Worth every penny
Let’s start with auditors. We may be waiting for the government to get its act together on key elements of audit reform, but things are moving elsewhere. This week, Sir Jan du Plessis, chair of the Financial Reporting Council, said Big Four firms should pay more for junior auditors if they wanted to attract more recruits. The Financial Times reports he denied it was tightening regulation making the profession unattractive. There are complaints from many quarters of the accountancy world about a talent shortage.
Sir Jan pointed out there had been bumper profitability at Big Four firms, so why shouldn’t their chiefs put their hands in their pockets and pay more (not his actual words)?
High Fliers Research points out that the average graduate in accounting is paid a median salary of £35,000, compared with £55,000 for investment bankers (no surprises there) and £50,000, dare we say it…for lawyers. Lawyers! Most graduates are paid £24,000-£26,999, according to the Higher Education Statistics Agency.
Your Board Agenda correspondent got his hair ruffled and a free chicken at Christmas when he left university massively overqualified for a job in local news. So, things could be worse.
Worth a try
Two weeks ago we reported on Toyota chair Akio Toyoda. He was potentially facing a vote against his re-election after Glass Lewis, the big proxy advisory firm, said the board didn’t have enough independent directors, so Toyoda should move on and make way for someone else.
Just to say: that didn’t work.
The FT reports that Toyoda emerged from the AGM still the company chair. Shareholders also voted down a proposal for more disclosure of the company’s climate lobbying.
Perhaps the votes went nowhere, but the FT suggests the fact the proposals were made means change is under way: “Governance experts and environmental activists say the unusual challenge to the country’s largest company by market capitalisation marks significant shifts under way in the Japanese market…”. Better late than never, we suppose.
What’s it worth?
Here’s a note for accounting nerds: The FRC has warned CFOs to get their fair value accounting in order.
Fair value accounting, if you’ve forgotten, is the process of valuing assets and liabilities at their current market rate. Not at historic market rates (like the eye-watering price you paid for them), or the future market rate (the bonus-boosting price you’d dearly love to get for them) but the CURRENT rate (Hello, bad news!).
Seems simple? Well, not always. Volatility in markets caused by climate change and a less than reassuring geopolitical backdrop can mean there’s a lot of “estimation” involved in defining those “current” rates.
So, the FRC wants more transparency from companies in how they determine their fair values. The FRC also advises, should you be confused about the whole fair value run-around, get someone in to do the job for you. Now you know.
Do you have strong views on how to “create and maintain” an ethical corporate culture? Board Agenda certainly hopes you do but, more importantly, the Institute of Business Ethics (IBE) wants to hear about it.
The IBE has launched a consultation on developing an ethical culture, after a recent survey found that only half of FTSE 100 companies had “written commitments” to protect staff reporting concerns about unethical behaviour.
Ian Peters, director of the IBE, said: “We want to help companies ensure they’re following the gold standard when thinking about or creating their ethical culture. This consultation has been informed by some of the most senior and experienced businesspeople in the country—and I would encourage companies to share their thoughts to help British business.”
Click here to share your ethical culture comments. The consultation closes on 13 August.
Less than worthy
Continuing the theme of ethics, a bit of survey news now. More than a third of business leaders in the US and UK say they have been asked to cut “ethical corners often” at work.
The poll, by the UK accountancy body CIMA, along with its US partner AICPA, also reveals that 71% of younger employees say business ethics is increasingly important. Around 41% of employees have been faced with an ethical dilemma at work.
A healthy 36% of young adults say “taking action when faced with an ethical dilemma” is the “most meaningful” thing a company can do. The figure among business leaders is only 23%. Priorities, eh?