Revisionsfirmaet Mentor Registeret Revisionsanpartsselskab – Blokken 90
August 3, 2021
August 3, 2021
August 2, 2021
The International Accounting Bulletin’s (IAB) latest piece delves into our network’s perceptions of technology and its role in the future of accounting.
Read the full article here.
July 29, 2021
Below is the International Accounting Bulletin’s latest piece on the G7 initiative that discusses the post-pandemic options for developing countries in relation to tax, and how they may oppose it.
July 22nd 2021
Ganesh Ramaswamy, Kreston Global Tax Group, Asia Pacific Regional Director
Economists and tax experts in developing countries are of the considered opinion that a global minimum tax rate would take away a tool that developing countries use to push policies that suit them.
Particularly against the backdrop of the pandemic, IMF and World Bank data suggest that developing countries with less ability to offer mega stimulus packages may experience a longer economic hangover than developed nations. Developing countries have been implementing tax cuts since the 1960s as a way of attracting overseas investments and generating more economic activities and employment opportunities. This advantage would no longer be there for developing countries with the advent of minimum floor rate tax.
However, developing countries know very well that tax competition brings more harm than the perceived benefits. Tax cuts come at the cost of public spending on infrastructure, education and health. Serious overseas investors keen to expand business in developing countries would primarily look at infrastructure, lower cost, justice delivery and quality of workforce rather than the tax code of the investee country. To provide these requirements to investors, tax revenues are a must for developing countries. In this context, it’s likely that most developing countries will get behind the G7 deal in due course.
July 27, 2021
HMRC recently published its long-awaited ‘Cryptoassets manual’ signalling that the wait-and-see era might be over when it comes to accounting for Bitcoin and other such cryptocurrencies.
When cryptocurrencies such as Bitcoin emerged more than a decade ago, they presented a challenge to global tax authorities – how could this new form of intangible asset be taxed, and investor liability established?
In fact, the challenge seemed so great that many, including the UK tax authority, HMRC, almost seemed to be ignoring the issue. In March 2021, however, it updated the official documentation on this subject.
It refers to cryptoassets, of which cryptocurrencies are a subset. HMRC is clear that it does not regard cryptoassets as currency, or as a form of money, but rather ‘similar in nature to a trade in shares [or] securities’.
The revisions to the manual underline that the important question in deciding on a tax treatment is whether cryptoasset activities amount to a trade. In other words, is investing in and trading cryptoassets a substantial business in its own right?
If an individual is deemed to be trading, HMRC says, receipts and expenses will feed into the calculation of trading profit. Income tax will apply rather than capital gains tax. In the case of companies, cryptoasset profits will be treated as part of trading profits rather than as a chargeable gain.
The changes to the guidance are not yet backed by law in the UK, and there is still no international accounting standard covering cryptoassets.
The IFRS Interpretations Committee last considered cryptoassets and cryptocurrencies in 2019 when it concluded that:
“IAS 2 Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business. If IAS 2 is not applicable, an entity applies IAS 38 to holdings of cryptocurrencies.”
IAS 2 defines ‘inventories’ as assets held for sale in the ordinary course of business, in the process of production for sale or as materials or supplies to be consumed in the production or delivery of services. IAS 38 refers to ‘intangible assets’ which it defines as any “identifiable non-monetary asset without physical substance”.
Because cryptoassets and currencies are not treated as legal tender in any territory, and certainly not by the United Nations or other global bodies, they do not meet the strict IFRS definition of cash, as set out in IAS 32:
Regardless of references such as the above that might apply to cryptocurrencies, the fact remains that, to date, there is no specific accounting standard covering cryptoassets.
As the status of this new type of asset becomes clearer in coming months and years, and as more tax authorities follow HMRC’s lead in determining local policy, we can surely expect to see more concrete global reporting standards emerge.
Contact us for more information or to talk about how your business accounts for cryptoassets.
July 19, 2021
Published on the Accountancy Daily
As the consultation on the future of audit closes, Peter Manser, head of audit and assurance at Kreston Reeves LLP, argues that managed shared audit needs careful consideration but could open up much-needed competition among audit firms
The government’s proposals for audit reform are part of their initiative to ‘restore trust in audit and corporate governance’. Audit is one strand, along with corporate reporting and corporate governance including the role of a new audit regulator.
As a mid-tier network, Kreston Global supports the bigger picture concept that trust in corporate reporting involves auditing and corporate governance and the work of the regulator over auditors, directors and companies.
High profile corporate failures inevitably and rightly fuel debate over improving audit quality. Carillion failed in 2018, BHS in 2016. Three significant public consultations have subsequently examined the different issues.
Reform in the corporate world always takes time and inevitably the proposals for audit reform are going to take time to produce change. Some commentators are looking at 10 years plus. That’s a long enough time window for further corporate failures to add to the ongoing debate.
The key issue for audit quality for listed and larger companies is the lack of choice. Increasing competition through wider choice will drive innovation and improve audit quality. Mid-tier firms can add to both quality and choice in the right circumstances. Yet there are significant barriers to entry to listed audit work for challenger and mid-tier firms. These include the management of liability and risk including reputation, recruiting, and retaining resource, adapting our audit processes and developing our quality control and management systems.
In response to the consultations the government has proposed managed shared audit which provides opportunities to overcome these barriers. For our member firms, shared audit could provide a route to gain experience and build reputation in an area where we are effectively currently excluded.
For firms to engage in shared audit will require boldness, and significant investment. The lack of competition for listed company audit has become extreme with the Big Four accountancy firms auditing 100% of the FTSE 100 and 97% of the FTSE 350. Such market concentration raises questions over the resilience of the audit profession for listed and other large entities.
Failure, or even the perceived risk of failure of the one of the Big Four would result in severe disruption and of course yet further market concentration.
There is a significant difference between the Big Four firms, challenger firms and mid-tier firms in terms of resource and expertise. Increasing the number of viable competitors for the more complex audit assignments is a sizeable project but a vital one. The conclusion of public consultation is that more audit firms enabled to compete for listed and large company audits will improve both resilience and quality of audit for these entities.
The main barriers to entry are usually seen as capacity, capability and reputation. Would changing the rules currently precluding majority control by external investors help (as has recently been suggested by the former head of the Financial Conduct Authority (FCA))?
Building capacity, capability and reputation will require investment, but this is only one factor. Lack of investment due to the constraints on ownership of audit firms has not been identified as a significant factor during the current public consultations. After all, the current ownership rules spawned the Big Four.
Access to further investment will be necessary to challenge the Big Four, but to build the infrastructure is a long-term project that will necessitate careful planning and oversight. Changing investment rules for audit firms will require detailed consideration of the independence issue that will arise, and the impact on audit quality.
Mid-tier firms will also need to thoroughly consider the cost of the compliance regime for auditors of listed and large entities.
At least one of our member firms has made representations that the role of the regulator needs to be proportionate, one of enabling competition through education.
A further barrier to competition is the current liability regime. For many of our member firms this would preclude involvement in joint audit (as opposed to managed shared audit), which was previously mooted by the Competition and Markets Authority (CMA).
There appears to have been little sympathy to firms’ liability during the consultations process. This is a significant reason why joint audit will not help increase competition and choice.
Managed shared audit overseen by a supportive regulator could create the right environment for firms to commit to the required investment in people and resources. The objective needs to be to enable firms to accumulate the relevant experience to add competition.
As a network, we are excited by the potential opportunities of managed shared audit, as the effects ripple through our profession. Yes, this will be a phased approach to building capacity, capability and reputation outside the Big Four.
In the long term, shared audit will improve auditor choice and audit quality. It would be good to see shared audit beyond the FTSE 350 explored as a means of developing mid-tier firms. This would encourage firms to make the required investment in people, resources, quality control and management systems in a way that would be commercially viable.
Audit is one strand in restoring trust in the corporate world and the signs are there that with care and investment, the changes can be made. It remains to be seen how far the proposed changes to corporate governance and reporting will go towards to restoring trust.
July 16, 2021
Liza Robbins, our CEO, is featured in this latest piece published by Financial Management. Based around the challenging times in which businesses currently operate, the article talks of the need for finance leaders to tune into what their team members are going through in order to cultivate a productive workplace environment.
“The global crisis has presented leaders with an opportunity to relaunch themselves and learn new skills to motivate teams and drive business performance.” – Liza Robbins
July 9, 2021
LONDON – Kreston International, one of the world’s largest accounting networks, has today announced that it has rebranded to become Kreston Global, positioning the network for its next phase of growth and evolution. The rebrand takes place as Kreston celebrates its 50th anniversary in 2021, and as its profile continues to grow around the globe.
With a refreshed visual identity and a new website, the Kreston Global brand is now an even more powerful asset for member firms operating in a truly digital-first environment. The new brand also enables a more flexible framework for inclusion of member firms’ local names and brands, ensuring local relevance while cementing the firm’s connection to Kreston’s substantial global reach and resources.
Since its foundation in 1971 as one of the earliest accounting networks, Kreston Global has grown to a network of 170 independent firms in more than 120 countries around the world. With five decades’ experience of world class client service, Kreston continues to be a top partner of choice for dynamic businesses and individuals with international ambitions.
Liza Robbins, Chief Executive of Kreston Global, said:
“As Kreston celebrates its 50th anniversary, the time was right to evolve our name and brand to ensure it truly represents the colourful, accessible and deeply connected network that is Kreston Global. The world continues to emerge from the pandemic to a more digital-first environment than ever before, presenting unique challenges to organisations wanting to stand out and communicate effectively with clients and other stakeholders. With a newly refreshed brand, we are now able to support and empower our member firms around the world more effectively than ever before, as well as take our global brand profile to the next level.”
The new Kreston Global identity and logo was developed by Akiko Design, a UK-based web design and development agency.
July 8, 2021