Accounting & Business

Question 1

What did you learn in your Accounting (CPD) training?

Answer 1

That the objective of creating accounts is to provide information on a business’s financial position. Learnt about some of the accounts prepared, e.g. balance sheets and profit and loss accounts.

Question 2

What is a balance sheet?

Answer 2

• Statement of a businesses financial position
• Shows assets and liabilities at a given date (usually end of financial year)
  (Assets – cash, property, debtors, other investments)
  (Liabilities – borrowings, overdraft, loan and creditors)

Question 3

What is a profit and loss account?

Answer 3

• Summary if businesses income and expenditure, usually annual
• shows whether a company made a profit

Question 4

What is a cashflow statement?

Answer 4

• Shows actual receipt and expenditure (incl. VAT)

- shows whether a company generated cash

Question 5

What are current and non-current assets?

Answer 5

(Assets – cash, property, debtors, other investments)
Current = to be converted to cash within 1 year, e.g. a property sold soon.
Non-current = not likely to be converted to cash within 1 year e.g. trademarks, property, plant and equipment

Question 6

What are current and non-current liabilities?

Answer 6

(Liabilities – borrowings, overdraft, loan and creditors)
Current = amounts owed within 1 year, e.g. overdrafts, short-term loans
Non-current = long-term financial obligations e.g. deferred payments, long-terms loans

Question 7

What is the difference between Management Accounts and Audited (Company) Accounts?

Answer 7

Management – prepared for internal use by a business and are NOT audited
Audited – prepared by a Chartered Accountant
Statutory – mandatory for limited companies, generically formatted, requested by HMRC

Question 8

What is UKGAAP?

Answer 8

UK Generally Accepted Accounting Principles – valuations for inclusion in financial statements are prepared in accordance with this. Savills uses UKGAAP.

Question 9

What do you know about IFRS 16?

Answer 9

Effective after 1 January 2019.
Brought in as transparency measure.
Full cost of all leases to be recorded on balance sheet. An occupiers rent recognised as a liability, though service charges would be accounted seperately.
Leases of less than 12 months or shorter are exempt.

Question 10

The contents of a plc’s company accounts?

Answer 10

• Chairmans Statement
• Independent auditors report
• Income statement (profit and loss account)
• Statement of financial position (balance sheet)

Question 11

Where is the Net Profit found in the financial accounts?

Answer 11

On the profit and loss accounts (income statement)

Question 12

How have Savills performed this year?

Answer 12

A good performance despite market uncertainty in UK & Hong Kong. Strong growth in less transactional services -
Property Management, transaction advisory

Question 13

What is going on in the local housing market?

Answer 13

2019 overshadowed by brexit uncertainty. prime market highlights affordability issue for owner occupiers, with many buying in cheaper hinterland sites. These sales underpinned by HTB. Strong start to 2020 due to reduced politcal uncertainty, however Covid 19 has had an effect on the global economy which will ripple into housing market on a macro and micro level.

Question 14

Who can prepare audited accounts?

Answer 14

Chartered or certified accountants.

Question 15

Why is it important to understand accounts?

Answer 15

It is important I understand accounting principles in order to understand my department’s performance, and producing forecasts of expected turnover for the upcoming quarter and year.
Also I am aware it is important for assessing covenant strength and for the profits method of valuation.

Question 16

What are the main different types of fee structure you have used?

Answer 16

• Percentage fee based on value of asset bought or sold
• Fixed fee
• Hourly rate

Question 17

What is your company’s strategy?

Answer 17

The current strategy is to grow organically and in cases through acquisition of smaller businesses in order to diversify our service offering, promote technology and increase our presence in key geographical areas. Cluttons ME business would be a recent example.

Question 18

What is your company’s strategy?

Answer 18

The current strategy is to grow organically and in cases through acquisition of smaller businesses in order to diversify our service offering, promote technology and increase our presence in key geographical areas. KKS (Design & Workplace Consultancy) is an example. Integrated Currells (6 offices in London).

Question 19

What are the applicable accounting standards in the UK?

Answer 19

International Financial Reporting Standards (2015)
UK GAAP has to accord with IFRS which has different ways of reporting the information
IFRS 16 requires the full cost of leases to be outlined

Question 20

What are the main types of ratio analysis used to assess a company’s financial strength?

Answer 20

• Liquidity – the ability of the company to pay its way (solvency). More companies fail due to cash flow than any other reason.
• Investment/shareholders – information to enable decisions to be made on the extent of the risk and the earning potential of a business investment.
• Gearing – information on the relationship between the exposure of the business to loans as opposed to share capital.
• Profitability – how effective the company is at generating profits given sales and/or its capital assets.
• Financial – the rate at which the company sells its stock and the efficiency with which it uses its assets.

Question 21

What types of taxation are there?

Answer 21

1. Stamp Duty Land Tax – residential stamp duty is charged on incremental bands, whilst non residential is charged on transactions over £150,000 - at 5% for transactions over £500,000
2. VAT – a tax on services and goods; a company has to register for VAT if their annual turnover is over £82k in a 12 month period; if a property is elected for VAT the landlord can recoup VAT paid on services or works to that property; new build properties are zero rated for VAT so any VAT paid can be claimed back
3. ATED – Annual Tax on Enveloped Dwellings; bought into tax properties held by offshore companies

Question 22

Does the RICS have any guidance on money laundering?

Answer 22

RICS professional standards and guidance, global - countering bribery and corruption, money laundering and terrorist financing - February 2019

Question 23

National picture on the property market?

Answer 23

▪ Sluggish GDP growth (1%) with continuing risk of
Brexit affecting market confidence
▪ Weak sterling and comparative pricing maintains
attraction to non domestic investors
▪ ‘Boris bounce’ post the Election, buoys confidence in
December (may be tempered by Covid 19)

Question 24

Why are assets and liabilities important to consider?

Answer 24

As this would highlight the worth of an individual or firm. This would be used when establishing covenant strength.

Question 25

What is your company’s business strategy?

Answer 25

• Emphasis on the growth of the non-transactional business. (Property management & consultancy)
• Entering new markets and geographies- Develop EMEA, North America, accelerate growth in
  core markets in Asia Pac.

Question 26

What has been your job in your team?

Answer 26

I have been a graduate surveyor in the new homes team in Cambridge. As a team, we advise throughout the whole development process from inception to completion. My role was to keep abreast on the market and produce research for consultancy reports giving recommendations on values, mix and design. Which often resulted in a winning agency. My role would comprise operating on a variety of development sites, assisting with marketing, sales and handovers. Once qualified, I look to take more responsibility and lead on larger sites.

Question 27

How would you make a good presentation?

Answer 27

Understand the requirement - subject, audience, timings.
Organisation - use powerpoint, practice presenting
Knowledge - gather data, verify and analyse - be clear and concise
Confidence - speak clearly, know your subject.
Questions - encourage to take questions.