The most recent articles from Accountancy Age

CFOs and CIOs speak a different language

Rachael Singh — 2008-08-01T15:50:00.000Z

Rachael Singh, Accountancy Age, Friday 1 August 2008 at 15:50:00

Research shows that CFOs fails to communicate effectively and CIOs lack understanding of business strategy

A new study has revealed that chief financial officers feel their IT colleagues lack understanding of the business strategy, whilst chief information officers find that the finance department fails to communicate goals effectively.

The survey of more than 130 senior finance professionals and IT executives across Europe, titled 'Are CFOs from Mars and CIOs from Venus?', found that the pressure is increasing on both parties to share the same agenda, but that neither group is clear about how best collaborate in order to add value to the business.

Commenting on the research, Grant Waterfall, technology assurance partner at PricewaterhouseCoopers said: 'The perception gap between CFOs and CIOs is revealed in their answers to questions on leadership, the ability to collaborate, long-term strategic thinking and planning. Overall, CIOs express a much better opinion of CFOs than vice versa. IT’s biggest complaint was a lack of communication, even a sense of ‘financial snobbery’. Where CIOs were reporting to CFOs rather than directly and collaboratively to the CEO they felt a distinct lack of influence both at operations and board level.'

The report also highlighted that CFOs wanted IT to be up to 'scratch' on what they felt was needed to run the organisation effectively whilst CIOs thought that their departmental priorities had been sidelined and seek to gain a more equal partnership.

The underlying problem brought to light seems to be that IT –speak is considered another language by the finance department and that CFOs use a language 'foreign' to their CIOs.

Tom Gunson, partner PricewaterhouseCoopers said: 'The tension between CIOs and CFOs is well known and it is about time it was addressed.'

'To help develop a common language between finance and IT, organisations should consider rotating their people through each department (and the business) as part of their cycle of experience' he added.

Crucial IR35 appeal hits the High Court for the second time

Paul Grant — 2008-06-06T10:43:00.000Z

Paul Grant, Accountancy Age, Friday 6 June 2008 at 10:43:00

John Bessell starts another battle to avoid payment of £99,000 in employment taxes

An appeal will be launched in the High Court today which could have huge implications for future claims under IR35 tax law.

IT contractor John Bessell will begin his second battle to overturn a previous ruling to pay £99,000 in employment taxes under IR35, funded by the Professional Contractors Group.

The director of Dragonfly Consulting claims that as a freelance system tester for the AA for three years, he should not be considered an employee.

Special Commissioner Charles Hellier had previously ruled that there was 'nothing which points strongly to…Mr Bessell [being]…in business on his own account.'

The PGC claims that a rejection of his appeal could 'undermine much of the successful defence against IR35,' and that under case law 'one would expect Mr Bessell to be found outside of IR35'.

Big Four back in top ten consultancies

Kevin Reed — 2007-11-08T00:00:00.000Z

Kevin Reed, Accountancy Age, Thursday 8 November 2007 at 00:00:00

Since their recent return to the consulting market, the Big Four have massively outgrown their competitors

The Big Four have smashed their way back into the list of the top ten consulting firms this year, massively outgrowing the leaders in the marketplace.

Three of the four firms who recently re-entered the market have all seen the work come flooding back. PricewaterhouseCoopers fee income grew by 34% to £289m, KPMG’s grew by 13% to £242m and Ernst & Young climbed by 16% to £198m.

In contrast, Accenture, IBM and Xansa grew headline revenues by 2%, 6% and 8% respectively.

This year’s Accountancy Age survey of the market puts the Big Four all back in the top ten consulting firms by revenue.

The figures will be the best riposte to established players in the marketplace, who earlier this year provocatively suggested the Big Four didn’t have as much range and depth as they did.

‘I’m pleased the Big Four had a good year. It confirms all types of client will look for our high-value advisory services,’ said Deloitte managing director of consulting David Owen.

The firms are still short of the revenues of the main players. Accenture made £851m last year, the survey says. The market as a whole grew income by 12% to just under £6bn.

After non-competes ran out between the Big Four and the consultancies to whom the firms had sold their consulting arms, the accountants have pursued aggressive hiring strategy, reclaiming many former employees in the battle for talent with the IT giants.

Insider Business Club: IT Asset Management

Damian Wild — 2007-10-09T00:00:00.000Z

Damian Wild, Accountancy Age, Tuesday 9 October 2007 at 00:00:00

What do you have, where is it and how much is it worth?

A company must have a clear picture and understanding of what assets they own before they can even begin to manage their IT effectively, however many organisations fall some way short of this. In this session we look at how companies can better identify, manage and value IT assets. Should IT be treated any different from other more tangible assets? What are the essentials of an effective governance regime? And what is the future of IT asset management? Our panel of experts will be discussing these crucial issues, giving advice and answering questions from the live listening audience.

Click here to listen to the broadcast from 19/9/07.

(Note: registration may be required).

'Sub-prime' not cause of lower Accenture earnings

AccountancyAge.com — 2007-09-28T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Friday 28 September 2007 at 00:00:00

No impact from sub-prime mortgage woes - it's the loss of a tax benefit

Consulting giant Accenture has reported lower quarterly earnings than a year ago, despite announcing record quarterly and full-year revenues.

At the same time the company said US sub-prime mortgage troubles among lenders had had no impact on the company so far.

Despite not being impacted, the company told analysts at a conference call it would 'continue to monitor the situation'.

The company reported net income for the fourth quarter ending 31 August 2007 fell to $316.8m (£160m), from $346.4m for the corresponding period last year.

The cause of the fall in earnings was a rise in tax expenses to $253m from $23.7m last year, when the company enjoyed as a tax benefit.

'Demand for our services, particularly in consulting, remains robust,' CEO William Green said in a statement.

Further reading:

Accenture profits rise on strong demand

Profile: David Thomlinson, MD of Accenture

Consultants dismiss Big Four challenge

PCG takes tax battle to party conferences

AccountancyAge.com — 2007-09-27T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Thursday 27 September 2007 at 00:00:00

Tour of autumn party conferences planned

Freelancers group, the Professional Contractors Group (PCG) will take its long-running battle to get the IR35 tax laws scrapped to the annual party conferences this autumn.

The PCG has joined forces with the Work Foundation to press the case for recognition of freelancers.

PCG chairman David Ramsden said: 'The Government pays great attention to the self-employed when it comes to tax," continued Mr Ramsden. "IR35, the so-called 'freelancers' tax' is enforced vigorously. Yet many freelancers do not understand the tax and may be incurring unnecessary financial penalties.'

PCG said it had handled 1,440 IR35 cases on behalf of its members, of which only four were found to fall within the scope of IR35.

'This is a waste of taxpayers' money, tax inspectors' time and is appallingly stressful and financially damaging for genuine freelancers trying to run a business,' Ramsden added.

Further reading:

Tory scrapping of IR35 'just an idea'

Tories pledge support for contractors

PCG: Freelancers don't trust taxman

Stock market malaise leads to £25bn pensions deficit

David Jetuah — 2007-08-17T00:00:00.000Z

David Jetuah, Accountancy Age, Friday 17 August 2007 at 00:00:00

Market upheaval puts the UK's top 200 companies under the cosh, as pension funds plummet from a net surplus position into deficit

Blue-chip companies' pension funds have nosedived from a surplus position into a £25bn deficit as a result of the current stock market crisis.

The UK's top 200 companies have taken a battering because 57% of their assets are held in shares.

Bond yields have offset the stock market freefall, and pension fund trustees are shifting more of their assets from equities into the lower risk area.

Actuaries Lane Clark and Peacock calculated that £15bn has been moved from equities to bonds.

Tories pledge support for contractors

AccountancyAge.com — 2007-08-15T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Wednesday 15 August 2007 at 00:00:00

Cameron government would scrap IR35

Small businesses and contractors have been promised the world by the Conservative Party.

According to website contractoruk.com, the Tories would abolish the controversial tax rule IR35, reverse the tax rate on small companies, (pushed up by 3% in the last Budget) and review anti-avoidance laws for managed service companies.

The Tories are due to announce a new deal for business on Friday and are due to include pledges to cut red tape by £14bn.

Much of the annual saving is expected to come from scrapping huge amounts of legislation which the party sees as unnecessary, outdated or excessive.

A spokesman for contractors group, PCG said: 'We hope that the party will adopt proposals to do this, and abolish IR35 accordingly – once employment status is truly clear, IR35 will be unnecessary.'

Further reading:

PCG: Freelancers don't trust taxman

Lords push for review of small business tax

New IR35 rules: passing muster

PCG: Freelancers don't trust taxman

AccountancyAge.com — 2007-08-10T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Friday 10 August 2007 at 00:00:00

Contractors group calling for a legal duty of care to be placed on HMRC

Freelancers and contractors’ representative body, the Professional Contractors Group (PCG) has called for a legal duty of care to be placed on HM Revenue and Customs so they cannot perform 'rogue investigations'.

The PCG made this demand in its formal response to HMRC's consultations on safeguards and compliance checks.

PCG's policy officer John Kell said: 'Freelancers and other small businesses have very little trust in HMRC so it's high time that HMRC was put under a legal obligation not to harm peoples' commercial interests. Many of our members have costly and distressing experiences of dealing with HMRC, even when they owe no tax and it's quite wrong that HMRC can just walk away.'

The call was made just weeks after the judgment in the Arctic Systems case, in which HMRC was found to have issued a wholly incorrect tax demand for £42,000 and the owners of Arctic Systems, Geoff and Diana Jones

Further reading:

HMRC questioned over IR35 investigations

SMEs at risk from more red tape, warns PCG

Research supports review of IR35

Xansa to be sold to French group

Larry Schlesinger — 2007-07-31T00:00:00.000Z

Larry Schlesinger, Accountancy Age, Tuesday 31 July 2007 at 00:00:00

Bid accepted for group which does work for Beeb and NHS

Xansa, the accounting and IT outsourcing group, is to be sold to French IT service provider Steria in a deal worth around £472m.

In April, Xansa signed a £19m deal to provide accounting services to the NHS, while it has also agreed an £85m deal with the BBC.

The news though was not well received by the market, with shares falling as much as 10% on fears the offer was too high.

The combined company would rank among the top 10 in its sector in Europe with revenues in excess of £1.2bn

Further reading:

Xansa signs £19m NHS deal for accounting services

Threshers agree £8m outsourcing deal with Xansa

Xansa finalises deal with Beeb

The big three bore me

Kevin Reed — 2007-06-21T00:00:00.000Z

Kevin Reed, Accountancy Age, Thursday 21 June 2007 at 00:00:00

When will KPMG, PwC and E&Y resume plans to undertake IT implementation work on behalf of clients? Hearing them protest to the contrary has become quite boring.

In fact, they probably intend to badge it up as ‘evaluating technology-focused processes’ or something like that.

We all know the firms divested their consulting businesses in the early 2000s. But even then the talk was of the Gang of Three, as some within Deloitte refer to them, creeping back into consulting work. Deloitte, through luck or judgment, retained its consultancy arm.

The Gang steadily built up their ‘advisory’ arms, steadfastly keeping clear of ‘big ticket IT implementation work’. Now they face a dilemma. They provide advice, but that includes advising on IT.

Ultimately, if you advise on IT, you must ‘do’ IT. You can’t just send techies on a course out in some mansion in Wiltshire twice a year. Providing advice requires experience, but IT advice in particular requires hands on, up-to-date skills.

The top bods at Deloitte seem pretty happy with where they sit on the issue. The firm rode out conflict of interest issues and emerged through the other side with a ‘consulting’ arm that still undertakes small-scale IT implementation and systems integration work, using its own strategy consultants.

Even if the others want more nitty-gritty IT integration work, they still have a massive battle recruiting the right staff – battling Deloitte and the big technology firms such as Capgemini and Accenture.

They will move in that direction because there’s good money in it and they can still avoid being wholly responsible for big IT systems support,or IT centres in Bangalore. If, or when, the gang finally start talking about IT implementation, don’t bother waking me up to tell me.

Kevin Reed is a reporter on Accountancy Age

Tax system still favours married couples

AccountancyAge.com — 2007-06-20T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Wednesday 20 June 2007 at 00:00:00

HMRC appeal to Lords making family businesses 'wary'

Despite HM Revenue & Customs case against husband and wife IT firm Arctic Systems going all the way to the House of Lords, the tax system still favours married couples, mainly due to the capital gains tax and inheritance tax benefits their status brings, a new report by the Institute for Fiscal Studies has claimed

Entitled Taxation of the Family, the IFS report made this claim, while at the same time saying HMRC was attempting to confront couples in business with anti-avoidance rules, thus imposing ‘greater limitations’ on their tax planning.

It further warned that the increasing tendency of ‘HMRC to seek to counter what it considers unacceptable family planning by married couples is causing the tax advantages of marriage to be eroded, at least for those owning their own companies’.

The IFS said HMRC’s appeal to The House of Lords to rule against the IT consultancy has made family firms ‘wary’.

Further reading:

Arctic row 'will happen again'

Arctic Systems hearing ends one day early

HMRC: Arctic set-up is 'voluntary joint taxation'

Revenue under fire over IT system planning

AccountancyAge.com — 2007-06-12T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Tuesday 12 June 2007 at 00:00:00

Cost of new system has tripled since 2004

The Public Accounts Committee has slammed HM Revenue & Customs over the cost of its new computer system which has tripled since 2004.

The PAC concluded in its report on the handling of the 'Aspire' computer system contract, that the way HM Revenue & Customs awarded the contract failed to reflect that its IT needs could change a lot over the course of the contract.

In its report, MPs also criticised HM Revenue & Customs for subsidising the bid costs of IT companies vying for the contract to the tune of £52m in order to secure competition.

The computer system, which supports services in areas such as child benefit payments and income taxation is run by consultants Capgemini.

The French firm won the £2.9bn contract in 2004. It increased to £4.5bn in 2005 when the Inland Revenue was merged with Customs & Excise.

After the government admitted last year that the IT system would cost £8.5bn over the 10-year life of the contract, the PAC launched its investigation.

Further reading:

4,000 sign up to offshore tax disclosure scheme

Taxman furious over buy-to-let row

Bates blames Revenue for Leeds collapse

Matalan awards services contract to Capgemini

AccountancyAge.com — 2007-04-17T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Tuesday 17 April 2007 at 00:00:00

Consultants to provide outsourced finance function, among other services

IT consultant Capgemini has won a contract with discount clothes retailer Matalan to provide outsourced services - including applications for finance functions - from July 2007.

Under the new contract, Capgemini will support all of Matalan’s core business-critical applications from Mumbai, including point-of-sale, stock control and replenishment, merchandising, finance, human resources and office applications.

Matalan said that by using Capgemini’s offshore facilities, it would gain significant cost savings and further increases its IT efficiency and service quality.

Further reading:

Capgemini names global CFO

Capgemini almost lost client over 'E&Y' branding

Cap Gemini results disappoint

Deloitte set to win Herefordshire council IT bid

AccountancyAge.com — 2007-04-12T00:00:00.000Z

AccountancyAge.com, Accountancy Age, Thursday 12 April 2007 at 00:00:00

Council documents show that Deloitte will be recommended

Deloitte looks set to win a major IT contract with the Herefordshire Council, according to council documents.

The Herefordshire Connects project is expected to produce more than £15m in savings over the next four years.

Deloitte, if it is confirmed as the winning bidder, will have the task of consolidating more than 500 legacy systems with an enterprise resource planning package and to improve and integrate services to the public with the introduction of a customer relationship management product.

A final decision will be taken on 11 April.

Further reading:

Deloitte nabs Mercer consultant for key role

Deloitte: Pension deficit at five year low

Deloitte man named as MCA vice-president