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 sector review

trends in
the travel

terrorism, global warming,
low-cost airlines – just
how well is the industry
travelling?                        1
                                                    from the chair
                                                       Welcome to issue 58 of Corporate Sector
    Corporate Sector Review                         Review. I hope you’ve had a productive few
    Issue 58 – October 2006                         months but have also found time to enjoy a
                                                    summer holiday.
    Editor                                               Speaking of holidays, the cover story reports
    Susanna Cornelius                               on recent developments in the travel industry.
                                                    Journalist Faith Glasgow examines the impact
    Corporate Sector Review is published            of terrorism, climate change and customer
    quarterly by ACCA. Articles are published in    demands. Have they taken their toll or is the
    good faith without responsibility on the part   industry rolling with the punches?
    of the publishers or author for loss                 Richard Willsher takes us to foreign shores
    occasioned from acting or refraining from       with his article on the rise and rise of India’s
    action as a result of any views expressed       economy. He tells us that India’s affluent middle
    therein. The opinions are not necessarily       class now rivals in number the combined
    those of the undertaking which employs the      population of Germany, France and the UK.
    author, and should not be regarded as the       Definitely a market to be reckoned with.
    official opinion of ACCA except where stated.        Should we work towards global reporting
                                                    standards? Richard Aitken-Davies and Richard
    This document has no regulatory status.         Martin ask this question and discuss attempts        meetings around England aimed at answering
    It is issued for guidance purposes only.        at converging US GAAP and IFRS.                      any questions that you might have about CPD
    Nothing contained in this document should            Jill Wyatt profiles ACCA member Eileen          and informing you about the many support
    be taken as constituting the amendment or       White, Associate Director at Arup. Eileen            resources available to you.
    adaptation of the ACCA Rulebook. In the         charts her career progression and tells us                We are delighted that the annual Corporate
    event of any conflict between the content of    about some of the challenges she has faced.          Sector Business Lecture will be taking place
    this document and the content of the                 Peter English, author of Succeeding at          again this autumn. The lecture will look at the
    ACCA Rulebook, the latter shall at all times    Interviews, provides tips on improving your          rise of China’s economy and the speaker will
    take precedence.                                interview performance in order to get the jobs       be Dr Linda Yueh, who is known to be ‘the
                                                    that you want. Learn about preparation,              BBC’s favourite commentator on the global
    All correspondence should be sent to:           etiquette and asking the right questions.            economy’. Details will be sent to all members
    Tony Carlisle, ACCA UK,                              In other news, ACCA has been busy               in the corporate sector shortly. The date for
    29 Lincoln’s Inn Fields,                        developing support services for senior members.      your diary is 29 November.
    London WC2A 3EE                                 ACCA is collaborating with the Institute of               As usual, I’d like to extend the invitation
    tel: 020 7059 5913                              Directors and CriticalEye in order to help meet      to you to contribute suggestions about what
    fax: 020 7059 5959                              your development needs. Please see the In Brief      you’d like to see in Corporate Sector Review
                                                    section for further details.                         – after all, it is your magazine. Please email
                                                         ACCA has received feedback that members         tony.carlisle@uk.accaglobal.com.
                                                    are not fully aware of the ease and flexibility
                                                    of ACCA Realise, ACCA’s CPD scheme. Training         Raymond Fagan – Chairman, ACCA
                                                    and Development Officer Sara Llewellyn has           Corporate Sector Network Panel
                                                    contributed an article that addresses some
                                                    commonly held misconceptions. Further to
                                                    this, ACCA UK has organised several

The ACCA Corporate Sector Network Panel             Claire Baty                                          Marc Fecher
welcomes feedback. Panel members can                Group Reporting Manager, Centaur                     Partner, Corporate Finance, Kingston Smith
be contacted as follows:                            Communications Ltd                                   MFecher@Kingstonsmith.co.uk
Richard Aitken-Davies                                                                                    Stephen Priddy
(Representative of Council)                         Shaun Ellis (Vice Chairman)                          Associate Director, Arup Group Ltd
richard@aitken-davies.co.uk                         Financial Controller, Cheil Communications           steve.priddy@arup.com
                                                    Europe Ltd
Steve Bailey                                        shaun.ellis@samsung.com                              Paul Simmonds
Managing Director, RWC Plc                                                                               Director/Consultant,
Steveb@rwcplc.com                                   Raymond Fagan (Chairman)                             Hunscote Consulting Limited
                                                    Director, Cavendish Corporate Finance Ltd            SimmondsPNS@aol.com

2                                                                                                              corporate sector review October 2006
in brief                                            features
diploma in company direction              04        scaling the heights                       06
                                                    Eileen White, Associate Director with
ACCA lead sponsor at World Congress       04        global design and business consulting
                                                    firm Arup, tells Jill Wyatt her story.
CPD meetings                              05
                                                    how to succeed at an interview            08
CriticalEYE in partnership with ACCA      05        attending a job interview can be a
                                                    stressful experience, but if you follow
                                                    the advice given by Peter English your
                                                    chances of succeeding should increase

                                               08   demystifying CPD                          13
                                                    still have questions about meeting
                                                    your CPD requirements? Sara
                                                    Llewellyn answers them for you

                                                    doing business with India                 14
                                                    a range of business and investment
                                                    opportunities provide a variety of
                                                    routes into this booming emerging
                                                    market, says Richard Willsher
cover story                                         convergence in accounting standards       16
                                                    is the effort being put into converging
trends in the travel industry             10        US GAAP and IFRS worth it? Richard
Faith Glasgow reports on how the threat             Aitken-Davies and Richard Martin
of terrorism, environmental concerns                think so
and the changing whims of customers
have affected the travel industry                   technical help                            18

                                               10   guidance on topical technical issues

                                                    calendar                                  19
                                                    calendar of key dates


corporate sector review October 2006                                                           3
 in brief

diploma in company direction
   ACCA has partnered with the Institute of Directors (IoD) to offer a
tailored version of the acclaimed IoD Director Development Programme
for senior ACCA members.
     The aim of the programme is to equip directors from all sizes and
types of organisation – from listed companies to privately owned to
public sector – with the all round skills, knowledge and understanding
essential for being an effective and successful board member.
     The programme is offered in two parts: firstly, the Certificate in Company
Direction, followed by the Diploma in Company Direction. Successful
completion of the diploma (and examination) takes you one step closer
to achieving Chartered Director status, the professional qualification
that recognises the professionalism and experience of directors.

the certificate in company direction
The certificate encompasses the knowledge and awareness necessary
to function effectively as a director. The learning will be delivered in a
series of courses, backed up by a set of e-learning modules leading to
the certificate examination.

the diploma in company direction
The diploma provides an opportunity to put the knowledge gained from
the certificate into practice in a business-like environment. It encourages
peer group support, challenge and stimulation, mirroring the operation
of a board. A three day ‘Developing Board Performance’ exercise, where
delegates run an organisation as its board, is followed by the diploma
examination.                                                                      ACCA to be lead sponsor for World
To obtain Chartered Director status there is a professional review that
assesses performance and experience as a director.                                Congress of Accountants in Istanbul
board development service                                                            ACCA is the lead sponsor for the 17th World Congress of
We are pleased to work with IOD to offer the Board Development Service.           Accountants, which will be held in Istanbul in November 2006.
The aim of the service is to work with you and your board to improve                   ACCA is the Diamond Sponsor for the Congress, which is being hosted
performance. Participating in such an initiative would constitute verifiable      by The Union of the Chambers of Certified Public Accountants of Turkey
CPD. The service can be tailored to meet the specific needs of your               (Turmob) and The Expert Accountants’ Association of Turkey (EAAT),
organisation but could include:                                                   and co-hosted by the International Federation of Accountants (IFAC) at
    board workshops                                                               the Istanbul Convention and Exhibition Centre from 13 to 16 November,
    bespoke programmes to help the senior team work its way through               which is expected to attract 5000 delegates from the profession.
    to the achievement of a generic corporate outcome. Succession                      ACCA Chief Executive Allen Blewitt said: “ACCA is delighted to be
    planning is an excellent example of the kind of situation in which a          lead sponsor for the 17th World Congress. We felt it was appropriate to
    structured series of workshops and other interventions prove of               support the congress to this level because we have over 80,000 members
    great value                                                                   and students in the surrounding region, many of whom will be represented
    one-to-one briefings – these sessions are designed for individual             at the congress. We are also delighted to be able to support the Turmob,
    board members. For example, sessions might help a director                    one of the hosts, with whom we have a very positive relationship and with
    understand the change in role involved in moving from a subsidiary            whom we are working to help promote and develop the accountancy
    board to the main board, or to understand the corporate governance            profession.”
    environment in different jurisdictions. They are also frequently used
    to help individual directors prepare for specific events or get up to
    speed on particular topics
    board evaluation – a regular audit of the board’s performance.

To find out more information about these initiatives, please contact
Ros Leah: ros.leah@uk.accaglobal.com or 0207 059 5921.

4                                                                                                                 corporate sector review October 2006
                                                                                                                                  in brie

                                                                                                                                   in brief
CPD meetings                                                                CriticalEYE in partnership with ACCA
   From 1 January 2007 all ACCA members are required to undertake              ACCA recognises that its members holding senior positions demand
CPD. ACCA Realise has been in place for almost two years and yet it         very different support services to those just embarking on their careers.
seems many members are not fully aware of the CPD scheme’s flexibility.          ACCA has recently consulted with its members who will be required
    ACCA UK has organised a series of meetings in England designed to       to undertake continuing professional development (CPD) from 1 January
answer your questions and make you aware of the support available to        2007. Many members cited networking and technical reading and research
make complying with the scheme as easy as possible. Please also turn        as the primary means of keeping abreast of business developments.
to page 13 to read Sara Llewellyn’s demystification of CPD.                      Working in partnership with CriticalEYE, ACCA has developed a
                                                                            unique service that facilitates high-level networking and access to the
dates and locations                                                         latest strategic thinking. Each member will be allocated their own
15 November Manchester Conference Centre                                    personal account director who will tailor CriticalEYE’s offering to his/her
21 November Gatwick Worth Hotel – Nr Crawley                                specific needs.
28 November London-Elstree Holiday Inn (M25 JCT 23)
29 November Novotel Southampton                                              ‘CriticalEYE provides a rare combination of high-level networking,
5 December     Holiday Inn Bristol Filton                                    focused business insights, stimulating seminars and an active online
13 December Lincoln’s Inn Fields, London                                     community. I have not come across any other operation with such a
                                                                             progressive, high quality vision for its service to members. In addition,
Registration and refreshments: 18.00–18.30                                   their engagement with their community is unique – they make sure
Meeting: 18.30–20.00.                                                        they know what you need and make sure they help you make
                                                                             connections that matter.’
There is no charge for attending these meetings but bookings must be made                                                  ,
                                                                             Derry Newman, MD, Sony UK; Senior VP Sony Europe
in advance. To make a booking, please contact Caroline Lavers:
caroline.lavers@uk.accaglobal.com or 020 7059 5863. Please note that            For further information – including details of how to join CriticalEYE
venues are subject to change but details will be confirmed upon booking.    at a discounted rate – please visit http://uk.accaglobal.com/uk/members/

  upcoming members’ event
  creating and measuring brands
  6 November, 29 Lincoln’s Inn Fields, London
  Clive Moffatt, Managing Partner of Moffatt Associates, will address a number of topical issues including:
     increasing importance of intangible assets
     definition of a brand and market perceptions
     benefits of having a brand
     criteria for creating a successful brand
     ways of measuring brand value
     internally generated v acquired brand assets
     moving branding up the corporate agenda
  Using recent MA case material Clive will highlight the important role that Accountants can play in helping companies – large and small – to
  adopt a more objective and systematic approach to building brand equity.
       For more information or to book a place at the event, please email emma.hale@uk.accaglobal.com.

corporate sector review October 2006                                                                                                                     5

                                                                                                          Eileen White, Associate
                                                                                                          Director with global design
                                                                                                          and business consulting
                                                                                                          firm Arup, tells Jill Wyatt
                                                                                                          her story.

scaling the heights
   At the tender age of 13, as she studied           missed city life. So, I got on a boat and went in    exams, I went back to live with my parents
bookkeeping in a small school in Ireland,            search of work, quickly landing myself a job         for a couple of months to study.”
Eileen White could have had little idea that         as an accounts junior with an advertising                 On her return to England, Eileen found
she was already sowing the seeds for her             company in Kingston.                                 that the recession was biting and
future career. But by the time she was 18,                 “The work was quite basic – credit control,    employment scarce. She spent a year temping
there was no doubt in her mind that the world        purchase ledger etc – but it was a useful first      for a number of food companies and then
of finance was for her.                              step and I registered with ACCA to sit my Level      found a job as a bookkeeper, working for a
     “At school I was good at the business           One exams in May 1989. I knew people who             company in the rag trade. “I did everything
focused subjects and they were also the subjects     had taken a similar route and felt that I had        from payroll to purchase ledger, credit control,
that I enjoyed. The education system in Ireland      the commitment to make working three or four         invoicing and year-end and tax returns,’ she
is quite different to the English system, and        nights a week at night school doable. The            says. ‘It was a superb way to get a thorough
by the time I was 16 I had learnt a lot about        qualification was flexible and I could study and     knowledge of running a small business.”
bookkeeping and account preparation. As my           take examinations at my own pace, which was
parents had relocated to Ireland when I was          a great bonus. I reminded myself of this fact as     a lucky break
eight I did not have to study the Irish language     I watched my friends enjoying a livelier social      Two years later, in 1994, the company went
for my Leaving Certificate but I needed to study     life than I could fit in!                            bust and Eileen again found herself in search
an additional subject so that I could obtain the           “It was far from plain sailing from then on,   of a job at a time when good employment
grades to study for a professional qualification.    however. The advertising world was great fun         opportunities were still hard to find. Securing
As I had an interest in business studies I           but I really needed to earn more money, so I         a temporary position with Arup as an assistant
chose business organisation in its place. I was      applied to work for one of the regional health       accountant seemed like a lucky break. In this
the only pupil in the school to study this subject   authorities, which still existed at that time. It    capacity, she reported to a qualified accountant
and to some degree I was self-taught, which          seemed like a good decision because the health       and handled returns for the group’s German
was a useful discipline.”                            service was very supportive in terms of study        office, as well as becoming involved in operating
     Although her teachers encouraged her to         leave and flexible about working hours.              plans and financial reporting for some of the
consider third level education, Eileen was                 “Unfortunately, the office environment was     building engineering groups. Four months
already certain that she wanted to combine           very different from that of the small private        later the position was made permanent.
employment with studying for a professional          company that I had come from. There were set              “I was only part-qualified at this point but
qualification. “I knew I was equipped with the       procedures to follow and no real scope for           Arup understood the benefit of supporting its
grades to make this possible,” she says. “I          change. It really wasn’t for me so I left and as     staff through studies for professional
also wanted to return to England as I really         I was shortly due to sit another stage of ACCA       qualifications,” says Eileen. “Then, as now, it

6                                                                                                               corporate sector review October 2006
provided its employees with an excellent study        for many large projects all around the world.        In October 2005, Eileen returned to England
package, including study leave and finance            One of the projects I was involved in was the        to re-join the corporate finance team and has
for all relevant courses and I was able to take       Terminal 5 project at Heathrow Airport.”             been putting her experiences gained over the
advantage of this. Today, we have at least half                                                            previous 12 months to good use. She is now
a dozen students studying for professional            challenges overseas                                  working on building the support and
accountancy qualifications and Arup has been          In 2004, following the resignation of two            guidance available to her overseas colleagues.
accepted as an ACCA approved employer for             colleagues in the Arup New York office, Eileen            “I am often asked if I ever think about
CPD as well as an accredited employer for             was asked to go and manage the finance team          leaving Arup to gain new challenges but at the
training and development of ACCA Professional         there through a time of change and to train          moment I don’t need to move to gain new
Scheme students.”                                     the new financial controller. “Stepping into         experiences or challenges – they are all
     In 1996, Eileen qualified with ACCA. It          someone else’s shoes was an enormous                 available here on a daily basis. I look back
had taken seven years but she had no regrets.         challenge,” she says. “I had to get to grips with    on what I have achieved since leaving school
“I know plenty of people who have been                different legislation, a different culture and, to   and think I’ve done pretty well for myself.”
through university and aren’t qualifying until        some extent, what sometimes seemed to be a
their mid-twenties or even early thirties,” she       different language!                                  Jill Wyatt is a freelance journalist
says. “All this time I have been earning and               “Nevertheless, it was immense fun and I
gaining real experience of the working world.”        was asked to extend my stay so I could
     The mid 1990s were exciting times for Arup       oversee the operating plan process for the
as the company reorganised and introduced             New York office. This was a very interesting
new systems. “Life never stood still,” says Eileen.   exercise and meant that I was involved with
“Qualifying brought me a pay rise and more            the project managers, helping them plan for
exposure to working directly with line groups.        the year ahead and in particular ensuring
By now I had been promoted to Accountant              that the forecasting was correct for the two
Responsible for the Corporate Services Group,         main projects in the office – Fulton Street
which handled the firm’s central services             Transit Center and 2nd Avenue Subway.”
covering HR, finance, IT and legal budgets for             At the end of her six months in New York,
all of Arup.                                          Eileen was again asked to take on a trouble-
     “In finance, I progressed through the            shooting role – this time to oversee a period
positions of Assistant Accountant, to Accountant      of change in the group’s office in Australia.
and then to Senior Accountant. I was also             “This was a great experience because, once
promoted to an associate grade in 2001 and            again, I had to stand on my own feet,” she says.
an associate director grade in 2003. During           “Until my overseas ventures, I had been used
this time my work became more varied. I was           to being able to call on the support of a large
Finance Officer for the Industrial Engineering        team of people with a huge range of skills and
Division and some of the Specialist Groups,           knowledge who were in the same location as
which involved reporting to the board and             me. You don’t have that when you are working
assisting with the financial aspects of bids,         remotely in the regions and I quickly gained a
charge rates and meetings with external clients       better understanding of the difficulties some
                                                      of my colleagues face.”

corporate sector review October 2006                                                                                                                   7

                           Attending a job interview can be a stressful experience, but if you
                           follow the advice given by Peter English your chances of succeeding
                           should increase.

how to succeed
at an interview
   The bad news about job interviews is that the job doesn’t always               finally, list all the questions that you might be asked, how you will
get offered to the best candidate: it goes to the candidate who is best           answer them, and which questions will provide you with an
at being interviewed. The good news is that anyone can significantly              opportunity to talk about your strengths and achievements. Many
improve their interview performance, and this article tells you how.              candidates feel nervous because they think (wrongly) that they
                                                                                  cannot predict what they will be asked. In fact, a five minute
preparation                                                                       brainstorm will probably uncover 75% of the questions that the
Most people underestimate the amount of preparation that is needed                panel will be using.
for an interview. In addition to the obvious (researching the organisation,
reading up on ‘hot topics’ etc) you need to do the following:                 be nice to everyone
     identify examples of your previous experience and achievements           If one of the secretarial team collects you from reception, remember to
     that demonstrate how you meet the person specification for the job.      treat them with the same courtesy and respect that you will show the
     It’s vital that you have real-life examples or anecdotes which you       other panel members (introduce yourself, shake their hand). You’d be
     can describe to the panel. It’s not enough to say “I have good           surprised at the number of interview panels that ask the opinion of the
     communication skills” – any half decent interviewer will recognise       person who is escorting candidates to and from reception. An NHS
     this as nothing more than a candidate’s opinion about themselves.        director recently confided to me that he always asks the chief executive’s
     Experienced interviewers look for solid evidence (what sort of           PA to predict who the successful candidate will be – and she has
     communication skills? In what context have they been used? What          never been wrong.
     was the result?)
     once you have identified your examples you need to think carefully       how to enter the room
     about how you will describe them. My advice is to prepare for the        The research shows that there are three things you can do when you enter
     interview as if you were preparing for a presentation, which means       the room that will make the interview panel rate you more highly at the
     rehearsing how you will talk about your examples. This advice            end of the interview: smile, make eye contact with the panel members,
     may seem strange, but most of us find interviews stressful, and          shake hands.
     when we are under stress we can be less fluent than normal. The               Some candidates have difficulty getting the handshake right. It is
     points we could make with confidence and fluency in front of our         possible to over-do it by bounding into the room and thrusting your hand,
     friends in a social setting don’t come to our lips as easily when        martial arts fashion, towards the startled interviewers. It’s better to simply
     our palms are sweating and our hearts thumping. If you rehearse          raise your hand slightly from your side as you walk towards the panel
     (out loud and in your mind) there is much more chance of your            members. Hopefully they will pick up the cue and will shake your hand.
     words coming out in the way that you intended.                           If they don’t you can let your hand fall back unnoticed. One thing to
                                                                              remember is that briefcases etc should be carried in your left hand so
                                                                              your right hand is free.

8                                                                                                               corporate sector review October 2006
interview etiquette                                                                I’ve also enjoyed helping them think through ways in which they can
Some etiquette is obvious: not chewing gum during the interview, for               get the most from their budget.”
example. One, often overlooked, pitfall concerns your eye contact. It often
happens that one member of the interview panel appears more friendly               ‘Do you have any questions for us?’
than the others. This is rarely a conscious ‘good cop/bad cop’ ploy on             Towards the end of the interview, the panel often invite you to ask any
the part of the panel, but you still need to be careful about how you react.       questions you might have about the role. The way you end the interview
     The natural human response, particularly in a stressful situation like        is important, as this is often the impression that you leave with the panel.
an interview, is to make eye contact with people who seem to be interested         There are three types of questions:
in us. If you are not careful you can find yourself directing all your answers     Bad questions: “Do you operate a flexi-time system?”
at the kindly faced panel member who made the mistake of giving you                OK questions: “What training and development opportunities are
an encouraging nod and smile as you stumbled through your answer to                there within the organisation?”
the first question. Before long you will be clinging to the kindly interviewer’s   Good questions: “I’ve really enjoyed my experience of managing
gaze like a non-swimmer to a rubber ring, with the result that they start          projects in my last job – would there be scope for me to take on a
to feel uncomfortable and the other panel members feel snubbed. So                 specific project in this role?”
share your eye contact around.
                                                                                   Remember that you should view every part of the interview as an opportunity
answering the questions                                                            to put over your key points; your questions to the panel are just another
The wrong way to view interview questions is as a series of traps which            opportunity to show the panel what qualities you have. If you do have
you have to avoid falling into. From this perspective the great fear is not        genuine questions about terms and conditions or training opportunities
being able to answer a question and success means having reached the               it may be better to wait until you have actually been offered the job then
end of the interview without having made a fool of yourself. A more positive       say something along the lines of: “I’m very excited about the job - there’s
and helpful way of viewing questions is as opportunities to sell yourself.         just a couple of points I want to clarify...”
A good candidate is able to use each question as a basis for talking
about one of their key points.                                                     finally: remember it’s a mutual interview
     For example, if you are asked the (common) question, ‘tell us about           The most impressive interview performers are usually those candidates
your current job’, you should avoid simply listing every aspect of your            who treat the interview as a two-way process: it is an opportunity for you
job. Start by briefly summarising the role: “I provide financial advice and        to explore the job that is on offer, and decide whether it is right for you.
support to one directorate,” then go on to talk about one of your (prepared)
key points: “one of the things I’ve really enjoyed about the job is that it        Peter English is the author of Succeeding At Interviews, published by
has enabled me to work closely with other managers and clinicians.                 Management Pocketbooks in 2004. He provides coaching for candidates
I’ve developed my understanding of the kind of information they need.              in CV preparation, psychometric tests and interview skills. Peter can
                                                                                   be contacted via pete@peterenglish.co.uk

corporate sector review October 2006                                                                                                                              9
cover story

              TRAVEL INDUSTRY

                                   Even for such a dynamic industry as the
                                travel business, the past few years have been
                                eventful. The growth of internet bookings;
                                9/11, subsequent terrorist alerts and the
                                knock-on effects on security; growing public
                                and industry awareness of climate change
                                and the need for more sustainable tourism: all
                                have made their mark on public perceptions
                                of travel and holidays.
                                     But according to Fred Hitchins of the
                                specialist research consultancy IRN, the single
                                biggest influence on the industry has been and
                                continues to be the driving force of the low-
                                cost airlines, led by easyJet and Ryanair. Their
                                cheap flights, coupled with the choice and ease
                                of booking flights and hotels on the internet,
                                are behind the decline of the conventional off-
                                the-shelf package holiday, and the rapid rise
                                of what’s known as ‘dynamic packaging’ –
                                tailor-made holidays to you and me – as
                                consumers opt to pick and choose their own
                                travel arrangements and accommodation.
                                     Dee Byrne of the Association of British
                                Travel Agents (ABTA) says that travel agents
                                are trying to meet customers’ needs by sourcing
                                and offering hotels and flights separately. “As
                                well as their main holidays people now take
                                two or three short breaks in a year, and they’re
                                particularly likely to tailor-make their own
                                packages for those,” she observes. Package

10                                    corporate sector review October 2006
                                                                                                                                        cover story
Faith Glasgow reports on how the threat of terrorism,
environmental concerns and the changing whims of
customers have affected the travel industry.

trends in the
travel industry
deals are used primarily for the main holiday.      UK terrorist threats have had relatively little        Certainly, Eurostar reported a 29% increase in
     However, not all package holidays are on       influence on the industry as a whole. In the           passengers during that period, cruise bookings
the wane. “The more successful packages these       aftermath of the disruption to UK airports             were boosted and the ferry companies also
days appear to be niche or activity-based           caused by the security alerts on 10 August,            enjoyed some much-needed extra demand as
holidays where the holiday company can add          VisitBritain, the national tourism agency,             late-booking holidaymakers switched their
value beyond the straight ‘sun and sand’ deals,”    monitored the effects on inbound tourism to            plans to avoid flying. But whether these
says Hitchins. “Indeed, cruises, which must         Britain. At the end of August it reported that,        responses are a temporary blip on the back
count as the ultimate niche package, have been      ‘for the most part, concern continues to focus         of widespread airport disruption, or whether
rocketing in popularity – volumes have roughly      on the inconvenience of potential disruption           people’s confidence in the reliability of holidays
tripled over the last 10 years and they now         to itineraries caused by security measures             involving flights has been shaken more
account for around 5% of all package holidays.”     rather than the treat of terrorist activity itself.’   fundamentally, is not yet clear.
     Where are the current must-visit                    A similar response has been evident among
destinations? Consumers are becoming more           outbound UK holidaymakers, claims Dee Byrne.           sustainable tourism
adventurous in their choice of short break          “The security problems didn’t have a massive           One development – likely to have major long-
destinations, with a growing interest in trips to   effect on package holidays: chartered flights          term significance in the face of concern over
Eastern Europe in preference to the old favourite   were not cancelled, and tour operators made            climate change and the burgeoning Fairtrade
haunts nearer to hand, according to Fred            it a priority to get everyone out on their holiday     movement – is the growing interest, among
Hitchins. Bulgaria, Slovenia and Croatia are        even if there were delays.” But it’s too early to      both operators and consumers, in so-called
also popular for package holidays because of        say whether there will be a knock-on effect            sustainable tourism. In general terms, this
the value for money they offer.                     dragging down next year’s bookings, as the             involves both minimising the environmental
     Current long-haul hotspots include Brazil      main booking period is not until January.              impact of tourists and maximising the economic
and cultural tours to China. Indeed, long-haul           “British people are pretty resilient in the       and social benefits to the local economy.
operators are now offering two-centre China         face of terrorist threats and increased security            A number of focused charities and campaign
trips, split between the usual tourist honeypots    and I don’t think they will let such problems          groups have emerged, including Tourism
and a beach resort on the Chinese coast.            stop them from travelling,” Byrne continues.           Concern (www.tourismconcern.org.uk),
                                                    “But cancelled flights are a big inconvenience         which campaigns to ensure tourism benefits
threat of terrorism                                 [British Airways alone had to cancel almost            local communities, and Climate Care
Of course, terrorist activities have been           1,300 flights during the August chaos] and             (www.climatecare.org.uk), which (among other
closely linked to transport hubs and tourist        they may look for alternative means of                 things) enables travellers to offset the carbon
targets worldwide. Yet it seems that the recent     holiday travel.”                                       emissions produced by their flight by supporting

                                                                                                                                                      continued over

corporate sector review October 2006                                                                                                                             11
cover story

                           trends in the travel industry (continued)

tree-planting or renewable energy projects.        water conservation and recycling, protecting        would cause real trouble for the many
     The charity arguably most central to the      wildlife attractions such as nesting turtles        developing countries whose economies are
travel industry in this respect is the Travel      from damage by tourism, and ensuring the            heavily dependent on tourism.”
Foundation, which was set up in 2003 by the        local economy benefits from tourist money.               Meanwhile, low-cost airlines – whose
industry itself and various NGOs with support           Weston gives the example of a project in       expansionist policies have come in for much
from the government. It now has around 100         Tobago to help fishermen and farmers sell           criticism from environmentalists – point out
members, including many of the biggest             their produce to local hotels. “It’s harder than    that they have made huge investments in new,
companies and a number of specialist               it sounds because in many cases the big hotels      more fuel-efficient aircraft, and that an air
operators. Of course there are many hundreds       have catering contracts which mean they import      fuel tax would be an economic disaster. It
of operators and thousands of travel agents,       all the food they serve. But where it’s in place,   would certainly mean an end to the cut-price
but as David Weston of the Travel Foundation       everyone benefits – the tourists eat fresh local    flights we’ve become so used to. Clearly,
explains, progress is steady. “A few years         produce, transport costs and carbon emissions       there are no easy answers, but environmental
ago, no travel companies had responsible           are minimised getting it there, and the local       concerns are bound to remain high on the
tourism policies; now 40 or 50, including          producers have a market.”                           agenda for the travel industry.
some of the biggest in the UK, have one and             The big change in recent years is that
some have dedicated members of staff to            sustainability is no longer looked on as a          Faith Glasgow is a freelance journalist
deal with it,” he says.                            slightly cranky fringe benefit. Tour operators’
     The Travel Foundation has a two-pronged       attitudes have changed markedly as fair trade
mandate. First, it works with UK travel agents     and the environment have become increasingly
and tour operators to help them make their         high profile – and marketable. But although
businesses more focused on sustainable tourism.    suppliers may now be prepared to spend
This may be a matter of, for example, helping      money on responsible tourism, consumers are
suppliers choose more enlightened hotels or        more resistant to paying for environmental
educate customers about the importance of          conservation. So, as Weston emphasises,
sustainable tourism.                               awareness-raising is a key aspect of the
     For instance, Thomas Cook, one of the         foundation’s work.
biggest members of the Travel Foundation, has
broken new ground by highlighting hotels with      environmental concerns
‘responsible tourism’ policies in its new          And what, more generally, of the airlines’
brochures. “The 18 hotels that have been           carbon emission debate? Airlines stand
awarded these logos are those that have            accused by the likes of Friends of the Earth        ‘Tour operators’ attitudes have
demonstrated via detailed questionnaires that      (FoE) of being the fastest-growing source of
they take environmental and social issues          greenhouse gases, with a doubling of UK             changed markedly as fair trade
seriously and work to ensure that their
operations run responsibly,” comments a
                                                   passenger numbers forecast by 2030. Air
                                                   fuel is not taxed at present and FoE’s line is
                                                                                                       and the environment have
Thomas Cook spokesperson.
     Second, the Travel Foundation initiates a
                                                   that introducing a tax would control that
                                                   growth. But as David Weston points out: “It’s
                                                                                                       become increasingly high profile
variety of projects around the world – improving   not that simple – stifling holiday air travel       – and marketable.’

12                                                                                                           corporate sector review October 2006
Still have questions about meeting your CPD requirements?
Sara Llewellyn answers them for you.

demystifying CPD
   CPD training becomes compulsory for all ACCA members from                  ACCA will require me to complete a complex annual return
January 2007. However, feedback suggests that members still have              You can either make your CPD return online at any point in the year, or
some questions about ACCA Realise requirements, so we’ve addressed            you can complete the paper version which is linked to your subscription
some common misconceptions to ensure that your experience of CPD is           renewal. You just need to tick two boxes and sign a declaration to confirm
beneficial rather than burdensome.                                            that you have achieved the CPD requirements and are maintaining your
                                                                              competence in relation to professional ethics. There is no requirement
I need to attend courses to meet the CPD requirement                          to supply any supporting documentation unless ACCA requests this as
ACCA Realise is all about your personal development. You can develop          part of its monitoring process.
your skills in a wide variety of ways – for example, a significant amount
of learning and development takes place in the workplace. The key             CPD must cover technical accounting issues
questions to ask are:                                                         CPD undertaken must be relevant to you. If you work for a cereal company
     was the learning activity relevant to my career?                         a seminar on wheat may be relevant to you and develop your business
     did I maintain or develop my skills?                                     knowledge. Therefore, it would constitute CPD. Similarly, you may be
     can I demonstrate this?                                                  required to undertake a course on business French for a forthcoming
                                                                              business trip – again, if it is relevant to your career, it constitutes CPD.
CPD activities could include:                                                 Practising members should still aim to ensure that the majority of their
   learning and development activities that occur in the workplace e.g.       CPD consists of technical accounting.
   discussion groups, mentoring and coaching, briefings from auditors
   learning from participating in networks and discussion/working groups      I need a certificate to demonstrate I have undertaken CPD
   reading and research, and completing further study or qualifications       CPD is verifiable if members can explain the relevance of the activity, show
   e-learning via the internet or other multimedia                            proof of involvement and explain how they will benefit from participating
   writing and presenting in business or technical issues                     in the activity. Evidence to support verifiable CPD may include:
   attendance at courses/seminars/conferences.                                     hand-outs/notes from attendance at courses, conferences or seminars
                                                                                   slides/notes from presentations
One example of workplace development occurs when a practitioner needs              materials/research notes and final pieces of technical or business articles
to undertake research to advise a client. This involves consulting relevant        records of mentoring or coaching, including objectives and progress
technical material, telephoning ACCA’s technical advisory service and              materials/notes of participation in organised and monitored
producing a recommendation report for the client. The practitioner notes           discussion groups
the number of hours taken in research. The hours taken in research are             materials/outputs or products from work, for example a business
the CPD units. The report is the demonstration that the research has taken         plan developed as a result of research and learning about how to
place. The whole exercise is verifiable.                                           prepare such a plan
     Another example involves an FD tasked with preparing a briefing               materials/attendance certificates from courses and workshops.
for new board members. The FD has already identified that she has to
develop presentation skills and ensure that the board members                 I am currently taking a career break to raise a family – how am I
understand key company issues. The FD notes how many hours are                going to meet the requirements?
spent developing the presentation and refining her presentation skills.       You can apply for a waiver that will relate to verifiable CPD units if you
The actual presentation power point slides and speaking notes are             are following the unit route and taking a career break. You can also
evidence of the learning activity.                                            apply if you are on maternity or paternity leave, long term sickness
                                                                              leave, are unemployed, or have onerous caring duties for a close
does XYZ count as CPD?                                                        family member. Generally, a minimum period of one month’s absence
Only you can answer this question. As general guidance, ask yourself:         from work is required to be eligible for a waiver.
    did I learn something?                                                        You can apply for a waiver using the online tool, downloading a
    is it relevant to my current role or future career aspirations?           form from the ACCA Realise website, or contacting ACCA Connect. If
    can I demonstrate this?                                                   you are accepted for a waiver you must still complete a CPD return
                                                                              and complete the required 19 non-verifiable CPD units.
If you have answered yes to the first and second questions, it is CPD.
If you have answered yes to all three questions, it is verifiable CPD.        Sara Llewellyn – Training and Development Officer, ACCA

corporate sector review October 2006                                                                                                                       13

                           A range of business and investment opportunities
                           provide a variety of routes into this booming
                           emerging market, says Richard Willsher.

doing business with India
   The economic fundamentals are compelling.       setting up a state-of-the-art laboratory in          Moreover, according to a study released earlier
Indian gross domestic product has grown at         Bangalore to rival its headquarters in California,   this year by the Boston Consulting Group, the
between 7.5% and 10% each year since 1999.         where core search engine technology will be          next generation of businesses is set to become
    Estimates from among others the Reserve        developed. And Indian engineering houses are         world class and will change the face of doing
Bank of India and US investment bank Morgan        using 3-D computer technology to develop             business with India: The New Global
Stanley are that this will continue in 2006 at     everything from car engines and forklifts to         Challengers: How 100 Top Companies from
around 9.5% and drop back marginally in            aircraft wings for the likes of General Motors       Rapidly Developing Economies Are Changing
2007. Compared with the major economies of         and Boeing.’                                         the World looks at 100 fast growth emerging
Europe where any appreciable above inflation                                                            market businesses, of which 21 are from India.
growth has proved difficult to achieve over        retail                                               These include Bharat Forge, the world’s
recent years, India looks enticing.                Meanwhile western businesses are keen to             second largest forging business; Wipro, the
                                                   access India’s burgeoning and increasingly           third largest third-party IT services and business
more than plain vanilla BPO                        wealthy retail market. Its rapidly increasing,       process outsourcing company; Ranbaxy
India’s global leadership in business process      affluent middle class is now reckoned to             Pharmaceuticals, one of the top 10 generic
outsourcing (BPO) is well known. According         number around 200m; roughly equal to the             pharmaceuticals manufacturers; and Bajaj Auto
to research conducted by Atradius1, the            entire populations of Germany, France and            and Mahindra & Mahindra, the automotive
Netherlands based credit insurer: ‘India has       the UK added together. These people are              equipment makers. Investing in and partnering
an estimated 60% of the world’s IT and BPO         buyers of goods and services that are sourced        with such companies offers a dynamic
market and this is growing by 40% a year.’         or delivered from overseas as well as from           alternative to investing in the more benign
This has brought competitive advantages to         the domestic market. India is now reckoned           European environment.
British businesses, particularly in financial      to be among the ten largest retail markets in
services. Moreover, the country produces           the world and growing fast. Recent deals have        acquisitions: a two way street
about two million new graduates per year who       included Fiat’s planned joint production             A number of western businesses are now
speak English, many of whom are qualified          facilities for small cars with Tata Motors, among    involved in acquiring or selling businesses
in accountancy, computer studies, business         many others. This growth applies to other            where one end of the deal involves an Indian
and commerce. Basic salaries for bottom-of-        consumer sectors; in the year 2000, for example,     counterparty. Major groups Tata, Birla and the
the-scale operators are likely to be $2000 to      there were 5.6m mobile phone subscribers in          Ambani family’s Reliance Group have been
$3000 per annum and just about any process         India – now there are 10 times this number.          active in making acquisitions abroad and there
that can be carried out or delivered online can                                                         is a raft of other businesses and families that
be outsourced to India at a fraction of the cost   partnerships                                         are making acquisitions overseas. Research
of performing the same process in-house in         Well-established, family owned and/or run            from Close Brothers, the London-based
the West.                                          enterprises are the backbone of the country’s        corporate finance house, finds that since
     The Atradius research also demolishes the     commercial life. The Tata Group, for example,        2002 Indian corporates have acquired 101
low-cost equals low skills argument: ‘What is      with revenues of $18bn has been around for           international businesses, spending £2.9bn to
even more exciting about India is the pace of      over 100 years while the $8bn Aditya Birla           do so. And the pace of activity is accelerating
innovation. It is the Indian design teams of       textiles, metals, cement and oils group traces       sharply with 29 deals valued at £1.1bn
technology giants such as Hewlett-Packard,         its origins back to 1857. These are world-           announced in the first four months of 2006.
Cisco Systems and Motorola that invent the         class businesses with operations across the
latest software and dazzling multi-media           globe and already work in partnership with           infrastructure: bad news – good news
features for next-generation devices. Google is    many western businesses.                             However, the Indian picture is by no means

14                                                                                                            corporate sector review October 2006
entirely rosy. ‘The threat to India’s growth over     The LSE also advises that 24 Indian companies
the next two years is its poor infrastructure,’       have either depositary receipts or ordinary
according to research published by Morgan             shares quoted on the main market either as
Stanley in June 2006.2 ‘To address the                overseas listed companies or on the wholesale
problem, India needs to mobilize capital              Professional Services Market.
more effectively and streamline the process                A further set of investment options has
for the implementation of infrastructure              begun to appear in the shape of private equity
development, objectives that require strong           funds. A recent report from consultants Bain
government. Coalition politics, as now                and Company3 concluded that the Indian private
prevailing in India, tend not to produce strong       equity market will grow rapidly over the next
governments. Since India has been able to             five years reaching $7bn by 2010. They say
achieve high growth in the past three years           that this will enable investors to gain from the
even with a poor infrastructure, the hope is          enhanced rate of growth that private equity
for continuation of the same…’                        can bring to high growth companies in the
     The other side of the country’s                  rapidly growing Indian market place. At the
infrastructural weaknesses is the opportunity         same time exits by means of IPOs on either
for those working in infrastructure advice and        local or international stock exchanges will
construction sectors. The UK Department of            enable investment gains to be harvested.
Trade and Industry’s UK Trade and Investment               In summary, India is a massive emerging
(UKT&I) highlights construction, engineering,         market offering significant business and
healthcare and medical, oil and gas, power,           investment opportunities. It is a rising
transport and water as key targets for British        economic powerhouse, already one of the world’s
exporters and consultants.                            largest economies. It is forcing itself onto
                                                      western agendas and cannot be ignored.
portfolio investment
What other routes are open to investors seeking       endnotes
exposure to the Indian growth story? Emerging         1
                                                        Elephant or Tiger? In introduction to doing
market funds are the obvious route and typically      business with India, Atradius
India makes up a significant proportion of            2
                                                        India and China: New Tigers of Asia Part II,
so-called ‘big four’ or ‘BRIC’ funds that invest      JM Morgan Stanley June 2006
in Brazil, Russia, India and China.                   3
                                                        Indian Private Equity Outlook Study, Bain
     Investing directly in stocks listed on the       & Company September 2006
Mumbai Stock Exchange is a more risky path to
follow. A significant market correction that          Richard Willsher is a freelance journalist
occurred in May this year illustrated the weakness
of India’s financial markets in the face of foreign
investors’ changes in investment behaviour.
     Direct investment in Indian companies
quoted in London is another option. Currently
there are five listed on AIM which, according
to a spokesperson for the London Stock
Exchange, have either the majority of their
operations in or revenues deriving from India.

 India: the facts
 Population                                                    1.095 billion
 Workforce                                                     500 milliion
 Official language                                             Hindi
 Business language                                             English
 GDP                                                           $775bn (£412bn)
 GDP growth rate (2005 estimate)                               7.6%
 GDP per head in US$ terms                                     $728
 Inflation rate                                                4%
 Population below poverty line                                 25%
 Population over age 15 that can read and write                59.5%

 Sources: CIA World Factbook / Economist Intelligence Unit

corporate sector review October 2006                                                                                15

convergence in
accounting standards
   We are rapidly heading towards a world                                                               changes in groups has been harmonised and,
where there are two main financial reporting                                                            going forward, will be largely the same under
systems: US GAAP accounting, used by the                                                                the two systems. This is an important
largest part of the global capital market, and                                                          development given the level of global merger
International Financial Reporting Standards                                                             and acquisition activity, the different treatments
(IFRS), the system now being used as the                                                                having been the source of the largest differences
benchmark in many other countries (all of                                                               between the two accounting systems.
Europe, China, Australia, Malaysia and Egypt                                                                 In terms of share-based payments
to name a few).                                                                                         (including US executive stock option schemes),
     There has been controversy in certain                                                              IASB issued IFRS 2, which was comparable
quarters about whether the time and effort                                                              with the US standard SFAS 123. Following
being put into convergence between these two                                                            that, the Americans in effect changed the status
reporting systems is worth it, and whether it                                                           of SFAS 123 from voluntary to mandatory.
will have an adverse effect on the quality of the                                                            Of course, significant areas of difference
international standards.                                                                                remain. Impairment of property, plant and
     Given ACCA’s status as the world’s largest                                                         equipment – the models for triggering when to
professional international accountancy body                                                             do a test and then the model for measuring
with over 370,000 students and members in                                                               the impairment when it comes to it – are
170 countries, it may not come as a surprise            into a lower cost of capital, reduced           different even though both models seem to
that we support the idea of global accounting           interest costs and higher share prices          work reasonably well. On revenue recognition,
standards. Convergence between IFRS and US              for those companies with joint listings in      there are just a couple of IFRS standards that
GAAP is important in our view for a number              both America and another country, there         deal with this, by contrast to the 200-plus
of reasons:                                             should be substantial savings, particularly     standards, interpretations and other statements
     the harmonisation of financial reporting           in terms of preparation costs. Obviating        dealing with the subject in US GAAP      .
     around the world will help to raise the            the burdensome US GAAP reconciliation                So how far do we need convergence to
     confidence of investors generally in the           statement required at present would be a        proceed? We do not believe the capital markets
     information they are using to make their           worthwhile prize                                need identical standards in every case. What
     decisions and assess their risks. The              harmonisation of requirements also              is most important is the confidence that
     opposite is perhaps the clearer case. If           assists the international mobility of           reporting has been done to a high standard
     accounting for the same events and                 professionally qualified accountants            and that there is equivalence in the different
     information produces radically different           themselves. Mobility of skilled labour          systems. This is the objective of the European
     reported numbers, depending on the                 can only be a good thing.                       Commission in its convergence discussions
     system of standards that are being used,                                                           with the US – mutual recognition of US GAAP
     then it is self-evident that accounting will   So where is the process currently? Encouragingly,   and IFRS and the removal of the need for a
     be increasingly discredited in the eyes of     good progress has been made so far. Some of         reconciliation statement by foreign companies
     those using the numbers                        the major sources of difference have been           registered with the SEC.
     for individual companies it should be the      eliminated or are declining. For example, the            What is sometimes overlooked is that, while
     case that the greater confidence in reliable   issuing of IFRS 3 meant that the treatment of       the reporting by companies to stock markets
     and transparent information translates         business combinations and how to deal with          is a critical activity for those businesses, the

16                                                                                                            corporate sector review October 2006
Is the effort being put into converging US GAAP and IFRS worth it?
Richard Aitken-Davies and Richard Martin think so.

bulk of accounting and reporting takes place                                                              guidance (IAS 18) is perhaps rather incomplete
by unlisted companies and not to those sorts                                                              and out of date.
of investors. In this context, identical standards                                                             Convergence is a process of getting closer,
seem less critical and it would be sufficient if                                                          which ACCA supports. However, the current
there were mutual recognition of the                                                                      pursuit of convergence risks forcing a rapid
equivalence of quality of the two systems.                                                                and costly change of pace in IFRS and taking
     The reasons as to why convergence with                                                               convergence further than is justified on clarity
the US should be pursued have been noted.                                                                 and quality grounds. Therefore, focusing on
There is, however, a downside to all of this for                                                          the backlist of standards is probably not the
IFRS – a price in terms of costs and difficulties                                                         right approach. A joint approach on all major
of the changes in the standards that convergence                                                          new developments would be our preferred
inevitably creates. These include:                                                                        way forward.
     extra costs in the preparation of financial
     statements by all IFRS companies –                                                                   Richard Aitken-Davies is Vice-President of
     implementing new requirements and                                                                    ACCA. Richard Martin is ACCA Head of
     restating previously reported numbers                                                                Financial Reporting
     changes have to be communicated and
     understood by all of those involved in
     preparing the accounts, auditing them and       reporting IAS 14 with equivalent provisions
     using them                                      derived from the corresponding US standard
     translations of the amended standards           SFAS 131. This is a convergence project pure
     are required for the many languages in          and simple. The costs are clear. Companies
     which IFRS are applicable                       (many applying IAS 14 for the first time last
     the changes have to be approved by the          year) will now have to redo their segmental
     various national endorsement authorities        disclosures. It is hard to see where the
     and often incorporated into their legal         improvement and benefit comes. There appears
     systems                                         to be a loss of information compared with the
     continuous piecemeal changes undermine          existing requirements. There seems more risk
     the reputation of IFRS. Some might              of a biased or incomplete disclosure of data. Not
     justifiably ask why high quality standards      all analysts will think this represents progress.    ‘... what is very important is
     need such frequent amendment.                        Nevertheless, what is very important is
                                                     that major new developments in accounting            that major new developments
But we do not believe these problems mean            standards are done jointly, so that the principles
that convergence should stop. Not at all. What       will be in step and new differences avoided.         in accounting standards are
it does mean is that changes to IFRS should
always be justified by the improvement in the
                                                     So, for instance, there is a need for a general
                                                     standard setting out the principles of revenue
                                                                                                          done jointly, so that the
quality of the reporting that results.
     Take, for example, the recent proposals to
                                                     recognition. There is too much sector-specific,
                                                     issue-specific guidance in US GAAP on the
                                                                                                          principles will be in step and
replace the international standard on segment        one hand. On the other, for IFRS the existing        new differences avoided.’

corporate sector review October 2006                                                                                                                   17

                            contact the technical advisory service via telephone on
                            020 7059 5920 or via e-mail at members@accaglobal.com

technical help
   HMRC has issued the first five Tactical          age discrimination                                 It will also need to put in place monitoring
and Information Packages (TIPs) which               The Employment Equality (Age) Regulations          procedures. It may be necessary to seek
include franchises; confectioners, tobacconists     2006 came into effect on 1 October 2006.           specialist advice.
and newsagents; and waste disposal and              If an organisation has not already done so,
landfill sites.                                     it will be necessary to review its Human           Further guidance:
     The information covers trading practices,      Resources policies to ensure that it is not        www.opsi.gov.uk/si/si2006/20062014.htm
markets, competition and legislation. The           inadvertently transgressing the new regulations
TIPs can be accessed at: www.hmrc.gov.uk/           including areas of advertising, employment         www.dti.gov.uk/employment/
tips/index.htm.                                     packages, redundancy, retirement and               workandfamilies/maternity-leave-pay/
                                                    promotion. It will also need to put in place       guidance/page21116.html
HMRC interest rates                                 monitoring procedures. It may be necessary
Interest rate changes on under/over-paid            to take specialist advice.                         www.dti.gov.uk/employment/
taxes came into effect on 6 September 2006.             It should be made clear that the regulations   workandfamilies/adoption-leave/guidance/
    The rate of interest on unpaid corporation      apply to all workers, irrespective of age.         page21074.html
tax changes from 6.5% to 7.5%.                          The pension provisions in the regulations
    The rate of interest on over-paid corporation   do not come into force until 1 December 2006.
tax changes from 3% to 4%.
                                                    useful links:
The rate of default interest charged on the         www.opsi.gov.uk/si/si2006/20061031.htm
following changes from 6.5% to 7.5%:
     under-declared VAT, air passenger duty,        www.dti.gov.uk/employment/discrimination/
     insurance premium tax, landfill tax, climate   age-discrimination/index.html
     change levy, aggregates levy
     excessive repayments of VAT, insurance         extension of statutory maternity and
     premium tax, landfill tax, climate change      adoption paid leave
     levy, aggregates levy and customs duties       The Maternity and Parental Leave etc and the
     recovered by assessment                        Paternity and Adoption Leave (Amendment)
     late payment of customs duty.                  Regulations 2006 apply where a baby is
                                                    due on or after 1 April 2007.
The rate of statutory interest paid on the               Where an employee’s baby is due before
following increases from 3% to 4%:                  then, the previous legislation and guidance
     where an official error has caused an          will continue to apply regardless of when
     overpayment, a failure to claim credit, or     the baby is actually born.
     a delay in certain repayments of VAT,               There are similar provisions in respect
     insurance premium tax, landfill tax,           of children expected to be placed for
     climate change levy, aggregates levy and       adoption on of after 1 April 2007.
     excise duties                                       If an organisation has not already done
     where there has been undue delay in            so, it will be necessary to review its Human
     processing a claim for repayment of            Resources policies to ensure that it is not
     excise duty and customs duty.                  inadvertently transgressing the new regulations.

18                                                                                                           corporate sector review October 2006
For further information on events, visit www.accaglobal.com/events.
For technical advice call 020 7059 5920.
                       October 2006
                                           National Minimum Wage increase came into effect. Details of the new rates can be found on the
                                           DTI website: www.dti.gov.uk/employment/pay/national-minimum-wage/index.html

                                           Employment Equality (Age) Regulations came into effect. Details at:

                                           Extension of Statutory Maternity and Adoption paid leave. Regulations due to come
                                           into effect in respect of births due on or after 1 April 2007. Further information:

                                           Guidance on statutory payments in respect of Statutory Maternity Pay and Age
                                           Discrimination and Statutory Payments can be found on the HMRC website:

                                           Class 1B NIC and income tax under PSAs due for the year ended 5 April 2006

                       December 2006
                                           The pension provisions contained in the Employment Equality (Age) Regulations 2006 are due
                                           to come into effect.

                       January 2007
                                           AIM listed companies to adopt IFRS for accounting periods commencing on or after
                                           1 January 2007. See AIM Notice 15 issued 21 December 2005.

                                           FSA aims to end audit requirements for small firms subject to FSA regulation. Further details:

                                           Waste Electrical and Electronic Equipment (WEEE) regulations come into force. Full
                                           producer responsibility begins 1 July 2007. Further information can be found at:

                       other key deadlines
                        Corporation Tax    Payment of corporation tax – nine months and one day after the end of the accounting period
                                           Normal due dates for companies required to make quarterly instalments:
                                              1st instalment – six months and thirteen days from the start of the accounting period
                                              2nd instalment – three months after first instalment
                                              3rd instalment – three months after the second instalment
                                              4th instalment – three months and fourteen days from the end of the accounting period

                        VAT                Filing of quarterly VAT returns – one month after end of VAT quarter
                                           Payment of VAT – one month after end of VAT quarter

                        Company accounts   Normal dates for filing of accounts at Companies House
                                              ten months after period end (private companies)
                                              seven months after period end (public companies)

corporate sector review October7 2006                                                                                                       19

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