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Global outstanding debt in the form of corporate bonds issued by non-financial companies has hit record levels, reaching almost $13 trillion at the end of 2018. This is double the amount outstanding in real terms before the 2008 financial crisis, according to a new OECD paper. Corporate Bond Markets in a Time of Unconventional Monetary Policy says that non-financial companies have dramatically increased their borrowing in the form of corporate bonds. Between 2008-2018, global corporate bond issuance averaged $1.7 trillion per year, compared to an annual average of $864 billion during the years leading up to the crisis. Companies from advanced economies, which hold 79% of the total global outstanding amount as of 2018, have seen their corporate bond volume grow by 70%, from $5.97 trillion in 2008 to $10.17 trillion in 2018. The corporate bond market in emerging markets, mainly driven by growth in China, reached a total outstanding amount of $2.78 trillion in 2018, up 395% compared to a decade ago. China has moved from a negligible level of issuance prior to the 2008 crisis to a record issuance amount of $590 billion in 2016, ranking second highest in the world. The risks and vulnerabilities in the corporate debt market are also significantly different from that of the previous pre-crisis cycle. The share of lowest quality investment grade bonds stands at 54%, a historical high, and there has been a marked decrease in bondholder rights that could amplify negative effects in the event of market stress. At the same time, in the case of a financial shock similar to 2008, $500 billion worth of corporate bonds would migrate to the non-investment grade market within a year, forcing sales that are hard to absorb by non-investment grade investors. Against this background, the paper cites concerns around global economic growth. In the case of a downturn, highly leveraged companies would face difficulties in servicing their debt, which in turn, through lower investment and higher default rates, could amplify the effects of a downturn. While major central banks have modified their use of extraordinary measures recently, the future direction of monetary policy will continue to affect the dynamics on corporate bond markets. Gross borrowings by governments from the bond markets are also set to reach a new record level in 2019, according to the recent OECD Sovereign Borrowing Outlook 2019. Any developments in these areas will come at a time when non-financial companies in the next three years will have to pay back or refinance about $4 trillion worth of corporate bonds, close to the total balance sheet of the US Federal Reserve. Source: OECD 25/02/2019

Feb 25, 2019
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Accounting technicians play an important role in many jurisdictions and an accounting technician qualification is frequently a pathway into the accountancy profession. IFAC recently shared a framework for professional accountancy organisations that will support a competent, skilled and future-ready accounting technician workforce. "Prepared by the AAT, and based on the association's competency framework, An Illustrative Competency Framework for Accounting Technicians is a conversation starter," explained Joseph Bryson, Head of Quality & Development at IFAC. "IFAC hopes that every professional accountancy organisation with an interest in the accounting technician qualification shares their experiences and helps to grow this important segment of the global accountancy ecosystem." The Framework's illustrative example is a resource for professional accountancy organisations creating an Accounting Technician designation as an additional pathway into the accountancy profession. Those interested in sharing their experience and knowledge should email their articles and/or resources marked "IFAC AAT Framework Discussion". Source: The International Federation of Accountants 22/02/2019

Feb 25, 2019
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Unlike previous tech advancements, the adoption of the fifth generation of mobile network standards – known as 5G – is going to be enterprise not consumer-led. Mike Stone explains. I believe 5G will start by enabling manufacturing’s fourth Industrial Revolution, or Industry 4.0, and transform sectors including industrial manufacturing, defence, infrastructure and healthcare. 5G is expected to generate a variety of new applications and business cases for enterprises, many of which have yet to be imagined. For example, high-definition video and voice will likely supplant the keyboard as the main computing input mechanism. This would not be possible without 5G as a key enabler, as its power and speed will be needed to manage a new tsunami of data. But the government has a crucial role to play in allowing 5G and Industry 4.0 to deliver their full potential – not least in ensuring they are properly secure. It is vital that 5G is secured, as it will almost certainly lead to sensors and other devices communicating and making decisions independently of humans. If these decisions are to be trusted, then we must be certain that no malicious code has been injected. The first generation of Internet of Things (IoT) technologies had little or no security – the perceived threat was small, and it was prohibitively expensive and difficult to introduce into small sensors. Sadly, cyber-attacks by both state actors and criminals have shown that there is a very real risk which must be addressed. 5G needs government for governance While 5G will not be controlled by governments, it can’t happen without them. Some government agencies will have a role to play in opening access to 5G, which allocates devices a specific slice of a network rather than sharing bandwidth. This makes it potentially viable for facilities such as military airfields to securely share bandwidth with civilians. In some countries where commercial networks do a poor job of serving rural areas, providing access to military connections could significantly help to connect remote communities and bridge the digital divide. More broadly, 5G will disrupt public sector agencies and companies in ways that will require governments to regulate. It will allow more use of augmented and artificial intelligence but may need rules on what decisions can be delegated to machines and when humans need to be ‘in the loop’, particularly in the military environment. Securing 5G networks Security is fundamental to 5G’s success and this may be where government interventions are most important. As discussed, IoT devices based on earlier wireless standards are notorious for poor security. It is now possible to fit more processing power into tiny devices, meaning 5G has the capacity to provide security at the network level. 5G holds huge promise for a range of industries. But while this is a technology that will be led by enterprises, it will only succeed if governments set industry-specific regulations and ensure devices and networks are well-secured. Mike Stone is the Global Chair of Defence and National Security & Global Head of Technology Transformation for Infrastructure, Government and Healthcare at KPMG International.

Feb 22, 2019
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In the age of frequent job hopping, the importance of self-career development is an increasingly vital component to an individual’s success within the workplace. Dearbhla Gallagher explains how to get your career moving. Long gone are the days of being a 'company man'. People move offices and jobs more than ever before. For ambitious employees, self-development can be extremely effective for enhancing professional progression and acceleration up the career ladder. In order to progress, the following steps can be taken: 1. Find a mentor One of the best ways to attain marketable skills and gain support is through a suitable mentor. It should be someone who can support you in your professional accolades and ascent and help further you in your development. Mentors can have profoundly positive career impacts, from assisting your development of new perspectives to helping you to gain a better understanding of your industry and organisation. Having the trusted experience of a mentor provide you with guidance, encouragement and support will enable you to build confidence in your ability to execute tasks and, ultimately, improve your performance in the workplace. 2. Grow your personal brand In order to sell your personal brand in the marketplace, you must become your own chief marketing officer. Constantly analyse, refine and improve upon the ways to market yourself, and assess how you appear in the job market. One of the best ways to gain a competitive advantage and improve your own brand image is through education. Seek out short-term educational opportunities in the forms of webinars, online courses, after work classes, etc. LinkedIn’s new eLearning platform offers an abundance of opportunities in this area for self-development. 3. Seek performance feedback It is important to gain feedback in every task that you undertake, even if it is negative. It is reported that only 15% of millennial employees routinely ask for such feedback. However, this is the only way for you to gauge your current proficiency and truly improve upon your skill set. In the absence of criticism, it is often difficult to become self-aware. Feedback from others informs us in ways that enriches our self-knowledge. When asking for feedback, try to be specific and focus narrowly on the area where you need help. Those employees who are willing to take criticism on board are the ones who will be most receptive to changing behaviour, and therefore more likely to demonstrate success in their career path. My advice Companies in this day and age expect much greater individuality, flexibility and creativity from their employees. Rising to positions of leadership, therefore, requires workers to craft their own career development strategies. There is much power to be gained through growing your personal brand, finding a mentor and gaining feedback, and this is illustrated in the corporate leaders of today. Dearbhla Gallagher is the Manager of People Development at Baker Tilly.

Feb 22, 2019
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The fallout from recent high-profile media cases has raised doubts amongst many commentators about the ability of organisations to create a safe space for whistleblowers within the workplace. Justin Moran and Michael Fitzgerald set out the top five tips to improving corporate culture and creating a safe space for whistleblowers. Change the emphasis towards ‘speak up’ rather than ‘whistleblowing’ While traditionally known as whistleblowing, the term ‘speak up’ is now more widely used to help promote the reporting of concerns across the organisation in a more positive manner. Organisations should review the language used within policies and procedures to ensure that the communication and messaging is in keeping with best practices. Foster a culture that embraces the value of employees who raise concerns One solution to creating a workplace culture that embraces the value of employees (reporters) who raise concerns is by recognising the inaccuracy of the negative but pervasive perceptions about reporters. The false perceptions about a reporter’s motivation often prompts an immediate reaction from management who views the employee raising the concern as the actual problem, rather than addressing the problem identified by the employee. Nothing can hurt an organisation more than an environment where employees are discouraged from speaking up because of management inaction or likely retaliation. Boards and senior management need to ensure that the tone set by way of policy and behaviours supports a speak up environment. Provide multiple channels for raising concerns A critical success factor of any speak up framework is the availability of multiple, safe avenues for employees to raise concerns. However, those avenues must be trustworthy, protective of the employee and understood by everyone in the organisation. It is important that employees can raise concerns to higher internal levels without restriction. Employers need to assess the option of anonymous, third-party reporting that is truly protective of an employee’s identity. Best practice corporate governance arrangements require Boards to routinely review policies and procedures, and the reports arising from its operation. Respond to employee concerns in a timely manner An organisation’s speak up policy should outline a commitment to responding to concerns raised by employees with reliable processes and procedures. Global surveys have shown employees are more reluctant to speak up for fear of reprisal and a belief that their concerns will fall on deaf ears. Communication and awareness of the process should be reviewed on a regular basis and incorporated into brand values and organisational plans, including risk and compliance frameworks. Make arrangements for independent investigation The value of robust and independent investigation processes cannot be underestimated. Best practice corporate governance emphasises the requirements of Boards to ensure that arrangements are in place for the proportionate and independent investigation of speak up concerns. Best practice directs that investigative processes are independent from management and human resources to ensure confidentiality and objectivity. Organisations should ensure that investigative processes are conducted on a confidential basis and in a timely manner by qualified professionals to help manage costs and reputational risks. Justin Moran is a Director, Forensic Investigations, Internal Audit and Risk in Mazars and Michael Fitzgerald is a Senior Manager, Forensic Investigations, Internal Audit and Risk in Mazars. Mazars hosts The Future of Business podcast series with Vincent Wall. You can listen to episode 9 on White-collar crime and whistleblowing here

Feb 22, 2019
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The Financial Reporting Council (FRC) and the UK's Department for Business, Energy and Industrial Strategy (BEIS) have published letters for auditors and accountants to share information in case there is no deal for leaving the EU by Friday 29 March 2019. The letters have been posted on Gov.uk and can be accessed from the FRC’s website. Source: Financial Reporting Council.

Feb 21, 2019