CP recently teamed up again with Halfords to host another roundtable retail forum. Bringing together finance professionals from some of the UK’s biggest retailers to talk about the hot issues affecting them.
Hosted by Cat Kelly, Cooper Parry’s Head of Retail and recent ex-Chair of the ICAEW Retail Advisory Group. And joined from Halfords by Jenni Smith, Head of Group Financial Reporting & Control and Prithy Patel Group Financial Accountant.
The discussion was lively and wide ranging with finance people from across a broad variety of companies. It was a great representation of the retail sector. Showcasing its breadth. The companies represented ranged from high street names and consumer brands through to hospitality and utilities. Though diverse it quickly became apparent that they have a lot in common.
Following on from the previous event a couple of participants had said they’d like to take the opportunity to spend more time doing a deep dive into some topics. As a result, the agenda for the event focussed on the internal control environment and the landscape post UK SOX.
Given the informal collaborative nature of the event the discussion did of course flow and stray into other areas. This was particularly true during the breaks and over a tasty lunch when chat continued and networking was a focus.
A FLAVOUR OF WHAT WAS DISCUSSED
UK SOX REPORTING (NOT FORGETTING US SOX)
Unsurprisingly with the major changes to the reporting requirements for corporate governance brought by UK SOX the subject pretty much recurred throughout the morning. UK SOX being a key driver in retailers adopting new processes and controls. With only a year until the final version when UK SOX legislation is agreed there was much discussion around the implications and practical solutions to managing change. The complexity of the evolving position being even more complicated for those operating in the USA given the difference in approach.
Many retailers have been quite reactive to UK SOX rather than addressing it on the front foot. They’re now in the position of having to put in place process maps along with controls to ensure they’re correctly followed. UK SOX is now becoming business as usual rather than something a long way off. Many of the teams present are busy testing their controls. Working through who owns the risk. The consensus and top tip from the Forum is that controls are kept granular. Be clear on what you’re trying to control and don’t stray into other areas.
TECH SOLUTIONS
When it comes to International Financial Reporting Standards and specifically IFRS 16 which relates to the collation of lease information there was agreement that tech solutions should be the way forward.
The reality of trying to collate and manipulate data on excel spreadsheets should be a thing of the past. Frustratingly for some of the people present the old ways are still the best despite the development of software. The reality of managing tens of thousands of leases for commercial space is mindboggling. Ensuring data integrity is quite a headache that many in the room are battling with.
There was a sharing of insight around the pros and cons of various tech solutions. From Horizon to Innervision and Oracle Fusion, plus many others on the market. There was agreement across the table that ultimately, it’s all about investing the time upfront to get the most out of any chosen system.
IFRS 17 AND INSURANCE
A question which had many around the table scratching their heads is ‘when is a performance guarantee insurance?’. Some larger retailers with franchise operations use performance guarantees to enhance the offer to businesses coming into their fold. The difficulty arises with some auditors suggesting that IFRS 17 means this a form of insurance. It’s a debate which is likely to rumble on for some time.
SUSTAINABILITY
There was discussion about company progress on the ESG (Environmental, Social and Governance) journey. Across the board responsibility for sustainability and green initiatives tends to sit outside finance teams. However, when it comes to the audit reporting requirements it comes back into the finance remit. Collecting data in a way that is presentable to auditors and publishable in annual reports can be challenging.
There were a mix of opinions expressed over the collection of data being outsourced to external consultants. In theory it makes sense. But in reality, it can cause headaches. Those end of year deadlines or keeping your annual report to a manageable length being very real challenges. Particularly when it comes to evidencing progress. No one wants to be challenged by the Financial Reporting Council (FRC).
From around the table, it’s clear retail companies are taking sustainability seriously. But they are grappling with what it means and the challenges posed for them. From the impact of climate change on their risk register to the need for air conditioning in stores and involving their suppliers in coming up with solutions to packaging and transportation methods.
WANT TO JOIN THE CONVERSATION?
Chatham House rules were firmly in place for the Forum, so we haven’t broken any confidences. But hopefully this taster into the insights and reflections shared gives you a feel for the wide range of topics covered. Attendees were generous about sharing information. Uncovering some of the hurdles facing them. We’re not giving away all their strategies and practical tips to overcome them. After all that’s one of the perks of being in the room.
We’ll be hosting the Halfords Retail Forum again along with other retail focussed events. Keep an eye on our events page for details once they’re finalised. The Retail Forum is a great event for finance leads from retail businesses to mingle within your peer group. If you’d like to tap into this treasure trove of insight and lively discussion, drop us an email through the link below so we can add you to our potential invite list. We do limit places to help facilitate conversation.
Or if any of the above has sparked some thoughts you’d like to discuss do get in touch.
