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EU Enlargement
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Financial Reporting
Money Laundering
Women in Business
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  Whats New
 

Whats New?

(June 2007)

See a preview of our latest animations on :

  • Running a Business
  • Managing Staff
  • Competing for Business
  • Marketing in Business
  • In the Boardroom

You can now buy 5 seperate CD ROMs, consisting of 10 interactive short animations, suitable for your presentations, under each of the above titles by contacting us here. To learn more about these CD ROMS click here and ask for details

See a preview of our latest illustrations on :

  • Business
  • Human Resources
  • Investment
  • Competition
  • Funding Start-up Companies

 

Hybrid Finance all the rage

The Financial Times reported on 6 February 2006 that bankers are expecting explosive growth in a new form of securities, so-call hybrid securities. The new securities combine the most advantageous features of debt and equity to reduce companies tax bills and cut their financing costs while bolstering their credit ratings.

The Markets in Financial Instruments Directive (MiFID) is due to be implemented in the Spring of 2007.This Directive is designed to improve price transparency of traded financial instruments while also making it easier to execute trades across borders.

This suite of over forty images deals with the issues associated with the proposed introduction of the revised IAS standards from 1 January 2005. There are many other graphics dealing with Financial Reporting matters.

See Paul Cummins' article on the Uk Financial Reporting Council Strategy for 2005

 

 

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Basel II -Capital Requirements Directive

The Financial Times reported on 15 November 2005 that delays in the implementation of the Basel II Accord ( due in 2008) in the US would, in the view of large European Banks, erode the benefits which the new rules would give(improved risk management by using models based on past performance to help set the amount of capital banks are required to hold by regulators). In the US regulators and politicians are worried about the complexity of the regulations and the potential negative competitive impact on 7000 smaller US banks.

 

picture thumbnail on Basel II

 

picture thumbnail on Basel II

Sarbanes-Oxley

 

The Financial Times reported on 27 February 2006 that the SEC is facing renewed calls to loosen its rules after failing to appease foreign companies that claim it is too difficult to "deregister" from the SEC and thus avoid US reporting requirements.

 

 

picture thumbnail on Sarbanes-Oxley picture thumbnail on Sarbanes-Oxley

Corporate America moves away from profit forecasting

The Financial Times reported on 13 March 2006 that a concensus is forming amongst chief executives, regulators and analysts against the quarterly ritual that encourages management to pursue narrow, short term targets, in favour of more detail on underlying performance.

The Financial Times on 22 November 2005 reported that the UK regulator has warned the insurance industry that it may force brokers to disclose their commissions to the public if they do not deal adequaitely with conflicts of interest in their industry.

On the 23 November 2005 the same publication reported that the UK FSA has warned that competitive initial public offerings appear to be exacerbating conflicts of interest.The concern is that the process leads to conflicts of interest by forcing the delay in the appointment of investment banks, putting pressure to provide positive analyst research and over-aggressive pricing of deals.

 

These pictures depict these issues.

picture thumbnail depicting the UK Independent Pensions Commission

picture thumbnail of the UK Independent Pensions Commission

Pensions

Turner Plan gains support

The Financial Times reported on 9 March 2006 that plans for a new low-cost saving scheme to tackle Britain's looming pensions crisis are gathering momentum in spite of objections from pension funds and the insurance industry.

On February 1, the Finacial Times reported a City analyst warmimg that companies are effectively masking the scale of their pensions liabilities by failing to reveal crucial assumptions such as how long they expect their staff to live.

Adair Turner's UK Pension Commission Report ,recently published in late 2005 makes the following key recommendations:

  • more generous state pensions
  • state pension age to rise from 65 to 67 after 2020, then linked to life expectancy
  • individuals automatically enrolled in new savings plan, but given the right to opt out
  • aim to resolve pension funding problem with higher taxes, more saving and longer working lives

 

See Paul Cummins' articles (1) and (2) on pensions

 

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Women face new obstacles to joining the Board

The Financial Times on the 23 November 2005 quoted researchers arguing that the implementation of the Higgs Report post 2003 had actually reduced the chances of putting women on company boards. The thought is that by requiring that the majority of board members be independent non-executive directors, the scope for women executives in companies to fill the remaining executive director positions was reduced.

The Financial Times Reported on September 9, 2005 that the EU has dropped a plan to force companies to set up special audit committees after months of sharp criticism by business leaders and corporate governance advocates.It was feared that mandatory audit committees would impose an excessively rigid system on companies. . The new rules will allow member states to "determine that the functions assigned to the audit committee or a body performing equivalent functions may be performed by the administrative or supervisory body as a whole"

 

 

 


 

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corporate governace image

Financial Services Regulation

It was reported in the Fimancial Times on 25 July 2005 that the UK Association of British Insurers would support moves to inprove customer protection so long as it was not at the expense of competition and innovation. These graphics depict this issue.

 

It was reported in the Financial Times on Tuesday 30 August2005 that the Hedge Fund Industry is awaiting action on from the Regulator regarding certain perceived abuses in the industry. It is sugested that the regulator may perceive funds, aided by prime brokers , may be using inside information gathered in one market sector to trade assets in another.. Another possible area is in London's booming leveraged loan market.

 

picture thumbnail eliot spitzer image

 

picture thumbnail graphic depicting salesmanships over stewardship in the Investment Banking Sector

US steps closer to deal on IASB Accounting standards

The Financial Times reported on 27 February 2006 that the IASB and the US Financial Accounting Standards Board have agreed to make "significant progress" in writing new joint standards in 11 areas by 2008. Each organisation has also agreed to examine and , if necessary,modify existing standards in 10 other areas.

The Financial Times reported on 8 December 2005 that a new proposed standard on mergers and acquisitions , published by the International Accounting Standards Board ( IASB) in June 2005,has attracted criticism from a remarkable range of constituents. The areas of criticism focus on :

  • full goodwill method ( acquirers having to value underlying goodwill)
  • fair valuing of contingent liabilities
  • Finacial statements of individual entities
  • Transaction costs to be treated as a seperate expense

There have been a number of high profile scandals in the US,recently, about the role of Investment Managers and how they have given preference to share trading deals to preferred clients (who placed other business with the Investment Manager) at the expense of small investors/ pension funds etc. Industry pundits have blamed this outcome on the preoccupation of the Investment Manager with selling his services for a profit( salesmanship) as opposed to looking after the interests of clients (stewardship).These graphics depict this issue and explain some of the background.

See Articles 1 and 2 published in November 2004 by Paul Cummins on this subject.

 

picture thumbnail graphic depicting the market timing scandal in the US Mutual Funds Sector picture thumbnail

Auditors promised limited libility

It was reported in the Financial Times on 15 December 2004 that the UK Government has reached agreement with the Accountancy Profession and other business interests to limit the liability of auditors against catestrophic claims in return fot their agreement to a new criminal offence of"knowingly and rectlessly" giving false opinions. The legislation will be brought in after the next UK general election if Labour wins. In the US, in January 2005 the Business Roundtable Group has indicated support in the US for limited liability.

In December 2004 it was reported that the EU Commission intends to set up a co-ordinating group to to bring together audit oversight boards from member states

 

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picture thumbnail graphic depicting the UK Independent Pensions Commission

Accounting changes impact profits of companies

The Financial Times reported January 2005 that AXA, France's biggest insurer, how its revenues would be down as a result of the move from French accounting standards to the new international financial reporting standards. . By contrast it reported that Vodafone, the world's largest mobile phone network operator turned its pre-tax loss for the period of 6 months to September 2004 into a significant profit.

It was reported in the Financial Times on May 10th 2005 that the Accounting Standards Board is urging adoption of guidelines on the operating and financial reviews-tells companies to select new performance indicators like measures on employee morale, waste generation etc, in their financial reports, to be calculated transparently and reported consistently-to help exp[lain themselves to investors.

Our graphics address the main areas of impact from the introduction of new IAS or IFRS standards

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