The Financial Power List 2014
Accountancy Age and Financial Director reveal 2014's accounting and financial powerbase
Accountancy Age and Financial Director reveal 2014's accounting and financial powerbase
1 Laurence Longe, managing partner, Baker Tilly
The surprise pre-pack sale of listed firm RSM Tenon to Baker Tilly sees several hurdles that must be cleared to secure the practice’s future. Longe must show a united front among partners, that headway is being made in merging the firms culturally as well as geographically and, of course, paramount to the firm’s future will be the announcement on which international network will serve them in the future: Baker Tilly International or RSM International? Longe may have worked on five national mergers at Baker Tilly in the last 15 years, most notably taking six years to amalgamate HLB Kidsons, but this is going to be the most critical.
2 Jean Stephens, CEO, RSM International
The talk of the town is that following its acquisition of RSM Tenon, Baker Tilly is using two international networks, and is due to pick either its own, or RSM International this year. But CEO Stephens is already in the market – looking to score either a collection of smaller firms or a good-sized successor to Tenon. But PKF International is hot on her tails hoping to recruit several smaller firms to succeed PKF, which merged with BDO in 2012. The heat is on RSM’s CEO to fill the gap soon.
3 Paul Druckman, CEO, International Integrated Reporting Council
Some of the biggest changes to company reporting in decades will see annual reports include more narrative information, such as greenhouse gas emissions and gender representation. Druckman, and the international body IIRC, are at the forefront rolling out an integrated framework for all companies in December this year. The body hopes to create further updates with pilots run by global companies this year. Druckman will have his work cut out for him that integration is the way to go, especially after the FRC claimed the current framework needs revising.
4 George Osborne, chancellor of the Exchequer
Chancellors are staples of the Financial Power list simply by virtue of their position. That said, Osborne is likely to use 2014 to set his stall out for the upcoming election in 2015, continuing to search for a balance between driving down the deficit and stimulating business. Having had to spend this term reconciling differences from both sides of the coalition, the run-up to the ballot box could see a departure as the Tories seek a move away from power-sharing.
5 Alex Salmond, first minister of Scotland
With most polls still showing marginally more Scots erring toward remaining in the UK, Alex Salmond is likely to be more vociferous than ever as he looks to strengthen his case for Scottish independence ahead of October’s referendum. Already, Holyrood is set to establish its own tax authority, Revenue Scotland, to oversee its devolved tax powers, but Salmond will have to tread carefully if he is to convince onlookers he is able to balance pressure to lower its tax rates and the need to fix its public finances. A separate tax regime would also be a pain in the proverbial for the accountancy profession.
6 Stephen Haddrill, CEO, FRC
Judging by the FRC’s priorities for 2014 Haddrill is going to be in for another hectic year, which will see the accountancy watchdog promoting a longer-term approach to corporate governance and stewardship, improving the quality of smaller listed company reporting and influencing EU and international developments.
An interesting sub-plot to developments at the FRC will be the appointment of a new chairman with Baroness Hogg expected to be replaced in the near future. The question is whether, having served as CEO for four years in which he steered the FRC through the most radical structural overhaul in its history, Haddrill we see the appointment of a new chair as time to move on, or a time to provide continuity to a regulator which is already dealing with a number of changes in key positions.
7 Paul Aplin, ICAEW tax faculty technical committee chair and AC Mole & Sons tax partner
Aplin and his firm AC Mole have had a pioneering role in accounting technology in the UK. So much so, that HM Revenue & Customs regularly directly consult the firm on technological changes. Over the last year, Aplin has campaigned tirelessly for continuing provision of relaxations to real-time PAYE requirements for the smallest businesses, something that earned him an Outstanding Achievement Award at last year’s British Accountancy Awards. This year is likely to see him continue that work as the government and HMRC seek to complete the roll-out.
8 Margaret Hodge, chair of the Public Accounts Committee
Hodge’s warpath against tax avoidance is showing no signs of abating in 2014 after a year which saw her and her colleagues again confront their favourite foe, Google, over its tax affairs. Popular with the press and public, she has earned a large number of critics in the accountancy world, many of whom query her knowledge of tax. With the OECD keen to address the issue of the taxation of multinationals, expect Hodge to have plenty to say in 2014.
9 Lin Homer, chief executive, HM Revenue & Customs
Having now made the top job at the taxman firmly her own after her first full year in the role, Homer has made clear she is no soft touch. Significant inroads have been made into tax avoidance, with little over 70 marketed schemes still available, while the tax gap stands at 7%. The coming year is likely to see the progress of real-time PAYE and the ongoing focus on tax avoidance take up much of her time, while the progress of the closure of HMRC’s 281 contact centres is set to draw keen interest, too.
10 The next CFO, Royal Bank of Scotland
Probably the most prominent role in British banking. Whoever replaces Nathan Bostock as chief financial officer at the 81%-taxpayer-owned bank will need to play a key role in any future privatisation of the bank.
Bostock, who defected to Santander after only ten weeks in the job, does have a 12 month notice period at the bank, but RBS chief executive Ross McEwan, who himself only joined RBS in October, will want to see an appointment made sooner rather than later.
With a sweeping overhaul of bank underway, the new CFO will need to heavily involved with the creation of a ‘bad bank’ inside RBS, and focusing the bank towards high street lending.
11 PKF UK network members
There’s nothing like a bit of target-setting to win you a place in the Power List. From the ashes, the PKF network has begun rebuilding in the UK – albeit with three firms (PKF Littlejohn, Cooper Parry and Johnston Carmichael). More recruits are planned in 2014, with Cooper Parry chairman Jeremy Bowler setting out PKF’s stall as creating an equivalent ‘top ten’ UK firm. Can the parts equate to that of a ‘whole’ firm?
12 Vernon Soare, executive director – professional standards, ICAEW
After some trials and tribulations, the ICAEW has gained licensing authority for probate services, and to regulate multi-disciplinary practices. Spearheaded by Soare, will this be a boon for ICAEW members, or a damp squib? Soare has also voiced concerns on behalf of the ICAEW about the FRC’s structure and powers in recent years – where will their relationship head in 2014?
13 Jenny Willott, parliamentary under secretary of state for employment relations and consumer affairs, BIS
Perhaps not a name you would expect to appear on the list, but the MP for Cardiff Central could have a lasting impact on the profession this year.
With Jo Swinson on maternity leave for much of the year, Willott will be filling in as Minister for Employment Relations and Consumer Affairs in the Department for Business, Innovation and Skills. Responsible for corporate governance and company law Willott will be involved with efforts to improve company reporting and a consulting on a further increase to audit exemption thresholds.
EU member states have until 2015 to implement the directive, and BIS is expected to consult on any changes next year.
14 Simon Michaels, managing partner, BDO
Michaels cut a reasonably satisfied figure in 2013, with few dramas emerging after it assimilation of PKF. But 2014 is key for the enlarged firm in making the most of its increased size and breadth, in terms of driving efficiencies, making investments and keeping everyone happy. Oh, and structuring itself to pick up some big audits as well.
15 Ed Balls, shadow chancellor
For all George Osborne’s foibles as chancellor – and there are many – few would argue Balls has offered powerful opposition. While the ‘cost of living’ argument has made Labour some ground, economic credibility is yet to be attained. Balls’ response to the Autumn Statement in December made little impact. The coming year is key if Labour wish to have a serious chance at the polls in 2015.
16 Arnold Schilder, chair of the IAASB
The IAASB is currently overhauling auditor reporting rules, which in the currently form have some significant differences to rules already implemented by the FRC.
For instance, the IAASB proposals require going concern statements to be made in all cases while the FRC’s requirements do not. Additionally, the FRC’s requirement to report on the application of materiality would be dealt with as an ‘other matter’ rather than a ‘key audit matter’ under the IAASB’s proposals. With the FRC coming under fire from the likes of the ICAEW for pressing ahead, where Schilder and the IAASB come down will have ramifications for the UK and the FRC.
17 Chris Hodge, executive director of strategy, FRC
Replacing Mridul Hegde as the FRC’s executive director of strategy last year, Hodge is taking on a role that the FRC has described as “critical” to the regulator and its future strategic direction.
The eyes of the profession will be on Hodge to see how he performs after rumblings that the FRC had previously failed to effectively articulate its strategy.
18 Government’s CFO
Would a central government CFO achieve strategic financial planning from its Treasury base? Some would say it sounds like a nightmare role. Others, such as the ICAEW and PwC believe it is of critical importance. The ICAEW is not so happy that the mooted role seems likely to be a combination of the head of public spending and head of the government finance profession. Three roles into one? Anyone fancy it?
19 David Gauke, Exchequer secretary to the Treasury
Amid the clamour and heat around tax avoidance, Gauke consistently cuts a composed, sanguine figure, often speaking in even-handed, confident terms of the tax system’s future and the government’s ability to address the tax system’s problems. Completing the roll-out of real-time PAYE and Universal Credit will be high up his list of priorities this year.
20 Louise Brittain, partner, Wilkins Kennedy
The high profile insolvency practitioner is known as the go-to-girl for contentious complex cross-border insolvencies, especially on behalf of the taxman. However, Brittain has upped sticks and left Big Four firm Deloitte, moving back into the mid-market at Wilkins Kennedy, having already spent 14 years at Baker Tilly. Can she achieve what she did at BT, to help create an unrivalled insolvency division to take on the big firms?
21 Richard Pennycook, group FD, Co-operative Group
The winner of the Outstanding Achievement Award at the inaugural Business Finance Awards, and with a long career behind him, it seemed time for him to take a back seat – or at least a portfolio of non-exec roles. But no. Unable to resist the lure of using his finance and turnaround skills, Pennycook has taken on the huge challenge of stabilising the Co-op. With Lord Myners leading a governance review, headlines will ensue.
22 David Sproul, CEO & senior partner, Deloitte
The bigwig is inadvertently leading the profession in a fight against the FRC over newly-created disciplinary sanctions, which can take a firm’s fee income into consideration when divvying out fines – as well as whether firms should be punished for issues which have taken the FRC nearly ten years to reprimand for. Deloitte is appealing a record-breaking £14m fine for its advice to MG Rover owners. This on top of a recent influx of negative headlines including running a Lloyds Banking call centre, and defending audit work at Autonomy amid allegations of accounting misrepresentations.
23 Scott Barnes, CEO, Grant Thornton
It’s been a good year for Grant Thornton and its boss Scott Barnes. The British Accountancy Awards’ Global firm of the Year award winner picked up its first FTSE 100 audit, and Barnes told Accountancy Age that advisory services to large corporates – particularly in financial services – was its line of attack going forward. Barnes is likely to revise the firm’s ‘£500m by 2015′ this year, and after taking the top role in 2009, it will be interesting to see his appetite for future targets and direction.
24 Hans Hoogervorst, chairman, IASB
Strangely, if the profession’s wishes of a period of quiet and consolidation were heeded then Hoogervorst and the IASB would not appear in the Power List at all.
But there is still significant work to be done before all parties concerned can kick back and take a breather. Top of Hoogervorst’s to-do list is sorting out the IASB’s conceptual framework, most notably silencing the argument over the inclusion (or not) or prudence within the framework.
It is also about time that the IASB finally completes the impairment phase of IFRS 9. The delay in replacing IAS 39 has been a source of frustration, but with the IASB completing the hedge accounting standard, closure on this most thorny of standards could be close at hand.
25 Stephen Coleclough, CIoT president
CIoT presidents only have a year to make their mark, and Coleclough wasted little time in making his agenda clear after accusing the UK of a “slapdash” attitude to Europe. Instead, he set his sights on improving the UK’s approach to Europe on issues such as compliance with EU law, broadening the institute’s education provisions and engaging further with the ongoing public debate on tax.
26 Michael Izza, CEO, ICAEW
Seemingly comfortable with his role at the ICAEW, as its boss since 2006, one wonders where his future direction lies. Stepping up as the ICAEW’s second CEO, after the boldness of first incumbent Eric Anstee, Izza has led the institute towards greater international presence and more engagement with government. But sating the interests of such a diverse membership is nigh on impossible – will he make the right decisions in 2014?
27 Giles Frampton, vice president, R3
Insolvency law is to undergo its most dramatic shake-up since the Insolvency Act 1986. It will, essentially, be scrapped and reconstituted. It will be up to Giles and Co, at the largest insolvency trade body, to ensure that the changes, which are currently out for consultation, are included into any legislation to be implemented at the end of the year.
28 Mark Carney, governor, Bank of England
The optimist among us will read the economic tea leaves as pointing to better days ahead, but Carney will not be accorded an easy rise in 2014 for all the positive harbingers of an economic recovery.
Firstly, the economy needs sustained low interest rates to spur growth and aid the recovery of the dented financial sector. Carney has said interest rates will remain untouched until unemployment drops below 7% and will need to resist pressure from those who want a rate in hike in response to a rapidly improving housing market.
29 Richard Murphy, pundit and founder of Tax Research UK
The self-styled “lone voice” of tax has long been the loudest, and Murphy shows no sign of cooling off in his quest for a fairer tax system. Frequently featured on television and radio, Murphy’s views are closely aligned with those of Hodge, while he is sure to take a keen interest in the progress of the OECD’s attempts to tackle tax base erosion and profit-shifting.
30 Vince Cable, secretary of state, Department for Business, Innovation and Skills
Is Cable happy about his efforts at red-tape cutting and easing the availability of credit finance to business? He certainly seems so in the updates and press releases made to the media. Whether playing his part in raising the audit exemption threshold, creating an SME business bank, making directors liable for corporate collapses, or the re-introduction of cash accounting has made him many friends is another matter. As we creep towards another election, the ‘bolshy one’ in the coalition will surely have a strong agenda that impacts accountants.
31 Paul George, executive director of conduct, FRC
As the man who effectively audits the auditors, George is going to be in for a busy 2014. For one, the work of the FRC’s Audit Quality Review team has been greatly expanded by the Competition Commission, so that FRC should now review every audit engagement in the FTSE 350 on average every five years.
The FRC is also to conduct a formal review of bank audits in the second quarter of next 2014 to find out why progress in improving their quality has been so slow, while its long-running dispute with Deloitte over the firm’s work at MG Rover continues to rumble on.
In many ways the dispute, which saw Deloitte fined £14m over its role in advising the owners of MG Rover, is a test case for the FRC’s new more draconian sanction guidelines. Deloitte has appealed the decision, with the appeal hearing is expected early this year.
32 Robin Freestone, CFO, Pearson and chairman, 100 Group of Finance Directors
As chairman of the 100 Group of finance directors, a discreet but highly influential group of the UK’s most prominent CFOs, Freestone will play a key role in shaping the business landscape in Britain. Among Freestone’s priorities in his second year as chair, will be the need to improve the competitiveness of the UK by pushing back on proposed regulation unless it has a clearly explained, justified and costed rationale; promote efficient capital markets and long term equity ownership in large UK-based corporates; and improve the profile of big business as a force for good. Freestone is also CFO of FTSE 100 learning and newspaper group Pearson and will be speaking at the Accountancy Age’s sister title’s annual Financial Director summit.
33 Julie Walsh, managing partner, Kingston Smith
The head of professional services firms at KS, took the reins from long-time managing partner Sir Michael Snyder in November – although he remains as chairman. Her appointment brings the total number of female managing partners in the Top 100 to five. Walsh is now the highest ranking female managing partner.
34 Ric Traynor, chairman, Begbies Traynor
The listed firm model has crumbled in front of the profession’s eyes with Traynor propping up the last one left standing. Following Vantis’ pre-pack administration in 2010, then RSM Tenon’s in 2013, all eyes are firmly placed on Begbies. Traynor has already bought the firm’s Red Flag division himself, sold the tax service line and secured new debt facilities. However, it’s going to take a bit of faith to get the firm back on track after several quarters of reduced revenue figures
35 Andrew Bonfield, FD of National Grid and head of the Hundred Group’s tax committee
Given the number of people who spent Christmas without power and the mainstream media’s concern over the UK’s ability to keep its lights on, the activities of Andrew Bonfield as FD of the National Grid are likely to pique a fair amount of interest. Despite that, Bonfield was relaxed in a recent interview with Financial Director. “The UK is relatively small, so the damage caused to the transmission system is normally pretty low,” he said.
36 Audit partners, Top six firms
The next 12 months could prove to be the most frenetic in the careers of the audit partners from the UK’s six largest accountancy firms.
The cumulative effect of UK and EU changes to the large listed audit market – which regular tendering or switching of auditors among FTSE 350 companies – will result in a slew of contracts expected to come onto the market.
PwC, as the largest of the FTSE 100 auditors, perhaps has the most to lose. But as the recent changes at Marks & Spencer, Land Securities and BG Group – which PwC lost – and HSBC, Ladbrokes and Hargreaves Lansdown – which PwC won – show, there is sure to be a veritable merry-go-round of activity.
37 Ian Powell, chairman and senior partner, PwC
A mere £3.6m in his back pocket after last year’s PwC results, he spoke of ‘responsible growth’ with a ‘robust’ strategy going forward. Diversity continues to be a Powell crusade, voicing discontent that just 16% of recent partner promotions were to women. Maintaining its position as the FTSE 100 auditor, while continuing to lower its non-audit to audit fee ratio, against a backdrop of market fluidity, will be fun to watch. A pension scheme actuarial review is always a nervous time, and not something Powell will be looking forward to in March.
38 Simon Collins, UK chairman and senior partner, KPMG
After 2013 it is really a case of ‘more of the same please’ for Collins and KPMG. Following a period in which the slash 3% of its workforce, last year’s 27% increase in UK profits was a welcome relief after what Collins’ described as the “first and toughest year” of a three-year turnaround plan at the firm.
Indeed, the jump in income, which saw average earnings for KPMG’s 585 partners increase to £713,000, meant the firm was able to hold back part of the profits for investment in its services. In 2014 Collins will be judged on how well that money – earmarked as part of a £450m investment in the UK over the next three years, is spent. Technology, which Collins describes as the “golden thread” running through the firm will be the main beneficiary.
39 Steve Varley, UK chairman and managing partner, EY
It was with much fanfare that EY last year launched a new corporate strategy and tagline, while rebranding from its former incarnation as Ernst & Young.
As can be seen at rival firm KPMG, changes in strategy take time to bed in and Steve Varley will be judged on how EY’s change in direction takes effect during 2014 as it builds on a 6% rise in revenues reported in the last financial year.
The main areas to watch will be big data and cyber security, where the firm intends to double the size of its teams over the next two years.
40 Graham Lamont, CEO, Lamont Pridmore
After phenomenal success in the British Accountancy Awards for his firm, the pressure is on for Lamont Pridmore to continue to out-achieve its competitors. As it phases out its partnership structure, the firm may be likely to continue to evolve, but how far the can the Kendal firm continue to grow?
41 Algirdas Šemeta, EU taxation and anti-fraud minister
Šemeta’s plan to introduce a EU-wide financial transaction tax – or Tobin tax – fell short in 2013, and while some 11 nations still are set to adopt it, it is far from certain the same drive remains behind the project, which would have had far-reaching implications to global trading. Rescuing the proposal will surely form the bulk of his workload in 2014.
42 Tony Sarin, joint owner, Clark Howes
Is it unfinished business for Sarin? Pioneering the listed consolidator model with Numerica, he left the firm, which was eventually subsumed. He suggests his return into practice management at Clark Howes, alongside Tim Shaw, is ‘getting back doing what you know and love’.
43 Andrew Tyrie, chair of the Treasury Select Committee
Deconstructing all that went on in the Co-op Bank and its acquisition of Britannia Bank is high up Tyrie’s agenda in 2014, while holding the chancellor to account also forms the bulk of his committee’s work. In a year of political grandstanding, Tyrie’s role is likely to be a challenging one.
44 John Whiting, tax director of the Office of Tax Simplification and non-executive director of HM Revenue & Customs
One of the most respected names in tax, Whiting’s charge of simplifying the tax code is far easier said than done. Despite repeated calls for, and recognition of, the need for simpler tax rules, little progress has been made, and few of the body’s recommendations have been enacted. Should significant progress be made in the coming year, it would surely go down as a major coup.
45 Helen Brand, CEO, ACCA
The OBE-wielding Brand has seen the number of ACCA members leap 8,000 in a year, taking its global membership above the ICAEW. But heavy is the crown. The profession is up in arms over changes to audit rotation, the increase in audit thresholds, a radical redesign of insolvency law and a crackdown on tax avoidance, Brand will have to show that the institute is the voice of the profession.
46 Steve Hare, CFO, Sage
Hare takes up the reins as CFO of the largest accountancy software provider in the UK. Sage has been having a bad run of late, its launch of online accounting tool Sage One was labelled as too simplistic and data had to be manually inputted from on-premise technology to the new system. Sage also announced a pre-tax profit decline of more than 51% for the year ended 30 September 2013. However, it has launched an updated version of Sage One to work out the kinks. Turning the company’s fortunes around will be no easy task.
47 Brendan Nelson, president, ICAS and non-executive director, RBS and BP
Not as outspoken as his ICAS predecessor Sir David Tweedie, and stepping down from the role in April 2014, but he isn’t a wallflower. Nelson will instead focus his efforts on his vital governance roles at both RBS and BP – British corporate institutions repairing battered reputations.
48 Kath Haines, chief executive, CABA
An accountant and finance director by trade, Haines has overseen great changes at the ICAEW- affiliated accountants support charity. Debt Awareness Week and new courses were big focuses for CABA in 2013, its increased marketing and facilities for financially and emotionally stressed accountants – in the ongoing tough climate – sees more and more people using their services.
49 PKF International
The international network had a combined fee income of £2.8bn – with PKF UK making up £103m before its merger with BDO. However, the network has come out fighting, bringing on board Littlejohn, Johnston Carmichael and Cooper Parry. It also created a CEO role, taken up by John Sim last year, formerly regional director of the network and managing partner of PKF Thailand.
50 Carl Jackson, managing partner, Quantuma Restructuring
Jackson left RSM Tenon at the end of September, setting up Quantuma with fellow RSM Tenon partners Paul Goddard and Kelly Mitchell. However, less than a year later they stepped up again, buying two former RSM Tenon practices at the end of last year. Quantuma now has offices in Marlow, Brighton and Southampton, with it unlikely to stop there.