The news of the month through the eyes of industry leaders
The Accountant asked the heads of UK global accountancy bodies to select some news stories that caught their eye this month, and these are their picks:
The Chartered Institute of Management Accountants (CIMA) chief executive Charles Tilley picked two stories from Financial Times tackling the issue of productivity in the UK.
The first one (Professional services at heart of UK productivity problem) features FT proprietary research, according to which four sectors are dragging down productivity rates in the UK, compared to pre-crisis levels.
Those sectors are manufacturing, telecommunications and computing, banking and finance, and most notably professional services.
"With the sector failing to improve ever since the financial crisis, this raises a challenge for accountants, who make up a large chunk of the professional services sector," Tilley says.
According to FT research, productivity growth of lawyers, accountants and management consultants stood at 3.8% per year between 1997 and 2008; but it has fallen annually by less than 1% after the crisis broke.
Tilley says, however, that both the media and the statisticians are over-simplifying the concept of productivity.
"They fail to take into account that most of the value created by service-led industries is "intangible", meaning they often drive benefits in areas that may not show up on balance sheets, such as intellectual property."
Quoting recent CIMA-sponsored research, Tilley explains that intangible assets accounts for two thirds of the true and total value of UK companies, with over £1trn ($1.5trn) of those assets remaining undisclosed on balance sheets.
"Failing to account for intangibles undermines the professional services sector and consequently the service sector-dominated UK economy," he says.
The second news story chosen by Tilley (NHS faces bigger than expected financial ‘black hole‘) addresses also the issue of productivity but from a public sector perspective.
The productivity and funding of Britain’s National Health Service (NHS) has become a hot issue of the current electoral campaign. As the FT article reports, the NHS is projected to overspend its £110bn annual budget by £626m this year.
Tilley says the NHS is the nation’s favorite "political football" and will remain a key issue for months to come.
"But while the debate rages about how much and on what to spend, nobody seems to be speaking to the accountants. We are the ones who understand where the money goes and how we can be using it better."
Tilley continues: "By working closely and more collaboratively with clinical staff, accountants, particularly management accountants, can improve NHS efficiency while maintaining patient standards."
Tomorrow: Helen Brand, ACCA
Charles Tilley’s picksProfessional services at heart of UK productivity problemFinancial Times, 19 April 2015By Chris Giles, Fernando Giugliano and Sarah O’Connor
NHS faces bigger than expected financial ‘black hole’Financial Times, 6 April 2015By Sarah Neville