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Shaping your ACCAFocus groups what members told us

2 | Shaping your ACCA |

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Executive Summary 4

Public Practice 6

Internal Audit 12

Corporate 16

Financial Services 20

Contributors to the report

Kevin ReedFreelance editor, comms and practice consultantE: [email protected]

Pat DelbridgeMember Engagement Manager, ACCA Europe and the AmericasE: [email protected]

Milana FominaMember Engagement Manager, ACCA Europe and the AmericasE: [email protected]

ACCA’s extensive outreach programme has seen views received from members across the UK. The culmination of note-taking from these focus groups, covering members in public practice, the corporate sector, financial services and internal audit, saw 46,000 words written to capture their views. The focus groups took place in the Spring of 2017 – before HMRC made the decision to delay the implementation of Making Tax Digital.

A webinar in July, co-presented by John Williams, Head of ACCA UK and

Kevin Reed, a freelance editor, covered the highlights of the feedback

garnered and a discussion of the role that ACCA should play. A follow up

webinar on 13 October will discuss what ACCA can and will do in response

to this feedback from members. You can register for that webinar as well as the

on demand version of the first webinar.

This report provides an executive summary of the key issues raised across

the membership followed by further information on feedback by sector.

ACCA focus groups – executive summary

By Kevin Reed former editor of Accountancy Age and now a freelance journalist

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People

There are broad concerns about ‘people’ across the meetings. These range from relevance of their current skills; the ability to train relevant skills in others going forward; and a very tough recruitment market.

Essentially, the world is moving apace. Accountants, whether serving clients in practice, or operating within the finance function, have more asked and expected of them. Technology enables them to outsource some of the work, and is to be welcomed. However, that is leading to a skills gap. The next generation are not coming through in the numbers required, and learning what they need to on the job. Those higher up the ranks are performing a multitude of tasks, with a multitude of responsibilities.

There is a longer-term need for ACCA to maintain its qualification relevancy, and perhaps consider flexibility around its core qualification (or offer more post-qualification).

Careers advice and support would also be welcomed. Overall, succession planning is of vital importance to accountants in the corporate sector and public practice – and is currently a struggle.

Members also highlighted a lack of enthusiasm for ACCA’s current recruitment portal – but also a need for such a service. They were largely unaware of the recent re-launch of the portal which is now significantly improved.

Making Tax Digital and HMRC

Making Tax Digital (MTD) will be a problem for many practices, who are contemplating how to re-engineer their practice, from a technology, client and staffing perspective. Some firms will struggle badly, and may give up. Others will grasp the opportunity to automate lower-skilled tasks and have more informed discussions with clients – ultimately providing a better and more valuable service. But even those with the will and strategy will not find it easy.

ACCA will need to consider very carefully how it supports its members during this process.There was little positive said about HMRC during the meetings. It will be important for ACCA to continue to lobby vigorously to HMRC on a number of issues, from its aggressiveness, to slow and poor communication. It will also be important for ACCA to make this lobbying known to members, and perhaps involve them in that process. Monitoring MTD from the HMRC perspective will also be critical.

ACCA

Members were generally positive when asked about their view on ACCA. However, they had a long list of requests and requirements, which ACCA will need to consider carefully.To summarise, there are a number of products and services that ACCA offers, but which aren’t well communicated to all members (ie. apprenticeships). Some services would benefit from further investment (ACCA Careers).

Communication, technical support and career development were the key themes of members’ wants and needs. Consideration of the ACCA qualification’s future relevance, exemptions currently handed out, plus post-qualification support and supplementary certificates were raised on several occasions. ACCA will need to look at how it provides services to an audience that is wide-ranging in its needs. Partnerships with other information providers may be an area to explore further.

Conclusion

The ACCA focus groups showed that, while there isn’t an existential crisis about being an accountant, there is a general wariness about what lies ahead. Those questioned asked for an ability to control their destiny better, and clearly want ACCA to proactively support them through that process.

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Executive summary 1

People: Roles; Skills and Recruitment

Roles / Skills / Training

With practices considering the move to more value-added services, they need to be able to recruit and train people that have a mix of technical and entrepreneurial/advisory/soft skills. But this is ‘very difficult’, according to Bristol members. Members were pleased to hear that ACCA’s qualification is evolving in that direction.

While accountants need to be more rounded they must consider their pricing model, otherwise clients feel they can take advice on any matter within the fee for compliance work (pointed out by Cambridge members).

For firms’ succession planning, recruitment and training issues are a huge problem - made worse as they look to adapt their business models and cope with MTD (where they believe more staff will be needed to get through the first stages).

Practices in Birmingham cited ‘considerable’ time training staff on IT and software, but MTD may require just low-level staff to manage the bulk of the work. Some may outsource this, or eventually automate. This must be considered as a risk in light of other succession planning concerns. ACCA should also consider IT and technology in its curriculum.The younger generation is

Public practice2

uninterested in becoming business owners, point out Harrow members. Then, some want to be partners but lack the entrepreneurial skills, the clients, and funding. ACCA support around this issue would be welcome – perhaps a ‘jobs board’ for those looking to retire and for those looking to become partners or start a practice.

Recruitment

Hiring the right people continues to be a barrier to growth for practices. There appear to be multiple reasons why recruitment is so difficult – a historic lack of trainees during the last recession, competition on salaries and more senior positions offered by bigger practices and other sectors, an expectation for work/life balance – all adding to make recruitment one of the biggest issues facing practices.

Across the board there seems to be a lack of potential recruits. Some have suggested that the largest firms reined in training during the 2008 recession, and that has led to a knock-on effect of a lack of qualified accountants looking for new opportunities.

With fewer candidates available their value goes up – and practices cited industry and the public sector as paying more. Conversely, working in big cities like London and Birmingham is expensive relative to wages, making it even more difficult for smaller practices to run city-based operations.


Another issue that is flagged up consistently through the member research is that of the expectations of trainees and raw recruits. Birmingham members flag up that some new staff are unwilling to put in hours above their contracted 35, such as Saturday working during the self-assessment season. They also prioritise training over their work – and work/life balance is a big part of their role selection. ACCA could provide guidance and support on how to recruit and retain staff.

Another effect of the market conditions is that smaller practices lose trained staff up the chain – with some even seeing part-qualifieds breaking their training contract to move. They are ‘enticed’ by more senior roles, coming earlier in their careers than before.

Recruitment agencies are used, but are expensive and viewed as ‘unethical’. They will also headhunt people they have placed just months down the line.

Audit is viewed as increasingly specialised, perhaps due to the rising thresholds shrinking the market. As such, recruiting audit staff is becoming more difficult – to the point where some said they ‘cannot see where the next generation of auditors will come from’.

Newcastle members noted, contrarily, that many businesses beyond the threshold still took an audit for other assurance reasons, which has given enough work for trainee auditors.Birmingham members said that the practices remaining in the shrinking audit market had more work to undertake, and they couldn’t bring people in quickly enough.

There appear to be multiple reasons why recruitment is so difficult – a historic

lack of trainees during the last recession, competition on salaries and more senior

positions offered by bigger practices and other sectors, an expectation for work/life

balance – all adding to make recruitment one of the biggest issues facing practices

Staff recruitment levels

School leavers (AAT) seem more attractive to the practices than graduates – less expensive and they ‘grow up’ with the practice, learning systems and processes. Graduates are often given ‘too many’ ACCA exemptions. However, graduates generally learn quicker, and school leavers can be ‘hit and miss’. But some members argued that graduates require less training and are therefore less expensive in comparison to school leavers.

There is some traction with apprenticeships. Numerous groups are using apprentices, and with success – often putting them through AAT first. Only a few locations were unaware of the ACCA apprenticeship scheme – but they were interested to find out more. ACCA should promote their apprenticeship scheme in schools more heavily, members suggested.

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Technology

There are a number of crucial issues around technology impacting on practices. This includes: the software and systems they use to serve their practice; online accounting services and associated requirement for broadband infrastructure; client’s ability (and willingness) to use computers for accounting/filing purposes; HMRC’s systems and processes, particularly in light of MTD; and the direction of travel of accounting software providers – are they there to help practices and clients, or will they put practitioners out of business?

Members warned that broadband infrastructure must be more robust, faster and cheaper, or online accounting will be held back. Others want agent online communication prioritised so they can undertake clients’ work more efficiently. Ultimately, MTD is not about HMRC ‘improving’ the quality of filing data – that will be the work of practitioners – one example sees a practitioneralready request the information fromclients, and then have it inputted bystaff into QuickBooks.

No matter how good QuickBooks or Xero can work, advisers will be needed by clients – although the threat of pure compliance work being automated is well noted. However, practices are wrangling with how to manage the software – provide it to the client, or ask them to purchase? Some people will try and fail at using the software themselves, so practices will be approached to firefight.Technology that takes the mass of compliance work out of the hands of accountants must be viewed positively – freeing up accountants to provide advice.

There is general acceptance of cloud accounting among practices and clients, but there is some resistance. Clients are being split into subsets – those that want compliance onlyand do their own accounts, versusthose with more complicated servicerequirements. Sometimes this split isrun along software lines: QuickBooksfor more simple needs; Xero for morecomplicated affairs.

One key upshot for practices is making sure staff are IT-trained and literate. For some, they will require fewer staff – however, this could impact on succession planning (see People). Some practices have seen older staff unable to pick up new IT skills, while younger staff are stronger on systems but less so on core accounting.

QuickBooks and Xero are widely being implemented to manage cloud accounting.

Cyber security

In general, practices seem unperturbed by cyber security, relying on outsourced cloud service providers to manage compliance. Some practices are still operating and holding data via in-house servers.

While there is awareness of the potential dangers from cyber-attacks, there appears little in the way of structured policies and organisational governance around IT security. In two locations, for example, not one attendee had a cyber-attack recovery plan. A few practices had suffered cyber-attacks, losing a day’s data.

Making Tax Digital

The profession must change, said the groups. A ‘point of view’ issue: you either take MTD as ‘lumbering’ your practice with compliance; or an opportunity to evolve to more advisory services and move up the value chain.

Members want agent-online priority, and helplines in light of MTD. They question the £10,000 threshold as ‘unreasonably low’ and making no sense (eg. earn between £10,000 and the personal allowance of £11,000 and you would need to file under MTD).

There is widespread concern that HMRC’s platform will be unable to cope with MTD, particularly in context of RTI problems. ‘It has a habit of implementing systems that don’t work.’

While they accept MTD ‘will happen’, they would like further phasing and delays implemented.

Even though there is strong suspicion that MTD is a forerunner to quarterly tax payments, HMRC is already easing back on what it can/will do with the information (very little it seems), which is a sign HMRC is aware of the practical problems of MTD.

MTD is of grave concern for many clients. One member in Cambridge said 50% of clients filed ‘shoebox’ records (see Technology). Some clients want accountants to ‘do’ MTD for them. Subcontractors are a group that will be problematic, say Manchester members.

Fees will increase for many clients, while some practices will ‘shed’ clients likely to prove problematic. Costing and billing is likely to be painful - pass on the cost directly, or absorb (see Technology)?

Public practice2


Despite concerns, there is positivity about MTD. It will bring clients to practices to undertake their books, for example, or get clients to track their finances more effectively (easing the 31 January rush).

Even if people manage their own affairs through software, an accountant will still be required, some said – the process of capturing their own information will open up time to ‘talk’ to accountants about what it all means. Increased fees, alongside better record-keeping, are all benefits. The only downside is it means, again, a compliance focus for the practices until clients get up and running.

Regulation/HMRC

Regulation

The taxation system is a barrier to moving practices away from compliance to value-added/advisory work. Each statutory update eats into practices’ time, views echoed by different member groups. As pointed out in Bristol, it makes giving advice even more difficult, because the rule changes mean your advice becomes outdated.

‘Policy on the hoof’ is also a major concern – it is ill-thought-through. FRS 102, auto-enrolment (AE), RTI, NI backtrack…all receive some criticism. Tax and regulation ‘disproportionately’ affect small businesses.

Members in the Reading group are worried they will ‘miss’ a legislative change – smaller practices don’t have the same level of exposure. They would welcome ACCA ‘filtering’ information to them (see ACCA).

Manchester and Harrow attendees saw AE as an opportunity to take on payroll.

The profession must change, said the groups. A ‘point of view’ issue: you either

take MTD as ‘lumbering’ your practice with compliance; or an opportunity to evolve

to more advisory services and move up the value chain.

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HMRC

Views on HMRC ranged from ‘frustrating’ to ‘useless’. Agent helplines were staffed with people without the requisite knowledge to deal with anything other than basic queries – although some members suggested that half of queries were dealt with by phone. Cardiff members suggested advice received was ‘inconsistent’.

Writing into HMRC is often required to resolve issues, but waiting for a response can take months, and is still drawn out.

Harrow and Newcastle members severely criticised HMRC, for its attitude towards agents and clients. They describe HMRC as threatening in their communication. HMRC’s website ‘is getting worse’, said Newcastle, while CIS and PAYE departments are ‘very poor’. But Self-Assessment filing and corporate tax teams in HMRC were described as good.

Ultimately, HMRC’s mistakes and attitude cost accountants unchargeable time.

Stories of unexpected HMRC visits to retail premises were ‘intended to frighten and are morally unacceptable’, heard the Harrow members.

There is evidence of resourcing issues at HMRC, with numerous examples cited by members where it appears backlogs are dealt with by staff moving around the departments. These delays and communication backlogs are seeing clients hit with overdue penalties.

There is a disconnect between agents being able to register clients for tax, but not authorised as acting agent at that time – the agent then misses out on HMRC notifications (see ACCA).

The only positive comments received were that self-assessment, VAT and payroll are well-organised (London member); and some RTI had improved P60 detailed access (Manchester).

Economy and trade

A number of regulatory, tax and market-focused headwinds are pushing against businesses around the UK.

For example, the narrowing of IR35 rules has seen the contractor industry struggle, which then impacts on the sectors in which they operate. Birmingham, Newcastle, and Harrow cite the issue – GPs, Network Rail and government contractors have been affected.

Squeezes on government funding have seen charities in difficulty with consortia formation, and more ‘commercial mindedness’ becoming prevalent in the sector.

Local retailers and convenience shops are struggling to deal with regulation, employment law and online competition. ‘Central Harrow retail units are almost entirely takeaways, charities and pound shops’. Business rates are contributing to the demise of high street retail in Cambridge and Leeds.

Bristol members noted an uptake of online-only businesses, but they struggle to ‘step up’ and take premises. Some existing retailers are effectively using stores to market their wares for online sales.

Newcastle has been hit by public sector job losses, but other companies have stepped in to fill the void.

Public practice2

Oil and gas price falls have seen significant numbers of people laid off. Local economy is ‘dire’. But, some see opportunities in the north-east and Scotland as those areas are being developed – Visit Aberdeenshire is very active.

This is represented by the Aberdeenshire accountants prospering – there is no shortage of work but the client mix is changing. Redundant oil and gas workers are setting up as ‘one-man bands’.

Both Aberdeen and Birmingham see opportunities to offer clients IT services (installation/support) and other value-added services (management accounts etc). The Tech sector is driving many locations, such as Bristol.

The Cardiff economy is positive, despite Brexit and lack of support from banks - investment is being sought.

Manchester, Cambridge, Leeds and Bristol are buoyant. The construction industry is performing, property prices are rising and universities are busy. Leeds’ access to finance has improved. Bristol members noted that they are picking up bookkeeping work, and need to develop efficiencies (see Tech).


ACCA

Professional development/networking

Webinars are liked by London members, but they miss the face-to-face questioning and networking of physical events (there are fewer regional face to face events). There is some support for residential practitioner conferences and Saturday conferences. Physical events are liked primarily for the ability to meet other practitioners.

External provider events are popular (Mercia, SWAT, Tolleys, 2020) – however, it has been noted that these providers are moving towards webinars. HMRC webinars are considered basic. Most like a mix – though comments were received about lack of awareness of some ACCA events. Webinars are convenient and flexible (can re-watch and pause).

Products and services

Technical advisory service:There was a mix of opinions on the helpline. It is generally found to be difficult to get through to someone. Some have found the service very good, others more limited. The website could be developed further. More helpsheets, templates and checklists would be welcome. Manchester members like the factsheets over similar products produced by the ICAEW.

In Practice e-magazine was praised widely.

What could be offered:A Reading attendee uses a newsletter and ‘legislative info service’. It’s useful for him and clients – could ACCA not white-label a similar service?

HR and employment issues becoming a more complicated area, of which practitioners need advice.

More guidance required for those looking to set up in practice - perhaps a forum?

Most groups called for more technical support from ACCA – perhaps provision of vital, distilled, information?

Members would welcome more support and PR to help clients and the general public to understand the difference between a qualified and an unqualified accountant.

ACCA should lobby HMRC to improve the agent authorisation/notification process. Another ‘communication’ issue sees debt management companies unable to deal with clients’ authorised agents. HMRC should be able to confirm this easily.

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Members would welcome more support and PR to help clients and the

general public to understand the difference between a qualified and an

unqualified accountant.

Internal audit3

Relevance/perception

Push-back from stakeholders ‘takes its toll’, although only one member is considering leaving Internal Audit because of it. There is still a strong perception of Internal Audit as ‘the police’. Some departments value Internal Audit, depending on the level of risk maturity of the department, whether it has been audited before, and the level of regulation that the business faces – the more regulated it is, the more used they are to audits and viewing them as a priority.

The extreme of that is heavily profit-focused businesses that are ‘trickiest’ to deal with – they do not believe in Internal Audit, and it takes time to change that mind-set.

Self-declaring (where management declare issues they have identified and are addressing) prior to an audit is a ‘good tool’, said members, to speed up and improve the Internal Audit process. It also helps with culture and the way Internal Audit is perceived – management takes some credit for acting, and it cements Internal Audit’s role. However, there were differing opinions around whether Internal Audit should make recommendations – some said they should, others said they should stick to observations, ‘or it crosses into consultancy’.

Technology

Use of technology

It is no longer a question of ‘if’ data analytics will become a big part of Internal Audit, but when, say the members. However, it is far from a straightforward process.

Generally, the older and bigger the business, the more data silos, systems and processes will be in place – and therefore more difficult to access the right data, or have the right audit software/technology to undertake the task. One member found 180 different systems within their business.

If undertaken incorrectly, exceptions will be missed and false-positives picked up. The process of putting in place audit tech systems and processes for an audit is often so long that results do not appear until the end of the audit itself. Therefore mitigating this is important.

Some are using Internal Audit technology, but many are not – they want to use more software to help them but is ‘so difficult’ they fall back on traditional methods.

‘Data analytics is a good principle but there is still a long way to go,’ the members said.

While creating in-house solutions is difficult, one member said it would be nice to have a tool on the server identifying exceptions.


IT Audits

In larger companies, IT auditors may operate separately to other Internal Auditors, while smaller companies outsource IT audits. London members describe the relationship between Internal Audit and IT auditors as ‘divisive’. When working together they produce much higher quality results.

IT auditors need to broaden their horizons and think of the business more broadly – this should involve their integration of work with Internal Audit. ‘Their approach tends to be theoretical and without the business knowledge from operational auditors, they will get it wrong’, said one member.

People: Roles; Skills and Recruitment

Internal Audit as a career

Internal Audit has been viewed by some as a stepping stone into business, but members are now seeing it as a career in its own right (Birmingham and Manchester ‘always’ viewed it as a career). Larger companies will mix career auditors with rotational auditors.

Members are seeing recruits that want to be career internal auditors (see Recruitment); one member in Financial Services said IA is viewed as ‘aspirational’, as it provides broad business knowledge and work/life balance in a sector that largely does not provide that balance.

Many members started as external auditors, but found Internal Audit interesting (delving into the business) – ‘Every quarter is different’. InternalAudit is more of a ‘soft skills’ rolethan other ‘screen-based’ accountingjobs, and seen as a move away from itbeing so tied to finance.

Managing audit committees and directors requires understanding and political nous; providing a ‘win-win’ for all sides. ‘There are ways to give opportunities for difficult clients to feel comfortable, and build networks to influence directly.’

One member said internal audit should be an integral part of all accountants’ careers, and ACCA should encourage this. Internal auditors make better finance leaders as they see strategic/finance/operational issues. Birmingham and Manchester members advocated secondments into Internal Audit; although this may undermine Internal Audit as a long-term career choice.

It is no longer a question of ‘if’ data analytics will become a big part of Internal

Audit, but when, say the members. However, it is far from a straightforward process.

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Recruitment

A London member recruited two internal auditors recently, but noticed more IIA-only qualifieds than ‘ACCA with IIA’. He prefers qualified accountants for Internal Audit roles, because ACCA provides a foundation while IIA-onlys tend to ‘miss’ that analytical detail from their efforts (see Skills/training). They are generally not as rounded as ACCA-qualifieds.

Other members concurred, while one member says that in banking, internal recruits for Internal Audit roles are fine because they already understand risk. These so-called ‘subject matter (sector) experts’ are being seen as a third option, and are cited by another member.

LinkedIn has opened the door to overseas recruits into UK IA. London members find that recruitment suitability issues focus on report-writing and it was agreed generally that the quality of candidates has dropped over the years – their written work is not good enough (see Skills/training).

Skills

Internal auditors in Manchester said they need to understand IT audits, even when the work is outsourced. This is concurred in Birmingham, where they say the Head of Internal Audit must understand this specialism. IT auditors are specialists, but internal auditors must understand the methodology, ‘understand the results, and ask the right questions’.

The writing style of Internal Audit staff is not good enough. The organisational style and tone can make it difficult to comprehend and adjust to. Manchester members say the ‘objectivity’ is missed at the start, and there is opinion over fact. Conversely, they must help the board understand what the report is there to achieve. This is part of a wider concern about a lack of ‘soft skills’ very much needed by internal auditors.

Non-accountant internal auditors do not see relevance of accountancy qualifications.

Auditing culture

Auditing culture is commonplace in the financial services sector, but in non-regulated sectors it is still seen as nebulous and hard to define.

Institute of Internal Auditors (IIA)

IIA standards provide ‘high-level’ guidance, not much beyond - a good framework, said London members. However, in Birmingham they are viewed as ‘comprehensive’ and are rated highly.

Many members see the ACCA qualification as ‘more than enough’ to get you through a career in Internal Audit, while others said that the two qualifications are complementary – IIA provides learning on systems and organisational structure.

Dual members drop their IIA membership if they move out of internal audit – but maintain their ACCA membership. IIA membership gives access to their library of content, which is seen as a positive.

ACCA

How can ACCA support?

Careers advice is important for Internal Audit members, as has been consistently shown among other groups. What training/qualifications do you require to find a new role? Can ACCA help them pick up non-executive director positions, what path do you need to take to achieve that?

A legal document library would be useful. Existing subscription services are too expensive for smaller operations. It was acknowledged that the ACCA would struggle to compete on technical content with IIA, so should consider niche courses (for example on internal audit report writing) or information. Report writing was cited on a number of occasions by Internal Audit members.

ACCA may want to consider a conversion course – to provide internal audit teaching (currently lacking from ACCA). External auditors who move into Internal Audit initially have ‘too narrow a skillset and approach’.

Changes in accounting standards and tax law require IA members to keep up to date – which is not easy. More focused courses in the context of developing internal auditors would be welcome. Accounting and Business should have dedicated space for Internal Audit. ACCA UK’s Internal Audit e-bulletin is well regarded.

Working on internal auditors’ end-users, such as audit committees, would be welcome. Committee members need to be up-skilled.

Auditing culture is

commonplace in the

financial services sector,

but in non-regulated

sectors it is still seen

as nebulous and hard

to define.

Internal audit3


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Webinars on the findings from the consultative meetings and

ACCA’s proposed actions addressing key concerns are now

available for members to view or book.

WE

BIN

AR

S

An on-demand webinar:

Shaping your ACCA focus groups – what members told us Recording date: 11 July 2017

WATCH NOW

A live webinar:

You spoke, we listened – ACCA’s response to cross-sector member feedbackDate: 13 October 2017Time: 12:30–13:30 (GMT)

BOOK NOW

http://event.on24.com/wcc/r/1413401/A9BB3CD3DDFE22FABAF0C0FE2D0B6F65/110919

http://event.on24.com/wcc/r/1413401/A9BB3CD3DDFE22FABAF0C0FE2D0B6F65/110919

Corporate4

IT/Communications sectors

Members from IT/Communications sector reported that strong competition is putting pressure on pricing, exacerbated by growing customer expectations. It is getting harder and harder to match customer expectations, deliver a high quality service and offer competitive prices. Keeping prices down makes it very hard to maintain cost efficiency. Foreign trade is unclear, with Brexit looming and cheaper markets in Europe/Asia.

Acquisitions are prevalent, which led to reduction of headcount in some IT companies. Mergers also have an effect on aligning the systems, which becomes tricky.

Cash-strapped government is putting pressure on NHS Budgets. In Bristol, growth areas include e-commerce and professional services, particularly tech companies. Ironically, tech development is impacting all sectors.

Brexit

In Reading they feel Brexit may lead to a small downturn in the region, and fully-UK-based companies may see tech product prices increase. There are also concerns over the rise of the cost of imports. However, the technology sector is predicted to be growing regardless of Brexit.

Manufacturing

Manufacturers in Leicester are seeing technology impacting on their operations – orders and specs are now being delivered online with tracking technology being used. Private sector seems stable, although constraints are being placed on NHS budgets causing a knock-on problem.

The construction industry is performing well, although Brexit is creating a certain level of uncertainty.

Manchester growth areas include housing market, retailers that are weighted towards importing, small businesses, and IT consulting (through the government’s digitisation strategy).

Areas of decline include mills (industry almost gone, with some attempts to reinvent); manufacturing squeeze, through energy (difficult to drive value from providers, little cost competition); water (clean-up costs high, if contaminated); Carbon Reduction Commitment (‘tax on energy’); and compensation culture.

Brexit

UK-focused manufacturers in Leicester are unmoved by Brexit, but there is a slight concern regarding restrictions on international labour. NHS-focused manufacturers that supply equipment are not concerned about tariffs. However, larger manufacturers that export 80% of produce to Europe are worried about duties.


It is getting harder and harder to match customer expectations, deliver a high

quality service and offer competitive prices. Keeping prices down makes it very

hard to maintain cost efficiency. Foreign trade is unclear, with Brexit looming and

cheaper markets in Europe/Asia.

Professional Services

The majority of consulted professional services members think the economic situation is improving. From the client perspective, they noted that the construction market is still growing, though not as fast and that could be due to VAT uncertainty borne of Brexit.

While Brexit has led to uncertainty, in the shorter term it is providing opportunities for professional services firms especially in light of the government requiring expert advice on Brexit negotiations. One legal firm says clients are preparing and planning to take jobs from the UK abroad.

Members also believe that the UK could end up with more influence abroad, citing Norway’s position as a member of the European Free Trade Association (EFTA) and the country’s influence in shaping global standards.

Tech

Investment

In manufacturing (Leicester) it was noted that while there was ‘momentum’ behind new technology, companies were still slow to implement systems that could cope with reporting requirements. Examples of systems used in manufacturing included: SAP; Oracle; Blackline (reconciliation); Magnitude (reconciliation); and statutory accounts preparation technology.

In Manchester, managers are struggling to keep up with basic IT, putting pressure on the small finance functions to learn and handle technical updates creating a feeling of isolation. A similar view to this was aired by professional services members, who are finding themselves dealing mostly with technical learning due to a number of systems coming into play.

In the IT/communications sector, the amount of M&As taking place meant that it was difficult to align systems, causing headcount to fall. However, even with new systems being introduced, old ones are still there and still need updating and maintaining.

The IT sector has faced much outsourcing and offshoring, inevitably impacting on finance functions. Much transactional work has moved away, leaving a skills void.

Cyber security

Members working in manufacturing have noticed the rise of phishing e-mails whereby requests forpayments seem to originate fromMDs/FDs. Hence, finance staff arehaving to do due diligence by callingsuppliers to verify these ‘strange’payment requests. Some companieshave put processes in place to handlecyber security (three-level approvalprocess noted by one member) forlarger businesses.

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Cloud

There seems to be little appetite for ‘the cloud’ from the two manufacturing discussions (Leicester and Manchester). Companies avoid moving to the cloud unless absolutely necessary. Instead, they ensure they have protected networks in place and update Microsoft operating systems only after a new update has been around for a while to check it has worked for others and there are no bugs. Some also back-up onto their own servers.

Professional services members said there was a ‘big push’ on the cloud, however, this seems to relate more to their clients. Some of the members said they’ve developed cloud packages for clients but are not doing the same internally (for example, using SAP).

Challenges

The professional services sector noted the vast amount of data at hand and the trick is to manipulate and align systems and then analyse the data.

Other challenges voiced include GDPR, an especially prominent issue for an employer with 18,000 employees and thousands of CVs on file. Members wanted to know how they can best prepare for it to ensure compliance.

People: Roles; Skills; and Recruitment

Roles/skills

Members in manufacturing flag up a preference for taking on juniors and for progressing them as it is more cost effective and engenders loyalty. However, this is difficult to achieve if an ageing workforce doesn’t move.

The IT sector noted training as a ‘challenge’, as roles change so quickly and lower level positions are outsourced. Besides, the working environment is changing and with staff being home-based or abroad, it becomes challenging to manage. This leads to a broader problem of process and governance. Little investment is put into up-skilling staff offshore preventing career progression.

‘The role of the modern-day accountant is more akin to a project manager’, said one IT member in relation to the point above. Others said that senior managers ‘hadn’t done finance’ for 10-15 years because the work had been outsourced. Globalisation and rising wages in developing countries will see those jobs outsourced to ‘robots’.

They also pointed to FDs being ‘more strategic’, ‘bringing value to strategic decision-making’ and the modern accountant ‘encompassing so many different things’, a view echoed across the member groups.

IT members noted that customers prefer to lead their lives online, and this will impact on how transactions are undertaken and, ultimately, see accountants and back office staff no longer required to be ‘data inputters’. Invoice processing technology has already been introduced, where ‘99% can now be done by software as it is rules-based, 1% comes from accountant sense-checking and auditing.’

Members suggested that modern accountants require a wide ranging skill set in order to survive, ranging from IT/technical through to ‘soft’ and ‘people’ skills. Members are expected to develop in business support and project management roles.

Flexible working must be adopted to keep staff motivated, a point raised in other sector reports.

Recruitment

One of the larger manufacturers employs 80% of staff internally, cultivating the culture of loyalty. A two-year cycle sees exams funded and, if they pass, staff are encouraged to stay on. One ACCA member has recently been promoted to a finance manager in this business. One other employer has platinum status with ACCA and partners with Kaplan on bringing students in as well as beginning apprenticeships.

However, there is little momentum for apprentices among IT sector members – one member’s company has introduced and others voiced some interest in finding out more. In professional services, though, 20% of consulted members are already recruiting apprentices.

But there are exceptions where the finance team is so small, there is just no room for staff progression unless somebody leaves.

There is some acknowledgement of ACCA Careers service among members from manufacturing, but not by IT sector members.

Corporate4


ACCA

Image/perception

Manufacturing members said ACCA had ‘transformed’ over the last couple of decades. It is ‘globally recognised’ and ‘flexible’. In Manchester it was noted that CIMA was almost non-existent.

IT sector members were approving of the introduction of ‘business case study’ exams into the ACCA qualification and thought it is a move in the right direction.

How can ACCA support?

Members would like to receive more e-communications that are proactiveand supportive:• ‘snapshot info’ of upcoming

(technical) changes, perhaps withan app;

• tax webinars and related content;• more articles on leadership and

people management (perhaps forFDs as well);

• further info on ACCA-X; andultimately, more personalisedmessages and information;

• some career advice for membersin larger companies would behelpful, too. This view was citedby both IT and professionalservices member groups.

Things they liked included: Budget email; sector-related content via the website.

Members also suggested ACCA put more emphasis on helping members gain a better understanding of the bigger picture; of running a business and building a broad range of skills. Members were pleased to learn this has been answered with the new curriculum.

IT members noted that customers prefer to lead their lives online. This will

impact on how transactions are undertaken and, ultimately, see accountants no

longer required to be ‘data inputters’.

Awareness of services

ACCA webinars are well received by all member groups with most members watching them live or on-demand. Other means of obtaining CPD were: AB magazine articles, AccountingWeb, Accountex and in-house training.

The majority of manufacturing members hadn’t heard of the technical advisory helpline, but thought it would be valuable to them.

All were aware of CPD-related courses and webinars, including discounts offered.

More awareness needs to be raised about ACCA Marketplace – benefits portal for ACCA members.

As said previously, there is little knowledge of ACCA apprenticeships, however, members are interested in finding out more.

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Financial services5

Banking

Housing is booming in Glasgow, but agriculture is struggling and could be made worse if Brexit subsidies are not replaced. Financial services in the region is ‘getting stronger’ and is now ‘on the map’ with Edinburgh.

Some of the challenges members in banking face: regulation; Brexit uncertainty; and agriculture subsidy removal (agriculture exposure also voiced as a concern in London – banks with agriculture exposure and retail will feel the Brexit effect much stronger).

In London, members cited the following challenges: FOREX rules; cost-cutting adversely impacting on service delivery; and smaller FS firms don’t have adequate training budgets. Also, asset management margins have been squeezed.

Brexit

In Glasgow, banks have set up internal teams to analyse the impact of Brexit and to develop action plans. Key Brexit issues are: general uncertainty; potential interest rate hike; UK firms exiting Glasgow post/during Brexit and potential ditching of European base altogether.

In London, concern is that reporting requirements will align with US. However, members feel strongly about the fact that EU regulation should be used and implemented here. Solvency II, Basel and MiFID benefit FS ‘really well’, and would be ‘ideal’ to keep them.

Asset management firms are expected to ‘feel’ Brexit more, and may launch funds offshore.

Insurance

A key challenge is an ‘understanding gap’: buyers don’t understand what cover they’re buying; sellers don’t understand what cover they’re selling. Terrorism cover is becoming more prevalent.

Longevity is the key issue in the Life sub-sector. Insurers are reaching their capacity, so finding a profit is difficult. There are fewer participants in the market due to the low margins. Although, life insurance itself hasn’t changed, the way it’s sold and delivered is changing, impacting the back-office. Millennials are not buying life insurance causing an issue for insurers.

For the insurance sector, the main challenges include: distribution (customer interaction); insurers are becoming underwriters; changing insurance marketing channel. Other barriers to insurers’ development include: driving down expenses; regulation; organisational resistance to change; low interest rates and low ROI; Insurance Act requires disclosure of all client interaction which is onerous.

New players with different operating models are entering the market and taking market share from well-established insurers (the likes of Google, IKEA).


Members do not understand why insurance is seen as part of financial services and that they are regulated by the Bank of England.

Brexit

Some insurers are moving their base to Luxembourg, Brussels, or Frankfurt – a cost to offset Brexit risk. They are also prepared to help government with Brexit negotiations by offering expertise. Brexit is also being seen as an opportunity to build individual deals.

Tech

Banking

Managing against cyber-attacks is a key issue at the moment, with phishing emails prevalent. In addition, changes in the regulation have put pressure on IT departments in terms of compliance. A lack of lead time exists between implementing changes and checking that the checks and balances are in place.

Customer needs/requirements are driving changes within the technology space. Customers now expect to be able to transact online, especially via mobile devices, so digitisation of services is huge. Managing this versus compliance is a key concern.

Consolidation of systems is also occurring. In London, a member cites cutting from 100 down to 20 systems, with data warehouses being utilised. Data security is a big concern, too.

In asset management, there is a big outsourcing surge.

Insurance

Within the insurance sector, the delivery of it is changing from the system and processes perspective. Main concern for insurers right now is how to get millenials to buy insurance?

The technology is there, but brokers and underwriters are ‘refusing to embrace it’. One member speaks of an insurer that has attempted six different technology introductions in the past few years, however, the adoption is slow and people are unwilling to change. For example, premiums and pricing is still being undertaken on paper.

EU regulation also makes it difficult to drive change through technology. Insurers must innovate, but margins are so tight they don’t want to spend saying it is ‘not worth the risk’. US compliance is easier, so it makes it more attractive to invest in IT and develop. Data integrity is ‘terrible’, while staff are not ready to change.

In Glasgow, banks have set up internal teams to analyse the impact of Brexit

and to develop action plans. Key Brexit issues are: general uncertainty; potential

interest rate hike; UK firms exiting Glasgow post/during Brexit and potential ditching

of European base altogether.

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Introduction of person-specific risk-profiling is being pulled by tech. Wearable technology can gauge a lot of information about clients, (e.g. their blood pressure, heart rate as well as their vitality), and offers insurers ‘a lot of opportunity’ to build and adapt insurance plans eg. selfies could be used to gauge risk profiles.

New data protection rules (GDPR) make change a scary thing to undertake, particularly if client data is being moved. More education is required regarding this.

People: Recruitment; Roles; and Skills

Banking

A skills gap has been created as a result of outsourcing. Most recruiting is happening at a higher level where senior staff are ‘parachuted’ in from other rival banks in the area. Offshore operations are breaking the link as banks are unable to offer practical application experience to trainees in Glasgow.

More apprentices are coming into banking; however, their expectations around salary and job requirements are unrealistic.

In asset management an outsourcing surge has been observed, which makes oversight very expensive. Client-facing services need to come back to UK, but staff costs then are expensive. Robotics has already started undertaking process-driven roles and this trend is to continue.

Other factors discussed were flexible working, which is becoming more popular, lack of adequate training budget and need for updating IT skills, especially around data management.

Insurance

Some organisations are considering moving out of UK post-Brexit. Those remaining in the UK fear struggling to access skills from abroad.

Insurers/brokers who are facing the Apprenticeship Levy consider it to be ‘good’, with some hiring a blend of newly qualified and part-qualified accountants. One insurer takes on graduates with various skillsets and experiences, however, the common problem is that all graduates have an unrealistic mind-set.

ACCA

Banking

Member support:Members want to see more member events. Some shared a strong feeling of not being engaged with ACCA post-qualifying and wanted this to change.

Members in banking, given recent arrest cases of whistle-blowers, suggested ACCA could offer confidential, anonymous and impartial support for whistle-blowers; perhaps via ACCA’s website.

Topics ACCA could help with:• Guidance on PRA; • Brexit; • Basel III; • IFRS 9• Governance and how to manage change

When asked ‘what one thing ACCA could do for you?’, members said they would like to see the following from ACCA:• Receive more local research as a snapshot, rather than lengthy material• Formation of Special Interest Groups (would help networking and spread news of ACCA services)• More awareness raising among members re: Shared services qualification• ‘Confidential’ focus groups• Informal ‘meet ACCA’ meetings at employer premises• Invite school leavers to meet senior FS members to discuss accounting career• ‘Close the gap’ between graduates and school leavers

Qualification views:• Exemptions at lower/level 2 are thought to be unnecessary as graduates ‘need to know the basics’• Members note ACCA ‘prestige’ has increased; including more auditors undertaking the qualification• Members feel it should be easier to identify ACCA approved employers• The qualification is ‘very flexible and broad’, allowing members to move jobs between sectors and geographies

Financial services5


A skills gap has been created as a result of outsourcing. Most recruiting is

happening at a higher level where senior staff are ‘parachuted’ in from other rival

banks in the area. Offshore operations are breaking the link as banks are unable to

offer practical application experience to trainees.

Insurance

Member support:Members suggested ACCA could help develop ‘an innovative mindset’ among members. ‘Innovation usually comes with entrepreneurial spirit. We, accountants, should be able to change the culture within the organisations!’

Members also suggested that ACCA lobby government on why there are different accounting regimes in each sector.

They feel ACCA should consider partnering with bodies such as ABI; Lloyd’s; LMA; Aviva; and IUA on events and activities. Technical topics would be of interest, such as GDPR and future of Solvency II.

Qualification views:• Qualification should be vocational and to be studied while at work as this helps with exam taking• Quarterly exams are still a new thing and are still viewed with caution by members• Members also feel there should be fewer exemptions offered to ensure qualifieds get a good understanding of basic accounting functions • Pass mark should be increased to 75% from 50%. Perhaps introduce a ‘major fail’, where a second fail would lead to a ‘reconsideration’ of their career path.• ACCA is being considered to be more commercially focused now than previously.

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