Less is more (influential)

Last week I wrote that perfection comes from including only the essential. Let me explain one way to apply that thinking to an audit report or similar (as taught to me when I worked at a Big Four firm).

Let’s say that the work being reported has identified 10 issues. Naturally some of those will be more significant or important than others.

One approach may be to list all 10 issues as findings with reasons/evidence, implications and recommendations. To be more convincing convincing you might list them in descending order of significance.

This seems a persuasive way of reporting the findings. The trouble is, the items at the bottom of the list (or several pages into it) are weak, either because the implications of the findings are *relatively* trivial and/or the evidence behind the findings is not as strong.

This relative weakness gives the recipient of the report an opportunity to be critical. They could resist the inclusion of those findings, either explicitly or implicitly. This can then result in their view of the overall report being diminished, potentially to the point where they can justify to themselves that the report can be ignored.

What my audit partner taught me was to include only the strongest handful of findings and recommendations. That way, the one at the bottom of the list is still significant and well-evidenced, making the whole report more impactful.

If you feel that the minor items must be included in the report consider putting them in an appendix. That way they are reported but you are signalling to the reader that they are not essential to understanding the report’s main message(s).

Why does the UK’s tax year begin on 6 April?

Historically, in Britain taxes were due on the first day of the year, which was 25 March (Lady Day). When Britain (and its empire) moved from the Julian calendar to the Gregorian calendar in 1752 it was necessary to ‘lose’ 11 days so that 2 September 1752 was followed by 14 September 1752. Taxpayers did not want to have to pay their taxes 11 days early, as they saw it, and so the first day of the tax year moved from 25 March to 5 April.

Then, in 1800 another was lost when compared with the Julian calendar because in the Gregorian calendar 1800 was not a leap year and so the first day of the tax year became 6 April.

Another day was ‘lost’ from the calendar in 1900 but this time the British government did not change the dates of the tax year and it has remained the same ever since.

International public financial management — my new book

My new book, International Public Financial Management: Essentials of Public Sector Accounting to give it its full title, was published at the very end of December.

The book is part of a project with CIPFA who wanted a book to complement their IPFM qualifications. This is partly to be a a resource for students that seeks to capture the essential elements of the modules they study, and reflects good practice as put forward by CIPFA in its examination syllabuses. It is also partly aimed at people who are not CIPFA students but are practitioners in the public sector who want a concise book covering the essentials of public financial management.

If you want a copy of the book this is the official page on the publisher’s website. You can also buy if from Amazon, of course.

Online accounting training for one

I wrote previously about the work I do for Ibba Girls Boarding School in South Sudan and the trip I made to the school in February 2015 to recruit a new finance manager. The school is (almost entirely) funded by a UK charity, the Friends of Ibba Girls School (FIGS), and it is important to FIGS that the school has high standards of probity and governance to go with the high quality education. That’s why the school is willing to employ a finance manager whose primary job is to manage the school’s cash on a day to day basis.

Last year the school’s finances were managed by an experience teacher from Australia, Jamie, who was working at the school for the year alongside his wife, who was the co-head. Jamie had no financial training but was experienced with IT so he taught himself how to use the cloud version of QuickBooks to maintain accounts during the year. At the end of the year I made the sorts of adjustments that accountants make when they pull together the annual report and accounts.

Jamie’s replacement is Santino, a locally-raised young man with a business degree from Uganda. His degree included the fundamentals of double-entry bookkeeping but he was not experienced in maintaining a set of accounts in a dedicated accounting software package. This meant he would need some help from me to develop his accounting knowledge and skills (and that's fine because Ibba Girls Boarding School aims to do more than educate girls).

After my visit to South Sudan I decided to change the accounting system used by the school to Xero because (a) the user interface looks better and easier to use for a novice and (b) we could get a better deal if both FIGS and the school used it than if we stuck with QuickBooks.

Since taking up his post in March, the most pressing things for Santino to do have been to make sure staff are paid at the end of each month, that food and other supplies are bought regularly so that the girls are safe and secure, and that the (modest) school fees payable by the girls’ parents are collected. All of these transactions need to be captured in the school’s accounts, though, so that reports can be presented to the governors in South Sudan and the FIGS trustees in the UK.

Ibba Girls School finance manager

I was faced with the problem of how to train Santino to do some fairly complicated accounting tasks from 6,000km away. At first I thought I would have to write a procedure manual, a prospect I did not relish since technical writing is very difficult to do well. After a while I realised I could use my presentation skills and technology instead. I decided I would create screencasts and share them with Santino so that he could learn by watching me using Xero.

It is a relatively simple set up. I set up Xero for Ibba Girls Boarding School so I have access to the live accounting information and can create some demo transactions to show Santino what he needs to do. I record my screen, with an audio commentary when I am doing these transactions using Quick Time Player (which is a standard app on all Apple computers). I keep each video to two or three minutes in length and I record each in a single take. I know I could edit clips together using iMovie but I just have a rehearsal before I press record and then go for a take. Mostly they work out fine as first takes but sometimes I stumble over my words or something and I simply scrap that take and start over.

Once recorded I check each video for clarity before uploading to the internet using Droplr. I then email to Santino the short URLs that Droplr creates for each video and he can then watch them inside a web browser (as many times as he likes) or download the videos (in .mov format) to his computer.

So far I’ve done 12 videos covering accounting for payroll and income. I'm pleased with them and I can tell they are effective because I can see the transactions Santino has been entering into Xero. There’s still plenty more videos for me to create and share but I hope that by the time I visit the school in the late summer/autumn Santino will have brought the accounts fully up-to-date and be able to generate reports for the governors directly in Xero.

Online certificate in IPSAS launched

I’m a CIPFA accountant but over the last few months I’ve been working with a different accounting institute, the Association of Chartered Certified Accountants (ACCA) on the development of an online course. The course is their Certificate in International Public Sector Accounting Standards (IPSAS). The course opened today for registrations.

Those who don’t know much about the accounting profession might not be entirely surprised to learn that accountants have lots of rules and regulations to follow. Unfortunately (or perhaps fortunately, depending on your point of view) the rules and regulations are not the same for every organisation in the world. There are some differences between countries in the accounting standards used by private sector companies although many countries have adopted the International Financial Reporting Standards (IFRS).

IFRS nearly fit, but don’t quite fit, public sector bodies. Public bodies have some significant differences in their finances, such as having tax-raising powers, and investing in assets like roads and parks and schools and public hospitals that have no promise of earning them income in the future but will cost them money to operate and maintain. Hence, over the last 15 years or so, the accounting profession, in the guise of the International Public Sector Accounting Standards Board (IPSASB) has been developing and publishing IPSASs. There are now 32 of them (plus a special one for public bodies that use cash accounting rather than the more sophisticated accruals basis of accounting). The full set is available for free in PDF format from the IPSASB (use this link) but be warned, there are 2,000 pages over two volumes, and a total download of over 8MB.

There are some countries (including Austria, Cambodia, Kenya, Spain,South Africa, and Vietnam) and organisations (including the European Commission, NATO and the United Nations family of organisations) that have adopted IPSASs as they are. In some other countries, like the UK, public bodies follow the IFRS as far as they are able, and look to IPSAS for guidance on how to deal with transactions that IFRS doesn’t deal with. And there are other countries who have developed their own standards for their public bodies, often using the IFRS and IPSAS as a basis.

Anyway, my point is that IPSASs are important to public sector accountants, either because they are used directly, or because they underpin the accounting standards that they follow, and the course by the ACCA is intended to address the need for accountants around the world to know what IPSASs are, and at least understand the important principles. If you are interested in the course you can read more about its contents and find out how to register for it at the ACCA’s website.

Why the UK tax year ends on 5 April

Today is 5 April, the final day of the UK tax year. It is unusual for an annual period to end on the 5th day of a month. I can’t think of any others. Generally, we like to use the first or last day of the month for defining periods—and this is especially the case with financial periods. Companies and governments are likely to use 31 December, 31 March, 30 June, etc as dates for the end of their financial years. In fact, as far as UK public sector bodies are concerned their budgets and statements of accounts use 1 April to 31 March as their financial years. So why does the UK government collect taxes on the basis of a year that runs from 6 April to 5 April?

Historically, in Britain taxes were due on the first day of the year, which was Lady Day, the 25 March. When Britain (and its empire) moved from the Julian calendar to the Gregorian calendar in 1752 it was necessary to ‘lose’ 11 days so that 2 September 1752 was followed by 14 September 1752. The change made the year 1752 11 days shorter and taxpayers did not want pay their taxes on 25 March 1753 because that was, in their view, 11 days too early. To settle this the first day of the tax year was moved from 25 March to 5 April. Then, in 1800 another day was lost because in the Gregorian calendar 1800 was not a leap year but it was in the Julian calendar. The result was the change of the first day of the tax year to 6 April, where it still remains. (There was another day was ‘lost’ in 1900 but by that time the British government had clearly had enough of moving the dates.)