The Kreston Academies Benchmark Report shows escalating anxieties among academy trusts regarding the future of their financial health. Although there are considerable surpluses in the sector, per-student income has increased by a mere 1% against inflation rates of over 10%, higher energy costs, and teacher pay increases. Consequently, 88% of trusts anticipate future decreases in surpluses and reserves.
Kreston Academies Benchmark highlights include:
The sector’s financial surpluses are lower than in the previous record-breaking year. However, a substantial number of single academy trusts (SATs) in the primary sector (47%) reported deficits for 2021/22, indicating that larger trusts have tremendous fiscal success.
This is the first time primary SATs have seen average in-year deficits in four years. This is due to a few primary SATs with huge deficits caused by capital and maintenance expenditures that pulled down the overall average.
The Office of National Statistics (ONS) has reported a 30% rise in capital spending compared to 2022. This is due to a predicted drop of at least 12% in primary and nursery school attendees in the next 6 years, resulting in a 7.4% decrease in MAT revenue reserves per pupil from £802 to £743. Despite this, larger trusts with more than 7,500 pupils still achieve surpluses similar to 2021. 70% of MATs expect growth by 2023/24, with 5% expecting growth of 7+ schools for both 2023 and 2024.
There was a noticeable decrease in grant funding for academies that moved trust in 2021/22, with only 23% receiving it compared to 63% back in 2014/15. The total level of funding was £1.73m, significantly lower than the £3.16m seen last year.
If you are interested in the Kreston Academies Benchmark Report, have a UK-based academy trust, and would like accounting advice and support, please get in touch with one of our members here.
BANSBACH has acquired strong partners in the growth region of Lake Constance, with Dr. Altmann in Überlingen, the tax consultancy firm Böttinger in Frickingen-Altheim and Bodensee Treuhand GmbH Wirtschaftsprüfungsgesellschaft, effective 1 January 2023.
With a total of 35 colleagues, WP/StB Dr. Michael Altmann and WP/StB Wendelin J. Böttinger will manage their respective locations and, together with StB Olaf Gläser, will be responsible for the development of the Lake Constance region. Bodensee Treuhand will provide auditing services alongside BANSBACH GmbH. This merger enables BANSBACH to offer its comprehensive advisory services in the Lake Constance area, with continuity through regular contacts and personnel. Services include bookkeeping, preparation, and auditing of annual financial statements, accounting and audit-related consulting services, national and international tax and legal consulting, transaction services, and business consulting services for CFOs.
For more information on the ongoing BANSBACH growth and doing business in Germany, click here.
Global vacancies
Starino Novaka 23
February 1, 2023
News
Kreston Global starts 2023 by adding eight new firms across four continents
January 23, 2023
LONDON – Kreston Global has begun 2023 by welcoming eight new member firms on four continents: India, Uganda, Lebanon, Japan, Croatia, Bangladesh, Chile and Taiwan.
Top New, based in Taiwan – returning to the Network
Kreston Croatia was founded by Managing Partner Ivan Pečur who has worked in a number of international accountancy organisations over the last 16 years as an audit partner. He is joined by two other partners.
Bhatia & Bhatia was founded in 1981 and provides audit, tax and accounting services to a range of domestic and international clients. It works closely with a broad base of affiliated chartered accountant firms across all major cities in India.
Kreston HM was founded by Managing Partner Hitesh Mehta in 2005. It provides audit, accounting services and tax advisory to international and local clients from its offices in Kampala and Jinja. It has three partners and 45 staff.
Accurate Accounting & Audit was founded in 2021 and is led by four certified auditors. It has over 20 staff based in its central Beirut offices, providing services to corporate and private clients across the construction and building supplies, professional partnerships, hospitality, retail and sports sectors.
Maria Howlader and Co is based in Dhaka, Bangladesh and comprises 34 employees and offers audit, accounting and tax services to international businesses and foreign subsidiaries based in Bangladesh and overseas.
Kreston ATC Chile is a newly established firm in Chile, based in Santiago. The firm has 24 staff and five partners, and is led by Managing Partner Hans Caro. The firm is made up of previous Kreston partners including Ricardo Gameroff who is already involved with the Kreston network through the Global Audit and Quality
Groups. The firm has a number of international clients and specializes in external and internal audits, taxes, risk advisory, forensics, payroll and bookkeeping.
Top New & Co is based in Taipei, Taiwan and is returning to the Kreston network after a few months away. Run by Yashu Hung, who is the lead audit partner, together with two other audit partners and a staff of 20, they offer audit and accounting services to a range of privately owned and not-for-profit organisations.
2022 saw Kreston Global holding its hugely successful network-wide conference in Madrid, the first in-person conference the network has held since the pandemic began. 2022 also saw the launch of its first Environmental, Social and Governance Advisory Committee, launch of new international steering groups for Internal Audit, Transfer Pricing and Life Sciences, and lastly a flagship thought leadership report, ‘The Interpreneur Mindset’.
Liza Robbins, Chief Executive of Kreston Global, said:
“It is with great pleasure that I welcome our latest joiners to the Kreston Global network. To have eight firms join in a short period is a major achievement, but to have eight firms of this calibre join is a significant testament to our depth and breadth.
“In recent years we have spent a great deal of time evaluating and fine-tuning our strategy. We have listened closely to our members, working with them on a range of areas and launching a number of exciting new initiatives. I am excited to move into 2023 with both our existing and new colleagues as we continue to develop our proposition to the entrepreneurial business community.”
Get in touch to talk about how Kreston Global firms can help your expanding business in these eight countries.
The article in Compliance Week outlines how the European Union is set to shake up corporate reporting on environmental, social, and governance (ESG) goals by introducing new regulations. Companies are being urged to use 2023 to prepare for these changes and stakeholders’ expectations.
Regulators in the EU have been increasingly vocal about the need for companies to act more sustainably and report their actions and progress in achieving ESG goals in a more meaningful and transparent manner. Last month, the EU agreed to pass legislation to do just that.
Action
The Corporate Sustainability Reporting Directive (CSRD) will introduce more detailed reporting requirements for large and listed companies on non-financial areas such as environmental impacts, social rights, human rights, and corporate governance. The directive will ensure that sustainability information will sit alongside financial information and be audited, which means that the initial compliance cost for companies could be significant as the amount of data that needs to be collected will likely increase, along with the number of people involved in the integrated reporting process.
The CSRD will apply to large companies already covered by the EU’s non-financial reporting directive from 2025 and other companies incrementally year-on-year through 2029, depending on their size and/or revenues. For the 2025 financial year, companies with a net turnover of 40 million euros (U.S. $42.5 million) or more, at least €20 million (U.S. $21.2 million) in assets, and 250-plus employees will need to report. Around 50,000 organizations in the European Union or with EU-based subsidiaries will need to comply.
CSRD Updates
In a Nov. 9 speech, Mairead McGuinness, European commissioner for financial stability, financial services, and the capital markets union, said, “For the first time …we are putting sustainability reporting on an equal footing with financial reporting.” She added that the final text of the CSRD provides a good basis for alignment with the EU’s proposed Corporate Sustainability Due Diligence Directive, which is currently being negotiated between the European Commission, European Parliament, and the European Council and aims to further improve long-term corporate governance.
On Nov. 23, the European Financial Reporting Advisory Group, which provides technical advice to the European Commission, submitted its first draft of CSRD standards, which the commission must review/amend before making them available for public consultation in the spring. Under the 12 standards, companies would be required to publish comprehensive and comparable information about their sustainability, from their environmental impact regarding pollution, climate change, and biodiversity to workers’ rights, communities affected by their operations, and the impact on customers.
Stuart Brown, Kreston Global ESG committee member was invited to comment, stating he felt that businesses should not feel overwhelmed by the new compliance directive, but see it as an opportunity to assess their own ESG risks.
Get in touch to discuss your ESG reporting with one of our experts.
Meera heads up the James Cowper Kreston VAT & Duty services and leads firm services into South East Asia.
She has built up extensive technical knowledge over more than 20 years specialising in VAT taking a practical approach and successfully arguing against HMRC to achieve substantial VAT savings and compensation for clients.
Meera’s experience covers business restructuring (mergers and acquisitions), VAT cost reduction strategies, international cross-border supply chains, partial exemption methods, land and property transactions, film production, charities, VAT planning and mitigation and assisting businesses with disputes with HMRC. With a number of years of experience at HM Revenue and Customs, she brings a range of skills and expertise in inspections and negotiations, valuable to clients.
VAT on UK imports as a non-established overseas business
January 5, 2023
We are often required to offer advice on VAT on UK imports. If your business is not established in the UK and you intend to import goods for resale there, you need to consider your VAT compliance obligations. Your business is likely to be required to register for and pay VAT on the first import of goods and subsequent sale.
What is a non-established overseas business?
Referred to by HM Revenue & Customs (HMRC) in the UK as a “non-established taxable person”, abbreviated to NETP, the overseas business does not have a fixed establishment in the UK. They trade using their overseas entity, absent a UK branch registered at Companies House. A fixed establishment has all of the following: • A UK physical location with a degree of permanence; • Human resources under the control of the overseas business; • Resources capable of making and receiving supplies of goods or services.
The following characteristics alone do not create a fixed establishment. • Storage of goods; • Computer servers; • Accountants or an agent’s UK address; • A UK VAT registration number, without the three positive indicators (location, staff, capability); • Employees moved to the UK temporarily, for a time-specific project.
What different VAT conditions apply to a NETP?
A NETP, cannot make use of the UK VAT registration threshold, whereas a UK-established business can make £85,000 of taxable sales in the UK in any 12-month period, before compulsorily VAT registration. A NETP must compulsorily register for VAT when they make their first taxable sale of goods they import into the UK. If services are provided from overseas businesses to UK businesses, which are subject to the Reverse Charge procedure by the UK recipient, these supplies do not force the overseas company to register for VAT in the UK. Possible business models were available to a NETP selling goods in the UK.
Import as an owner of the goods into the UK, and register for VAT as a NETP immediately before or after the first sale in the UK.
Arrange for the UK customer to take title to the goods before they physically arrive in the UK, so the customer is responsible for submission of a UK import entry to HMRC. This model may be unpopular with the UK customer, who gains the responsibility and cost of submission of the UK import entry to HMRC. This model does not work with a “Just In Time” supply model which requires prompt delivery of goods after the order is received, and usually requires local storage of goods in the UK, rather than importing goods to order.
A commission model, where a sales order received from a UK customer is passed to a third-party UK business, which supplies the goods to the customer. Commission is earned from the UK supplier, a b2b supply of services, which does not require that the overseas business register for VAT in the UK. There are several potential negative commercial impacts for such a model including “poaching” of the customer by the UK supplier, but this model can work for some businesses. This arrangement avoids the need for the overseas business to register for VAT in the UK.
Enter a formal agency arrangement for VAT purposes, where title to the goods in the UK, for customs and VAT purposes passes to an appointed UK agent. The UK agent acts as if they own the goods, collects proceeds of resale, declares the VAT to HMRC and passes the proceeds to the overseas business, less an agency fee. This arrangement avoids the need for the overseas business to register for VAT in the UK.
What to consider if the NETP registers for VAT in the UK, following the first model above.
Most NETPs appoint a UK VAT agent to manage the UK VAT registration requirements, although it is not compulsory. There is no requirement to appoint a “fiscal representative” in the UK, so the agent does NOT become jointly and severally liable for the amounts due on the VAT return. The VAT return must be submitted digitally to HMRC using Making Tax Digital (MTD) approved accounting software, so the software of the NETP will probably not meet this requirement.
If the NETP keeps stocks in the UK and does not import to fulfil a specific order, it needs to ensure that the import valuation on the customs entry is accurate, given that it does not yet have a sales invoice value to match to the incoming goods. The import valuation method for customs cannot, therefore, be Method 1, the price paid or payable, as the NETP is moving their own goods to the UK. Another valuation method needs to be used. Advice from a UK customs/VAT agent should be gathered before import.
The UK customs import entry needs to quote a UK “Economic Operators Registration and Identification Number” (an EORI). An EU EORI will have no effect. A NETP cannot obtain a UK EORI number as the applicant needs to have a UK establishment. The NETP will need to appoint a customs representative in the UK to be the “importer of record”, who will quote their EORI number on the UK import entry in box 14. This is referred to as “indirect representation”, where the customs agent becomes jointly and severally liable for the custom duties and import VAT. The NETP is the consignee, the owner and the recipient of the goods. The NETP’s VAT number is quoted in box 8 of the import entry and this allows the customs agent to use Postponed VAT Accounting (PVA) for import VAT. PVA allows the NETP to pay no import VAT at the time of the goods arrival, but rather pay and claim (usually the same amount) on their next UK VAT return.
If the NETP is using the UK as a base for physically selling non-EU goods also to the EU (in addition to UK sales), this potentially could lead to double taxation of customs duty, once on arrival in the UK (dependent upon the HS code in the UK tariff) and again on arrival in the EU (dependent upon the HS code in the EU tariff). If so, one solution is to use the customs import relief termed “Inward Processing”, where the customs duty is relieved if the goods are to be exported outside the UK. Further guidance about how Inward Processing works in the UK can be obtained from a customs duty specialist. The same potential difficulty arises in reverse if non-EU goods are imported into the EU and then subsequently moved to the UK.
Goods sold via an online platform/marketplace
If the platform delivers goods or processes payments, HMRC requires that the marketplace is liable for declaring UK VAT to HMRC. This is a separate topic, but mentioned here in passing.
Contact us now
If you own a non-established overseas business and you would like to discuss your VAT needs, please get in touch with one of our Indirect Tax experts today.
News
BANSBACH Improved in Employer Ranking Index
December 23, 2022
Congratulations to Kreston firm BANSBACH who round off a successful 2022 by significantly improving their ranking in JUVE‘s Top Tax Employers 2023, moving up eight places to 14th in the country.
This is largely a result of employee workplace innovations such as part-time partnerships and the option to work from home, but also a significant strategic expansion plan. This has seen BANSBACH adding a number of acquisitions and strategic partnerships with firms like O&R Oppenhoff & Rädler in Munich as well as adding an entire team from BDO in Freiburg.
Joint Managing Partner for James Cowper Kreston in the UK
Alex is joint Managing Partner for James Cowper Kreston in the UK, and an Audit and Assurance partner acting for many owner managed organisations and individuals. He has a specialist knowledge of the film industry and also is a member of the Kreston Global Audit Group.
How is audit reform affecting the profession?
September 22, 2022
After several high-profile failures and large company collapses in recent years, the audit sector has found itself under heavy scrutiny.
In fact, 2021/22 saw a record amount of fines issued by the Financial Reporting Council (FRC) totalling £46.5 million – almost triple the £16.5m issued in the year before.
The ripple effect of large company collapses has taken its toll on public trust in audit and corporate governance, particularly when it comes to the performance of the UK’s four largest audit firms.
As the Government implements new audit reforms and the market slowly shifts away from the Big Four, smaller audit clients can also expect to see some impacts as a result of these changes.
These include replacing the FRC with a new Audit, Reporting and Governance Authority (ARGA).
ARGA will have a number of new powers compared to the old regulator, including the ability to ban failing auditors from reviewing large companies’ accounts, sanction directors of large companies for breaches of duty, and oversee professional bodies’ regulation of the accountancy profession.
The reforms also bring more large private companies within scope of the regulator, redefining public interest entities as those with more than 750 employees and £750 million in annual turnover.
A gradual shift from the Big Four
Another key reform means FTSE 350 companies will be required to conduct part of their audit with a challenger firm outside of the Big Four – a move intended to improve competition in the market.
A recent report from the FRC shows this shift is already happening to some extent. While in 2017, Big Four firms audited 96.8% of FTSE 250, that percentage had dropped to 89.2% by 2022.
And when it came to the UK market outside of those largest firms, the Big Four’s share had reduced from 74.2% to 28.2% over the same period of time.
So while the Big Four remains dominant over the UK’s largest companies, smaller companies are now seeing a much broader choice in the audit market, and are increasingly likely to work with a challenger firm.
What does the reform mean for smaller audit clients?
In theory, this increased competition should mean you see higher-quality work as an audit client, with rivalry between auditors encouraging enhanced services and lower fees.
The reality would appear to be that firms are spending more time on audits which does improve quality. However, this also comes at a cost because firms have realised that they need to increase fees to a level commensurate with the work that they are doing. Therefore, audit fees have actually risen rather than fallen.
In addition, because firms are spending more time on audits, without an increase in the total number of auditors there will be a reduction in capacity in the audit market. This can be seen in the market, and it has made it hard for some companies and particularly not for profit entities to find auditors willing to quote for work.
Another key change for smaller audit clients to look out for is the loosening of reporting requirements.
At the same time as it published its consultation response in May, the Government also announced plans to update the definition of micro-enterprises, with the aim of reducing the reporting burden on smaller businesses.
Micro-enterprises are currently defined as those which employ fewer than 10 people and have a turnover or annual balance sheet below €2 million.
The Government believes this threshold could be “forcing too many of Britain’s smallest businesses to spend time and money preparing accounts to a level of detail only needed for larger companies”.
It also says it will consider the reporting requirements on smaller public interest entities, and review the current restrictions on remunerating directors in shares.
Broadly speaking, the Government has been keen to emphasise that smaller businesses will see no extra regulations under the reforms – its focus is instead on the UK’s largest companies.
Get in touch to talk about how changes to the audit market could affect you.
News
Dean Pearson
Global Head of R&D Tax
Tax Partner at BHP dealing with tax advice to businesses and owner managers. Advising clients on a range of issues including VAT, property transactions, share schemes, reorganisations and company valuations. A corporate tax specialist with extensive experience in claiming tax reliefs for innovation, such as R&D tax credits and the Patent Box.
Advice for firms with clients who have UK operations
September 13, 2022
How will Research and Development tax relief be affected by the upcoming UK Finance Bill?
On 20 July 2022 (Legislation Day), the UK Government revealed draft legislation for the upcoming changes to R&D tax relief. Many of the changes, which form part of the forthcoming Finance Bill 2022/23, had already been anticipated prior to the announcement, but it is always interesting to see what the detail looks like. One area that was awaited with interest was the proposal that companies notify their intention to make R&D claims in advance.
From 1 April 2023, companies will need to digitally pre-notify HMRC of any planned R&D claims, and within six months of the end of the period to which the claim relates.
Fortunately, businesses that have claimed in one of the preceding three accounting periods will not need to pre-notify. This key exemption to the pre-notification ruling is welcome news for all companies that have claimed R&D tax relief in a recent accounting period but, for those who haven’t, it could prove to be a headache.
Also from April 2023, tax reliefs will be refocused towards innovation undertaken in the UK, meaning that expenditure on subcontracted R&D and externally provided workers (EPWs) must be incurred within the UK, while additional relief will be denied for any R&D activity performed overseas.
Other key changes highlighted on Legislation Day include the expansion
of qualifying expenditure to incorporate costs for data and cloud computing associated with R&D, and that all Corporation Tax returns that contain an R&D claim will need to be submitted to HMRC by way of a digital service.
Making a claim
Under the existing rules, a company can make a claim for the previous two accounting periods because they have a statutory right to amend a tax return up to 12 months after the filing deadline.
But the new rules state that, if the business hasn’t made a claim in any of the preceding three accounting periods, it wouldn’t be able to submit a claim for the two previous periods that would normally be open (under the current rules), since notification must take place within six months
of the end of the accounting period in question. This is the case even though the statutory deadline for filing or amending these returns is yet to pass. Therefore, retrospective claims may not be possible without being proactive.
If you need to make an R&D claim for a previous accounting period, you must do so before 1 April next year. If you or your clients need some further guidance on this, please contact our Global head of R&D Tax, Dean Pearson.
News
Top rankings for our German member firm
August 11, 2022
Congratulations to our German member firm, Kreston Bansbach, whose consulting arm Bansbach Econum, has been ranked among the top consulting firms in Germany in the Handelsblatt 2022 Best Consultants list.
They have been ranked for excellence in the Pharma and Healthcare industries, as well as for their expertise in the Family Business and Mid Market sectors, and for their work in Restructuring and Turnaround.
The peer group survey is run by Handelsblatt Research Institute and asks around 16,000 participants to rate their top consulting peers companies in 22 categories”.
Our Spanish member firm, Kreston Iberaudit, has recently formed a partnership with Valgianni, an Andorran-based accountant and business adviser, due to the considerable advantages offered by this country and principality. If you are interested in finding out more about opportunities for inward investment, here are some Youtube video links (https://youtu.be/5LtplR1XWBk, https://www.youtube.com/watch?v=66u3GfhUu1o) or there are some factsheets available here or you can contact Elena Ramirez at Kreston Iberaudit for more information.
Ian has been a partner at James Cowper Kreston since 2008, with a diverse portfolio of high-net-worth clients. Before he joined James Cowper Kreston, Ian began his career in a Big 6 firm, where he was a National Client Service Director, chairing the Estate Planning Group.
Ian is the global mobility lead for the UK for Kreston Global.
Tax advice on bringing capital into the UK
July 26, 2022
The advice for bringing capital into the UK changed over three years ago. There was a window of opportunity for UK resident individuals who were non-UK domiciled to “cleanse” their offshore accounts so that they could remit funds to the UK free of UK tax. This window closed on 5 April 2019 so that it is no longer possible for someone who is living in the UK to cleanse their funds into clean capital, income and capital gains in order to remit tax-free cash to the UK.
Bringing clean capital into the UK
From 6 April 2019 onwards it has been important for those who are moving to the UK to live to separate out their funds outside the UK between the original capital, income earned on that capital and capital gains. This means identifying the three constituent parts, and making arrangements so that income and gains that arise after the person has arrived in the UK are kept separate by separating them into different bank or broker accounts. Their finances are “clean” up to the point that they move to the UK and become resident here. That clean capital can then be remitted to the UK free of tax whereas the income or gains would be subject to income tax or capital gains tax respectively if remitted. This segregation process must be set up before the individual arrives in the UK.
Avoiding mixed funds
We have experience of one individual who came to see us after arriving in the UK and wanted to bring in cash to buy a house. Unfortunately, this individual had been in the UK for a number of months so cleansing wasn’t possible and they hadn’t segregated accounts before arrival with the result that what is known as a “mixed” fund was remitted and was taxed on the element that represented income and gains.
This shows the importance of taking the right advice before leaving for the UK.
Why choose Kreston Global?
Kreston firms are committed to long-term client oversight and the service we provide means that we work closely together, including offshore service providers, to ensure that the correct solution for each client is designed, implemented and kept under review.
Kreston Global’s network of global mobility experts are well positioned to assist HNWIs in offering tax advice to individuals or companies.
If you’d like to find out more about our global mobility services, get in touch by phone or email or visit the global mobility page. You can also become a member and realise the full benefits of our global network.
News
Stuart Brown
Head of Technical & Compliance, Director of Duncan & Toplis
Stuart is director and head of technical and compliance at Duncan & Toplis. Stuart leads the technical developments for the business, including auditing, financial reporting, and quality assurance. It supports the continuous improvement of our processes using the Lean Six Sigma methodology.
In 2021, Stuart was appointed to Duncan & Toplis’ operations board and became a member of the ICAEW’s influential Ethics Advisory Committee (EAC). As a committee member, he gives advice on complicated or precedent-setting cases and contributes to the development of new guidance and other policy issues.
Root Cause Analysis
July 25, 2022
Have you heard of Root Cause Analysis (RCA)?
In the auditing world, it has recently taken centre stage as audit practices around the globe prepare for the 15 December 2022 – the effective date of the new International Standard for Quality Management auditing standard (ISQM1).
Under the new standard, there is a requirement for auditing practices to use RCA to assist with the practice-wide improvements of audit quality. Prior to this, some national authorities (such as the Financial Reporting Council in the UK) have required firms to perform RCA following audit quality reviews to analyse their findings and attempt to prevent issues from reoccurring once identified.
What is Root Cause Analysis?
The clue is, quite literally, in the name.
Simply put, it is a tool to pinpoint what the root cause of a given situation is. For audit purposes, it may be used to find out why the quality of an audit file was not up to expected standards, or why an audit was not performed as efficiently as it should have been. RCA is especially effective for discovering the underlying cause of issues and can be used in any industry, helping to focus efforts on improving or circumventing the identified problem(s).
I was first introduced to RCA while studying for the black belt qualification in the process improvement methodology known as Lean Six Sigma (LSS). At the core of LSS is the philosophy of continual improvement, a mind-set that every process can be improved. Before something can be improved, we first need to identify what is wrong with it and, importantly, what has caused the issue to begin with.
If we do not know what has caused the issue, how can the issue possibly be rectified? Or avoided in future?
In our firm we have carefully utilised RCA while improving a number of our own internal processes including billing, client onboarding, client communication and workflow methodology. How?
You can find a wealth of advice online regarding how to perform RCA, here I’d like to provide a brief overview of how we approach it at Duncan & Toplis.
What’s the problem? Effective RCA implementation
Firstly, you need to identify exactly what issue you are investigating.
Do not try to just jump straight into high-level issues. For example, avoid starting an RCA meeting on the premise that “our customers don’t like the new widget”. Some preliminary investigation is needed here. Does it not work? Is it manufactured too slowly? Is it too expensive? Clearly, defining the issue will help to focus the analysis.
Secondly, collect the required data. Once the issue has been defined, obtain the required data and compare it to a measurable expectation. For example, the production of a widget may be too slow for customers. Set an expectation of how long production should take and compare this to the actual time it is taking. In this case, you may then want to obtain the times between each stage of the production process to better highlight production bottlenecks.
Next, arrange an RCA meeting. This should involve all key stakeholders of the process or project. Ideally, the meeting should be coordinated by someone independent of the process / project under review to ensure that the conversation is focussed and remains entirely objective.
Asking a lot of “Whys”
We tend to start the conversation with the broad question of “Why?”.
Why is X not happening in Y? Keep asking “why?” until there is consensus in the group as to the specific root cause of an issue. This is why RCA is sometimes referred to as the ‘5 whys’. Think of the questioning nature of toddlers! The data collected in the previous stage can provide effective evidence for the conclusions reached.
Of course, meetings may not run so smoothly. If that is the case, the conversation can be focussed through the use of several different models. For example, the Ishikawa (or fishbone) diagram is something that we utilise at Duncan & Toplis. This enables different potential causes of an issue to be visually represented and funnels the conversation into different categories, such as equipment, process, people, materials, environment and management.
Once the root cause of an issue has been identified, targeted solutions can be implemented to resolve the issue.
Sometimes, the team may conclude that there are two or more issues that equally appear to be the root causes of an issue. In this case, pick a solution to focus on one cause and review the outcome. If that does not work, move on to the next cause until improvements are seen. Do not attempt to remedy both in tandem as this will impact your ability to measure the individual success of both measures.
This is a very brief overview of Root Cause Analysis, but hopefully, it has given you a taste to investigate further and to help you to strive towards process perfection!
If there are ongoing issues with processes in your business have you considered undertaking a root cause analysis?
Speak to your nearest Kreston member firm or contact marketing@kreston.com for help to find a specialist in your location.
Global vacancies
Leyenseweg 113-B
July 18, 2022
Global vacancies
Lichtenauerlaan 122
News
Kreston Bansbach identified as a top 20 business consultant firm in Germany
July 8, 2022
After a decline in 2020 due to the Covid-19 pandemic, the consulting market shows signs of recovery. The 20 largest management consultancies headquartered in Germany reported average revenue growth of 16.6 per cent in fiscal 2021. In 2020, total revenues declined on average by 6.8 per cent – after more than 10 consecutive years of growth. The leading international consulting groups grew on average by 13.1 per cent in fiscal 2021 (2020: 1.6%). Current challenges such as the Ukraine war, rising energy and manufacturing costs, and related inflation have had little impact on the revenue guidance of the leading business consultancies: the German top 20 plan to grow by 15.4 per cent in fiscal 2022, and the international consultants by 11.5 per cent.
International firms dominate the German consulting market. The 17 leading international providers on the Lünendonk List generated an estimated global revenue of 136.4 billion euros in 2021, of which Germany accounts for 10.5 billion euros (2020: €8.2 billion; +28%).
The list of Lünendonk® 2022 “Leading business consulting companies in Germany” is attached in German. Consulting companies are presented with their respective total turnover and number of employees.
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cookielawinfo-checkbox-functional
11 months
This cookie is set by the GDPR Cookie Consent plugin to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by the GDPR Cookie Consent plugin. It is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by the GDPR Cookie Consent plugin. It is used to store the user consent for the cookies in the category "Other".
cookielawinfo-checkbox-performance
11 months
This cookie is set by the GDPR Cookie Consent plugin. It is used to store the user consent for the cookies in the category "Performance".
CookieLawInfoConsent
1 year
Records the default button state of the corresponding category & the status of CCPA. It works only in coordination with the primary cookie.
device_id
10 years
Cookie used to maintain a local copy of the user's unique identifier.
viewed_cookie_policy
11 months
This cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not a user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Cookie
Duration
Description
__cf_bm
30 minutes
This cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
bcookie
1 year
LinkedIn sets this cookie from LinkedIn share buttons and ad tags to recognize browser ID.
bscookie
1 year
LinkedIn sets this cookie to store performed actions on the website.
currency
1 year
This cookie is used to store the currency preference of the user.
lang
session
LinkedIn sets this cookie to remember a user's language setting.
li_gc
6 months
Linkedin set this cookie for storing visitor's consent regarding using cookies for non-essential purposes.
lidc
1 day
LinkedIn sets the lidc cookie to facilitate data center selection.
UserMatchHistory
1 month
LinkedIn sets this cookie for LinkedIn Ads ID syncing.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Cookie
Duration
Description
ac_enable_tracking
1 month
This cookie is set by Active Campaign to denote that traffic is enabled for the website.
device_view
1 month
This cookie is used for storing the visitor device display inorder to serve them with most suitable layout.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Cookie
Duration
Description
__kla_id
2 years
Cookie set to track when someone clicks through a Klaviyo email to a website.
_ga
2 years
This cookie is installed by Google Analytics. It is used to calculate visitor, session and campaign data and it also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to identify unique visitors.
_ga_M0XVMQMRZ1
2 years
This cookie is installed by Google Analytics.
_gat_gtag_UA_188891991_1
1 minute
This cookie is set by Google and is used to distinguish users.
_gat_gtag_UA_7661078_5
1 minute
This cookie is set by Google and is used to distinguish users.
_gid
1 day
This cookie is installed by Google Analytics. It is used to store information on how visitors use a website and helps to create an analytics report on how the website is performing. The data collected includes the number of visitors, the source of visitors and the pages visited in an anonymous form.
AnalyticsSyncHistory
1 month
Linkedin set this cookie to store information about the time a sync took place with the lms_analytics cookie.
CONSENT
16 years 5 months 19 days 16 hours 12 minutes
These cookies are set via embedded YouTube videos. They register anonymous statistical data e.g. how many times the video is displayed and what settings are used for playback. No sensitive data is collected unless you log in to your Google account, in that case your choices are linked with your account, for example if you click “like” on a video.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
