark Farrar, at
the recent IAB awards. He
told us that PQ magazine
has become required
reading for him, and that he
is actually enjoying the
read. He told us that he
reads us on his train journey
into Aldersgate Street. What
a very nice man!
around Accountex at Excel. It seemed strange not to see all

those ACCA exam sitters rushing to their exams. It was a bit
sale-y for our liking, but we had to laugh at our poor friends on
the GAAPweb stand. The jobs portal people forgot their chairs,
and feet were throbbing by day two. What they also needed was
a copy of PwCs Manual of accounting New UK GAAP, as
quite a few, shall we say, more mature accountants wandered
up to the stand and asked for advice on FRS 100 et al. Now
GAAPweb can help you with a great job, but you will need a
proper text to get up to speed with the new UK GAAP!
LIKE MY CAR?
Halfords boss is Matt Davies, who trained as

an accountant with Arthur Andersen in 1992.
Davies may have given away too much about
his pulling technique in a recent interview.
He claims he has only ever owned one
decent car a TVR 390E (its a bit of a cult

1980s sports car). Well, he says his wife was
impressed with his lovely little car, and
obvious impressed with him, too, as she is
still his wife. However, Davies explains that
once he had pulled (his words) he felt he
didnt need the car again and swapped it
for a Nissan Micra.
TIME FOR A PETITION WHO WANTS TO BE

In England and Wales, mothers names
are not on marriage certificates.

Chartered accountant Ailsa Burkimsher
Sadler didnt think that was right and so
started a petition. After all, marriage is
not a business transaction between the
father of the bride and
father of the groom!
And it looks like she
has won the day, as
the Home Office
has agreed to look again at the
certificates after priests, registrars and
MPs joined to support her, and more
than 28,000 people signed the petition.
WEV E
A BILLIONAIRE?
If you want to join the billionaires

club (the 0.001%) there are
three things you need to do,
apparently. First, move to Hong
Kong. Next get a PhD at a top
university. And, finally
work in a country with
an English legal
system. These are
the perfect
conditions to help
you become a
super-entrepreneur.
GOOGLE
WATCH
Googles tax arrangements is
a perennial hot potato. Our
favourite story on this theme
was Priests damn Google on
tax. The Missionary
Oblates of Mary
Immaculate have
called on Google to
hand more of its
profits to the
taxman, we are told.
ITS JUST
SO 2012!
Time Out has a

great section called
Word on the
Street a roundup of the most
ridiculous things
people have
overheard in
London. Such as:
Bongos are the
new ukulele. Well,
this week included
Your accountant
is so 2012. But
we arent sure if
that is a good or a
bad thing.
Just days earlier the

Cambridge Satchel Company,
run by accountant Julie
Deane, was praised for paying
its corporation tax. Deanes
company was used by Google
in its ads and an editorial in
The Times explained that she
paid just 10m less than the
search engine giant.
The Cambridge
Satchel Company paid
1.1m on revenues of
12.9m. Google
paid 11.6m in
corporation tax in the
UK in 2012.
GOT THE L OT
Sony Reader up for grabs Get your very own
PQ magazine was having a tidy up at the office when

we came across a Sony Reader. The PRS 505 has a
6 screen and weighs just 250 grams. Its Lithium-ion
battery means you get up to 6,800 page turns per
charge. You can store up to 160 titles on this reader,
or expand your library and add more titles via memory
stick or SD card. And it can all be yours to take on
your much deserved post-exam hols.
To be entered for this giveaway just email your name
and address to graham@pqaccountant.com, headed
up Sony Reader, and one lucky reader will be sent this great prize. It
really is as easy as that!
Powerbank and mug
The AIA had one of the most popular stands at the

recent Accountex exhibition. Great giveaways were
hard to find this year, but the AIA had one a
powerbank for your iPhone, iPad or laptop. We
persuaded them to let us have five to give away this
month. We will throw in an I love PQ magazine mug
and some of you will get the AIA tax tables too!
To be entered for this free draw simply email us at the usual address
graham@pqaccountant.com. As always we need your name and full
address. Put Powerbank in your email heading.
Terms and conditions: One entry per giveaway please. You must send your name and address to be entered for the draw. All giveaway entries must be
received by Friday 4 July. The main draw will take place on Friday 11 July 2014.
TO ENTER THESE GIVEAWAYS EMAIL GRAHAM@PQACCOUNTANT.COM

38
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PQ magazine

Meet our guest editor

Partners at the Big 4

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19Analysis What it takes to get to

22ACCA P2 paper The Corporate

Reporting paper is a tough one:

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The career of Stewart Hamilton, who

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BE YOURSELF IF YOU CIMA sitters

International manufacturing subsidiary of a US parent company,

EARLY WARNING SYSTEM

London South Bank University is

that it will allow the college to

For the introduction of the