{"id":5943,"date":"2020-01-13T14:51:16","date_gmt":"2020-01-13T14:51:16","guid":{"rendered":"https:\/\/www.accountex.co.uk\/insight\/?p=5943"},"modified":"2020-01-13T15:19:37","modified_gmt":"2020-01-13T15:19:37","slug":"cva-solution","status":"publish","type":"post","link":"https:\/\/www.accountex.co.uk\/insight\/2020\/01\/13\/cva-solution\/","title":{"rendered":"CVAs seen as just a &#8216;sticking plaster&#8217; solution"},"content":{"rendered":"<p>Research shows that procedures aimed at saving struggling firms from going bust fail in half the cases where they are used.<\/p>\n<p>A survey by estate agency Colliers International reveals that between 2016 and 2019, 13 of 23 company voluntary arrangements preceded the group going into administration.<\/p>\n<p>CVAs are used by businesses to reduce their debts.<\/p>\n<p>Interestingly other companies that did not agree a CVA ended up looking for investors to buy the business.<\/p>\n<h3>Industry adviser<\/h3>\n<p>Examples of failed CVAs include those agreed by Toys R Us and Jamie\u2019s Italian, according to a report in the Financial Times.<\/p>\n<p>The website quotes Richard Hyman, a retail industry adviser. \u201c[CVAs] are a sticking plaster on a life-threatening ailment,\u201d\u00a0 he says.<\/p>\n<p>\u201cThey look to shave costs in a business and in this trading market the real issue that distressed businesses face is that they don\u2019t generate enough revenue.\u201d<\/p>\n<p>The Centre for Retail Research and the British Retail Consortium last week said that 2019 had been the worst year for retail in 25 years.<\/p>\n<p>BRC research showed that <strong><a href=\"https:\/\/brc.org.uk\/news\/2019\/worst-year-on-record-for-retail\/\" target=\"_blank\" rel=\"noopener noreferrer\">total sales fell 0.1 per cent<\/a><\/strong>, compared with 1.2 per cent growth in 2018.<\/p>\n<h2>New money laundering regulations in play<\/h2>\n<p>Last Friday saw the fifth money laundering directive (or 5MLD) spring into action.<\/p>\n<p>The new regulations give accountants a due diligence role in tackling organised crime.<\/p>\n<p>According to a report in <strong><a href=\"https:\/\/www.accountancyage.com\/2020\/01\/10\/what-does-5mld-mean-for-accountants\/\" target=\"_blank\" rel=\"noopener noreferrer\">Accountancy Age<\/a><\/strong>, it&#8217;s important that companies and accountants get to grips with the new law.<\/p>\n<p>HMRC has fined several accounting firms for anti-money laundering rule breaches.<\/p>\n<h3>Process and procedure<\/h3>\n<p>ICAEW says these are the areas of process and procedure that <strong><a href=\"https:\/\/www.icaew.com\/technical\/legal-and-regulatory\/anti-money-laundering\/fifth-anti-money-laundering-directive-5mld\" target=\"_blank\" rel=\"noopener noreferrer\">accountancy firms<\/a><\/strong> will need to look at. Here&#8217;s an extract from their guidance:<\/p>\n<ul>\n<li>Firms providing both direct and indirect tax advice are now captured by the rules.<\/li>\n<li>When you take on a limited company or LLP or certain types of trust as a client, you must check that details of the Persons with Significant Control have been filed with the registrar (ie, Companies House) and report any discrepancies you identify.<strong>\u00a0<a href=\"https:\/\/www.gov.uk\/guidance\/report-a-discrepancy-about-a-beneficial-owner-on-the-psc-register-by-an-obliged-entity\" target=\"_blank\" rel=\"noopener noreferrer\">Read further guidance on how to report a discrepancy.<\/a><\/strong><\/li>\n<li>Confirmation that electronic ID verification can be considered as a reliable source of evidence, where the electronic process is free from fraud and provides sufficient assurance of the identity of the individual.<\/li>\n<\/ul>\n<p>Mike Harris, director of financial crime compliance at Lex tells Accountancy Age: &#8220;There\u2019s a whole swathe of sectors that weren\u2019t subject to AML regulation that now are, so an accounting practice with any business exposure in that area is going to have to go through and review all of its policies and procedures.<\/p>\n<p>&#8220;If they deal in those sectors, they\u2019re going to have to take a different approach to risk than they would have done up until today.<\/p>\n<p>&#8220;The compliance considerations as a result of all this new regulation are significant.\u201d<\/p>\n<h2>Ahh yes, back to the future of audit<\/h2>\n<p>Apparently, the boss of the competition regulator has been meeting with top accounting execs in to reignite interest in audit market reform., according to the FT.<\/p>\n<p>It seems that Andrew Tyrie, of the Competition and Markets Authority, has had dinners with\u00a0 the likes of KMPG boss Bill Michael, EY\u2019s chairman Steve Varley and other leading lights of the industry.<\/p>\n<p>The CMA has called for law changes to end the dominance of the big.<\/p>\n<p>It recommends splitting up the audit and consulting functions KPMG, EY, Deloitte and PwC.<\/p>\n<p><em><strong>Much is talked about this subject, but very little, it seems, ever gets done. Maybe 2020 will be different.<\/strong><\/em><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Research shows that procedures aimed at saving struggling firms from going bust fail in half the cases where they are used. A survey by estate agency Colliers International reveals that between 2016 and 2019, 13 of 23 company voluntary arrangements preceded the group going into administration. CVAs are used by businesses to reduce their debts. [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":5945,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[444,4,442],"tags":[],"class_list":{"0":"post-5943","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"category-news","9":"category-practice"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>CVAs seen as just a &#039;sticking plaster&#039; solution - Accounting Insight News<\/title>\n<meta name=\"description\" content=\"Research shows that procedures aimed at saving struggling firms from going bust fail in half the cases where they are used\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.accountex.co.uk\/insight\/2020\/01\/13\/cva-solution\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CVAs seen as just a &#039;sticking plaster&#039; 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