2016 predictions from the ICAS Executive Team
What will the future hold for the finance and accountancy profession? As the year draws to a close, the ICAS Executive Team share their predictions for 2016.
Anton Colella, ICAS CEO
I hope 2016 will be the year of 'The Power of One' where ICAS takes its new ethics initiative into the global profession and the wider business community with conviction and impact - reinforcing the role of personal responsibility to stand up to corporate unethical behaviour and bad practice.
In 2016, we will also see the rubber hit the road on the thorny issue of international tax. The BEPs initiative now needs to be implemented consistently and effectively by governments around the world. If it isn’t, we will fail to move forward on a key issue overshadowing the profession.
2016 will also be the year when the collective efforts to grow the brand of Chartered Accountants Worldwide start to bear fruit. This involves the leading chartered bodies from the UK, Ireland, South Africa, Australia, New Zealand and Singapore, and others, joining the global family.
For ICAS 2016 will be the year that we increase our efforts and our determination to create the leading global professional community.
We will be working hard with CIPFA to further develop our partnership. We will also see more digital initiatives rolled out for the benefit of members as we work towards our vision of creating a truly "Virtual ICAS".
We will see the birth of a new ICAS Financial Services Community, based in London, but serving our members around the world.
We will focus our efforts on our three key themes - making ICAS more global, virtual and diverse.
2016 will be a testing time for the global economy. We could be on the cusp of a significant global slowdown. The influence of China on all of our business lives will be increasingly evident, while the geopolitics of the oil industry may be the single most important factor, in determining growth or recession.
Everywhere CAs will be working to make sure that opportunities triumph over these mighty risks.
Atholl Duncan, Executive Director, UK and Global
For my prediction for 2016, I point my crystal ball to the fields of politics and business.
In the States, we'll discover whether Donald Trump's outlandish statements make him more or less likely to become President. From this side of the Atlantic that might seem unlikely. CAs stateside will tell you otherwise.
Europe will come back centre stage to trouble David Cameron. I suspect the odds on Brexit will shorten considerably as the possibility of the UK voting to leave become ever more likely - much to the consternation of the business community. Once again, we'll be facing a referendum which is too close to call.
The crisis in North Sea oil will deepen. Instead of talking about how to maximise economic recovery from the remaining reserves we'll start seriously debating what will replace the most prosperous industry the UK has had for the last 40 years.
In Scottish politics we face a Parliamentary Election. It's hard to predict anything other than another SNP majority. Watch to see if the SNP find a way to reject the legislation which has flowed from the Smith Commission and seek to fight another election on the Constitution rather than on what they would do with a new raft of powers and responsibilities.
The pressure may grow on their record in government - on health, education, policing and the Forth Bridge - but the lack of steel in any of the opposition parties should see the SNP home to an astonishing third term in power.
In the boardroom, digital will remain firmly to the fore, with an increasing focus on how we use new technology to automate and drive administrative efficiency, as businesses strive to hammer the cost of sales.
Fintech will be the new hot sector with investors and business leaders struggling to work out how technology will really revolutionise the financial services sector.
Finally, will 2016 be the year when the London property bubble finally bursts? The fallout from that would be felt far and wide.
Only time will tell.......
Lesley Glen, Chief Operating Officer
My predictions for 2016 involve a look ahead at some of the many initiatives that will come into place during 2016 which finance teams need to be ready for.
Payroll looks likely to have a busy year ahead. For those members with operations in Scotland payroll will need to be ready for the implementation of Scottish income tax in 2016 and throughout the UK payroll we will also see the end of the dispensation regime for expenses. 2016 will also see many more employers reach their staging date for auto-enrolment, so we are likely to see pensions remain high on the agenda for many CAs.
2016 will no doubt see increased importance of cyber security on the finance radar. This is an area which continues to be a significant business risk for most organisations. The new year will see security changes to BACS from 1 June, 2016. These will require organisations to ensure their systems meet the new standards if they are to continue to be able to access BACS after that date. With so many more businesses undertaking digital services the new European VAT rules on digital products will be another example of the increasingly digital world of business affecting finance teams in 2016.
Looking to financial reporting, the coming year will see many organisations preparing their financial statements under the new Combined Code for the first time. In particular it will be interesting to see how disclosures evolve around the new viability assessment requirements. Many CAs will also be preparing accounts using FRS102 for the first time.
All in all, 2016 promises to be a year where finance teams will again have a wide range of changes to plan and execute.
Mark Allison, Executive Director, Education
My prediction for 2016 is that the recently announced Apprenticeship Levy, effectively a 0.5% payroll tax, for any business with payroll over £3m, will lead to much analysis and planning by all medium and large organisations. Industries with existing high-quality apprenticeship schemes, such as engineering and construction, will see this as both a realignment and an opportunity. However, will it lead these industries to train more apprentices?
Activities where apprenticeship schemes have been unsuccessful or low quality, and there are many, including in the accountancy sector, will be considering new schemes driven by the tax introduction. Time will tell whether these new schemes will be in the public interest and deliver value for money
In 2016 ICAS will seek to become part of the UK Accountancy employers’ new accountancy apprenticeship certifications. We will also take steps to consider the efficacy and efficiency of the Apprenticeship Levy more generally, throughout the UK.
Michelle Mullen, Executive Director, Regulation
2016 will be a year of significant change for the audit framework in the UK as it was last overhauled in the early 1990s! As the Financial Reporting Council becomes the single competent authority for the UK, it will inherit a broad spectrum of powers that have been assigned to the professional bodies until now. The extent to which those powers will be delegated to ICAS and the other RSBs is still a matter for discussion, but whatever the final outcome the profession’s level of accountability to the FRC will be stronger than ever.
In 2016, tax regulation could become the next big thing! Nearly a third of tax agents in the UK are not regulated and I cannot see HMRC and Revenue Scotland allowing that situation to continue indefinitely. Even if government cannot be persuaded to regulate accountancy services in the UK, I predict they could look to regulate individual specialisms which align with current political objectives. The Treasury’s desire to eliminate tax avoidance may result in enhanced regulation of individuals (or perhaps firms) who act as tax agents for UK individuals and companies.
Finally, in the current climate, I certainly envisage heightened scrutiny of the accountancy sector’s Anti Money Laundering compliance in 2016, as the UK continues to place the disruption of serious organised crime and anti-terrorism high up on the agenda. It is important for our firms to strive to be exemplars of good practice for the accountancy sector. Throughout 2016 and beyond ICAS will continue to be a developmental regulator, supporting our firms to achieve compliance wherever possible.
David Wood, Executive Director, Technical, Policy and Practice Support
Will 2016 be the year when one or more major climate events makes governments and business take more seriously the need to sustain better our natural environment? Will more UK and global businesses focus on "doing the right thing" and look at their operations in a more holistic and sustainable manner? After all, some global businesses are bigger than many small countries, and can have a huge impact. Will the business sector embrace the UN's Global Goals for Sustainable Development to which governments are now signing up?
Global shifts are taking place steadily but almost imperceptibly. The increasing dominance of China is likely to be evidenced in both increasing Chinese investment in the UK and globally, along with the diaspora of Chinese people determined to play their part in the global community.
The UK will flirt with the idea of leaving the EU trading bloc and going it alone, which will increase uncertainty for business, and society generally, and will raise questions on the likely future direction of the EU. And the US will hold a Presidential election in November which at the present time seems likely to split and polarise the American population. The support of China for IFRS will assist in the move towards a single global accounting language. Hard to imagine that IFRS will be a key Presidential election topic, but the outcome of the US election could impact on how the US progresses with any degree of accounting convergence.
How will the UK and global audit market evolve in 2016? Data analytics are likely to make audits more innovative, effective and insightful, but the investment required may act as a further barrier to increased choice in the FTSE 100 audit market. Will the increased costs of data analytics investment, more frequent audit tendering and the introduction of mandatory audit firm rotation requirements make 2016 the year when one or two of the larger firms think about leaving the audit market? At the SME end of the audit market how will the higher audit exemption threshold impact on the demand for smaller company audit and the provision of audit services by firms?
Many listed entities will be applying the UK Corporate Governance Code provision to produce a viability statement for the first time. The time period chosen for this assessment is intended to be longer than one year and reflects the nature of the business. However, I suspect the cube root of twenty seven might prove quite popular in this respect.
ICAS has called for a multi-stakeholder approach to addressing the tax avoidance issue, and has been working with other professional bodies in improving the effectiveness of our professional guidance. Attention should then focus on the legal profession and unqualified tax advisers to make sure they become subject to the same standards and expectations as our profession.
Whilst the OECD has issued its package of BEPS recommendations, to what extent will governments liaise and co-operate rather than use their tax systems to compete for inward investment? This may also be a pertinent consideration as tax powers are devolved to the regions of the UK. ICAS will work with the UK and Scottish Governments and with Westminster's All Party Parliamentary Group on Responsible Taxation, to exert as much influence as we can.