All posts by NTSI Publishing Team

Accountancy, FInance, Finance and Banking, Wales

ACCA welcomes proposals to strengthen auditor reporting requirements on breaches of law and regulations

  • ACCA backs FRC proposals to allow auditors to focus on laws and regulations that are most likely to have a material impact on the financial statements.

 

ACCA (the Association of Chartered Certified Accountants) is backing FRC proposals to enhance auditor quality and foster users’ confidence in financial statements.

 

The FRC – the UK’s accounting regulator – is proposing enhancements to existing requirements. This would strengthen auditor requirements to detect and report material misstatements from non-compliance with laws and regulations, and to clarify instances auditors should report such breaches, and other significant matters, to the relevant regulators.

 

The FRC says updating ISA (UK) 250 and ISA (UK) 2X0 will enhance the usability and informativeness of the audit and provide greater assurance to users of financial statements that potential material misstatements have been properly assessed by the auditor.

 

Jessica Bingham, policy and insights lead, (EEMA & UK), ACCA, said: “Enhanced requirements for auditors to consider and address relevant laws and regulations will promote transparency and accountability, ultimately bolstering investor and stakeholder confidence.”

 

ACCA welcomes FRC’s acknowledgement that auditor’s responsibilities cannot be open-ended in terms of identifying and determining compliance with all laws and regulations relating to the entity.

 

To assist, the FRC is introducing a more robust risk assessment process. This will help auditors identify those laws and regulations that have, or may potentially have, a material effect on the financial statements.

 

However, Bingham adds: “ACCA asks that the FRC carefully consider the risk that in practice the impact of the updated requirements could be to shift workload from management to the auditor.”

 

The FRC is proposing switching from a procedural approach to an outcome-based approach, using risk focused assessment for the identification and assessment of relevant laws and regulations.

 

ACCA says this gives flexibility and discretion to auditors, allowing them to exercise comprehensive professional judgement to identify the likelihood and materiality of misstatements.

 

While acknowledging resource issues, ACCA is calling for ISA (UK) 2X0 to apply eventually to listed entities as well as public interest entities.

 

Bingham said: “We recognise the need to avoid burdening those with limited resources but believe that the proposed application material for ISA (UK) 2X0 appears to be a valuable asset for auditors, offering practical guidance on identifying and addressing suspicions of non-compliance.”

 

The revised ISA is set to come into effect for audits of financial statements for periods commencing on or after 15 December 2024.

 

Visit ACCA’s website for more information.

Charity, Charity Events, Charity News, News

Lord’s Taverners Wales raises £26k in charity Christmas lunches

The ever-popular Lord’s Taverners Wales Christmas lunches in December 2023 raised a further £26,000 for the charity.

 

Last December was the 39th year the Christmas lunches have been held in Wales.

 

Held at Cardiff’s Marriott hotel and hosted by well-known Wales comedian Rod Woodward, the two lunches attracted several hundred guests, who helped to raise £26,000 for the youth cricket and disability sports charity.

 

The two events were memorable festive celebrations for the run up to Christmas. Guests were treated to performances from a variety of stars, including comedians Daliso Chaponda, Josh Daniels, Nina Gilligan and Abandoman, as well as magicians El Baldinho, James Hawker, Adam Reeves and musician Jack Chandrinos.

 

The money raised from the event will go towards the charity’s Wicketz, Super 1s and Table Cricket programmes, along with funding sports wheelchairs, sensory and play equipment facilities and minibuses for special needs schools.

 

Andrew Gibson, Chairman of Lord’s Taverners Wales, said: “We were delighted to hold our annual Christmas lunch once again and welcome a host of friendly faces, new and old, to raise important funds for the charity and support our work going into the new year.

 

“I want to extend a huge thank you to all our supporters in 2023 who have helped us reach incredible fundraising targets, and I look forward to our events in 2024, especially our 40th anniversary of these Christmas lunches.”

 

The Lord’s Taverners Wales supports some of the most marginalised and at-risk young people across the country using sport and recreation to build links between communities and encourage groups to play sport together. The charity currently runs its Wicketz programme in Barry, Ely, Llanrumney and Pontypridd.

For more information about the Lord’s Taverners Wales and the support they offer, visit https://www.lordstaverners.org/our-regions/south-wales/

News

Estate agents reveal what’s in store for landlords and sellers in 2024

  • Rents to increase over next 12 months
  • Sales market is returning to pre-covid levels

A Cardiff estate agents has shared its outlook for lettings and sales for the next year.

Thomas H Wood, which has offices in Whitchurch and Radyr, has been helping customers buy, sell and rent homes across south Wales for over 50 years.

The experienced lettings team has noticed a trend of upward rents over the last few years which is set to continue in 2024.

John Wood, director of Thomas H Wood, said: “Since the end of lockdown, we have seen a surge in property rents in the private rented sector and the rent increases are set to continue this year. We are seeing forecasts that expect prices to rise by 5% over the next 12 months.

“We expect rent prices to continue to increase over the next year at a steadier pace than they have previously. However, this will depend on any further policies introduced by the Welsh Government and when these are implemented. If the rent control measures proposed in last year’s green paper consultation become a reality, this could lead to a rent surge as landlords sell and therefore reduce the stock available on the market.”

With regards to sales, the team is relieved to see market conditions returning to pre-covid levels, following the abnormality and volatility of the market immediately after covid.

Paul Wood, director of Thomas H Wood, said: “October and November showed positive signs within the marketplace with sales and new instructions performing better than expected. However, sellers need to remember that it is currently a buyer’s market so properties will take a longer time to sell and will likely sell below the asking price.

“Interest rates decisions will be watched closely by buyers concerned about mortgage rates. The stabilisation of the base rate is having a positive effect on the market at the moment. With inflation yet to meet its 2% target, we anticipate that the static base rate could continue for some time in 2024.

“Any reduction in the base rate is likely to fire up the £450,000 to £650,000 market which has been a little slow over recent months as owners have been hesitant to sell and potentially take on a bigger mortgage.”

Thomas H Wood is a leading independent, family-run estate agent in Cardiff, specialising in selling and letting residential and commercial properties across north Cardiff. For more information, visit www.thomashwood.com.

Accountancy, Accountancy & Accounts, FInance, Finance and Banking, Finance News, Wales

58% of SMEs cite rising costs as top concern for 2024 in new research

  • Challenges in talent acquisition, cost management, and ESG reporting emerge as the three top hurdles for SMEs in 2024.

New research from ACCA (the Association of Chartered Certified Accountants) highlights the pressing challenges and strategic innovation opportunities for small and medium-sized enterprises (SMEs).

The study, SMEs: Business challenges and strategic innovation opportunities, reveals three main challenges: escalating costs, workforce and talent management, and the evolving ESG (Environmental, Social, and Governance) reporting agenda.

Aleksandra Zaronina-Kirillova, head of SME at ACCA, says: “As we enter the new year, SMEs are grappling with a wide spectrum of challenges, but our findings are also a clarion call for SMEs to embrace strategic innovation. By addressing these challenges head-on, SMEs can unlock new growth avenues and strengthen their market position.”

The report emphasises the need for tailored strategies that can help SMEs navigate the evolving business landscape successfully, including embracing innovation, optimising resource management, and staying ahead of regulatory changes.

Key findings include:

  • Cost pressures and the economy: SMEs face significant increases in utility prices and supplies, with 58% of businesses highlighting higher costs as their top concern. A quarter of respondents said utility prices had surged by over 20%. This significant challenge underscores the need for effective cost management and innovative financial strategies.
  • Workforce and talent management: The study revealed a notable rise in job vacancies and challenges in filling specific roles. Increased job vacancies for professional workers were reported by 31% of businesses, and 14% were unable to find suitable candidates for clerical workers, technicians, and service and sales workers. This calls for a renewed focus on talent acquisition, skill development, and retention strategies.
  • SMEs and the ESG agenda: Nearly 50% of SMEs are now required to provide ESG information, highlighting the growing importance of sustainable practices. However, the report identifies a gap in the ability to generate and manage this data, presenting both a challenge and an opportunity for SMEs. Less than 45% of those surveyed said they had received training in how to effectively collect ESG data, leading to a lack of universal framework and metrics for reporting.

Zaronina-Kirillova added: “In these testing times, SMEs must pivot towards innovative strategies to navigate the complexities of cost pressures, talent retention, and sustainable practices. Our research not only identifies the critical hurdles but also offers a roadmap for SMEs to emerge stronger and more agile.”

The roadmap within the report recommends the adoption of digital technologies, enabling SMEs to streamline operations, reduce costs, and enhance productivity. It also emphasises the importance of embracing sustainable practices, not only as a regulatory compliance measure, but also as a strategic move to attract new business and customers.

It also encourages SMEs to develop and retain top talent through continuous learning and development opportunities.

In this rapidly evolving landscape, the role of accountants, especially those in small and medium-sized practices (SMPs) can be pivotal. Accountants are not just financial stewards but strategic advisers who can guide SMEs through complex challenges such as managing rising operational costs, navigating new regulatory requirements, and implementing effective ESG practices.

Accountants’ expertise in financial management and strategic planning is crucial for SMEs to optimise resources, identify cost-saving opportunities, and ensure compliance with evolving regulations.

To access the full report please visit ACCA’s website.

Business News, Insurance, Wales, Wales News

Insurance group Howden expands presence in Wales with new Swansea office

Howden, the international insurance group, has announced the opening of a new office in Swansea.

This strategic expansion is part of Howden UK & Ireland’s commitment to further strengthen its foothold in the South and West Wales region, providing risk advisory services to businesses.

The new office is located at Axis Court, Riverside Business Park, Swansea. Under the leadership of Gary Stevens, Regional Managing Director, who has over four decades of industry experience, the Swansea office aims to become the leading competitor in the commercial broking sector in South and West Wales.

Stevens, previously of Aston Lark, which was acquired by the Howden Group in 2022, has outlined ambitious goals for the office, including doubling the size of the team by the beginning of 2025, reflecting the company’s dedication to employing the best talent and fostering a dynamic team culture.

“I am thrilled to lead the team in Swansea as we work towards becoming the primary choice for risk advisory services in South and West Wales,” said Gary Stevens.

“Howden continues to be a driving force in the insurance industry and our goal is not just to be a significant player within Howden, but also to be the go-to partner for Welsh-based companies seeking high-quality risk advice.”

The investment in the Swansea office underscores the importance of South Wales to Howden UK & Ireland’s overall business strategy, with a second office in the region set to open this spring.

Stevens also emphasises the importance of having a collaborative and enjoyable work environment, stating: “We aim to have fun while delivering exceptional service to our clients. We’re building a team of highly skilled brokers with expertise in various sectors, including transportation, construction, charity, care, professions, sports and leisure, and waste/recycling.”

In July 2023, it was announced that Howden would become a Principal Partner of The British & Irish Lions for the next four years and the official front of jersey sponsor for the upcoming 2025 Lions Tour to Australia. This partnership support extends to a community level via the Lions Origin Clubs, with the Wales office supporting local teams across the region.

About Howden:

Howden is the 5th largest employee-owned business in the UK, and one of the largest insurance groups in the world, with $35bn premium under management and 1.7 million clients served by 15,000 employees.

Howden is made up of talented experts with the freedom and support to do what we do best. We are united by a shared passion and no-limits mindset, and we collaborate to create a powerful international team that can rise to any challenge. Together, we are working to change the insurance narrative – supporting our clients while using insurance as a tool to increase resilience for individuals, businesses, and communities. www.howdenbroking.com

Accountancy, Business, Environment, Sustainability

European Commission urged to improve stringency of SFDR classifications to fight greenwashing

  • ACCA and CISI call for European Union regulations to be more effective in promoting sustainable finance.
  • Greenwashing rules are a potential barrier to entry and improvements are recommended to drive meaningful investment.

 

In a response to the European Commission’s Targeted Consultation Document: Implementation of the Sustainable Finance Disclosures Regulation (SFDR), ACCA (the Association of Chartered Certified Accountants) and CISI (the Chartered Institute for Securities & Investment) say that the European Commission (EC) has an opportunity to influence wider global regulations including SEC greenwashing rules, using the lessons learnt from the SFDR and other jurisdictions’ regulatory successes in this space.

ACCA and CISI say that to ensure effective regulation, the SFDR needs greater guidance and clarification. The response was informed by the two bodies’ policy positions, sustainability focused engagement across the EU and UK, and roundtable discussion.

Jessica Bingham, policy and insights lead, (EEMA & UK), ACCA, said: “We recognise that SFDR has driven increased transparency for investors, enabling them to make informed decisions based on the sustainability practices of asset managers and the environmental, social, and governance (ESG) characteristics of investments.

“It has led to greater accountability for asset managers and a stronger emphasis on ESG integration in investment decision-making processes. As we shift to genuine impact investment, asset managers are now recognising the value of impact investing as a means to fulfil their fiduciary duty to investors, while also contributing to societal and environmental progress.”

However, adhering to the SFDR’s extensive disclosure requirements can be costly for asset managers, as it requires gathering and analysing vast amounts of ESG data, developing and implementing new reporting systems, and training staff on the regulation’s intricacies. This can put a strain on asset managers’ budgets and limit their resources for other critical initiatives. In some scenarios this has led to sustainability being the first area to cut.

George Littlejohn, CISI senior adviser, said: “ACCA and CISI question the extent of positive impact that the SFDR’s mandatory disclosure requirements have had. We believe that in many ways the nature of the regulation has hindered some firms as opposed to inspiring better practice and investment.

“Despite its positive impacts, the Sustainable Finance Disclosure Regulation (SFDR) has also been met with some criticism and concerns.”

The SFDR relies on the availability of high-quality, consistent ESG data to effectively inform investor decision-making and evaluate asset managers’ sustainability practices. However, the current state of ESG data is often fragmented, inconsistent, and lacking standardised definitions. This can make it difficult for asset managers to accurately assess their ESG exposure and report on their performance.

ACCA and CISI acknowledge that this will improve over time, and the introduction of the Corporate Sustainability Reporting Directive will assist in taking significant strides in the right direction. However, there will continue to be a heavy reliance on estimates and challenges will remain in gathering, measuring and analysing non-financial data. This translates across the non-financial reporting sphere and both ACCA and CISI recognise their role in assisting their members through this transition to ensure relevant capacity building and upskilling.

The current SFDR has been a first move in establishing criteria to combat greenwashing. However, it is not at present fulfilling its potential to be effective in promoting sustainable finance. ACCA and CISI urged the EC to consider steps such as:

 

  • Adopt a transition-focused approach to the SFDR.
  • Introduce more labels for different types of sustainable investments.
  • Phase in the implementation of the SFDR over time.
  • Create more flexibility in the SFDR.
  • Reassess the hierarchy of the labels.
  • Move beyond climate-focused sustainability.

 

This could enable a more sustainable financial system that aligns with the Paris Agreement and the Sustainable Development Goals.

Visit ACCA’s website for more information.

 

Business, Business News, Business Research

Welsh businesses optimistic despite investment and trade challenges

Businesses in Wales remain optimistic despite trade challenges and a continued hesitancy to invest in both equipment and training, according to Chambers Wales South East, South West and Mid’s latest Quarterly Economic Survey.

In Q4 of 2023, half of Welsh businesses stated that they believe that turnover will improve over the next 12 months while 42% predicted that profitability would improve, a small rise of 2% since the previous quarter.

However, investment and trade challenges persist, affecting business plans for long-term growth.

Over the last quarter, only 23% of businesses in Wales increased their investment in plant and machinery or equipment and 16% increased their investment in training. Just over half of Welsh businesses (52%) did not change their investment plans for plant and machinery or equipment and 66% did not change their investment plans for training in Q4 of 2023.

While trade fared slightly better in Q4 than Q3 of 2023, businesses in Wales have seen decreases in sales and orders both domestically and internationally. UK sales and advance orders both fell by 35% in Q4, while export sales and advance orders to overseas markets each decreased by 44%. Almost three quarters of businesses in Wales identified new markets as an opportunity for their business to recover.

Paul Butterworth, CEO of Chambers Wales South East, South West and Mid, said: “Our latest Quarterly Economic Survey results show a small rise in business confidence and optimism in Q4; the shoots of confidence and growth are starting to appear as we begin the new year.

“However, the results also demonstrate the low growth economic climate businesses in Wales are currently operating in, as firms continue to report minimal movement in investment plans, skills development and trade.

“Building on the growth measures announced in the Autumn Statement, businesses will be looking to the Spring Statement in March for further assistance and, with a general election likely to happen this year, it is vital that a stable economy and long-term growth support is prioritised by policymakers.”

News

ACCA on the Welsh Government budget

As widely predicted and trailed by ministers, today’s draft Welsh Government budget will make sobering reading for many. The draft budget has focused additional spending on protecting frontline services with a focus on supporting health and social services, local government and schools. Major losers in the draft budget include spending next year on rural affairs and climate change.

In terms of the economy, as well as the reduction in the budget available to support climate change initiatives, it is disappointing to see the budgets for apprenticeships and skills funding through Personal Learning Accounts reduced, as well as reduced funding for business and trade support. Those working in retail, hospitality and leisure will be concerned at the reduction in support via the non-domestic rates relief for these sectors.

Lloyd Powell, head of ACCA Cymru/Wales, said: “It was always going to be an extremely difficult budget for the Welsh Government, in the face of inflation and sluggish growth and the need to protect core services. However, the reductions in budgets to support skills, adapting to climate change and reduced support for sectors which continue to struggle will inevitably have an impact on the overall performance of the Welsh economy in the longer term, and on Wales’ net zero ambitions.”

News

Welsh business activity growth accelerates amid stronger client demand

Key Findings

  • Fastest rises in output and new business since June
  • Inflationary pressures strengthen
  • Backlogs of work increase at quicker pace

The headline NatWest Wales Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 61.5 in October, up from 57.1 in September, to signal a marked expansion in output. The rise in business activity was the sharpest for four months and the steepest of the 12 monitored UK areas. Anecdotal evidence suggested that the upturn was due to greater client demand and a stronger increase in new business.

Welsh private sector firms indicated a marked rise in new business during October. The pace of expansion accelerated to the sharpest for four months, as firms often noted that strengthening client demand drove growth. Of the 12 monitored UK areas, Welsh firms recorded the steepest upturn in new orders.

Output expectations for the year ahead at Welsh private sector firms remained strongly upbeat at the start of the fourth quarter. Companies stated that optimism was linked to hopes of a further uptick in client demand and stabilisation in supply chains. That said, the degree of confidence dropped to a three-month low, and was below the UK average.

October survey data signalled a strong upturn in Welsh private sector employment. Higher workforce numbers were attributed to greater new order inflows and increased business requirements. Nevertheless, ongoing labour shortages persisted, with firms noting challenges hiring suitable candidates for current vacancies and a high turnover of staff. The rate of job creation eased to the slowest since May and was among the softest of the 12 monitored UK areas.

Welsh private sector firms registered a further marked increase in outstanding business during October. The rate of growth was the fastest for three months and the sharpest of the 12 monitored UK areas. Companies stated that the rise in work-in-hand stemmed from greater new sales and challenges hiring new staff amid labour shortages.

Input costs increased at a substantial pace at the start of the fourth quarter, with the rate of inflation accelerating to a series-record rate. The pace of increase was the second-fastest of the 12 monitored UK areas, behind only Northern Ireland. Companies often noted that higher input prices were due to greater transportation, fuel, wage and raw material costs.

Welsh private sector businesses recorded a marked rise in output prices at the start of the fourth quarter. The rate of inflation accelerated to the fastest in almost 21 years of data collection. In line with the trend for input costs, Welsh firms signalled the second-sharpest increase in charges of the 12 monitored UK areas (slower than only Northern Ireland). Companies attributed the rise in output charges to the pass-through of costs to clients.

Gemma Casey, NatWest Ecosystem Manager for Wales, commented:

“Welsh private sector firms registered a positive start to the fourth quarter with a marked rise in business activity following stronger new order growth and strengthening client demand. As a result, the rise in backlogs of work accelerated  at a high pace. That said, the rate of job creation slowed to a five-month low as firms noted that labour shortages hampered companies’ abilities to fill vacancies with suitable candidates.

“Inflationary pressures strengthened as raw material and labour shortages, alongside greater transportation and fuel costs, pushed input prices higher. Encouragingly, firms were able to pass on higher costs to their clients through the fastest rise in charges in almost 21 years of data collection.

“Meanwhile, output expectations remained upbeat with optimism linked to a further uptick in demand and stabilisation in supply chains.”