Financial Management (UK) articles from November 2003

Financial Management (UK) archives from November 2003

Editorial comment.
November 1, 2003... As FM goes to press, shareholder relations have again hit the headlines. Corporate investors, led by US fund manager Fidelity, have refused to accept Michael Green as executive chairman of a newly merged ITV (formerly Granada and Carlton)....

Following its proposals to amend UITF Abstract 13, "Accounting for employee stock ownership plan trusts", the Accounting Standards Board's urgent issues task force (UITF) is consulting further on a related amendment to UITF Abstract 17, "Employee share schemes", before it finalises revisions to the former.(Technical Update)(Brief Article)
November 1, 2003... Following its proposals to amend UITF Abstract 13, "Accounting for employee stock ownership plan trusts", the Accounting Standards Board's urgent issues task force (UITF) is consulting further on a related amendment to UITF Abstract 17,...

The International Federation of Accountants has released exposure drafts of seven statements of membership obligations.(Technical Update)(Brief Article)
November 1, 2003... The International Federation of Accountants has released exposure drafts of seven statements of membership obligations to help it assess three key areas: * the extent to which the 155 member bodies are implementing standards published by...

Experts predict revival for equities: all the signs are there for a strong comeback next year.(Investments)
November 1, 2003... Despite the decision by many companies to move their pension funds from equities to bonds, the outlook for global equities is extremely positive, a leading fund manager has told Financial Management. Earnings estimates are on the rise...

Smaller listed firms plead for grace period on IASs.(Investments)(international accounting standards, Quoted Companies Alliance)(Brief Article)
November 1, 2003... The Quoted Companies Alliance, which represents businesses outside die FTSE 350, has called for a delay in the introduction of international accounting standards (IASs). In a letter to the European commissioner driving the changes, Frits...

Charities lack continuity plan: most third-sector bodies are unprepared for the words.(Risk Management)
November 1, 2003... Fewer than half of the UK's charities have developed strategies to respond to technical, natural or financial disasters, according to a survey by the Charities Finance Directors' Group (CFDG) and accountancy firm PKF. Almost 60 per cent of...

Underinsured firms in danger.(News Round-Up)(Brief Article)
November 1, 2003... Businesses are jeopardising their own survival by reducing their liability insurance cover, according to a report by insurance firm Marsh. Last year companies purchased almost 20 per cent less cover for their general and product liability...

Disciplinary cases.(News Round-Up)(Alan Shield, Peter Okrah, Sarah Faiz)
November 1, 2003... Concluded conduct cases Investigation committee. Alan Shield ACMA (no. 0226447) Alan Shield allegedly refused to forward information to the client's, Chappell Antiques & Fine Art and Ms J Chappell's, new accountant. Taking into account...

FTSE bosses widen pay chasm.(News Round-Up)(Financial Times and the London Stock Exchange)(Brief Article)
November 1, 2003... Senior executives' salaries have increased by more than six times that of the average employee over the past decade, according to a research report by Incomes Data Services. The average earnings of British employees have grown by 45 per cent...

Investors rate social concerns.(News Round-Up)(surveys of shareholders on corporate social responsibility)(Brief Article)
November 1, 2003... Institutional shareholders are starting to see good corporate social responsibility (CSR) as essential, according to a report by Echo Research, a "reputation audit" specialist. Sandra Macleod, the firm's chief executive, said there was little...

FCO offers global security advice.(News Round-Up)(Foreign and Commonwealth Office)(Brief Article)
November 1, 2003... The Foreign and Commonwealth Office (FCO) has launched an information service concerning security and political risks around the world aimed at British businesses with activities abroad. FCO staff in London and overseas will brief firms on...

Key IT systems fail to deliver: vendors have been accused of a 'conspiracy of silence'.(Financial Software)
November 1, 2003... A basic flaw exists in the way that IT systems are planned, acquired and managed--and much of the fault lies with the vendors, Martin Butler, president of the Butler Group, told an audience of IT analysts, vendors and users last month. ...

Accountants urged to improve their client care.(Financial Software)(Chris Daffy)(Brief Article)
November 1, 2003... Many accountants in practice are failing to harness the benefits of good customer service, Chris Daffy, author of Once a Customer, Always a Customer, told delegates at a recent seminar organised by Iris Software. "Good customer service can...

Seminar preview.(Brief Article)
November 1, 2003... Household goods firm Unilever reorganised its finance function last year as part of its "Path to growth" restructuring scheme, which aims to double the company's growth rate by 2004. Paul Baumann, director of the finance academy at Unilever,...

Green signals 'danger' for CEOs: investor activism is an issue that firms can't afford to ignore.(Conference Round-Up)
November 1, 2003... Shareholders are becoming more active--and it isn't necessarily good news for business. It's not surprising, after years of seeing plummeting equity values mad terrifying reports of a pensions. black hole, that investors are starting to ask...

Further conference highlights.(Conference Round-Up)(Brief Article)
November 1, 2003... * Derek Higgs (pictured left), author of the controversial review of the role and effectiveness of non-executive directors (Neds), will examine the role of Neds in creating shareholder value and the impact of the new Combined Code. * Roger...

Secrets of the knight revealed: Sir Brian Pitman shares his insights on shareholder value with Cathy Hayward.(Conference Round-Up)
November 1, 2003... The ability to generate consistently superior total shareholder returns over time is the single best measurement of management performance, Sir Brian Pitman, former chairman and chief executive of Lloyds TSB, will tell delegates. But he'll...

Barbour aims to cut to the chase.(Conference Round-Up)(John Barbour)(Brief Article)
November 1, 2003... The key question for finance departments is not how they can restructure or reorganise what they do--there are a million answers to that. John Barbour, founder of Corporate Value Improvement, a consultancy that aims to help businesses deliver...

Blue-chip firms seek FM honours.
November 1, 2003... Leading FTSE-250 companies, including HSBC, Procter & Gamble, Carlsberg-Tetley and BAE Systems, have entered the CIMA/Financial Management Awards this year. The competition has also attracted entries from as far afield as Botswana and Sri...

Presidential engagements.(Institute News)(Calendar)
November 1, 2003... 3 Nov ICAS dinner, the Savoy, London 6 Nov ClMA president's dinner, Merchant Taylors' Hall, London 7 Nov President's and past president's luncheon, London 8 Nov West of Ireland dinner dance, Castle Troy Park Hotel. Vice-president...

On-line developments for CIMA.(Institute News)(Chartered Institute of Management Accountants )(Brief Article)
November 1, 2003... CIMA customer service will be enhanced with improved on-line functionality this month. Members and students will now be able to: * pay annual subscriptions on-line; * pay subscriptions via direct debit; * view financial statements;...

Correction.(Institute News)(Correction Notice)
November 1, 2003... In 1972 the Institute of Cost and Works Accountants changed its name to "The Institute of Cost and Management Accountants" and not the "Institute of Chartered Management Accountants", as stated in October's FM. We apologise for any confusion...

Elections to council 2004.(Institute News)
November 1, 2003... Retirements by rotation Notice is given that, as the term of office of" the council member in each of the following electoral areas expires at the end of the AGM in June 2004, elections will be held in January and February 2004....

Success stories.(Letters)(Letter to the Editor)
November 1, 2003... Further to the article "Precedent setter" (July/August), I congratulate Claire Ighodaro on her appointment as president and wish her success in the role. At the same time I would like to voice my concern about her comment: "in the early days,...

Image conscious.(Letters)(Letter to the Editor)
November 1, 2003... With respect to the article "Precedent setter", I find the description of "a profession battling hard to shed its 'male, pale and stale' image" as offensive and discriminatory. I understand the message you are trying to send, but you do...

No Canute do.(Letters)(Letter to the Editor)
November 1, 2003... The jury may be out over whether finance can be out sourced as easily as functions such as IT, HR and administration ("Getaway drivers", September), but much of the traditional fare of the accounting function has been administration. This is...

Roaring nineties.(Letters)(Letter to the Editor)
November 1, 2003... I see in the October issue (Institute news) that the oldest CIMA member is said to be 92. In fact, for your records, I am a retired member and my age is 95. My date of original election is misleading, as I was a mature student and already a...

Capital letters.(Letters)(Letter to the Editor)
November 1, 2003... The author of "The third way" (October) observes that "the MGR when added to the cost of capital percentage is an approximation of the MIRR". In fact, the precise relationship between these rates of return is given by: MIRR = cost of capital +...

Do your ohm work: enhanced capital allowances for firms that invest in approved energy-efficient equipment offer a significant cash-flow boost and potentially shorten payback periods.(Tax)
November 1, 2003... Environmental reporting is becoming the norm as a result of pressure from investors and consumers. The UK Accounting Standards Board has included social and environmental matters as elements of its operating and financial review standard,...

Cartesis[R]: as more and more firms recognise the value of business performance management (BPM) solutions, Jonny Cheetham answers your questions on managing IT projects.(Questions & Answers)
November 1, 2003... We are starting a project to select a new BPM system. How can we ensure that this is managed properly? Gartner estimates that IT project failures account for $75 billion of corporate losses every year; so strong project management is...

Post modernist: Royal mail's chairman has developed a business model which acknowledges that human issues are anything but 'soft'. Cora Lynn Heimer Rathbone and Steve Macaulay explain his approach.(People Management)(Allan Leighton)
November 1, 2003... How do you capture a bit of business magic? Look into the mind of a clear thinker who has transformed a major company and is bang in the middle of trying, with no little difficulty, to repeat the feat at a national institution. Then ask what...

Status symbols: in which situations can a long-term agency worker be considered an employee? The legislation might seem clear on the matter, writes Sue Nickson, but of course it's not so simple in reality.(Legal)(Dacas v. Brook Street Bureau (UK) and Franks v. Reuters Ltd.)
November 1, 2003... The Employment Rights Act 1996 defines an employee as "an individual who has entered into, or works under, a contract of employment". It defines the contract of employment as "a contract of service... whether express or implied and (if it is...

DIY ABC: received wisdom states that sponsorship at board level is crucial when you're implementing an ABC system. Andrew Booth explains how Co-operative Insurance Services managed without it.(Technology)(management of activity-based costing)
November 1, 2003... Formed back in 1867, Co-operative Insurance Services (CIS) is the only co-operative in its industry. It has 4.5 million customers and manages funds worth more than 20 billion [pounds sterling]. CIS and the Co-operative Bank were brought...

In search of a lingua franker: jargon-filled corporate reports can be more than an annoyance for users, writes Malcolm Smith If a company seems incapable of communicating clearly, there may be more sinister factors at play.(City)
November 1, 2003... We're all familiar with the comical possibilities of a breakdown in communications, as exploited by Sir Humphrey Appleby, the scheming civil servant in Yes, Minister. But, as the political storm over the information given to justify the war in...

They thought it was all over.(overview of Wembley Stadium construction and finance, Wembley National Stadium Ltd.)(Cover Story)
November 1, 2003... The new Wembley Stadium project has been marked by controversy since it kicked off nearly nine years ago. At several points it looked as though the venture would never succeed, as it faced funding problems, political goalpost-shifting and a...

Use it or lose it: it's often claimed that the need to spend budgets by the end of the year leads to wasteful expenditure. In their CIMA-backed research project, Noel Hyndman, Rowan Jones and Maurice Pendlebury examine the effect of annuality on budget-holders in a range of public-sector organisations.(Finance Budgeting Annuality)(Chartered Institute of Management Accountants )
November 1, 2003... A basic rule of public-sector budgeting is that allocations must be spent by the end of the financial year or be lost to the centre. Not only that, but if an allocation is not used in one year it may be cut for the following year. So there is a...

Can we budge it? If budgeting is flawed in the private sector, it's hopeless in the public sector, writes Merrill Cassell. But there is an approach that, if adopted, could negate many of the problems that beset the current process and destroy value.(Beyond Budgeting)
November 1, 2003... The public sector has used many forms of budgeting over the years. Several have had their day, including lump-sum, line-item and zero-base budgeting. Today, most budgets are prepared by object of expenditure and function, and several other...

Native programs: the task of installing new information technology is tricky enough at home, let alone in a foreign operation, which can pose a whole set of extra problems. Cathy Hayward asks the experts to share their experiences of rolling out financial software internationally.(How to: implement a global IT system)
November 1, 2003... Implementing a new financial IT system in a UK head office can be a nail-biting experience. In the first few days the software crashes, people aren't familiar with the way it works and the whole business slows down. But if you roll out the same...

Waiting to exhale: the government has brought in a range of financial incentives for companies to help it honour its promises on cutting the UK's carbon dioxide emissions. Malcolm Hill, Laurie McAulay and Adrian Wilkinson explain the measures--and point to where accountants in business can play a key role in the strategic management of energy.(Emissions Trading)
November 1, 2003... As part of its obligations under the 1997 Kyoto protocol, the UK is committed to reducing its emissions of greenhouse gases by 12.5 per cent between 2008 and 2012. In addition, the government has an even more demanding national objective of a...

Safety in numbers: the volume, complexity and strictness of accounting standards have grown significantly over the past few years as the regulators strive to prevent another Enron. Accountants have never before been under such close scrutiny, writes Jake Claret, who explains how CIMA members can protect themselves should the finger of blame ever point their way.(Risk Management)(Chartered Institute of Management Accountants)
November 1, 2003... Business is getting ever more risky. The commercial environment is full of pressures affecting finance professionals. New legislation is placing extra responsibilities on us all, and the regulatory framework is getting stronger. A "complaints...