Clement Keys Chartered Accountants - Birmingham

Academies will benefit from innovative and robust financial advice

2012-02-27T02:11:00.000-08:00

More and more local authority schools are converting to academies – according to the Department for Education they now make up more than a fifth of all secondary schools – and while the upside is that an academy has greater autonomy, the governing body and management team will be in need of expert financial advice to ensure a smooth transition and effective year-end reporting.

The academies that we have been working with are preparing audited statutory accounts for the first time and have welcomed the strategic advice that we provide in addition to the specific guidance that is needed on the content of the Annual Report and Accounts (ARA).

Clearly regulations have to be met, but the change in status presents a perfect opportunity to review current financial processes and establish innovative and robust systems for the future.

We take a pro-active approach to advice with regard to developments in the sector, helping to identify innovative ways for the new academy to generate income, and presenting ideas so that the ARA is ‘user-friendly’ and readily accessible to the general public so that it can be utilised as an effective reporting and marketing tool.

It’s not just a question of the day-to-day processing of income and expenditure: an academy needs a finance and IT system and business IT solution that can deal with a whole raft of activities, including the production of management accounts, cash flow forecasts, balance sheets, VAT and tax compliance issues.

At Clement Keys, we have specialists in all areas so we can offer advice on key topics such as pensions and VAT.

Academies have to undergo a statutory audit and arrange an audit of pension returns – both to the Teachers’ Pension Fund and any local government schemes to which non-teaching staff belong – our experience in the education sector helps us respond to individual establishment’s needs.

We also have experienced tax and VAT advisors that can advise on liability to VAT and partial exemption as well as perform ad hoc assignments, such as reviewing the use of trading subsidiaries.

Women in the boardroom

2012-01-31T03:41:00.000-08:00

Cultural change will put more women in the boardroom

There’s no denying that the bleak economic prospects for 2012 are uppermost in our minds, but one of my personal hopes for this year is to see businesses committing to the cultural change required for more women to make a difference in the boardroom.

Following his Government-commissioned review, Lord Davies recommended that FTSE companies work towards a voluntary target of a minimum of one in four female board members by 2015, yet a report by Cranfield School of Management found that very little progress had been made.

What I found particularly disappointing was that more than two thirds of the UK’s top 100 companies had not yet decided how they intend to comply with the recommendations.

This is not only an issue for big businesses, the same situation arises with many SMEs, and it would be fantastic to see change being embraced by all businesses and across all industries.

Whatever the size of the company I don’t believe that a combination of quotas, heavy handed rules and further regulation is the way to create the next generation of women at board level – it simply wouldn’t be beneficial, especially for companies that operate in more gender biased industries.

Research suggests that what typically drives employees to stay in or leave a job is not so much money, as relationships and job satisfaction. For SMEs, particularly in the current climate, the key to success is surely a matter of finding ways to ensure that talented women are content within the workplace, and this can be achieved at least in part by giving them the opportunity to gain experience and develop the skills required to run a business at the highest level.

I applaud those companies that are taking this issue seriously and enrolling women onto mentoring programmes, for example, and hope more will follow suit in 2012. This kind of approach appears to be very effective and I’m convinced it is what we need to achieve a balanced mix of expertise in the boardroom and head off any further talk of mandatory legislation on quotas.

No magic wand but free business advice

2011-11-30T05:36:00.000-08:00

There may have been some good news for small businesses in the Chancellor’s autumn statement but there is no doubt that cash strapped SMEs and start-ups still have many obstacles to overcome in this challenging environment.

Whilst I don’t have a magic wand to solve all of their problems I am delighted that Clement Keys is able to offer a helping hand to small business via a free business advice service delivered in association with the Institute of Chartered Accountants in England and Wales (ICAEW).

The Business Advice Service offers local companies a free initial consultation, which could save them money and generate ideas to create more profit.

The service is designed to enable SMEs to source advice on a wide range of issues, such as how to start a business, taxation, financial management and access to finance, so that they come away from the meeting with an understanding of their options and how to resolve a particular problem.

To take advantage of the offer, SMEs and start-ups should visit http://www.businessadviceservice.com/
and follow the initial consultation request button, which can be found next to the Clement Keys entry on the ICAEW Directory of Firms.

Show me the money!

2011-07-26T02:48:00.000-07:00

I am sure that many in the accountancy profession are experiencing the same confusion as me over bank lending.

The banks are telling us that they have money to lend and are willing to lend, in the press every day but the businesses that I work with are still finding it very hard to secure any lending from the banks!

The situation may be explained by an interesting conversation that I had recently with the son of a long term client of mine.

He has recently joined a major clearing bank as a corporate manager and been given a portfolio of small business clients and has been told to get on and start encouraging them to borrow money.

The only problem is every application he submits he gets turned down by the bank’s credit committee as not meeting their lending criteria. He was therefore having an enormous gripe about the fact that he was being squeezed from both sides by his employer, the one side encouraging him to sell borrowing as much as possible whilst the other side is not prepared to authorise anything.

Whilst I would never encourage irresponsible lending, one does wonder if this goes someway to explaining the apparent contradiction we are currently experiencing.

The banks are ready and willing to lend but their over cautious credit committees are doing a very successful job in preventing this from happening.
Maybe we can believe what we read in the papers………..

Southern Cross & the Care Homes Crisis

2011-07-05T08:00:00.000-07:00

It is not without some dismay that I have been reading about the downfall of Southern Cross in the press. Clearly this has been a disaster waiting to happen over the last year or so and finally it has.

The thought that up to 35,000 elderly residents could be ‘on the streets’ does not bear thinking about as my understanding is the average survival rate of an elderly care home resident after being moved is approximately six weeks.

There does seem to be some hope in that the landlords to a large extent are taking on these homes and in my opinion, there is no way the government would have stood by and let the homes be closed and the residents moved with the consequent mortality event.

I have to say the financial model which Southern Cross adopted in providing this care does seem to represent the type of reckless financial management which only takes place at the height of a boom.

I can understand their desire to release capital from land and buildings and they would argue their business is providing care rather than being land and building landlords. However, the one problem with this is that you then leave rent to the vagaries of your landlords and market forces which I believe has ultimately led to the downfall of Southern Cross.

It is difficult enough trying to run a care home in the current climate with the pressures of staff costs against zero increases from local authorities where residents are funded or self funding residents having reducing income due to current investment returns, without having to cope with ever increasing establishment costs.

I know it is easy to be wise after the event and hindsight is a wonderful thing and I can only say I do take relief in the fact that for the time being the ongoing security of the residents seems to be safe, after all that must surely be the most important thing.

Big Society Blog

2011-06-06T04:22:00.000-07:00

A recent decision by a police inspector friend of mine – who signed up as a ‘special policeman’ the day after being forcibly retired from the police service – makes me consider how the concept of asking volunteers to take up professional activities will work under the Big Society banner.

It is fair to say my friend’s retirement, and that of many of his colleagues, was brought about by the comprehensive spending review which is impacting across the whole of society. My friend’s pension ensures he will be financially secure, so his motivation is not money but, rather, that he needs to do something with the rest of his life. With 30 years’ experience he has a great deal to offer, yet he wouldn’t entertain any thought of going back to pounding the beat.

There is a distinction between somebody being public spirited and organising a neighbourhood watch scheme – which is how I would envisage the Big Society operating within a law and order context – and a highly experienced police officer switching from being paid for what he does to doing it voluntarily, which smacks of law and order on the cheap.

I fear that using volunteers to provide essential public services, such as policing, is fraught with risk. The paid employee generally goes to work because he needs to earn a living, but the volunteer does not use that rationale so there is a much greater risk of him giving up his role. For the very same reasons, it will be far more difficult to replace that individual if he decides to leave.

While I wholeheartedly support the notion of people contributing to improve society, we could be storing up trouble if we rely on recognised professional activities being undertaken on a volunteer basis.

More relevant charity reporting ?

2011-04-20T08:55:00.000-07:00

National big name charities appear to be holding their own with the recent Red Nose Day raising over £74 million and people running, cycling and trekking all over the world for various other household names such as Breast Cancer.

The media profile that these charities benefit from makes me wonder about the smaller charities and how their fund raising has been effected by the recession.

If charities have to compete for limited donations, the idea that charities should attempt to quantify the benefit they are providing so that funders can compare how effectively charities are achieving their objectives seems even more important.

Joe Bates

There has been a feeling within the charity community for some time that they should attempt to do this. It would enable them to demonstrate that what they are doing is for the benefit of the public as well as in pursuit of the aims for which they were originally set up.

For the charities it would provide a very useful tool in comparing the charity’s effectiveness, a bonus at a time when the Charity Commission has reviewed the charitable status of certain independent schools and fee paying care homes.

I would make direct expenditure on charitable activities the headline figure in the charities accounts would enable people to see at a glance what the charity was achieving, both with the charities commission and the public.

A possible example of this could be a charity which seeks to reduce bullying in a school playground. If at the beginning of the year 50% of the children reported being unhappy due to bullying and at the end of the year this was reduced to 40% as a result of the charity’s activity, an attempt would be made to value this increased happiness amongst pupils in financial terms.

In practice evaluating such benefits in financial terms may be easier said than done, but, providing a benchmark as to the effectiveness of the charity would be a good place to start.
Joe Bates 20 April 2011

Women on Boards - working towards change

2011-04-20T08:22:00.000-07:00

The Lord Davies report into Women on Boards has become a hot topic provoking many discussions and debates on social media sites around the globe.

So what is the basic message? – women are under represented at board or executive levels. Why? – due to a variety of factors including lack of access to flexible working, difficulty achieving work life balance, not shouting about personal achievements and disillusionment with career progress.

One thing that does seem to be agreed upon is that diversity is very positive and a fresh perspective can help to improve financial performance, which in the long term produces better rewards for stakeholders in a business.

We are now in an era where the family unit is changing. Responsibility is shifting and men are keen to share in parental responsibility. For years, the work place has been unfair to fathers with the expectations being on the man to work long hours in order to commit their time fully to an employer. If society can start to break down these gender expectations and start to balance responsibility more evenly between parents at home, then it stands to reason that the balance of time available to men and women in the workplace should equalise too.

Women may then not need to take such a long career break which must be one of the major factors contributing to career progression and the disparity in pay between men and women.

So is this an ideal or is it achievable? Lord Davies is not recommending in the UK that we go for quotas, alternatively he recommends that we work towards a certain percentage of representation, which for FTSE100 companies is a minimum of 25% female representation on their boards by 2015.

In respect of smaller and medium sized enterprises, it will really be down to the individual companies to put this into practice, and it is hopeful that they might mirror the changes that are being made in the very top level firms.

It will be a long process and it is unlikely to be an easy one. But with more professional role models for women, and better support networks both in the workplace and at home, I personally hope that, as we represent half of the population, we can start to make a change.
Fleur Holden - 20 April 2011