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ACCOUNTING ANDBUSINESS DIRECT

ACCA'S BULLETINFOR FINANCEPROFESSIONALS

25 November 2009

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NEWS

PwC buys Paragon to boost consulting arm Accountancy Age

Microsoft CFO to leave, look for bigger job Reuters

Grant Thornton slips further behind Big Four The Times

Brussels warns on accounts rules

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http://www.accaglobal.com/economy

Brussels warns on accounts rules FT.com

Ex-Parmalat auditors settle US investor lawsuit Reuters

OFT delves into insolvency market Accountancy Age

FSA to be audited by NAO Accountancy

US accounting oversight body hits roadblock CFO.com

Madoff liquidator seeks fees of $22.1m FT.com

Stakeholders turn to non-audited company info Accountancy Age

HMRC could face damages over 'thin cap' rules Accountancy Age

Two-thirds of South African firms report fraud Business Day (South Africa)

TECHNICAL

IFAC presses for action to adopt and implement global financial standards IFAC

Lessons from the financial crisis for financial reporting, standard setting andrule making SEC

Strengthening relationships with agents and employers HMRC

Corporation tax on chargeable gains: indexation allowance - October 2009 HMRC

Financial reporting of pensions: ASB feedback and redeliberations FRC

Customer relations managers now available for tax advisers in four newlocations HMRC

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Composite payments HMRC

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PwC buys Paragon to boost consulting arm -Accountancy AgeMore than 90 staff will move across to PwC, with teams based in the UK, Turkey, Singapore, as well as a jointventure in Dubai. Around 40 staff have joined in the UK.

PwC head of consulting Ashley Unwin said the deal would enable the firm to provide CPM services beyond justadvice, but through to implementation of systems.

"We are delighted to announce the acquisition of Paragon Consulting Group. Paragon is a leader in corporateperformance management technology and this acquisition is an excellent strategic fit with our consulting business," saidUnwin

We are delighted to announce the acquisition of Paragon Consulting Group. Paragon is a leader in corporateperformance management technology and this acquisition is an excellent strategic fit with our consulting business.

Follow us on Twitter »Readability version 0.4

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Microsoft CFO to leave, look for bigger job |ReutersBy Bill Rigby

NEW YORK (Reuters) - Microsoft Corp's Chief Financial Officer Chris Liddell is to leave the company at the endof the year, indicating that he is looking for a bigger job at another company.

Liddell, 51, has been CFO at the world's largest software company since May 2005, after joining from paper andpackaging maker International Paper Co, where he was also CFO.

The New Zealander, who has a masters degree in philosophy and does triathlons in his spare time, is now "looking ata number of opportunities that will expand his career beyond being a CFO," according to Microsoft.

Before coming to the United States, Liddell was CEO of New Zealand forest products company Carter Holt HarveyLtd, and also worked as an investment banker.

He will be succeeded as Microsoft CFO by Peter Klein, who is currently CFO of Microsoft's Business Division,which makes the highly profitable Office suite of programs.

Microsoft shares fell 21 cents in after-hours trading to $29.74.

(Reporting by Bill Rigby; editing by Carol Bishopric and Gunna Dickson)


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Grant Thornton slips further behind the Big Four -Times OnlineGrant Thornton, Britain’s fifth-largest accounting firm, disclosed a 4 per cent fall in full-year revenue to £378 millionyesterday as profit per partner slumped by 19 per cent to £201,000.

Scott Barnes, the firm’s chief executive, said that its performance was solid in light of the financial crisis, although itcontinued to lose ground on larger accountancy rivals, such as Deloitte, KPMG and Ernst & Young.

That will come as a blow to many in the market who had hoped that Grant Thornton and BDO, its closest competitorby size, would challenge the dominance of the “Big Four”, also including PricewaterhouseCoopers, in the auditmarket.

Mr Barnes said: “Overall, our performance has been encouraging and provides a sound base for future growth.”

Two years ago, before the global financial crisis began, Mr Barnes’ predecessor laid out ambitious plans to increasethe firm’s revenues to more than £500 million by 2011, yet since taking the helm at Grant Thornton in January, MrBarnes, a corporate recovery expert, has spent much of his time making cuts.

About 200 rank-and-file staff and 50 partners were let go this year, while a further 150 employees were movedinternally. Mr Barnes said that the shake-up was necessary because the firm had been left bloated after a merger withRSM Robson Rhodes, then Britain’s twelfth-biggest accounting firm, in July 2007.

“We ran into the recession with too much cost,” he said. “With hindsight, we probably should’ve moved towardrationalising that at an earlier stage.”

Despite the timing of the merger, Mr Barnes pointed out that it was a good move as it boosted the firm’s presence inLondon and strengthened its forensic and financial services practices. “Ask our partners and 99 per cent will say itwas strategically the right thing to do,” he said. “I don’t actually think we’ve seen the benefits of the merger yet andwe will over the next two to three years.”

Unlike most of its competitors, Grant Thornton has expanded its audit practice, increasing fees by 3.4 per cent to£121 million. Mr Barnes said the firm had raised its share of the market by targeting big private companies andsmaller listed ones.

Grant Thornton audits 277 listed clients, according to Hemscott, which places it fourth among City accountants,ahead of Ernst & Young, although the Big Four has maintained its stranglehold on larger clients.

Grant Thornton had double-digit growth in its corporate recovery and forensic businesses, which generated fees of£75 million and £17 million, respectively. But its corporate finance practice — which specialises in deals worth up to£50 million — was badly hit by the downturn, falling 33 per cent to £44 million.

Mr Barnes expected deal activity to pick up towards the end of next year and restructuring and insolvency to remainbusy for at least the next two years. Profits will pick up again in 2010, he said. The firm is aiming to double profit per

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partner to around £400,000 within three years. Mr Barnes said that the firm planned to increase the number oftrainee accountants it hires next year from 177 to 200.

Last month, BDO reported a 5 per cent slump in full-year revenue to £335 million. Even if the two firms weremerged, they would be only half the size of the smallest Big Four accountancy firm, Ernst & Young, which hadrevenue of £1.4 billion.

Many observers, including the Financial Reporting Council, the accounting watchdog, are concerned that thedominance of the Big Four has restricted competition, particularly in the audit market.

The rumour mill Alex Spence: Analysis

Two years ago, Grant Thornton unveiled ambitious plans to increase revenue to £500 million. It had just acquiredRSM Robson Rhodes and appeared set for rapid growth. There was talk that it could close the distance on Ernst &Young and break the Big Four’s lock on blue-chip audit and advisory work.

That would have been welcomed by regulators, professional bodies and investor groups, which have becomeconcerned in recent years that the dominance of Ernst &Young, Deloitte, KPMG and PricewaterhouseCooperscould be stifling competition.

However, the prospect of Grant Thornton or BDO eroding the gap now seems fanciful. Both firms were hit by thefinancial crisis, with their revenues shrinking. Both have made redundancies and cut partners and are focused now onimproving profits rather than expanding.

So while the Financial Reporting Council is eager to stimulate competition, it seems there is little that can be done.

Announcing its results yesterday, Grant Thornton scotched rumours that it was involved in merger talks with Ernst &Young. Rumours of a tie-up have been rife for several months, but Scott Barnes, chief executive, said they werebaseless: “That’s absolutely not true and I’ve no idea where it comes from.”

Ernst & Young is under pressure to strengthen its UK operations, yet it would have little to gain from acquiring GrantThornton other than adding bulk. And regulators would almost certainly block a takeover by a Big Four member of afirm in the next tier.


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FT.com / Companies / Financial Services - Brusselswarns on accounts rulesBrussels has warned that it will be months before it decides whether to support a radical overhaul of accounting ruleson how banks and other financial institutions value their assets.

Charlie McCreevy, the outgoing internal markets commissioner, has stepped into the debate that rattled the Europeanfinancial industry last week.

The European Commission decided to delay the introduction of controversial accounting rules just as they were madeavailable for use in most of the rest of the world outside the US.

The standards need “to have a complete overview of all aspects”, Mr McCreevy said in a letter to Gerrit Zalm, headof the independent foundation which oversees the International Accounting Standards Board, the internationalrulesetter.

The Commission’s decision not to deploy the rules this year “reflects the changed financial outlook and marketimprovements”, Mr McCreevy added.

Brussels’ decision to ring-fence the bloc from the rules, which focus on controversial fair value or mark-to-marketaccounting, revealed a deep split between European financial institutions over the way the new rules value assets intheir accounts.

It followed a call by the Group of 20 nations for the IASB to fast-track an overhaul of accounting rules after somepolicymakers and banks blamed “fair value” for exacerbating the crisis by providing a snapshot of the value of banksas the markets fell.

Accountants said the reforms would provide greater clarity in determining which bank assets must be marked tomarket.

But analysts say some French, German and Italian banks with large investment banking activities would be hitdisproportionately by the changes, forcing them to book losses on large holdings of derivatives. Supporters of therules, including HSBC chief financial officer Douglas Flint, have said European banks are now at a “competitivedisadvantage” to peers outside the EU.

In the letter, dated November 19, Mr McCreevy said introduction of so-called IFRS 9 financial standard would beconsidered when the IASB had published the full standard, including rules on hedge accounting and liabilities, which isdue in late 2010.

He emphasised that Brussels remained committed to a single set of global standards and said the EU supported theIASB’s simplified approach of measuring assets in two ways – “fair value” and “cost” – down from four previously.

Sources familiar with discussions in Brussels say some of those people involved were concerned that the delay wouldprovide an opportunity for the US standard-setter to push “full fair value” as the best model for international

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Ex-Parmalat auditors settle US investor lawsuit |Markets | US Markets | Reuters* Deloitte to pay $8.5 mln, Grant Thornton $6.5 mln

* Auditors accused of aiding multi-billion-dollar fraud

By Jonathan Stempel

NEW YORK, Nov 19 (Reuters) - Two former auditors of Parmalat SpA (PLT.MI: Quote, Profile, Research)agreed to pay $15 million to settle a class-action lawsuit by U.S. equity investors over their roles in the Italian dairycompany's 2003 collapse.

Deloitte Touche Tohmatsu will pay $8.5 million and Grant Thornton International will pay $6.5 million to settle,documents filed Thursday with in Manhattan federal court show.

The case was brought by several funds on behalf of thousands of investors who said they lost money from Parmalat'smulti-billion-dollar fraud.

"It is very rare that worldwide coordinating audit networks enter into settlements like what we have," said JamesSabella, a lawyer at Grant & Eisenhofer PA in New York representing the investors, in an interview.

Lead plaintiffs include Hermes Focus Asset Management Europe Ltd, Cattolica Partecipazioni SpA, Capital &Finance Asset Management, Societe Moderne des Terrassements Parisiens and Solotrat, court documents show.

Deloitte and Grant Thornton did not immediately return calls seeking comment. Continued...


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OFT delves into insolvency market - AccountancyAgeThe report is aimed at looking into fee levels and recovery rates, following concerns about what’s returned tocreditors and how much an insolvency job has cost.

The main protagonists have issued fairly bland, straight-up responses to the announcement from the OFT but there isa feeling that some of the bigger players outside the Big Four could be more welcome of an investigation than the bigguys.

Ric Traynor, executive chairman of Begbies Traynor Group, said: “The group believes that the majority of the marketoperates effectively and competitively but would support any opening up of the market to competition for largerinsolvencies.”

If it is found that the largest firms charge too much for the returns they secure, the endgame could be bigger, morelucrative work for the next tier. But it is more likely that the OFT will also look at broader issues, beyond how the BigFour operates.


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Accountancy MagazineThe financial watchdog is to have its own accounts scrutinised, with the appointment of the National Audit Office asits auditor.

In a Hansard recorded statement on 22 October, MP Sarah McCarthy-Fry said: ‘The NAO has a valuable role toplay in delivering transparency and accountability, so I am pleased to announce today that the Financial ServicesAuthority has decided to appoint the Controller and Auditor General as its financial auditor from the nest financialyear, 2010-11’.

She added that will enable the Public Accounts Committee to receive and investigate reports into aspects of theeconomy, efficiency and effectiveness of the FSA’s performance.

The move has been welcomed by the Association of Independent Financial Advisers.

‘With a budget that has rocketed to nearly half a billion pounds (£437m) a year, it’s critical that the FSA is held toaccount,’ said director general of AIFA Chris Cummings. ‘We have always said that, as a statutory body, the FSAmust be more transparent and clearly demonstrate value for money. The appointment of the NAO ensures that thePAC can fully scrutinise FSA’s performance on a regular basis.’


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Congress Waters Down FASB-Oversight Plan - -CFO.comLawmakers have backed away from a proposal that would have weakened the Securities and ExchangeCommission's oversight of accounting standard-setters.

Reps. Ed Perlmutter (D-Colo.) and Frank Lucas (R-Okla.) introduced a bill earlier this year that would have createda new body to oversee the Financial Accounting Standards Board. It would have comprised the TreasuryDepartment, Federal Reserve, and Federal Deposit Insurance Corp., as well as the SEC.

The bill never gained traction amid criticism from accounting firms and investor advocates who feared it would allowthe proposed Financial Services Oversight Council an unacceptable degree of influence over accounting rules. In itsplace, Perlmutter and Lucas proposed an amendment to the Financial Stability Improvement Act that would formallyrequire council regulators, including the SEC, to review and comment on current and proposed accounting rules. Thatrepresented a significant dilution of the congressmen's original intent, since FASB, under its current standard-settingprocess, regularly collects input on its proposals from the various affected parties.

On Friday the amendment passed by voice vote in the House Financial Services Committee, which has yet to vote onthe entire financial-stability bill. That legislation is still in the early stages as the Senate continues to work on its ownversion of how to reform the U.S. financial-regulatory system. The one-sentence, four-line amendment calls forregulatory bodies to advise the SEC on its oversight but does not give them final authority over the commission.

The SEC currently has sole authority over FASB, which it has designated as the main U.S. accounting standard-setting organization. The SEC also approves FASB's budget and frequently provides input on the board's activities.Trade groups that opposed the new regulatory council included the Council of Institutional Investors, the Center forAudit Quality, the U.S. Chamber of Commerce, and Financial Executives International, as well as former SECchairmen and one current SEC commissioner.

Trade associations that had been in favor of weakening the SEC's authority in this regard voiced support for theamendment. The American Bankers Assn., which has been very critical of fair-value accounting rules in the past year,said the change would retain FASB's authority for developing rules, as well as the SEC's oversight over thosestandard-setting activities. "The Perlmutter-Lucas amendment will empower the Council to work with the SEC tomitigate concerns over accounting standards that pose systemic risk and threaten the stability of the United Statesfinancial system," said ABA president and CEO Edward Yingling in a statement.

Congress is still finding other ways to add scrutiny to FASB's rules. Also recently added to the Financial StabilityImprovement Act was an amendment that would require the standard-setter to study the effects of new rules knownas FAS 166 and FAS 167, which go into effect in January and change the way banks and other financial institutionswill account for securitizations and special-purpose entities. Banks are wary of the rules, which will change how theydefine their control over financial assets and liabilities and force them to consolidate some of their off-balance-sheettransactions back onto their financial statements.

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FT.com / Companies / Financial Services - Madoffliquidator seeks fees of $22.1mBernard Madoff’s bankruptcy trustee and his law firm have asked a federal judge to approve more than $22.1m infees for five months of work trying to recover money for the victims of the fraudster’s $65bn Ponzi scheme.

Irving Picard is the court-appointed trustee liquidating Mr Madoff’s former business on behalf of Securities InvestorProtection Corporation, the non-government agency that helps customers of failed brokerages.

He was appointed in mid-December, just days after Mr Madoff was arrested. If the latest fee requests are approved,the total combined bill for Mr Picard and his law firm, Baker & Hostetler, since then would amount to more than$37.5m.

“No single document could comprehensively set forth all of the tasks engaged in by the trustee since hisappointment,” Mr Picard said in a court filing on Monday, as he requested fees for work from May to the end ofSeptember.

Mr Picard said the process required “intensive investigation” and involved hundreds of subpoenas. He has filed 14lawsuits seeking more than $14.8bn from “feeder funds” and others. He is involved in litigation in Europe, Gibraltarand throughout the Caribbean.

In court documents from Monday, Baker & Hostetler, where Mr Picard is a partner, said it was seeking $21.28m infees and $280,682 to cover expenses for acting as counsel to Mr Picard from May to September. Mr Picard isseeking $835,605 in fees and $921 in expenses for his work as trustee.

Mr Picard said that he had spent 385 hours reviewing claims, 124 hours investigating the Madoff business, 68 hoursworking on lawsuits and 92 hours responding to press enquiries, among other things. The law firm was previouslygranted about $14.6m and Mr Picard $759,229 in fees for their work from mid-December to April.

The fees include a 10 per cent “public interest discount” from the firm’s normal rates. Other firms working with Baker& Hostetler, including law firms and forensic accountancy groups, are together seeking more than $2.6m in fees.They have also accepted a discount from regular billing rates.

Mr Picard has so far recovered about $1.4bn on behalf of Mr Madoff’s victims. As of November 19, he hadcommitted to paying out about $554m. The claims that he has allowed amount to more than $4.6bn. A hearing on thefees is expected to be held next month.


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Stakeholders turn to non-audited company infoNon-audited info proving attractive to stakeholders, as reporting complexities turn away investors

Written by Kevin ReedAccountancy Age, 24 Nov 2009


Financial stakeholders are increasingly using non-audited sources of information to get a betterpicture of company performance.

The financial communication challenge, a report produced by Tapestry Networks for Ernst &Young, found that financial reporting complexities and continuing volatility in the economy meantstakeholders were turning to managements’ analysis of company performance and forecasts, inaddition to key operational performance metrics, to help them better understand companyperformances.

John Flaherty, head of assurance, UK& Ireland, at Ernst & Young, said:“Financial stakeholders now want acomplete overview of companyperformance. Audited financialstatements remain highly importantbut this latest research demonstratesthe need for businesses to implementa new level of communication if trust isto be restored in financial statements.This could help to bridge the mistrustcreated by the financial crisis.”

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Two-thirds of firms in SA report fraud

Pressure to reach targets during downturn may be driving force

SANCHIA TEMKIN

Professional Services Editor

NEARLY two in three companies in SA reported falling victim to economic crime during the past 12 months,according to a new report released yesterday by PricewaterhouseCoopers.

"The global economic downturn has heightened the pressures and incentives to commit fraud," said Louis Strydom,head of PwC's forensics practice in SA. "Economic crime is pervasive, persistent and pernicious. No organisationand no industry is immune from the threat of fraud," he said.

"In these tough times, the temptation to inflate results or take part in other forms of financial statement fraud mayovercome ethical values.

"In an economic downturn, financial targets are more difficult to achieve, individuals may feel pressured, and theirpersonal financial position may be threatened by reductions in pay or layoffs."

The study of more than 3000 companies in 54 countries was carried out by PwC with INSEAD business school inJuly and August.

The study found that 62% of companies had experienced some form of economic crime during the period. Globally,financial statement fraud was found to be the fastest-growing form of economic crime and had more than tripled since2003. However, in SA it had decreased from 45% in 2005, to 39%.

Strydom said one of the reasons could be the focus of the auditing profession on accounting fraud and its outcome.

Strydom said it was not surprising that the most significant category of economic crime continued to be assetmisappropriation (82%). It was usually the easiest to detect since it involved theft of items with a clear value, Strydomsaid.

Other economic crimes reported by companies included bribery and corruption (59%), financial statement fraud(39%), money laundering (10%) and tax fraud (3%).

The study found evidence that the economic downturn had helped to drive the incidence of fraud. The majority ofcompanies (78%) said their companies faced greater risk of economic crime in the downturn.

Of those companies that identified underlying business pressures or incentives as the main reason for the risingincidence of fraud, 54% said difficulty in achieving business targets was a motivating factor for fraud during therecession.

Countries reporting high levels of economic crime included SA (62%), Russia (71%), Canada (56%) and Kenya(57%).

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SA's high rate could be attributed to the country finally uncovering and detecting white-collar crime and companiesreporting matters to the authorities, said Strydom.

Despite the high levels of fraud reported, it could not be discounted that further incidents had gone undetected.

For instance, there had been a reduction in the number of staff members deployed on internal controls as a result ofthe economic downturn.

In 2007, 20% of companies in SA reported that internal audit was the means by which economic crime wasdetected.

This year, only 5% referred to internal audit. Strydom said this could be attributed to "increasing pressure beingplaced on internal audit and the downsizing of teams".

The study also found that the profile of the internal fraudster was changing.

Crimes committed by middle managers rose, accounting for 29% of all internal frauds, up from 22% in 2007.

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Home > News > Corporate Taxation

HMRC could face damages over 'thin cap' rulesTaxman is first case of paying damages

Written by Santhie GoundarAccountancy Age, 24 Nov 2009


A High Court ruling in a case against the taxman by global businesses including Siemans, Volvoand IBM, could see HM Revenue & Customs lose hundreds of millions of pounds in damages,leading accountants have said.

The ruling is thought to be among the few – possibly even the first – corporation tax cases whereHMRC is held as potentially liable in damages. This would mean that HMRC may have tocompensate litigants in advisers’ fees as well as paying back taxes.

Known as the Thin Cap GroupLitigation Order, the case sawcompanies claim damages andrestitution for the extra corporation taxpaid as a result of interest charged oninter-company loans.

Peter Cussons, head of EU direct taxgroup at PricewaterhouseCoopers,commented, “A claim for restitutionsimply rules that the additional taxpaid is unlawful, and HMRC wouldhave to pay it back.

“However a claim for damages is amore far-reaching remedy. It couldpotentially include interest on tax paid,foreign tax paid and legal fees.”

The ruling applies only to tax chargedon interest paid before the rules werechanged on 1 April 2004.

There is some slight consolation for the taxman though: the High Court judge ruled that the rulingwould only apply to transactions that occurred before that date, but after another key court rulingin December 2002.

However Chris Morgan, head of international corporate tax at KPMG, warned: “The six-year time-limit rule for claiming for damages or restitution still applies. Anyone who has not made a claimbefore December 2008 has lost their right to claim. There might be a possibility to make an ‘erroror mistake’ claim through prior years’ tax returns, but these would be subject to EU rules.”

A spokesperson for HMRC said they were considering the decision before deciding whether or notto appeal.

The thin cap conflict revolves around a disagreement over tax charged on the interest made frominter-company loans.

Problems arose when loans came from EU-based parent companies to a UK subsidiary. HMRCwas said to have not treated EU parent companies fairly.

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IFAC Presses for Action to Adopt and ImplementGlobal Financial Standards(Washington, D.C./November 19, 2009) - The International Federation of Accountants' (IFAC) 32nd annualCouncil meeting in Washington, D.C., this week emphasized the urgency of achieving global adoption andimplementation of financial standards, especially for accounting and auditing.

Robert L. Bunting, IFAC President, says, "There is no high-quality information without the work of accountants--andcertainly no way forward from the global financial crisis without it. What we need is a level playing field in financialreporting. What we do not need is trans-Atlantic accounting arbitrage and political interference in the technicalaspects of standard setting. Governments, standard setters, and the accounting profession need to collaborate closelyif common high-quality standards in accounting and auditing are to be established, adopted, and well implemented.And that includes accounting standards for governments, many of which have become major investors in the privatesector during the crisis."

IFAC's Chief Executive Officer, Ian Ball, adds that IFAC's work in delivering this message to its members and theirgovernments is increasingly important. "We have expressed the importance of global accounting and auditingstandards to the G-20 twice this year--before the Leaders' Summits in London and Pittsburgh--and believe that nowis the time for action at the country level if we are to achieve what was agreed by the G-20."

These messages were reiterated frequently in workshops and seminars during IFAC's two-day event, hosted by theAmerican Institute of Certified Public Accountants.

The Council's formal deliberations included approval of IFAC's strategic actions for the coming year, which include:

continuing development of auditing, ethical, accounting education, and public sector accounting standards thatmeet the public interest;promoting the adoption and implementation of these standards;exercising IFAC's voice for the global accountancy profession, including input to the G-20 and other keyinternational organizations; andaddressing the needs of small- and medium-sized entities (SMEs) and seeking to avoid excessive regulatoryburdens being placed on this critical economic sector.

The Council approved three new member bodies: Iranian Association of Certified Public Accountants (IACPA);Latvian Association of Certified Auditors (LACA); and Society of Certified Accountant and Auditors of Kosovo(SCAAK).

In addition, two associates were approved: Brunei Darussalam Institute of Certified Public Accountants (BICPA);and Ordre des Experts-Comptables du Luxembourg (OEC). The Council also gave affiliate status to the NationalAssociation of State Boards of Accountancy (NASBA) from the United States.

About IFACIFAC (www.ifac.org) is the global organization for the accountancy profession dedicated to serving the publicinterest by strengthening the profession and contributing to the development of strong international economies. IFAC

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http://www.ifac.org

is comprised of 159 members and associates in 124 countries and jurisdictions, representing more than 2.5 millionaccountants in public practice, education, government service, industry, and commerce.


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SEC Speech: Lessons from the Financial Crisis forFinancial Reporting, Standard Setting and RuleMaking (Commissioner Kathleen L. Casey;November 17, 2009)

by

U.S. Securities and Exchange Commission

Financial Executives International's 28th Annual Current Financial Reporting Issues ConferenceNew York, New YorkNovember 17, 2009

Thank you so much, Ken, for that kind introduction. I am pleased to join you today at this important conference,focused on some of the most important issues in financial reporting facing issuers this reporting season, as well asdevelopments that will continue to affect issuers in upcoming years.

Before I continue, I need to make the standard disclaimer that my remarks today represent my own views, and notnecessarily those of the SEC or my fellow Commissioners.

While financial reporting issues can be daunting even in the most benign market and regulatory environments, it is fair tosay that the recent financial crisis has posed nearly unprecedented challenges for us all. As regulators, we have beenchallenged to analyze, understand and develop timely and measured responses to market conditions as the crisis hasunfolded. As issuers, you have been challenged to keep up with, and comply with, regulatory responses and evolvingaccounting standards arising out of the financial crisis, while at the same time contending with operational and liquidityissues that attended a deteriorating economy and a crisis of confidence in the financial markets.

Although we have begun to emerge from the financial crisis, there are many lessons yet to be learned from it. The key,of course, is to draw the right lessons. And this is no small feat. There remain marked differences in view with respect towhat went wrong during the crisis, what problems need to be fixed and how to fix them. Indeed, as we meet today,Congress continues to deliberate fundamental changes to the regulation and operation of our financial system andmarkets. The stated objective of this reform is to promote greater market resilience and financial stability. Insofar asthese reforms implicate the quality, integrity and transparency of financial reporting, the outcome of this debate will havepotentially far-reaching implications for the jobs that you do.

This afternoon, then, I would like to focus on three of the key lessons that I think we can take away from the crisis, andthat should both inform policy makers' efforts at reform and caution against legislative and regulatory responses thatwould undermine the efficient functioning of our markets:

First, financial stability depends upon market confidence; and investor confidence, in turn, depends upon the

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transparency of financial statements.

Second, financial reporting and accounting standard setting must remain focused on the needs of investors. Whilethere are many other important stakeholders that rely on financial statement reporting, investors' interests mustremain paramount.

Third, financial reporting must remain relevant and informative to investors, and should not impose unnecessary orcostly burdens that do not add to investor understanding.

Lesson 1: Accounting Standards Must Promote TransparencyIt cannot be gainsaid that financial stability requires market confidence, and investor confidence depends upontransparent financial statements.

The fundamental purpose of financial statements is to inform current and prospective investors about an issuer'sperformance and financial condition, enabling investors to make well-informed decisions. As a result, transparentfinancial statements are the cornerstone of efficient capital markets. Conversely, if financial statements are opaque,investors are forced either to make poorly informed investment decisions or to keep their money on the sidelines,leading to stunted and inefficient markets.

Moreover, efficiency is essential for the stability of our financial markets. When, however, information in financialstatements turns out to be less than transparent and capital markets become inefficient, there is the potential forinstability.

Financial Reporting during the Financial Crisis

During the financial crisis, our financial reporting standards — particularly those relating to "mark-to-market" accounting— came under tremendous pressure, with respect to both the transparency of financial statements under existingaccounting standards and the clarity of related disclosures.

It has been said that, "Amid the pressure of great events, a general principle gives no help." So, too, we saw theprinciples underlying mark-to-market accounting tested during the financial crisis as issuers dealt with the considerablepressures caused by inactive markets and illiquid securities.

Recognizing the need for clear direction to the markets, in 2008 the Division of Corporation Finance issued guidance onfair value measurements and other disclosure issues that preparers should consider in preparing their periodic filings. InSeptember 2008, the Office of Chief Accountant, in coordination with the staff of the FASB, jointly issued a releaseproviding clarifications on the determination of fair value under FAS 157 that were proving to be particularly challengingduring the prevailing environment. Shortly thereafter, the FASB finalized authoritative guidance relating to the applicationof fair value accounting in inactive markets. And in April 2009, the FASB further refined its guidance on fair valueaccounting by addressing the valuation of assets where there has been a significant decrease in the volume and level ofmarket activity for the asset when compared with normal market activity, and by enhancing the disclosures regarding fairvalue accounting.

Beyond these immediate regulatory measures that the Commission took on its own initiative, Congress also directed theSEC to review and study the use and effects of fair value accounting standards. The Emergency Economic Stabilization


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Act included among its provisions a requirement that the SEC conduct a study of mark-to-market accounting, inconsultation with the Secretary of the Treasury and the Board of Governors of the Federal Reserve System.

In late December, the SEC delivered the mandated report. While recommending against the suspension of fair valueaccounting standards, the report offered several important recommendations, such as developing additional guidance fordetermining the fair value of investments when markets are inactive and market prices are thus not readily available. Thereport also recommended enhancing existing disclosure and presentation requirements related to the effect of fair valuein financial statements.

Among its key findings, the report noted that investors generally believe that fair value accounting increases financialreporting transparency and facilitates better investment decision making. The report also observed that fair valueaccounting did not appear to play a meaningful role in the U.S. bank failures that began to occur in 2008. Rather, thereport indicated that these early failures appeared to be the result of growing probable credit losses, concerns aboutasset quality, and, in certain cases, eroding lender and investor confidence. Although the report did not examine themuch greater number of bank failures that occurred in 2009, I have no reason to think that the conclusion would bedifferent.

Further, the report identified existing accounting standards for recording impairments as one of the most significant areasneeding improvement. The report recommended that accounting standard setters consider, among other things,evaluating alternative reporting standards that would have the potential to provide investors with both current fair valueinformation, on one hand, and transparent information regarding the cash flows that management expects to receive byholding investments to maturity, on the other.

Finally, the report highlighted a number of important recommendations of the SEC's Advisory Committee onImprovements to Financial Reporting ("CIFiR"). For example, the report pointed out that the use of judgment inaccounting and auditing has increased due to the focus on more objectives-based standards (such as FAS 157) andrecommended that the SEC and the PCAOB consider a CIFiR recommendation to adopt a policy statement related tothe application of judgment in accounting and auditing.

I believe that the fair value report has been, and will continue to be, a useful source of information and guidance not onlyfor the Commission, but also for policymakers in Congress and independent standard setters as they continue toconsider these important issues.

The second key lesson is the importance of remaining focused on investor needs in financial reporting and accountingstandard setting. In keeping with this precept, accounting standard setters should strive to promote transparency forinvestors above all. While the interests and preferences of other stakeholders are clearly important considerations in thestandard setting process, where those interests conflict with the needs of investors, investors' interests must prevail.

In many instances, the interests of investors and the interests of other users of financial statements, particularly prudentialregulators, are aligned. A primary example is loan loss provisioning. In March, the Financial Stability Board's WorkingGroup on Provisioning, which I co-chaired with Comptroller of the Currency John Dugan, issued a report "assessing thecontribution of loan loss provisioning practices to procyclicality and whether changes in existing loan loss provisioningaccounting standards could reduce procyclicality . . . while still meeting the needs of investors for transparency."

By way of background, the theory that provisioning practices may contribute to procyclicality is as follows:

U.S. economic data suggest that, during an economic downturn, provisions increase as a percentage of loan


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volume;

Increased provisions lower accounting measures of profits and retained earnings. These measures typically serveas the starting point for determining regulatory measures of capital adequacy, and certainly affect the market'sappraisal of the soundness of an institution;

An institution's remedial steps to address these issues might include reducing lending;

On a macro-level, reduced lending would negatively affect the economy;

Conversely, in periods of economic growth, provisioning practices may have the procyclical effect of "stoking"the economy.

It is possible that, by recognizing loan losses earlier in the credit cycle, procyclicality may be reduced. For instance, inthe recent financial crisis, large provisions were recognized at the same time that operating revenues for financial firmswere declining, resulting in a more dramatic incremental decrease in the determination of profit or loss for a financialinstitution. This decrease had the effect of decreasing firms' regulatory capital, at a time when the environment for raisingadditional capital was very difficult. The Working Group's report contained several recommendations aimed atimproving the information provided to investors, including a recommendation that standard setters "reconsider theincurred loss model by analyzing alternative approaches for recognizing and measuring loan losses that incorporate abroader range of available credit information." This recommendation and other recommendations in the report, ifimplemented, would not only serve to increase transparency for investors, but would also serve the regulatory purposeof potentially reducing procyclicality.

Although the interests of investors and the interests of other users of financial statements are often aligned, they may notbe aligned in all instances. When they do not align, it would be a mistake to promote accounting standards that wouldmake financial statements less transparent for investors. An example of such a disconnect occurred in the early 1980s,when accounting policies relating to "supervisory goodwill" were put in place to achieve the regulatory purpose ofincentivizing healthier thrifts to acquire thrifts that had failed largely as a result of a spike in interest rates that led to arapid reduction in the value of their holdings of single-family fixed-rate mortgages. The creation of supervisory goodwillallowed the acquiring thrifts to increase their reported profits and regulatory capital even though the supervisory goodwillhad little economic significance. When these accounting policies were later rapidly phased out after Congress passedFIRREA in 1989, which mandated the adoption of GAAP to replace Regulatory Accounting Principles, a significantnumber of institutions were revealed to be significantly undercapitalized, and many of these institutions subsequentlyfailed in the early 1990s.

Standard Setting Process

Thus, the goal of standard setting must be to develop high-quality and unbiased accounting standards that promotetransparency and that are, in turn, viewed as credible by our markets. If, however, the standard setting process issubject to undue commercial or political pressure, market participants may lose confidence in the financial informationreported by firms. But while accounting standard setters must be independent, they must also be held accountable. Thestandard setting process is a delicate balancing act that highlights the importance of the Commission's oversight function.The Commission strives to ensure that this process is not compromised by inappropriate pressure and, at the same time,that the process produces high quality standards that elicit information meeting the needs of investors and other users.

The standard setting process is designed to ensure that standard setters hear and consider differing points of view on


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difficult accounting issues expressed by a wide array of stakeholders. In the context of fair value, for instance, thestandard setting process has been informed and improved by the public debate among prudential regulators, investors,issuers, academics, and other policymakers and market participants in support of, or opposing, mark-to-marketaccounting.

When politicians and others fail to make principled arguments, however, and instead threaten or otherwise bring unduepressure to bear on standard setters in an effort to achieve political or other ends — such as to gain advantage forcompanies domiciled in certain jurisdictions — we subjugate the interests of investors to these ends and risk sacrificingtransparency in financial reporting. Even perceived lapses in standard setters' due process can be damaging and serve toundermine efforts to achieve high-quality accounting standards.

IFRS Roadmap and Convergence

As I have already noted, the objective of financial reporting is to provide decision-useful information to investors toenable them to make judgments across a wide variety of investment opportunities. In our global markets, however,investment opportunities are not limited to U.S. companies. As a result, accounting standards that provide investors withhighly comparable, decision-useful information about businesses without regard to their domicile will facilitate well-informed capital allocation decisions among investment opportunities across the globe, leading to continuedimprovements in the efficiency of the global capital markets.

For many years, the Commission has supported and led efforts to develop a single set of high quality accountingstandards to support this need of investors for information on companies worldwide. As you know, consistent with theCommission's 2005 roadmap, in 2007 the Commission eliminated the requirement that foreign private issuers that file inIFRS, as issued by the International Accounting Standards Board (or IASB), reconcile their financial statements to U.S.GAAP. The question now before the Commission is the extent to which the use of IFRS should be permitted ormandated for U.S. issuers.

This goal of providing investors with comparable information about businesses worldwide is the animating principlebehind the Roadmap for the Potential Use of Financial Statements Prepared in Accordance with IFRS by U.S. Issuers,which the Commission published in November 2008 (the "Roadmap"). Our consideration of the Roadmap, and thedialogue on global accounting standards, is ongoing. We received over 200 comment letters on the Roadmap from awide array of stakeholders, and your thoughtful comments are extremely helpful.

As the number of U.S. investors with holdings of securities of non-U.S. companies continues to increase, theCommission and the FASB would be remiss and would fail the needs of investors if we did not continue to support thedevelopment of a single set of high quality global accounting standards. The desirability of convergence on certain keyaccounting standards — particularly those related to financial instruments and other areas relevant to the credit crisis —has been highlighted in a number of forums, including the March 2009 communiqué of the G-20 finance ministers, theDepartment of Treasury's June 2009 Regulatory Reform report and the July 2009 Report of the Financial CrisisAdvisory Group. The Commission strongly supports the continued convergence efforts of FASB and IASB. Theexisting convergence targets of these two standard setters pursuant to their 2006 MoU, as updated in September 2008,set the goal of completing several major joint projects by 2011. And less than two weeks ago, the FASB and IASBissued a joint statement reaffirming their commitment to achieving convergence of IFRS and U.S. GAAP, andannouncing plans to intensify their efforts to complete the major joint projects described in the MoU.

Going forward, it is crucial that the United States continue to play a leadership role in the support and development of a


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single set of high quality global accounting standards. It is also my hope and expectation that the Commission will soonarticulate the next steps to be taken with respect to the use of IFRS by U.S. issuers — further signaling our commitmentto this important goal.

Commission Actions Relating to Disclosure

In addition to the Commission's recent efforts relating to the quality, clarity and transparency of accounting standardsand related disclosures, this past summer, the Commission proposed new rules affecting the Compensation Discussionand Analysis section of issuers' proxy statements. These rules would require issuers to include a discussion and analysisin the CD&A about how the company rewards and incentivizes its employees to the extent that their compensationpolicies and practices create risks to the company. The proposed rules relate to compensation policies and practices foremployees generally — not merely those relating to the named executive officers — if risks arising from those policies orpractices may have a material impact on the company.

It is important to understand this proposal in the context in which it was offered. One of the myriad factors that havebeen cited as possible contributors to the financial crisis was the failure by some large financial institutions to appreciatethe risk-taking incentives created by certain compensation policies and structures, and to manage these risks effectivelyacross the firm as a whole.

Although commentators, the Commission and other policymakers do not contend that compensation policies of allpublic companies raise these same concerns or contributed meaningfully to the financial crisis, the Commissionrecognized that, at individual firms, it is possible that compensation policies and practices, and their relationship to afirm's risk management function, can be significant to investors in those firms. Once again, your comments relating to theproposed new CD&A requirements have been thoughtful and helpful, and will help to shape any final rules that weultimately adopt.

Lesson 3: Financial Reporting Must Remain RelevantNevertheless, it is important that the Commission not forget that the goal of our disclosure rules must always be toprovide investors with material information to facilitate their capital allocation decisions. We cannot allow our disclosurerules to become a means of advancing political or social agendas, which leads me to the third lesson: financial reportingmust remain relevant and informative to investors, and should not impose unnecessary or costly burdens that do not addto investor understanding.

For example, there has recently been some discussion of the Commission's disclosure requirements relating to "climatechange," including the possibility that the Commission will issue interpretive guidance in this area. My governing principlein determining whether to support any such guidance, as with my analysis of any other rules or guidance, will be that itmust be driven by investor needs and designed to elicit decision-useful information for investors, rather than advancingan agenda unrelated to investor protection.

Financial statements and disclosures are, by their nature, long, dense, and potentially overwhelming. Our challenge inadopting new disclosure requirements is to make the new disclosure useful and informative. If we are not successful inmaking this disclosure relevant to investors — for instance, if disclosure becomes unwieldy, confusing, or boilerplate (asis too often the case) — we will have only succeeded in making an already long and cumbersome document evendenser, rather than better.


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Financial Reporting Innovations

One way that the Commission can make disclosure and financial information more useful, and thus relevant, to investorsis to make it more accessible. Innovations in financial reporting, such as the use of interactive data, are helping theCommission to make important strides towards this end.

In January, the Commission adopted rules requiring that issuers provide their financial statements to the Commission andon their corporate Web sites in interactive data format using XBRL. From our receipt of the first mandatory filing usingXBRL in July 2009 through the end of October 2009, 448 companies had filed reports in XBRL under the new rule,including 32 smaller companies that were not yet required to file using XBRL.

The second phase of the rule, which will go into effect in July 2010, will require that approximately 1,500 morecompanies file using XBRL. In addition, the first group of filers will, for the first time, be required to file detailed datafrom financial statement footnotes in XBRL.

These rules show great promise and I continue to be encouraged by our good progress. Nevertheless, the Commissionmust remain vigilant and responsive in ensuring that any requirements that we impose on issuers accomplish theirobjectives.

In conclusion, as we emerge from a period of tremendous turmoil and instability in our capital markets, it is moreimportant now than ever that our laws, regulations and accounting standards promote transparent financial statementsand decision-useful disclosure for the benefit of investors, in order to facilitate well-informed investment decisions. Allstakeholders have a part to play in achieving this goal, from policy makers, including the Commission, the otherexecutive agencies, the accounting standard setting boards, and Congress, to commentators, who help to inform policydebates and ensure that policies are based on a rigorous evaluation of their merits, to you and your auditing firms, whohave the ultimate responsibility of preparing and reviewing the financial reports and disclosure on which investors — andthe global capital markets — depend. So long as we maintain a common understanding that investors must always beour primary focus, I believe our markets can emerge from the recent tumultuous period stronger and better positioned toachieve the objectives of long-term stability and growth.

I would like to again thank the FEI for inviting me to speak to you today, and I wish you all a safe trip home and awonderful Thanksgiving.

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http://www.sec.gov/news/speech/2009/spch111709klc.htm

HM Revenue & Customs:Strengthening ourrelationship with agents and employersWe know that agents represent some 15 million of our customers and that employers act for some 30 million peoplewho pay tax/National Insurance and claim credits. We really value the contribution that both groups make in helpingus to deliver our service.

We want to work closely with agents and employers to explore how we can improve what we do to our mutualbenefit.

A number of consultative groups already exist and we will work through these, and with agents through localWorking Together groups, as well as looking for other opportunities to discuss ways in which relationships with HMRevenue & Customs (HMRC) can be improved.

To add impetus to our intentions we have set up a new Departmental Programme to bring together the work alreadyin hand and to align activity across HMRC. The key aims of the Programme are to:

Improve service levels for our core services so that agents and employers see a real differenceImprove our relationship with agents and employers locally and nationallyIdentify opportunities for structural and process changes that will deliver long term benefits for agents and forHMRC.

Brian Redford is the Programme Director and will lead the new Agent and Employer Service Improvement Teamwhich will incorporate the HMRC Tax Agents and Advisers Team (TAAT), Working Together (WT) groups andwork within the employer area.

We are keen to hear from agents and employers about the type of changes they would like to see that will lead toservice improvement. We will be seeking opportunities to discuss these at meetings and roadshows. Watch thisspace…


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HM Revenue & Customs: Corporation Tax onChargeable Gains

Corporation Tax on Chargeable GainsOctober 2009The value of the retail price index, as published by the Office for National Statistics, for October 2009 is 216.0(January 1987 = 100).

The indexed rise to be used in calculating the indexation allowance in respect of assets disposed of in October 2009is as follows:

1982 - 19881989 - 19951996 - 20022003 - 2009

1982-1988

1982 1983 1984 1985 1986 1987 1988

January - 1.615 1.487 1.368 1.244 1.160 1.091

February - 1.603 1.477 1.349 1.236 1.151 1.083

March 1.719 1.599 1.469 1.328 1.233 1.147 1.075

April 1.665 1.563 1.437 1.279 1.212 1.122 1.042

May 1.646 1.552 1.428 1.269 1.208 1.120 1.034

June 1.639 1.546 1.421 1.264 1.209 1.120 1.026

July 1.638 1.532 1.424 1.268 1.215 1.122 1.024

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August 1.637 1.521 1.402 1.262 1.208 1.116 1.002

September 1.639 1.510 1.397 1.256 1.197 1.109 0.993

October 1.626 1.501 1.382 1.260 1.194 1.099 0.973

November 1.613 1.492 1.375 1.252 1.175 1.089 0.964

December 1.618 1.486 1.377 1.249 1.168 1.091 0.958

1989 1990 1991 1992 1993 1994 1995

January 0.946 0.808 0.659 0.593 0.566 0.529 0.479

February 0.932 0.797 0.650 0.585 0.556 0.520 0.470

March 0.923 0.779 0.644 0.580 0.551 0.516 0.464

April 0.890 0.727 0.623 0.556 0.536 0.498 0.450

May 0.878 0.712 0.618 0.551 0.531 0.493 0.444

June 0.872 0.705 0.611 0.551 0.532 0.493 0.442

July 0.870 0.703 0.614 0.556 0.535 0.500 0.449

August 0.865 0.686 0.611 0.555 0.529 0.493 0.441

September 0.852 0.665 0.605 0.549 0.522 0.490 0.434

October 0.838 0.658 0.599 0.544 0.523 0.488 0.442


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November 0.823 0.662 0.593 0.546 0.525 0.487 0.442

December 0.818 0.663 0.592 0.552 0.522 0.479 0.433

1996 1997 1998 1999 2000 2001 2002

January 0.438 0.399 0.354 0.322 0.297 0.262 0.246

February 0.431 0.394 0.347 0.319 0.290 0.256 0.243

March 0.426 0.390 0.343 0.316 0.283 0.254 0.238

April 0.415 0.382 0.328 0.308 0.270 0.248 0.229

May 0.413 0.377 0.321 0.304 0.265 0.240 0.226

June 0.412 0.371 0.322 0.304 0.262 0.239 0.226

July 0.417 0.371 0.325 0.308 0.267 0.246 0.228

August 0.411 0.363 0.319 0.305 0.267 0.241 0.224

September 0.404 0.356 0.314 0.300 0.258 0.237 0.216

October 0.404 0.354 0.313 0.297 0.259 0.239 0.214

November 0.404 0.353 0.314 0.296 0.255 0.244 0.212

December 0.399 0.350 0.314 0.291 0.254 0.246 0.210

2003 2004 2005 2006 2007 2008 2009


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January 0.211 0.180 0.143 0.117 0.071 0.030 0.028

February 0.205 0.175 0.139 0.112 0.064 0.022 0.022

March 0.201 0.170 0.134 0.108 0.057 0.018 0.022

April 0.192 0.163 0.127 0.099 0.052 0.009 0.021

May 0.190 0.158 0.125 0.093 0.048 0.004 0.015

June 0.191 0.156 0.124 0.088 0.042 Nil 0.012

July 0.191 0.156 0.124 0.088 0.048 Nil 0.012

August 0.189 0.153 0.121 0.084 0.042 Nil 0.007

September 0.184 0.148 0.119 0.079 0.038 Nil 0.003

October 0.183 0.145 0.117 0.078 0.034 Nil Nil

November 0.182 0.143 0.116 0.074 0.030 Nil

December 0.177 0.137 0.113 0.066 0.024 0.015

The RI month is the month in which the allowable expenditure was incurred, or March 1982 where the expenditurewas incurred on or before 1 March 1982.

The table given is applicable only to bodies within the charge to corporation tax on their chargeable gains.

Tables prior to December 2001 were published as monthly press notices

2009

September 2009August 2009July 2009


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Accounting Standards Board - Press NoticesThe Accounting Standards Board (ASB) has today issued a report ‘The Financial Reporting of Pensions: Feedbackand Redeliberations’. The objective is to provide the International Accounting Standards Board (IASB) withrecommendations on matters it might consider in developing a future financial reporting standard on pensions.

The report is a follow-up to the January 2008 Discussion Paper (DP) ‘The Financial Reporting of Pensions’. It setsout the ASB’s redeliberations and recommendations following the comments received during the consultationprocess. A total of 103 responses were received to the DP and the ASB has spent considerable time in reviewing theissues raised.

The report is being published under the Pro-active Accounting Activities in Europe (PAAinE) initiative by the ASB,the European Financial Reporting Advisory Group (EFRAG), the Accounting Standards Committee of Germany(ASCG) and the French Conseil National de la Comptabilité (CNC). The recommendations are, however, onlythose of the ASB. The other bodies consider the report a useful contribution to the debate on the financial reportingof pensions but do not express a view as to the recommendations.

The report has, in the main, affirmed the views set out in the DP, acknowledging that a number of them cover difficultissues and are controversial. In particular, on the measurement of liabilities, it has affirmed the view that the discountrate used should reflect the time value of money, and therefore should be a risk-free rate. The ASB has reiterated thatit is not possible to make a reliable estimate of the risk arising from the size and variability of the liability to paypension benefits. In its view users of financial statements are better served by disclosures regarding the risk ratherthan through adjustment of the underlying liability.

In addition there is an attempt to clarify the cash flows that should be used in measuring the liability to pay pensions.

The ASB has, however, decided not to affirm its view that the actual return on assets held to fund pension liabilitiesshould be presented separately as financing income in the statement of comprehensive income. Whilst acknowledgingthe conceptual merits of this approach, it took into consideration the views of some respondents, including users offinancial statements, who did not consider the approach useful. The ASB considers that further research is required inthis area.

The report is being sent to the IASB today. Commenting on its publication, Ian Mackintosh, ASB chairman, said:

“When embarking on this project in October 2005 the aim of our research was to stimulate debate and assist in thefurther development of international financial reporting standards for pensions.

The quality and number of responses received to the discussion paper provide evidence that the discussion paperachieved its objective of stimulating debate on the financial reporting of pensions.

This report sets out the ASB’s views following redeliberations and I believe provides the IASB with valuable materialfor consideration in its current short-term project and for the longer term fundamental review of the financial reportingof pensions.”

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HM Revenue & Customs: Customer RelationsManagersLast year we introduced a pilot for Agent Account Managers in Edinburgh and Ipswich as part of our drive toimprove access for tax advisers to HM Revenue & Customs (HMRC) services. We limited the pilots, at least initially,to a relatively small number of agents. As a considerable amount of contact so far has been on Processing issues wehave now appointed Agent Customer Relations Managers (CRMs), to provide the same service on a pilot basis, infour of our largest PAYE and SA Processing locations around the country.

What service does the Agent CRM offer?

The Agent CRM role is not intended to replace existing contact, escalation and complaints processes. We would askyou to continue to do business with us through the usual channels as far as possible. This new service is a point ofcontact for when it is not possible to resolve problems through the usual routes. It is very much a concierge role,helping agents to get the assistance you occasionally need - signposting you to the right part of the Department orwebsite, for example.

Is this service now available to every tax adviser?

No, not yet. In order to manage the service we will be introducing it incrementally.

Who can use this service now?

Some agents in and around Cardiff, Newcastle, Manchester and Glasgow will be able to use this service in the firststaged rollout, based on their postcode. Please check the details below to see if your postcode is included.

For Agents in postcode area CF1 - CF14Customer Relations Manager Adrian Jones 02920 326105

For Agents in postcode area NE1 – NE9Customer Relations Manager Peter Gunn 0191 2396431

For Agents in postcode area M1 – M14Customer Relations Manager Christine Hiscox 0161 261 3761

For Agents in postcode area G1 – G5Customer Relations Manager Bob Gilchrist 01355 275897

The service is available to all agents within these postcodes, irrespective of where their clients’ tax records are held.This approach is consistent with our local Working Together arrangements aimed at strengthening liaison betweenpractitioners and HMRC at a local level.

When can other agents expect to be included?

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If your postcode is not listed, you will not be able to use the service at the outset. However, depending on how thispilot progresses, we hope to roll out the service to many more locations over the next few months – and in Liverpoolvery shortly.

We will review the effectiveness of this approach at the end of March and we’ll be looking for feedback from thoseof you who have been involved and used the service.


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HM Revenue & Customs: Composite Payments -(One Payment with Multiple Payslips)Where you post payments to the Accounts Office it is best to send a single cheque with a single payslip. But if youneed to send a composite payment for more than one client on a single cheque, please ensure there is a separatepersonalised payslip for each taxpayer. Where the composite payment is for a partnership, we need the individualpersonalised payslips so we know how to split the payment between the partners. Also please check that theindividual amounts for each taxpayer add up to the total of the cheque.

If you submit a schedule, please provide both the name and Unique Tax Reference (UTR) of each individual on theschedule. Only provide the National Insurance number if the individual has not been set up with a UTR.If you intend to pay by cheque(s), you must provide no more than 99 Payslips for each cheque, ensuring that eachbundle totals the cheque as any discrepancies are not easily identified.

If using the pre-printed payslip from the statement and a different amount is being paid to that in the amount boxstrike through the incorrect amount and write the correct amount above the box.

No later than one week before the payment date, fax the schedule direct to Sarah Doherty on (01274 539599) totalthe schedule where appropriate in blocks of no more than 99 to the value of the cheque(s).

The most secure way to pay is electronically, when you pay, you must include a covering letter and a copy of theschedule confirming that a faxed copy has already been provided.

If you have any questions telephone Sarah Doherty on 01274 539538.


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20091125 - Accounting & Business Direct

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