Tax avoidance, Dutch style
I have posted before on the difference between tax evasion and tax avoidance. Here is an article from the Guardian on the latter and how Dutch laws help http://t.co/3ydUKpGB
More responsive corporate reporting?
CIMA’s e-zine (June, 2011) suggests a more responsive corporate reporting system is need for organisations. The report by CIMA, PwC and a think-tank called Tomorrow’s Company suggests that an evolving reporting system is necessary to reduce risk within organisations and meet the changing needs to both organisations and society. From from brief reading of the report, a central argument seems to be that the traditional (and incumbent) corporate reporting system is still primarily aimed at the providers of capital. Other elements or reporting have been appended on to this system e.g. environmental reporting, rather than the full reporting system itself called into question. You may ask why change what is currently there. I’m not sure this is the definite answer, but changes in technology, the business environment and business risk (to mention but a few) have been arguably more drastic in the past 20 years than the previous 100 years.
The report argues that a new corporate reporting systems needs to have six characteristics, which I summarise below. It argues that if these are incorporated within internal reporting and management processes, the external reporting will likewise improve.
- Encourage innovation and change. This should allow a reporting system to respond effectively to shifts in the business environment.
- Balance judgement and compliance i.e. go beyond compliance reporting solely. What information is needed as a basis for good decisions.
- Focus more on long-term value, by more integrated management and external reporting.
- Make reporting accessible, timely and relevant.
- Give shareholder and investors more information in long term sustainability and value creating capabilities.
- Ensure some balances and checks are incorporated into the overall reporting system and make someone responsible for this.
Business lessons from Apple
Here is a really good article from Forbes on what other businesses could learn from the legacy of Steve Jobs – and to the man’s testament this is posted from an iPhone at my kitchen table. Read the piece here
Giving finance feedback to businesses – making it relevant
In the May 2011 edition of Financial Management (CIMA’s monthly journal), Richard Young writes a very nice summary of how managements accountants can provide good and relevant financial information and feedback to business units. I’ll summarise the main points below:
- Think strategically – in essence, the key metrics will the ones which support strategy. This may be cost, revenues or a non-financial measure
- Focus on accountability – limit the feedback to factors which are controllable by managers/business units
- Be clear – keep it very simple, use only a few key metrics
- No surprises – keep the information useful, less detailed and relevant to the manager/business unit
- Be clear – explain figures to non-finance people, highlight how finance can help managers
- The big picture – target feedback so that no managers/units get enveloped in too much information. They need to able to see the “big picture”
- Two-way process – finance can also be the receiver of information. Reports/metrics can be challenged by operational managers
- Persevere – it may take some time for finance’s metric to be accepted by some managers/business units. But persevere
Data theft cost Sony as much as earthquake
I remember some meetings in my past life, when I had to justify expenditure on information to my boss – a chartered accountant with not too much in-depth knowledge of IT. This was in the late 1990’s. Of course, technology has moved on dramatically since then, but I’d be fairly sure that any accountants today would still be questioning the costs if IT/IS infrastructure and software. And today, it is not only the cost of the equipment that needs to be considered, it is the cost of the information held by companies. This is a very difficult thing to cost, but the problems at Sony in recent months gives some idea. In May 2011, the Los Angeles Times wrote about the cost of the first hacker attack on Sony (there was another one in June 2011). The article reports a cost of $171 million, which is believe it or not is nearly as much as the impact of the Japanese earthquake/tsunami earlier that year on the companies profit ($208m). I’m not sure what the hackers did to break in to Sony’s systems, but I bet it would have cost a lot less than $171 million to make their systems hacker-proof. And I’d also bet the hacker’s would be happy to repair the damage for a lot less than $171 million too!
So are we (Ireland) getting it right……
A small delve into economics, sorry. I read this article on the Wall Street Journal about my homeland (well, my dear home too!) and it make me think, well, we not total gobshites! Of course, we’re not, no matter what Fr. Jack (left says!). But in all seriousness, I can’t help but compare what the articles says to my own experience of talking to and helping small Irish businesses. I don’t know anyone who is not worried about the future of their business, but yet they all pulled-up their socks and did what any management accountant would advise – look at your costs, your processes, what you do and so on. I know two businesses who realised they needed to work 3-days weeks for almost a year, but they are now fine again. Others dropped price, or just worked smarter. I also can think of others who just would not adjust their cost structure, prices, staff or anything. Where do you think these guys are? Well nowhere simply. Of those businesses that adapted to survive, they have learned a hard lesson on cost structures, doing things well, adjusting price and looking after customers. Those, like the WSJ article say about Ireland, will be the stronger firms in the future ( I hope ).
Using Microsoft Excel to estimate costs with linear regression
If you have studied management accounting, you may remember the long-winded formulae to estimate values to put in a linear equation. Well, it’s a lot easier using MS Excel. Take a look at this video I have put together.
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