Tag Archive | "kpmg"

Resigning accountants receive huge counter-offers

Contractor accountants may be interested to hear that the results of Robert Walters’ annual survey into accountants pay showed that those who did get a bonus this year, received increases in excess of 10%.

Marks Sattin, a leading accountancy recruiter, said a lot of companies are worried about losing key employees and are making counter offers to those who are considering resigning. In some cases they are offered up to 20% more than their current salary.

Accountants are obviously highly valued in the UK and 50% of them receive a counter offer when they hand in their resignation.

Companies in the banking, energy, FMCG and media sectors are all struggling to find qualified, experienced accountants and are leading the counter offer trend. Retail and investment banks are offering the largest salary increases in a bid to retain their key talent, according to Marks Sattin’s MD, Dave Way. Nearly 70% of employees have received salary increases to entice them to remain loyal to their current employer, he said. This trend is also increasing in Amsterdam, Dubai, Paris and Zurich. Way concluded by saying 2011 is the year of the counter-offer.

A report by CIPD/KPMG this summer found that a lot of employers are having difficulties finding staff and this was especially true when it came to filling accountancy roles. PWC, for example, grew by 6% this year and has been running a big recruitment drive to hire 3,200 new employees.

Young jobseekers may want to bear this in mind when they think about their future career options. It is not essential to undertake a degree course to become an accountant. There are various routes into the profession, including in-house courses and distance learning.

The UK urgently needs more young people to enter the accountancy profession otherwise we could end up with a massive skills shortage.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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UK’s 50p tax rate is higher than most other EU countries

KPMG’s global tax survey has discovered that the UK’s top personal income tax rate of 50% is higher than the top rate in the majority of other EU countries.

Sweden has the highest rate of income tax at 57%, Denmark and the Netherlands have rates of 55% and 52% respectively, while Austria and Belgium both levy the same 50% rate as the UK on their high earners. The average personal income tax rate in the EU works out as 37%, and in Western Europe it is 45%.

KPMG surveyed 96 countries and found that the only two other nations with top rates higher or equal to the UK’s were Aruba at 59% and Japan at 50%.

Marc Burrows, from KPMG, said everyone notices headline rates. The UK does come out a bit better when you consider social security taxes and tax thresholds, but people don’t tend to take those into account.

He went on to say that Western European countries do not have particularly competitive rates when compared to Asian countries such as Hong Kong (15%) and Singapore (20%).

Last month, the Institute of Fiscal Studies warned that the UK’s 50p tax rate could be losing money for the government. The IFS pointed out that there are several ways to reduce taxable income when tax rates rise.

The Treasury estimates that the top rate will raise £2.7 billion per year, but the Chancellor of the Exchequer has asked HMRC to analyse the revenue raised so far. The Tories say the 50p rate is purely temporary but the Lib Dems want it to be a permanent feature of the UK’s taxation system.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Is your 40 year old finance manager a typical fraudster?

Recent research by KPMG discovered that the typical white collar fraud is carried out by senior male finance staff, and that it takes longer to detect.

KPMG based its findings on 348 real fraud investigations, across 69 countries, conducted by its member firms.

Most likely to participate in fraud are men in the 36 to 45 age group holding senior management roles in finance. This group accounted for 41% of cases, whilst the number of frauds committed by members of the board has increased to 18% from 11% in 2007.

90% of frauds are targeted against the perpetrator’s employer and 33% of the fraudsters will have been at the company for longer than 10 years. 61% work in collusion with another fraudster, almost double the 32% of collaborators in 2007.

The main motive for fraud is personal gain, followed by pressures to meet budget and profit targets. The survey also noted that 74% of fraud cases exploited weak internal controls.

The head of KPMG’s investigations network in Europe, Middle East and Africa, Richard Powell, said that a lot of the frauds he has investigated in the last few years have been detected via whistle blowing reports. Very few are discovered by management or auditors.

In 2007, it took an average 2.9 years to detect a fraud, now it takes 3.4 years. Companies also fail to act when they see warning signs, the report said. In 2011, 56% of cases were preceded by a red flag, compared to 45% in 2007. Only 6% of these red flag cases are acted upon immediately, compared to almost one in four of the 2007 cases.

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Cost saving ideas can win the day for contractor accountants

Contractor accountants may want to consider working alongside their clients to come up with cost saving measures after the ICAEW said this year promises to be extremely difficult financially for many companies.

The combination of low consumer confidence and public sector spending cuts will have a considerable impact on their revenue generating ability, the Institute warns.

ICAEW’s head of enterprise, Clive Lewis, said that despite the recent decrease, inflation is still high, but this is only one of many pressures facing companies at the moment.

In order to offset increased costs, the Institute has put forward a number of suggestions which could interest accountants, such as whether profit margins can be increased. It also suggests re-examining the fundamentals of products and services but warns against switching to cheap materials which could damage a brand and affect sales.

A lot of suppliers are offering incentives and there could be benefits to changing. There are now new suppliers with competitive prices in the market place and things could have changed significantly since a company’s supplier base was last reviewed.

Businesses should also tackle overheads such as energy costs, human resources and space. Significant improvements can be gleaned by more effective organisation of workloads and workspaces.

Leveraging the power of technology enables employees to work better, reduces the need for meetings and cuts down on communication costs, the Institute advises and companies can further cut down by taking advantage of all the tax allowances and reliefs they are entitled to.

KPMG recently reported that businesses could see £90bn added to their costs as the savings they made during the recession get wiped out. 80% of business leaders say the cost of finance is outstripping their cost-cutting efforts, whilst 76% blame salary inflation.

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Businesses are reasonably confident but consumers are not

New research from KPMG shows that whilst the majority of UK companies are optimistic about the prospects for the future, the complexity of rules and regulations are still a barrier to growth.

YouGov conducted the survey of more than 500 firms and discovered that 72% of companies think there is an opportunity for their business to grow despite the government’s austerity measures.

56% of businesses are still confident about the general outlook for their company and 47% said overseas opportunities are helping UK firms compete better globally. 26% of the survey’s respondents also reported an increased production capacity.

60% of businesses and limited company contractors said they were concerned how the budget would impact their firm and 52% highlighted the fact that complicated rules and regulations restricted their ability to grow. 43% of business owners are also still concerned that it is hard to access funding from the banks.

KPMG’s head of UK markets, Malcolm Edge, said businesses agree that the government needs to do more to encourage growth. Companies need the assurance that something will be done to reduce bureaucracy and provide support to help companies achieve sustainable growth.

Whilst businesses are generally optimistic, the opposite is true of consumers. The most recent report from Nationwide shows a significant fall on consumer confidence last month.

The chief economist at Nationwide, Robert Gardner, said consumer confidence has now fallen to its lowest level since the institution started its regular survey.

There are many factors that could be contributing to this, he continued. We still have a fragile labour market, high unemployment and a weak growth in salaries. There is little sign of inflation easing and disposable incomes have been hit by rising fuel costs and the increase in VAT. The economic recovery is still sluggish and there was not much positive news last month to boost consumer’s confidence, he concluded.

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EC says the UK is taking tax avoidance measures too far

The European Commission has requested that the UK amends its anti-avoidance and tax evasion measures.

Last week, the EC said that regulations regarding the attribution of gains to non-UK resident firms and the transfer of assets abroad were disproportionate. The Commission added that the UK regulations go beyond those that are reasonably necessary in order to prevent tax avoidance.

David Kilshaw, the chair of KPMG’s private client practice, said this could be a serious threat to the Treasury’s revenue as it concerns a significant amount of tax.

Current provisions allow for HMRC to review offshore structures and tax individuals holding assets in them at the personal tax rate. However, the EC says this is discriminatory as individuals are not liable to pay tax on the assets of a UK based company.

The EC also wants the UK to change the regulations regarding cross border capital gains. At present, if a company that is UK resident acquires a share greater than 10% of a company in another EC state, and that company sells an asset and realises capital gains, the UK company is liable to pay corporation tax on these gains.

Kilshaw also warned that HMRC might start to tax UK companies at a higher rate if it is forced to tax them the same as offshore companies.

If the UK does not comply with the request, the matter may be referred to the European Court of Justice.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Auditors in the dog house

Accountants will know that dogs generally bark at the least sign of danger but now Lord Lawson is suggesting that accountants should bark also! He has said that auditors were amongst the dogs that didn’t bark throughout the recent banking crisis.

A House of Lords enquiry, which has been looking into the audit profession, has found that accounting rules had a significant role to play in the crisis. Tim Bush, who is a member of the ASB Urgent Issues Task Force, pointed out that international accounting standards have forced auditors to stop being prudent when they carry out audits.

Bush said that accounting rules on contingent liabilities, impairment and securitisation were key factors in the collapse of the UK banks. He also suggested that we should reinstate UK GAAP.

Meanwhile, the Accountancy and Actuarial Discipline Board appears to have more on its plate than it can handle. The watchdog for the audit profession currently has 17 active cases to work through.

At the beginning of the week the AADB announced a new investigation into KPMG’s audit of BAE systems. The board has launched some high profile investigations since the crisis began including PwC’s JP Morgan Securities audit and an audit of Lehman Brothers by Ernst and Young.

The AADB team only consists of 5 members, two forensic accountants and three lawyers, and the heavy workload has meant they have to outsource a large proportion of the work, which slows down investigations. It is expected that further cases will be announced in the coming months.

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Will the UK Visa cap cause more functions to be outsourced?

There’s been a lot said recently about clamping down on the amount of migrant workers allowed to enter the UK. Despite this, the latest CIPD/KPMG Labour Market Outlook report suggests that as the UK labour market improves, so does the employment demand for migrant workers.

600 employers took part in the survey and 45% of them said they have experienced difficulties in recruitment. Engineering, IT and accountancy positions are hardest to fill and consequently 17% of employers intend to hire migrant workers during Q3. 21% have recruited migrant workers in the last 3 months and of those workers, 37% came from outside the EEA.

Offshore outsourcing also seems to be making a comeback with 9% of private sector enterprises intending to offshore jobs over the coming 12 months. India is still the most common offshoring location, followed by China and Eastern Europe. Call centres, IT and finance are amongst the most likely functions to be outsourced abroad.

The public policy adviser from the CIPD, Gerwyn Davies, pointed out that it will take time to train British workers to fill the positions currently being occupied by skilled migrant workers. He believes that the proposed migration cap should be phased in gradually so as not to harm our competitiveness.

There is currently a temporary visa cap on all new Tier 1 applicants and applications for Tier 2 visas are limited by the issuance of Employer Sponsorship Licences. The permanent cap on UK visas will be introduced next April.

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