Making the Hundred count

ANDY HALFORD, chief financial officer (CFO) of Vodafone, the world’s largest mobile phone company, has been appointed chairman of the influential Hundred Group, an association of leading FDs.

What’s Happened?

Halford, an ICAEW fellow, will replace Ashley Almanza – CFO at global energy company BG – as head of the Hundred Group.

The group, which has previously battled against corporate governance changes and new accounting rules, is powerful but discreet.

Described by Accountancy Age’s sister magazine Financial Director as “probably the most influential organisation that you’ve never heard of”, the Hundred Group prepares to lobby government officials behind closed doors, rather than through the media. The group’s FD members are primarily from FTSE 100 companies.

Halford is a heavyweight appointment. At Vodafone, he is responsible for the finances of a company with 343 million customers worldwide. Halford has three divisional FDs below him, and it this wasn’t enough responsibility he has also overseen tax, treasury and cost-reduction initiatives.

An ability to multi-task will come in handy as head of the Hundred Group, at a time of possible reforms to the audit industry, regulatory and tax system.

What Happens Next?

Speaking to Accountancy Age, Halford revealed three priorities for the Hundred Group: to lobby the government over making the UK economy more competitive and business-friendly as it recovers from recession; to make sure that any business regulations passed in response to the economic crisis are proportionate; and to raise the profile of the Hundred Group.

Halford takes the helm at the FD group as moves to reform the audit industry gain momentum. The long-running debate over whether audit firms should be allowed to provide advisory services to their audit clients has been reignited by a House of Lords inquiry into the role of auditors in the lead up to the banking crisis.

Peers reiterated concerns over non-audit services – that an accountancy firm’s independence could be undermined by the substantial revenue it received for non-audit work for audit clients. It’s a long-running debate and new restrictions on non-audit services have been mooted.

Meanwhile, the European Commission has proposed that auditors should report on a broader range of financial data and work more closely with regulators to share knowledge.

Do audit industry rules need to be overhauled? Halford says that any issues with audit were largely confined to the banking industry, meaning that sweeping changes to audit rules are unnecessary.

The Hundred Group will make a detailed response to the EC consultation shortly.

Auditors have lobbied for a cap on their liabilities to protect them from being sued by clients that are trying to recover losses after going bust.

Halford is not convinced. In 2009, he told Accountancy Age : “I think the issue is this: we understand why liability caps should be something that the accounting firms would want to have, but equally, as stewards of our shareholders, we’ve got to be very comfortable before going that route. Frankly, to shave a small amount off an audit fee but to put a cap, which otherwise would not exist, on the claims that could be made is an interesting balance, so I don’t know how much traction that will actually get.”

And then there’s tax – one of Halford’s specialist areas.

Earlier this year, Vodafone reached a £1.25bn settlement following a long-running dispute with the taxman over its liabilities from the acquisition of German-based telecommunications company Mannesmann.

Legal wrangling over the “controlled foreign companies” (CFC) tax regime has caused headaches for companies with foreign subsidiaries, but the coalition government has promised to simplify the rules.

Halford says that the Hundred Group will discuss reform of the CFC with the government. The coalition has promised to simplify the tax system and has set up an Office of Tax Simplification. Halford welcomes the drive to simplify the tax system but cautions that officials face a major challenge.

“Unfortunately, complexity has built up over decades in the tax system,” he says. “The key thing is getting the right people round the table to work out how to simplify the system.”

Halford wants to make the Hundred Group “more visible” to the public and media. But don’t expect anything too incendiary in the media; the group’s preferred strategy will remain discreet lobbying of government officials and accountancy standard-setters.