Pricing strategies struggle amid supply chain chaos
FRC Chief Executive to join HS2
It was announced earlier in February that FRC chief executive, Sir Jon Thompson, has been appointed Chair of HS2. In assuming the role, he will be standing down as CEO of the FRC at the end of his six month notice period. During this period Thompson will be serving as CEO of the FRC on a part-time basis. Sarah Rapson has been appointed on an interim basis as Deputy CEO to support Jon, the Board and the executive committee during this period.
The FRC stated: “The new CEO will inherit a strong organisation ready for its next chapter. We are grateful for Jon’s leadership, and I look forward to working with him through his notice period.”
Super apps improve cross-departmental functions
App Radar managing director, Silvio Peruci, said: “Super apps are a fairly new concept in Europe and North America. They are far more popular in Asia and Africa - e.g. WeChat (China), paytm (India) and Grab (Southeast Asia) which allow users to use one app to carry out various functions across industries. These are very popular apps with an estimated 379 million, 428 million and 223 million Android lifetime downloads respectively. Collectively they have over a billion users on Android devices alone.
“Tight regulation and antitrust laws are among the reasons why such apps are far less prevalent in the Western world, especially within financial services. However, there are steps being taken in that direction. For example, PayPal aims to create a super app with its integration of Venmo, and more recently Elon Musk claimed that his purchase of Twitter is his “accelerant to creating the everything app”.
Peruci’s comments come as Super apps become increasingly relevant in the modern world. The versatility of these mobile or web-based applications makes of them highly appealing tools for businesses globally. Their services include payment and financial transaction processing, and have the potential of offering users more engaging and powerful experiences, as reported by the technological consulting firm Gartner.
Peruci further added: “In Europe, Open Banking is enabling accounting and financial services apps to communicate with each other and perform a wider variety of actions (with the user’s permission). For the accounting industry specifically, this has made it easier for platforms such as Xero and QuickBooks to automate processes (such as bank feeds), provide a fuller picture of their accounts for users and accept digital payments for invoices.
“Where these platforms already have integrations with other non-accounting platforms (sales, payroll, workflow, payment etc), there is scope for these platforms to create super apps that bring this all into one app. Or we may see the big tech companies acquiring accounting platforms to integrate the technology into their super apps.”
Peruci concluded: “In the business world, super apps have the potential to not only improve cross-departmental collaboration and communication but also make the procurement process easier as businesses will have the option to purchase a licence for one platform, rather than multiple licenses for specific apps and departmental needs.”
Gender pay gap widened by performance related pay
Performance-related pay is an important but overlooked factor behind the the gender pay gap, analysis from Cardiff University has found.
Academics at Cardiff Business School analysed UK-wide employee data to assess the impact of performance-related pay.
Their results found that, compared to jobs which were not subject to performance-related pay, there is a lower concentration of female employees in performance-related pay jobs, particularly at the higher end of the wage spectrum, where bonuses are more common.
While performance-related pay was shown to affect the public sector consistently, it became increasingly important in the private sector in higher paid roles.
Gender differences between how performance-related pay is rewarded for men and for women have a further, but more modest role in widening the average gender pay gap.
The team’s analysis concludes that performance-related pay accounts for 12% of the overall gender pay gap, making a larger contribution than many other influences, such as tenure or temporary employment status.
Lead author Dr Ezgi Kaya said: “Our research shows a lower concentration of females in performance-related pay jobs. This could be down to personal preference on the types of roles that women go for, or restrictions in access to these sorts of jobs. But what is clear is that performance-related pay widens the overall gender pay gap considerably.
“This has practical implications for employers in terms of the design of their payment systems. Further research is needed to investigate whether this area needs further policy attention. If organisations want to address the gender pay gap, performance-related pay is an area that needs real consideration if they are serious about attracting female employees.”
Data for the study was drawn from hourly pay and annual performance-related pay provided by organisations to the Annual Survey of Hours and Earnings from the Office for National Statistics.
Attention on the gender pay gap tends to focus on the average worker. This latest analysis explores the entire wage distribution, allowing academics to assess the role of performance-related pay on the gender pay gap among both low and high paid workers.
AICPA Asks US Congress to Extend Section 174 R&E
The American Institute of CPAs (AICPA) submitted a letter to the US House of Representatives Ways and Means Committee and US Senate Finance Committee requesting immediate consideration of the treatment of section 174 research and experimental expenditures, as well as numerous expired tax provisions.
Specifically, the AICPA supports the deferral of the Internal Revenue Code (IRC) section 174 amortisation requirement of research and experimental expenditures and requests that Congress retroactively extend the effective date to amounts paid or incurred in tax years beginning after 31 December 2025.
This retroactive extension will allow businesses to continue expensing research and development costs for an additional four years, which will simplify tax compliance and minimise confusion related to identifying costs that should be capitalised rather than expensed. To further simplify the tax code, the AICPA recommends permanent allowance of expensing for section 174 expenditures.
In its letter to the leadership of the tax writing committees, the AICPA notes that there has been uncertainty and confusion surrounding tax extenders in the last several years. “While some measures, such as those designed for economic stimulus, are appropriate for temporary and sporadic use, longstanding, continually renewed, temporary tax provisions, including many incentive provisions, have become far too common,” the group says in the letter.
“We urge Congress to ease the confusion and stress by immediately extending the expensing provision related to section 174 and consider the other tax provisions that have recently expired or will expire in 2023,” said AICPA President & CEO Barry Melancon, CPA, CGMA. “It is challenging for businesses and their advisors to remain in constant compliance with tax rules when they are continually changing. Additionally, these perpetual changes have become an added financial burden for taxpayers, tax professionals, the IRS, and tax software vendors, resulting in significant cost to retroactively modify accounting and tax software, tax forms and instructions.”
FRC lists successful signatories to UK Stewardship code
The FRC has announced an increase in the number of signatories to the UK Stewardship Code following the publication of its updated list.
The list now includes successful applicants who submitted their reports at the end of October 2022. The regulator received 105 applications, of which 88 were successful, taking the total number of signatories to 254, up from 235 in September last year. This includes 179 asset managers, 58 asset owners and 17 service providers. The additional signatories bring the total assets under management of the list to £46.4tn ($55.7) up from £40.7tn.
The more diverse range of business models and investment styles among successful applicants is a positive indication of the broader adoption of responsible investment practices across the industry. There was also an encouraging level of re-application from previously unsuccessful organisations which used the FRC’s feedback to improve how they reported the outcomes and impact they are delivering through effective stewardship.
The FRC noted better reporting in this application cycle, which included disclosure of stewardship activity spanning multiple years, and encourages all signatories to use their report as an opportunity to demonstrate their ongoing progress.
FRC executive director of regulator standards, Mark Babington, said: “Congratulations to the successful signatories to the UK Stewardship Code. It’s great to see returning signatories to the Code provide updates on how they continue to deliver high-quality stewardship activity.
Babington further said: “It is also pleasing to see previously unsuccessful applicants using the FRC’s feedback to improve their reporting and become signatories.”
The FRC has stated that it will continue to place emphasis on reporting of activities and outcomes for our assessment of reports received in 2023. It further noted that high-quality, informative case studies are expected from all signatories.
The FRC has extended the asset owners’ deadline for submitting annual stewardship reports for the Spring window to 31 May 2023. The deadline will remain 30 April 2023 for asset managers and service providers. For the October 2023 deadline, the FRC will only accept renewal applications from existing signatories.
ICAEW issues practical tips on UK CFDR
The latest addition to the ICAEW Financial Reporting Faculty’s range of factsheets is helping preparers get to grips with the requirements of the UK’s Climate-related Financial Disclosure Regulations.
While the suite of existing factsheets covers UK regulations for company accounts (as well as financial reporting under IFRS and UK GAAP), this publication is the first to be focused on sustainability reporting, reflecting the growth in reporting requirements in this area.
The Climate-related Financial Disclosure Regulations, introduced in 2022, require disclosure of climate risks and opportunities facing businesses. This follows the recognition that the reporting of material climate-related information helps support investment decisions as we transition towards a low-carbon economy. Enhanced disclosure requirements better equip investors to direct investments towards sustainable and resilient businesses.
This year will see in-scope publicly quoted companies, large private companies and LLPs report in line with the regulations for the first time. Entities are required to include climate-related information across four key areas: governance, strategy, risk management, and metrics and targets.
The disclosures are based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. They must be included in the Non-Financial and Sustainability Information Statement within the strategic report (or Energy and Carbon Report for LLPs not required to produce a strategic report).
The new reporting regime is part of a fast-evolving landscape of climate reporting requirements. The faculty’s new factsheet helps preparers navigate this complex landscape by providing answers to frequently asked questions, including how the regulations interact with other reporting requirements, such as the TCFD recommendations, the FCA listing rules and other strategic and directors’ report requirements.
The factsheet covers both the regulations and the accompanying non-binding guidance issued by BEIS. It also provides practical tips and examples to help preparers meet the relevant requirements and understand potential linkages with other elements of the strategic report. Other useful resources are clearly signposted throughout the factsheet, including on the use of scenario analysis, which is generally considered to be one of the more challenging aspects of the legislation.
Financial Reporting Faculty technical manager, Laura Woods, said: “It is widely appreciated that applying the regulations may be challenging for those yet to report under any climate-reporting framework or legislation.
“Our factsheet aims to help those at an earlier stage in their climate-related reporting journey understand the requirements, become familiar with the resources available and avoid common pitfalls. It is also important to bear in mind that many investors and regulators appreciate that the depth and quality of disclosures on climate matters is expected to develop over time as improvements are made to the information available to management.”