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08/10/2012 12:35


Editor’s choice A desire for a balanced life and having thoroughly enjoyed mentoring her audit juniors led Tunku Abdul Rahman College vice principal Kho Sok Kee to switch careers from accountancy to education. See page 12

RISING WAGES Low-paid workers in Malaysia will have something to cheer about come 1 January next year when the minimum wage policy kicks in. The proposed minimum monthly wage of RM900 in Peninsular Malaysia and RM800 in Sabah, Sarawak and the Federal Territory of Labuan is expected to benefit 3.2 million private sector workers. Analysts say real wages in Malaysia have been low or stagnating because of price controls, subsidies and the influx of cheap unskilled foreign workers. Malaysia’s labour market is characterised by a high presence of low-skilled workers who make up about 70% of the labour force, significantly higher than in Singapore at 51%, Taiwan at 67% and South Korea at 65%, according to a recent CIMB Bank research report entitled Minimum wage – curse or cure. Part of the problem is that wages in Malaysia lag behind productivity growth. A study by the World Bank shows that wage growth was 2.6% per annum during the past 10 years, compared to productivity growth of 6.7% per annum, suggesting a suppression of wages, especially for low-paid workers, and an inefficient labour market. The contentious issue is not whether to impose a minimum wage, but where to place the bar. Not everyone is happy about the proposed minimum wage levels, with workers, employers and politicians arguing about the ideal minimum level. There are workers who say the proposed limit is too low, while SME employers are crying out that a higher level will raise costs and could bankrupt them and put millions out of work. However, the government and economists say the transition is necessary to bring a better quality of life for workers and make Malaysian businesses more efficient. This is part and parcel of moving Malaysia higher up the economic value chain in order to attain a highincome economy. It is envisaged that this move will also help raise the level of competitiveness amongst companies, enabling them to compete in the global economy. For in-depth coverage of the impact of the minimum wage policy, check out our cover feature on page 16. Lee Min Keong,

TALENT SEEKER To champion new talent, Malaysia’s central bank has tapped career banker Lee Khee Joo to run the Financial Sector Talent Enrichment Programme. Page 34

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CRIME FIGHTERS The latest set of revised global recommendations means that accountants have an even greater role to play in the battle against fiscal crime Page 40

TECHNICALLY BRILLIANT? There are over a hundred technical articles with multiple-choice questions on the ACCA website – demonstrate your understanding and get verifiable CPD

BIG AMBITIONS? For your next move, check out www.accacareers. com/malaysia

11/10/2012 13:53

AB MALAYSIA EDITION CONTENTS NOVEMBER/DECEMBER 2012 VOLUME 15 ISSUE 10 Asia editor Colette Steckel +44 (0)20 7059 5896 Editor-in-chief Chris Quick +44 (0)20 7059 5966 International editor Lesley Bolton +44 (0)20 7059 5965 Malaysia editor Lee Min Keong Sub-editors Dean Gurden, Eva Peaty, Vivienne Riddoch Design manager Jackie Dollar Designers Robert Mills, Zack Starkey Production manager Anthony Kay Advertising James Fraser +44 (0)20 7902 1210 Head of publishing Adam Williams Printing Times Printers Pictures Corbis ACCA President Barry Cooper FCCA Deputy president Martin Turner FCCA Vice president Anthony Harbinson FCCA Chief executive Helen Brand OBE ACCA Connect +44 (0)141 582 2000

ACCA Malaysia ACCA Malaysia Sdn Bhd (473007P) 27th Floor, Sunway Tower 86 Jalan Ampang 50450 Kuala Lumpur 1 800 88 5051

ACCA Malaysia Kuching branch Unit #8.01 8th Floor Gateway Kuching No 9 Jalan Bukit Mata 93100 Kuching Sarawak 1 800 88 5051

Accounting and Business is published 10 times per year. All views expressed within the title are those of the contributors. The Council of ACCA and the publishers do not guarantee the accuracy of statements by contributors or advertisers, or accept responsibility for any statement that they may express in this publication. Copyright ACCA 2012 Accounting and Business. No part of this publication may be reproduced, stored or distributed without the express written permission of ACCA.

Accounting and Business is published by Certified Accountant (Publications) Ltd, a subsidiary of the Association of Chartered Certified Accountants. 29 Lincoln’s Inn Fields London, WC2A 3EE, UK +44 (0) 20 7059 5000

Features 12 Aspire to inspire Kho Sok Kee swapped a career in accountancy for educating future generations 16 Paying fair What will Malaysia’s forthcoming minimum wage mean for businesses? 20 Exit strategy What are the implications of Greece leaving the eurozone? 23 Dismantling the euro Capital Economics’ Roger Bootle offers some practical suggestions

26 Future vision Sustainability and financial results can go hand in hand, says KPMG’s Yvo de Boer, a former UN climate chief 28 Cloud control Remote technology will revolutionise the boardroom Audit period July 2009 to June 2010 138,255

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There are six different versions of Accounting and Business: China, Ireland, International, Malaysia, Singapore and UK. See them all at



06 News in pictures A different view of recent headlines

42 Update The latest from the standard-setters

08 News in graphics We show a story as well as tell it using innovative graphs

45 Accounting solutions PwC experts answer questions on employee incentive plans and agent versus principal

10 News round-up A digest of all the latest news and developments

VIEWPOINT 30 Cesar Bacani ASEAN is set to become a regional driver for growth 31 Errol Oh Audit employees at large firms are voicing their concerns 32 Barry Cooper Accounting for the Future was a valuable event for members, says the ACCA president

46 A guide for the perplexed The first of a two-part series examines recent innovations in corporate reporting 48 CPD: hedge accounting A look at the rationale for hedging and its impact on financial statements

Your sector

51 CPD: strategy How strategy needs to be managed as a living process and how to deal with implementation



34 A passion for learning FSTEP’s Lee Khee Joo is helping to nurture Malaysia’s future accountants

54 Mastering your MBA application Tips for admission success

33 The view from Douglas Young of Goods of Desire, plus news in brief

38 Reporting for duty Our new series looks at how companies can improve their corporate reporting

39 PRACTICE 39 The view from Tan Siow Ming of PwC Malaysia, plus news in brief 40 Fraud fighters Accountants have an increased role to play in the global crackdown


Accounting and Business is a rich source of CPD. If you read it to keep yourself up to date, it will contribute to your non-verifiable CPD. If you read an article, learn something new and apply that learning in some way, it will contribute to your verifiable CPD. Each month, we also publish an article or two with related questions to answer. If they are relevant to your development needs, they can also contribute to your verifiable CPD. One hour of learning equates to one unit of CPD. For more, go to

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ACCA NEWS 58 Compact considerations ACCA has signed up to the UN Global Compact 60 CPD Annual CPD declarations are now due for submission 62 News ACCA Learning Partners’ Conference discusses the e-professional; members welcomed at Appreciation Nights; Hari Raya Aidilfitri gathering honours enduring relationships 64 Devanesan Evanson Continuous development is at the heart of ACCA’s values, says the ACCA Malaysia Advisory Committee president 65 Council ACCA holds its 107th AGM in London 66 News Barry Cooper formally elected as ACCA president; ACCA students and affiliates often earn above average, new survey reveals

12/10/2012 16:09


News in pictures


A ceremony in Taipei, Taiwan, commemorates the anniversary of the birth of Chinese philosopher, Confucius, whose teachings focused on charity, justice, propriety, wisdom and loyalty


Zong Qinghou, of drinks company Wahaha, has topped the Hurun Rich List as China’s richest man, worth US$12.6bn


Legoland Malaysia, constructed using more than 50 million bricks, opens. Models include the Petronas Towers and the Great Wall of China

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Imelda Marcos, pictured celebrating the birthday of her late husband and president Ferdinand Marcos, is seeking re-election to a second term as congresswoman, continuing her family’s political comeback


Singapore has agreed a deal with Formula One to extend the country’s Grand Prix contract until 2017. Its night race has been a highlight of the Formula One calendar since the event came to Singapore in 2008


Malaysian Prime Minister Najib Razak, pictured at Independence Day celebrations, has announced a voterfriendly 2013 Budget ahead of next April’s general election


Two new art museums have opened on the site of the 2010 Shanghai World Expo. The China Art Museum and the Power Station of Art began trial operations during the National Day holiday

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News in graphics



The number of Chinese US dollar billionaires in 2012 (2011: 271; 2006: 15), according to the Hurun Report.


Uptake of smartphones across South-East Asia over the past year.


The number who say China’s slowdown is affecting their business, according to a Retail in Asia poll.

Malaysia has fallen two places since last year in the Washingtonbased thinktank Freedom House’s latest Freedom on the Net (FOTN) report, which measures internet freedom in 47 countries. This places Malaysia on the 23rd spot, in the same league as Libya and Jordon, and maintains its ‘partly free’ label in the thinktank’s FOTN status. In the region, Malaysia ranks behind the Philippines (7th place) and Indonesia (21st) but is ahead of Thailand (35th), Vietnam (40th) and Burma (41st).

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The number of staff who plan to stay with their current employer in the next year, according to Deloitte’s Talent 2020 report.

Month in figures

Southa Kore

4 In 2


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South Korea



Singapore came out ahead of Hong Kong again in a corporate governance survey by the Asian Corporate Governance Association and CLSA Asia-Pacific Markets that examined 11 markets and more than 800 listed companies. Singapore ranked 69th (67th in 2010) and Hong Kong came 66th (65th in 2010).

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CFOs are investing more in videoconferencing equipment, datacentre efficiency kit and electric vehicles, according to Deloitte’s 2012 Sustainability and the CFO Study. Some 250 CFOs took part, from companies with more than US$1bn in revenue each.



56% Videoconfere




21% Datacentre efficien cy kit Elect


ric ve hicl


2011 2012











KEY 1 Hong Kong 2 Singapore 3 New Zealand 4 Switzerland 5 Australia 5 Canada 8 Mauritius 12 Ireland 12 UK

The UK has been overtaken in the latest economic freedom table published by Canadian thinktank the Fraser Institute. The key ingredients of economic freedom are: personal choice; voluntary exchange coordinated by markets; freedom to enter and compete in markets; and protection of persons and their property from aggression by others.










Emerging markets offer some of the lowest tax costs as well as growth potential, according to KPMG’s Competitive Alternatives 2012: Focus on Tax. Companies in India pay about 50% less in tax costs than their peers in the US.

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News round-up

VAT ROLL OUT MOVES UP A GEAR China’s roll out of value-added tax (VAT) for service industries has stepped up, with implementation in Beijing in September, followed by Jiangsu and Anhui last month. Shanghai was the first city to roll out the tax in January. ‘The ultimate scenario is for the VAT system to be implemented nationwide – and across all industries,’ Peter Law, senior manager, tax advisory services at international audit and advisory firm Mazars told China Daily. ‘It is anticipated that this will occur before the end of the 12th Five-year Plan, which is 2015.’ He noted that while in the past, large amounts of tax in China were collected from land sales, the future seems to focus on VAT collection, ‘which promises to be the richest source of revenue in the world once the programme is implemented in all cities’.


Mid-tier management salaries in Malaysia are about 10% to 30% lower than those of their counterparts in Singapore, Hong Kong and Australia, according to a survey by Kelly Services. Drawing on the findings of Kelly Services Asia Pacific Professional

and Technical Salary Guide 2012, Melissa Norman, Kelly Services managing director in Malaysia, told The Star that while new graduates in Singapore are commanding a starting salary of around S$2,500 (RM6,200), many Malaysian graduates are ‘still hovering between RM1,800 and RM2,000’. She added: ‘You need to go one step further and ask: “Why are [Singaporeans] getting paid a little more, and why are we paid a little less?” This brings you to the quality of the students. The majority of graduates here come out lacking in skills.’


Chinese industrial companies’ profits fell for the fifth consecutive month in August, indicating that the economic downturn is set to continue, Bloomberg reported. Quoting the National Bureau of Statistics, it found company profits dropped 6.2%, a decline accelerating since the 5.4% drop in July, and a 1.7% fall in June. The figures, based on a survey of 41 industries, suggest that China is heading towards its weakest annual expansion in 22 years.


The number of super-rich in China has fallen over the past year, with fewer US


Corporate governance standards are improving in Asia, according to the Asian Corporate Governance Association-CLSA Asia-Pacific Markets’ Corporate Governance Watch 2012. However, the report found that some standards have slipped since the last report in 2010, the scope ranging from ‘relatively minor corporate transgressions to growing concerns about the reliability of financial statements and, at the extreme, outright fraud’. Singapore topped the rankings, followed by Hong Kong and Thailand, all with improved scores. China dropped four percentage points, and Japan and Taiwan by two. Indonesia was placed at the bottom, with The Philippines second from last.

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dollar-billionaires for the first time in seven years. According to the Hurun Rich List’s latest annual report, there are now 251 Chinese billionaires, down 20 on a year ago, and 37 of the richest 1,000 saw a 50% drop in their wealth. Rupert Hoogewerf, Hurun Report chairman and chief researcher, said that although this year has seen ‘some significant wealth bloodletting, it is worth remembering that these entrepreneurs are still up 40% on two years ago and almost 10 times 10 years ago.’ Solar, textiles and retail have been the hardest hit this year, while entertainment, IT, natural gas and property developers with large landbanks have had a good year.


US food giant Kellogg is tapping China’s growing appetite for Westernstyle cereals and snacks. The company has announced a joint venture with Singapore-based Wilmar to further the distribution of its Kellogg’s and Pringles brands. Kellogg chief executive John Bryant said that the project positions the company’s China business for growth ‘and fundamentally changes our game in China’. China’s snack-food market is expected to reach an estimated US$12bn by year-end, up 44% from 2008.


Sales of luxury goods in Asia continue to drive growth for top-end European brands. Italian label Prada has reported a nearly 60% growth in firsthalf earnings, with Asia-Pacific’s share accounting for nearly 36%. Sales in the region for Miu Miu brand – also owned by Prada – rose 34.7%. Group-wide, revenues from Asia Pacific recorded the highest growth of all markets, up 43.9%. Paris-based luxury house Hermès is also cashing in, reporting a 25% rise in sales in mainland China, Hong Kong and Singapore, compared with 21% globally. Singapore ranks highest in Asia for corporate governance standards

HK AND CHILE SIGN AGREEMENT Hong Kong and Chile have signed a historic free trade agreement, the first

11/10/2012 11:16



A Greek exit – dubbed ‘Grexit’ – from the eurozone is considered more likely than not by some commentators. With the implications for Greece almost beyond comprehension, could other countries also follow suit?


between the special administrative region and a Latin American country. Inked at the Asia-Pacific Economic Cooperation leaders’ summit in Vladivostok, Russia, in September, the agreement will markedly improve the business environment for entities involved in economic activity between the two territories. The resultant liberalised access to services is expected to boost Hong Kong’s financial services industry and may potentially serve as a gateway to the Central and South American markets. Currently, Chile ranks 29th among Hong Kong's worldwide goods trading partners, and 32nd for services.

Burnett, Asian global capital markets chairman at UBS, was quoted as saying: ‘There is plenty of cash, there is a history of great deals, but investor confidence is thin on the ground at the moment. Once that is restored there will be no shortage of attractive IPOs’ Only 32 IPOs were completed in Hong Kong in the first six months of 2012, according to Deloitte.


Hong Kong is having its worst year for initial public offerings (IPOs) in a decade, the South China Morning Post reported in an article describing the much-hyped market as currently being ‘on ice’. Disappointing outcomes of listings, the eurozone crisis and slowing growth in the mainland have all taken their toll, compounded by the bad experience of investors who lost money in Hong Kong listings in 2011. Peter

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Emerging Asia is starting to produce significant amounts of its own innovation after years of playing research and development (R&D) ‘catchup’, according to Coming of Age: Asia’s Evolving R&D Landscape, a new report


Workers in Hong Kong and China are becoming more stressed, according to the latest global survey by flexible workspace provider Regus. From Distressed to De-stressed revealed that 75% of workers in China say their stress levels have risen in the past year – the highest increase among the world’s top 50 economies. In Hong Kong, the figure was lower, at 55%, but still higher than the global average of 48%. Respondents identified work as the biggest trigger of stress, with half of Hong Kong respondents and 55% of those in mainland China wanting more flexibility in their jobs. In response, Robin Bishop, chief operating officer at Community Business – which promotes community social responsibility in Asia – said that companies cannot ignore the impact of poor work-life balance on their bottom lines.


CFOs working across Asia Pacific are more confident about market conditions and career opportunities compared with their global counterparts, according to the Michael Page International Global CFO Barometer 2012. When surveyed, 83% of AsiaPacific respondents believed that economic conditions in their country were either satisfactory or good, compared with 59% globally. And 88% of respondents based in Asia Pacific rated the region as the most attractive for business in 2012. The survey also found that Asia-based CFOs are focused on career opportunities, with 59% looking to broaden the scope of their current role in the next two years. Salary continues to play a key factor in career choice, as indicated by 59% of Asia Pacific and 51% of global respondents.

Cooperation summit meeting in Vladivostok, Russia, in September.


Economic disruption, including possible recession in the US, the eurozone crisis and China’s slowing economy have taken a toll on the confidence of CEOs in the Asia Pacific region, according to PwC. Just 36% of executives surveyed by the firm say they are ‘very confident’ of business growth over the next 12 months. Their prospects, however, improve in the longer term, with more than half (54%) expressing a high level of confidence for the next three to five years. Asia Pacific CEOs also believe that the region is on track to achieve greater economic integration, a top priority of the Asia Pacific Economic

from the Economist Intelligence Unit, commissioned by Mercer. For 50 years, Asia’s emerging markets have largely adopted ideas developed elsewhere in the world, but this is now changing, the report found. ‘As Asia and the emerging markets become increasingly important growth engines for the global economy, R&D and innovation in Asia have taken on increasing prominence. Global technology companies investing in R&D in the region do so not only to tap the growth markets but the disruptive innovation coming from the region,’ said Joon Tan, principal consultant, information product solutions, at Mercer.

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The search for a balanced life led Tunku Abdul Rahman College vice principal Kho Sok Kee to switch from accountancy to education


ost of us owe a debt of gratitude to our parents. Apart from the love, care and nurturing, they instil values that we carry with us into adulthood. For Tunku Abdul Rahman College (TARC) vice principal Kho Sok Kee, the emphasis her late father placed on education is something that she’s not only grateful for, but has also inculcated in her the belief that education can truly be life changing. ‘When I look at my students I think of my father, and how his belief in me and his aspirations for me made all the difference,’ she says. ‘I would not be where I am today had it not been for my father.’ So indelible is the impact that Kho has never shied from lending a helping hand to needy students at the college. She recalls personally assisting those who didn’t have enough money to pay for their final semester or ACCA fees. ‘Lending a hand and being there for them at the crucial moment of their lives, and then seeing their success at the end, is very satisfying,’ she says. ‘What is more gratifying is that these students even made attempts to repay after they started work and tracked me down – even though they may have moved to Singapore!’ The youngest in a family of eight, Kho, who hails from Kuching, Sarawak, counts herself lucky to have had a

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very supportive father who believed in her and wanted her to further her tertiary studies in the UK. At the time, her elder brother was studying law at Lincoln’s Inn in London, and it would have been a financial burden for her father to support both of them at the same time. ‘He was in the civil service and was already retired when I was in form six,’ Kho recalls. ‘Determined to fulfil his aspirations and mine, too, he checked out all avenues for me to be able to go overseas.’ Fortunately, she

was how I got into it,’ she says. In 1977, she enrolled at South West London College to undertake the ACCA Qualification and graduated in 1981. On her return to Sarawak, Kho applied to work for the state government to fulfil the service bond attached to her study loan. But because there were no vacancies, she was released from her bond. Given the limited career opportunities in Kuching at the time, she decided to look for a job in Kuala Lumpur, and

‘I ALWAYS TELL STUDENTS: “I CAN LIGHT THE FIRE IN YOU BUT I CANNOT KEEP THE FIRE BURNING; YOU NEED TO DO THAT”’ obtained a Sarawak state loan, and chose accountancy. ‘As a state loan holder, there were certain fields specified in the application,’ Kho says. ‘Accountancy stood out as a field that I thought I could do, and that was it!’

London calling Although Kho applied to a number of universities in the UK, her brother advised her that to become an accountant, an accountancy degree might not be the best option. ‘He steered me towards ACCA and that

found work at Price Waterhouse as an audit assistant. She describes her two-year stint at the firm as a good training ground. But after she got married and started a family she found the long hours and demanding nature of audit less than ideal. She moved to a mid-sized firm and then into the commercial sector. Juggling work and family, Kho wanted a balanced life for herself. ‘I wanted a career but at the same time I also wanted time with my family. When the recession came, the company I worked for was facing

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The CV Kho Sok Kee is the vice principal in charge of collaboration, innovation and entrepreneurship at Tunku Abdul Rahman College (TARC). She is a member of the college’s senior management team, a member of the Council at TARC and sits on a number of college committees. Prior to her present appointment, Kho was head of the School of Business Studies at TARC. A Fellow of ACCA, Kho has been with the college since 1988. Before entering academia, she worked in public practice and industry and has experience in audit and assurance, having started her career with Price Waterhouse. cashflow problems. Dealing with debtors, creditors and banks was not exactly pleasant and I decided it was a good time to make a career change,’ she says. Education was an area she had long considered – she had enjoyed mentoring her audit juniors – and so in 1988, she decided to take the plunge. ‘I applied to TARC and was accepted into the school of business studies,’ she recalls. ‘I have never looked back since.’

‘Their success is my success’ Kho concedes that making the switch from accountancy to education was challenging. ‘I was going back to textbooks,’ she says. ‘I had to learn all the new accounting standards, theories and applications. I thought that what I had learnt during my college days would suffice but I was wrong! The number of accounting standards I had to learn in my time seemed so few.’ The responsibility, too, was daunting. ‘I needed to learn how to impart knowledge to eager young minds that

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relied on me to pass their exams. There was a lot of preparation work in the initial years. Who says teaching is easy?’ As the years progressed and as she connected with the students, Kho found it to be a truly purposeful and fulfilling career. ‘Their success is my success,’ she says, adding that it is especially satisfying when less able students do well and tell her that she inspired them to excel. ‘It’s the average and below-average students that you are able to motivate to do well that’s the most inspiring,’ Kho says. ‘I always tell them: “I can light the fire in you but I cannot keep the fire burning; you need to do that.”’ Making a difference to any individual is satisfaction beyond description. ‘Corporations talk about corporate social responsibility but for me, working in TARC is like being in a social enterprise,’ she says. The philosophy of the college, which was established in 1969, is to widen access to tertiary education, she says, adding that it is a not-for-profit concern. Fees charged for

courses at the college are ‘affordable’, says Kho, pointing out that a four-year course (after SPM) costs less than RM20,000. The college, Kho adds, also believes in ‘holistic education balanced through academic rigour and extracurricular pursuits’. She points out that students have 114 student societies and clubs to choose from to hone their leadership, interpersonal and teambuilding skills. ‘It’s not just about learning but creating a platform for students to hone their soft skills and become socially responsible citizens,’ she says. Since its first ACCA exams in 1971, TARC has carved a niche for itself in the professional accountancy education sector, and is an ACCA Platinum Approved Learning Partner. ‘We have produced the country’s most valued pool of accountants,’ Kho says. ‘Go to any Big Four [firm] and you will certainly find TARC graduates in every echelon of the organisation – from partners to directors, managers, seniors and associates!’

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The college has, Kho adds, incorporated the ACCA curriculum into its diploma and advanced diploma programmes. It is also proud of the fact that it’s the only institution outside the UK and Ireland to be granted the privilege of running the ACCA internally assessed programme since 1987. Under this arrangement, students can achieve part of the ACCA Qualification where all the assessment for specified papers is devolved to TARC, with ACCA adopting an advisory and monitoring role. ‘There will be designated ACCA staff from the UK and ACCA appointed external examiners who closely monitor and quality assure this programme,’ she explains. Studying accountancy at TARC, Kho adds, one also has the advantage of being in a multidisciplinary environment; the school of business studies offers 32 different business programmes. Students can therefore benefit from studying marketing, management, economics, banking and finance, among others. The college is also currently working with KPMG and ACCA to build students’ soft skills.

Collaboration and innovation Reflecting on the nearly 25 years that she’s spent as an educator, Kho believes that she made the right move all those years ago. ‘I certainly have no regrets leaving public practice,’ she reflects. Not only has she gained a lot of satisfaction from the job over the years, she has also taken on greater responsibilities – first as head of the school of business studies (from 2004 to 2010) and, more recently, as vice principal in charge of collaboration, innovation and entrepreneurship. Her portfolio, she says, covers everything. ‘I oversee all kinds of collaboration with both academia and industry,’ she says, adding that collaboration with overseas universities serves as a good gauge of where its quality and standards lie.

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The tips *

Be prepared to work hard; there are no short cuts. All the hours you put in will build you and prepare you well for what is to come. Hard work builds perseverance and perseverance will build character. Work honestly, sincerely and with integrity because the world is very small; you don’t know whom you are going to meet! Whichever field you choose, do it with passion and you will do well. Passion will simply drive you to great heights. In all things that you do, do them responsibly with gratitude in your heart!

* * * *

‘Innovation is about being innovative in managing all aspects of our operations, [covering] innovative curriculum development, managing students’ innovative projects and protecting their ideas.’ As for entrepreneurship, Kho says her role includes creating the environment for students to turn their business ideas into reality. The college’s Centre for Innovation and Entrepreneurship, set up this year, for example, offers students an opportunity to realise the commercial value of their ideas. Kho hopes to be able to contribute as much as she can in her remaining years at the college. ‘I believe that knowledge should be shared,’ she explains. ‘The more you share the better you become. I would readily mentor and guide the next level of staff to grow and take the college to greater heights. This will be a legacy for me to leave behind.’ Sreerema Banoo, journalist



Tunku Abdul Rahman College (TARC), named after Malaysia’s first prime minister, Tunku Abdul Rahman Putra Al-Haj, was established in 1969. The college is 50% subsidised by the government for all its recurrent and capital expenditure. The remaining 50% funding comes from the college trustees and income collected. From an initial intake of 764 students with classes conducted in various centres in the Klang Valley, the college today has a 186-acre main campus (with 18,000 students) in Setapak and five branch campuses in Penang, Perak, Johor, Pahang and Sabah.

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ome 1 January 2013, Malaysian employers will have to abide by the minimum wage policy set by the government in its efforts to achieve the nation’s goal of becoming a developed, high-income economy. The move has met with mixed response. Many employees were disappointed that the minimum monthly wage was not set at a higher level, while some employers were concerned about the short implementation period of six months. Another concern highlighted was the disparity in rates set between Peninsular Malaysia at RM900 and Sabah, Sarawak and the Federal Territory of Labuan at RM800. However, both the government and economists believe that the transition is necessary to bring a better quality of life for workers, as well as to ensure that Malaysian businesses become more productive and use resources more efficiently. On 30 April this year, the eve of Labour Day, Prime Minister Datuk Seri Najib Razak announced that the policy was a bid to propel the nation’s economic transformation agenda by addressing poverty issues, while at the same time stepping up productivity levels. ‘The introduction of the minimum wage is a historic moment for Malaysia,’ he said. ‘The lowest-paid will now be guaranteed an income that lifts them out of poverty and helps ensure that they can meet the rising cost of living.’ Apart from domestic workers, the policy is expected to benefit some 3.2 million private sector workers.

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The National Employment Returns 2009 study, initiated by the Human Resources Ministry, revealed that 33.8% or around 1.3 million private sector workers in Malaysia still earned less than RM700 per month. The rates have been set by the National Wages Consultative Council, set up to oversee the implementation of the minimum wage policy. Its proposal is based on a World Bank study which suggests that, in order to keep existing economic fundamentals intact, the basic salary cannot be set too high. Najib, too, had indicated that the impact of setting the rates higher could be detrimental to the nation’s economy, labour market and foreign investment. ‘If the minimum wage is set at higher than RM900 (basic salary), this is expected to affect the economy, the labour market and the inflow of foreign investments,’ he said.

the economic structures in both areas and takes into consideration business sustainability concerns for employers, particularly smaller ones. The government has also indicated that it will continue to review the rate every two years to ensure relevance with an end goal of implementing a single minimum wage policy throughout the nation.

Why a minimum wage policy? According to CIMB Bank analyst Lee Heng Guie, there are three mechanisms that currently determine the wages of workers in the Malaysian private sector: the Wages Council Act 1974 (WCA), collective bargaining (CA) and market forces. However, in a research report entitled Minimum Wage – Curse or Cure?, Lee notes that existing provisions have not provided a decent standard of living and cover only a small number of workers. ‘The existing CAs do not cover

‘MALAYSIA’S LABOUR MARKET IS CHARACTERISED BY A HIGH PRESENCE OF LOW-SKILLED WORKERS – ABOUT 70% OF THE LABOUR FORCE’ ‘If this happens, the industry cannot operate properly and many workers will lose their jobs. The government cannot allow this to happen because it will be detrimental to the welfare of the workers as well as to the nation’s interest.’ As for the disparity between Peninsular Malaysia and East Malaysia, he explained that the decision was arrived at guided by expert studies on

the majority of low-paid workers,’ Lee writes. ‘As a result, wages in Malaysia are largely determined by market forces. Real wages have been low or stagnating because of price controls, subsidies and the influx of cheap unskilled foreign workers,’ he says. Lee points out that current market conditions favour a minimum wage. ‘Malaysia’s labour market is characterised by a high presence of

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BOON? low-skilled workers who make up about 70% of the labour force, significantly higher than in Singapore at 51%, Taiwan at 67% and South Korea at 65%.’ Dr Yeah Kim Leng, chief economist at Ratings Agency Malaysia Holdings, agrees that there is a need to do away with Malaysia’s dependence on foreign labour. While the policy also applies to them, Yeah hopes that locals would take up work at salary levels higher than before the implementation of minimum wage, adding that the policy will put an end to exploitation of employees by unscrupulous employers. Lee points out that presently in Malaysia, wages lag behind productivity growth. A study by the World Bank that shows that wage growth was 2.6% per annum in the past 10 years compared with productivity growth of 6.7% per annum, suggesting suppression of wages, especially for low-paid workers, as well as an inefficient labour market. The introduction of a minimum wage will, suggests Lee, lead to ‘pent-up consumption’ as workers embrace the opportunity for increased spending, Lee notes. ‘A back-of-envelope calculation shows that an adjustment of RM200 per month for 3.2 million workers amounts to an estimated annual income of RM7.7bn,’ he says. This would in turn translate into an annual disposable income of RM3.9bn or 0.5% of gross domestic product. Lee and his CIMB colleagues believe that the appropriate minimum wage could, in due course, enable what he describes as a ‘big push’, with

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The introduction of a national minimum wage will see an increased income for millions of employees. But what will it mean for businesses?

the low-wage, low-consumption and informal labour market moving into a high-wage, high-consumption and formal market. Meanwhile, Yeah believes that employers are likely to feel the pinch in forking out higher salaries, resulting in increased cost pressures which may lead to companies passing on increased cost to consumers. However, most Malaysian companies are already paying their employees’ salaries in line with or above the minimum wage so the number of affected employers will be small, he says. Affected employers would have to re-examine their business processes in order to become more efficient and productive, Yeah adds. ‘This is part and parcel of moving Malaysia higher up in the economic value chain and attaining a high income economy,’ he says

Boosting competitiveness With some 90% of countries operating minimum wage policies – including Malaysia’s regional peers China, Taiwan, South Korea, Thailand and Indonesia – Lee believes that implementation is unlikely to hurt the country’s competitiveness. ‘Malaysia’s competitiveness is a function of a conducive investment climate, predictable economic policies and an array of business-friendly incentives, as well as the provision of good infrastructure and skilled workers,’ he says. ‘If labour productivity rises faster than wages, capital and stock owners will benefit. Companies may increase the budget for the training of their

On the up: with an estimated 1.3 million private sector workers – a third of the workers in the country’s private sector – earning under RM700 a month, the national minimum wage, to be implemented next year, aims to lift them and their families out of poverty.

workers. If the rise in productivity growth matches the rise in wages, this will result in a lower cost of production and companies may absorb the rise in unit labour cost,’ he notes. Lee adds that the higher wage will have a net positive impact on the economy as any potential small loss of jobs will be more than covered by its multiplier effect as it puts more money in the hands of workers. He adds that there is strong empirical evidence that countries that implement a minimum wage tend to see a positive wage effect and a small negative employment effect among workers covered by the legislation. Yeah suggests that if companies do not innovate or move up the value chain, choosing instead to base their strengths on labour cost competitiveness alone, they risk losing relevance in the global economy. ‘Competitive pressure should not be driven by labour cost but instead by factors such as technological adoption, productivity and innovation.’ He adds that Singapore’s experience in implementing high-wage policies as part of its growth model in the 1970s has worked well in attracting high-value industries into the country.

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Fair enough? Above: a family in Semporna, Sabah. East Malaysia will initially have a lower national minimum wage than Peninsular Malaysia (above right), but the government has indicated that it will continue to review the rate every two years. ‘Malaysia has already gone past the phase of being able to offer cheap labour as competitive advantage and we need to embrace this reality,’ he argues.

Employers’ perspective Two employers who will be directly affected by the minimum wage policy told Accounting and Business that they have no choice but to comply with the order. Declining to be named, a chief executive of a palm oil plantation says that he is prepared to ‘work within the parameters’ as the policy has already been set. Acknowledging that the cost of business would rise as a result of the policy, he says that the company will introduce improvements that would help it achieve greater efficiency while reducing cost in other areas. A director of a wood product manufacturer, meanwhile, believes that his business will be largely affected as it is very labour intensive. He is, however, making adjustments to mechanise certain functions in order to not be so dependent on labour. ‘This does not mean we will be letting go of our employees as we plan to upskill them, especially if they are productive employees,’ he says. ‘But we hope that the government will also support us in this area.’

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The Malaysian government’s National Minimum Wage Order 2012 (NWMO 2012), which was gazetted on 16 July this year, will come into effect on 1 January 2013 for employers who employ six workers or more, and from 1 July 2013 for those with fewer than six workers, according to a statement from the Ministry of Human Resources (MOHR) issued in July. Employers carrying out professional activities classified under the Malaysian Standard Classification of Occupations (MASCO) must implement the policy on 1 January, regardless of the number of employees. According to the gazette, the minimum wage rate has been fixed at RM900 per month or RM4.33 per hour for Peninsular Malaysia and RM800 per month or RM3.85 per hour for Sabah, Sarawak and Labuan. The wage structure was proposed by the National Wages Consultative Council based on studies conducted by the World Bank, which included factors such as the cost of living, poverty line index, median range, productivity and unemployment caption style rate. Employers who fail to comply with NWMO 2012 can be fined RM10,000 per employee. For a continuous offence, they can be fined RM1,000 per day. Repeat offenders face a RM20,000 fine or five years’ jail, or both.

The director, who declined to be named, believes that cost of production will increase as a result of the minimum wage policy and cautions that this could lead to deepening competition with other countries where labour costs are lower. ‘However, we understand that the government has its own sets of reasons for implementing it and we will have to abide by it,’ he adds. Meanwhile, the Federation of Malaysian Manufacturers (FMM), which represents various manufacturing, labour-intensive companies in the country, has raised concerns on the implementation of the policy. In various media reports following the announcement, it highlighted that the policy needs a comprehensive review,

adequate time for transition and extensive consultation with stakeholders. Overall, it would seem that the move to introduce a minimum wage in Malaysia has been carefully thought out, at a time when the nation has a serious agenda to meet. Its implementation is crucial in ironing out current inefficiencies plaguing both competitiveness levels of businesses, as well as the quality of lives of employees whose wages are below the minimum level. In a developed nation, quality of life is highly valued and the implementation of this policy will not only be helping Malaysia achieve that; it will also contribute to more balanced economic growth. Asha Gopalan, journalist

12/10/2012 16:12

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12/06/2012 15:11




What would be the effects of a Greek exit from the eurozone for accountants and Greece’s trading partners?


spectre is haunting Europe: that of a possible Greek default and exit from the euro. A Grexit, as it has been called, could have catastrophic repercussions for the economies of Europe – and possibly the world too – or it could provide some kind of solution for the troubled eurozone and the heavily indebted country. Amid the uncertainty, one thing seems certain: nobody really knows what such an event will mean. ‘Nobody has ever gone to hell or to paradise and returned to tell us how it was,’ Harilaos Alamanos, president of Greece’s Institute of Certified Public Accountants (SOEL), told Accounting and Business. ‘Nobody knows how an exit will be achieved. And the experience of entering the euro does not help with how an exit from the currency might go.’ For professional accountants, a Greek euro exit could mean an upgrade of their role, according to Alamanos. ‘We will have to assess the implementation of all the changes that will be imposed on businesses or in the wider public sector companies. But while this may be good for the sector, as it will bring more jobs, it is obviously bad for the country.’ Jonathan Loynes, chief European economist and director at London-

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based Capital Economics, the company whose Roger Bootle won the Wolfson Economics Prize on the smoothest process by which a member state could exit the eurozone (see pages 23–24), says that his firm’s view is that ‘a Greek exit is more likely than not’.

Exit ‘80% likely’ Unlike most other forecasters, Capital Economics has built such an event into its central economic projections. Loynes says: ‘It’s hard to put an exact number on it, but I would estimate something like an 80% chance that Greece will be out by the end of 2013. There are few signs as yet of policymakers taking the steps we mapped out in the Wolfson entry but that is not surprising as the entry dealt with how to manage a country’s exit, which has not yet commenced.’ Much of how a Greek exit might look depends on whether the country defaults in an orderly or disorderly fashion. Dr Vassilis Monastiriotis, senior lecturer at the London School of Economics and affiliate at the Hellenic Observatory, believes that the catastrophe of a disorderly exit would bring upheaval to the markets. He says: ‘The immediate effect would be that bank accounts would be frozen so the Greek economy would collapse until a new currency was issued. Hyper-

inflation will intensify problems of poverty in the population, destabilising the situation socially and politically. The country will operate basically on a cash economy and foreign investment will stop. ‘Imports will become hugely expensive as importers would have to pay cash in a very devalued currency. All domestic companies would find it impossible to operate in the international market unless they hold liquidity in foreign reserves, which very few companies do. Not many companies would survive this for long.’ This, however, is a scenario that most analysts, including Monastiriotis, consider unlikely. What is expected is an orderly exit where the eurozone

08/10/2012 10:47


‘LIQUIDITY WILL BE PROVIDED TO THE BANKING SYSTEM, AND TO LARGE COMPANIES THROUGH LOAN GUARANTEES OR SHORT-TERM LENDING’ partners agree with Greece a procedure to phase the country out of the eurozone. Monastiriotis says he expects the European Central Bank (ECB) to guarantee liquidity in the Greek banking system during a transition period. ‘There will be a combination of measures that control capital movements with a number of guarantees to ease the pressures arising from that,’ he says. ‘Liquidity caption will be provided style to the banking system,

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and, I imagine, there would also be measures to provide liquidity directly to large companies through loan guarantees or short-term lending.’

Who gets the reserves? Greece’s foreign reserves would be put in the spotlight. ‘If a country is to exit the eurozone, do they get their initial allocation of foreign reserves? Is the ECB going to keep them as collateral against the Greek debt held by the ECB or other member states? These

are issues that cannot be resolved overnight,’ says Monastiriotis. Constitutional issues may also arise for the EU about the extent to which a euro exit could be accommodated without breaching the rules that underpin the European single market. Monastiriotis explains: ‘Legally there are ways to allow for a temporary deviation and non-implementation of specific regulations and we have had examples of that in the EU context before. But of course these may be challenged in court by different companies or individuals that may be affected, and it may not be an easy situation for Greece or the EU.’ Foreign exchange markets are already assessing the possibility of a

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Greek exit and how that would affect the euro and a new Greek currency. In June, Bloomberg shocked foreign exchange dealers by testing on its live exchange rates system a post-euro Greek drachma code (XGD) as part of ‘contingency planning exercises in the normal course of business’. Igor Drobnjak, director of markets at foreign exchange specialist Tempus UK, part of the Monex Group, says: ‘In some ways the markets have already included the potential Greek default in the price of the euro. Only in 2012 we saw the euro drop against a basketful of currencies. Although this depreciation of the euro makes European goods more competitive on international markets, it is making eurozone debt less attractive. This means that most of the major investors and the banks, especially in the US, are carrying their positions on a Greek debt, which brings additional volatility. ‘Eurozone debt is mainly traded within peripheral countries. You don’t have so much exposure of Greek, Italian or Spanish debt in the global markets. It became more localised and in a way that is a natural hedge for these countries because they can devalue on their own the bonds they have issued. However, European banks – especially those that have the majority of exposure to that debt – will have to take the loss and put it on their balance sheet.’

And the kitchen sink too… A Greek exit would also raise issues of liquidity in other European countries. All the responsibility for providing liquidity in eurozone countries hit by a Greek exit ‘will be held by the ECB, which will likely need to resume bond buying, move rates to 0%, and apply any other non-conventional tool, if not all of them’, says Valeria Bednarik, chief analyst at Barcelona-based independent forex portal As for the fallout in exchange rates, Bednarik says that ‘among currencies, [US] dollar and yen will be the first beneficiaries probably followed by commodity currencies, Australian and Canadian dollars – the new market safe

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havens. The pound, on the other hand, will likely feel the weight of a European crisis and be pressured lower. The most benefited will be the Swiss franc, as the SNB [Swiss National Bank] will regain some air after the recent struggle to control the Swiss strength and establishing the EUR/CHF peg.’ Credit insurance costs have also been affected. A spokesperson for UK Export Finance, Britain’s official export credit agency, says that as market risk

Noemí Jansana, head of content at Fxstreet, says the big problem for Spain is that a Greek exit ‘would set a precedent that could favour the exit of other European peripheral countries and Spain, Italy and Portugal could easily follow the Greek path. But the real question is: when is it going to stop? Will France be the next? And then what?’ She believes that European leaders will do whatever it takes to preserve the euro’s integrity.

‘SPAIN, ITALY AND PORTUGAL COULD EASILY FOLLOW THE GREEK PATH. BUT THE REAL QUESTION IS: WHEN WILL IT STOP? WILL FRANCE BE THE NEXT?’ appetite varies for different countries, businesses interested in exporting to Greece have been asked to get in touch for a case-by-case assessment, unlike what happens with other advanced markets. UK Export Finance now accepts ‘applications for short-term cover for export contracts between UK exporters and buyers in Greece’ after the European Commission lifted for Greece a restriction on providing trade credit insurance cover for exports to buyers in the EU where the risk horizon is under two years. Meanwhile, trade-related insurance provider Euler Hermes says it will stick to a May statement that anticipated Greece remaining in the eurozone. It has, however, reduced its export cover on Greece as continued economic uncertainties make exporting to Greece substantially more risky. The company says it ‘is currently not covering new shipments to Greece, although shipments scheduled for delivery before the end of July remain insured’. Drobnjak says: ‘The major question now is to see whether the Greek scenario is a separate case or if it endangers [other eurozone] states. A Greek exit could create a vicious spiral endangering the core of the single region; in that case the only countries that could stay in the eurozone would be Germany, the Netherlands, France and Finland – not the best-case scenario for the euro per se.’

Monastiriotis says: ‘The transactional cost, the cost in political capital, the reputational cost that will be suffered by the EU, let alone the consequences for Greece itself, will all be huge. This is why all players will try to avoid a Greek exit.’

More power for troika The Greek government, Monastiriotis says, ‘will either find somehow the capacity to implement some of the measures to take forward the remaining reforms, in which case the measures may be softened, or we will move eventually into stricter forms of monitoring, so the troika of lenders [the EU, the ECB and the IMF] will be more involved in decision-making, controlling the government finances to resolve the deadlock’. Meanwhile Greece is the country feeling the burden the most. Alamanos says: ‘The businesses that are closing are usually the healthy ones, which pay their taxes, salaries, contributions to pension funds, etc. The rogue ones just don’t bother. They pay nothing and they are an unfair competition to the healthy ones.’ Whatever the outcome, an outcome should be reached soon as the euro and Greece itself are paying a heavy price for uncertainty. Michael Kosmides, journalist based in Athens

08/10/2012 10:47


BREAKING UP IS HARD TO DO… …but not impossible. Roger Bootle, winner of the Wolfson Economics Prize to create a blueprint for dismantling the euro, has written a meticulous instruction manual


ne of the cardinal rules of firefighting is always identify your exit before entering a blaze. Several eurozone nations must wish they had followed this advice when joining the continent’s bold experiment in currency union. Since the euro was intended to be a club that none could leave, no emergency escape plans were ever made. Lord Wolfson, a eurosceptic, wants to change that. He issued a challenge to economists to draw up a blueprint on how best to dismantle the currency. The £250,000 prize attracted 400 entries and was won by veteran commentator Roger Bootle, founder of the consultancy Capital Economics

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and former chief economic adviser to Deloitte. His winning submission is a meticulous instruction manual on how failing states can extract themselves from the zone in an orderly manner.

Whitewash-free The first merit of Bootle’s 156-page handbook is that it doesn’t sugarcoat the risks. Any nation wishing to exit the crumbling structure will confront a huge range of dangers. For a start, all hell would break loose if news of an imminent departure were to leak to the press. Citizens would make a beeline for the bank and immediately withdraw their savings, provoking an instant financial crisis. The replacement currency would plunge on the foreign

exchange markets – in the case of Greece possibly by up to 50%. Of course, currency devaluation is the ultimate goal of leaving the zone as it would eventually boost exports and promote economic growth. In the short term, however, it would raise the risk of hyperinflation. Rampant price rises would undo any gains in competitiveness and leave the hapless state back where it started. Then there are the practical issues of printing a new currency. A country could be left without cash in circulation for up to six months. One ironic effect of leaving the zone would also be to boost the real value of the nation’s foreign debts. So far from solving a debt crisis, leaving the euro

11/10/2012 10:51



Bootle: euro exit masterplan

would actually make matters worse – at least in the short term. ‘Our goal in the euro paper was to find a way around some of these perils,’ says Jonathan Loynes, chief European analyst at Capital Economics and one of the co-authors of the plan. ‘We looked to the history of currency break-ups – such as the collapse of the Soviet Union and Czechoslovakia – for clues about how this adjustment could be made with the least possible trauma.’

Keep it under your hat The first challenge is to keep secession plans secret for as long as possible. Ideally, a momentous decision like leaving the euro should be democratic, taking the pulse of all political parties as well as the public. Sadly, such an inclusive approach is not practical, Bootle warns. Advanced notice of such plans could precipitate ‘large capital outflows as international investors and domestic residents withdraw their funds’. Bond yields would surge and banks quickly run out of cash. So Bootle’s first tip is to keep the exit plan hush-hush until the last possible moment. The Czech government, for example, decided to break up its currency union with Slovakia on 19 January 1993, following the dissolution of Czechoslovakia in 1992. It concealed this decision from citizens until 2 February, just six days before the two new states adopted separate national currencies.

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In his plan Bootle says the key to making caption a style success of the clandestine approach ‘would be to keep the number of people who knew as small as possible and the delay between the decision and implementation fairly short’. Printing a whole new currency ahead of time is probably out of the question, given the lengthy period that such an operation would require.

Closing the hole in the wall Once the cat is out of the bag, capital and banking controls would be needed to prevent money fleeing the country. ‘Cash machines… would need to be shut down,’ advises Bootle’s plan. ‘Otherwise, realising that the euro would become more valuable than the drachma, most Greek residents [for example] would attempt to withdraw as many euros as possible from their bank accounts.’ Currency controls could be supplemented by forbidding residents from buying foreign assets overseas or setting up bank accounts outside the country. Foreign businesses in the country might also be barred from repatriating profits back to the home office. Capital Economics argues that such radical steps could be avoided if plans are kept hidden – especially if the transition takes place over a weekend when banks are closed. The most obvious practical issue in leaving the euro is that of minting new notes and coins. Since this might take months, the departing country would be left in limbo. One stopgap solution would be to stamp existing euro notes with a drachma symbol. This is not an option favoured by Bootle. Instead, the Capital Economics plan argues that a country like Greece could largely do without cash for a while. A recent survey by the European Central Bank showed that cash

accounted for just 5% of total transactions for the majority of businesses. For the small amounts of cash that are needed, the euro could continue to be used until a new currency was ready, Bootle argues. Another question is the potentially inflationary threats posed by a new currency. Retailers might take advantage of the changeover to raise prices. Many shoppers suspected this happened when the British shifted to a decimal system in 1971. To avoid such covert hikes, Bootle recommends introducing the new currency at parity to the euro, so an item that used to sell for 1.5 euros would sell for 1.5 drachma, although the new currency’s real value could soon fall sharply. Most crucially, however, the public would have to be quickly convinced that price rises were not going to get out of hand. A new inflation target would need to be set, to kick in after an initial adjustment phase. The nation could also consider issuing indexed bonds, whose interest payments would rise along with prices. This would reduce a government’s incentive to let inflation rip, Bootle says, and so reassure investors and the public.

Return to growth Politicians could offer another guarantee of good behaviour by setting up an independent auditor to monitor public borrowing. A departing sovereign should also organise an orderly default on foreign debt, writing down debts to a sustainable level so the nation could resume economic growth. The Wolfson Economics Prize ended up underlining many of the dangers of a euro split. But thanks to the Tory peer, discussing the practicalities of a breakup is no longer a taboo. Christopher Alkan, journalist

11/10/2012 10:51


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08/10/2012 12:26


A CLARITY OF VISION Companies are starting to see the link between sustainability and financial results, says KPMG special adviser and former UN climate chief Yvo de Boer


ver the past two decades we have recognised that the way we do business has a serious impact on the world around us. It is now apparent that the state of the world affects the way we do business. The central challenge of our age – maintaining human progress while minimising resource use and environmental decline – can simultaneously be one of the biggest sources of future success for business. Given the unprecedented natural resource scarcity, skyrocketing food prices, escalating energy security issues and an expected population of up to 10 billion in 2100, the private sector is ever more challenged to overhaul its strategy and make its business models futureproof. For example, if companies had to pay for the full environmental costs of their production, they would lose 41 cents for every US$1 in earnings on average. External environmental costs of 11 key industry sectors (including upstream supply chain) rose by 50% between 2002 and 2010. They include things like pollution – external costs that society will likely have to pay for in the future but are not included in transaction prices. Today’s leaders are struggling with complexity. Until now, we found global trends on energy, water security and

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food scarcity complex enough. The convergence of other forces such as population growth, deforestation and a surging middle class is impacting on business and the world around us. Leaders are overwhelmed by the sheer scale of these problems and are struggling to act. There are ways to solve these problems, and that includes harnessing the capacity of business. Policymakers and the business community should ramp up collaboration and demonstrate renewed leadership in order to achieve sustainable and equitable growth objectives. Government policies, investor values and consumer preferences are also altering rapidly, thus impacting businesses’ bottom line and demanding a long-term vision, supported by immediate action. Is this forced by stakeholder demand, or primarily driven by sound entrepreneurship? It is up to each and every company to decide for itself. Rather than attempting to survive risks resulting from global megaforces, business leaders can do much more. Indeed, with foresight and planning, and by undertaking pioneering actions to prepare for an uncertain future, they can thrive by turning risks into new opportunities. Companies need to develop resilience and flexibility for an

unpredictable future and build capacity to anticipate and adapt.

Understand the risks First and foremost, businesses need to fully assess and understand future sustainability risks, for example by integrating them into an enterprise risk management tool, defining their responses to deal with them, and analysing opportunities for efficiency, substitution or adaptation. Integrated strategic planning and strategy development are needed as well; this requires business management to make sustainability central to their corporate strategy and incorporate it at all levels. Put simply, businesses must manage risks and capitalise on opportunities by turning strategic plans and strategies into ambitious targets and actions. One can think of energy and resource efficiency improvements, sustainable supply chain management, and investment into innovation on sustainable products and services, as well as gaining access to new markets for greener products, services and technologies. It is also imperative to explore tax incentives tailored to alternative energy, energy efficiency and other areas related to sustainability. Another much discussed but less implemented tool for success in this area is measuring performance and

12/10/2012 16:55


MEASURING AND REPORTING SUSTAINABILITY ACTIVITIES TO STAKEHOLDERS WITH CLEAR, ACCURATE DATA IS QUICKLY BECOMING A PRIORITY reporting on sustainability, as well as the related benefits. The growing trend of integrated reporting is an example of how companies are building frameworks for sustainability reporting processes, stronger information systems and appropriate governance and control mechanisms on a par with those currently used in financial reporting.

Time to talk Organisations cannot do this alone. Collaboration with partners on sustainability issues is vital to enhance leverage and improve the cost-benefit ratio of action. Business leaders should seek opportunities for genuine dialogue with governments and demonstrate new and innovative approaches to publicprivate partnerships. Improved dialogue could focus on economic instruments and market barriers that could be reduced to make sustainable business operation easier. Good management used to be about preparing for the expected; now it is just as much about preparing for the unexpected. Without action and strategic planning, risks will multiply and opportunities will be lost.

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KPMG’s clients and business all over the world are seeing the link between sustainability and financial results becoming increasingly clear. Companies that recognise the external influences on their organisations and leverage them as opportunities are realising a competitive advantage. To that end, the exercise of measuring and reporting sustainability activities to stakeholders with clear, accurate data is increasingly relevant and quickly becoming a priority. Competitive advantage can be carved out of emerging risk. It is clearly no longer in question that we must transcend to a more sustainable economy. The question is the pace in which we are able, and especially willing, to achieve it. To thrive, or even just to survive, businesses need to understand the root causes of what affects their operations, not just the symptoms. The bold, the visionary and the innovative recognise that what is good for people and the planet will also be good for the long-term bottom line and shareholder value. This is how we can make our common economy futureproof.


Yvo de Boer is KPMG’s special global adviser on climate change and sustainability, responsible for driving the development of the firm’s Sustainability Service. He is former executive secretary to the UN Framework Convention on Climate Change (UNFCCC), and currently chairs the World Economic Forum’s Global Agenda Council on Climate Change. De Boer helped to prepare the position of the European Union in the lead-up to negotiations on the Kyoto Protocol; assisted in the design of the EU’s internal burden sharing; and has led delegations to UNFCCC negotiations.

12/10/2012 16:56



Cloud computing is revolutionising business and one particular development is allowing board members to dispense with cumbersome books, explains Eslinda Hamzah


he cloud is all about computing as a service rather than a product. It supports the sharing of resources – both hardware and software – through a web browser over the internet. This makes it ideal for companies of all shapes and sizes. By treating IT as a commodity, they can get what they need, when they need it, without heavy investment. Years ago, the largest part of the IT investment by far was the hardware. This is no longer the case. Software, along with licences, maintenance, upgrades, staff training and technical support, is a significant consideration. But cloud computing and, in particular, software-as-a-service (SaaS) can also take the sting out of the software budget.

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The advantages of SaaS range from low cost of entry to global accessibility, but also include ‘softer’ features such as easy administration and collaboration. The choice of applications is growing too, and includes sales tracking, accounting, customer relationship management, enterprise resource planning, invoicing, human resources and more.

Board portals One excellent example of cloudbased SaaS is the board portal. This technology, which is increasingly finding favour inside and outside the boardroom, is actually a secure website, which addresses some of the major challenges facing corporate boards: timely compilation, review,

dissection, analysis and approval of corporate information. Company directors have long been awash with paper, primarily in the form of the board books that are required reading before every full board and many committee meetings, and although some may pigeonhole them as a group of Dickensian technophobes, this stereotype couldn’t be further from the truth. Today’s directors are not only techsavvy and fully aware of the efficiencies that notebooks, smartphones and tablets can offer, they are already using these tools in the office, on the road and at home. The idea that technology can streamline board preparation is far from alien. An organisation’s board materials can run into hundreds of thousands of

15/10/2012 11:51


pages per meeting. Quite apart from the environmental impact of book production, the entire painstaking, time-consuming process is fraught with inefficiency – to say nothing of the stress of a looming deadline by which every director must receive his or her book, wherever in the world they happen to be. A board portal can be used securely on tablets, such as the iPad, on notebooks or on desktop computers. This enables board members to simply log on to the internet when they want to review and make annotations to board materials.

the business issues rather than the logistics of the board meetings.’

Security and governance Quite rightly, security and good corporate governance are serious considerations when applications reside in the cloud, and this is usually top of the agenda when companies are considering a board portal. Collecting and compiling sensitive material and dispatching it to all points of the compass can be fraught with danger – from board books compiled incorrectly, to materials left behind in hotel rooms, in the back of taxis, in

‘OUR DIRECTORS HAVE BUSY AND DEMANDING TRAVEL SCHEDULES. WHEREVER THEY ARE THEY HAVE THE CORRECT VERSION OF MATERIALS’ Because the board portal is a central, single and current repository of the board book, there is no duplication of materials and no opportunity for individual versions to become out of step with each other. Even last-minute revisions can be made in real time, ensuring that books are always up to date. It’s easy to see why board portals, already considered a boardroom standard by many US and European companies, are finding favour in Asia. Epic Bio, a Singapore-based joint venture formed by Emergent BioSolutions and Temasek Life Sciences Ventures, is a case in point. Although the company is headquartered in Singapore, the directors are located on three continents. ‘Epic Bio decided to streamline the workflow associated with building, approving and publishing boardrelated material by moving the entire process to a secure, digital, web-based platform,’ says Stephen Lockhart, director of Epic Bio and senior vice president of vaccine development at Emergent BioSolutions. ‘Our directors have busy and demanding travel schedules. Wherever they are they have the correct version of materials, so they can focus on

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airport lounges or on planes. Directors also know they are being scrutinised more closely than ever. The Sarbanes-Oxley Act of 2002 reinforced their legal and financial responsibilities and there is heightened pressure to perform their fiduciary duties to shareholders. This has led to an increase in both the number of meetings being held and the amount of information for review. It also requires more frequent communications between meetings. To be trusted to host sensitive board materials, a board-portal provider must demonstrate that it operates to the very highest security standards at all times and in all locations. Ideally the solution will have been designed to meet the stringent security requirements of, say, the banking, defence and healthcare industries. To avoid any doubt, the service provider should be able to provide a copy of a recent SAS 70 audit. A recognised auditing standard developed by the American Institute of Certified Public Accountants (AICPA), the SAS 70 audit is a service auditor’s examination performed in accordance with the Statement on Auditing Standards (SAS) No 70, Service Organizations. It signifies that

the application’s security infrastructure has been through an in-depth audit of its control objectives and activities, including those relating to information technology and related processes, and compliance with the requirements of Section 404 of Sarbanes-Oxley. The requirements of Section 404 make SAS 70 audit reports even more important to the process of reporting on the effectiveness of internal control over financial reporting. At an operational level, a good, web-based portal should be hosted in a totally secure, fail-safe environment that continues to operate, even at a reduced level, rather than failing completely. It will provide a single, centralised view within a standard web browser, and all documents will be encrypted so that only the ‘right’ pair of eyes can read them, and access is restricted to an agreed user group. While the ultimate purpose of a board portal is to securely support board communications and board workflows, the very fact that it lives in a digital world opens up enormous opportunities to enhance the work of the board in general. Some portals include calendars, contact information, resource materials and the ability to execute written consents or resolutions. Others have unique areas for committees, and can even be used for gathering and organising documents for the auditors. They can include a resource centre, providing directors with easy access to information and enabling them to add even more value to an organisation. The goal for many companies is to make the portal the go-to location for directors to access all the material they need to better perform their fiduciary duties. Whether you are looking to streamline your board, reduce hardware and operations costs, or simply provide productivity applications for your staff, look into the cloud – you should find there’s a silver lining. Eslinda Hamzah is managing director of Diligent APAC Board Services.

15/10/2012 11:51



Beyond the usual suspects [

With ASEAN set to become a major regional driver for growth, CFOs should take note of the significant market opportunities that countries such as Indonesia and Myanmar may have to offer, says Cesar Bacani

I always enjoy listening to my friend Rajiv Biswas, who is chief Asia-Pacific economist at IHS Global Insight. As usual, he was in fine form at the CFO Innovation Hong Kong Forum in September, where he presented his economic forecasts. The eurozone crisis and the US ‘fiscal cliff’ – the damaging failure to extend tax concessions due to expire at year-end – took centre stage, along with slowing gross domestic product (GDP) growth in China and India. But unlike other analysts, Biswas also focused on the 10-member Association of Southeast Asian Nations (ASEAN), whose members include Indonesia, Malaysia, Singapore, Thailand and my native Philippines. Biswas’s thesis is that ASEAN is becoming Emerging Asia’s third growth engine after China and India. ASEAN’s combined GDP is already significantly larger than that of India, he pointed out. By 2028, the South-East Asian bloc’s combined GDP will surpass that of Japan, Rajiv believes. CFOs everywhere should take note. ASEAN is becoming ‘an increasingly important market for international businesses across a wide spectrum of industries,’ says Biswas, particularly fast-moving consumer goods and luxury products as well as financial services, education, healthcare and tourism services. Significant market opportunities will also be created in infrastructure and the environmental sector. He’s not talking of just individual markets, either. By 2015, ASEAN will transform itself

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into the ASEAN Economic Community, which will focus initially on integrating trade in services, facilitating investment flows and allowing free movement of certain types of skilled labour –including finance professionals – across 10 markets with a combined population of 600 million increasingly affluent consumers. First among equals is Indonesia, says

Biswas, because of its strong natural resources base and 250-million predominantly young population. The country won an investment-grade credit rating last year on the back of its solid finances and economic and political reforms; GDP is forecast to exceed US$1 trillion next year and double to US$2 trillion by 2021. Biswas also expects Malaysia, Thailand and the Philippines to become ‘increasingly important domestic markets for intra-ASEAN trade and investment’. Tiny Singapore has a role to play, too, as a sophisticated financial, logistics and knowledge hub. The frontier economies of Vietnam, Laos and Cambodia will grow rapidly on the back of ASEAN economic and trade initiatives as well as resumed economic growth in China. Biswas also sees bluer skies for Myanmar, the fifth most populous member, as it embarks on political and economic reform after decades of isolation and dictatorship. ‘The unleashing of the Myanmar economy could create a significant boost to ASEAN regional growth as well as intra-ASEAN trade and investment flows,’ says Biswas, who projects GDP growth there of around 6% a year until 2020. No one can fully foretell the future, of course. But CFOs must help steer company strategy on a three-to-fiveyear view, if not longer. Given ASEAN’s momentum, its emergence as a regional driver of growth seems a safe bet even in today’s volatile economic environment. Cesar Bacani is editor-in-chief of CFO Innovation Asia

11/10/2012 10:46



When push comes to shove [

As a new ACCA/ACRA report highlights the level of discontent among audit employees at larger firms, steps must be taken to prevent unhappy staff from voting with their feet, says Errol Oh

In Malaysia in the late 1980s, when I was a tax assistant fresh out of school, the larger accountancy firms did not seem to have a problem attracting the best and the brightest. This was despite the almost clichéd perception that employees in these firms are often overworked and underpaid. Few things light up a CV more effectively than some years of varied experience at a top-notch accountancy firm. Things have changed. Not even accountancy firms, including the Big Four, are shielded from the war for talent. The firms have to work harder to position themselves as employers of choice. Visit the careers section of the website of any major firm and you will see that they put in considerable thought and effort so as to become appealing to potential recruits. It is light years away from the take-it-orleave-it mindset of the past. But are things so different inside firms today? Not if you go by the findings of Talent Attraction and Retention in Larger Accounting Firms – a recent survey commissioned by Singapore’s Accounting and Corporate Regulatory Authority (ACRA) and conducted by ACCA. What is fascinating is that employees are still complaining about being overworked and underpaid. Or as the report politely puts it: ‘From the survey results, an obvious source of discontentment was remuneration and benefits, particularly when measured in relation to work efforts.’ The report offers insights into what

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respondents feel about strong push factors. ‘Given that a first-year auditor has to work for about 250 hours a month…the take-home pay is only a mere S$10 an hour. I believe this is perhaps one of the strongest deterrent factors in getting talents to take up an audit career,’ says one audit employee. Another employee relies on calculations as well to make his point: ‘If we divide our monthly salary by the number of hours we work, the amount may be lower than what our public bus drivers/taxi drivers are earning.’ And here is a comment from a third

audit staff member: ‘Exponential increase in workload together with an incongruent increase in salary.’ Are these merely the grumblings of the spoilt and demanding Generation Y? Actually, that does not matter. The fact is, these voices of discontent belong to those who perform the bulk of the audit work. If they feel that their work conditions will not improve, they are more than likely to vote with their feet and quit. The report makes a distinction between audit firm employees who move on to the next phase of their careers after accumulating sufficient experience, and those who walk out because the firms are not doing enough to retain them. ‘Concerns arise when turnover becomes too fast to the extent that audit engagements become inadequately staffed at each level. The engagement teams may then find themselves not delivering at their optimal level and, as a result, audit quality suffers,’ it points out. The report is not just a collection of gripes. It provides the respondents’ thoughts on what needs to change, and a summary of key actionable points for the firms that have been derived from the survey findings. That ought to be compulsory reading for the firms’ management. Errol Oh is executive editor of The Star For more on the report:

12/10/2012 16:56



Stepping towards sustainability


ACCA president Barry Cooper reflects on the Accounting for the Future event and why accountants are key to a strong economy

As someone whose day job is to help prepare future generations of finance professionals, a constant challenge for me is to frequently scan the economic horizon. What will accountants need to know in 10 and 20 years’ time – what will the profession look like? How do we prepare students? Alongside that is the obligation to ensure that today’s professionals help not only the accountants of the future, but everyone in generations to come, have the opportunities to enjoy career and life opportunities in an ever-changing environment. This is why I was delighted to see that more than 10,000 ACCA members have participated in the Accounting for the Future online event. The event, comprising live and pre-recorded webcasts, presentations and workshops, which went live in early October and which is available on demand until the end of this year, explores the role that finance professionals will play in building a stronger and sustainable global economy. The subjects covered included: the emerging issues related to risk management; the issue of valuation and how trends and developments in social and environmental accounting may lead to changes in the methods used by accountants to evaluate assets and liabilities; global trends and developments in corporate disclosure; the importance of investor engagement; the influence which investors can have on corporations and organisations; and lastly the green economy. Thus this online event covered some contentious and challenging issues. Having such a large number of participants from around the world not only demonstrates our global strength, but enabled delegates to share experiences and highlight the issues they are facing in meeting the sustainability challenge. Importantly, those views will help ACCA develop member initiatives well into the future. I want to thank everyone who took part in what I am sure will prove to be an extremely influential milestone in our thinking on sustainability issues. Visit the event at accountingforthefuture Professor Barry J Cooper is head of the School of Accounting, Economics and Finance at Deakin University, Australia

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12/10/2012 10:44



Dutch brewer Heineken has gained approval in a S$5.6bn (US$4.5bn) deal to take full control of the maker of Tiger beer, Asia Pacific Breweries (APB). Shareholders of the Singapore conglomerate Fraser and Neave voted to sell the company’s holdings in the beer business to Heineken in late September after Heineken battled with Thai billionaire Charoen Sirivadhanabhakdi for the key Asian brewing asset. The battle for control was prompted in July when companies linked to Sirivadhanabhakdi bid for stakes in Fraser and Neave, as well as APB. In what had been an 81-year joint venture between the two companies, Heineken already had a 55.6% stake in APB while Fraser and Neave held about 40%. APB brews some of the most popular beers in South-East Asia, including Bintang, Anchor and Tiger.


The view from: Hong Kong: Douglas Young, founder and CEO, Goods of Desire

Q What is Goods of Desire’s business strategy? A We are building the first contemporary brand of Hong Kong that is proud to show its origins. Q Do you think there is a lot of potential for development for the Hong Kong market? A Yes, there is certainly a lot of potential, considering the increased tourism into Hong Kong from mainland China. But we are also looking at expanding overseas at the moment. Our new shops will be opening in Singapore and China this year. Q What are your marketing and business developing strategies for the coming months? A Our unique position is that we are immediately associated as a brand that gives Hong Kong culture a funky spin. Therefore, our current strategy involves collaborating with other brands that also want to share this value with their customers.

33 Corporate The view from Douglas Young of Goods of Desire plus news in brief; Malaysia’s next generation of finance professionals are being nurtured; how companies can improve their corporate reporting 39 Practice Tan Siow Ming of PwC Malaysia plus news in brief; getting tough on financial crime

Q What do you most enjoy about your work? A I enjoy seeing my concepts come to life.


PT Bakrie & Brothers, the investment arm of Indonesian Bakrie Group, and affiliate Long Haul Holdings have agreed with creditors to a plan to repay US$437m in debts. The company did not say how it would repay the debt, which was arranged by Credit Suisse and has the group’s 23.8% stake in the London-listed coal miner Bumi held as collateral. The Bakrie Group has previously sought new loans to refinance debt. In April, a group of lenders led by Credit Suisse asked Bakrie Group to top up the loan with about US$100m in cash due to a sharp decline in the family’s shares in Bumi.

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Q What lessons have you learnt in the past years? Do you have a personal motto? A I have learnt to stay true to my philosophy. My personal motto is: that which doesn’t kill you makes you stronger.


Location of headquarters: Hong Kong Number of employees: 120 Favourite book: The Art of Travel by Alain de Botton Company background: Founded in 1996, the retailer Goods of Desire has eight shops in Hong Kong as well as branches in Singapore and China. The company – which offers fashion, gifts, homeware and furniture – strives to preserve Hong Kong’s unique cultural legacy, and it is also involved with the Hong Kong Street Culture Museum.

11/10/2012 14:10



Stepping to the fore Having a strong belief in the need to keep pushing oneself, Lee Khee Joo is well placed to spearhead a programme aimed at nurturing the nation’s next generation of bankers In appointing a leader to champion talent development, it’s crucial to choose an individual with a passion for learning. With this in mind, Malaysia’s central bank tapped career banker Lee Khee Joo, whose experience spans 38 years in banking and finance, to run the Financial Sector Talent Enrichment Programme (FSTEP), which seeks to nurture entry-level professionals for the financial services industry. Lee is definitely an advocate of lifelong learning, with an array of qualifications under his belt, including an economics degree, a post-graduate accountancy diploma, an MBA and a professional accountancy qualification. Yet, the current head of FSTEP downplays the fruits of his paper chase. ‘My diverse qualifications in economics, accounting and business administration are nothing magical or extraordinary,’ he says. ‘Looking back, I must say that the lifelong learning philosophy is the main contributing factor in achieving most, if not all, of these qualifications.’ Lee is proud that he is a home-grown and pioneering accountant from the 1970s. ‘When I graduated from the University of Malaya with an economics degree in 1974, I joined the Central Bank of Malaysia (Bank Negara Malaysia) as a young bank examiner (loosely termed by bankers as Bank Negara auditors). At that time, there was no accountancy degree offered in any of the Malaysian universities. At best, what I had was an economics degree majoring in accounting.’ Nevertheless, the demands of his job in audit and assurance inspired Lee to strive to become a qualified accountant. Lee says that he owes a great deal to his then boss, Tan Sri Mohamed Basir Ahmad, who encouraged him to return to the University of Malaya to pursue a part-time post-graduate diploma in

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The CV Career banker and FCCA Lee Khee Joo was seconded as head of the Financial Sector Talent Enrichment Programme (FSTEP) by Bank Negara Malaysia (BNM), effective 9 July 2008. Lee holds an economics degree and a post-graduate accountancy diploma from the University of Malaya and an MBA from the University of Queensland, Australia. He has more than 38 years of experience in the banking and finance industry. Starting out as a bank auditor, Lee was attached to BNM for 23 years, holding various positions in bank examination and finance and culminating in the post of chief internal auditor. He subsequently held various senior positions in the former Pacific Bank, Malayan Banking and Hong Leong Bank, among others. accountancy. ‘Upon the completion of the programme, I qualified as a “home-grown” accountant,’ he says. Subsequently, Lee says he was blessed with ‘full pay plus scholarship’ by Bank

Negara Malaysia (BNM) to pursue an MBA degree at the University of Queensland, Australia, in 1981. But Lee wasn’t done. His vision was to pursue a global accountancy qualification and ‘ACCA was a natural choice’. Lee believes that ACCA was instrumental to his banking career, both in the regulatory and private sectors. ‘I sat the ACCA examinations on a part-time basis while being promoted to various levels of bank supervision at the central bank,’ he recalls. ‘The acquired knowledge from sitting the ACCA examinations helped tremendously in my career progression at Bank Negara Malaysia. ‘By sheer hard work and perseverance, I passed as an ACCA graduate in 1993. I can safely say that by achieving this, I was promoted to become the deputy manager in the Finance Department of Bank Negara Malaysia. After a few years, BNM identified me as the CEO to oversee the management of a problematic merchant bank in Kuala Lumpur. Years later, I moved from the Central Bank to the private sector, working with the former Pacific Bank, Malayan Banking and Hong Leong Bank to gain more commercial banking experience.’ Although Lee is no longer directly involved in the management of financial institutions, he still plays a critical part in the industry. Eager to share his knowledge and backed by a passion for lifelong learning, he’s helping to nurture the nation’s young banking prospects through the Financial Sector Talent Enrichment Programme (FSTEP).

Blue-ocean thinking Established in 2007, FSTEP is an initiative under the auspices of the Institute of Bankers Malaysia (IBBM) to develop and nurture entry-level

12/10/2012 16:58


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professionals for banks, and insurance and takaful (Islamic insurance) companies – collectively termed as the financial services industry – in Malaysia. IBBM is the professional and educational body for the banking and financial services industry in Malaysia. FSTEP is the brainchild of Tan Sri Dr Zeti Akhtar Aziz, the governor of BNM. It recruits diverse talents from multiple disciplines. ‘Apart from accountants, FSTEP uses “blue-ocean thinking” to tap into the non-traditional pool of talents from various disciplines. Graduates and those with not more than three years of working experience who are keen to pursue a career in the financial industry are encouraged to apply,’ explains Lee. Thanks to this non-traditional strategy, Lee reckons that ‘to date, FSTEP has trained more than 1,000 graduates from different disciplines, including engineers, architects, accountants, mathematicians, biotech scientists, actuaries, lawyers, psychologists and even a doctor!’ But getting a place in FSTEP is hardly easy; competition is stiff. Lee estimates that FSTEP receives more than 1,000 applications per intake for 100-120 places, and there are two intakes every year. Candidates must not be over 30; must achieve a minimum CGPA of 3.25 or its equivalent; must possess a fluent command of English; and must pass an interview by the sponsoring institution. All the selected participants must also secure a sponsor; FSTEP does assist candidates to find sponsors, says Lee. Since the idea is to produce work-ready graduates, FSTEP’s one-year intensive training programme complements the initial six-month classroom training with a structured six-month internship under a mentormentee arrangement with the sponsoring financial institutions. The comprehensive classroom training includes the transfer of technical knowledge using simulations, workshops and case studies. Since English is extensively used in global banking circles, the six-month classroom training includes an

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The tips *

Lee believes that the ACCA Qualification was pivotal to his career progression as a central bank auditor and, later on, a commercial banker. He passed his ACCA at 43 on a part-time basis, when many younger candidates struggle even on a full-time basis. ‘Without any doubt, the ACCA examination is difficult, but the attainment of the qualification is useful and essential to move up the corporate ladder.’


Take failures in your stride, leverage your strengths and navigate according to your vision to achieve your desired results, advises Lee. ‘Learn from failures but keep focused on results-driven goals to achieve significance in life.’


He advocates generous sharing of knowledge and is the author of two books: So You Want to be an Accountant? and Credit Facilities for Small and Medium Industries. intensive one-month English-language course which is facilitated by trainers from the British Council. And to develop well-rounded individuals, all participants undergo personal development courses, industrial visits, e-learning and outward-bound school experiences at Lumut, Perak, as well as community service projects. Given that FSTEP is a fairly nascent programme, the long-term

‘I SEE THERE ARE AMPLE OPPORTUNITIES FOR ACCA GRADUATES TO JOIN THE FINANCIAL SERVICES INDUSTRY THROUGH FSTEP’ performance of its graduates is yet to be assessed. However, this industry-led programme enjoys overwhelming support from the Malaysian financial services industry, says Lee. Of course, in the long run, it’s up to the individual to make the most of FSTEP training, he adds. ‘The success of the entire programme will depend on the commitment of the participants.’

ACCA and FSTEP In future, ACCA graduates are poised to benefit from a recent memorandum of understanding (MoU) signed between ACCA Malaysia and FSTEP. Lee describes the MoU as a ‘win-win which will expand the talent pool for the banking sector while providing ACCA graduates with a unique route to joining the Malaysian financial services industry via FSTEP’. The MoU also enables ACCA to recognise FSTEP’s credentials as a stepping stone to achieving professional accountancy qualifications. ‘All FSTEP graduates or participants will be given the chance to pursue a global qualification [to improve themselves]. As part of our effort in talent enhancement, ACCA can

12/10/2012 16:59


The basics: FSTEP

be a roadmap for professional growth and development for all our graduates in career advancement,’ says Lee. Currently, the numbers of ACCA graduates enrolling in FSTEP remain negligible, although employment prospects are excellent. Lee estimates that ‘there are not more than 10 ACCA graduates joining the FSTEP training programme. Upon completion of training, all of them were subsequently employed by financial institutions in Malaysia. On the demand side, I see there are ample opportunities for ACCA graduates to join the financial services industry through FSTEP.’ In terms of skillsets, ‘I think all ACCA accountants possess the basic skillsets to work in the finance sector. What accountants require is to supplement their knowledge,” says Lee. To gain the requisite entry-level knowledge to work in banking and finance, the FSTEP training programme incorporates the core and technical competencies required of financial services practitioners in line with the Banking and Finance Industry Competency Framework Model, which is benchmarked against international standards, he adds.

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ACCA graduates can expect enormous opportunities once they complete FSTEP training, Lee enthuses. Treasury operations, risk management, product development and wealth management are challenging areas that will always require strong financial and banking skills, says Lee. ‘In addition, there are new development and growth areas in Islamic banking, investment banking as well as insurance and takaful companies waiting to be explored. The potential markets of Islamic banking and takaful remain largely undertapped compared to conventional markets,’ he adds.

Islamic bonds In particular, Lee sees enormous potential in sukuk (Islamic bonds) and takaful as Malaysia jockeys for leadership in the Islamic finance race. Currently, Malaysia’s sukuk market is the world’s largest, and Malaysia continues to dominate the global sukuk market. Malaysia remains a top investment destination for Islamic funds, with sukuk issued in Malaysia accounting for 73.2% of global sukuk

Established in 2007, FSTEP is an initiative to expand the talent pool for the financial industry. The FSTEP training programme syllabus comprises four core streams: conventional banking, Islamic banking, investment banking and insurance and takaful. Besides providing technical training in banking and insurance, the syllabus is oriented towards the practical and operational aspects of banks and insurance companies. FSTEP training also includes simulations, workshops, case studies and on-the-job-training through structured internships with financial institutions.

issuances in 2011 compared to 72.5% in 2010. Takaful also has lots of room to grow, according to Lee. According to Bank Negara figures, as at end-2011, total assets of takaful funds increased by 15.8% to RM17bn, while total takaful contribution accounted for just 13% of total premiums and contributions in the insurance and takaful industry. Bearing these prospects in mind, young ACCA graduates might want to think out of the box and consider a non-traditional career in the relatively blue ocean of Islamic finance and takaful. Nazatul Izma Abdullah, journalist

12/10/2012 16:59



Top tips for this reporting season As reporting season fast approaches, PwC director Alison Thomas gives us her top tips for making your annual report more effective in communicating with the capital markets How can you improve your communications with the capital markets through your corporate reporting? Our 12 practical reporting tips – based on what investors tell us they would like to see in reporting – are a great place to start.

Have a backbone Use your objectives and strategy to underpin your reporting and provide the context for your activities and performance. Strategic statements set in isolation from the rest of your reporting can appear hollow.

Back to basics Explain your key capabilities and the key resources and relationships you depend on to create and sustain value. Consider both your key inputs/outputs as well as your own activities, and demonstrate how your business model interacts with other reporting elements.

The big picture Put your results in the context of market trends. Provide management’s perspective on the competitive landscape and macro environment to allow the reader to evaluate your strategic choices and actions.

Tell the whole tax story Provide clear information for stakeholders on the sustainability of current tax rates and how tax impacts your business, looking more broadly at tax strategy, risk management and the wider impact of tax as well as detailed tax performance in the tax note. .

Cash is still king

Explain how you make money, generate cash and are funded. Competition for capital is fiercer than ever before, so consider including detailed disclosure about your operating cashflow strategy and performance and consolidating

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your debt disclosure. Provide details of your debt maturity schedule and reconciliation of free cashflow to movements in net debt.

Survival of the fittest Demonstrate an understanding of the material sustainability risks and opportunities relevant to you and your key stakeholders and how they’re integrated into your core corporate strategy. Consider the impact of your business across your entire value chain when considering materiality.

Bottom up! Challenge whether the segment analysis is not just compliant but also makes visible the dynamics inherent within the business. Consider including a few additional line items such as working capital, operating cashflow and capital employed for each segment.

Flash in the pan? Explain what is driving financial performance – is growth sustainable? Consider using bridge charts to help investors understand what is driving revenue profit and growth. Ensure non-GAAP measures to support your messaging are clearly identifiable, consistently defined and reconciled to your GAAP numbers.

What gets measured gets done Identify key financial and operational KPIs used to assess progress against strategic priorities. Explain clearly how management are incentivised, highlighting the link between strategy, KPIs and the remuneration package.

Crack the code Go beyond compliance and bring governance reporting to life by demonstrating the activities of the board, the skills and experiences each board member brings to the table and how they interact.

Join the dots Avoid silos and present a clear, coherent and integrated picture of how your strategy, governance, performance and prospects lead to long-term value creation. Alison Thomas is a corporate reporting specialist at PwC. For further details on the tips, go to www.

Not the kitchen sink Highlight principal risks, not all risks. How might they derail your strategy? How are they managed? How has the risk profile changed during the year and what is the sensitivity of underlying performance to changes in these risks?

11/10/2012 10:52



PwC Taxation Services has called for Malaysia to broaden its tax base in order to gain from having a lower fiscal deficit ratio to gross domestic product (GDP) by 2015. With a broader tax base, the accountancy firm believes the Malaysian fiscal deficit of 4.7% of GDP this year can be reduced to 3% in three years. Jagdev Singh, a PwC senior executive director, says that one way to broaden the tax base is to introduce a goods and services tax as this would capture additional population and help the government increase its revenue in order to manage the country’s deficit level. Less than 10% of the population pays taxes under the country’s current regime, Singh says.

The view from: Kuala Lumpur: Tan Siow Ming, senior executive director and advisory leader, PwC Malaysia Q What is in your inbox at the moment? A Requests for meetings to discuss regional collaboration, talent management and client proposals. Q Your practice covers five countries: Malaysia, Thailand, Vietnam, Cambodia and Laos. Which currently requires most of your time? A Malaysia. We are seeing lots of opportunities with the government’s Economic Transformation Programme (ETP) and continuing mergers and acquisitions activity, with some private equity interest. The Thai economy is humming along; we see a trend for the larger Thai businesses to explore cross-border deals and investments. Q While Malaysia’s economic growth has slowed this year, which of the industries you advise has been affected the most? A The plantation sector is a significant component of the Malaysian economy. I would say the downstream business of oil palm refinery is facing a tough time on margins.

Suria KLCC retail complex, Kuala Lumpur, Malaysia


Chinese and US authorities have reached a tentative agreement to send US auditor inspectors to China as observers. The plan will be a ‘trust-building exercise’ that could lead to more cooperation, said Lewis Ferguson, a board member of the US Public Company Accounting Oversight Board (PCAOB). Inspectors from the PCAOB, the US audit-industry regulator, will be allowed to observe Chinese authorities examining the work of Chinese accountancy firms. This will be a step towards the potential joint inspections of Chinese firms by both US and Chinese inspectors that the board hopes will begin next year, Ferguson said.

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39 Practice Tan Siow Ming of PwC Malaysia plus news in brief; getting tough on financial crime 33 Corporate The view from Douglas Young of Goods of Desire plus news in brief; Malaysia’s next generation of finance professionals are being nurtured; how companies can improve their corporate reporting

Q What challenges do you foresee in the year ahead? A We have grown rapidly in our advisory business over the last four years but we have to avoid being complacent. Our priorities in the year ahead are three-fold. One, build a more client-centric business model to complement our growth from developing value-added solutions. Two, bring the best out of our people. Three, invest in innovation and industry expertise.


Firm structure: partnership Staff numbers (at 31 August 2012): 1,968 Favourite book: A Long Obedience in the Same Direction by Eugene H Peterson

11/10/2012 13:10



Accountants in crime-fight frontline Revised global recommendations give practitioners an increased role in the crackdown on money laundering, terrorism financing and tax evasion, says ACCA’s John Davies One of the very tangible ways in which practising accountants serve the public interest is as gatekeepers in relation to financial crime. Many accountants have by now come to accept that the regulatory obligations they have in this area are not only unavoidable but even helpful; first because they reinforce the status of accountants within society as responsible and trusted intermediaries, and second because the obligations act as an active deterrent to clients or prospective clients who might otherwise try to involve their professional advisers in their own criminal activities. The world at the moment is a dangerous and unstable place on many fronts. The international community still faces serious threats from terrorism and the spread of weapons of mass destruction. The depressed state of the global economy is also imposing highly competitive pressures

Bribery and corruption is another area of crime thought to be exacerbated by a harsh economic climate. Despite the well-publicised case of Siemens, which was forced to pay a record $1.34bn in fines by courts in Germany and the US for a series of bribery offences, a survey published in May 2012 by Ernst & Young found that a staggering 54% of UK executives would not rule out engaging in unscrupulous or illegal behaviour, such as misstating financial statements or providing personal gifts or cash to secure business; the number of respondents prepared to offer bribes had almost doubled in two years. This is despite the introduction in the UK of legislation that exposes companies to criminal penalties if any of their employees, subsidiaries or intermediaries offer or pay bribes. This developing context has now been reflected in the latest version of the authoritative recommendations

WHENEVER A PRACTITIONER SUSPECTS THAT A PARTY HAS CONSCIOUSLY COMMITTED A TAX CRIME, THAT WILL BECOME A REPORTABLE MATTER on individuals and businesses alike, and very often the pressures on both are liable to interact. KPMG’s latest UK fraud survey suggests that recorded fraud in 2011 exceeded £3.5bn in total, with fraud by company management up by 74%. Even in Australia, which has escaped the economic downturn affecting Europe and North America, KPMG found a steady rise in the incidence of fraud and concluded that 80% of business fraud is committed by employees and managers, often taking advantage of weak controls and defective processes of detection.

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issued by the Financial Action Task Force (FATF), the global body charged with monitoring trends in financial crime and with developing anti-money laundering and counter-terrorism financing (AML/CTF) measures. The latest set of recommendations, only the third revision since they first appeared, in 1990, imposes significant new expectations on governments to address emerging macro factors, including countering the proliferation of weapons of mass destruction and carrying out national risk assessment procedures to lay the foundation for focused remedial measures.

The revised recommendations incorporate a number of changes which stand to have a direct effect on practitioners and their work, as follows.

Client due diligence There is only a minor change made to what for most practitioners is the key area of client due diligence (CDD) – namely, the standard range of circumstances in which CDD procedures must be performed and the steps that need to be carried out in those circumstances. Formerly, parties were required by FATF only to obtain information on the purpose and intended nature of a business relationship. The new wording commits regulated parties expressly to understand its purpose and intended nature. The revised wording makes it more explicit that the point of the exercise is not solely to ask for information about the client’s intentions but also to understand those intentions; it also implies that the amount of information to be asked for should be in proportion to what the nature and purpose of the relationship is understood to be.

Politically exposed persons The recommendations already cover politically exposed persons (PEPs) to the extent that they come from a different jurisdiction than the one in which the practitioner operates. So, for example, a senior politician or military figure from a foreign country (who is a prospective customer or a beneficial owner) should be regarded as a PEP and so subject to ‘enhanced’ due diligence (EDD). The revised recommendations strengthen the PEP provisions with a new reference to domestic PEPs. Practitioners must now take

08/10/2012 10:53


‘reasonable measures’ to determine whether a prospective domestic customer or beneficial owner is a domestic PEP (or a person entrusted with a prominent function by an international organisation). Where the prospective relationship is considered higher risk, practitioners are required to apply the EDD measures. Revised recommendation 12 provides that the measures to be taken for both foreign and domestic PEPs should be extended to family members and close associates of the PEP concerned. This includes gaining senior management approval for dealing with them, carrying out reasonable inquiries to establish the source of their wealth, and undertaking enhanced ongoing monitoring of the relationship.

Groups Networks of professional firms are covered by a new recommendation to implement group-wide programmes against money laundering and terrorist financing. These should include policies and procedures for sharing information within the group for AML/CFT purposes. Group-wide arrangements could prove particularly advantageous in

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terms of placing reliance on CDD information acquired by third parties. Where a group as a whole adopts policies which follow the FATF recommendations, and where compliance with them is supervised at the group level by a competent authority, group companies should be allowed to rely on information provided by other group companies. Where such arrangements are put in place, national authorities may also decide that no special weight should be placed on the risk associated with the country in which the provider of information is based (another new element of the revised recommendations).

Extension of scope of the recommendations Some countries, such as the UK, already apply AML/CTF controls to tax offences but this has not until now been required under the FATF recommendations. The revised recommendations require individual countries to extend the scope of their AML/CTF measures to cover tax offences in respect of both direct and indirect taxes. It will be up to each country to decide whether to apply a threshold of

War on two fronts: the soldier at this checkpoint in Sana’a, Yemen, provides a very visible anti-terrorist measure, but accountants will also play an important role as gatekeepers of FATF’s system to create a hostile environment for terrorist financing materiality to this but, essentially, it means that whenever a practitioner suspects that a party has consciously committed a tax crime, then that will become, prima facie, a reportable matter. In those countries where tax offences do not currently form part of the national AML/CTF regime, this change is likely to have a significant impact on accountants. The FATF recommendations do not have regulatory force automatically, but need to be adopted formally by national authorities and regulatory bodies. The process of doing this is already well under way. In Europe a fourth directive on money laundering is currently being drafted as a priority measure, so members in public practice should be prepared for changes to their gate-keeping responsibilities in the near future. John Davies, head of technical, ACCA

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Technical update

A monthly round-up of the latest developments in financial reporting, audit, tax and law HONG KONG COMPANIES ORDINANCE The Companies Bill was passed by the Legislative Council on 12 July. The main changes include: A mandatory system of no-par for all companies with a share capital. Private companies must have at least one director who is a natural person. The standard for company directors’ duty of care, skill and diligence is clarified with a mixed objective and subjective test. More effective rules to deal with directors’ conflicts of interest. The ‘headcount test’ for privatisations and specified schemes of arrangement is replaced by a ‘not more than 10% disinterested voting’ requirement. New rules for proposing and passing a written resolution. Public companies, larger private companies and guarantee companies must prepare a more comprehensive directors’ report that includes an analytical and forwardlooking ‘business review’. Companies that meet specified size criteria can prepare simplified financial statements and directors’ reports. Strengthening of the enforcement regime in relation to the liabilities of officers of companies that contravene the Ordinance provisions. Auditors are empowered

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to require information or explanation from a wide range of persons that they reasonably need to perform their duties. A new offence in relation to inaccurate auditors’ reports. This is where an auditor knowingly or recklessly caused two important statements to be omitted from the auditors’ report. Companies can dispense with annual general meetings by unanimous shareholders’ consent. An alternative court-free procedure for reducing capital based on a solvency test. All types of companies can purchase their own shares out of capital, subject to a solvency test. All types of companies can provide financial assistance to another party for the purpose of acquiring the company’s own shares or the shares of its holding company, subject to a solvency test. For more information see


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BOARD DIVERSITY Hong Kong Exchanges and Clearing has released a consultation paper on proposed changes to the Corporate Governance Code and Corporate Governance Report (Code) regarding board diversity. It proposes that board composition should reflect diversity of perspectives in addition to a balance of skills, experience and independence. The deadline for comment is 9 November.

The consultation paper can be downloaded from Sonia Khao, head of technical services, ACCA Hong Kong

SINGAPORE MORE TIME FOR STANDARDS The Accounting Standards Council (ASC) will allow stakeholders more time to implement FRS 110, Consolidated Financial Statements, FRS 111, Joint Arrangements, FRS 112, Disclosure of Interests in Other Entities, FRS 27, Separate Financial Statements, and FRS 28, Investments in Associates and Joint Ventures. The mandatory effective date is deferred for a year to annual periods beginning on or after 1 January 2014. Earlier application is permitted. For more details see ACRA: QUALITY CONTROL The Accounting and Corporate Regulatory Authority (ACRA) has issued Part 2 of its series of Audit Practice Bulletins on Singapore Standard on Quality Control (SSQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements.The bulletin can be downloaded from TRAINING FOR DIRECTORS ACRA’s new training programme for company directors was held in September. The Directors

Proficiency Programme (DPP) saw company directors from small and medium enterprises being taught essential statutory requirements under the Companies Act and given e-filing guidance.The DPP is part of ACRA’s ongoing efforts to promote a high level of corporate compliance in Singapore. More information is available at INSURANCE ACT CHANGES The last major amendment to the Insurance Act (Cap 142) was in 2004. In this consultation paper, the Monetary Authority of Singapore (MAS) proposes amendments to the Act to take into account regulatory and market developments since then and to align, where appropriate, the regulatory framework for insurance with that of other financial activities regulated by MAS. For more, see www. VIETNAM TAX PROTOCOL The existing SingaporeVietnam Avoidance of Double Taxation Agreement was amended in September with a Second Protocol. The amendments include revisions to the permanent establishment, dividends, interest and capital gains articles. It will enter into force after ratification by both countries.The full text of the Protocol is available at Joseph Alfred, policy and technical adviser, ACCA Singapore

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RULES TO FACILITATE EXCHANGE TRADED BONDS AND SUKUKS On 26 September, Bursa Malaysia introduced the Rules to Facilitate Exchange Traded Bonds and Sukuks (ETBS) to be listed and traded on Bursa Securities. ETBS is aimed at offering greater choice to investors seeking products that yield stable returns with capital protection. The relevant rule changes to the Listing Requirements, Rules of Bursa Securities and the Rules of Bursa Depository can be accessed at www. CLARIFICATION ON THE EXECUTION OF FORM 48A FOR E-LODGEMENT On 5 September, the Companies Commission of Malaysia issued Practice Note No. 14, Clarification on the Execution of Form 48A for the Purposes of E-lodgement. For more information, go to TECHNICAL GUIDELINE ISSUED BY THE INLAND REVENUE BOARD (IRB) On 9 August, IRB issued a guideline in relation to the clarification on the non-application paragraph in the following Income Tax (Accelerated Capital Allowances) Rules: Income Tax (Accelerated Capital Allowance) (Plant and Machinery) Rules 2008 (P.U. (A) 357/2008) Income Tax (Accelerated Capital Allowance) (Information and Communication Technology Equipment) Rules 2008 (P.U. (A) 358/2008) Income Tax (Accelerated Capital Allowance) (Plant and Machinery) Rules 2009 (P.U. (A) 111/2009) For more information, go to under ‘Technical Gudelines’

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ANTI-MONEY LAUNDERING AND ANTI-TERRORISM FINANCING ACT (AMLATFA) 2001 On 29 August, the Inland Revenue Board informed taxpayers who commit any of the following three specified tax offences under the AMLATFA 2001 will be subject to a fine up to RM5m, jail for up to five years or both: failure to furnish income tax returns or give notice of chargeability (section 112 of the Income Tax Act 1967); submitting incorrect income tax returns (section 113 of the Income Tax Act 1967); and wilful evasion of tax (section 114 of the Income Tax Act 1967) For further details, refer to the IRB’s press statement at: http://tinyurl. com/9qbu2bs

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FRSIC CONSENSUS 18 ISSUED On 26 September, The Malaysian Institute of Accountants approved the release of FRSIC Consensus 18, Monies Held in Trust by Participating Organisations of Bursa Malaysia Securities Berhad. FRSIC Consensus 18 provides guidance on the accounting of monies held in trust by a participating organisation of Bursa Malaysia Securities Berhad pursuant to the provisions of Capital Markets Services Act 2007 and the Bursa Securities Rules. For more information, go to Vilashini Ganespathy, head – technical and professional development, ACCA Malaysia

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Technical update

A monthly round-up of the latest developments in financial reporting, audit, tax and law INTERNATIONAL FINANCIAL INSTRUMENTS The International Accounting Standards Board (IASB) has produced a series of webcasts on financial instruments. The updates last one hour and require registration. For more information visit HEDGE ACCOUNTING Changes to IFRS 9, Financial Instruments, have been published by the IASB. The amendments and accompanying guidance relate to changes to general hedge accounting. The draft and guidance are available until early December, then the IASB will finalise the draft and issue the revised standard. The guidance contains useful examples, questions and answers on implementation and details of amendments to other IFRSs.The amendments can be found at http://tinyurl. com/8gwklt7 IFRS FOR SMES International changes and updates on IFRS for SMEs, including guidance for different-sized entities, information on country adoption and resources for small and mediumsized enterprises are available at IFRS-for-SMEs ILLEGAL ACTS The International Ethics Standards Board for Accountants (IESBA) has issued an exposure draft,

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Responding to a Suspected Illegal Act. The draft is open for comment until 15 December and IESBA intends to revise the ethical standards code in light of the comments it receives in the second half of 2013. The proposed changes highlighted in the draft are where professional accountants in practice or business override, or have a right to override, the fundamental principle of confidentiality and to disclose a suspected illegal act to an external authority. Go to publications-resources ISAES AT A GLANCE Two at-a-glance updates that will be useful when considering engagements over the next 12 months are: International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statements. The standard applies to assurance reports covering periods ending on or after 30 September 2013. ISAE 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus. The standard applies for assurance reports dated on or after 31 March 2013. The guides provide links to further information provided by the IAASB (International Auditing and Assurance Standards Board). For more information visit


* ISAS AND SMALLER AUDITS The IAASB is finalising its survey on ISAs and how they have been applied to smaller audits and is collating feedback. Its current work indicates that there are some benefits in terms of audit quality and the cost impact has been relatively small. Views differ as to whether changes need to be made to the standards to make them more suitable for smaller audits. The IAASB will be aggregating the UK results with those of other countries in the next few months. The findings from the SME survey will be combined with the input that is expected to be received on ISA implementation from firms, regulators, standard-setters and others and will be discussed by the IAASB in June 2013. REVIEW ENGAGEMENTS The IAASB has issued International Standard on Review Engagements 2400 (Revised), Engagements to Review Historical Financial Statements. The revised standard applies for periods ending on or after 31 December 2013. The standard deals with the practitioner’s responsibilities when engaged to perform a review of historical financial statements, when the practitioner is not the auditor of the entity’s

financial statements, and the form and content of the practitioner’s report on the financial statements. The standard contains useful illustrative information within the appendices including an illustrative engagement letter for an engagement to review historical financial statements and illustrative practitioners’ review reports. When applying the standard, practitioners will need to consider International Standard on Quality Control 1 (ISQC1). The standard states: Relationship with ISQC 1. Quality control systems, policies and procedures are the responsibility of the firm. ISQC 1 applies to firms of professional accountants in respect of a firm’s engagements to review financial statements. The provisions of this ISRE regarding quality control at the level of individual review engagements are premised on the basis that the firm is subject to ISQC 1 or requirements that are at least as demanding. The revised standard can be found at http://tinyurl. com/8tqf7xg


FIND THE STANDARDS You can find direct links to international accounting and auditing standards at: and http://tinyurl. com/8ptwg2l Glenn Collins, head of technical advisory, ACCA UK

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Accounting solutions In this month’s column, PwC authors answer technical questions on share purchase agreements, and on accounting for insurance policies


Entity A purchased 80% of entity B in 20x0. Under the share purchase agreement, entity A also has an option to acquire the residual 20% shareholding in 20x2 at fair value of entity B. How should entity A account for the option in 20x0 and the subsequent acquisition of the non-controlling interest? Entity A has a call option over the remaining 20% at the date of acquisition; it should therefore assess whether the risks and rewards in relation to this non-controlling interest in entity B have, in substance, also transferred to the group. If that is the case, entity A should account for the entire 100% as an acquisition. Options priced at fair value usually result in transfer of risks and rewards to the holder at the point of exercise only. There are no other relevant circumstances to consider in this case. As a result, the risks and rewards associated with the non-controlling shareholding are not deemed to be transferred to the group on acquisition of entity B, and entity A should account for the 20% as a noncontrolling interest in its consolidated financial statements. The call option does not meet the definition of a financial liability under IAS 32, Financial Instruments: Presentation, as it is within the control of the entity A. Although there is minimal initial investment and the contract will be settled at a future date, the value of the option does not change in response to an underlying financial variable; it does not therefore qualify as a derivative under IAS 39, Financial Instruments: Recognition and Measurement, para 9. In 20x2, if the option exercised, any difference between the consideration – that is, the fair value of the shares paid – and the carrying amount of the non-


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of the insurance policy is greater than the present value of the defined benefit obligation it will reimburse. The policy does not meet the definition of a qualifying insurance policy and therefore cannot be treated as a plan asset. However, the criteria for recognising the reimbursement right as an asset have been satisfied. How should the cost of the insurance policy and the difference in value from the related obligation be accounted for? As a reimbursement right, the insurance policy is recognised as a separate asset, rather than being deducted from the pension obligation to which it relates. In all other respects, this asset and any related income should be accounted for in the same way as plan assets (in accordance with IAS 19, Employee Benefits, para 104C and D). However, because the right to reimbursement exactly matches payments of a portion of the defined benefit obligation, the fair value of the reimbursement right is deemed to be the present value of that portion of the defined benefit obligation. Any difference between the cost of the insurance policy and the present value of the defined benefit obligation it is designed to reimburse should therefore be treated as an actuarial loss. This is independent of whether the insurance policy is purchased by the pension fund or by XYZ Ltd itself, because the policy meets the definition of a reimbursement right.


controlling interest is adjusted to entity A’s equity under IAS 27, Consolidated and Separate Financial Statements, para 31. The resulting cash outflow should be classified as a financing activity, as it represents a transaction with equity owners under IAS 7, Statement of Cashflows, para 42B.


XYZ Ltd buys an insurance policy to reimburse payments of a portion of its defined benefit pension obligation. Reimbursement under the insurance policy will exactly match the amount and timing of the benefits payable under the plan. The cost to the company

This month’s solutions were compiled by Imre Guba, Michelle Millar and Iain Selfridge of PwC’s Accounting Consulting Services


IFRS and US GAAP: Similarities and differences includes insight on recent and proposed guidance; detailed analysis of differences including an assessment of the impact; and a report on the US GAAP codification project. Visit

15/10/2012 14:42



A guide for the perplexed In the first of two articles, ACCA’s Roger Adams looks at recent innovations in the relentlessly expanding field of corporate reporting

The corporate reporting space has grown immensely more complex in recent years. Not only has the volume and complexity of financial reporting standards increased, but the way in which large organisations are reporting has itself changed and expanded. Corporate social responsibility (CSR) or sustainability reporting, narrative reporting and integrated reporting are just three of the new forms that accountants (and users of accounts) have to contend with and make sense of.

Bigger and bigger Over the past 20 or so years the scope and content of the legally required annual corporate reporting package has mushroomed. A listed company’s annual report and accounts package will now contain most, if not all, of the following elements: performance highlights (key performance indicators) chairman and CEO’s reports or statements a description of the company’s business model together with an explanation as to how it creates value a management commentary (or business review, management discussion and analysis or operating and financial review) an executive remuneration report corporate governance and risk disclosures the audited financials including the directors’ report (often merged into the management commentary or business review), the income statement, balance sheet, cashflow statement and notes to the accounts the auditors’ report.

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Many annual reports also contain a separate section dealing with corporate responsibility or sustainability.


A new era? As one might expect, the mandatory annual report and account package has traditionally been targeted at an investor or shareholder audience, and by and large this continues to be the case. Integrated reporting, which is discussed in more detail in the second part of this feature (to appear next month), continues to prioritise the investor as the key audience for the annual report and accounts. However, a feature of large company reporting since 1990 has been greater standalone voluntary non-financial reporting to a wider stakeholder circle. Pressure for companies to become more transparent about their relationships with their employees, the communities where they operate and their impact on the natural environment and society at large has come from a variety of sources: Regulation. Increasing levels of regulation cover aspects of the sustainability universe such as carbon emissions, health and safety performance and employee welfare. Regulation, however, tends to prompt specific disclosure rather than wide spectrum disclosure. Reputation and competition. Guarding against reputational risk is now recognised as a core issue in supporting brand value. Nongovernmental organisations, consumers and the media have been instrumental in turning the publicity spotlight on poor practices in areas as diverse as human rights, supply chain labour practices, environmental damage, lack of



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workforce diversity and, most recently, business ethics. Operational efficiency and cost savings. The regular publication of targets for improvement – in workforce relations and in resource use, for example – can act as a stimulant to continuous improvement. The benefits of cost reduction and improved operational efficiency programmes are often easier to capture with non-financial measures (such as eco-efficiency ratios) than in purely financial terms. Values and ethics. An increasing number of organisations seek to link their corporate value set to their long-term corporate strategy and business model. Macro trends. Governments, regulators, economists and environmentalists alike are concerned about the negative effects of ‘short termism’. The focus is increasingly on creating sustainable value for the future. Both business models and report content are changing to reflect this shift.

CSR and sustainability reporting From a zero base in 1990, the related practices of environmental, social and sustainability reporting – also known as CSR reporting or corporate responsibility reporting – have now established a firm foothold as mainstream reporting tools. According to KPMG’s International Survey of Corporate Responsibility Reporting 2011, reputational considerations continue to drive corporate responsibility reporting. Additionally, the benefits that can be

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The growing scope of reporting Since mid-1800s

Annual report and accounts

Since 1990


Since mid-1990s


Since 2000

Sustainability, CSR

Since 2010

Integrated reporting

derived from innovation and learning are rapidly gaining appreciation. Not only do 95% of the Global 250 now issue corporate responsibility reports (up from 83% in 2008 and 64% in 2005), but almost half report gaining financial value from their corporate responsibility programmes. A third of national top 100 companies report the same benefits. As the perceived importance of sustainability issues (such as climate change, water usage, diversity and so on) has grown, so too has the range of stakeholders to whom companies now feel obliged to report. And as the number of interested stakeholders increases, so too does the scope of non-financial corporate reporting (see table). As the bigger of the two tables on this page demonstrates, even non-financial reporting has its own subdivisions. The KPMG report declares: ‘Clearly, corporate responsibility reporting is now an essential requirement for any company hoping to be seen as a responsible corporate citizen. Innovation and learning, in particular, has consistently ranked highly as a driver for corporate responsibility

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The subdivisions within non-financial reporting

Social and environmental performance highlights

Annual report and accounts

Separate standalone report

Yes – along with financial highlights


Yes – highly truncated version of the CSR/ sustainability report Full CSR/sustainability report



People reporting

Yes – highlights from CSR/sustainability report

Yes – with detailed performance data

Climate change disclosures including greenhouse gas emissions statement



Water footprint statement

Yes – in time

Yes – in time

reporting over the past decade. This is indicative of the large number of companies that see corporate responsibility as a means to drive greater innovation through their businesses and products in order to create a discernible competitive advantage in the market.’ And a 2010 Accenture study, A New Era of Sustainability, found: 72% of CEOs cite ‘brand, trust and reputation’ as one of the top three factors pushing them on sustainability. Revenue growth and cost reduction is second with 44%. 86% of CEOs see ‘accurate valuation by investors of sustainability in long-term

investments’ as important in reaching a tipping point in sustainability. The second of these two findings is particularly important in ensuring that the investment community buys into the need to move to a longer time horizon for gauging the performance of their investments.


Roger Adams is ACCA’s director of special assignments


Next month: how to identify best practice in the new corporate reporting and whether the future of reporting lies in more fragmentation or some form of integration

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Answer questions about this article online Studying this article and answering the questions can count towards your verifiable CPD if you are following the unit route and the content is relevant to your development needs. One hour of learning equates to one unit of CPD

Hedge accounting: draft alert The IASB wants better links between an entity’s risk management activities, the rationale for hedging and the impact of hedging on the financial statements, says Graham Holt

IAS 39, Financial Instruments: Recognition and Measurement, sets out the requirements for recognising and measuring financial assets, and financial liabilities. Many users of financial statements felt that the requirements in IAS 39 were difficult to understand, apply and interpret. Thus, the International Accounting Standards Board (IASB) is developing a new standard for the financial reporting of financial instruments that is principle-based and less complex. The three main phases of the IASB’s project to replace IAS 39 are: A Phase 1: Classification and measurement of financial assets and financial liabilities. In November 2009, the IASB issued the chapters of IFRS 9, Financial Instruments, relating to the classification and measurement of financial assets followed by the requirements related to the classification and measurement of financial liabilities in October 2010. B Phase 2: Impairment methodology. The IASB is redeliberating the proposals issued in an exposure draft and the supplement to that draft to address the comments received from respondents. C Phase 3: Hedge accounting. On 7 September 2012, the IASB issued a draft of the general hedge accounting requirements that will be added to IFRS 9. In addition to the three phases above, in June 2010 the IASB decided to retain

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the existing requirements in IAS 39 for the derecognition of financial assets and financial liabilities but to finalise improved disclosure requirements, which were issued in October 2010 as an amendment to IFRS 7, Disclosures. The current rules on hedge accounting in IAS 39 have frustrated many preparers, as the requirements are not really linked to common risk management practices. The detailed rules have at times made achieving hedge accounting impossible or very costly, even when the hedge was an economically rational risk management strategy. The IASB wishes to provide better links between an entity’s risk management activities, the rationale for hedging and the impact of hedging on the financial statements.

Principle-based approach The requirements also establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the hedge accounting model in IAS 39. However, the IASB has made some significant changes to certain aspects of the proposals contained in the draft that was issued in December 2010. The proposals do not fundamentally change the current types of hedging relationships, or the current requirement to measure and recognise ineffectiveness; however, the proposals mean that more hedging strategies used for risk management would qualify for hedge accounting.

The draft relaxes the requirements for hedge effectiveness assessment and consequently the eligibility for hedge accounting. Under IAS 39, a hedge must be expected to be highly effective both at inception and on an ongoing basis. Subsequently, the entity must demonstrate that the hedge has been highly effective. ‘Highly effective’ is defined as a quantitative test of 80% to 125% under IAS 39. Under the draft, more judgment is needed to assess the effectiveness of the hedging relationship. A hedging relationship would need to be effective at inception and on an ongoing basis, and would be subject to a qualitative or quantitative, forward-looking effectiveness assessment. The following requirements need to be met: 1 an economic relationship must exist between the hedging instrument and the hedged item 2 the effect of credit risk must not dominate the value changes that result from that economic relationship 3 a hedge ratio must reflect the relationship between the quantities of the hedged item and hedging instrument used by the entity for its risk management purposes 4 an entity cannot intentionally weight the hedging instrument or hedged item to achieve an accounting outcome inconsistent with the purpose of hedge accounting. The first requirement means that the

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hedging instrument and the hedged item must be expected to move in opposite directions because of a change in the hedged risk such that there is causality and not just correlation between the items. Perfect correlation between the hedged item and the hedging instrument is not required and is not sufficient, as there must be an economic relationship. For example, there are different prices quoted for oil. These include the prices of West Texas Intermediate (WTI) crude oil and Brent crude. The former reflects the price at Cushing, Oklahoma, and nexus for the delivery of American and Canadian crudes and the latter reflects the price of North Sea oil. Therefore, it would be possible to hedge a Brent crude exposure with a WTI derivative. The second requirement means that the impact of changes in credit risk should not be of a magnitude such that it dominates the value changes, even if there is an economic relationship between the hedged item and hedging derivative, and the third requirement indicates that the actual hedge ratio used for accounting should be the same as that used for risk management purposes, unless the ratio is inconsistent with the purpose of hedge accounting. The IASB appears to be specifically concerned with deliberate under-hedging, which either minimises the recognition of ineffectiveness in cashflow hedges or creates additional fair value

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adjustments to the hedged item in fair value hedges. The draft includes a number of changes to the definition of a hedged item. Risk components of non-financial items can be designated as a hedged item provided the risk component is separately identifiable and reliably measurable. The draft retains the principle for financial and non-financial risk components to be separately identifiable and reliably measurable and this must be assessed within the context of the particular ‘market structure’. However, ‘market structure’ is not defined. It does not follow that, if there is a derivative instrument on aluminium and aluminium components are used in manufacturing cars, that aluminium is an eligible risk component in a hedge of car component purchases. There is probably a need to see how aluminium car components are priced in the market and how this relates to the price of aluminium. The draft now includes a rebuttable presumption that non-contractually specified inflation risk will not usually be an eligible component of a financial instrument. Two scenarios are set out in the draft, one of which indicates that an inflation risk component is eligible for hedge accounting and another in which it is not. Entities can hedge non-financial items for a price risk, for example, a commodity price risk that is only a

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component of the overall price risk of the item. This is currently prohibited under IAS 39. The draft also makes the hedging of certain groups of items more flexible. A group of items, including a group of items that constitute a net position, may be a hedged item under the proposals if: 1 it consists of items that are eligible hedged items 2 the items in the group are managed

An entity is not allowed to voluntarily terminate a hedging relationship that continues to meet its risk management objective and all other qualifying criteria. However, the draft has retained the requirement for rebalancing to be undertaken if the risk management objective remains the same, but the hedge effectiveness requirements are no longer met. Normally, accounting rebalancing will only be undertaken when adjustments

THE DRAFT HAS RETAINED THE REQUIREMENT FOR REBALANCING TO BE UNDERTAKEN IF THE RISK MANAGEMENT OBJECTIVE REMAINS THE SAME together on a group basis for risk management purposes. The draft makes the hedging of groups of items more flexible, although it does not cover macro hedging which will be the subject of a separate document. Entities commonly group similar risk exposures and hedge only the net position, which could be the net of forecast purchases and sales of foreign currency. Under IAS 39, a net position cannot be designated as the hedged item. The draft permits such hedging strategies if the entity hedges on a net basis for risk management purposes. However, if the hedged net position consists of forecasted transactions in a cashflow hedge, hedge accounting on a net basis is only available for foreign currency hedges.

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are made to the actual quantities used for risk management purposes unless deliberate and inappropriate action is undertaken to achieve an accounting result that is inconsistent with the purpose of hedge accounting. The proposals on discontinuation have not changed but further guidance is given on how to distinguish between an entity’s risk management strategy and its risk management objective. Risk management strategy is established at the highest level and could include some flexibility to react to changes in circumstances without requiring a new strategy. The risk management objective is applied at the particular hedge relationship level. The draft retains the current IAS 39 requirements for fair value hedge

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accounting. However, the fair value option in IFRS 9 is extended to contracts that can be settled net in cash and meet the exception whereby applying fair value accounting eliminates or significantly reduces an accounting mismatch. Additionally, the draft would permit certain credit exposures to be designated at fair value through profit or loss if a credit derivative that is measured at fair value through profit or loss is used to manage the credit risk of all, or a part of, the exposure on a fair value basis. Some industries, such as banking and insurance, may see the proposals as of less importance than the IASB’s forthcoming macro-hedging paper, but sectors with substantial commodityrelated risk such as airlines and manufacturers will welcome the opportunities provided. The new proposals are likely to benefit nonfinancial services entities which can hedge clearly defined individual risk items. However, the guidance remains complex in some areas and to comply companies may need to apply a greater degree of judgment. A principle-based approach requires additional disclosures to users of how a company is managing risk. Graham Holt is an examiner for ACCA, and associate dean and head of the accounting, finance and economics department at Manchester Metropolitan University Business School

12/10/2012 17:03



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Managing strategy In the fourth article in our strategy series, Dr Tony Grundy shows how strategy needs to be managed as a living process and how to deal with implementation In this fourth article we look at how strategy is a living process and not just an organisational routine. But first to recap: In the first article, we looked at what strategy really is and how its processes and language need to be kept simple and clear. Some key terms were explained and differentiated, such as strategy, options, objectives, mission and vision, and in the second article we also defined competitive advantage too. We also explained that strategic thinking was a much more fluid and creative process than more operational thinking. We also defined strategy in three ways. First, analytical: moving from the current position to future goals; second, creative: the ‘cunning plan’; and third, aspirational and visionary: ‘what we really, really want’. All definitions add value. In the second article we explained how important the external




environment was – particularly how important the competitive forces were for impacting on margins and returns. We also explained how competitive advantage had an equally important impact too. These competitive variables all change over time, resulting in a need to adapt the strategy, as we saw in the Bikram yoga case. In the third article we looked at how we could be more creative and indeed cunning in our generation and evaluation of options, with the Octopus and the Option Grid –techniques used to develop successful strategies at major corporations like Diageo and Tesco. We now look at how this can be applied as a process and particularly how to deal with implementation. Strategy needs to be managed as a staged process – see table, below. Here we see that the first stage is one of diagnosing the current position – quite


separate from that of option generation. This separation is crucial, as otherwise managers will be trying to do too many disparate things – analytical and creative – all at the same time; the result being a mess. We then select from those options a small number of options – maybe as little as three – that are true ‘strategic breakthroughs’ to implement in this period, or ‘strategic decisions that will have a major impact on competitive position or capability or both, and on financial performance’. If these breakthroughs are too numerous, then there will be a lack critical mass of resources, effort and attention. We might thus have to say ‘no’ to options even with good scores. Saying ‘no’ is good. Strategy is about concentration. Implementation is a separate cycle of strategic thinking (stage four) where we are scoping strategic projects, doing detailed planning, business cases, the financials, planning change,

Strategic planning process Current position

* SWOT * PEST forces * Five Vision and * objectives * Competitive bench-marking

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Future options

plan/ * Cunning checklists analysis * GAP Strategic * option grid

Strategic breakthroughs


and cost * Value drivers

over * Difficulty time

Control and learning

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Answer questions about this article online Studying this article and answering the questions can count towards your verifiable CPD if you are following the unit route and the content is relevant to your development needs. One hour of learning equates to one unit of CPD

gaining support and mobilising. This is still the land of strategic thinking. The final stage, control and learning, is not just about monitoring the operational and financial metrics, but also progress against strategic milestones. The accountant should play a very big part in this to ensure that it doesn’t get too tactical. This is also a learning process too, so we are reflecting on what is/isn’t working in implementation and why, and adjusting it, and also continuing to learn about our changing environment. This is a very organic, living process and this may not work well if there is too much emphasis on metrics and control. The first stage tools were addressed

strategic milestones * appropriate and metrics frameworks in place implementation techniques * strategy used well. Strategic breakthroughs, like entering a new market or a new distribution channel, are complex and may impact different parts of the organisation. They must, therefore, be project managed and this may mean that instead of relying on busy operational managers to do it, that some managers are full-time project managers instead. Project managing business projects, especially those involving a lot of change, is a different thing to managing technical projects, and demands a more fluid approach.

STRATEGIC BREAKTHROUGHS, LIKE ENTERING A NEW MARKET, ARE COMPLEX AND MAY IMPACT DIFFERENT PARTS OF THE ORGANISATION in the first and second articles. Turning to the third, implementation, be warned that this is often the graveyard of strategy. Here: performance = quality of strategy x quality of implementation x timing. This explains why if we mess up implementation, the result can be so poor. Timing is also very important too, as the external and internal timings need to be right, so some strategies might get accelerated and some delayed. To get implementation right requires the following: project managing of strategic breakthroughs robust business cases change management issues thought through and managed

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There is a lot more work on business cases and on the broader long-term financial projections of revenues and costs. This involves looking at the value and cost drivers of each of these, the key assumptions, and evaluating these qualitatively and quantitatively, and producing influential and resilient business cases and incremental cash flows by strategic project. This is interesting work for the accountant. Change management can be addressed by taking the key shifts between the present and the future and doing an extended ‘gap analysis’ of these, or ‘from-to’ analysis. Here we split out the key shifts of ‘from-to’s’ and score how far from the old to the new we are, perhaps on a

1-to-10 scale. We can use a cut-down ‘seven S’ model, or by analysing the key shifts as: strategy systems skills structure style. All the usual softer issues also need to be thought through in terms of buy-in, culture change, structure change, team building/rebuilding, etc. It is well known that in a major change some individuals and teams will move through the transition phases of change at different speeds and, in the course of this, performance can dip (the ‘transition curve’). This effect is magnified if done badly – for example if an acquisition is integrated badly. Where the change is severe due to the difficulties of the business – a ‘strategic turnaround’ – then this puts more pressure on the strategy development and implementation process. Leadership needs then to be both commercially and strategically astute, and also charismatic. Where there is inappropriate leadership, strategy will get bogged down no matter how good the process is. In terms of controls, it is important that besides the conventional financials and efficiency metrics (and customer satisfaction ones) that we find in a ‘balanced score card’, that we also include more outward-looking, dynamic and less tactical ones too, such as: relative market share customer ratings compared with those of key competitors strategic breakthrough milestones achieved long-term economic value actually generated (‘economic value added’

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is the net present value of net cashflow in the business). Finally a number of strategy implementation tools can be deployed, including: the option grid (see third article) to evaluate and prioritise different ways of implementing a strategy, and also individual strategic projects, both before and after the extended ‘gap analysis’ in the form of ‘from-to’ analysis, as we saw earlier, perhaps with the cut-down seven Ss value and cost driver analysis, see last article the ‘difficulty over time curve’, see below. When evaluating implementation difficulty – both to go behind the box in the strategic option grid and also within the detailed planning of the breakthroughs – there are a number of tools. One of these, ‘force field’ analysis, which splits out and evaluates the key enablers and constraints, is very good and is worth a look. Here one does a vector picture to evaluate how impactful the positive and negative forces are likely to be – on the basis of your most cunning implementation plan. Then you look at the overall picture of vector arrows up and down: if they are mainly down it tells you that you will have a very rough ride. A simpler and far more dynamic tool is just to attempt to picture how difficult you envisage the implementation to be over time, given your most cunning implementation plan. Ideally you would also do a force field to support that. Moving on we now have some very useful tips to make the process living

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and easier. We mentioned project management and this should kick in at the start. The first stage of the process should be to do a ‘plan for the plan’. This is an area where you the accountant should be very much be involved. A ‘plan for the plan’ is defined as ‘a detailed document of the optimal stage-by-stage process which deals specifically with the strategic issues faced in a creative, incisive and robust way, and that produces appropriate insights and outputs of maximum value’. A plan for the plan typically contains: a list of the key strategic issues a very high-level view of the likely gap analysis to get an idea of the stretch some separate first-stage planning activities (‘planning modules’), such as market analysis, customer value analysis, technology change, competitor analysis, process development, organisation development, cost management second-stage activities, such as strategic options workshop, board integration workshop, change management, communication, controls and metrics timings and time absorbed.


Each one of these might have as a one-pager: outputs process and tools inputs (data, etc) interdependencies with other modules people, timings and facilities. The accountant can play a big role in planning this. A second area of input for the accountant is in writing ‘strategic position papers’ or ‘documents which diagnose the current position and explore options for a particular area or more generally without reaching definitive conclusions’. The aims of these are to generate a rich debate of the issues before making resource and other decisions, to provide input to the final strategic plan, to build commitment and to influence key stakeholders. A spin-off is that the eventual plan is often very much like the position paper material – the latter is certainly much quicker to write. In conclusion, we are now in good shape for the final article on ‘strategy and the finance function’.


Dr Tony Grundy is an independent consultant and trainer and lectures at Henley Business School in the UK,

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Securing your place [

Once you’ve decided to take the plunge and do a master’s degree, you need to give plenty of thought to your CV, your personal brand and your approach if you want to get past the admissions committee

In the June issue, we looked at the burgeoning popularity of online master’s degrees, with a time-poor workforce eager to do whatever it can for an edge in the fight to get and keep the best jobs. However, you can’t simply walk into a master’s course – you have to be accepted. And acceptance is based on more than just financial viability. Applying for a master’s can be a lengthy and complex process and there are many steps to the application process, so start early and leave yourself plenty of time. The first thing to do is visit the websites of schools with MBA and MSc programmes to which you would like to apply and make sure that you actually qualify. Most schools will have a minimum requirement. As a qualified ACCA you may have some exemptions or access to an accelerated route. After you have made sure that you meet the minimum requirements to apply for the MBA programme, the next step is to take a look at the application procedures outlined on the business school’s website. They may all vary from school to school but there are some boxes that all course providers will expect you to tick. You will need references. Choose them wisely; pick people with whom you have worked closely, either academically or professionally, and who can thoroughly endorse your ability to excel at a master’s. People who can give specific examples of your work habits and accomplishments are the best providers of references. In this day and age most people keep their CVs reasonably up to date, but it’s important that you give it a complete overhaul if necessary. There are an eye-watering number of ‘helpful’ websites and companies that will happily tell you how to create the

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‘perfect CV’ and it’s easy to get overwhelmed. Pick up tips from LinkedIn contacts with an impressive CV – it’s free to do so and just as good as any online templates.

Create your own brand Most MBA programmes require applicants to write an essay or personal statement. This is your chance to say why you are applying for an MBA and how you want to use your education in the future. It’s also a chance to show the admissions department a bit of your personality. Something Stacy Blackman, CEO of Stacy Blackman Consulting and MBA blogger, advocates is articulating a unique and compelling brand image. ‘Coming up with your personal brand is not always easy,’ she admits. ‘We try to simplify the process by boiling it down

to a few steps, as follows. ‘Write down a ton of information about yourself – personal stories, interests, talents, hobbies, activities, and traditions. Do it quickly and don’t worry too much about the content; we call this the “brag sheet”. ‘Evaluate your list and come up with recurring themes, such as ethics, teamwork, environmental concerns and international travel. The possibilities are endless. ‘Once you have three to five themes, you have your unique brand. Convey it to the admissions committee through concrete stories from your background.’

A bespoke application Where you are in your career will also make a difference to how you should apply to do a master’s. ‘If you are a young applicant, consider your



‘I was looking for a way to develop to the next stage, and decided that the MBA was a great way of doing this,’ says Andrew Donnelly. ‘I researched courses and routes, but the Oxford Brookes global MBA for ACCA members offered the greatest breadth of experience.’ As a member, he was able to take the accelerated route, which was another key deciding factor. Being dyslexic, he had not gained any great academic qualifications. ‘Later in life I qualified as an accountant, but my real fear was being able to deliver the quality of work required. I overcame this by having confidence in myself and ensuring I asked the very obliging tutors questions whenever I wasn’t sure about a topic.’ Donnelly has a hectic job and home life which he says makes it difficult to create a fixed study schedule. However, he adds: ‘Studying online has been great for me as it allows me to fit the study in when I can. Being able to log on wherever you are is such a great benefit – and in fact I did the first part of the MBA on a cruise ship while on holiday! However, you do need to be disciplined to meet the deadlines, because if you are not logging on regularly and checking the progress of seminars, you can fall behind.’ His advice to those considering an MBA is to research it thoroughly first. ‘You should also review the syllabus and match it against your aspirations and interests. Enjoying the topic makes reading and studying so much easier.’

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‘STUDYING ONLINE HAS BEEN GREAT FOR ME AS IT ALLOWS ME TO FIT THE STUDY IN WHEN I CAN. BEING ABLE TO LOG ON WHEREVER YOU ARE IS SUCH A GREAT BENEFIT’ maturity, your career focus and the perspective and experience you can contribute to classroom discussion,’ advises Blackman. ‘Leadership, vision and confidence are just some of the qualities that will be required and scrutinised by the admissions committee. If you begin drafting essays or reflecting on your experiences and come up empty, an extra year or two may serve you well.’ Likewise, if you are a more mature candidate, your application will be examined in different ways. ‘If you graduated 10 or more years ago, you need to show concrete career progression and real leadership,’ Blackman continues. ‘Admissions committees will want to see a track record of success, and clearly understand your motivation for returning to school at this later stage.’

Digital clean-up Finally, after applying to whichever schools you think suit you best, turn your attention to information they can find out about you which may not be on the application form. As more employers and educational establishments use online professional networks to research individuals who approach them, make sure your online presence reflects the professional image you need to present. If you allow complete access to your Facebook profile, now may be the time to change your settings to restrict access. Beth Holmes, journalist

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Compact considerations ACCA recently signed up to the UN Global Compact. ACCA’s Roger Adams and Gordon Hewitt explain why, and look at whether it could be right for your organisation In July 2012, following the Rio+20 United Nations Conference on Sustainable Development, ACCA announced that it has become a member of the United Nations Global Compact (UNGC). What is the Global Compact and what are its objectives? The UNGC was launched in July 2000 with the aim of promoting the development, implementation and disclosure of responsible and sustainable corporate policies and practices. It is defined as ‘a strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption’. The 10 principles are summarised in the box opposite. Signatories make a commitment to incorporate the 10 principles into their operations. Business participants are required to communicate the steps taken to do this via an annual Communication on Progress (COP), a public disclosure to stakeholders (eg investors, consumers, civil society and governments). As a non-business participant, ACCA is not required to issue a COP but is encouraged to do so by UNGC as the requirement serves a number of important purposes, including advancing transparency and accountability; driving continuous performance improvement; safeguarding the integrity of the UNGC and the UN; and helping to build a growing repository of corporate practices to promote dialogue and learning. Who are the other members? Currently there is a formidable array of more than 8,700 corporate

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‘THE OBJECTIVES OF THE GLOBAL COMPACT CLOSELY MATCH OUR OWN CORPORATE VALUES’ HELEN BRAND, ACCA CHIEF EXECUTIVE participants and other stakeholders from more than 130 countries, making it the largest voluntary corporate responsibility initiative in the world. Participants include leading international companies, service providers, partnerships and professional bodies, including many key ACCA partners. Why has ACCA decided to become a member? By signing up, ACCA is demonstrating an active commitment to upholding its core values, as well as underlining our longstanding support for sustainable business. It brings ACCA into line with many leading companies and organisations, and increases the opportunities for more partnerships with both private and public sector organisations. Membership fits well with our historical support for initiatives such as the Global Reporting Initiative, the UNCTAD/UNGC Sustainable Stock Exchanges programmes and the agenda of the International Integrated Reporting Council. ACCA chief executive Helen Brand says: ‘Becoming a member of the UN Global Compact is a logical step for ACCA. The objectives of the Global Compact closely match our own corporate values. Our commitment to ethics and professionalism, married to our long-term support for the wider sustainability agenda and our numerous partnerships in the corporate responsibility arena, together demonstrate our willingness to both serve the public interest and contribute

to the continuous improvement of the way in which business is conducted in all sectors of the global economy.’ What does membership mean for ACCA in terms of governance, monitoring and reporting? In terms of a corporate commitment, ACCA will be expected to: 1 make the Global Compact and its principles an integral part of business strategy, day-to-day operations and organisational culture 2 incorporate the Global Compact and its principles into the decisionmaking processes of the highestlevel governance body (ie Council and the executive team) 3 contribute to broad development objectives (including the Millennium Development Goals) through partnerships and 4 advance the Global Compact and the case for responsible business practices through advocacy and active outreach to peers, partners, clients, consumers and the public. Why should other organisations consider joining? Private sector organisations and public sector bodies will have different motivations for subscribing to the objectives of the Global Compact. These will include: direct association with the UN from a pure brand perspective demonstration of a corporate responsibility leadership position at the sector/national level accessing a UN-driven enabler of closer relationships with

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governments and non-governmental organisations enhanced feed-through to users of sustainability/integrated reporting exercises evidencing a strong commitment to corporate governance – reassurance for the growing body of environmental, social and governance (ESG)-driven investors. The benefits also include: adopting an established and globally recognised policy framework for the development, implementation and disclosure of ESG policies and practices sharing best and emerging practices to advance practical solutions and strategies to common challenges advancing sustainability solutions in partnership with a range of stakeholders, including UN agencies, governments, civil society, labour and other non-business interests linking business units and subsidiaries across the value chain with the Global Compact’s Local Networks around the world – many in developing and emerging markets accessing the UN’s extensive knowledge of and experience with sustainability and development issues utilising UNGC management tools and resources, and the opportunity to engage in specialised workstreams in the ESG realms.

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What impact has the compact had and where is it heading next? NGC membership hit 8,700 in 2012 and executive director George Kell has ambitions to reach 20,000 by 2020. Impressive as these numbers seem, it is worth bearing in mind the conclusions of the UNGC Corporate Sustainability Forum, held in Rio directly before the Rio+20 conference, that ‘despite progress, corporate

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sustainability has not penetrated the majority of companies around the world, nor have we seen the depth of action needed to address the most pressing challenges. To reach scale, economic incentive structures must be realigned so that sustainability is valued and profitable.’ ACCA believes that, via the embedding of our corporate values, through our investment in a wideranging corporate social responsibility programme and through our programmes designed to allow

employees and others to ‘speak up’, we are well placed to play our part in taking the UNGC agenda forward. ACCA believes that the basic premise of the UNGC is sound and looks forward to playing a full role in assisting in the achievement of its core objectives. At the same time we also hope to benefit from the shared learning and development resources and possibilities which lie at the heart of the UNGC process. Roger Adams is director – special assignments and Gordon Hewitt is sustainability adviser, ACCA


1 Businesses should support and respect the protection of internationally proclaimed human rights and 2 make sure that they are not complicit in human rights abuses

Labour 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining, 4 the elimination of all forms of forced and compulsory labour, 5 the effective abolition of child labour and 6 the elimination of discrimination in respect of employment and occupation

Environment 7 Businesses should support a precautionary approach to environmental challenges, 8 undertake initiatives to promote greater environmental responsibility and 9 encourage the development and diffusion of environmentally friendly technologies

Anti-corruption 10 Businesses should work against corruption in all its forms, including extortion and bribery

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Submit your CPD declaration By submitting your CPD declaration as part of your membership, you are demonstrating your commitment to professional development to your peers and employers Your annual CPD declaration for 2012 is due for submission to ACCA by 1 January 2013. Submit it online now or at any point until the end of the year by logging into myACCA. As a professional body, our members define who we are – you represent ACCA to the world. We’re proud to have you among us and that you carry the ACCA designatory letters. It is these letters that distinguish you and show your commitment to professional development and ethics to your peers and employers.

podcasts, online seminars, research and qualifications from our partners.

More CPD than you think You might think you haven’t completed enough CPD for the year, but each year we find that members are doing

Do I need to prove it? You do not need to send in supporting evidence with your annual CPD declaration – this process is just to confirm that you have maintained your professional development. However, you should keep your CPD evidence for three years in case you are selected for a CPD review.

Calling all members To maintain this high value of ACCA membership, each year we ask all members to declare their commitment to professional development, regardless of their particular development route. The declaration process is very simple and takes no more than five minutes to complete.

What if I haven’t done any learning? The annual CPD declaration has two options: select Option A to show that you have completed your CPD or Option B if you have not. CPD is a membership requirement, so if you indicate that you have not met the requirements we will contact you with further advice on how to do so.

How to declare? The easiest way to declare is online by logging into myACCA via the ACCA website at www.accaglobal. com – 77% of members are already using this method.

For further information

Last-minute learning? There are still plenty of learning opportunities available if you need to complete your CPD requirement for 2012. My Development is a dedicated CPD area of the ACCA website where you can source relevant learning for your CPD. My Development provides a one-stop shop for articles, e-learning,

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learned is relevant to your career and you can explain how you have applied the learning, you can claim it as verifiable CPD. For further information and to check the requirements of each route go to:

more CPD than they realise. Think about what you have learned this year that is relevant to your role – did you undergo training on a new software or research a topic area specifically for a new client? There are many ways to learn and as long as what you’ve

We have published detailed instructions on our CPD policy at If you are facing difficulties with CPD please contact ACCA as soon as possible, as you may have completed the requirement – or be eligible for a different route or a waiver – without realising it.

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61 YOUR ANNUAL SUBSCRIPTION NOTICE AND CPD DECLARATION HAVE BEEN POSTED TO YOU... But you don’t have to wait to receive them. The quickest and simplest way to pay fees and submit a CPD declaration is through your online account at myACCA. Remember annual subscription fees and CPD declarations must be received by ACCA on or before 1 January 2013.

ACCA – the global body for professional accountants

Your professional development is important to us. To help you maintain your competitive edge we are proud to introduce ACCA’s new learning hub – My Development. It is designed to be the central access point for all your learning and help you meet your CPD requirement as well as progress in your career. You can find local faceto-face events, technical articles, e-learning and lots more.

Visit My Development today at

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11/10/2012 13:42


ACCA news

LEARNING PARTNERS’ CONFERENCE 2012 Around 100 educationists from the public and private sectors gathered together with employers at the ACCA Learning Partners’ Conference in September. The theme was the rise of e-professionals and discussions focused on the challenges and benefits of embracing learning technologies that create work-ready staff for the accountancy profession. Discussions were led by panellists Dr Khong Yoon Loong, vice chancellor at KDU University College, Jason Crimson, Asia-Pacific shared services director at personal care company Kimberly-Clark, and Matsham Ahmad, director of Malaysia Practice Enterprise Centre (MyPEC); and moderated by ACCA country head Jennifer Lopez. The panellists quickly agreed that a serious gap exists between the classroom and industry that must be addressed. Khong suggested the first step in addressing the gap was understanding the new generation. ‘The key is to accept, adapt and adjust,’ he said. ‘Even as technology has completely changed our own lives today, we have to understand that it will further change the lives of the next generation. ‘Instead of looking at this scenario as a threat, think of the opportunities. It is us who have to change because the next generation will not.’

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Speaking from an industry perspective, Jason Crimson observed that companies must adapt to a more virtual environment if they are to pursue business opportunities. ‘We find that there is a lack in graduates where application is concerned,’ he said ‘Theoretical knowledge of technology is not enough; they should also be familiar with technology and know-how to work with the systems by the time they enter the workforce.’ But it will not be easy to correct the problem given the new generation’s skewed perception of work. ‘While the new generation enjoys using emerging technologies, this sense of fun is not transferred when they are at work. Educators must help to change the students’ perception… educate them that technology is an enabler of success,’ said Crimson. The panel further concluded that industry practitioners must work in partnership with educational institutions to bridge the gap between academic and industry expectations, and provide a platform for young Malaysian talents to realise fulfilling careers. The rise of e-professionals was debated by (L to R) Dr Khong Yoon Loong, vice chancellor at KDU University College; ACCA country head Jennifer Lopez; Jason Crimson, Asia-Pacific shared services director at Kimberly-Clark; Matsham Ahmad, director of Malaysia Practice Enterprise Centre (MyPEC)

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(L to R) Soo Hoo Khoon Yean, PwC Malaysia partner; Siew Chin Kiang, KPMG partner; Jennifer Lopez, ACCA Malaysia country head; Datuk Wan Selamah, accountant general of Malaysia; Professor Dr Rozainun Abdul Aziz, Universiti Teknologi Mara accountancy faculty dean; Dato’ Gan Ah Tee, managing partner of BDO Malaysia; and Nik Mohd Hasyudeen Yusoff, executive director of the Audit Oversight Board

ACCA’S AIDILFITRI GATHERING ACCA held an open house reception in September in celebration of the Hari Raya Aidilfitri festival. Around 200 business partners and associates attended this social gathering that recognised their enduring relationships with ACCA. Guests included top executives from PwC, Ernst & Young, KPMG, BDO Malaysia, the Malaysian Institute of Accountants, and the Securities Commission Malaysia. ACCA also had the pleasure of welcoming Datuk Wan Selamah binti Wan Sulaiman, accountant general in the Accountant General’s Department of Malaysia, Dato’ Lukman Ibrahim, deputy CEO of Proton Holdings and member of the ACCA Malaysia Advisory Committee and Nik Mohd Hasyudeen Yusoff, executive director of the Audit Oversight Board.

ACCA Malaysia recently organised a series of member receptions in Ipoh, Bintulu, Sibu and Kuantan. Held throughout September, these annual gatherings welcomed around 100 ACCA members. For most, these receptions were an opportunity to catch up with old friends and meet new ones in an ever-growing network of support. Members learned of upcoming initiatives by ACCA, in particular, the various online CPD learning opportunities and ACCA’s virtual conference, which will gather together like-minded professionals from all over the world. Thank you to Chew Pete Cheung, Victor Loh, Thomas Tang and Wong Seng Chong, ACCA network chairmen in Ipoh, Bintulu, Sibu and Kuantan respectively, for their help in making these annual receptions a success. Wong Seng Chong (L), member network chairman for Kuantan welcoming new ACCA member, Loo Ying Hui ACCA ACCA members in Ipoh (middle) ACCA members in Sibu (bottom)

(L to R) Seri Idawaty, ACCA Malaysia’s head of student support; Lee Sik Weng, director at HELP College of Arts and Technology; Clement Dass, ACCA’s executive – student support; Celina Chai, senior manager at HELP College of Arts and Technology; Jessie Chua, programme coordinator at HELP College of Arts and Technology; Jane Chiong, ACCA professional development manager; and Dorothy Deo, ACCA technical manager

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11/10/2012 12:14



Strength in numbers [

ACCA’s Accounting for the Future event, held last month, highlighted the benefits of our wide global network, says Devanesan Evanson

ACCA held one of its biggest events last month – Accounting For The Future. During the five-day event finance professionals from across the globe explored the role we play in building a stronger and sustainable global economy. ACCA members are familiar with this annual initiative which connects finance professionals around the globe by means of live webinars and on-demand sessions; additional events took place in the UK, Ireland, South Africa, China, Hong Kong and, of course, Malaysia. This year, I am pleased to note that 10,000 professionals worldwide participated. Throughout the event, extensive discussions were initiated to identify and manage risks; explore the trends and developments in social and environmental accountancy and the future of corporate reporting; and uncover ways to operate in a green economy. Most of the topics covered have always been on our agenda, and continue to be of importance to the accountants of tomorrow. With 154,000 members worldwide, ACCA champions the value of connecting our members and has harnessed the latest technology to make this possible. This year’s massive gathering of professionals goes to show that our accountancy and finance professionals have a strong network of support available to them. This strength in numbers was again witnessed at the ACCA Malaysia Annual Conference 2012, which was held concurrently with Accounting For The Future and saw a lively discussion about the future roles of accountants in an increasingly uncertain global economy. Out of all the discussions, one fact received no debate – that our roles as accountants today are no longer the same as that of the past. As practising professional accountants, our responsibilities are heavy. In fact, organisations are recognising that many of the issues at the top of the corporate agenda lie squarely within the finance professional’s expertise. From dealing with access to finance and knowing how to strengthen the balance sheet, to having an overview of the entire operations of a business entity, finance professionals are excellently positioned. Consequently, there is an intrinsic need for finance professionals to be at the forefront of business and finance matters. One way of being so equipped is by ensuring that our knowledge and skills are always challenged and bettered. ACCA members should view Accounting for the Future and all upcoming online seminars as an opportunity to access ACCA’s latest research and insights, learn from industry experts, earn continuing professional development points and connect with your peers globally. Simply go to research-insights to get started. Continuous improvement and development is at the heart of ACCA’s values. Opportunities are aplenty for ACCA members to be involved in important discussions that affect our profession, organisation and country. I urge everyone to participate and be an influential contributor to your future. Devanesan Evanson is president of the ACCA Malaysia Advisory Committee

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107th AGM: 20 September 2012 The AGM was held at 29 Lincoln’s Inn Fields, London, W2, and 48 members were present 1 NOTICE AND AUDITOR’S REPORT The notice of meeting and the auditor’s report on the accounts for the period 1 April 2011 to 31 March 2012 were taken as read. 2 THE MINUTES The minutes of the AGM held on 15 September 2011 and published in the November 2011 issue of Accounting and Business were taken as read, and signed as correct. 3 RESOLUTION 1 Adoption of the report of the Council and the accounts for the period 1 April 2011 to 31 March 2012. Chairman Dean Westcott (ACCA president) gave his presidential address and asked chief executive Helen Brand to give a presentation. He then invited questions and comments on the Report and Accounts. He drew members’ attention to the statement which had been circulated and which showed that valid proxy votes had been cast in respect of Resolution 1 as follows: for 3,411, against 44. The president then put the resolution to the meeting and,

on a show of hands, declared it carried, the votes being cast as follows: for 36, against 0. 4 RESULT OF THE BALLOT FOR THE ELECTION OF MEMBERS TO COUNCIL The scrutineer’s report and the number of votes received by each candidate in the ballot for the election of members of Council were reported, as follows: Orla Collins 3,394; Dean Westcott 3,280; Brian McEnery 3,045; Julie Holderness 2,893; Robert Stenhouse 2,875; Jenny Gu 2,678; Leo Lee 2,592; James Lee 2,525; Gustaw Duda 2,423; Belinda Young 2,377; Raphael Joseph 2,375; Andi Lonnen 2,145; Ronan Carrig 1,763; Frankie Ho 1,368; Azza Raslan 1,168; Shamreen Ashraf 1,084; Kwame Antwi-Boasiako 1,042; Aamer Allauddin 975; Billy Kang 924; Mubashir Dagia 891; Saad Maniar 815; Faisal Siddiqui 813; Jacques Fakhoury 786; Sham Mathura 725. The president, therefore, declared the

following members elected or reelected to Council: Orla Collins, Gustaw Duda, Jenny Gu, Julie Holderness, Raphael Joseph, James Lee, Leo Lee, Brian McEnery, Robert Stenhouse, Dean Westcott and Belinda Young. 5 RESOLUTION 3 Appointment of auditor The president reported that Council recommended that BDO LLP, chartered accountant and registered auditor, be reappointed as the association’s auditor. He then invited questions on Resolution 3. He drew members’ attention to the statement which had been circulated and which showed that valid proxy votes had been cast in respect of Resolution 3 as follows: for 3,281, against 175. He then put the resolution to the meeting and, on a show of hands, declared it carried, the votes being cast as follows: for 33, against 1. The president thanked members for their attendance and declared the meeting closed at 2.15pm.


Pakistan and Sri Lanka. Council agreed to appoint Frances Walker and Rosalind Wright as lay members of the ACCA Regulatory Board with effect from September 2012 and to appoint David Thomas as a lay member in September 2013. The Regulatory Board comprises a majority of lay members and is chaired by a qualified lawyer. Council then held its Annual Meeting on the afternoon of Thursday 20 September, following ACCA’s 107th AGM. Members voting at the AGM gave overwhelming support to the various resolutions before the meeting. The minutes are shown above. At the Annual Council Meeting, Council chose ACCA’s officers for the coming year. ACCA’s new president is Barry Cooper and he will be supported by Martin Turner (deputy president) and Anthony Harbinson (vice president).

Council also welcomed one new member whose election was declared at the AGM – Orla Collins, who is based in Ireland. There are 16 different nationalities represented on ACCA’s 36-member Council, over one-third of whom are female, thus continuing to reflect the increasing diversity of the organisation as a whole. Council took a number of other decisions at its Annual Meeting: It approved Council standing orders for 2012–13, in accordance with the bye-laws. It chose three Council members to serve on Nominating Committee in 2012–13, along with the officers. It agreed a Council work plan and a set of objectives for the Council year 2012–13. The next meeting of Council is on 24 November, immediately after the 2012 meeting of the International Assembly.

Council held a meeting on the morning of 20 September at which it considered some important issues. It received the regular report from the chief executive on ACCA strategic developments, organisational performance, key market developments and research and insights and technical developments. It considered a paper providing feedback on the Council meeting in Nairobi and noted that the event was successful in reinforcing ACCA’s position as a key supporter of the profession in Kenya and in Africa as a whole. Council agreed to reaffirm its policy of holding an international Council meeting every two years. It also agreed in principle that the international meeting in 2014 should be held in Dubai with associated regional visits to Bangladesh, Oman,



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ACCA news


From left: Martin Turner, Barry Cooper and Anthony Harbinson

New president Barry Cooper takes the helm as ACCA president for 2012/13

Inside ACCA 65 Council ACCA holds its 107th AGM in London 64 Devanesan Evanson Continuous development is at the heart of ACCA’s values, says the ACCA Malaysia Advisory Committee president 62 News ACCA Learning Partners’ Conference discusses the e-professional; members welcomed at Appreciation Nights 60 CPD Annual CPD declarations are now due for submission 58 Compact considerations ACCA has signed up to the UN Global Compact

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Leading accountancy academic Professor Barry J Cooper from Australia was formally elected ACCA president in September. Professor Cooper is head of the School of Accounting, Economics and Finance at Deakin University in Melbourne. Previously, he was head of accounting schools at the Hong Kong Polytechnic and RMIT University, Melbourne, and played a key role in establishing the ACCA Qualification in China. In his spare time he is an organic olive oil grower and processor. During his term on ACCA’s Council, Professor Cooper has chaired a number of ACCA committees. He wrote his inaugural president’s column in Accounting and Business last month. He said: ‘I look forward to playing my part in ensuring that ACCA continues to work closely with employers, and that we meet their needs in an increasingly global economy.’ ACCA’s Council also elected management consultant Martin Turner as deputy president; he has been chief executive of Hywel Dda Health Board and chief executive of the Central Northern Adelaide Health Service, and a Council member since 2004. Vice president for 2012/13 is Anthony Harbinson, who is director of justice delivery at the Department of Justice in Northern Ireland.


ACCA has commissioned Nottingham Business School to research the roles, features and personal attributes which public sector financial managers should aim to display, highlighting good practices. To find out more or contribute contact Professor Malcolm Prowle at

Arnold Schilder (pictured), International Auditing and Assurance Standards Board (IAASB) chairman, was among leading figures in the auditing world who attended a New York cocktail reception hosted by ACCA USA. Guests included other senior IAASB representatives, staff of the International Federation of Accountants (IFAC) and ACCA New York chapter members. ACCA was also represented by technical director Sue Almond and ACCA USA head Warner Johnston.


ACCA students and affiliates frequently earn salaries that exceed national averages across other professions, according to ACCA’s latest Students and affiliates salary and career survey 2012. The report’s findings capture information on the salaries, bonuses and benefits, including students studying for the foundation level qualifications, as well as recording working hours, career plans and priorities. Of the 22,379 responses, 63% received a pay rise on the previous year, with 65% gaining an increase of at least 6%. Of those receiving a bonus, 53% were awarded a larger bonus than in the previous year. In addition, 84% aim to gain a more senior position in their current area and 75% want to lead a finance team.

VIDEO EXPLORES PUBLIC VALUE Delivering value to business and society is a critical role for ACCA. A short video has been produced exploring what is meant by public value in the context of accountancy, and how ACCA as a professional body delivers that. Visit http://

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12/10/2012 16:03

AB MY (Malaysian edition) – November/December 2012  

AB MY (Malaysian edition) – November/December 2012 of Accounting and Business magazine (ACCA)

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