Audit / PwC grilled by MPs over BHS ‘going concern’ audit

BHS auditor PwC faced challenges over the decision to describe the retailer as a ‘going concern’ just days before its sale for £1 to a consortium with no retail experience, during a parliamentary select committee session which also heard evidence that the company’s finance director was warned ahead of the deal, which saw BHS collapse into insolvency within months, that the buyer was a former bankrupt

Tax / Pension death benefits: tax planning tips

Mike McAnulty, director at independent financial adviser Central Investment, discusses the tax changes in pension death benefits and why it is critical to have all financial management implemented before death

Tax / US tax rules scupper major fertilising merger

US fertiliser manufacturer CF Industries has ditched plans for a $8bn (£5.5bn) merger with smaller Dutch rival OCI, which would have originally seen it set up a new holding company in the UK, following the US Treasury’s announcement of further measures to crackdown on so-called tax inversions

Insight / BHS pension advisers under fire over failure to restructure scheme

Pension advisers were put under intensive grilling at the latest joint parliamentary evidence session into the collapse of BHS with criticisms of the lack of oversight and the failure to restructure the retailer’s pension scheme

Tax / Wrong code warning for SDLT for buy-to-let purchases

HMRC has reminded conveyancers to use code ‘04’ for the ‘type of property’ when completing Stamp Duty Land Tax (SDLT) for buy-to-let and second residential properties 

Insight / ICAEW to offer partial licenses for insolvency practitioners

In an extension to the existing insolvency practitioners’ licensing arrangements, ICAEW is to offer partial licenses following changes to insolvency rules

Tax / HMRC considers VAT position of adult colouring books

The craze for adult colouring books has come to the attention of the taxman with HMRC officials reviewing the zero VAT status with a mind to possibly charging VAT at the full 20% rate

Tax / House sales plunge in April following tax changes

There was a substantial  drop in seasonally-adjusted residential property transactions between March and April this year according to the latest HMRC figures, with analysis suggesting the 45.2% decline in the number of houses sold was down to purchasers rushing to beat the introduction of the higher rates of stamp duty land tax (SDLT) on additional properties, which came into effect in April 2016

Audit / Charity Commission consults on trustee disqualification powers

The Charity Commission has launched a three-month public consultation on how it should implement new powers to disqualify certain persons from being trustees in circumstances where they are judged not fit to act on behalf of a charity, for a period of up to 15 years

Technical Alerts

23 May 2016

Accounting / Forensic accounting: skills beyond numbers

The skills  of an expert forensic accountant go beyond the ability of a senior professional's experience in making sense of details and minutiae, and often demand relevant experience, knowledge of the rules of evidence and court process, says Gavin Perason, forensics accounting partner at HSNO

Accounting / IFRS Foundation reports £1m drop in income after ‘challenging’ year

The IFRS Foundation, the oversight body of the International Accounting Standards Board (IASB), has released its annual report for 2015, described as a ‘challenging year’ with falling income following a big drop in the US contribution and growing criticism over governance, although the finalisation of the lease accounting standard was a sign of some progress on convergence

Audit / Government’s move to shared services cost more than it saved, NAO reports

The National Audit Office (NAO) is sharply critical of the government’s programme to transfer back-office functions to two shared service centres, which it says has not resulted in anything like the anticipated cost savings due to problems with the way it was managed

Insight / Mercer & Hole launches corporate advisory services division

Accounting firm Mercer & Hole has reorganised its services lines with the creation of a new division, corporate advisory services, to meet clients’ needs by combining corporate finance and restructuring expertise

Insight / Online wealth management service launched

Two former senior banking executives launched a new online wealth management service targeting high network individuals, branded as Netwealth 

Insight / Brothers jailed over £400k Gift Aid and VAT fraud

An accountant from Harrow, Abu Talib Ghadiri, 34, faces six years in prison for his involvement in a £400,000 Gift Aid and tax fraud

Insight / ACCA-qualified accountant jailed for failure to declare £430k income

An ACCA member from Essex who failed to declare income and pay £107,000 of tax owed from accountancy work and property lettings and tried to hide the money in his children’s bank accounts has been jailed for four years, following an HMRC investigation into his affairs

Insight / Deloitte expansion in Belfast will make it second biggest UK office

Deloitte is committed to growing its workforce in Belfast to 1,000 by 2020 after already achieving earlier recruitment targets which means once the office is fully staffed it will be the largest office in the Big Four's network outside of London by the end of the decade

Technical Alerts

20 May 2016

Audit / AQI 2016: FRC audit inspection reports flag revenue recognition as problematic

Poor reporting of revenue recognition and problematic interpretations and analysis of complex supplier arrangements in the retail sector are the biggest problems highlighted in the latest audit inspection reports into the Big Four and mid-tier audit firms, released by the Financial Reporting Council. Sara White talks to executive director for audit Melanie McLaren about the regulator’s take on the latest batch of inspection reports

Tax / HMRC to go live with Verify identity authentication

The government has announced it will officially go live next week with gov.uk Verify, the online service taxpayers will need to use to prove their identity before accessing HMRC’s digital services and other government online offerings

Audit / Charity Commission swiftly responds to overhaul auditor guidance post Kids Company

The Charity Commission plans to overhaul auditor guidance on the back of MPs recommendations, following the failure of Kids Company, proposing to update its list of 'matters of material significance' to widen charity audits' scope to include emphasis of matters and concerns, failure of trustees to take action on serious matters previously highlighted by auditors and conflicts of interest among the charities they audit

Audit / AQI 2016: PwC pulled up over audit of complex retail supplier arrangements

The latest regulatory inspection of audit work conducted by PwC has highlighted a number of shortfalls in the consistency of the management’s ability to challenge client assumptions and ongoing problems with the audit of complex supplier arrangements

Audit / AQI 2016: FRC flags KPMG audits for conflict and ethical issues on non-audit services

KPMG has emerged as the worst performer in the latest round of audit inspection reports, with two audits requiring significant improvements, the Financial Reporting Council (FRC) has said, as it flagged up the firm's audits for conflict issues relating to non-audit services for tax work and the use of the firm’s investor relations specialists to refine messaging to institutional shareholders of an audit client; poor audit committee communications and weak IT system control checks

Audit / AQI 2016: EY must tighten up audit of revenue recognition and partner independence

Failings in the quality of risk assessment into revenue recognition issues and reporting lapses over potential conflicts of interest and partner independence continue to be an issue at EY although the firm has improved its overall quality of audit in this year’s Audit Quality Inspection (AQI) report from the Financial Reporting Council (FRC)

Audit / AQI 2016: BDO rapped for lack of audit evidence relating to revenue

BDO has been pulled up on several issues in the latest inspection of its audits by the national regulator. These range from ensuring more audit procedures are performed for audit of revenue to improving testing of controls and having more targeted testing of journals, among other issues

Professional Development / People in the news: EY, UHY, RBK, Bishop Fleming, Scottish finance minister

Career news this week includes a new global vice chair and area managing partner at EY, UHY expands Manchester team, partner appointments at Russell Brennan Keane and a reshuffle in Scottish government sees a new cabinet secretary for finance

Insight / Deloitte, PwC, KPMG partners face BHS grilling

Partners from Deloitte, PwC and KPMG will find themselves up for a grilling by MPs at the start of next week as part of the two investigations by Parliamentary select committees into the events surrounding the administration of BHS and the fate of the retailer’s pension scheme

Audit / AQI 2016: GT improving but could do better on audit quality monitoring arrangements

The quality of Grant Thornton’s (GT) audits is judged to have risen, but the firm still needs to do more to improve its audit quality monitoring arrangements, particularly with regard to some ethical and independence issues, according to the latest Audit Quality Inspection (AQI) report from the Financial Reporting Council (FRC), which is the first in three years where no GT audits were assessed as requiring significant improvement

Tax / Trio of free pension advisory services to be merged into single entity

Pension Wise, the free advice service set up to promote and advise on pensions reform and annuity freedoms is to be merged into the other publically funded advice services on pensions, to create a single website and advisory service 

Insight / Grant Thornton head Romanovitch named in City AM's Power 100 Women list

Sacha Romanovitch, CEO of Grant Thornton UK LLP, has been included in City AM's Power 100 Women list for the first time, joining an elite group of ten leading women accountants from across the Big Four firms and the ICAEW

Audit / AQI 2016: Deloitte told to challenge management and improve pension scheme audits

Deloitte has been slow to challenge management in critical areas of judgment during audits according to the latest Audit Quality Inspection (AQI) from the Financial Reporting Council (FRC), which also identified weaknesses in the firm’s auditing of defined benefit pension schemes, and says it needs to improve its audit approach in the areas of revenue and inventory and its communications with audit committees

Technical Alerts

19 May 2016

Tax / Brexit: deciphering the facts from the fiction

Allie Renison, head of Europe and trade policy at the Institute of Directors, is on a myth-busting mission amidst a battle for votes in the upcoming referendum in which both the leave and remain camps are guilty of unashamedly wielding fiction as fact 

Tax / Former KPMG partners to challenge HMRC over Belfast office raid

Four former partners at KPMG’s Belfast office have won the right to challenge HMRC over the legality of a probe into their personal tax affairs, after a court was told a raid on their offices and homes was a ‘publicity stunt’

Audit / FRC avoids critical analysis of Big Four audit inspection reports

The Financial Reporting Council has issued the annual audit quality inspection reports for the Big Four audit firms, and mid-tiers, BDO and Grant Thornton, but surprisingly has not issued any overview of current performance or quality

Tax / CIOT urges clarity over new criminal offence for corporate tax evasion

CIOT is calling for HMRC to provide effective guidance so that companies have firm understanding of what the government might consider adequate measures to guard against rogue members of staff who facilitate tax evasion, in light of provisions in the Queen’s Speech to introduce a new criminal offence for failing to prevent this

Insight / Less than sparkling diamond sales result in 13-year ban for director

The director of a company which traded fines wines for diamonds has been disqualified for 13 years for giving false information to customers and failing to keep any accounting records following an Investigation by the Insolvency Service

Tax / Entrepreneur’s relief withdrawal for company sales triggers record winding ups

Changes to the rules on claims for entrepreneur’s relief in the event of a company sale led to a spike in solvent companies being wound up in March before the new capital gains tax (CGT) rates came into force, according to the latest figures from insolvency body, R3

Insight / Two thirds of small businesses tied up in red tape

Over half of smaller business owners (55%) say their company’s growth is being held back by the amount of time they have to dedicate to business administration, according to research from the Federation of Small Businesses (FSB), which also shows small companies spend an average of £3,600 on help and advice with tax compliance. 

Tax / SMEs keep half of apprentices after initial training

Research from the Association of Accounting Technicians (ATT) found that 175,000 of small businesses have kept on at least half of their apprentices after the training period

Tax / HMRC trials changes to reduce mistakes on self assessment online returns

HMRC is running a trial designed to improve self assessment online returns process for taxpayers and iron out problems with the final filing process

Audit / Hays changes auditor to PwC after 27 years with Deloitte

FTSE 250 recruitment specialist Hays has chosen PwC to replace Deloitte as its external auditor following a formal tender process which saw the company make its first change in auditor for 27 years, having been with Deloitte since its listing in 1989

Insight / Haulier banned as director for driving off with £500k in unpaid VAT

Steven Heard, a haulier from Kent, has been disqualified for over eight years for not properly dealing with the taxation affairs of LVH Services Ltd and failing to ensure the company had adequate records to account for over £1m of transactions and some £500,000 of VAT owing

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