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SG AB SG.ab accounting and businesS 02/2012


accounting and business singapore02/2012

a high point accountants scale mount kinabalu

thriving business

model of success shanker iyer on 20 years in the business

smps must adapt and survive

opinion a decade of sarbox network manage your brand

on the brink

Eurozone: will asia cash in? talent skills crisis intensifies directors autonomy at risk

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12/01/2012 15:10




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03/01/2012 11:38


Editor’s choice Since setting up his own practice in 1993, Shanker Iyer has gone from strength to strength, collecting a number of prestigious accolades . For our interview with this respected and admired Singapore accountant, turn to page 12

HITTING THE WALL? Singapore’s accountancy sector is at a crossroads. Policymakers have big ambitions to transform the city-state into a global hub for accountancy services, but the profession is facing a serious talent crunch – and the problem is not just about attracting talent. The final report by the Committee to Develop the Accountancy Sector (CDAS) pointed out that the sector faces ‘serious challenges in talent retention’; at the same time Ministry of Manpower data indicates that auditor and accountant roles are consistently among the top 10 job vacancies. In fact, statistics for 2010 placed the job of accountant top of the list of vacancies in the professional services sector, with auditor second. Though the issue has been a long-standing one, the demand for talent has become acute in the wake of the financial crisis and with Singapore’s growing affluence. This month’s main feature on page 16 examines the underpinning issues and provides insights from various industry players on ways to tackle the problem. Solutions for easing the crunch seem mixed. Some observers argue that the severity of the shortage can be eased by attracting foreign talent and developing local talent – and that strategy appears to be key for the CDAS. Others warn that the shortage will dent Singapore’s plans to be an accountancy hub operating in a complex global economy. That hub needs accountancy professionals with a wide range of skills and crossborder work exposure. Some of the other investments to promote Singapore as a banking centre will suffer if the country does not have access to accountants with the right skills. There is also the chance the shortage will relieve itself in the next few years, even without intervention. While the process ahead remains uncertain, it’s clear the problem can’t be resolved overnight. Attracting and retaining the right kind of talent may require patience and persistence going forward. Sumathi Bala,

ONE YEAR ON As Japanese business starts to recover from the devastating tsunami last year, we ask what accountants can do to restore confidence. Page 24

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TIME’S UP Tenure, multiple directorships and strong ties to CEOs all threaten the objectivity, independence and effectiveness of company directors in Asia. Page 52

VIRTUAL BRIEFING CENTRE Attend live and on-demand audio and video webinars in the virtual theatre, chat with fellow delegates in the networking centre, and access the digital library.

ACCA CAREERS Check out thousands of jobs and expert careers advice at www.

12/01/2012 17:06

AB SINGAPORE EDITION CONTENTS FEBRUARY 2012 VOLUME 15 ISSUE 2 Editor-in-chief Chris Quick +44 (0)20 7059 5966 Asia editor Colette Steckel +44 (0)20 7059 5896 International editor Lesley Bolton +44 (0)20 7059 5965 Singapore editor Sumathi Bala Chief sub-editor Eva Peaty Sub-editors Peter Kernan, Vivienne Riddoch Design manager Jackie Dollar Designers Robert Mills, Jane C Reid Production manager Anthony Kay Advertising James Fraser +44 (0)20 7902 1210 Head of publishing Adam Williams Printing Times Printers Pictures Corbis ACCA President Dean Westcott FCCA Deputy president Barry Cooper FCCA Vice president Martin Turner FCCA Chief executive Helen Brand OBE ACCA Connect +44 (0)141 582 2000

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

SG_Contents.indd 4

12 Going global The secret of Shanker Iyer’s success has been to step outside his comfort zone 16 Crunch time To become an accountancy hub, Singapore must solve its talent crisis

ACCA Singapore 435 Orchard Road #15-04/05 Wisma Atria Singapore 238877 +65 6734 8110


Audit period July 2009 to June 2010 138,255

20 Euro storm A look at how the euro went from being the next big thing to all washed up 24 Rebuilding Japan Accountants are playing a key role in restoring business confidence 28 Risky business To be effective, risk management must be consistent 32 New order Global power will continue to shift to emerging markets, says IFA board member Japheth Katto 51 Fight for independence The effectiveness of directors in Asia is under threat

13/01/2012 15:42


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

46 Update The latest from the standard-setters

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

48 CPD: IAS 1 A look at the comparability of financial statements across national boundaries

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

Your sector

VIEWPOINT 34 Cesar Bacani What’s behind the current trend of companies drawing down cash?


40 Errol Oh Malaysia’s Inland Revenue Board is getting tough

35 The view from Deanne Ong of Origin Holdings, plus news in brief 36 No turning back Shared services and outsourcing will drive business performance in the future 38 Opportunity knocks Organisations must be prepared to turn risks into positive results



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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41 The view from Tiffany Wong of KPMG China, plus news in brief

54 Building ‘brand you’ Online social networking is a powerful tool for managing your career

42 Under watchful eyes Regulation of audit firms in Hong Kong looks set to become independent

ACCA NEWS 56 Flexible learning ACCA offers a wide range of online CPD options 57 Dean Westcott Focusing on the past may not prevent future failures, says the ACCA president 58 Rulebook update Changes to the 2012 ACCA Rulebook 60 Kaka Singh Affiliation is challenging, says ACCA Singapore’s president 61 Commitment is key ACCA deputy president Barry Cooper talks ethics 62 Climb every mountain Accountants scale Mount Kinabalu for charity 64 News SMPs must adapt to survive; highlights of the Council meeting on 26 November

12/01/2012 17:07


News in pictures


Craftsmen make dragon lanterns in Jiangsu province, ready for Chinese Lunar New Year, which heralded in the Year of Dragon


Restaurateur Kiyoshi Kimura (left) bid 56.5 million yen for a giant 269kg tuna at Tokyo’s Tsukiji fish market, smashing the record price for a single bluefin


Honda had to destroy 1,055 cars, after Thailand’s worst flooding for 50 years led to the carmaker’s factories in Rojana being swamped for nearly two months

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12/01/2012 10:41



North Korea’s new leader Kim Jong-un (centre), accompanies the hearse carrying the coffin of his father and late leader Kim Jong-il, during his funeral procession in Pyongyang


China is pushing ahead with its high-speed rail systems, which include the China Railway High-speed train (shown), despite the train crash in July that killed 40 people. It unveiled a prototype bullet train capable of reaching up to 500km an hour in December


Aung San Suu Kyi’s National League for Democracy party will return to mainstream politics for the first time in two decades on 1 April, in the parliamentary byelections


An entire city carved out of ice and snow is the main attraction at the 28th Harbin International Ice and Snow Festival in Heilongjiang province, North-East China

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12/01/2012 10:41


News in graphics


Proportion of Malaysians in their 50s with retirement savings, according to HSBC.

1: India

2: Vietnam

3: Turkey

4: Argentina

=5: Chile

=5: Hong Kong


Developing economies ranked highest in taking on new staff in 2011, according to a survey of 40 countries by Grant Thornton. In India 67% of businesses were hiring, compared with –33% in Greece in last place.




Number of companies in Singapore that see labour costs as a key challenge, according to a KPMG forum.





Number of companies Deloitte expects to list on the Hong Kong stock market in 2012.




A report by Washington-based financial watchdog Global Financial Integrity (GFI), Illicit Financial Flows from Developing Countries over the Decade Ending 2009, has revealed that the illegal flight of capital out of Malaysia has reached a level rarely seen in Asia, with the exodus more than tripling over the course of the decade. The report found that 157 developing economies lost more than US$900bn in illicit financial outflows in 2009 alone despite the onset of the global financial crisis. The developing world is estimated to have lost US$8.44 trillion in the decade to 2009. The graphic shows the biggest victims of illegal capital flight over the decade.

Month in figures

How far property prices in Hong Kong and Shanghai are tipped to fall in 2012, according to Knight Frank.

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The fall in value of the Hong Kong dollar has pushed Hong Kong well down the list (from 32nd to 58th) of most expensive cities in the world to live in, according to a survey by ECA International. Singapore, which has moved up 11 places to 31st, is now eighth-most expensive city to live in in Asia.

12/01/2012 16:22


The most expensive catastrophes are usually weather-related, but a series of geophysical events accounted for half the insured losses in 2011.

Last year was the costliest ever in terms of damage caused by natural catastrophes throughout the world, according to research from Munich Re.

-$ $380


JAPAN US$210,000M

Global losses two-thirds higher than former record.





Japan/New Zealand quakes make up two-thirds of total.



Insurance covered less than one-third of total losses.



Of the 820 catastrophes, most were weather-related.







Deaths from disasters (excludes Africa famine).





The threat of cybercrime is growing and it ranks as one of the top four economic crimes, according to PwC’s Global Economic Crime Survey 2011. Of the 3,877 respondents polled in 78 countries, almost half (48%) of those who had experienced economic crime in the last 12 months thought the risk of cybercrime was on the rise, with only 4% believing it was falling.






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Proportion of investors deploying strategic planning tools to plan for an uncertain business environment, according to AT Kearney’s index of confidence in foreign direct investment.


The extra hit Spanish banks face in further provisions on bad property assets as part of a new round of reforms for Spain’s financial sector, according to the FT.


Number of Royal Bank of Scotland jobs that will go this year as the stateowned UK bank plans to shrink its investment bank.

Month in figures



12/01/2012 16:24


News round-up


The key organisation representing property developers in Singapore has warned that the new cooling measures that sharply raised stamp duties could hurt the real estate market and the wider economy. The president of the Real Estate Developers’ Association of Singapore (Redas) said developers may face increased land costs. The curbs could also lead to a fall in home values, while possibly damaging the already fragile economy and dampening foreign investment. The measures – dubbed by some experts as the harshest since September 2009 – include an additional buyer’s stamp duty of 10% on foreigner home purchases.


Japan’s ruling party, the Democratic Party of Japan (DPJ), has agreed to postpone a sales tax increase amid growing opposition. A DPJ panel has agreed to delay raising the tax to 8% until April 2014, with a further increase due in October 2015. The 8% tax level

was due to come into force by April 2013. Prime minister Yoshihiko Noda has been seeking to double the sales tax from the current 5%, amid growing debt levels.


Singaporeans must brace themselves for a longish period of slow growth, as the global economy is expected to be in for a slowdown, said minister for trade and industry, Lim Hng Kiang. The government, however, does not expect an economic crisis. Growth for 2012 is still expected to be positive, slowing to between 1% and 3%, from last year’s 4.8%. His comments came after Prime minister Lee Hsien Loong urged Singaporeans to take this year’s slowdown in their stride.

CUT TAX TO PROTECT ECONOMY PwC Singapore is calling for a reduction in the corporate tax rate in the upcoming Budget to help shield the economy from global turmoil. It says now is a good time for tax rates


Fitch Ratings has cut its forecast for growth in emerging Asia to 6.8% for 2012, from 7.4% estimated in June, citing the deteriorating outlook for the world economy and the lagged impact of policy tightening in some countries. Many emerging Asian economies, apart from China and India, are bolstered by scope for a domestic policy response to any deterioration in the global economy, Fitch said in its Asia-Pacific Sovereign Credit Outlook report. Emerging Asia’s sovereign credit-worthiness is supported by strong or improving public and external finances, as well as relatively strong mediumterm growth prospects for most countries, Fitch said. The agency cut its 2012 growth forecast for China to 8.2% from 8.5% previously. In India, where the ratings company says inflation and monetary tightening are weighing on investment, it predicts the economy will expand 7.5% in the year ending Helen Brand March 2013.

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to come down, with the eurozone crisis still unresolved and Singapore showing signs of slowing. PwC is pushing for the company tax rate to drop to 15% from 17%. It says that, with many businesses and individuals looking to Asia, lower taxes would be welcome.


Japan and India struck a US$15bn currency swap deal that could support the sagging rupee as Japanese premier Yoshihiko Noda made a lightning trip to New Delhi to push closer ties. The deal was part of a slew of agreements clinched by India and Japan, which is seeking to forge stronger alliances in the Asian region as a counterweight to China’s growing might. ‘Japan has technology and capital while India has a young workforce as well as abundant demand for infrastructure,’ Noda said.


The equity capital markets in Singapore have raised US$6.3bn from 68 issues in the year to date, down 3% from last year, according to data from Thomson Reuters. Mapletree Commercial Trust’s US$764m initial public offering (IPO) is the biggest by a Singaporean-based company for 2011 on the Singapore Exchange (SGX). The honour of the top IPO on the SGX, however, goes to Hong Kong-based Hutchison Port Holdings, whose US$5.5bn offering also makes it the largest ever in Singapore, surpassing SingTel’s long-held record since 1993.


India will allow foreign nationals to invest directly in the country’s listed companies, in a bid to deepen its under-developed capital markets. ‘[We] decided to allow qualified foreign investors to directly invest in the Indian equity market in order to widen the class of investors, attract more foreign funds and reduce market volatility,’ the Finance Ministry said. The move, which also allows pension funds and trusts greater freedom to invest directly, was due to come into effect on 15 January 2012.

12/01/2012 10:49



Once a contender to become the world’s next reserve currency, the euro is instead descending further into chaos – with no end in sight. What does the crisis mean for Asia, and could the region stand to benefit in the long term?



Singapore banks and teleco companies have been pitched as safe bets for investors next year – away from more volatile sectors such as commodities and property. Analysts expect the wider market to dip further in 2012, before a rebound later in the year. A decline of 16% thus far makes Singapore the worst performer in South-East Asia. It is about on par with Japan’s decline but not as steep as the drop in Hong Kong, India or mainland China.

sales through M&A deals. His ministry had received 194 applications for M&A deals from domestic and foreign companies between January and midDecember, up 43% from a year earlier.


A panel reviewing auditing at Olympus said it had so far found no violations

hit a new high of S$2.5bn in 2010, up 9.6% from 2009. Business expenditure on R&D, an indicator of private sector spending in research, also grew by 6% from S$3.7bn in 2009 to S$3.9bn in 2010. Total expenditure on R&D in Singapore in 2010 was S$6.5bn, up 7.4% from 2009. The statistics were reported in the National Survey of


China’s industrial companies are posting slower profit growth, a further sign that the country’s economy is losing pace. According to the National Bureau of Statistics, industrial firms saw their net income rise by 24.4% in November, compared with 25.3% in October 2011. The industrial sector has been one of the main drivers of China’s expansion. China’s growth has slowed for three quarters in a row and some forecasts see it dipping below 9% in 2012, which would be the weakest expansion in more than a decade.


The National Productivity and Continuing Education Council has identified four additional sectors to boost Singapore’s productivity. They are: financial services, accountancy, social services and process construction and maintenance. These sectors, together with the 12 identified in 2010, will expand the scope of sectors reviewed by the council from 40% to approximately 55% of the country’s gross domestic product and from 55% to 60% of employment in Singapore.


China will quicken the pace of assessing merger and acquisition (M&A) proposals in 2012 to handle a fast-growing number of domestic and crossborder deals. Shang Ming, who heads the anti-trust division of the Ministry of Commerce, said the sluggish global economy had slowed down organic business expansion and pushed companies towards increasing

SG_B_newsroundup.indd 11

Fountain of Wealth, Singapore


Singapore’s economy contracted less than expected in Q4, but the outlook remains clouded by the troubled economies of its key trading partners in the developed world. The economy contracted at an annualised pace of 4.9% in the October-December period from the third quarter, when it had managed to eke out a small gain of 1.5%, the Ministry of Trade and Industry said. The median forecast in a poll of nine economists was for a 5.5% contraction in Q4. The economic crisis facing Singapore’s key trading partners took its toll on the island nation as the sovereign debt crisis in the eurozone and weak growth in the US economy crimped demand for goods and services. The contraction in Q4 capped when Singapore’s growth eased to 4.8% after a record 14.5% expansion in 2010.

of accounting guidelines in the handoff to the Japanese arm of Ernst & Young from another auditor, which drew questions from a previous panel looking into a US$1.7bn accounting scandal. The panel said in an interim report that further examination was needed of the handling of the takeover by Ernst & Young ShinNihon from KPMG AZSA in 2009. External auditors for Olympus have faced questions over whether they were tough enough in monitoring its books.


Public expenditure on Singapore’s research and development (R&D) sector

R&D 2010, published by the Agency for Science, Technology and Research (A*STAR).


China has again outshone the US as the top venue for initial public offerings (IPOs), despite steep share price falls on the mainland and Hong Kong stock markets. Companies raised US$73bn from IPOs in Shanghai, Shenzhen and Hong Kong this year, according to Dealogic – almost double the amount of money raised on the New York Stock Exchange. Hong Kong retained its crown as the top bourse for the third year in a row, with US$30.9bn raised.

12/01/2012 10:49




After deciding to go it alone, Shanker Iyer FCCA has seen his career go from strength to strength – picking up a clutch of prestigious accolades and positions along the way


hen Shanker Iyer FCCA started his practice in Singapore in 1993, it was an unplanned move. ‘I did not actually intend to open my own practice, because I knew it would be very tough,’ he says. ‘But I had always wanted to do my own thing. After working as a partner in a firm for many years, I couldn’t see myself going into a company and reporting to someone for the rest of my life.’ Formerly a partner with Moores Rowland in London and Singapore, he moved to Singapore in 1992 when the UK economy began to show signs of recession, and found himself at a

the International Fiscal Association, the latter being his fourth term. Prior to that, between 1998 and 2004 he served as president of the British Chambers of Commerce (BCC) in Singapore, a position that eventually won him an Order of the British Empire (OBE) in 2002 for his services to British commercial interests in Singapore Singapore and also as the inaugural president of the European Chamber of Commerce in Singapore from 2002–07. Speaking of the accolades he has accumulated, Iyer says: ‘If I wanted to get to the level where I am now, it was very important to do something outside the office. You cannot just live in your

‘COMING FROM A BIG COMPANY, DOORS OPEN FOR YOU BECAUSE THEIR NAME AND LOGO IS BEHIND YOURS. BUT ON YOUR OWN, IT’S JUST YOU’ crossroads: join a company or open his own firm? He picked the road less travelled and, almost another 20 years later, The Iyer Practice is a boutique firm specialising in international business and with sidelines in niche areas such as trusts; it is probably the only certified public accountant firm in Singapore that has a commonly owned trust company which is licensed by the Monetary Authority of Singapore. Its clients are primarily successful private companies or high-net-worth individuals around the world who are either doing business in, or structuring investments through, Singapore. Iyer chairs both the Singapore International Chamber of Commerce (SICC) and the Singapore branch of

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own world; you have to go out there and build your profile.’

Rude awakening That need for exposure was brought home to him in the early days of his practice. The difference between working as a partner in a major firm and working on his own came as a rude awakening, he recalls. Although he had spent several years in his former firm’s Singapore office, and was thus familiar with the landscape, he was not prepared for the obstacles faced by small, new and unknown firms; even basic things like approaching a bank for financing or pitching his business to clients took on new layers of complexity. ‘Coming from a big company, doors open for you because their name and

The CV 2011

Elected chairman of the Singapore International Chamber of Commerce.


Elected chairman of the International Fiscal Association, Singapore Branch.


Elected president of the European Chamber of Commerce, Singapore and conferred as Order of the British Empire (OBE).


Elected president of the British Chambers of Commerce, Singapore


Established The Iyer Practice in Singapore.


Gained ACCA Qualification.

12/01/2012 10:51


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12/01/2012 10:51


The tips The main obstacle to growing a practice is talent, not business, says Iyer. ‘If you are good at what you are doing, there’s plenty of business around,’ he says. ‘It’s similar to going to a restaurant or a shop: everybody wants good service, so if you can provide that, and your reputation is good, clients will come. The challenge that smaller firms face is people – attracting and retaining them. And it’s going to get worse with the current policy of restricting foreign talent.’ It is also not possible to compete with the Big Four in terms of attraction, he adds. ‘At the end of the day we are running a business,’ he says. ‘We have to keep pace with salaries but there is a limit.’ On the other hand, he feels that the talent shortage may be eased by other factors, beginning with the abolishment of audit for small businesses. ‘The audit profession will see a significant reduction in demand in the next few years. We’ll see a lot of people refocusing from audit, and that will free up talent for other areas,’ he says. Similarly, Iyer suggests, competition with banks may peter out. ‘I believe that the competition with banks will be less of an issue in future,’ he says. ‘Following the financial crisis, banking has become a less attractive industry. We may see less and less people going into the sector.’

community, drawing on connections from his earlier stint in Singapore. He had been auditor for the BCC since the mid-1980s and, in 1995, was invited to join the committee. Finally, the big break came in 1998 when he was elected president of the chamber. ‘Never in my wildest dreams did I expect to become president of the BCC,’ he says. ‘When that happened, my profile was substantially lifted. It was no longer just professional work, but recognition in society.’ The timing, as it happened, was also right for him to demonstrate his own skill. The BCC’s finances were not in good shape at the time, and his accountancy background came in useful for straightening things out.

International connectivity logo is behind yours. But on your own, it’s just you, and nobody behind you,’ he says. ‘Which makes it that much more satisfying when you succeed, because then you have done it through your own effort and talent.’ In order to build his own profile, he became heavily involved in the business

SG_F_Shanker.indd 14

Since starting his practice, Iyer’s focus has always been on international business, including and not limited to his close involvement with the British business community in Singapore. ‘My strength was in being qualified to work globally, and Singapore had a lot of international businesses then, as it still

does now,’ he says. ‘So I concentrated on strengthening my international connectivity to begin with.’ It was an apt choice considering his background. The Iyer family has been in practice literally around the globe for four generations, beginning with his grandfather, who had a practice in Burma, although he had to abandon it and flee to the UK when the military took over. His two uncles are chartered accountants; one had a practice in Canada. And Iyer and his brother are chartered accountants. Now, his own children are going into practice, too. ‘We’re an accounting family; you could say it’s genetic,’ he quips. The various services offered by The Iyer Practice expand on this initial specialisation, covering areas such as wealth management – which follows Singapore’s strategy to grow that segment of the financial sector – and international tax, which is particularly relevant to the firm’s work. ‘The world of international tax has evolved in quite some ways,’ Iyer says. ‘We see increased exchange of information, the developed countries

12/01/2012 18:05


A changing profession

needing to protect their tax base, and more focus on international structures.’ The biggest and most fundamental of these changes is, he adds, undoubtedly greater exchange of information within the last few years. ‘Until then, there was always the issue of secrecy. No country would discuss their domestic tax affairs with other countries, unless there was

International business and tax are not the only things to have changed. In almost 40 years, says Iyer, the accountancy profession has changed quite a bit, especially in terms of regulation. In Singapore, the current review of the Companies Act will have a significant impact on the audit profession because of the proposed abolishment of audit for small businesses. ‘Firms will have to do things very differently,’ he observes. ‘They will have to change the way they approach clients and the areas they focus on. Anyone who still relies on statutory audit to survive will have a problem, because that whole market is likely to shrink in a few years’ time and be concentrated in a handful of specialist firms.’ In five or six years, he predicts, specialisation will become the trend, with an increasing number of young accountants having to choose a particular area rather than entering audit en masse. ‘It’s not a bad thing at all,’ he says. ‘The universities will have to train people differently, of course.’ Another change in the industry, he observes, involves the expansion of service providers outside the traditional

‘THE MORE SPECIALISED YOU ARE, THE MORE CHANCE YOU HAVE OF SUCCEEDING. GET TO BE KNOWN IN YOUR CHOSEN FIELD’ some serious criminal activity involved.’ Now, he says, disclosure is becoming a global phenomenon. Although his clients are not yet affected, there is a general awareness of the changing landscape, and the firm is already receiving inquiries. ‘It’s early days,’ he comments. ‘But going forward, everybody will have regard for the new environment.’ The advantage of being based in Singapore, he adds, is that it has a very strong brand and is well positioned to overcome issues caused by the changes.

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accounting pratices. Global trust companies are moving increasingly into what used to be the province of accountancy firms, which may prod firms into offering services more often associated with the financial sector. ‘Large international trust companies are starting to set up in Singapore and offer services somewhat similar to to those provided by accounting firms,’ he says. ‘Some are even doing tax work, although that largely remains the preserve of the accounting profession,’ he says. ‘But

there’s nothing to stop traditional firms from doing the same, just as we are doing now.’ With his experience of establishing a successful practice, Iyer is open to the idea of young accountants striking out on their own. ‘I don’t think age is a barrier in itself,’ he says. ‘Of course, clients expect to see some experience in order to take them seriously.’ It is important for the entrepreneurially minded to understand and focus on their own strengths, he explains. ‘The more specialised you are, the more chance you have of succeeding,’ he says. ‘Get to be known in your own chosen field; pick something that the more established firms don’t do much of, especially in the use of technology.’ It also helps to train overseas and in a bigger firm, he adds, because that gives one a wider perspective – both in seeing the bigger picture and in familiarity with a broader range of services. ‘The more exposure you have, the more you will be able to add value to your business.’ On top of this, he says, there are three ‘A’s that clients look for: affability, availability and ability. The most important is affability; you need to get along with your clients. The second, availability, means being on call all the time. ‘It’s very important for a budding young accountant to have the right PR skills, to be able to get on with people and communicate,’ he says. ‘Clients will always go for someone who’s available to them. ‘The third, which a lot of clients take for granted, is ability. They assume that because we have a licence, we’ve done our studies and have been approved by the authorities.’ Ultimately, he says, success – whether in a generalist role or a niche, a large firm or your own practice – comes down to one trait: ‘Be persistent. There’s no difficulty in getting clients if you get the right message out.’ Mint Kang, journalist

12/01/2012 10:51


AGAINST THE FLOW Singapore’s accountancy sector is continuing to struggle to attract and keep hold of its talent, so how will the crisis affect the city-state’s bid to become an accountancy hub?


ingapore’s accountancy sector has suffered a major talent crunch in the last year and a half. The final report by the Committee to Develop the Accountancy Sector (CDAS) said that the sector faces ‘serious challenges in talent retention’; meanwhile, Ministry of Manpower data indicates that auditing and accounting roles are consistently among the top 10 job vacancies. Statistics for 2010, the year of the CDAS report, placed the job of accountant at number one on the list of vacancies in the professional services sector, with auditor at number two. The issue is a long-standing one, say industry players. Darryl Wee, country head of ACCA Singapore, dates it back at least to the 1990s and the increased demand for assurance services that accompanied Singapore’s economic growth. However, he says, the shortage recently became acute after the recovery from the financial crisis, and may continue to grow if nothing is done to ease it. Statistics from Robert Half International, which specialises in the placement of finance, accountancy,

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banking and technology professionals, also indicate a relative shortage of qualified accountants in Asia prior to 2008, according to Tim Hird, managing director for Asia. This has been exacerbated in the last few years by global institutions shifting their operational functions to the region for cost control. ‘The amount of contract work for accounting professionals has gone up by 300% in the last two years,’ he says. ‘This might mean that more accounting-related work is being outsourced for whatever reason.’

Attraction and retention An insufficient supply of local accounting graduates is commonly stated as one reason for the shortage. However, the issue runs far deeper than that, says Professor Pang Yang Hoong, dean of the Singapore Management University’s School of Accountancy. ‘Each year, the three universities together produce almost 1,200 accountancy graduates. In addition, returning foreign accountancy graduates, as well as private education providers and professional bodies such as ACCA, produce another several

hundred accountants each year,’ she adds. ‘The problem is in the relative unattractiveness of compensation packages and long working hours in the accountancy sector, compared with other sectors that hire accountants and accounting graduates, such as the finance sector.’ Only half of Singapore Management University’s accountancy graduates, she says, go into professional accountancy jobs each year. In contrast, up to a third will enter banking or finance for the attractive salaries offered. Concurring, KPMG managing partner Tham Sai Choy says that the long-term cause of the problem is competition for talent within the Singapore labour market. ‘The accounting profession remains an attractive career proposition but now competes with a vast array of new career opportunities,’ he says. ‘These other careers also offer prestige, job satisfaction and monetary rewards.’ Attracting talent is only one half of the battle, says Philip Yuen, CEO of Deloitte Singapore. ‘The attrition level is relatively high,’ he says. ‘At the junior level, it is relatively easy

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to fill positions. But after a few years, many people move on. The challenge is to retain the ones we want.’ It is, he adds, difficult for the accountancy sector to compete with the remuneration packages offered by the banking sector. ‘Accountants are often hard to retain as they are high in demand and therefore have a lot of opportunities to choose from. There is also a perception that moving jobs can provide a higher salary,’ agrees Hird, citing the ACCARobert Half International Talent Mobility Survey 2011, which found that nearly half of accounting professionals in Singapore intended to work with a new employer in two years’ time.

Uphill struggle It is all but impossible for firms other than the Big Four to attract local graduates, say partners in mediumsized firms in Singapore. Shanker Iyer, chairman of The Iyer Practice, says that he relies entirely on talent from

any one of the Big Four firms could have single-handedly absorbed a third to one half of all the local accountancy graduates produced – without taking into account those who chose to enter a different profession. This is not to say that the Big Four are not facing the same issues. There have been occasions when Singaporean firms experienced major talent outflows offshore, such as the massive privatisation of the Chinese economy between the late 1990s and early 2000s. ‘For us, the shortage became acute during that period,’ recounts Deloitte’s Yuen. ‘A lot of Singapore accountants were pulled to China, and so were accountants from other countries around the region, including Malaysia, where we traditionally source overseas talent.’ There is also the tendency of fresh graduates to join the firm for its prestigious name, and then leave after several years when they have the experience to secure a position

‘THE PROBLEM IS IN THE UNATTRACTIVENESS OF COMPENSATION PACKAGES AND LONG HOURS IN THE SECTOR, COMPARED WITH OTHER SECTORS’ around the region to fill positions, and his firm is not alone in doing so. ‘There are simply not enough local graduates to go around,’ he says. ‘The supply crunch is in all areas, right down to corporate staff. Even chartered secretaries are in demand.’ In economic upswings, says Teo Cheow Tong, senior partner/HR partner at RSM Chio Lim, the situation becomes even worse for well-known firms like his – RSM Chio Lim is Singapore’s largest audit and advisory firm outside the Big Four – as the competition then is not just with the banks, but with other firms trying to headhunt their experienced people. Industry insiders estimate that in any given year prior to the financial crisis,

SG_F_talentcrunch.indd 17

in commercial accounting. ‘We are a training ground for the industry,’ Yuen says wryly. ‘Having worked with us, they are very marketable; it’s a good thing for everyone.’

What about the hub? Singapore’s ambitions to be an accountancy hub have been made clear, with deputy prime minister Teo Chee Hean highlighting them in a speech last October. These ambitions are almost certainly going to be affected by the talent shortage, but it is difficult to estimate the extent of the impact. ACCA’s Wee thinks that developing an accountancy hub will actually ease the shortage rather than exacerbate it, as CDAS’s

recommendations will help small and medium-sized firms make themselves more attractive to talent. ‘So long as the economy is doing well, the shortage is unlikely to go away,’ he says. ‘However, the severity of the shortage can be eased by increasing the pool of talent by both attracting foreign talent and developing local talent – which appears to be key motivations for the CDAS recommendations.’ On the other hand, KPMG’s Tham feels that the shortage will create problems in the near future. ‘Singapore operates as a hub in a complex global economy. That hub needs accountingtrained professionals with a wide range of skills and crossborder work exposure. Some of the other investments to promote Singapore as a banking centre or as a fund management centre will suffer if we do not have access to the right skills,’ he says. ‘No doubt, some of that shortage can be dealt with by importing the skills. But if we did that, we would have wasted the opportunity to build enriching careers for even more of the talented people we do have in Singapore.’ The most optimistic view comes from Ernest Kan, president of the Institute of Certified Public Accountants of Singapore (ICPAS), who feels that the shortage will have little or no impact. ‘Given Singapore’s fiscal policy outlook, it is unlikely that this issue will create significant repercussion,’ he says, pointing out that measures are already underway to widen the talent pool. As early as October 2010, for example, the Accounting and Corporate Regulatory Authority began to recognise international experience in auditing to satisfy the practical experience requirement for registration as a public accountant. And this year, a post-university qualification programme backed by ICPAS and designed by ACCA is likely to be launched to bring non-accounting graduates into the profession, as is successfully practised in the UK.

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Suggestions for the future The most anticipated of the above measures is for non-accountancy graduates to begin entering the profession, something which many anticipate as a game-changer. Close after that comes work-life balance and career progression, which are often cited as the long-term reasons for poor talent retention in the sector. Firms need to speed up and broaden career progression for young accountants, says KPMG’s Tham, pointing out that accountants’ roles have today expanded from the back room to the CEO’s right hand. ‘Singapore companies are not dedicating sufficient resources to train accountants in middle management,’ says Dr Kan, citing recent ICPAS research which indicates that Generation Y accountancy

students are more motivated by career advancement and good working relations with colleagues than by monetary compensation. Another commonly highlighted issue is the need to move away from the current heavy emphasis on audit, which is believed to distort supply and demand. RSM Chio Lim’s Teo says making audit optional for nonpublic interest entities will ease the demand on firms and professionals. ‘Businesses that view audit as nothing more than a statutory requirement are resistant to fee increases, although standard compliance has increased over the past few years,’ he points out. ‘Making audit optional will result in a fee structure that is more reflective of real demand. This will lead to lower demand for audit services and talent without a


‘With the ongoing convergence in global accounting standards, accountants’ professional skills become more portable across borders,’ says KPMG managing partner Tham Sai Choy. ‘For example, emerging economies are often in need of experienced accountants. Accounting-trained professionals are therefore enjoying more job opportunities both at home and abroad, and competition for talent is both local and global.’ Data from the fifth annual Robert Half Global Financial Employment Monitor corroborates his assessment, with 67% of respondents indicating that it is very or somewhat challenging to find skilled accounting and finance professionals for certain jobs. A further 56% said they are at least somewhat concerned about retaining their staff in 2012, up from 45% in 2010. In Singapore, compared with Hong Kong, firms have an easier time filling entry-level positions – but a harder time getting senior personnel. Average time to hire

Level of position being filled


Hong Kong


Five weeks

Seven weeks


Nine weeks

10 weeks


14 weeks

12 weeks

Source: Robert Half

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corresponding drop in fee volume. Professionals will be able to have better work-life integration without having to make financial sacrifices.’ Yuen also adds that there is a need to change the image of audit. Many businesses deem audit a ‘necessary evil’ and do not fully appreciate the industry, creating a gap between audit’s actual value and its perceived value in clients’ eyes. ‘We need to promote the value of audit and bring people to understand what audit is about,’ he says.

What may lie ahead There is a chance that the shortage will relieve itself in the next few years, even without intervention. Robert Half’s Hird estimates a 10% to 20% increase in the number of people seeking to enter the accountancy sector in both Hong Kong and Singapore over the last two years. Applications by local candidates have increased by two to three times, he says, while foreign candidates have gone up three to four times. At the same time, many are worried by the government’s Singapore First policy, which will hit the exact group of overseas professionals that small and medium-sized firms rely on to plug their talent gap. Furthermore, warns ACCA’s Wee, the supply of overseas talent may dry up as countries around the region begin to face their own shortages brought on by economic growth. ‘It may not be feasible to over-rely on lower-cost foreign inflows as a panacea to ease the shortage into the indefinite future. The local pool of experienced talent with specific domain expertise needs to grow urgently and dramatically,’ he says. Overall, it is certain that just as the problem has been entrenched for some time, the solution will also take a while to make itself apparent. As Yuen puts it: ‘If we had a recipe for success, it would have been done much earlier.’ Mint Kang, journalist

16/01/2012 11:40


into the maelstrom

Despite its promising start, the euro is now in a state of chaos – and with no prospect of escape any time soon. How did it come to this?


or most of the past decade, the euro was considered one of the best currencies in the world: stronger than the dollar, more popular than the Swiss franc or the British pound, odds-on favourite to become the world’s next reserve currency. Now, that’s changed. The European sovereign debt crisis that began a little over two years ago has shaken faith in the common currency of 17 European Union (EU) members. A number of European banks and countries are in fiscal disarray, and some disgruntled Europeans in both the stronger and weaker parts of Europe talk about breaking up the currency union. By the end of 2011, the 10-yearold currency had fallen from US$1.45 over the summer to US$1.29. Most forecasters now predict US$1.10 – US$1.20 by the end of 2012 – and no one’s talking about it becoming the top reserve currency anymore. How did the euro go so far wrong? Looking at the euro crisis in retrospect, it seems to have happened in the same way that a character in Ernest Hemingway’s novel, The Sun Also Rises, says he went bankrupt: ‘Two ways. Gradually, and then suddenly.’ In the case of the euro, it has been the other way round.

Suddenly... The common currency made it impossible for member countries to

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set their own interest rates or print their own money, yet did not require specific fiscal performance. Member countries promised not to run deficits of more than 3%, but the agreement had no penalties for those that ran over those limits, and indeed a number of countries have done so repeatedly since the 1992 Maastricht Treaty, with little consequence. Critics at the time argued that this might eventually lead some poorer countries to take advantage of the strong collective balance sheet, or that harnessing rich and poor countries together would lead to harsh, punishing economic conditions for people in the poorer parts of Europe. Or both.

...and gradually... In the beginning, however, none of this seemed to be a problem. The 2002 adoption of the new currency went smoothly, and for nearly a decade, the euro was seen as a success. Day to day, the common currency made business easier, and conducting business between countries that a few decades before had fortified borders became much less complicated. Intra-union investment grew. Italians complained a bit about higher prices, but the European economy did become more integrated. After starting out at below the dollar, the currency

continued to appreciate through most of the noughties, becoming in relatively short order one of the world’s leading currencies. ‘As long as it worked, I think everybody benefited from it, but for different reasons,’ says Paul Jorion, a Le Monde columnist and former commodities trader. But beneath the surface, the monetary union began to have difficulties. Productivity kept rising more quickly in Germany than in the south, made even more competitive by restrictions on raising wages that exacerbated Europe’s economic imbalances. Harvard economist Martin Feldstein has pointed out that since the euro’s launch, relative labour costs in southern Europe have risen by 30% compared to those of the north, making the southern economies much less competitive than they were 10 years ago. Poorer countries took advantage of the easier access to low-interest loans that the eurozone gave them. In Spain and Ireland, this easier credit was channelled into a huge but ultimately disastrous building boom. Relaxed credit made it easier for the poorer countries to delay reforms that EU administrators said were necessary to make their economies more competitive. Debt rose quietly, and even vast bank bailouts made in the aftermath of the 2008 credit

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PRODUCTIVITY KEPT RISING MORE QUICKLY IN GERMANY THAN IN THE SOUTH, MADE EVEN MORE COMPETITIVE BY RESTRICTIONS ON RAISING WAGES crisis, such as Ireland’s move to back its troubled banks, didn’t seem to damage faith in the euro system.

…and suddenly, again Although a few eyebrows were raised over Greece’s spending for the Athens 2004 Olympics, it wasn’t until December 2009 that the story about the true size of Greece’s sovereign debt broke. Revelations that Greek government debt now exceeded €300bn – a vast amount of money for a population of 10.7 million, 113% of gross domestic product (GDP) and almost double the allowed level – shocked the markets. Initially, however, there was little governmental response. ‘There was a kind of window of opportunity, let’s say in the first six months of 2010, where they could have reacted, but they let that period go. They didn’t do anything,’ says Jorion. As a result, the costs of the bailout skyrocketed, he says, from a few billion to hundreds of billions.

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Rounds of discussions and bailouts followed throughout that year – first with Greece, then with Ireland. Later, Spain, Portugal and even Italy also became causes of concern. Germany did not want an unconditional bailout of Greece and the other broke countries. In a country with an ancestral fear of a repetition of its 1920s hyperinflation, no one wanted to hear about deficit spending – especially to preserve other people’s pensions. At the same time, the Greeks argued that the country was too poor to pay the debt back. There was some speculation that Greece, or one of the other countries at risk of default, might leave the currency union. But with most of the debt euro-denominated, the devaluation game would not be cost-free, either. Nor were deep bond haircuts possible. German and French banks and pension funds were major holders of the Greek debt, so cutting the amount owed could lead

to serious domestic troubles further north, particularly for France, which stood in danger of losing its AAA bond rating. Finally, in December 2011, the eurozone countries agreed in principle to austerity and a programme of fiscal discipline, but many details remain to be worked out. Nor is it clear that the deal will even be adopted. Multiple parliaments will need to approve the plan – and we may even see a few national referendums. ‘The European Council has given us kind of a flavour of where we are going and we are going the German way, and we all know that but implementation risks are huge,’ says Jose Manuel Amor Alameda, a partner at Analistas Financieros Internacionales, a Madrid-based risk analysis agency.

What next? But even as heads of state continue to talk about responsibility and financial discipline, what seems to be happening is the opposite: devaluation. As the European Central Bank (ECB) extends more loans and prints more money, investors are losing some of their faith in the euro.

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Any devaluation has winners and losers. In this case, one of the losers seems likely to be Asia. Higher prices in euro terms will squeeze Asian export margins. A weaker euro will also tend to focus more investment inward, further lowering European foreign direct investment (FDI), which already fell 62% in 2010, the latest year for which figures are available from the European Union (EU). Total global investment has already fallen from €281bn in 2009 to €107bn in 2010, according to EU statistics – only 20% of the €550.5bn where it stood in precrisis 2007. However, aside from the drag on exports and FDI, devaluation does have one positive quality for Asian companies: it makes European companies a bargain. ‘Asian strategy will shift from export to investment in Europe,’ predicts Jagdish Sheth, a professor of marketing at Emory University and author of Chindia Rising (2008). Peter Williamson, a professor of international management at Cambridge University’s Judge Business School, agrees. ‘The Chinese are always looking for a good deal and they’re under quite a lot of pressure from the Chinese authorities not to be seen to be overpaying,’ he says. For fast-growing Asian firms, the prospect of entry into the world’s largest economy and the chance to acquire a smart, technically excellent company will prove attractive – particularly if Sheth is right that Chinese buyers now feel the US is a risky place to make an acquisition. The country has, he believes, become somewhat xenophobic since the 11 September attacks and memories of prior merger rejections linger. But their buys in Europe won’t be indiscriminate. Williamson expects that the Chinese will focus not on access to the market but companies that could be useful in their fast-growing markets back home, such as major energy companies or small technology businesses. Often, he says, targets will be companies that they have worked with for some time.

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In most respects, that’s a good thing for Europe. While governments typically like to talk about a strong currency, a weak one actually has a lot of advantages, at least in the beginning. As the euro declines, imports will become more competitive, boosting demand everywhere in the union from Greece to Germany. With prices at a discount, outsiders – everyone from tourists to investors – will find the world’s largest economy now suddenly on sale. More exports should make things a bit better for European youth, too. Almost 49% of young people in Spain are unemployed, with nearly the same rate among young Greeks. With the odds that long against getting a job, ‘revolutionary’ tends to be high on the list of occupational choices. Overall, ECB figures quoted in a recent Morgan Stanley forecast estimated that a weakening of the euro by 10% in 2012 would add 0.7% to EU GDP in the first year and 1.2% in the second. Plus, the debt itself is devalued with respect to foreign bondholders, reducing the risk of crisis.

Grim outlook Over the long run, however, the outlook is still grim. Spanish analyst Amor believes that the German plan will be implemented, despite the many ways it could flounder: at the moment, there is no alternative. ‘In Spain, the government will get a page with all the things they have to do and they’ll sign it,’ he says. ‘They have no other choice.’ However, Amor doesn’t believe that austerity will be enough to end the crisis. ‘You want a more robust union in terms of fiscal discipline, supervision, sanctions, etc? ‘That’s [all] very well, but at the end of the day, the economies are going to be bleeding. So how long is this going to last until the constituencies start saying, we’ve had enough? And that’s the moment of truth. But that’s probably two or three years down the road.’ Bennett Voyles, journalist

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Welcome Accounting & Business readers enquiries

ASIA ADS.indd 6

10/10/2011 11:13



Accountants in Japan have played a vital role in rebuilding business following last year’s earthquake and tsunami


he powerful earthquake of March 2011 changed the physical landscape of Japan forever and, in combination with the tsunami that it triggered, will be remembered as the most destructive natural disaster in living memory in the country. Nearly a year on, business is almost back to normal in areas outside the hardest-hit prefectures of Fukushima, Iwate and Miyagi, but it will take decades for the people, and the small firms that accounted for by far the largest proportion of business in the region, to return to normality. Indeed, many may never reach that goal. Farmers whose land lies within the 30km mandatory exclusion zone around the crippled Fukushima Daiichi nuclear plant will not be able to earn a living from the fields for generations, partly due to the contamination of the soil but also because consumers are refusing to buy their produce. Meanwhile, the fishermen who trawled the Pacific to the east of the plant are not allowed to sell the fish they land. The small businesses that operated in towns such as Ishinomaki,

Rikuzentakata and Minami Sanriku will be effectively starting from scratch after their premises were washed away, the tsunami destroying data stored in computers and the more frequent paper files that they relied on to do business. But out of the initial chaos, Japan has rallied. Companies and organisations in other parts of the country, as well as from abroad, have come to the country’s assistance. The government has acted with admirable swiftness, while individuals around the world have responded with the kind of generosity that is seen only in times of crisis. The accountancy profession has also reacted with decisiveness and alacrity – and it needed to, given that the earthquake struck just weeks before the start of Japan’s new fiscal year. ‘Great efforts were made to get through the March year-ends and to try to keep as close to business as usual,’ says Nicola Sawaki, a partner on the IFRS desk at Ernst & Young ShinNihon in Tokyo. The Japanese Institute of Certified Public Accountants (JICPA) quickly


AP_F_Japantsunami.indd 24

Message of hope: although much needs to be done, support from businesses around the world, as well as practical help from key professions including the accountancy sector, have played a vital role in enabling Japan’s recovery, both in the short term and to ensure its future financial stability produced guidelines designed to assist companies, Sawaki says, drawing heavily on their experiences in the aftermath of the 1995 earthquake that struck Kobe. Issued on 30 March, the audit guidance for companies affected by the disaster addressed the

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In the wake of the earthquake, authorities in Tokyo have re-examined their preparations for the long-overdue ‘Big One’, expected to strike Tokyo in the next 30 years. Here are some statistics from Mitsubishi Estate Co to consider:

8.88M 70% 25% 365,000 125,000 145,000 22,000 3.46M 1923 105,385 70 YEARS 89 YEARS

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Residents of metropolitan Tokyo. Probability of a major earthquake in Tokyo in the next 30 years. Buildings in Tokyo destroyed in a magnitude 7.3 tremor. Buildings destroyed by fire. Buildings collapsing due to liquefaction of the soil. Number of people injured in the disaster. Number of people seriously injured. People stranded due to failure of transportation systems. Year of the last major tremor, the Great Kanto Earthquake. Estimated number of victims of the 1923 disaster. Average time between major earthquakes in Tokyo. Period since last ‘Big One’.

most immediate issues of impairment losses on fixed assets and inventories; inspection and evacuation costs; the cost of the recovery of assets; and expenditure to avoid further impairment of damaged assets, as well as economic support for employees and their relatives.

Missing data, new paperwork The institute detailed the tax treatment of disaster losses and donations, while companies were granted extensions for filing their tax returns. ‘Some of the largest issues are lost records and destroyed paperwork,’

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The disaster has also served to further hamper discussions over Japan’s adoption of International Financial Reporting Standards (IFRS). Adoption was originally scheduled to be decided on this year, with application taking place a further three years later, but Shozaburo Jimi, minister for financial services, expressed his views on the timing of IFRS in late June. ‘Discussions on IFRS application will be started from June 2011, at the plenary meeting of the Business Accounting Council (BAC), after the joining of new members with different backgrounds,’ Jimi said in a statement. ‘Mandatory application should not take place from the fiscal year ending March 2015, at the very least. ‘A sufficient preparation period of five to seven years should be required if and after mandatory application is decided,’ he added. ‘The provision to terminate the use of US GAAP [generally accepted accounting principles] for FSA [Financial Services Agency] filing purposes after the fiscal year ending 31 March 2016, will be removed and the entities which are currently allowed can continuously use US GAAP.’ Tomo Sekiguchi, technical manager at the Accounting Standards Board of Japan, says that the outcome of the discussions are unclear. ‘The BAC has started its deliberations on whether and how to apply IFRS in Japan, beyond the voluntary one that is in place at present, and the council will discuss around 10 topics and consider the situations in other countries,’ he says. ‘But it seems that a number of council members are not totally convinced that IFRS fits Japanese companies, especially manufacturing firms, in a number of technical respects, with recycling one of the very important areas,’ he adds. ‘There are also worries about sovereignty.’ Yet others believe that IFRS will continually be delayed as long as Jimi remains the minister in charge of implementing the new system. ‘Jimi’s declaration that he will postpone the decision on the adoption of IFRS means he will not adopt it,’ argues Toshifumi Takada, a professor at the Accounting School of Tohoku University. ‘Jimi is out to make a show during his term.’ The professor claims that even though the FSA has agreed to adopt IFRS, Jimi’s appointment to the FSA of Yukihiro Sato, an adviser to Mitsubishi Electric and author of a book vehemently opposing the adoption of IFRS, means the process will be stalled.

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Light in spite of disaster: some 2,500 candles were arranged in the shape of a large smiling face at a park in the Roppongi district of Tokyo. The Smile for Japan campaign aimed to boost the spirits of everyone affected by the earthquake and tsunami says Koichiro Kimura, assurance leader at PwC Japan. ‘Some of the records can be recreated, but in many instances where management are not able to recreate them, they will need to estimate or provide evidence using alternative data sources. ‘We are now working with management to ensure that the methodology selected and assumptions used are appropriate, and that any estimates provided are reasonable,’ he adds. Accountancy firms have also assisted in the preparation of financial statements and tax returns, particularly in the area of completing the numerous forms for exemptions and refunds, as well as the unfamiliar paperwork required to apply for claims for emergency government grants. ‘Over the longer term, companies may need the assistance of consultants in ensuring that their future business plans create a sustainable business, and their business continuity plans are appropriately designed,’ Kimura

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says. ‘Additionally, for a number of industries, consultants are helping to establish structures for publicprivate partnerships in order to source funds and ensure that they are fit for purpose.’ PwC has been assisting Sendai City local authority in developing its economic recovery strategy. The largest city in the affected region sustained serious damage and its all-important container port will be operating on a reduced scale for at least another 12 months. Just as important – at least to

that something needed to be done to reverse the perception. Along with 15 colleagues, Chau has helped write a book to get the message across – to people in China, in particular – that nearly all of Japan is perfectly safe to visit. Proceeds from the book are being donated to the victims of the disaster.

Global concerns A PwC report on the global community’s perspective of the situation over the coming months, released in July 2011, suggested that

A PWC REPORT ON THE GLOBAL COMMUNITY’S PERSPECTIVE OF THE SITUATION OVER THE COMING MONTHS SUGGESTED THAT CEO’S CONFIDENCE IN JAPAN REMAINS UNCHANGED the people who felt the full impact of the disasters – were the millions of small gestures made by people around the world, from donations of clothing to household items, offers of accommodation and simply messages of support. Elsewhere, Ernst & Young collected donations from staff to assist the victims and extended support to colleagues in the affected areas, as did organisations such as Keidanren (the Japanese Business Federation), JICPA and the Accounting Standards Board of Japan.

Clearing misconceptions Tsz Ling Chau, a senior manager for PwC in Tokyo, was in Hong Kong at the time of the disaster and was shocked at the media coverage, creating the perception that the whole of Japan was a virtual wasteland in the wake of the earthquake, tsunami and nuclear accident. When she returned in April, she quickly realised that the impact had been grossly overstated and

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CEOs’ confidence in Japan remains largely unchanged – perhaps a surprise given the combination of the natural disasters, long-term economic stagnation and the unyielding strength of the yen. Some 82% of CEOs doing business in Japan replied that they were either very confident or somewhat confident about growth over the next 12 months, while that figure rose to 89% when asked about revenue growth over the next three years. However, firms also identified two key action items that they have learned require attention – short-term demand forecasts and scenario planning – but they were also explicit in identifying Japan’s needs if it wants to rebuild business confidence. Top of the list was improved economic policies and management of the national deficit, which is presently running at more than 200% of gross domestic product (GDP). That requirement was followed closely by a clear energy policy that supports energy security, and more timely and

accurate government communication. Nearly as important, the CEOs indicated, is leadership and political stability – not always easy in a nation that has had five national leaders in as many years. Other issues that were cited in the study included improved regulatory oversight of risk management and governance systems, policies to address the impact of an aging and shrinking workforce, and tax reforms and incentives. On top of this, the cost of the work to rebuild the disaster-affected region remains astronomical. On 1 December, the government announced that it would push through a fourth extra budget for the fiscal year worth JPY2.5 trillion (US$32.18bn), largely to finance relief programmes for companies and individuals affected by the March disasters. The proposal is the first time since 1947 that Japan has drawn up four extra budgets in one year and comes on top of trillions of yen already earmarked for relief efforts in the north-east of the country. The day before the government’s announcement, the Japanese parliament approved a bill to secure funding for reconstruction efforts through changes to the nation’s taxation system, which includes the Special Reconstruction Corporation Tax, which will be imposed at a rate of 10% on domestic and foreign companies for three years from 1 April 2012, and a similar Special Reconstruction Income Tax, at 2.1% for both individuals and corporations for 25 years from 2013. Paying for the reconstruction will be a burden on the nation for many years. But Japan can count on a public that has a long and honourable tradition of rebuilding itself from the ashes of disaster. Julian Ryall, journalist

10/01/2012 12:54



he day-to-day activities of financial controllers and other accountants on the business shop floor have a vital role to play in successful risk management and the finance professionals in the business stand ready to do more. This is one of the main findings of new ACCA research looking at the role of accountants in risk management. Based on a survey of more than 2,000 members from all over the world, the research reveals a statistical relationship between the use of good practices by accountants – such as properly executed forecasting and budgeting – and a lower incidence of ‘dysfunctional behaviour’. Poor accounting practices include a general lack of risk awareness when making decisions, playing down risk to get approval for proposals, overstating benefits and underestimating costs. Accountants in the survey reported a high level of dysfunctional behaviour around risk management. Almost every respondent reported the ‘gaming’ of forecasts. Others mentioned treating forecasts as targets, providing optimistic forecasts to avoid criticism and pessimistic ones to reduce expectations. The survey also found that such behaviour was commonplace – fewer than 1% said none of them happened at their organisation. Paul Moxey, ACCA’s head of risk management and corporate governance, says the findings highlight the important and positive role for organisations of integrated risk

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management – the idea that risks should be identified and managed as part of a core management process rather than left to a compartmentalised team or individual. ‘Risk happens at all levels of business and for all types of business functions,’ he points out. ‘It doesn’t sit in neat silos. Risk management needs to be something everyone in an organisation does. ‘Our survey showed that accountants, particularly at the shopfloor levels of a business, have an

to risk management is huge and necessary in any organisation.’ The survey comes at a critical time for risk management. The financial crisis highlighted the disastrous consequences of senior management ignoring risk management, and led to the climb of the practice up the corporate agenda, although its new apparent importance has not always been matched by increases in budgets or actual actions. Moxey fears that once the current crisis has passed, the risk function may

‘ACCOUNTANTS HAVE AN EXCELLENT GRASP OF THE RISKS FACED BY THEIR ORGANISATION AND THE STEPS NEEDED TO NEGATE THEM’ excellent grasp of the risks faced by their organisation and the steps needed to negate those risks. Businesses need to make sure they use the abundant risk awareness and risk management skills of their qualified accountants, and not miss an opportunity to effectively integrate risk management.’ As accountants provide decision support, such an approach puts them in an important position – after all, most ‘risky’ business decisions contain a financial element. And in most organisations the accountants outnumber the formally designated risk managers. As one respondent to the survey put it: ‘Although not always appreciated, the contribution of the finance section

again decline in status, with potentially dangerous consequences. Another finding of the research is that those in mid-level roles such as financial controllers and management accountants are much more aware of both risks and dysfunctional behaviour than are their board-level colleagues – including non-executives. Most non-executive board members said overly optimistic forecasts to avoid criticism were never made in their own organisation, but only 20% of financial controllers or accountants agreed. Non-executives also seem less aware than everybody else of problems with persistent quality issues. There are several possible explanations. Those at more senior

12/01/2012 16:59


Effective risk management starts on the finance ‘shop floor’ and should embrace the whole organisation, according to the findings of a new ACCA study levels are less involved in the day-to-day running of an organisation, and so are less aware of detail, taking a broader overview of a business. It could be that the information they are presented with by their teams is sanitised in some way. Additionally, as the financial crisis showed, there are often plenty of incentives for not asking challenging questions or rocking the boat. One respondent, a financial controller in Ireland, said: ‘Decision analysis is sometimes hijacked by higher-level political motivations, leading to poor decision-making and adverse impacts.’ The study shows clear support among accountants for ‘challenging senior people’ as part of an ideal business culture. A questioning approach can help avoid the kind of cultural bias or ‘groupthink’ that leads

to risks being missed. As another financial controller said: ‘There will always be uncertainty around decisions to enter new markets or to try new ideas, but the accountant should be able to highlight the potential risks and rewards of various actions, and to seek ways to mitigate the impact of any risks.’ A CFO respondent said: ‘Accountants need to be business partners. They need to be involved in decision-making and help other functions see the possible implications of decisions they are about to make or have made.’ The study found that input from accountants in the decision-making process had a number of beneficial effects. Some 95% of respondents said that input always made people more aware of the uncertainties involved.

The fall-out from the crisis: Occupy Wall Street protesters in New York (far left) Shock and awe: photocall for Margin Call, a film starring Kevin Spacey (centre), that portrays the events that destroyed Lehman Brothers. and shook the US financial system (middle) Disasters can be natural as well as human-inspired: restaurant in Bangkok, Thailand, as a river in spate dumped vast quantities of floodwater in the city (right)



Private equity investor ABCI Investment Management takes risk very seriously. The Hong Kong-based company has put risk management at the centre of its commercial operations, both before and after acquisitions are made. A subsidiary of Agricultural Bank of China, ABCI has a portfolio fund valued at HK$5bn. Its management team consists of some 20 professionals, including specialists in risk management, finance, compliance and law. This team works together to identify and evaluate suitable acquisition targets, and to monitor each investment until it is realised. Its private equity managing director Bernard Wu, who is also chairman of ACCA Hong Kong, says: ‘Risk exists in every corner of a business, and it’s our job to identify and evaluate every risk in a target company’s history, operations and forecasts.’

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Accountants work in compliance as well as finance as part of an integrated risk management team. The most important elements in evaluating a prospective investment are checking management integrity and evaluating performance trends against ABCI’s exit target. ABCI researches the sources of the company’s financing. For start-up operations, it assesses the attractiveness of the projected business performance and margins versus the records of the owners and management. The Companies Registry and the Tax Bureau are also valuable information sources – tax history is a very important indicator. If the finance team is happy with the initial evaluation results, ABCI then performs a detailed risk assessment on the target company, analysing its current and projected growth rates compared with its peer group, to determine whether the forecasted performance is reasonable.

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A similar number said it helped people think more widely about the possible consequences of a decision, and only marginally fewer said it encouraged decisions that reflected the interests of all relevant stakeholders. In times of global economic uncertainty, such input can make the difference between success and failure. ‘Instability is the new stability,’ said the FD of a leading investment and insurance business. ‘The banking crisis has morphed into the sovereign debt crisis, and now we are confronted by the real risk of a double-dip recession.’ According to this FD, an integrated approach is key to a finance team’s successful risk management. However, there is some way to go before risk management – and the role of accountants in its implementation – is fully integrated. According to KPMG’s global Risk Management Survey 2011, 42% of C-level executives were dissatisfied with the quality of risk management integration into strategic planning, project assessment, capital allocation and budgeting – all areas where accountants should be making a valuable input. But the key message from the survey, devised and analysed by Matthew Leitch of Internal Controls Design, and detailed in the resulting report, Rules for Risk Management: Culture, Behaviour and the Role of Accountants, is that accountants are aware of the issues and keen to get involved. Businesses should not waste this opportunity.

US snowstorms can be so violent as to force the declaration of a state of emergency; good risk management means being aware of – and ready for – the worst


ACCA’s study asked how accountants could influence the decision-making process 0%











Questioning proposals even when they are by senior people

Recognising uncertainties and being willing to seek and use relevant data

Divorcing decision-makers’ personal interests from decision-making

Choosing actions that are ethical

Choosing actions that are legal

Thinking carefully about decisions, and using calculations/models if possible

Chris Quick, editor-in-chief and Philip Smith, journalist


ACCA has developed an online tool allowing businesses to compare themselves to practices and experiences from businesses in the survey, and identify areas for improvement. You can find it at: researchandinsights

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Requiring compelling business cases for new ideas

Achieving consensus

Unquestioning compliance with instructions from senior people

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Company secretary-advert 5 ACCA Perspective.pdf


1:45:02 PM









Asia Ads.indd 2

03/01/2012 11:38



International Federation of Accountants board member Japheth Katto takes an accountant’s-eye look at the future of the Asia Pacific economies


s an African accountant, I view the rise of Asia Pacific as hugely significant. Africa’s links with the region are deepening and expanding. For instance, Australia’s trade with Africa is growing at an average of 6.1% a year and China ended 2010 as Africa’s biggest trading partner. As I pointed out at the Confederation of Asian and Pacific Accountants (CAPA) Conference in Brisbane, Australia, last year, where I was a speaker, Africa’s great potential in energy, minerals and commodities will make the continent the next frontier for the Asia Pacific economies. From Australia to Vietnam, Asia Pacific’s population is growing as strongly as its economy and many of its markets have emerged as robust global players over recent years. Of course, beyond the glowing gross domestic product (GDP) figures, markets in the region face some big risks. For example, while China and India now have economies that compete with the US and Japan, their lowcost production bases are forcing middle-income countries in Asia Pacific to find new ways of remaining competitive. Then there is the fear of recessionary contagion from the West, not to mention the risk of

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failures in corporate governance and risk management that have been so painfully felt in the West. Financial markets and economies are experiencing increasing and rapid change. The biggest of all is the tilt from Western economies to the BRICS (Brazil, Russia, India, China and South Africa). And it’s not just the BRICS. Following close behind are the emerging economies known as the Next 11 or N-11 (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam), many of which also lie in Asia Pacific. Yet the current state of markets and economies is a cause for real concern. ACCA’s latest quarterly surveys of the world’s accountants – people who have their fingers on the pulse of the economies in which they work because they deal with the real and tangible needs of businesses – make for grim reading. In the second quarter of 2011, confidence in the economy among global respondents plummeted because of the Western world’s continuing economic malaise. Even in Asia Pacific, until then so immune, accountants reported the first-ever net loss of confidence since the survey began, a trend confirmed in the third and fourth quarter reports.

Sovereign debt also remains a clear and present risk. According to the most recent edition of The Economist’s World Debt Guide, which shows overall debt as a percentage of GDP, Europe is far more highly leveraged than the BRICS. The figure for Britain is 495%, Spain 370% and Italy 316%, compared with 195%, 129% and 71% for China, India and Russia respectively. Not all of Asia Pacific looks so healthy, though: the figure is 492% for Japan and 306% for South Korea. But the skills and competencies of the accountancy profession all over the world also represent an opportunity for development. In its report, Competent and Versatile: How Professional Accountants in Business Drive Organizational Sustainable Success, the International Federation of Accountants (IFAC) identified eight interlinked drivers of that success: a customer and stakeholder focus; effective leadership and strategy; integrated governance, risk and control; innovative and adaptive capability; financial management; people and talent management; operational excellence; and effective and transparent communications. As creators, enablers, preservers and reporters of sustainable value,

12/01/2012 15:00


GLOBAL POWER WILL SHIFT FURTHER TO EMERGING MARKETS. THE DRIVING FORCE OF GLOBALISATION WILL NO LONGER BE WESTERN MULTINATIONALS BUT INTERNATIONAL COMPANIES BASED IN EMERGING MARKETS The shape of the future: the Tri-Bowl exhibition centre is part of the US$40bn Songdo new city being built from scratch near Seoul, South Korea, to service the three booming north-east Asian markets of economic giants China, Japan and South Korea

accountants are central players in many of these themes. In preparing reports they must enhance transparency and communication so that the reports resonate with stakeholders, who may not be based in the region. Brevity, relevance and flexibility are the gold standard here. The drive towards global accounting standards is both a challenge and an opportunity for accountants. In Asia Pacific, the timing and degree of convergence on International Financial Reporting Standards (IFRS) in various jurisdictions both vary. Australia, Malaysia and Singapore, for example, have almost fully aligned with IFRS; some countries such as Taiwan have set a timeline for convergence, while others have not yet committed to specific plans. There is, however, an increasingly clear recognition that convergence with IFRS is inevitable. The influx of money into Asia Pacific economies means that a great many questions are being asked about how companies can effectively manage the legal and reputational risks. Ethical issues are as pertinent in Asia Pacific as in the rest of the world, and businesses must operate with a clear sense of values. Ethical leadership from the top is a necessity.

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Governments in Asia Pacific have been proactive in tackling bribery and corruption. As early as 1999, the region’s leaders recognised the challenge and along with the Asian Development Bank and the OECD established the Anti-Corruption Initiative for Asia-Pacific. The World Economic Forum’s Partnering Against Corruption Initiative (PACI) has also been doing good work to tackle the issue. It is challenging the belief held by some that bribery and corruption oil the wheels of business – its research shows that corruption actually increases the cost of doing business globally by up to 10% on average. We accountants have a huge role in fighting corruption, and must abide by standards of conduct set by the International Ethics Standards Board for Accountants. The economic, political and environmental climate has exposed shortcomings in financial regulation, financial reporting, corporate transparency, climate change and assurance provision. It is in addressing these shortcomings that the accountancy profession can help markets in the Asia Pacific region – and indeed around the world – cope with the challenges of the future. In ACCA’s report Where Next for the Global Economy: A View of the World

in 2030, an expert panel (of which I was privileged to be a member) hypothesised, among other things, that global power will shift further to emerging markets. The driving force of globalisation will no longer be Western multinationals but international companies based in emerging markets. This levelling of the global playing field will stimulate competition among countries for access to finance. More volatile global markets will become the norm. Regulation will be applied at a global level, reflecting the ability of business, capital and people to cross borders. A multipolar world of superspecialised regions will develop, spurred by information technology. Education will be increasingly seen as a growth enabler and those countries that value education and invest in it should reap the rewards. It’s a vision of a brave new future: a world economy with parity between markets and a much wider range of key players, sharing power and influence in a new order that will bring greater global prosperity. This article is based on a presentation given to the CAPA Conference 2010


Japheth Katto FCCA, CPA (U) is CEO of the Capital Markets Authority in Uganda and an IFAC board member

12/01/2012 15:00



Spending amid the ruins [

As the eurozone’s problems threaten to engulf the global economy, Cesar Bacani asks why some Asian companies are changing tack and drawing down cash to invest in ambitious growth strategies

The remarkable consistency with which the region’s companies squirrel away cash and cash equivalents continues to amaze me. Since the start of the CFO Innovation Asia Business Outlook Survey in September 2009, during what then looked like the tail-end of the global financial crisis, the proportion of respondents who said that their company would decrease cash on the balance sheet never went beyond 23%. However, in the fourth quarter 2011 survey, 29% of the region’s CFOs said they would draw down cash, at the same time saying they would focus on expanding into new consumer segments and geographical markets. This new trend is holding up three months later. In our survey for the first quarter of 2012, fieldwork for which was done from 6 to 20 December 2011, 30% of CFOs surveyed indicated their company would reduce cash levels in the next 12 months. What’s going on? At this time of great uncertainty, when the euro may not survive the eurozone’s fiscal and economic problems, you might think it’s best to build cash as protection against a financial crisis. This is, in fact, the case with the majority of Asia’s CFOs, who say they will increase cash on the balance sheet (36%) or keep the level unchanged (34%). But the significant rise in the proportion of those that will draw down cash indicates that some companies have decided to take a calculated risk and use internal resources to fund expansion. This is what India’s Titan

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Industries is doing. The US$1.2bn-insales maker of jewellery and watches is acquiring Swiss watchmaker FavreLeuba and expanding its domestic retail network using part of its US$201m cash pile. ‘All our expansion will be funded from internal resources,’ Titan CFO Subbu Subramaniam told CFO Innovation Asia. ‘There will always be temporary slowdowns, but our view is that in the

long term the India growth story is very much intact.’ China Zhongwang Holdings, the world’s second-largest maker of extruded aluminium products, has the same idea. It is tapping its cash reserves to help finance expansion into high-end aluminium flat-rolled products. ‘The group has over RMB19bn [US$3bn] of cash on its balance sheet,’ says executive director and vice president Lu Changqing. ‘We therefore have ample financial resources ready for the purchase of equipment for the flat-rolled business and funds needed for business development.’ These ambitious spending plans are not without risk. In the same survey, for example, 43% of respondents were worried that their company’s receivables were at risk of not being paid, a sharp increase from 33% three months ago and just 20% in June 2011. So if the business environment is murkier, does it make sense to draw down cash in order to expand? The answer depends on each company’s unique circumstances and its view of the long-term prospects of its business – and the markets where it operates. Time will tell whether Titan’s faith in India’s growth story is justified and whether Zhongwang is right to bet on the business cycle turning up again in 2014, when its flat-rolled aluminium facilities are due to reach full capacity. But by investing now they may be ensuring that they are ahead of their more cautious competitors when the good times return. Cesar Bacani is editor-in-chief of CFO Innovation Asia

10/01/2012 11:11



China’s airlines could be barred from joining the European Union’s emissions trading scheme, which came into effect on 1 January. The Civil Aviation Administration of China (CAAC), is considering measures to fight the emissions scheme, including trade sanctions and prohibiting mainland carriers from joining. Under the scheme, all airlines flying to and from Europe face levies on their carbon emissions, which will be based on the length of the flight. Airlines that refuse to pay risk losing their landing rights at European airports. The Chinese government is currently forming retaliatory measures, said Cai Haibo, deputy secretary-general of the China Air Transport Association, which represents Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines. One option may be to stop buying aircraft from European manufacturer Airbus.


Nokia, the world’s largest mobile phone maker by volume, is moving its Asia Pacific headquarters to Beijing from Singapore, as part of its plans to raise business efficiencies and meet savings targets. While it is disappointing news for the city-state, the move makes sense as the Finnish phone maker’s plan is to target China’s fast-growing market to drive much of its future growth. Central to the plan is its partnership with Microsoft to offer Windows-based phones in China this year. A Nokia spokesman reportedly said the company will continue operations in its Singapore office.

AP_YCORP_intro.indd 35


The view from: Singapore: Deanne Ong, business development director, Origin Holdings Q What plans do you have for this year? A We will be rolling out a new computer system that will change the way we work. Our line of work, pest control, has always been largely labour-reliant, with our service technicians as frontline staff. The new system will let our service technicians report back to the office more quickly and accurately, and provide our clients with more real-time information. Q What is your outlook for 2012? A We are cautiously optimistic. In 2011, we invested in developing our executive team and we are now better prepared for the future. We are also rebuilding our [parent and subsidiary] companies’ infrastructure and looking at differentiating ourselves from the competition. Finally, we usually see attrition within our industry during a recession and this means increased [acquisition] opportunities. Our goal is to grow in Singapore by 20% in the coming year.

35 Corporate The view from Deanne Ong of Origin Holdings; transforming the finance function through shared services and outsourcing; a look at Ernst & Young’s risks and opportunities report 41 Practice The view from Tiffany Wong of KPMG China; Hong Kong’s moves towards independent regulation of the audit profession

Q What do you think is the main factor in getting companies to be environmentally friendly? A As long as there is a good business case for companies to engage in environmentally friendly practices, more companies can and will do so. Q What was the company’s biggest corporate social responsibility contribution last year? A We were involved in the Stop Pest Community Project at Kreta Ayer, a multi-stakeholder CSR project to help residents [of an apartment block] get rid of a bedbug problem. Q How do you keep yourself motivated? A Being motivated is just part and parcel of what I do with my team.


Annual turnover: S$2.9m Number of employees: 59 Favourite hobby: Golf

12/01/2012 15:34



No turning back It is clear that shared services and outsourcing are here to stay and will increasingly help finance functions to drive business performance A big priority for CFOs in today’s global economy is how they shape the finance function to drive business performance. There are three big priorities: reducing the cost of running the finance function in the first place, improving the efficiency of finance processes, and making finance a more effective and able partner for the business. The key tools in the toolbox that finance leaders have turned to to drive these initiatives have been shared services and outsourcing. ACCA has just published its first report on how leading organisations are transforming the finance function. Finance Transformation: Expert Insights on Shared Services and Outsourcing presents insights from experts at 20 of the world’s leading companies on the success of transformation through shared services and outsourcing. In the report the likes of Coca-Cola, Shell, Unilever, AstraZeneca, PwC, Ernst & Young, KPMG and Deloitte share their perspectives on the current issues, challenges and opportunities in the shared services and outsourcing space. Shared services started in the 1980s in the US and by the 1990s had migrated to Europe. Today shared services are a global phenomenon, with leading companies and finance leaders seeking to explore the benefits they can bring to finance operations. It’s not hard to see why. Shared services and outsourcing operations have been an overwhelming success for the businesses that have adopted them.

Cost no-brainer The obvious draw is reduced cost, as consolidation of finance activities into specific locations has driven significant scale benefits, and most importantly tapped into significant labour arbitrage between different geographies. Put

INT_YCORP_outsource.indd 2

LABOUR ARBITRAGE MAY NOT IN FUTURE BE AS COMPELLING AS IT ONCE WAS, BUT OTHER REMOTE DELIVERY BENEFITS CONTINUE TO SHINE THROUGH simply, it replaces relatively expensive management accountants in mature economies with their equivalents in cheaper locations. But to sell the benefits of shared services and outsourcing on cost alone would significantly underplay the other benefits of ‘remote delivery’. Labour arbitrage may not in the future be as compelling as it once was, but the other benefits from remote delivery continue to shine through. So what are these benefits? First, there is standardisation. Remote

delivery takes finance processes that seek the same outcomes across different geographies and turns them into one, ensuring consistency and understanding of how these processes work, rather than variations on a theme, and leveraging technology to deliver them. Second, remote delivery brings transparency. The transfer of finance activities into remote delivery centres gives the business and the finance function greater visibility on how finance operations work and how they can best

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support business aims, which helps drive accountability and ownership. Third, remote delivery offers control. The use of shared services and outsourcing for finance helps drive better financial control across the organisation and makes the auditing process more effective and efficient, with controls typically located in one or a few locations rather than dispersed across the business. Fourth comes quality. Better finance processes drive qualitative outcomes that are better first time round. They also start to drive greater insight into the business metrics and outcomes that matter, and the understanding of how processes may affect these. These four benefits are often cited as the key advantages of shared services and outsourcing, but there are others. Businesses often say that shared services and outsourcing help reduce finance operating risk (linked to transparency). In particular, businesses that choose to keep remote delivery units in-house through captive shared service centres say this lets them drive and retain specialised capabilities that may be important to the organisation – for example, regulatory skills.

Freeing up finance This, in turn, raises the broader issue of talent development. By consolidating and centralising finance operations, the business gains visibility over the skills it needs and the talent at its disposal. This is not just about visibility in the remote delivery centre: similar benefits should accrue to the retained function as staff are freed up to develop skills in necessary areas. Caroline Curtis FCCA, senior director of controllership accounting and reporting, EMEA, Yahoo, says: ‘Our shared service centres bring many benefits – speed of execution, reduced operational risk, specialised capability when it may be needed (for example, with regulatory issues), operational flexibility and an ability to control talent development effectively.’

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Anoop Sagoo

Given these benefits, it should come as no surprise that ACCA’s report shows that there will be no turning back from shared services and outsourcing. Businesses have already stripped out significant costs in their finance operations, and other benefits have started to accrue. It seems that shared services and outsourcing for finance are here to stay. While ACCA’s report concludes that shared services and outsourcing have been a success, there is much more that can still be done. In particular, the priority of many businesses is not finance transformation per se: an efficient and cost-effective finance function is beneficial, but increasingly business leaders want to understand how the finance model can improve business outcomes and profitability, and the role of shared services and outsourcing in this. They seek to drive the finance model that best meets the needs of the business and which is fully integrated with the business. Anoop Sagoo, senior executive for business process outsourcing at Accenture, says in the report: ‘The CFOs that I work with see finance


Caroline Curtis

transformation as a vehicle and tool to drive change. What they are most interested in now is performance.’ Jamie Lyon, ACCA head of employer services month, we will be looking at the *Next challenges involved in outsourcing you are a CFO or FD interested in *Iffinance transformation, shared services or outsourcing and want to contribute to ACCA’s programme, please contact, +44 (0)20 7059 5513

*VIEW FROM DELOITTE: PETER MOLLER, PARTNER Shared services and outsourcing have been an overwhelming success and are now recognised as key components of a best practice finance function. Remote delivery is an idea whose time has come and any organisation with multiple back-office finance functions is likely to benefit from a shared service structure – whether run as a captive or outsourced. The labour arbitrage that has driven nearshoring and offshoring over the past 10 years will decrease. But even if there is little cost arbitrage to be gained from a low-cost location, there are many other benefits, such as the adoption of a single best practice and more productive process, better spans of control, and standardised and enhanced data and reporting. Such benefits will ensure that consolidated transaction processing and even higher value activities will continue to make good business sense. There is no turning back.

10/01/2012 14:53



Turning risks into results In every sector, the future will favour the fast and lean in the fight for market share. Ernst & Young’s Andy Embury examines the firm’s risks and opportunities report Many economies and markets are feeling the effects of fiscal consolidation, tighter credit policies, weaker consumer demand and real inflation. Other economies – Germany, Sweden, India and Russia, to name just a few – offer businesses attractive growth opportunities. But even within these growth economies, important regulatory changes in some industries may represent a real challenge to those companies that are ill prepared or slow to change. In ‘no growth’ economies, too, clear opportunities to outperform competitors exist for those businesses nimble enough to avoid looming risks, refocus on higher growth segments, get ahead of the competitive cost curve, find and keep more of the best people, and execute faster. This is one of the main findings from recent Ernst & Young research, which charts the global top 10 business risks and opportunities. We gathered opinions from leading industry-based and academic commentators across seven global sector groups. And we conducted a large-sample survey of companies and governments in 15 countries to rank the risks and opportunities, to obtain forecasts on whether these challenges

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would be more or less important in 2013, and to discover how leading organisations in each of the seven sectors are responding to these challenges. Over the next three years, global businesses see their greatest opportunities coming from improving operational agility and ‘optimising’ cost competitiveness, according to the research report, Turn Risks and Opportunities into Results. While the past couple of years have been characterised by intense cost-cutting, we’re now seeing companies responding to competition by improving execution of their strategies and by investing to boost operational agility and competitiveness. To present a snapshot of the 10 top risks in the seven sectors covered, we created a ‘risk radar’ (see diagram opposite). The radar screen is divided into four quadrants that categorise the type of risk: compliance (originating in politics, law, regulation, governance), financial (stemming from volatility in the market and real economy), strategic (related to customers, competitors and investors), and operations (affecting the processes,

* * * *

systems, people and overall value chain of a business). Those risks that the 700-plus executives we interviewed thought posed the biggest challenges in the years ahead are placed nearest the radar screen’s crosshair intersection, with an arrow to indicate whether respondents thought the risk would rise or fall in importance by 2013. According to our research, regulation/ compliance continues to pose the biggest overall risk to global businesses irrespective of market. Regulation and compliance risks are of greatest concern to banking and life sciences businesses, and of least concern to retail, but in every sector, regulation/compliance ranks among the top four risks. Looking ahead to 2013, both banking and life sciences – the sectors that currently rank this risk highest – see risk in this area continuing to rise in the years ahead. Companies in most rapid growth markets, including China, India, Russia and the Middle East/North Africa (MENA), report that the impact of regulation and compliance risks is expected to diminish by 2013. To manage this risk, 59% of organisations are looking to strengthen their risk management functions.

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After two years as the sixth ranked risk, the challenges associated with cost control have surged to second place. Even though our survey respondents assess the impact of this risk as high, measures to respond are still just a work in progress in many of their organisations. Government sector respondents, grappling with national austerity measures, have assigned this risk the highest average rating of any risk across all the sectors. In contrast, banking executives gave lower priority to challenges relating to cost-cutting than any other sector. Respondents in most sectors expect cost-cutting challenges to decline in importance as 2013 approaches. These expectations are at odds with forecasts from the panellists we interviewed that challenges associated with both public debt and healthcare

costs will continue to grow. Risks associated with the war for talent continue to rise. Talent management ranks among the top four challenges for almost all sectors and is expected to escalate in importance as 2013 approaches. Many of the geographies where this risk is of particular concern are in the emerging markets. Respondents are evenly divided in citing internal problems, such as weakness in HR processes, and external pressures, such as rising competition for talent, as responsible for pushing this risk up the league table.

Going up We also produced an opportunity ladder based on our research, divided into four sections. These represent the four drivers of competitive success (represented by businesses in the top quartile in both revenue and EBITA growth) identified in











Social acceptance risk and corporate social responsibility

Market risks Slow recovery/ double-dip recession

Regulation and compliance

Pricing pressures

Cost cutting Emerging technologies

Managing talent

Risk to rise by 2013




pe ra t

t ra




Expansion of government’s role


Access to credit

No change expected

Risk to fall by 2013

Risks thought to be the biggest challenges are nearest the crosshair intersection

AP_YCORP_EYrisk.indd 39

our Competing for Growth research: customer reach operational agility cost competitiveness, and stakeholder confidence. The top four global business opportunities focus on investing in areas such as, processes, tools, training, IT, innovation, and strategic execution. Improving execution of strategy across business functions is ranked number one overall, with organisations seeking to improve how they communicate the business vision, goals and strategy, involving all business functions in the strategic planning process, including budgeting and forecasting. Traditionally, businesses have sought market opportunities at a much earlier stage, but today we are seeing businesses focusing on making sure they have the capability and innovative strengths to make a real impact in their chosen markets. The research shows a high degree of consistency across both countries and industries, with a common focus on operational agility and cost competitiveness. This consistency applies across markets, although there are signs that organisations in emerging markets are sensitive to the need to adopt more mature operating models, structures, processes and business controls, as well as respond to competitive threats. Surprisingly, emerging market demand growth is ranked only as the fifth top opportunity. Indeed, one in five organisations reported they had limited their Asia focus, following setbacks there, in favour of their home market. Nevertheless, the emerging market demand growth opportunity is predicted to rise by 2013. Every organisation has its own unique set of risks and opportunities, but this research provides some insight into how other organisations are thinking and how that thinking is evolving. As we know, fortune also favours the prepared mind‌

* * * *

Andy Embury is Ernst & Young’s EMEIA Advisory Services leader To download the report, go to www2.

10/01/2012 14:55



IRB toughens up its act [

With just 1.7 milllion active taxpayers in Malaysia, the Inland Revenue Board has a number of plans up its sleeve to ensure more direct tax is collected from individuals and companies, says Errol Oh

Every year, as part of the Budget formulation process, the Treasury prepares a memorandum that explains the Malaysian government’s revenue estimates for the year ahead and the revised estimates for the current year. Naturally, the document is chock-full of numbers, and the accompanying narrative is terse. However, the information sometimes hints at interesting developments. For instance, the memoranda issued in the past three years have all partly attributed the increased collection of individual income tax to audit activities and more stringent investigations. Previously, the Treasury usually linked the ups and downs in tax collection solely to the country’s economic performance. This suggests that the Inland Revenue Board (IRB) has taken a more aggressive approach to getting individuals to pay tax. This mindset switch is perhaps also reflected in some recent proposed amendments to the Income Tax Act that were sought by the board. One change that the IRB wanted was the power to direct a taxpayer to make advance payments if it believed that the taxpayer had not submitted his returns correctly. Another amendment was designed to allow the board to disregard any information or particulars produced by a taxpayer after a deadline set by the board. Furthermore, the taxpayer would not have been able

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to rely on that information to dispute a tax assessment before the Special Commissioners of Income Tax. Had a third proposed change become law, the IRB would have had the right to gain access to data stored on computer. However, the amendments drew vigorous opposition from various parties, who were concerned that such moves would lead to an unreasonable expansion of the IRB’s powers and might scare away investors. The relevant clauses were subsequently deleted before the bill was passed. While it is clear that the board has

stepped up its collection of individual income tax in recent years, what about companies? After all, company income tax accounts for about 46% of the government’s direct tax revenue. There are indications that the IRB is gearing up on this front as well. For example, last August, the IRB advertised for assessment executives on a contract basis. What stood out was that it was looking for people with at least three years’ experience in corporate audit or accounting, and the job required them to plan and conduct tax audits, and to handle resulting taxpayer appeals. The board signed up 100 people, 97 for the corporate tax department. There is indeed a lot of scope and impetus for increasing income tax revenue from individuals and companies. In September last year, IRB CEO Datuk Dr Mohd Shukor Mahfar said about five million people in Malaysia were eligible to pay taxes but for various reasons, only 1.7 million were active taxpayers. In addition, a key priority is to narrow the federal government deficit, which was 5.4% in 2011. But the other side of the coin, of course, is for the government to demonstrate that while it is putting more effort into collecting tax, it is also working hard to ensure that every sen of taxpayers’ money is well spent. Errol Oh is executive editor of The Star

10/01/2012 11:12



Two Indian auditors were banned for life in December from practising as accountants for their role in the US$1bn Satyam Computer Services scandal. The Institute of Chartered Accountants of India (ICAI) barred Pulavarthi Siva Prasad and Chintapatla Ravindranath after finding them culpable of ‘serious gross negligence’ for Satyam’s audits between 2001 and 2008. Inflated profits and unrealistic share values were central to the Satyam fraud. Both accountants worked for the Kolkata-based firm Lovelock & Lewes under an agreement with Price Waterhouse in Bangalore, Satyam’s home city. At the time of going to press, disciplinary hearings against four other chartered accountants – PwC auditors Talluri Srinivas and Subramani Gopalakrishnan, Satyam’s ex-CFO Vadlamani Srinivas and former Satyam internal audit chief VS Prabhakara Gupta – were delayed due to legal proceedings.

The view from: Hong Kong: Tiffany Wong, partner, KPMG China Q What’s your top priority at the moment? A Restructuring is a very specialised business and there are not a lot of people in the market who know exactly we do, other than acting as liquidators. My priority is to raise the awareness of restructuring services, including how we add value to businesses and clients, within our firm and other professional advisers such as lawyers. Q With another global economic slowdown predicted in 2012, what impact are you expecting it will have on Hong Kong’s insolvency and restructuring market? A The economy is in a very fragile state. When market liquidity is drying up even more, we expect to see more collapses and distress situations in 2012. While listed companies have the option of raising capital in the market, smaller private businesses need to manage their liquidity carefully. Q What work gives you the most satisfaction? A Being able to turnaround failing businesses so that jobs are saved and creditors and shareholders can recoup at least part of their losses.


Michael Lim Choo San has been announced as the new chairman of Singapore’s Accounting Standards Council (ASC). The city-state’s Ministry of Finance, which announced the appointment, said in December his term is for two years. Lim is also the chairman of the Land Transport Authority and chairman of Nomura Singapore and the Pro-Tem Singapore Accountancy Council. Lim was previously executive chairman of PwC Singapore. He takes over from Euleen Goh, who led the ASC since it was established in 2007 to develop and promote financial reporting standards.

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41 Practice The view from Tiffany Wong of KPMG China; Hong Kong’s moves towards independent regulation of the audit profession 35 Corporate The view from Deanne Ong of Origin Holdings; transforming the finance function through shared services and outsourcing; a look at Ernst & Young’s risks and opportunities report

Q In Hong Kong, there are limited avenues to turn distressed companies around. Is this a major issue in your work? A Definitely. There is no automatic stay of proceedings provision in the Hong Kong legislation until provisional liquidators are appointed over a company. This means a company in distress does not have the breathing space that it needs from creditors in difficult times.


Number of partners and staff: About 9,000 Specialisations: Insolvency, formal and consensual restructuring, deceased estate administration and family dispute resolution Hobbies: Having meals or drinks with family and friends Favourite piece of music: Canon in D by Johann Pachelbel

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Under watchful eyes Hong Kong is looking to move towards international practice of independent regulation of the audit profession. So how and when will the proposed changes come into effect? Despite the disgruntlement of some auditors in Hong Kong about being forced to surrender their professional scrutiny of accounts to independent regulators, a proposed move away from self-regulation is set to align the city with global trends. Speaking about the research carried out by the Hong Kong Institute of Certified Public Accountants (HKICPA) into alternative systems that would see Hong Kong meet international regulatory criteria with regards to the audits of locally listed companies, HKICPA executive director Chris Joy says that a full report is yet to be made to the Hong Kong government. ‘We’ve come to some general conclusions, had some discussions with the government and we can see the way forward,’ he says. ‘Clearly, there will need to be both a member and a public consultation, given that it’s a matter of public interest.’ Auditor regulation comes under the powers given to the HKICPA as the profession’s regulator by the Professional Accountants Ordinance (PAO); in other words, regulation is entirely vested within the institute. Logic says that something has to change to bring Hong Kong into line with the rest of the world. Citing the direct responsibility for regulating auditors of listed companies of the Public Company Accounting Oversight Board (PCAOB) in the US and the Professional Oversight Board under the Financial Reporting Council (FRC) in the UK, Joy points out that the lack of independent oversight of the audit protection regime in Hong Kong could become problematic. ‘Hong Kong is not recognised by the International Forum of Independent Audit Regulators (IFIAR), nor is it recognised as an equivalent regime by the European Union (EU).

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‘We haven’t got to the stage where overseas regulators are clamouring to come and review our firms. But potentially that could happen. Our goal is to gain the recognition as an equivalent regime because we are confident we are of the same standard. We also want to protect our Hong Kong audit firms from being reviewed by every regulator under the sun,’ Joy says. Membership of IFIAR requires ‘responsibility for and oversight of the inspection of listed company auditors to be with an independent body’. Hong Kong currently lacks this. Additional requirements from

State of independence In essence then, the proposal to overhaul self-regulation is about one very fundamental issue in Hong Kong: its lack of independent oversight of auditor regulation. Specific details of the proposals that the institute will submit to the government are not yet publicly available. But it seems likely that direct oversight of the auditors of Hong Konglisted companies will be placed in the hands of Hong Kong’s own FRC, set up in 2006 by the government under the Financial Reporting Council Ordinance. The FRC has investigatory power only, being entrusted with statutory

‘WE MUST BE PERCEIVED AS WORKING TO PROTECT THE PUBLIC INTEREST, WHICH WOULD INCREASE PUBLIC CONFIDENCE IN OUR PROFESSION’ the EU mean that the Hong Kong auditor of a Hong Kong-listed company that is also listed on a European exchange must be registered with and be subject to oversight by the European regulator.This becomes an issue if the latter is of the view that Hong Kong is not equivalent in terms of audit regulation to European standards. ‘If we can meet the EU equivalence requirements then that should mean that we won’t get EU regulators wanting to come to Hong Kong to review audit work; they would rely instead on the inspection work done in Hong Kong,’ Joy says. These are the key drivers pushing the Hong Kong government and the HKICPA to cement overseas perceptions of the city’s regulatory regime for auditors of listed companies, while also bolstering its status as an international financial centre.

responsibilities to investigate financial reporting irregularities by locally listed companies and to enquire into possible non-compliance with financial reporting requirements. Additional responsibility on this front would simply focus its core responsibilities on listed companies but would transfer the practice review function for listed companies from the HKICPA to the FRC. The HKICPA would retain the power to carry out practice reviews on all firms that handle non-public interest companies along with its responsibilities for accountants’ accreditation, accounting standards promulgation and disciplinary action. Albert Au, chairman and chief executive of BDO Hong Kong, points out that the proposal isn’t unique; rather, it is part of the global trend towards greater regulation, not just of accountants but also of banks and

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other financial institutions, by independent bodies, primarily driven by governments in the wake of the Enron scandal and, more recently, the 2008 global financial crisis. ‘The PCAOB took away selfregulation from the accounting profession in the US, then the same thing happened via the FRC in the UK,’ Au says. ‘In Hong Kong we also made some changes through our FRC but it’s time we took this to the next level.’ Au is deputy chairman of the HKICPA’s audit profession reform committee, formed in June 2010. Chaired by Hong Kong Stock Exchange (HKEx) chief executive Charles Li, the committee has two working groups on regulatory and professional liability reform. The regulatory reform group is

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reviewing the role of the institute concerning self-regulation. The preliminary proposal to transfer some of the institute’s regulatory powers to the FRC came out of the regulatory reform working group. ‘We felt that if we were going to move the practice review function we would simply move that which related to firms that audit publicly listed companies,’ Au says. In effect, this move would change the regulatory role of the HKICPA significantly, because practice review is an important regulatory function. It would give the FRC the ability to enter a firm and review how it is conducting its audit work, examine how it is organised to deal with audit quality and allow it to drill down and review the working papers of those listed

companies being audited. As Au notes, this is a very large area of regulation.

Duplication danger? Not surprisingly, firms that operate globally won’t be threatened with any further regulatory requirement because they are already subject to regulation oversight by overseas regulators for listed clients that operate in multiple markets. For Hong Kong firms auditing private companies, nothing changes because the practice review function will continue to be overseen by the HKICPA. For local independent firms working on listed companies, though, there is concern that the transfer of powers to the FRC may lead to duplication of effort, with both the latter and the institute carrying out practice review

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functions. It’s not unfeasible that both regulators could be carrying out a practice review on listed and private clients simultaneously in one firm that handles both types of clients. Nevertheless, the proposal is being touted by the regulators as leading to a better regulated profession and more confidence in Hong Kong. As Au sums up: ‘The challenge of self-regulation is that we are perceived as protecting our own. From this point of view alone, the public perception of the accounting and audit profession in Hong Kong has to change. We must be perceived as working to protect the public interest, which would increase public confidence in our profession. ‘Just as importantly, to have Hong Kong perceived to be self-regulating when it is such an important stakeholder in the global financial market does not do Hong Kong any good,’ Au continues. ‘Look around you; all the major financial centres are moving away from the self-regulation of accountants. I think our move to do the same means that we would be more internationally recognised and accepted by the global financial community. It is a move in the right direction.’ Countering this gung-ho attitude is the not entirely welcome prospect of

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having to comply with yet more regulation in the management of listed companies in Hong Kong, and the inevitable issue of related costs. As the institute’s Chris Joy admits: ‘The reality

is that to set up a new system there will be cost implications but there are benefits in addition to costs.’ Kate Watson, journalist


For all the talk of proposals and public consultations, there is a major stumbling block to the expediting of the plans by the Hong Kong Institute of Certified Public Accountants (HKICPA) to lessen the profession’s reliance on self-regulation: legislation. According to Chris Joy, HKICPA executive director, legislative change to facilitate the proposal is not imminent. ‘We’re talking about a system that is largely founded on legislation so there’s going to need to be legislation changes, which take time’ Joy says. Part of the problem is that 2012 is a politically focused year in Hong Kong. With the central government’s selection of a new chief executive for the Special Administrative Region, and elections for the legislative council – Hong Kong’s parliament – in September, efforts are being focused elsewhere. To achieve the necessary changes, amendments will likely have to be made to the Professional Accountants Ordinance, the law that regulates accountants in Hong Kong, and the Financial Reporting Council Ordinance, which enables the FRC to investigate accountants. It’s questionable whether this process may make it onto the 2012 legislative calendar. ‘I would stress that this is very much an ongoing process,’ Joy says. ‘We are engaged with government in talking about where we go from here. There is a lot more work to be done in terms of consultation with members and the public, and in working out exactly what the changes need to be and how they’re going to happen. There will have to be legislation changes to accommodate this. Hong Kong has been a bit of an outlier from the usual arrangements in the rest of the world with respect to audit oversight of listed companies. That said, as we’ve done our research into other regulatory practices, it hasn’t appeared to us that other jurisdictions have found the perfect solution yet.’

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Technical update

A monthly round-up of the latest from the standard-setters INTERNATIONAL IFRS CHANGES At the end of 2011, the International Accounting Standards Board (IASB) announced that the mandatory effective date of IFRS 9, Financial Instruments, would be deferred from 1 January 2013 to 1 January 2015. The IASB has also amended IFRS 9 to provide relief from the requirement to restate comparative information, but transitional disclosures will be required. In December 2011 the IASB issued an amendment to IFRS 7, Financial Instruments: Disclosures, aimed at improving the information presented in financial statements about the effect or potential effect of offsetting arrangements. The balance sheet offsetting of financial instruments was the subject of a joint project between the IASB and the US Financial Accounting Standards Board and, while a joint exposure draft was issued in January 2011, the respective boards have decided to retain their existing models but jointly issue new disclosure requirements. These will apply for periods beginning on or after 1 January 2013. An amendment to IAS 32, Financial Instruments: Presentation, was also issued clarifying the requirements for offsetting financial instruments. The amendment, Offsetting Financial Assets and Financial Liabilities, will apply for periods beginning on or after 1 January 2014 and

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is retrospective. The revised standard clarifies: The meaning of ‘currently has a legally enforceable right of set-off’. That some gross settlement systems may be considered equivalent to net settlement. IFRS 10, Consolidated Financial Statements, was issued in May 2011 and some concerns have been raised about the transitional provisions addressing when the standard needs to be applied retrospectively. As a consequence, the IASB has issued an exposure draft suggesting amendments to clarify the requirements. The proposed changes are: An explanation that the ‘date of initial application’ means the beginning of the accounting period in which IFRS 10 is applied for the first time. Clarification that relief from retrospective application would apply where an interest in an investee was disposed of in the comparative period such that consolidation would not occur at the date of initial application. Clarification as to how the comparative period(s) should be adjusted when required by the standard. The SME Implementation Group (SMEIG) of the IFRS Foundation has added a further module to its training material in relation to the IFRS for SMEs addressing related party disclosures. The material is

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available at at no charge. The SMEIG has also published two questions and answers addressing: Entities that typically have public accountability. Interpretation of ‘traded in a public market’.

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Yvonne Lang, director, Smith & Williamson

MALAYSIA BASEL III IMPLEMENTATION On 19 November 2011, Bank Negara Malaysia (BNM) issued a notification of the implementation of Basel III. BNM supports implementation and will strengthen the existing capital and liquidity standards for banking institutions in Malaysia, bringing them in line with Basel III. BNM plans to implement the reform package in accordance with the globally agreed timeline which provides for a gradual phase-in from 2013 to 2019. More information at www. NEW CURRENCY SERIES On 21 December 2011, BNM announced the introduction of Malaysia’s new currency series. Launched by prime minister Najib Razak, the banknotes are in the denominations RM1, RM5, RM10, RM20 and RM100 and will be available for circulation in the second half of 2012. The coins, with denominations 5 sen, 10 sen, 20 sen and 50 sen, were launched

earlier on 25 July 2011 and introduced into circulation in January 2012. GRATUITY PUBLIC RULING On 5 December 2011, the Inland Revenue Board (IRB) issued Public Ruling (PR) No 10/2011: Gratuity. This PR, which is effective from year of assessment 2011 and subsequent years of assessment, provides an explanation on the method used to characterise lump sum payments received by employees on the termination of their employment as gratuity and the relevant tax treatment. It can be downloaded at pdfam/PR10_2011.pdf MASB DISCUSSION PAPERS On 16 December 2011, the Malaysian Accounting Standards Board (MASB) issued three discussion papers (DPs) for comment: MASB DP i-1 Takaful. MASB DP i-2 Sukuk. MASB DP i-3 Shariah Compliant Profit-sharing Contracts. In view of Malaysia’s convergence with International Financial Reporting Standards (IFRS) on 1 January 2012, these DPs have been issued to discuss the application of IFRS to takaful, sukuk and sharia-compliant profit-sharing contracts. Comments can be submitted online by 16 March 2012 via

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Vilashini Ganespathy, head – technical and professional development, ACCA Malaysia

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SINGAPORE MRA DISCUSSED On 1 November 2011 a roundtable in Kuala Lumpur discussed the implementation of the accountancy mutual recognition agreement (MRA). Members of the ASEAN Federation of Accountants (AFA), together with regulators and the ASEAN (Association of Southeast Asian Nations) secretariat, discussed the milestones, issues and challenges faced. More details can be found at NEW PRACTICE BULLETIN ACRA (Accounting and Corporate Regulatory Authority) has issued Audit Practice Bulletin No 2 of 2011: Audit Considerations in an Uncertain Economic Environment. It should be read together with Audit Practice Bulletin No 1 of 2009: Audit Considerations in the Current Economic Environment, which continues to be relevant. In light of the current environment, ACRA reminds public accountants to exercise vigilance, professional scepticism and judgment when performing the coming year-end audits. The bulletin is available at ACRA REVISES FEES There has been a fee adjustment for the information products and subscription services provided by ACRA. ACRA has avoided increasing the fees

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for information products and services since 1984, despite the various rounds of adjustments to the goods and services tax (GST). More details can be found at MORE ACAP FUNDING GST-registered companies that undertake the Assisted Compliance Assurance Programme (ACAP) from 1 April 2012 can look forward to a second tranche of co-funding by the Inland Revenue Authority of Singapore (IRAS). Companies that undertake ACAP within the five-year period from 5 April 2011 to 4 April 2016 and attain ACAP status will be offered 50% co-funding of ACAP fees capped at S$50,000, and a one-time waiver of penalties for voluntary disclosures of past GST errors. The ACAP status allows businesses to enjoy benefits such as three to five years of exemption from GST audits, faster refunds and resolution of issues, and automatic renewal of schemes. More information at Joseph Alfred, policy and technical adviser, ACCA Singapore

HONG KONG CONSULTATION ON GUIDE The Hong Kong stock exchange (HKEx) has released a consultation paper on the proposed Environmental, Social and Governance Reporting Guide.

The proposed guide is a first step towards Hong Kong-listed issuers adopting best practices and covers four areas – workplace quality, environmental protection, operating practices and community involvement – where general disclosure recommendations and key performance indicators are provided. The consultation proposes that the disclosures be recommended best practices. HKEx may consider raising the level of obligation to ‘comply or explain’, which is similar to the Corporate Governance Code, in the future. Comments are invited by 9 April 2012. QUALIFYING CRITERIA Under section 141D of the Companies Ordinance, a private company may prepare simplified accounts and simplified directors’ reports in respect of one financial year at a time. According to the Small and Medium-sized Entity Financial Reporting Framework (SME-FRF) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA), a Hong Kong company qualifies for reporting based on the SME-Financial Reporting Standard (SME-FRS) if it satisfies the requirement under section 141D. It was proposed that two types of private companies will automatically qualify for simplified reporting: A private company, except for a banking/


deposit-taking company, an insurance company or a stockbroking company, which is a ‘small private company’, ie a private company that satisfies any two of the following conditions. i Total annual revenue of not more than HK$50m. ii Total assets of not more than HK$50m. iii No more than 50 employees. A private company that is the holding company of a ‘group of small private companies’, ie a group of private companies that satisfies any two of the following conditions. i Aggregate total annual revenue of not more than HK$50m net. ii Aggregate total assets of not more than HK$50m net. iii No more than 50 employees. However, there are concerns that the revenue and asset criteria mentioned above are too restrictive. It was therefore proposed that private companies and private companies which are holding companies of groups of private companies not meeting the size criteria should also be allowed to adopt simplified reporting provided that most of their members so resolve. As such, a consultation paper has now been released to seek views on this. Comments are invited by 16 January 2012.


Sonia Khao, head of technical services, ACCA Hong Kong

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Statements across frontiers? Just how comparable are financial statements across national boundaries, given the clear and concise language in IAS 1? Graham Holt explores the evidence

IAS 1, Presentation of Financial Statements, requires that an entity whose financial statements comply with International Financial Reporting Standards (IFRS) has to make an explicit and unreserved statement of such compliance in the notes. Financial statements cannot be described as complying with IFRS unless they comply with all the requirements of IFRS, including International Financial Reporting Interpretations Committee interpretations (IFRICs). Inappropriate accounting policies cannot be rectified either by disclosure of the accounting policies used or by notes or explanatory material. On the basis of the above statements, it could be assumed that the comparability of financial statements could be assured, as the language used in IAS 1 is clear and concise. Recently staff at the US Securities and Exchange Commission (SEC) analysed the annual consolidated financial statements of 183 companies, including both SEC registrants and companies that are not SEC registrants, which prepare financial statements in accordance with IFRS. The 183 companies were domiciled in 22 countries and approximately 80% were domiciled in the European Union (EU), with companies from Germany, France and the UK representing just over half. The companies in the analysis represented 36 industries and were selected from the Fortune Global 500, a listing of the world’s largest companies by revenue.

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The standards reviewed were those in effect at 31 December 2009. It was found that company financial statements generally appeared to comply with IFRS requirements. However, it was felt that the transparency and clarity of the financial statements in the sample could be enhanced. Many companies did not appear to provide sufficient detail or clarity in their accounting policy disclosures to support an investor’s understanding of the financial statements, and some also used terms that were inconsistent with the terminology in the applicable IFRS. Further, some companies referred to local guidance, the specific requirements of which were not clear. Differences in the application of IFRS affect the comparability of financial statements across countries and industries. In the sample, any lack of comparability seemed to be caused through application of IFRS, or due to options permitted by IFRS or the absence of IFRS guidance in certain areas. In other cases, differences resulted from what appeared to be non-compliance with IFRS. Differences arising from the standards themselves were affected by guidance from local standard setters or regulatory bodies that narrowed the range of acceptable alternatives permitted by IFRS or provided additional guidance or interpretation. There was also a tendency by some companies to carry over their previous national practices in their IFRS financial statements.

In the absence of a specific applicable IFRS, an entity is required first to consider guidance in an IFRS standard that relates to similar issues, and then to consider the IFRS Framework. The entity may also consider recent pronouncements of other standard-setting bodies that use a similar conceptual framework, other accounting literature and industry practices, if they do not conflict with IFRS. Approximately 20% of companies in the analysis referred to local guidance for a specific transaction as part of their accounting policy disclosures. An interesting case arose where a company elected to rely on the pronouncements of another standard setter as regards their revenue recognition accounting policy. Subsequently the standard setter changed its guidance but the company did not incorporate the changes that the standard setter had made. IFRS is silent on this matter. IFRS requires compliance with IFRICs. However, like new IFRSs, IFRICs are not mandatory immediately. For example, in the EU, IFRICs are not implemented until after the European Commission adopts them. As a result, some companies in the EU adopted IFRICs at dates later than companies outside the EU. This practice can cause differences in accounting practices that the IFRICs are issued to address, due to a timing difference. IFRS permits a departure from specific requirements of IFRS if an entity determines that the application of that requirement would result in the

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financial statements being so misleading that they no longer meet the objectives of the Framework. This is often referred to as a ‘true and fair override’. There were no examples of the true and fair override in the sample. There were significant differences in the presentation of the statement of cash flows. IAS 7, Statement of Cash Flows, permits the use of the direct or indirect method of

claims. IFRS defines cash equivalents as ‘short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value’. Differences were seen in the items classified as cash equivalents; these ranged from balances at central banks to investments with a maturity exceeding three months.

COMPANY FINANCIAL STATEMENTS GENERALLY APPEARED TO COMPLY WITH IFRS STATEMENTS, BUT TRANSPARENCY COULD BE ENHANCED presentation. The vast majority of companies used the indirect method, with companies in two countries primarily using the direct method. This was due to the use of the indirect method being prohibited at the time of initial adoption of IFRS. Further, there were many variations relating to the profit or loss measure used as the starting point to determine operating cash flows. Additionally, there were differences in the classification of items within the operating, investing and financing categories. For example, most companies in the insurance industry classified their investment activities within cash flows from investing activities but some presented investing activities within cash flows from operating activities, either on a gross basis or net of payments of related benefits and

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IAS 38, Intangible Assets, defines an intangible asset as ‘an identifiable, non-monetary asset without physical substance’ and requires each entity to ‘assess whether the useful life of an intangible asset is finite or indefinite’. Some companies determined that certain types of intangible assets – for example, brand names – had a finite life, while others determined that the same type of intangible assets had an indefinite life. The brand names included some of the world’s most recognised brands. Additionally some companies disclosed useful lives that appeared to be capped at a maximum length rather than using an assessment of the useful life of the asset. Companies can select either the cost model or the revaluation model as their accounting policy and must apply that policy to an entire class of intangible assets. All of the companies elected to


use the cost model to account for intangible assets. IAS 36, Impairment of Assets, requires assets to be evaluated for impairment individually, or, if the recoverable amount of an individual asset cannot be determined, by cash-generating unit. A cash-generating unit is ‘the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets’. It was seen that there were several levels defined as cash-generating units, including: the operating segment; below the operating segment but not defined; one level below the operating segment; two levels below the operating segment; and the individual store or outlet. This is obviously a cause for concern in terms of the nature and accuracy of the impairment charge. One-third of companies disclosed that they entered into transactions within the scope of IAS 40, Investment Property. IAS 40 permits companies to elect to use either the fair value model or the cost model. Most companies applied the cost method, with those that used the fair value model mainly in the banking sector. There were problems with those companies who used the fair value model; several did not disclose the methods and significant assumptions used to determine the fair value of the investment properties, as required by IFRS. Also, there were variations by country in the determination of fair value for investment properties. The

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determination of fair value of investment property was regulated in one country, while in another it was measured for fair value in accordance with guidance published by a national organisation. Fair value should reflect market conditions at the end of the reporting period. In IAS 37, Provisions, Contingent Liabilities and Contingent Assets, IFRS requires a provision to be recognised

determine whether a provision should be recorded. There were several instances in which local laws or accounting regulations required the use of a separate account within shareholders’ equity to provide for specifically mandated reserves. IFRS gives no guidance regarding the presentation of these separate accounts. A group of companies in a particular country disclosed that 10%

THERE WERE INSTANCES IN WHICH LOCAL REGULATIONS REQUIRED A SEPARATE ACCOUNT WITHIN SHAREHOLDERS’ EQUITY when an entity has a present obligation whether legal or constructive as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle that obligation, and a reliable estimate can be made of the amount of obligation. Most companies stated these recognition criteria in their accounting policy, but did not provide any additional explanation as to how the criteria were applied. Some disclosed that one of the criteria applied to recognise a provision would be that no inflow of resources of an equivalent amount was expected. IFRS does not allow offsetting in the statement of financial position of amounts recoverable from third parties. In addition, some entities did not discuss the recognition criteria in IAS 37 but indicated that they looked to legal experts to

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of profit was transferred to a nondistributable statutory surplus reserve in shareholders’ equity in accordance with national accounting standards. Similarly, an entity disclosed that national law required it to maintain a general reserve within shareholders’ equity for the risk of impairments equal to 1% of risk assets, which are defined by law. IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations, requires: a) assets that meet the criteria to be classified as held for sale to be measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets to cease; and b) assets that meet the criteria to be classified as held for sale to be presented separately in the statement of financial position and

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the results of discontinued operations to be presented separately in the statement of comprehensive income. Companies tended to address some, but not all, of the criteria required for classification as discontinued or held for sale. Several companies described accounting practices that did not appear to comply with IFRS. For example, one of the criteria used to classify an asset as held for sale was that a sale would be completed within one year from the statement of financial position date, rather than one year from the date of classification. Another company classified assets as held for sale that were not available for sale in their present condition. This is inconsistent with IFRS, which requires that the asset ‘must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets’. There were other differences reported by the SEC in relation to deferred tax, operating segments and revenue recognition. As stated above many of the differences seemed to stem from national policies carried over at the time of transition to IFRS and national laws and regulations. It does appear that the aim of producing comparable financial statements across boundaries has some way to go. 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

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INDEPENDENCE The objectivity and effectiveness of directors in Asia is being threatened by multiple directorships, long tenures and strong ties to CEOs and companies, says a new survey

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he potential problems created by people holding multiple directorships and questions over the ‘independence’ of independent directors are not issues confined to the West. Throughout Asia, directors tend to sit on several boards, sometimes as many as 15, partly reflecting the dearth of qualified directors available in the region, but also the lower pay these directors are offered compared with directors in Europe or the US. They may also have very strong ties to the CEOs and companies, as relationship-driven business is still key in the region.

governance study in Europe for over 10 years, taking an empirical look at corporate governance. Data is taken mainly from annual reports and information provided by the company’s investor relations department, with generally over 300 items of data on every board covered. The company is now in the process of completing a similar study in Asia, but Robert Knight, regional practice managing partner for CEO and board practice at Heidrick & Struggles, presented some of the initial observations at a recent breakfast meeting in Singapore, organised by

‘YOU DO HAVE TO QUESTION REALLY WHETHER THE INDEPENDENT DIRECTORS DO HAVE AN IMPACT ON DECISION-MAKING OF STATE-OWNED COMPANIES’ These are some of the preliminary findings of a new study, Board Effectiveness in Asia – the Key Challenges, by executive search firm Heidrick & Struggles, that will be unveiled later this year. The study gathered data from companies in Australia’s ASX 50, New Zealand’s NZX 15, Hong Kong’s Hang Seng Index, India’s BSE Sensex and Singapore’s Straits Times Index. Heidrick & Struggles has been carrying out a biannual corporate

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the Australian Institute of Company Directors. One key point is that boards in Asia tend to meet less regularly, about four meetings a year on average, than the six to seven meetings that boards in the West hold. ‘This may explain why we have so much overcapacity in Asia. Some people here are sitting on 12 or 15 boards, and an awful lot of people are sitting on at least eight or nine boards,’ Knight said.

He also attributed the overcapacity to the lower remuneration of directors in Asia compared with their Western counterparts: ‘Nearly 50% to 80% less, although we are seeing an increase in remuneration.’ Asked whether there should be a cap on the number of directorships one could hold, Knight rejected the idea, saying it was up to each director to decide how many boards they can sit on, pointing out that different boards exert different types of demand on one’s time. But he added directors should have ‘enough self-discipline to say I’m doing too much and therefore shouldn’t take any more on, and the chairman should be able to observe very quickly if a director is on too many boards and is not prepared’. The study found that the structure of boards across Asia can often be similar, Knight said, adding there is a very strong relationship between the structure of the board and the structure of the ownership of companies in Asia. ‘You can spot immediately by looking at the composition of the board what the ownership structure of the company is, whether it’s family owned, state-owned etc. Something that was a bit of a surprise is that the combined role of chairman and CEO is more common in Asia than in Europe.

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Additionally, chairmen that were formerly CEOs in their past life are also more common,’ he said.

Keeping it in the family There are many more large state-owned enterprises and family owned business and conglomerates in Asia than in Europe, and one of the problems that raises is the issue of independence. ‘You do have to question really whether the independent directors do have an impact on decision-making of state-owned companies, especially in terms of strategic-making decisions,’ he said, pointing out that since directors are elected by the controlling shareholders, it is unlikely that independent non-executive directors can exert a strong influence on major corporate decisions and provide an adequate degree of monitoring of the majority shareholders. The study also indicates that independent directors sometimes have very strong ties to the CEOs in Asia. ‘Such ties tend to challenge the European or North American way of thinking. With family members being on the board, we tend to think immediately that’s wrong, but actually a lot of those family members on board work quite well, and there is probably nothing wrong having somebody who has been to Harvard, got a business degree, comes back at 30 and becomes a director of the company. In fact there is quite a good history of performance in these family run companies that challenges our way of thinking in the West,’ he notes.

Lack of heirs However, Knight pointed out that China may face succession problems in the future. ‘What’s going to happen with the one-child policy? In Asia, most parents have several heirs to choose from to run the company, but in China they won’t have the luxury in 10 to 15 years, and it’s going to be very hard for Chinese dads to admit that their son

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or daughter may not be up to running the company. It will be interesting to see if there is any devaluation of shareholder value on these companies when the younger generation takes over,’ he noted. The study showed boards in Asia face a particular set of issues, such as operating in different time zones and dealing with language and cultural differences. ‘While English functions as a lingua franca in the region, many boards are still very local and less international,’ he noted. Knight raised concerns about the average tenure of directors in the region, which is higher on average than in Europe. In one case, he noted, a director of a bank in Hong Kong has been on the board for 50 years! In Singapore, for example, a proposed change to the Code of Corporate Governance to set a nine-

year tenure limit for independent directors was recently dropped. Instead, it will be left to the company’s nominating committee to decide whether a director is still independent after nine years of service. But Knight said he believes there should be a regulatory limit on the tenure of the independent directors to ensure that they remain objective. ‘The biggest issue we’re seeing in the region is the lack of independence of independent directors, people that have 10-year-links all over the place. We’re also not seeing enough spread of diversity of talent on board, and the most important thing, everybody is over-boarded – and you cannot be effective if you’re seated on nine or 10 boards,’ he told Accounting and Business. Sonia Kolesnikov-Jessop, journalist


Many directors in Asia face added challenges because of the diversity of the region in term of legal and regulatory framework. There is still no uniform accounting standard across Asia, making it more difficult for directors who sit on multiple boards spread throughout different territories. ‘That invariably forces smaller and smaller boards for each territory, which can cause of lack of cohesiveness,’ said Robert Knight, regional practice managing partner for CEO and board practice at Heidrick & Struggles, explaining that corporates with business spread across the region are forced to have corporate governance oversight in each country via a separate statutory board. ‘In contrast, a financial services group spread across the EU could have oversight of all its businesses using one board only, because they will all be under the control of just one regulator [their home regulator] and therefore the standards are common for each country,’ he pointed out. He noted that because of the brisk pace of mergers and acquisitions (M&A) in the region, audit is often not fully integrated. ‘You can also see a number of companies using different auditing firms for their various entities because in Asia a lot of companies are buying new companies, acquiring auditors, and very often leaving them as they are. So there is no cohesion within the audit function as you would have in the UK for example,’ he said. ‘In the UK it’s simply a case that there’s very little M&A and the groups are far more mature and the business less diverse. This has resulted in virtually every group using the same audit firm across all its businesses. This isn’t a terribly important point, more an observation having moved from doing business in the UK to doing business in Asia.’

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How to manage your brand online [

When used effectively, social networking can play a key role in a planned approach to career management, enabling the ‘hunted’ to connect to potential ‘hunters’, explains Patrick O’Brien

Talent attraction and retention is a key challenge for business today, and technology – in particular the growth in social media – can lend a hand. Organisations and individuals are now embracing social networking on a more regular basis and it can be very beneficial in helping individuals to manage their careers. The ‘hunter’, looking for the talent, uses the tools to find out who is available and to run background checks; it is amazing what people reveal online and what trails they leave behind! At the same time, the ‘hunted’ use social networking to put themselves into the right places, so that they can be seen when required and, hopefully, in the best of lights. Humans are by nature social animals; it pleasures us greatly when we socialise, it pains us deeply when we do not. Social networking tools tap into a deep, inner need for that socialisation. The American psychologist David McClelland picked up on this concept back in the 1950s. He described our ‘need for affiliation’, a motivational need that humans have to relate to others; we naturally do what it takes to nurture this need. The growth in adopting levels of social media is therefore not surprising, and it has accelerated with access to high-quality tools. Email, MSN and blogs were the tools of choice in the early days, whereas nowadays one is more likely to use personalised web pages and microblogging tools such as Facebook, LinkedIn and Twitter. Social networking is now less a tech-savvy, generational thing; it is more about solutions. When used effectively, it can also be a powerful enabler in career management. Let’s now look at three personal branding and marketing related

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areas. It is helpful to keep these in mind when embracing social media as part of your planned career management approach.

Getting started ‘First things first’ is the mantra of management and self-help expert Steven Covey. So begin by considering what your needs really are. Face to face has its place, of course, so continue to take a portfolio approach to managing your career. Social networking is an extension to, not an exclusion of, all those other ‘real-world’ activities that you may have already been doing.

Begin by constructing a résumé that captures your brand, value and personality: the career path you’ve been pursuing; the strengths that you bring; the contributions you can make; and how you wish all those elements to be memorably represented. Build positively using social media, adapting it for the powers it affords you, as it: Enables your innate personal yearning to socialise. Extends your reach to a wider audience over a 24/7 timeframe. Puts you into the target zone of those people searching for talented candidates.

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Allows you to control, with * consistency, that first impression you will make on them. Social networking can be exceptionally empowering, too, as it allows you to own and manage your career, independent of your current organisation – and your boss. This can be a liberating experience, especially for those considering, or currently in, the process of career transition.

Personalising your message Facebook focuses on the fun and friendly side of personal relationships. For those who currently use it, there is no need to stop. That said, in terms of career management, it lacks that little bit of bite in terms of value-add; you need something built for the purpose. This is where LinkedIn comes in, as it is a tool engineered for business. It is structured around your career, focusing professionally on helping you connect and share among your business network. Moreover, it is a well-known space where talent ‘hunters’ go to seek the ‘hunted’. Going online is a little like placing yourself in a large department store window. When people pass by and look inside, they only see your avatar, don’t they? The real challenge begins in discovering how you can use your chosen tool to position yourself to your best advantage. A great first step is to stop and consider what you want them to notice, how you want to make them feel and, importantly, what you want them to say and do afterwards. You only ever get one chance to make that first impression, so a little strategy and forethought will provide you bigger paybacks later. Patrick O’Brien is the managing director of The Amanuenses Network in Singapore

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Like any new tool, there are good and better ways to use them. So as you start to build your online presence, keep the following eight points in mind. They will allow you to promote ‘brand you’ online in a much more captivating – and safe – way. 1 Permanence Whatever you say online will stay online; there is no eraser. So think before you publish. Not only are your words the first impression that you make, they will form the basis of very long and lasting impressions, too. 2 Truth Be truthful and ensure that the words you publish are correct. Never publish anything you might have to explain face to face afterwards. 3 Consistency Be consistent, by making sure that anything you say about your career aligns to everything previously said. Search engines very quickly flag inconsistencies; they are powerful, fast and unforgiving! 4 Realism Whatever you say, always be realistic. Just because the words chosen are your embodiment online, they cannot be fantasy. A career may be desired with future possibilities, yet it must be grounded in present realities; what you were needs to connect with what you may become. 5 Look to the future When people employ you, they won’t look for a better yesterday but a different and brighter tomorrow. Make sure to position your past so that it exemplifies areas where you can help your new organisation in their future. 6 Positivity Often résumés are constructed in a neutral way, sometimes even coloured with negative tinges. When socially networking, choose to take a positive treatment of the past and frame it with optimism for the future. People hire people who are positive and have future potential, not pessimists with a negative past. 7 Show personality People love to hire ‘people’ and expect those people to have personalities. So ensure that your avatar encapsulates your own personality. Unlike your résumé, the web affords you the opportunity to colour your character a little. Show a little positive attitude – seize that moment. 8 The essence of you Capture the full essence of who you are, what you can do for others and the manner in which you go about things. Social media allows you to ensure your contacts get to know you as you wish to be known, so leave them with an impression that tells them ‘who’ you really are. In closing, remember this: charisma is the colour of your character. Social networking tools give you the freedom to provide some warmth to your own expression, as you take charge to own and manage your career. Perhaps the time is now right to embrace them?

12/01/2012 10:50



The e-learning suite spots [

We take a look at just some of the ways in which ACCA members can gain access to CPD learning opportunities by engaging with a range of online platforms and initiatives

One of the biggest attractions of ACCA’s CPD suite is the flexibility that allows it to be applied to all types of learning. Members can use this to their advantage when planning and sourcing CPD where it is not possible for them to attend courses or face-toface events. Here we look at just some of the ways members can source CPD learning through engaging with the online platforms available.

Social networking and learning on the move Communication platforms are evolving rapidly, offering professionals new and innovative ways to communicate. The increase in the use of mobile communications allows you to network and learn whenever it suits you. ACCA has a number of official networking

groups that have the potential to offer you new learning, both in terms of verifiable and non-verifiable CPD. There are ACCA sites on LinkedIn, Facebook and Twitter. Alternatively, you might prefer to use ACCA’s own e-learning gateway at:

Podcasting With podcasts you can automatically receive the latest file covering your chosen topic as soon as it becomes available. You will find ACCA podcasts on current and relevant topics of interest to members. Members are able to access a series of podcasts (to which they can subscribe free of charge) on the ACCA website through the following link: Many more relevant podcasts are also available elsewhere on the internet. A good place to start is the iTunes Store.

Distance learning Distance learning is an excellent option that allows you to follow a particular

course by taking it online rather than in a classroom. It offers an opportunity that not only allows you to learn and apply the course syllabus to your role, but also opens up the opportunity of networking with fellow delegates online. Online networking in this way can facilitate lots of questions and debate on topics that are of interest to you for your role or career. Distance learning is also informative, inspiring and – most importantly of all – relevant to your CPD.

Voluntary work through professional forums Professional forums are another networking opportunity that can help you to source learning in your area of interest that could be relevant to your role. Often these can be sourced online but they still give you the opportunity to meet face to face periodically. Networking with people who have similar professional interests and objectives may open up opportunities to keep up to date with recent developments both locally and globally.


You can only count CPD learning as verifiable if you’re able to answer ‘yes’ to the following three questions: 1) Was the learning relevant to your role/career? 2) Were you able to apply the learning to your role/career? 3) Did you retain evidence of your learning? If you have undertaken general learning that is not related to a specific outcome, it is likely to be non-verifiable CPD. Such learning includes general reading and research.


10/01/2012 16:35

ACCA 57 A bad example


As a decade of Sarbanes-Oxley has shown, heavy-handed regulation can be a matter for regret, says ACCA president Dean Westcott

Whenever there is a major financial scandal, the call inevitably goes out for tighter regulation to prevent such a thing from ever happening again. That call is not always heeded but this year marks the 10th anniversary of an occasion when it most certainly was. The Sarbanes-Oxley Act will be 10 years old in July. Designed to thoroughly plug the gaps that enabled executives at Enron and WorldCom to get away with what they did, the law placed onerous responsibilities and duties on executives, and forced companies and their accountants to set up elaborate and expensive internal controls. It has been argued that Sarbox has been good for corporate governance as well as the credibility of accounts. But question marks remain about its effectiveness and serious criticisms have been made of the huge costs it has imposed on businesses. Critics also point out that it failed to prevent the collapse of Lehman Brothers – the outrider of the financial crisis. Some have warned of the danger of repeating the mistakes of Sarbox in the current process of reforming audit practice. It is undoubtedly healthy to have a root and branch examination into whether audit could have done more to alert companies and regulators about impending financial problems and whether audit practice should evolve so as to maintain its value and relevance. But some of the proposals currently being put forward appear to be based on the same optimistic assumption that underlay Sarbox – namely, that the way to prevent corporate malpractice is to impose rigid and bureaucratic rules from the top. ACCA is studying the proposals issued by the EU at the end of last year on both audit and financial reporting. The key issue for us is that the needs of the users of annual accounts are protected. But we should not ignore the question of cost and the risk of imposing regulatory costs that are disproportionate to the benefit sought. We urge regulators around the world to bear in mind the experience of Sarbanes-Oxley and to focus as much on meeting the challenges of today and tomorrow as on fixing the problems of the past. I know ACCA will continue to call for balance in ensuring any new regulation is good for business and in the public interest. Dean Westcott FCCA is finance director of Hinchingbrooke Hospital in Cambridgeshire, England

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12/01/2012 16:20



Fine-tuning the rules [

ACCA’s Ian Waters runs through the changes that have been made in the 2012 edition of the ACCA Rulebook to reflect the development of the association and its processes

This article sets out the main changes to ACCA’s bye-laws, regulations and its Code of Ethics and Conduct, as published in the ACCA Rulebook. The Rulebook is usually updated once a year. However, during 2011, interim changes were made, which took effect on 1 June 2011, and were reflected in the online version of the Rulebook at that time. These interim changes have been included in the details set out in this article.

Bye-laws The following changes to the bye-laws were approved at the 2011 AGM and subsequently by the Privy Council: When a member (or his or her firm) has been subject to a disciplinary process other than that of another professional body, it is more appropriate to discipline the member under a provision of bye-law 8(a) other than 8(a)(v) or (vi). Prompt notification to ACCA is required by a member when he or she or another member may have become liable to disciplinary action (save where this would be contrary to a legal obligation).



Membership Regulations The principal amendments to the Membership Regulations are as follows: The meaning of ‘book-keeping’ and the permitted activities of ACCA students have been clarified, including the entitlement of ACCA students who are licensed insolvency practitioners to undertake insolvency work. The Practical Experience Requirement (PER), set out in appendix 2 to the regulations, has been clarified to say that it must involve 36 months’ work experience in one or more accounting and finance-related roles.

of ‘workplace mentor’ * Ahasdefinition been provided. At the start of 2011, ACCA launched a new suite of entry-level qualifications known as Foundations in Accountancy (FIA), and the Mature Student Entry Route is no longer available. Interim amendments to the Membership Regulations were necessary to reflect the fact that, since January 2011, students are being registered to the new FIA suite of qualifications, which includes the Certified Accounting Technician (CAT) qualification, but also other entry-level and ACCA feeder qualifications. Other interim changes included: amendments to recognise the new practical experience requirement for CAT, called Foundations in Practical Experience Requirement; a change to the name of paper P1, from ‘Professional Accountant’ to ‘Governance, Risk and Ethics’, to reflect the increased content in the syllabus in respect of risk in response to feedback from employers.

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Global Practising Regulations The substantive change to the Global Practising Regulations allows nonaccountants to act as continuity nominees in respect of some activities, such as insolvency work.


Global Practising Regulations – Annexes 1 to 4


Substantive changes to Annexes 1 to 4 to the Global Practising Regulations: clarify that a licensed insolvency practitioner in the UK is in public practice, and so a member who holds an insolvency licence from another professional body must hold an ACCA practising certificate; require a member applying for an audit qualification in the UK, Ireland or Cyprus on the basis of audit experience or a certificate obtained

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some time ago to demonstrate relevant recent audit experience and CPD, or to undergo appropriate audit training; align the European annexes with the requirements of the European Statutory Audit Directive in that only two of the three years of practical training for the audit qualification need to be under the supervision of a statutory auditor; reflect the minimum professional indemnity insurance requirements in the UK and Ireland for firms wishing to conduct insurance mediation activities.

Global Practising Regulations – Australian Annex This is a new Annex, brought about as a result of ACCA achieving recognition by the Australian Tax Practitioners Board (TPB). TPB registrants may undertake tax and business activity statement agent services, and Annex 5 sets out the requirements of ACCA members who wish to undertake such services, incorporating the TPB’s requirements of ‘good fame, integrity and character’.

Irish Investment Business Regulations The only substantive amendment here reflects the new name of the investment business lead regulator in Ireland (now the Central Bank of Ireland). There are corresponding amendments to the Regulatory Board and Committee Regulations, the Authorisation Regulations, the Irish Annex to the Global Practising Regulations, and section 270 Custody of client assets of the Code of Ethics and Conduct.

Regulatory Board and Committee Regulations The substantive changes here better reflect the way in which the Regulatory

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Board is appointed by Council, and how Committees are established. An interim change was also made, because the terms of office of all the lay members of ACCA’s Regulatory Board expired in September 2011. In order to aid succession planning, future appointments will be made so that one-third of the Regulatory Board’s lay members will retire, in rotation, each year. Amendments to the Regulations were required to facilitate the issue of contracts to members of the Board for terms shorter than three years.

Authorisation Regulations These now clarify that the Admissions and Licensing Committee may only order a hearing to proceed at short notice if it deems it to be in the public interest. It may also exclude from any hearing anyone (including the applicant) who is likely to disrupt the orderly conduct of proceedings.

Complaints and Disciplinary Regulations The substantive changes to the Complaints and Disciplinary Regulations: provide a definition of ‘finding’ and amend the definition of ‘order’ accordingly (a change reproduced in the appeal regulations); separate interim orders from conditions imposed on an adjournment, and clarify that conditions imposed on an adjournment cannot be appealed; set out the effective dates of interim orders and conditions imposed on an adjournment; clarify the regulations relating to publicity in light of the new definition of ‘finding’ and in respect of conditions imposed on adjournment; enable the chairman, under certain conditions, to correct errors without a further hearing;

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the Disciplinary Committee * enable to exclude disruptive individuals

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from hearings (including members from their own hearings); require the Disciplinary Committee to indicate the facts on which its findings are based before a member is invited to make submissions on mitigation and sanction; allow for suspension of membership or registered student status at a health hearing.

Appeal Regulations Substantive amendments to the Appeal Regulations: make separate regulations for Disciplinary Committee and Admissions and Licensing Committee appeals, because a ‘finding’ is applicable only to a Disciplinary Committee hearing; specify what needs to be included in the appellant’s grounds for requesting the Appeal Committee to reconsider an application notice; provide a procedure for ensuring timely notification to ACCA if the appellant wishes the Appeal Committee, at a full appeal hearing, to reconsider some grounds of appeal where permission was refused by the chairman; allow the Appeal Committee to rescind findings as well as orders; clarify the regulations relating to publicity.


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Code of Ethics and Conduct Descriptions of professional accountants and firms and the names of practising firms – Section B4 The change to this section clarifies that ethical requirements in respect of ‘stationery’ apply to websites and other electronic communications. Professional liability of accountants and auditors – Section B9 The proposed change incorporates the model rule, encouraged by the Ministry of Justice, in respect of paid trustees and trust draftsmen, whereby if the trust document is to include a ‘trustee exemption clause’, the member has a duty to take reasonable steps to ensure the person creating the trust is aware of the meaning and effect of the clause. Ian Waters, regulation and standards manager, ACCA

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12/01/2012 16:21



First step to membership [

While many have now passed the first test towards ACCA membership, the journey has only just begun, says Kaka Singh

Congratulations to our new ACCA affiliates who recently completed their examinations and received their ACCA Qualification in November 2011. Our new affiliates completed the ACCA/Institute of Certified Public Accountants of Singapore Joint Examination Scheme (JES). The JES will end in September 2012, but ACCA will continue the examinations in Singapore as it has been doing in other parts of the world for over 100 years. With a recognisable brand and a solid reputation for producing a robust qualification and well prepared accountants for business; and good relations with notable employers, the ACCA Qualification will remain highly relevant and valued in Singapore. Our new affiliates have overcome numerous challenges to get where they are – night lectures, complex case studies, traffic jams on the way to school, precious weekends spent revising, and many juggling work and studies at the same time. I was inspired by the passion and the stories of so many who completed their studies. The recent top prizewinner in Singapore, who is also the second prizewinner globally, is a trained engineer whose goal is to become a top consultant with Ernst & Young. There is even a medical doctor who studied to become a better administrator. And there are many parents who encouraged and supported their children to study because they would have done it themselves, if only they had had the opportunity in their day. The first part of their journey is over, and the next step for affiliates is to complete three years’ practical experience requirements (PER) to become an ACCA member. Being involved in real-life work situations will help them to develop the skills, attitudes and behaviours they will need as qualified accountants. Think back to the beginning; all of us walked the path, pushing forward towards the goal and keeping our minds on becoming an ACCA member and the opportunities to come. ACCA affiliates bear a burden – an unspoken promise to be the very best in their careers and contribute to the community. They are to face all challenges, no matter how daunting. I encourage them to seek help from their families, employers and mentors. I also urge senior ACCA members to mentor young affiliates, to help fulfil their potential, aspirations and achieve their membership. For the ACCA designation represents the member as an individual of strong technical competence, who is able to contribute effectively in the workplace. It is this stalwart reputation and the integrity of our members that will ensure the designation remains valued in the workplace. Acquiring the ACCA Qualification is not easy. Becoming an affiliate is the beginning of a successful career ahead and I wish all our new affiliates the very best. Kaka Singh is president of ACCA Singapore

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12/01/2012 10:49

ACCA news


Model of responsibility A genuine commitment to ethical behaviour, rather than more regulation, is the key to restoring confidence in big business, says ACCA deputy president Barry Cooper ACCA deputy president Barry Cooper has urged businesses to revaluate their current attitudes towards risk, governance and ethics in order to behave more responsibly and manage stakeholder expectations. This is particularly urgent in the wake of the global financial crisis, as companies are forced to navigate a more complex economic landscape. ‘The financial crisis has put the spotlight on how corporates – especially those in the financial sector – have addressed issues such as risk, reward, governance and ethics,’ said Cooper, speaking at the recent 17th MIA-AFA Conference 2011. However, current prescriptions for restoring confidence in big business and the global financial system, namely increasing regulation, may not be effective. ‘With every corporate scandal and regulatory failure, the call goes out for more regulation. But the regulations to deal with risk – do they work?’ Cooper cited four reasons for regulatory weakness, such as the

Effective risk management is about understanding risks, and balancing these against rewards, he added. Since each business is unique, it is necessary to take into account factors such as the control environment, including the

‘THE LEAD MUST COME FROM THE TOP. THERE IS AN OLD SAYING – THE FISH ROTS FROM ITS HEAD. SO IF THE TOP IS ROTTEN, SO WILL THE BOTTOM BE’ failure to ‘frame’ regulatory controls to achieve the desired outcomes, business’s perception of regulations as irrelevant and a ‘bureaucratic burden’, the lack of effective supervision and enforcement, and the failure of companies to elicit genuine compliance and commitment to responsible behaviour. Instead, Cooper called for companies to revaluate risk management and genuinely commit to ethical and responsible behaviour. ‘We need to treat the causes and not the symptoms,’ he said.

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competence of the board and staff, the culture, key motivators and the ethical climate in assessing and managing risk. It is also vital to ‘understand the company’s strategy, its purpose, its business model, value drivers, systems and their associated risks’, he said. Cooper stressed that ‘ethical practices need to be relevant to the way each business operates, woven into the culture of each and, crucially, adopted by individuals of integrity within the organisation. The lead for this process must come right from the top, from the

CEO and from the boardroom.’ ‘Businesses, and where appropriate regulators, should seek to ensure that they commit themselves to recruiting and developing staff, especially senior executives, directors and financial staff, who have a strong ethical compass.’ ‘There is an old Chinese saying – the fish rots from its head. So if the top is rotten, so will the bottom be,’ he quipped. Lastly, he reminded the audience that although businesses thrive on collective wisdom and action, what motivates individuals to make certain decisions is often overlooked. ‘No matter how businesses are regulated, decisions will always be taken by individuals. As we have seen, this is where the regulatory process can fail’. ‘This dimension of behavioural risk needs to be recognised as crucial to risk management, as well as to the wider framework of good governance,’ Cooper emphasised. Nazatul Izma Abdullah, journalist

10/01/2012 13:06


ACCA news

AT THE PEAK OF SUCCESS Why would an accountant climb a mountain? The audit trail hardly demands such exertion! But it wasn’t a business proposition that Raymond Liew of McMillan Woods, was thinking of when he put together his firm’s Mount Kinabalu Charity Expedition in October 2011 – he was thinking more of service of the corporate social responsibility kind. His team from McMillan Woods, a global network of independent local and regional firms of accountants and professional advisers, raised RM100,000 – no mean feat, considering each person who participated financed themselves, while working to collect the sum, which was eventually donated to eight charities.

Each participant was required to contribute RM1,000 to cover the costs of the climb, besides paying their own airfare, board and lodging for the duration of the expedition. Wellwishers gave items like socks, first-aid kits, insect repellent and energy drinks and there were high-profile supporters, such as the first Malaysian astronaut, Dr Sheikh Muszaphar Shukor. But climbing Mount Kinabalu is not a leisurely jaunt, and participants had to train in earnest. ‘As soon as the expedition was conceptualised in May 2011, we started doing weekend hikes in hilly areas in the Klang Valley,’ Liew explains. ‘Most of us did almost six months of training but October is

hardly the best month for climbing. The weather was bad – misty and cold – and the trails were slippery because of the rain. It wasn’t easy. Plus, the sight of the mountain itself can be quite intimidating. Some participants took one look at it, and decided not to attempt the climb, even though they had trained.’

Giving back It was the second attempt for Liew, who suffered a series of mishaps during the climb, including a pair of shoes that came apart, and excruciating muscle cramps. However he kept going, partly due to the belief that business is about more

Raring to go ‘Sixty-seven members signed up originally,’ says Liew, president and managing partner of McMillan Woods. ‘Fifty of these attempted the climb of South-East Asia’s highest mountain, and 40 made it to the top, which is over 14,000 feet high. But whether or not they completed the climb was immaterial. The reason for the expedition went beyond the mountain. We were doing it for the underprivileged, to build team spirit and for personal fulfilment.’ The team comprised members of staff from the group’s offices in India, Thailand and Singapore and were joined by a four-person TV crew and a journalist from a local newspaper.

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Jason Boey (second left), Lynda Leong (third left) and Amy Ali (fourth left), pictured with two other participants, recount their experiences in the story on the right

10/01/2012 18:12



Raymond Liew, above and second from right in the top picture, with members of the McMillan Woods team in their climbing gear than just a healthy bottom line. ‘It’s not about making money. How much can you make? How much do you need in a lifetime? Working hard and making money is fine, but it is better in the long term to take care of your community’s needs, than to amass personal wealth. The service you render to others will go much further than anything you do for yourself,’ he added.

More to come With the mountain conquered, Liew is already planning the next trip: diving in Sipadan, off the coast of Sabah. Reputedly one of the world’s top three

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diving sites, Sipadan represents a totally different set of logistics and challenges, but he is optimistic he can raise RM150,000 for charity, 50% more than the 2011 effort. ‘We are aiming for 100 people to visit the island in May 2012,’ he says. ‘But it won’t be just for diving. As usual, our efforts will have more than just one dimension. Those who have attained their diving licences by then will do the dive; there will also be an opportunity for snorkelling in the beautiful waters around Sipadan, and those who neither dive nor snorkel will work very hard, cleaning up the beach!’

Jason Boey has worked in McMillan Woods’ tax department for 10 years, and has always looked for ways to do his bit for charity. When word spread that the firm would be organising the Mount Kinabalu expedition, he saw a way, as he put it, ‘to kill two birds with one stone’. Sabah was one state he’d always wanted to visit. ‘Climbing the mountain was a bonus!’ he says. ‘The hardest part for me was the middle of the climb – my muscles were aching terribly. I never really saw myself as someone who could do it, but I did. It was an amazing experience.’ For Amy Ali, whose does mostly secretarial work, it was her second time up the mountain. That was just as well; she injured her leg just before reaching the peak, and the unfavourable weather conditions forced her to turn back. But she will always remember and value the team spirit and camaraderie of the climb. ‘I was so excited; I just wanted to climb,’ says Lynda Leong, of the Corporate Secretary Department. ‘I’d never done anything like it before, and it was difficult to breathe at that altitude (over 14,000 ft), although I’d done six months of training.’ Easy-going Vimalraj Shanmugam, a corporate administrator, found himself shivering in near-zero degree weather even before he was near the peak. ‘The cold was incredible,’ he says. ‘But it was a good thing to do. If I had been alone, I would never have even thought about attempting it, but because of the group, I decided to try – and I am so glad I did. It was an experience of a lifetime.’ Majella Gomes, journalist

13/01/2012 13:09



Adapt and survive SMPs in Singapore need to change to meet clients’ evolving expectations if they are to prosper in the uncertain climate ahead, says an ACCA-ACRA survey Peer support within the accountancy industry and support from professional bodies – such as ACCA and the Institute of Certified Public Accountants of Singapore (ICPAS) – continues to play a crucial role in enabling the growth of small and medium-sized practices (SMPs) in Singapore. They welcome the provision of technical guidance – from high-quality materials to targeted seminars – as they chart further growth in the uncertain economic climate ahead, according to a recent survey commissioned by the Accounting and Corporate Regulatory Authority (ACRA) and conducted by ACCA Singapore. But in addition to the global issues confronting the accountancy profession as a whole, Small and Medium Sized Public Accounting Practices in Singapore – Bridging the Current to the Future, noted that SMPs in Singapore have a unique set of challenges.

Changing landscape These include evolving expectations from their small to medium-sized enterprise (SME) clients, challenges in capacity and competence building, talent retention, as well as changes in the business landscape, eg potential increase in statutory audit threshold. Therefore, to remain relevant, and to prosper in this ever-changing environment, Singapore’s SMPs will need to review the way they run their practices. In the longer term SMPs will have to communicate more effectively the value of high-quality audits to their clients, and/or branch into niche service offerings such as business advisory/ consulting and tax. The survey also confirmed that many SMPs derive their revenue mainly from statutory audit work, with taxation as the

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next largest contributor to revenue. Two in five respondents anticipated significant expansion in their operations in the next three years, buoyed by the expected positive economic growth at the time of the survey, and some 79% expected this to be fuelled by their statutory audit services – citing strong rising demand for existing services among their clients. With the increase in audit exemption threshold being considered, 40% believed that any resulting declines in revenues would be compensated by other work such as compilation engagements, taxation and other accounting services. On expansion of their own practices or operations, and how the SMPs see their own growth in the next few years, two-thirds of the respondents said they expected growth to be organic, while just 3% considered mergers as a way to grow. This lack of interest is due in part to the difficulty of finding suitable partners and also the fear of loss of control in decision-making.

THE ROLE OF *PROFESSIONAL BODIES In a recent article published in AB Singapore’s sister journal, Accountancy Futures, ACRA chief executive Juthika Ramanathan was ardent in her call for SMPs in Singapore to bring about a change in the profession. Speaking about the joint ACCAACRA survey, which was launched at the 2011 Public Accountants Conference (PAC), she noted the single most important message was that the state of play for SMPs has evolved into a far more complex and competitive environment overall in recent years. Two key observations were of particular relevance to

Skills shortage Resolving talent crunch issues was also cited as a significant constraint to the growth of SMPs, as attested by 74% of respondents. Regionalisation was well-acknowledged as a natural avenue of growth (76%). While 57% agreed it would help diversify the risk of individual country operation, about three-quarters of those surveyed said 5% or less of their revenues come from outside Singapore, suggesting that this is still a relatively untapped market. In addition, impediments to overseas expansion from the survey included unfamiliarity with foreign regulations (74%), cultural issues (42%) and language differences (36%).

Small and Medium Sized Public Accounting Practices in Singapore – Bridging the Current to the Future can be found at pdfs/bridging Annette Pau, journalist

12/01/2012 16:25


SMPs. The first was the importance of high audit quality, and how audit firms need to ensure they have adequate structures, processes and resources in place to address industry needs, so that they are well positioned to perform the audit function well. For Singapore SMPs, she said, these would be crucial issues to address head-on as long as they remained in the audit business. Second, SMPs should also keep themselves open to the many other business opportunities beyond audit services, so as to expand their service offerings to customers. Business advisory or taxation services were cited by Ramanathan as two such niche areas. She also noted that accountancy firms – whether big or small – need to level up their capabilities quickly to better confront the demands of their jobs and profession, and provide better value and higher-quality services to meet customer needs. Clear next steps for SMPs to consider include improving their technical capabilities, as well as pooling their resources via mergers and consolidation in the industry. In both instances, professional bodies like ACCA would play a key role – such as providing training opportunities for the former, or to play a ‘match-making’ role in the latter, connecting its members with similar growth aspirations, said Ramanathan.


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12/01/2012 16:26


ACCA news

Council highlights Highlights of the meeting on 26 November

Inside ACCA 64 Move with the times SMPs must adapt to survive 62 Climb every mountain Accountants scale Mount Kinabalu for charity 61 Commitment is key ACCA deputy president Barry Cooper talks ethics 60 Kaka Singh Affiliation is challenging, says ACCA Singapore’s president 58 Rulebook update Changes to the 2012 ACCA Rulebook 57 Dean Westcott Focusing on the past may not prevent future failures, says the ACCA president 56 Flexible learning ACCA offers a wide range of online CPD options

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Council’s final meeting of 2011 took place at 29 Lincoln’s Inn Fields on 26 November. This was held immediately following the annual meeting of ACCA’s International Assembly. Assembly members Shalini Popat (Kenya) and Nisreen Rehmanjee (Sri Lanka) were invited to give oral reports to Council on the outcomes of the Assembly meeting, including the debates Assembly members held around the topics of the advent of the e-professional and the future of ACCA’s global policy development. Council was also pleased to welcome Olivier BoutellisTaft, chief executive of the Federation of European Accountants, who gave a topical presentation on the European Commission’s green paper on audit. A number of other issues were debated at the meeting. Council met in break-out groups to discuss issues around the advent of the e-professional, a topic which had also been considered by the International Assembly. The discussions focused on how technological advances are changing the role and skills of the finance professional, the key drivers for the increasing use of technology and a profile of the next generation of worker. The outcomes of the discussions will help to inform the development of ACCA’s strategy in this area. Council also considered the regular report of the chief executive, covering a number of strategic developments both within and outside ACCA and developments in key markets. Council was particularly pleased to note that ACCA had been awarded a contract to advise on the development of a new post-university professional accountancy programme in Singapore. Following an earlier decision that Council’s next international meeting should be held in Nairobi in June 2012, Council received a report on arrangements for the meeting, together with proposals for a programme of events involving members, students and other important stakeholders. The meeting in Nairobi will take place on 23 June, after which smaller groups of Council members and senior staff will undertake visits to Ethiopia, Tanzania and Uganda in order to maximise the opportunity for stakeholders in the region to meet with representatives of ACCA’s governing body. Council agreed recommendations from Nominating Committee regarding skills criteria for non-Council members on a number of its standing committees. In other business, Council agreed a timetable for choosing its preferred nominee for vice president in 2012–13. It also received presentations from the chairmen of the governance design and market oversight committees on the work plans for their committees for the coming year. Council will next meet in London on 10 March 2012.




* *


ACCA chief executive Helen Brand is pictured at Buckingham Palace in London in December, shortly after receiving her OBE from the Queen. She was made an Officer of the Order of the British Empire in the Queen’s official Birthday Honours list in June last year, for services to accountancy. Brand said: ‘I truly believe that this honour is in recognition of ACCA’s success of which I am extremely proud to have played a part, alongside its members, students and staff around the world. ‘I was delighted to be able to share the special investiture day with my family, whose immense support has allowed me the privilege of serving as chief executive.’


A rare honour has been bestowed on Vietnam’s finance minister, Vuong Dinh Hue, for his contribution to the development of the accountancy profession in Vietnam. ACCA has made him an honorary member – this award has only been given six times since 1999. The presentation was made by ACCA president Dean Westcott last year.

12/01/2012 16:26

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accounting and business singapore02/2012

a high point accountants scale mount kinabalu

thriving business

model of success shanker iyer on 20 years in the business

smps must adapt and survive

opinion a decade of sarbox network manage your brand

on the brink

Eurozone: will asia cash in? talent skills crisis intensifies directors autonomy at risk

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12/01/2012 15:10

Accounting and Business_February 2012 (Singapore edition)  

The Singapore edition of A&B magazine for professional ACCA/FCCA qualified accountants.

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