CYBER RESILIENCE...

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WHY CYBERSECURITY IS ABOUT CULTURE AS MUCH AS TECHNOLOGY

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By Rhys Madoc, CEO, UHY International

June 2022

In the post pandemic world of work, robust cybersecurity defences are more crucial than ever.

That is not saying anything that most of us don’t know, but it is worth repeating. The pandemic has accelerated digital transformation, making us all much more reliant on online tools and services than we were just two years ago.

In our profession, we have seen a significant shift to using cloud-based bookkeeping software; and our clients expect to be able to contact us over Zoom, Teams or chat, as well as in person. We store more critical data in digital strongrooms, either in the cloud or on in-house servers.

Across the corporate world, reputations, revenue and even the futures of businesses rely on being able to keep that information safe. That is not an easy task. Cybercriminals are a determined foe.

 

DOING THE SIMPLE THINGS – EVERY TIME

However, as determined as the criminals are, the reputation of cybercrime can sometimes exceed its reality. Cybercrime is rarely rocket science. The things you need to do to foil most attackers are actually quite simple – you just need to do them again, and again, and again.

That means not just investing in an enterprise grade firewall, but making sure it is always updated to the latest version. It means backing up data on a daily basis. It means buying and applying Virtual Private Network (VPN) licences for employees connecting to your network remotely and making sure they use them.

And perhaps most of all, it means making caution routine. Deleting an email that contains a link you don’t recognise once is not enough. You have to avoid clicking suspicious links every time you encounter them, from now until forever.

That is a tough ask, because it requires constant vigilance. Drop your guard on just one occasion and the hackers might be in.

 

TTHE HOLISTIC APPROACH TO CYBERSECURITY

That stark truth is confirmed by statistics. A recent report found that 85% of data breaches have a human aspect (source: Verizon, Data Breach Investigations Report 2022). The average cost of a data breach, meanwhile, is an eye watering USD 4.24 million according to IBM (source: IBM.com/security).

How do you avoid the calamity of a major cybersecurity incident? It takes a holistic approach, which certainly includes technology, and might require third party support.

Many UHY member firms around the world now offer cybersecurity as a professional service. Our US firm, for example, operates a rapid response unit, which has a formidable reputation for forensically investigating security breaches and containing threats before significant damage can be done.

 

EDUCATION IS YOUR FIRST LINE OF DEFENCE

But whatever else you do, your cybersecurity strategy absolutely must include employee education. In one telling study, 61% of employees failed a cybersecurity quiz, and 60% of those that failed said they felt safe from online threats (source: talentlms.com cybersecurity survey).

In my opinion, that sort of misplaced confidence is as big a threat to your organisation as an unpatched server. Cybersecurity training should now be compulsory for all employees, as part of a process of continuing learning. Annual refresher courses should cover at least the basics, from recognising phishing attacks and securing mobile devices to connecting securely to your network from outside the office.

Or to put it another way, cybersecurity needs to become a habit. Your resilience to cyber attacks depends on the continuous vigilance of every member of your organisation.

So put the tools in place, from firewalls and antivirus software to intrusion detection and prevention systems. But remember that cyber resilience is as much about instilling a culture of caution as it is investing in the latest technology. As an organisation, you are only as strong as your weakest link.

 


Image acknowledgements: Microsoft 365 subscriber content

 

Corporate tax rates worldwide hit new low of just 25.1% – but new trend of rising rates has already begun...

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Corporate tax rates in leading economies worldwide have fallen to an average of just 25.1%* shows a new study by UHY, the international accounting and consulting network.

However, with the Covid-19 pandemic leaving a gaping hole in the public finances of countries around the world, UHY says that the trend of declining corporate tax rates worldwide is likely to be over for the foreseeable future.

The UK government already announced its intention to raise corporation tax rates to 25% from April 2023, more than two percentage points higher than the European average.  Argentina already increased its headline corporate tax rate from 30% to 35% in 2021. US President Joe Biden has also pledged to raise federal corporate income tax to 28%, after it was cut to just 21% by his predecessor Donald Trump in 2017.

Global corporate tax rates have been steadily decreasing over recent years, with the G7 average for a business recording profits of 1 million USD falling from 32% in 2014/15 to just 26% in 2020/21. Many countries sought to incentivise businesses to invest in their economies with attractive tax rates. France, often seen as a higher tax European economy, has lowered its headline rate from 31% to 26.5% in just the past three years. 

Subarna Banerjee, Chairman of UHY, comments: “Countries around the world have wanted to remain competitive by keeping the tax burden on companies as low as possible in recent years. The cash strapped governments of 2022 will likely now be considering increasing taxes on corporates.”

“Public finances will have to be shored up somehow and corporates can be an easier target politically than individuals. Businesses worldwide should be prepared for their tax costs to begin to rise in the coming years.”

 

Lower rates for SMEs remain vital, says UHY

UHY says that governments worldwide should ensure that any move to raise corporate tax rates does not affect the lower rates used to encourage the growth of SMEs. The Netherlands has recently reduced its corporation tax rate to just 16.5% for companies with taxable income under $450,000, while Croatia now offers a rate of just 10% for companies with a turnover of less than $1,125,000.

UHY explains that SMEs form the foundation of economies worldwide, employing millions of people and a path to sustainable economic growth. Encouraging SME development with tax incentives will be crucial to the post-covid recovery of both developed and developing nations.

Subarna Banerjee continues: “SMEs are a crucial component of international economies. In light of many countries’ post-covid recovery plans, it is encouraging to see so many continuing to support these smaller enterprises which form sustainable foundations of their economies.”

 

OECD’s global minimum tax rate may prevent further tax rate cuts

The OECD announced in October that 136 countries have signed up to a deal to enforce a minimum corporate tax rate of 15% from 2023. The deal will also allow countries to tax multinationals that make sales within their jurisdictions even if they do not have a physical presence there.

As a result of growing political pressure, some lower-tax jurisdictions will likely now have to increase their corporate tax rates for multinationals. Countries such as the Republic of Ireland have come under fire for their low corporate tax rate of just 12.5%.

These corporations are a key target for government clampdowns worldwide, with some multinationals choosing to operate from lower-tax countries, resulting in them recording lower profits in higher-tax countries.  

Alan Farrelly of UHY Farrelly Dawe White Ltd says: “In the last two decades there has been global competition amongst countries such as the Republic of Ireland offering the lowest corporation tax rates. The new OECD initiative will change this trend for countries utilising low corporation tax rates to attract foreign investment.”

 

Could more corporate tax hikes be possible?

Developing nations surveyed by UHY typically already had higher corporate tax rates than their more economically developed counterparts. India’s tax rates hit 34% for the largest corporations, with Nigeria implementing a headline rate of 32%, and Argentina charging its resident companies 35% on their profits.

Experts question whether there is scope for some countries to raise taxes further. Japan already charges its companies up to 38.2%, and Malta has similarly high rates at 35%. 

Lomme van Dam of Govers Accountants in the Netherlands says: “Governments should carefully balance their tax deficits with their economic recovery. Businesses paying punitively-high tax rates could lead to slower growth in employment, revenues and ultimately tax receipts.”

Global corporate tax rates fall to an average of just 25.1%

* According to the average tax rates of 33 UHY international firms, assuming companies have a profit of $1 million

 

Notes for Editors

UHY global press contact:

Leigh Lyons on +44 20 7767 2624

Email: l.lyons@uhy.com – www.uhy.com

Nick Mattison or Richard Crossan

Mattison Public Relations

+44 20 7645 3631

+44 74 4637 5555

Email: richard.crossan@mattison.co.uk

 

LEADERSHIP TODAY...

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IS IT NATURE OR NURTURE?

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By Rhys Madoc, CEO, UHY International

May 2022

Are leaders born or made? It’s an important question, because if you believe that leadership is a genetic predisposition, you had better make sure your talent acquisition strategy is first class.

On the other hand, if you think leadership can be taught and developed in people, you need to have the processes and resources in place to give talented candidates the hard and soft skills they need.

In my experience, most businesses will mix and match. They will recruit new leaders and also promote from within. But the prevailing wisdom favours an educational route to leadership in business. Some people arrive in your organisation fully formed, with the talent, drive and charisma to be leaders, but arguably they are likely to be a minority. Many more will have a potential that needs to be nurtured.

Doing so is critical to moving our firms forward, and maintaining stability of knowledge – the foundations to grow. More than anything else, good leadership candidates can future-proof your business, and help set tomorrow’s agenda. But what does that nurture process entail? Here are a few ideas.

 

Identify the best candidates

How do you identify the next generation of leaders? In professional services, excellent technical skills are a given, but you are also looking for evidence of strategic thinking.

  • Do they come to meetings with ideas?
  • Do they proactively suggest new ways of doing things?
  • Do they have a grasp of the bigger picture?

Good candidates may naturally take the lead on projects, but not by being the loudest or most forthright voice in the room. Persuasion is often the natural result of good ideas and clear thinking.

 

Train them for leadership

Potential leaders will be keen to learn, and you should give them the resources that allow them to explore their natural curiosity. Management development programmes will target ‘hard’ leadership skills like commercial awareness and business development, but soft skills are just as important. Leaders don’t shout or snap orders anymore. They persuade and motivate. They know how to manage remote teams as well as in-house. They are the number one reason other talented people come to work for your business – and stay.

 

Give them reason to stay

You need a retention strategy targeted towards your very best people. One study found that the top 25% of employees are four times more productive than average – and up to eight times more productive in specialist areas (such as tax, for example). Good people tend to know their worth. If you undervalue them, they will leave.

This is not necessarily a question of money. According to recent Gartner research, people want ‘radical flexibility’, which means a degree of autonomy. They want to feel cared for, so you need a wellbeing strategy. They want to have a sense of purpose and shared values. Perhaps more than anything, they want opportunities for personal growth. In terms of your leadership candidates, this could be the clincher.

 

Give them a path to success

In short, your best people could leave if they do not see a path to progression. The end of that path cannot be in some distant fairytale future. Top talent needs to know that good work, commitment and the acquisition of new skills and knowledge will be rewarded with promotion. They need to know with certainty the steps they have to take to make the next rung of the ladder, and when – all being well – they can expect to achieve it.

Larger organisations may implement formal leadership identification and development processes. Smaller ones may follow more informal paths, but the result should be the same. Employees with leadership potential should know how that potential is to be developed and when it will lead to concrete progress.

At UHY a development priority is to encourage our leaders of the future, from formal and informal webinar and conference learning around succession planning, to providing an annual leadership forum in Spain. The UHY Forum has run since 2002 and forum alumni have gone on to achieve remarkable success in member firms throughout the UHY network. UHY’s current international chairman and the managing partner of UHY Hacker Young (London & Nottingham) in the UK, Subarna Banerjee (pictured) is an alumnus of the UHY Forum and there are many other alumni members who are now in significant leadership roles across our network.

 

Nurture first

Why is any of this important? Can you simply go out to the market and recruit the leadership talent you need? The answer is that often you cannot find the ‘right fit’ person – whatever the ‘right fit’ is! Variety of experience brings its own rewards to an organisation in the form of new ideas and developing culture. Fully formed talent is in short supply and highly valued (which makes it expensive).

In the era of post-pandemic working, where great employees and potential recruits have a new-found sense of self – and arguably more bargaining power – I believe that nurturing your next generation of leaders from within is more necessary than ever.

The good news is that your next management candidate is probably in your organisation already. You just have to let their promise flourish.

 


Image acknowledgements:
Best candidate: Photo by Kona Studios on Unsplash
Meeting, and Subarna Banerjee: © UHY International

COLLABORATION WORKS...

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BUT WHAT DOES IT MEAN IN PRACTICE?

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By Rhys Madoc, CEO, UHY International

February 2022

Naturally, clients expect the best possible service from providers like UHY member firms. An important way we meet that expectation is through seamless and instinctive collaboration, within our teams, offices and the network as a whole.

It is no surprise, then, that working together is one of the four pillars of our network strategy. We know that when we collaborate we bring together a wide pool of knowledge and experience for the benefit of our clients.

Working together makes us better auditors, tax experts and business advisors. It means we can look at a client’s problem from multiple angles and bring in additional expertise to offer a second opinion or confirm a conclusion. When clients want cross-border services, working together means collaborating to give them the best local knowledge and on-the-ground expertise, helping them achieve their international ambitions.

It is known that collaboration is central to a successful business. Studies, such as that by Forbes have shown that teams which work together are more productive and innovative than teams which do not. But for a global professional services network like UHY, collaboration takes several forms, which in turn come together to form one seamless and joined up service.

 

Internal network collaboration

We collaborate as a network to share best practice, the latest research and new knowledge garnered from unique or complex client projects. 

We do that through our internal publications, a calendar of regional and global meetings and our network intranet, which is a comprehensive repository of articles, case studies, best-practice templates and training resources.

We encourage all our member firm offices to engage in continued discussion about our strategic direction and how it can better serve clients. 

This ongoing conversation feeds into an annual calendar of training and development opportunities.  

 

Collaboration on client projects

Clients expect us to collaborate internally and with their own teams – and sometimes with third parties too – for the best possible outcome. We want clients to see us as an extension of their own team.

Internally, collaboration happens when UHY individual experts and functional teams across different disciplines work together to provide a holistic service. These specialists might be in the same office, in cross-functional client service teams, or they might be on the other side of the world. In UHY we quickly know who to call in any one of our offices and any member firm can tap into the wider knowledge of the network to help them better meet client challenges.

Client stories in our bi-annual UHY Global magazine detail the ways in which our member firms come together to help clients, often on cross-border projects. Clients regularly ask for our help when auditing or opening overseas offices and subsidiaries, and acquiring foreign businesses. We offer a breadth of knowledge and experience across industries and sectors by harnessing the collective power of our network and tailoring it to each client’s needs.

 

COLLABORATIVE TEAMS

While collaboration often happens naturally, we also put processes in place to identify the opportunities to serve clients better. To that end, every UHY member firm has an International Contact Partner whose role it is to answer queries from international colleagues and clients alike, and oversee the progress of collaborative cross-border projects. Our Referrals Partners endeavour to ensure that cross-border work and enquiries received from – and outsourced to – other member firms, are effectively managed.

In other words, collaboration is built into our systems and processes. The result we strive to achieve, for clients, is a comprehensive and seamless service and solution, whether their project involves one UHY member firm or ten.

 


Image acknowledgements:

Map graphic and client story collage ©UHY International

Collaborative working Microsoft 365 subscriber content

WHAT IS QUALITY?...

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FOR CLIENTS, THE ANSWER IS SO MUCH MORE THAN COMPLIANCE WITH STANDARDS

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By Rhys Madoc, CEO, UHY International

December 2021

In accountancy, quality – at one level – is about making sure everything we do meets regulatory standards or legal requirements. Meeting these is the very minimum our clients expect. For example, international accountancy networks including UHY help to provide this assurance through membership of IFAC’s* Forum of Firms, conditional on meeting stringent quality standards.

But we know that quality goes beyond compliance. To help clients meet their objectives, we need to do more. Quality is also about service levels – for example, how reliable and responsive we are; how well we communicate; and how far we tailor our products to meet clients’ particular requirements.

 

A culture of quality

How do accountants nurture a culture of quality? We start with the basics. At its core, quality is about offering a consistently professional service, regardless of client size or spend.

Quality is caring about the total client experience, from first phone call to project handover – through prompt responses to queries, well-articulated proposals, a thoroughness in everything we do, and a determination to meet our deadlines and keep our promises. This is not a legal or statutory requirement. It is a commitment to our clients, delivered through our people.

Forging relationships is also about driving quality. When we get to know clients well, we are better able to understand their motivations and help them realise their ambitions. They turn to us for advice, and we become trusted advisors, a real mark of quality.

 

It is also what we do when nobody is watching

So what else does quality mean? To answer that, we need to understand that most professional services providers are now so much more than technicians.

Not only do we need to be experts in audit and assurance, tax, accounting and a host of business advisory disciplines, we also need to be highly knowledgeable about the wider globally-connected business world, and the challenges and opportunities our clients face every day.

That is why, for accountancy, the old adage is true. ‘Quality is what we do when nobody is watching’. That is what sets firms and networks apart.

For example, it is the insight we accumulate that does not just help businesses stay compliant, it helps them move forwards. It is the experience we bank through working in a variety of industry sectors. But above all, it is the client-centred cultures we work in that help us deliver value on top of expected technical expertise.

 

The UHY way

Our own client-centred culture has been the driving force behind the UHY global network since its foundation 35 years ago so it is not a fad or fashion, but a decades-old fundamental philosophy of how we do business together as a network across more than 100 countries.

In this sense, quality is about striving for seamless collaboration. Our firms meet regularly, share best practice and – most importantly – understand that with cross-border work the quality of one member firm reflects the reputation of the entire network. This engagement between our offices ensures we know the right person to contact in each country to meet client needs and address those needs quickly and efficiently. We pride ourselves on being cohesive, with a joined up approach to supporting all clients and cross-border initiatives. You can learn more about what quality means to UHY in our Capability Statement, where clients share their experiences of working with our member firms.

In other words, quality is an operational imperative for UHY, but we never stand still. Regulators, clients and the wider business world move on, and we move with them. We are a top 20 global accountancy network for a reason. We work hard for our clients, even when nobody is watching.

 


*IFAC is the International Federation of Accountants. “We are the global voice for the accountancy profession. We serve the public interest through advocacy, development, and support for our member organisations and the more than 3 million accountants who are crucial to our global economy.”  Source: www.ifac.org