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Editor’s choice With so many different activities taking place at the integrated resort of Marina Bay Sands, CEO George Tanasijevich is constantly on the lookout for synergies that will leverage the US$5.6bn investment that has been made in the business. See page 12

THE MENACE OF MISBEHAVIOUR The European debt debacle and the global financial crisis of 2008 have cast a pall over the financial sector. Lack of trust and confidence has led to the implementation of greater regulation globally to tighten corporate responsibility and accountability. Singapore, the financial hub of Asia, has not been immune. The need to plug governance loopholes has been at the forefront since the onslaught of the crisis. For standard-setters the key challenge hinges on the integrity of financial information. Our cover story (see page 16) explores the effectiveness of Singapore’s regulatory framework for companies as well as the role the accounting profession, especially auditors, can play in tackling the problems. The need to rein in corporate shenanigans has become more urgent than ever. The Ernst & Young 2012 Global Fraud Survey suggests there has been an increase in tolerance for unethical practices, particularly in emerging markets, since 2008. Evidently, many companies need better systems in place to detect and prevent instances of corporate fraud. Poll findings from Asia Pacific reveal that 15% think that financial performance misstatement can be justified. In Singapore, 4% of firms polled are willing to misstate a company’s performance, while 20% consider it acceptable to make cash payments to gain new business. Bribery and corruption are not endemic in the city-state compared with its regional peers, but there has been an increased willingness to pay bribes or misstate financial performance during the economic downturn. This should set off alarm bells. Just 36% now state they will not pay bribes or misstate financial performance, compared with 78% in 2010. Singapore has done well in upholding the standards in the integrity of financial statements, compliance and corporate governance. Moving forward, it will take a mix of culture and integrity, coupled with a sound regulatory framework, to stem the potential risks posed by unethical corporate behaviour. Sumathi Bala,

RIO GREENPRINT The Rio 20+ Earth Summit has endorsed the need for corporates to integrate sustainability into their reporting cycles. Page 20

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MORE Q THAN A Does the publication of non-binding Q&A guidance for those using IFRS for SMEs undermine the stability of the standard? Page 48

RESEARCH AND INSIGHTS APP Our free iPad app explores crucial trends and issues for business. Download it via or search for ‘ACCA Insights’ in the iTunes App Store. See page 82 for more information.

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

07/08/2012 14:25

AB SINGAPORE EDITION CONTENTS SEPTEMBER 2012 VOLUME 15 ISSUE 8 Asia editor Colette Steckel +44 (0)20 7059 5896 Editor-in-chief Chris Quick +44 (0)20 7059 5966 International editor Lesley Bolton +44 (0)20 7059 5965 Singapore editor Sumathi Bala Chief sub-editor Eva Peaty Sub-editors Dean Gurden, Peter Kernan, Vivienne Riddoch Design manager Jackie Dollar Designers Robert Mills 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

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12 Eye for detail CEO George Tanasijevich is tasked with guiding the Marina Bay Sands Resort’s myriad elements

16 Instilling integrity Despite its strong record, Singapore must still go further to stamp out corporate fraud

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 After Rio Businesses hold the key to bringing Rio+20’s sustainability reporting pledges to fruition

24 Sir Richard Branson As Virgin Money takes over Northern Rock, Branson describes his approach to business 28 Fiscal fragility In his regular quarterly report, ACCA’s Manos Schizas finds weakening confidence 30 Q&A: Enda Kenny Ireland’s prime minister describes how the new administration is repairing the economy

07/08/2012 14:19


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: IFRS for SMEs The release of non-mandatory guidance is not without its critics

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

51 Strategy This month our series focuses on the different layers that make up strategy


54 No nasty surprises Carrying out due diligence on potential investments in China is crucial

34 Cesar Bacani CFOs are stepping up to the anti-bribery challenge

Your sector 37 CORPORATE

36 Errol Oh It’s showtime for small businesses

37 The view from Philip Fong of Harry Elias Partnership, plus news in brief

40 Dean Westcott As his term draws to a close, the ACCA president applauds members’ commitment

38 Capital competition Disclosure is a vital weapon in the fight for financing

41 PRACTICE 41 The view from Jim Woods FCCA of PwC China and Hong Kong, plus news in brief 42 Seeds of hope Mazars mucks in on a tree-planting programme in Inner Mongolia


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

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ACCA NEWS 57 CPD Allow yourself time to reflect 60 Open for business The ACCA Council meeting in Kenya heard positive messages about the profession’s development in Africa 62 Exams for CFOs? Delegates at CFO Connect’s working lunch were polled on non-mandatory professional certification 64 News New members welcomed at appreciation night 65 Wilson Woo When it comes to maintaining corporate governance, integrity is everything, says the ACCA Singapore branch president 66 News Worldwide online event will highlight sustainability

07/08/2012 14:23


News in pictures


Performers dressed as Mary Poppins descended into the centre of the Olympic Stadium as part of the £27m London 2012 Opening Ceremony, created by Slumdog Millionaire director Danny Boyle


Rail passengers wait for power to be restored at a station in Kolkata after a huge outage cut electricity to 20 of India’s 28 states


Leung Chun-ying was sworn as Hong Kong’s third chief executive. The police officer’s son replaces Donald Tsang

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China’s first female astronaut Liu Yang salutes after exiting the reentry capsule of the Shenzhou-9 spacecraft. The mission was the second step in a threepart plan towards the set-up of the country’s own space station


Jubilant Yi Siling of China holds her medal and bouquet aloft after winning the first gold of the London 2012 Olympic Games, with victory in the women’s 10-metre air rifle event


The Hong Kong Police Band play the bagpipes at a ceremony marking the 15th anniversary of Hong Kong’s handover from Britain to China


Beijing’s heaviest downpours in six decades left at least 77 dead and brought chaos to transport systems and power supplies. Major roads were flooded and more than 500 flights cancelled. Some 65,000 people were also evacuated

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News in graphics


Chinese employers planning to hire in Q3, according to Hudson


People in China who now use the internet in some form


for ounted ia Rice acc East As in P D 1.0% ooff GGDP in South Asaiast Asia 2.7% of GDP in South E %

Asia nc spen onsume rs no d w of th less tha n 5% eir fo od b udge on ri ts ce



cted to rise Global rice consumption is expe (mmt) in tons ric met ion mill from 441 0, before 2010 to about 450 mmt in 202 2050 in t mm 360 just to g declinin

Rice consumption in Asia is declining rapidly due to economic growth, rising disposable income and lifestyle changes. Nevertheless, rice remains Asia’s most important crop, as it continues to be the single largest source of calories for the majority of consumers who are poor, according to the Asian Development Bank.


Companies in Asia have ‘strikingly’ few women in senior jobs, missing out on a vital pool of talent to fuel the region’s growth, consultancy firm McKinsey reveals in its survey Women Matter: An Asian Perspective. Despite the high percentages of female graduates, only a small number are making it to the top level.





15 12 11 9 9 5 5 3 2 1



Month in figures AP_B_graphics_08.indd 8

Singapore Australia Hong Kong China Taiwan Malaysia Indonesia India South Korea Japan

60 55 50 45 40 35 30 25 20 15 10 5 0



Companies in China, Hong Kong and Taiwan now on the Fortune Global 500 list for 2012

The poverty rate in Malaysia in 2009, up from 3.6% in 2007

In 2007, rice accounted for 29.3% of calories intake in Asia

6% 7%

9% 8%


KEY: China Singapore Malaysia Hong Kong



for ounted ast Asia Rice acc DP in E G f o 6.8% of GDP in South AsEiaast Asia 8.4% of GDP in South


Around 90% of the world’s rice is produc ed and co nsume d in Ass ociatio n of Southe ast As ia Nation s (ASE n A N) countr ies




Entry-level professionals

Mid-to-senior management

Executive committee



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With risk, control and compliance becoming increasingly important in today’s global marketplace, Ernst & Young’s survey of 695 chief audit executives and C-suite executives in The Future of Internal Audit is Now reveals that 80% of organisations acknowledge that their internal audit function has room for improvement.












Regulatory Strategic







For the second year running, Switzerland, Sweden and Singapore are leading the way in overall innovation performance, according to the Global Innovation Index 2012 (GII). Published by INSEAD and the World Intellectual Property Organization, the index ranks 141 countries and economies based on their innovation capabilities and results.

% 5 6

Centralised: in one location

% 16

Decentralised: by business unit Hybrid structure


The survey suggests that internal audit will continue to focus on a mix of business and IT reviews, with an increased emphasis on strategic and operational risks. Internal audit risk assessments, regulatory requirements and enterprise risk assessments remain the top three drivers of the audit plan.

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There is no one-size-fits-all structure for internal audit, the survey also found. While almost half of respondents described functions that were centralised, the remainder worked under other models. Ultimately, says the report, structure must reflect organisational needs.


Almost two-thirds (65%) of mining companies surveyed by Mazars are working towards compliance with the UN’s 31 Guiding Principles on Business and Human Rights, adopted last year. Further, 94% of respondents agreed that mining firms should be responsible for compliance within both their own organisations and among contractors.

02/08/2012 10:59


News round-up





KPMG is the first Big Four firm to gain approval from China’s Ministry of Finance (MoF) to create a local partnership on the mainland. The new firm will move beyond the existing joint ventures that accountancy firms have established in China, planting deeper roots in its growing economy., quoting from a MoF statement, said that the Chinese Institute of Certified Public Accountants has qualified 15 of KPMG’s 25 partners as being local. Ernst & Young is expected to be the next firm to gain approval.

Chinese accountancy firms are outpacing growth of the Big Four, according to data from the Chinese Institute of Certified Public Accountants (CICPA), reported by The report found that revenues of the top 10 domestic firms grew 38% in 2011, compared with just 6% growth for the international Big Four firms. This is consistent with a recent CICPA statement calling for domestic accountancy firms to ‘grow bigger and stronger’ via mergers, take on larger clients and explore overseas business.


Foreign banks in China more than doubled their profits in 2011, a PwC report reveals. Profit growth to 16.73 billion yuan in 2011 from 7.78 billion in 2010 shows that the 181 foreign banks operating in the mainland, including HSBC, whose total assets grew 24% to 2.15 trillion yuan over the period ‘may be finally hitting their stride’, according to the firm’s seventh Foreign Banks in China report. The growth was attributed to strong demand for corporate credit from multinationals expanding within China and an increasing number of state and private-owned enterprise customers. Renminbi internationalisation with strong demand in derivative trading also helped drive results.

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The outline framework for integrated reporting has been published by the International Integrated Reporting Council (IIRC). A prototype framework will be released before the end of 2012, with a draft framework circulated for comment by the middle of next year. The framework is intended to elicit material information on strategies, governance, performance and prospects in a clear, concise and comparable format, using a globally accepted method. IIRC CEO Paul Druckman said: ‘We are committed to a transparent process as we develop the first draft.’

Malaysia’s Tan Sri Dato’ Azman bin Hj Mokhtar FCCA, managing director of Khazanah Nasional, says that CFOs must step up to be effective gatekeepers in business. Delivering the keynote address at the ACCA annual CFO Summit in Kuala Lumpur, he said: ‘The word transformation is currently big in Malaysia, and in the finance function, accountants are the ones driving the transformation forward. Apart from establishing trust, we need accountants to show leadership and be a beacon of trust, certainty, stability and an anchor for the organisation.’


Ernst & Young data shows a lacklustre performance by Chinese stock exchanges to date this year. It found that in the first half of 2012, the Hong Kong Stock Exchange raised US$4bn over 31 deals; the Shenzhen bourse raised US$7.7bn across 88 deals; Shanghai Stock Exchange raised US$3.8bn over 16 deals; and in Taiwan, capital of US$242m was raised over eight deals. EY assurance partner Ivan Tong said that the pipeline of companies wanting to go public remains high, with issuers and investors ‘just waiting for the global market to stabilise and concerns over global growth to dissipate before they decide to become active again’.


China’s economy is on track for a soft landing despite increasing global headwinds, according to the International Monetary Fund. In a report that urges further reform and currency appreciation to rebalance growth and reduce risks, the IMF predicted that the growth rate of the world’s second-largest economy may moderate to around 8% in 2012 after six consecutive quarters of slowdown. Its report found that China ‘has ample room to respond forcefully’ to a worsening economic outlook, due to fiscal policy, but noted that investmentdependent growth ‘cannot continue at the rapid pace forever’.


Confidence among Hong Kong business leaders moved from pessimistic to optimistic in quarter two, the first upswing in 18 months, according to the latest Grant Thornton International Business Report. It described the rise to net +8% in Q2 2012 as ‘a welcome relief from the rising pessimism’, suggesting that this would translate to more pay for workers. The survey went on to reveal that up to 90% of Hong Kong businesses plan to offer a pay rise in the next 12 months, which tops the list for businesses in Asia and is fourth in the world.

06/08/2012 12:45



In an except from his book, Screw Business as Usual, Sir Richard Branson, creator of the Virgin Group empire and new owner of Northern Rock, talks about his mission to help make people better off through ‘impact investing’.



Talent retention is an issue for many industries, but especially for the financial sector. A survey of CFOs by recruitment consultancy Robert Walters, conducted during its recent breakfast forum in Hong Kong, found that 90% say it is challenging to find professionals able to align themselves with the company’s goals and strategies. Employers also selected ‘recruiting and retaining the best finance talent’ as one of their top three challenges in running their businesses, cited by 62.5%.

has yet to bottom out, Bloomberg reported. According to the report, Song told a Beijing forum: ‘The consensus is that China’s economic growth rate will be close to 8% in coming months, but I am more pessimistic because there are problems on the export side.’

AIA ENJOYS RECORD RESULTS Hong Kong-based pan-Asian life insurance group AIA has posted a


Foreign direct investment (FDI) into Asia Pacific economies increased 16% to US$733bn 2011, helping to lift global FDI inflows above their prefinancial crisis level, according to the Asia-Pacific Economic Cooperation (APEC) World Investment Report 2012. The report found that APEC economies’ rate of investment recovery is relatively fast compared with other regions, increasing their share of global FDI inflows to 48% in 2011 from an average of 37% during the 2005–07 run-up to the financial crisis. ‘While investment opportunities in the APEC region are not immune to global economic realities as we have seen, they are proving to be resilient and provide an outlet for capital that has the potential to spur growth for businesses and markets worldwide,’ said APEC secretariat executive director, Ambassador Muhamad Noor.


More Hong Kong employees feel that they cannot afford to retire until age 65 or later, according to the latest Fidelity Retirement Readiness Index. The survey found that 40% of respondents expected to work longer than they’d hoped. However, KP Luk, Fidelity Worldwide Investment’s head of institutional business for Hong Kong, said that this was not practical. ‘Hong Kong workers face an increasingly pressing need to manage their pension scheme more effectively,’ he said. ‘This means having a clear understanding of retirement goals.


China’s trusts may overtake insurance as the second largest sector for financial services, claims KPMG’s second annual Mainland China Trust Survey. It found that the sector’s robust growth is being driven by abundant liquidity and a corresponding shortage of investment options in China. Simon Gleave, regional head of financial services for KPMG Asia Pacific, said that a profit growth rate of 47% in 2011 highlighted ‘a great year for the trust sector’, while Jason Bedford, senior manager and report author, added that ‘trust companies are setting a benchmark in terms of transparency’.


Chinese central bank adviser Song Guoqing forecast a cooling of growth to 7.4% in quarter three, warning that the world’s second-largest economy

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gain closer access to top players in Asia’s growing class of ultra-rich. As part of the deal, BOC has sold its Swiss unit to Julius Baer and will refer clients with private banking needs outside mainland China to the Zurichbased bank. Boris FJ Collardi, CEO of Julius Baer, described the Chinese mainland as ‘one of the world’s most important and fastest-growing wealth markets’.

record business profit for the six months ended May 2012. Net income of the company climbed to US$1.44bn in the six months to 31 May, or 12 cents a share, from US$1.31bn, or 11 cents a share, a year earlier, it said in a statement to the Hong Kong Stock Exchange. Growth was propelled by a 28% jump in the value of new business compared with the same period a year earlier, and an operating profit up 12%.


Swiss private bank Julius Baer has entered a strategic partnership with the Bank of China (BOC) in a bid to


China’s economic performance ‘continues to disappoint expectations for a rebound’, according to Deloitte’s latest Asia Pacific Economic Outlook. Elsewhere in the region, the report found that India’s gross domestic product (GDP) growth has slowed down considerably, with 5.3% growth in the quarter ended March 2012 – the lowest in seven years. The economic performance of Singapore, on the other hand, exceeded expectations in May 2012. The report revised upwards GDP growth projections for Thailand, whose economy is recovering much faster than expected.

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CEO George Tanasijevich’s multitasking skills are crucial in bringing together the multiple elements of one of Singapore’s top attractions – the Marina Bay Sands resort


eorge Tanasijevich has always had an eye for detail. His first job out of college in 1984 was working in the advance party for a US presidential candidate, travelling ahead to make arrangements on the ground. ‘The number of details you have to deal with can be a bit overwhelming, but you learn quickly to juggle things and manage a lot of pieces in motion,’ he recalls. Switching to business management almost by accident 15 years ago, the Marina Bay Sands CEO has found that his early training and 10 years as a practising lawyer have served him well. ‘The foundation in law, being able to read something and analyse it, put together some thoughts, communicate them, be persuasive, achieve results – those are skills that translate well into any context. Even though I don’t practise law from day to day, I’m still able to use those skills, particularly the analytical part,’ he explains. Marina Bay Sands (MBS), part of the Las Vegas Sands family of resorts, is an aggregation of different businesses that need to be seamlessly integrated – casino, hotel, convention centre, shopping mall, theatre, museum – and this requires Tanasijevich to draw on his multitasking abilities, especially given the top-line numbers at stake. The net revenue for MBS operations in the first quarter of this year was US$848.7m, up 45% on the previous year, with the bulk coming from gaming – US$701.3m or almost 4.5 times the US$158.7m of revenue from its casinos in Las Vegas – followed by the 2,561-room hotel (US$77.1m), food and beverage (US$47.1m), the

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mall (US$34.5m) and convention and retail (US$29.8m). ‘My job is to make sure each piece of the enterprise is working effectively with one another so that we can derive results from a building that has so much under one roof to justify the US$5.6bn investment we made,’ he says. ‘There is so much opportunity for synergies among the different elements, it’s critical to be a very proactive

While working as a senior attorney for General Growth Properties – a publicly traded real estate investment trust that owns, develops and operates regional shopping malls across the US – the young lawyer embarked on the MBA programme of the University of Chicago Booth School of Business to further his career. ‘I wasn’t dissatisfied being a lawyer, but I wanted to do something different,’ Tanasijevich says.

‘THERE IS SO MUCH OPPORTUNITY FOR SYNERGIES AMONG THE DIFFERENT ELEMENTS, IT’S CRITICAL TO BE A VERY PROACTIVE MANAGER’ manager. So, for example, we’re constantly looking at customer response and traffic patterns, considering what we can do to make something that isn’t working work more effectively. Should we enhance something? Should we replace it? There is never a shortage of challenges and the to-do list is always long,’ he explains. ‘No two days are the same and that’s part of the excitement of the job and the industry, and this particular company,’ he adds. ‘You’ve got multiple businesses within this complex and on any given day there are new issues in each of those businesses popping up. This is a job where you have to be resourceful and proactive and ready for the unknown.’

‘Something different’ Tanasijevich says that when he began his career he hadn’t imagined he would be leading a multi-milliondollar company, but it is clear that he has always had plenty of drive.

‘I was doing litigation and I wanted to get more into corporate transactional work. So going to business school was a way to enhance my understanding of that aspect of things and position me to this type of work,’ he recalls. His career took a radical turn when he wrote a paper for his MBA studies on an IT issue that his company was facing and shared it with his CEO. ‘He called me up one day and asked me whether I would be interested in doing more for the company than being “just a lawyer,”’ he recalls. ‘The way he said it made me think. One thing led to another and I started working with him in the executive department.’ The first challenge Tanasijevich faced was the very different workload. ‘As a lawyer, you’re looking at the clock all the time because you are measuring the hours that you are billing into a particular function, and you’re reading and writing a lot. When you shift into a business role, it’s a different collection of responsibilities and a different

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focus, and there is a bit of a transition there, where you feel, “I should be producing some paper, I haven’t done one yet,” but soon you learn it’s okay,’ he says with a laugh. As he moved into the business function at General Growth, Tanasijevich started to work closely with institutional investors, promoting the company’s stocks and its growth story. His

expertise in the real estate investment trust market was spotted by a headhunter and in 2001 he was hired by CapitaLand as senior vice president of equity markets. In 2004, a Las Vegas Sands executive spoke to him about working for the company on ‘the most exciting real estate development project in the world’. That project was the Cotai Strip in Macau. Convinced, Tanasijevich joined Las Vegas Sands in 2004. In April 2005, the Singapore government announced plans to develop two integrated resorts to boost the local tourism industry which was facing rising competition from other destinations in the region, as well as to support the local job market, with the expectation of the creation of tens of thousands of jobs directly and indirectly. ‘I was moved back to Singapore to lead the bid team on the ground as I’d had previous experience working there,’ he explains.

Las Vegas Sands posted net revenue for the first quarter of 2012 of US$2.76bn, up 30.8% on the same quarter in 2011, while its operating income for the quarter was up 45.6% to US$707.6m. The increase in operating income was principally due to stronger results in Macau and at Marina Bay Sands in Singapore. Singapore’s net revenues alone totalled US$848.7m during the quarter, up 45%, with US$701.3m from casino revenues.

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Formal bids were submitted by four groups for the Marina Bay site: Genting International/Star Cruises, Harrah’s Entertainment/Keppel Land, MGM Mirage/CapitaLand and Las Vegas Sands. Although Harrah’s Entertainment and MGM were seen as frontrunners, Las Vegas Sands emerged as the surprise winner. ‘Even that morning before the announcement, friends were calling me commiserating because they had heard from a “reliable source” another party had won,’ Tanasijevich says.

‘Something from nothing’ ‘During the bidding period, we were creating something from nothing and trying to respond to a very detailed RFP [request for proposal] that clearly articulated what the government was trying to achieve. We had to present it in a way that was compelling and convincing,’ he says. But if the bidding

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The CV

period had been an extremely intense and stressful time, the real work really started when the company won. Since he took over as CEO in 2011, Tanasijevich has overseen record revenues for the property that have continued to surprise analysts. MBS delivered adjusted earnings before interest, taxes, depreciation and amortisation of US$472.5m for the first quarter of 2012, an increase of 66.1% compared with US$284.5m in the first quarter of 2011. While gaming revenues have been extremely strong, the company also reported hotel room occupancy of 98.4% in the first quarter of this year, up from 86.3% capacity in the comparable quarter the previous year. As a result MBS is keen to expand its business further in Singapore and is already eyeing land for development. ‘Our expansion ambition is a reflection of the strong results that we’ve had so far. The occupancy level of the hotel has been in excess of 98%, which is at the top of the market. That’s why we would be interested in building more hotel rooms and more

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exhibition space and another large ballroom,’ he says. Tanasijevich adds that while the booking lead time for the convention centre has shortened in the last couple of years, reflecting the current state of uncertainty in the global economy, MBS’s meetings, incentives, conferencing and exhibitions (MICE) business is still performing ‘at least as well as we expected’. ‘Did we think we would need to expand the building so quickly? Probably not, but we want to stay ahead of the demand. We already have a high usage rate in our MICE space. We think that very quickly we will run out of exhibition space; there are blocks of time when our ballroom is completely booked up and we’re feeling pressure there as well,’ he says. Tanasijevich says that while ‘we’ve been in discussions with relevant government authorities and we’ve made our interest known,’ the land sites that MBS is eyeing are currently not on the reserve list and thus not positioned to be released for public tenders. Beyond the expansion needs, Tanasijevich says that his key challenge is keeping the varied components of the integrated resort ‘fresh and attractive’ to drive more tourism. The number of visitors to Singapore climbed to a record 13.2 million in 2011, partly on the back of the two integrated resorts, MBS and Resorts World. While the CEO keeps an eye on potential competition from other countries in the region that have indicated their interest in setting up similar integrated resorts with a casino, he’s unconcerned about the near term, pointing out that countries such as Japan, Korea and Vietnam have


President and CEO of Marina Bay Sands; managing director – Global Development, Las Vegas Sands Corp.


Vice president – Singapore development and general manager, Marina Bay Sands.


Director of development, Las Vegas Sands, Macau.


Senior vice president, equity markets at CapitaLand in Singapore.


Corporate vice president of General Growth Properties.


General Growth’s senior attorney, responsible for heading the company’s litigation group and managing litigation across 38 states.


Law degree from Loyola University Chicago.

been mulling the idea for many years and the process has been very slow. ‘It’s difficult to put a timetable on any of those markets,’ he admits. ‘But in the meantime we’re quite pleased that we have this position here in Singapore and are reaping the benefits of the early-mover status.’ Sonia Kolesnikov-Jessop, journalist

06/08/2012 13:04




Transparency International ranks Singapore as one of the least corrupt countries in Asia, but better controls are still needed to detect and prevent corporate fraud


simple handshake to seal a deal may seem foolhardy in view of the numerous media reports of financial statement frauds. Ernst & Young’s 12th Global Fraud Survey, Growing Beyond: A Place for Integrity, has found that since the global financial crisis there has been an increase in unethical practices, particularly in emerging markets. As a result, many companies need better systems in place to detect and prevent corporate fraud. Singapore generally scores well in global risk surveys on fraud and unethical behaviour. According to the Transparency International Corruption Perceptions Index 2011, Singapore was ranked the least corrupt country in Asia, and among the least corrupt countries in the world alongside New Zealand, Denmark, Finland, and Sweden. In his book, Curbing Corruption in Asian Countries: An Impossible Dream?,

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Professor Jon ST Quah attributes Singapore’s success to a multi-faceted approach of salary improvement, an effective legal framework, and increasing resources for anti-corruption investigations. According to Quah, the impartiality of the city-state’s anti-corruption unit in conducting investigations ‘regardless of a person’s status or position’ has led to various cases involving wayward senior civil servants, politicians and senior executives of companies. Retired from the National University of Singapore and currently a consultant on transparency and governance he adds in his book: ‘While corruption is no longer a serious problem, this does not mean it does not exist.’ The key regulator with responsibility for overseeing business entities and public accountants in Singapore is the Accounting and Corporate Regulatory Authority (ACRA). The statutory board

aims to ensure the local regulatory regime keeps pace with international developments. To this end, ACRA recently instituted two programmes to strengthen the integrity of corporate financial reporting, which cover its two roles – regulator of companies and overseer of auditors. The Practice Monitoring Programme relates to practice reviews of audit reports that are submitted with financial statements of companies. It is a barometer aimed at ensuring internationally adopted standards and professional code of ethics are adhered to by auditors. The other measure is the Financial Reporting Surveillance Programme, a process that involves checks on submitted financial statements for compliance with Singapore Financial Reporting Standards. ACRA says the surveillance programme is similar to

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those in the UK and Hong Kong. ACRA’s measures are aligned with Singapore’s goal of upholding its reputation as a financial centre. Julia Tay, assistant chief executive (accountancy) at ACRA, says: ‘It is important to build a good corporate governance system around the financial reporting value chain that encompasses checks and balances on all the players, ie the preparer, the auditor and the user. While Singapore has a regulatory framework in place, the key to good corporate governance is still people, integrity and culture.’

Governance, risk and consulting Tay Woon Teck, managing director of governance, risk and consulting firm RSM Ethos, says that Singapore has done well in upholding the standards in the integrity of financial statements, compliance and corporate governance. Highlighting that Singapore’s brand name is well respected internationally, he credits local regulators and the profession in playing a pivotal role in the stewardship of finances and corporate governance. He notes: ‘Our good business laws are the envy of many jurisdictions and they are enforced fairly and the outcome is prompt. Our enforcement agencies have the ability to take action against anybody.’ Joseph Nah, acting group CFO of WBL Corporation, which is listed on the Singapore Exchange, concurs that Singapore’s regulations on compliance and governance have kept pace with international standards. He adds: ‘WBL Corporation will continue to uphold compliance to prevailing regulatory and accounting standard requirements, transparency and timeliness in disclosure of financial and material information.’

Transparency index At a national level, Singapore’s listed companies have been subject to scrutiny in a project in which their quality of corporate governance and transparency is assessed and ranked annually in a Governance and

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Transparency Index (GTI). Showing a ranking of listed companies that have improved their corporate governance, this annual index is a joint effort by the National University of Singapore Business School’s Centre for Governance, Institutions and Organisations, CPA Australia and The Business Times newspaper. Now in its fourth year, the 2012 index covers 674 listed companies. An article in The Business Times says it all, with the headline: Corporate governance huffs and puffs upwards. The mean score of all companies reviewed for the latest GTI stands at 34.9 points, from 31.5 points in 2011. The maximum score that can be achieved is 143, and SingTel, a regional telecommunication company has consistently topped the index,

improving its score from 109 to 111 this year, the report notes. The GTI 2012 announcement coincided with the release by the Singapore government of a revised Code of Governance due for implementation later this year. Shedding further light, Neo Sing Hwee, advisory partner at Ernst & Young Advisory, says the revised code aims to enhance the standard of corporate governance, focusing on several important areas such as risk management, board composition, director training, directorships and director remuneration practices. Neo stresses that companies need to pay attention to the quality and integrity of independent directors to ensure they can effectively discharge their oversight duties.


The most recent KPMG Singapore Fraud Survey, conducted every three years, shows more than one in five companies in Singapore, averaging 22%, are likely to have experienced some kind of fraud since 2008. The 2011 survey indicates the proportion of companies experiencing fraud has remained relatively stable since the 2008 survey, when it was 23%. ‘This report largely spans the period of the global economic crisis, where companies faced the greatest economic turmoil in recent years,’ says Bob Yap, head of forensic at KPMG in Singapore. ‘One effect is that it led to an increase in retrenchment and resignations, and employee misconduct frequently comes to light only when the employees leave their organisation,’ he adds. For the first time, the survey also covers companies’ approach to bribery and corruption. ‘The current regulatory climate is posing new challenges for companies as a result of new laws and stricter enforcement,’ Yap says. It is clear that bribery and corruption compliance is a challenge, with 57% saying they are unfamiliar with Singapore’s Prevention of Corruption Act and 85% unfamiliar with the UK’s Bribery Act 2010. When it comes to preventing incidents of corruption, the survey reveals that 37% of organisations surveyed had an anti-bribery and corruption compliance programme, whereas 14% had a compliance programme for foreign anti-bribery and corruption regulations. There has been little change between 2008 and 2011 in the profile of fraud perpetrators. According to the survey, 63% of frauds were ‘inside jobs’. Proportion-wise, the perpetrators comprise 47% employees, 17% management and 36% external parties such as customers or vendors. Commenting on the 17% fraud by senior members of a company, Yap stresses that ‘these individuals set the tone for the organisation and are in the position to do greatest harm’. The survey attributes three factors that contribute to fraud which are identified as unfamiliarity with the red flags of fraud (59%), weakness in IT security (56%), and weakness of management or board oversight (50%).

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‘Good governance helps to sustain the long-term viability of business and reputation of the company, and enhances investors’ confidence, even if it may not directly result in immediate monetary returns,’ he notes. Although the code is not mandatory, he expects ‘most listed companies will adopt it in their bid to maintain strong governance and stakeholder confidence’. ‘Additionally, the recent amendment to [SGX] listing rule 1207 also highlights the importance of the board having oversight responsibility on the adequacy of internal controls,’ he comments. However, RSM Ethos’ Tay does not believe that mandatory compliance will further enhance the protection to shareholders. ‘The current approach taken by regulators recognises that corporate governance is principlebased and the management should see it as a helpful business practice to incorporate and embed these principles into their governance and business operations,’ he says. On whether Singapore companies can expect more regulations, EY’s Neo says that one should consider if the existing regulations are effective, targeted at the right parties, and whether companies comply with integrity and consistency. ‘More importantly, executives across all levels of the company must embrace the spirit of corporate governance and do the right thing,’ he says. Full accountability, he stresses, should be a goal in the rules to avoid a situation where ‘Singapore independent directors, who are expected to uphold corporate governance, are held accountable, while controlling

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Ernst & Young’s 12th Global Fraud Survey, Growing Beyond: A Place for Integrity, was compiled with input from 1,700 CFOs and heads of internal audit, legal and compliance in 43 countries, including Singapore. Fifteen per cent of respondents from Far East Asia think that financial performance misstatement can be justified. Thirty-six per cent of respondents from Indonesia consider it acceptable to misstate a company’s financial performance, whereas 60% of respondents from Vietnam consider it acceptable to make cash payments to win new business. The same questions posed to respondents in Singapore show that just 4% are willing to misstate a company’s performance, while 20% consider it acceptable to make cash payment to gain new business. While bribery and corruption do not appear as widespread in Singapore compared with globally, the willingness of Singapore respondents to pay bribes or misstate financial performance for their business to survive the economic downturn has increased since the last survey in 2010, says EY. Just 36% of Singapore respondents state they will not pay bribes or misstate financial performance, compared with 78% in 2010, it notes.

shareholders, who are overseas, are not’.

Culture or regulations? As to the issue how much bearing culture or regulations have on the integrity of financial reports, EY’s Lawrance Lai, partner in Fraud Investigations & Disputes Services, believes the tone at the top is important. ‘A culture of strict vigilance and zero tolerance to unethical behaviour, coupled with communications that consistently articulate the same, can serve as a useful deterrent,’ he says. Lai stresses that companies need to assess their risks and put in place a comprehensive anti-fraud programme. Being proactive by implementing preventive measures and instilling a robust corporate culture of ethics and compliances are keys to reducing fraud, bribery and corruption, he says.

‘Compromising ethical standards to win business in difficult times is a very shortsighted move as it will not be long before the relevant authorities come knocking. The short-term gain of business opportunities can cost companies their long-term reputation’ Lai adds. Sharing RSM Ethos’ experience, Tay says: ‘An analysis of corporate fraud over the last 10 years shows that financial statement frauds are more likely to be committed by strong dominant leaders, or small groups, eager to show success in the short term and receive better compensation. ‘In many of these instances, strong and independently minded directors, who are well versed in the company affairs to act as an effective deterrent on the strong dominant leader to commit financial statement fraud, are virtually non-existent,’ he says. Ek Heng Ng, journalist

06/08/2012 14:41

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12/06/2012 15:11



With the implementation of Rio+20’s goals on sustainability reporting being left largely to individual governments, the corporate world is rising to the challenge


he goal of making sustainability reporting a norm for companies worldwide was boosted by an agreement forged at the United Nations Conference on Sustainable Development (Rio+20) in June. But ultimately, national governments will remain responsible for this key policy area. The investor-led Corporate Sustainability Reporting Coalition (CSRC) led the charge for a deal at the Rio de Janeiro meeting that included solid international commitments on expanding sustainability reporting, and some green activists will doubtless have been disappointed by the result. That was encapsulated in paragraph 47 of the final political outcome document of the conference, called ‘The Future We Want’. Written in what UN officials in Rio called ‘consensus language’, the paragraph states: ‘We acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information

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into their reporting cycle. We encourage industry, interested governments as well as relevant stakeholders with the support of the UN system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account the experiences of already existing frameworks, and paying particular attention to the needs of developing countries, including for capacity building.’ It is worth quoting in full, because even though it’s a call for action, the paragraph does not commit UN member states to anything specific, much less a convention that could include binding commitments under international law to impose ‘report-orexplain’ sustainability reporting as an annual requirement for all public and large global corporations. And while this was exactly what the CSRC asked from the world government delegations meeting in Rio, supporters of the idea think that even getting ‘sustainability reporting’ written into the agreement in this way was a success, especially as its inclusion was subject to tough negotiations.

Prime paragraph ‘Who would have thought, a few years ago, that a paragraph about reporting would be one of the most debated paragraphs in such an important summit on the future of our planet and of our societies?’ said Ernst Ligteringen, chief executive of the Global Reporting Initiative (GRI), during a side event of the main political conference in Rio. According to Ligteringen, paragraph 47 was the most debated clause after the issue of Sustainable Development Goals (SDG), which will replace the current Millennium Development Goals (MDG) in 2015. ‘These issues do come together: issues about environmental impact, social impact, economic impact, the role of business, the role of governments and how this all affects our future,’ explained Ligteringen. Rachel Jackson, ACCA’s head of sustainability, comments: ‘While the announcement does not go as far as ACCA would have liked, we are encouraged that Rio+20 has endorsed the need for big business to integrate sustainability into their reporting cycles.’

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‘The distinct and credible reporting of ESGs – environmental, social and governance disclosures – have an important part to play in encouraging a positive approach to sustainable development by business and the adoption of long-term and socially responsible investment strategies by investors,’ said Martin Turner, ACCA’s vice president, at the Sustainable Stock Exchanges Event in Rio on 18 June. Turner’s comments were aired at a session which ACCA co-sponsored with Aviva Investors, organised ahead of the full Rio+20 conference. ‘ACCA believes there is a positive and vital role for accountants to play in ensuring that ESGs provide meaningful information to stakeholders, with the aim of encouraging a more holistic approach to risk management by reporting companies,’ he said. ACCA recently published a paper which looks at the possible changes to the ‘zero draft’. The paper also includes a series of expert views from its Global Forum for Sustainability members. The forum was established in 2011 to bring together leading thinking on sustainability and the role of accountants. View Making a Difference at Rio+20 at

Shortly after the final political outcome document was known in Rio, the governments of Denmark, France, South Africa and Brazil coopted the GRI and the United Nations Environment Programme (UNEP) into a group, ‘Friends of Paragraph 47’. The group, which promised to be inclusive and to invite more governments and experts to join in, will look into best policy and practice for sustainability reporting with the aim of building a roadmap of actions to be taken as a result of its text. The ‘Friends’ promised to present a plan to the international community in the next

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few months following Rio+20. ‘I am delighted that Denmark and France and the others have decided to form the “Friends” to take forward governmental support for corporate sustainability reporting,’ said UK Labour Party MEP Richard Howitt, who, as a member of the European Parliament, has dealt with corporate sustainability legislation in Brussels. He was speaking during a side event organised by the CSRC in Rio, where he noted that the European Commission is expected later this year to propose legislation on non-financial reporting by companies in the European Union.

Sink or swim? Activists used a range of means to get their messages across at Rio+20, including (from far left) creating giant fish made from plastic bottles, campaigning on agriculture and marching against ‘life commodification’ Although he recognised the limits of paragraph 47, Howitt underlined its importance in involving governments and businesses and committing the UN to a process to take sustainability reporting further based on currently existing agreements. ‘We need effective public policy on this,’ said GRI’s Ligteringen. ‘We need to see how we are going to convince policymakers to make corporate sustainability reporting a common practice.’ The idea does have some powerful backers. In February the UK’s environment secretary Caroline Spelman supported the CSRC’s call as one of the priorities of the British government at Rio+20. At Rio she noted the need for good dialogue on what governments can do to follow up on paragraph 47. ‘We can talk to other governments and ask them how they want to approach it and then try to create a norm,’ she stated. ‘You have to very carefully consider what kind of norm you want; it’s all too easy to jump to a standard that is too low or too

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high. Governments make the mistake all the time, thinking they got it right, and not actually testing waters with the law and regulations,’ she explained.

Corporate action Launched during the Private Sector Forum of the UN General Assembly in September 2011, the CSRC’s specific purpose was to obtain an agreement in Rio for a clear process to be put in place under the UN General Assembly that would commit governments to ask companies registered in their countries to include sustainability reporting in their annual reports or to explain why they would not. Led by the institutional fund management group Aviva Investors, part of Aviva plc, the CSRC united about 70 organisations representing investors with assets under management of approximately US$2 trillion, but also financial institutions such as index FTSE, professional accountancy bodies such as ACCA, non-governmental organisations (NGOs) including the GRI, the Stakeholder Forum and the Worldwide Fund for Nature (WWF) and UN bodies such as the UN Environment Programme (UNEP) Finance Initiative and the UN Conference on Trade and Development (UNCTAD). ‘We all know the benefits (of corporate sustainability reporting): empowering investors and consumers with the information they need to make the right choices, putting sustainability at the heart of business decisions and looking after the bottom line, with financial, social and environmental increasingly intertwined, rather like DNA,’ said Spelman during the CSRC side event in Rio. According to a document circulated at the Rio+20 conference, Aviva Investors made the bold move of asking for corporate sustainability reporting at global level. Robust corporate sustainability reporting would, said the report, help the capital markets go beyond shortterm decisions based on thin information. ‘To include sustainability in our investment decisions, we need

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information about the sustainability of companies in which we invest. Today, while investors know about a company’s profits and cashflows, they know little about a company’s sustainability,’ read the document. ‘Paragraph 47 recognises that corporate sustainability reporting is a policy to be advanced, that it needs to come to scale and that we need pace behind it,’ Ligteringen told Accounting and Business. He believes that a standard in sustainability reporting is fairly near, since a global move towards this kind of voluntary reporting started at the UN sustainable development conference in Johannesburg in 2002. GRI’s fourth generation of reporting guidelines is expected to be released in May 2013. According to Ligteringen, they are being made more robust so they come as close as possible to a standard in sustainability reporting. However, from Ligteringen’s standpoint, sustainability reporting is not enough to inform investors on the main value drivers of a company. ‘Sustainability reporting talks about the licence to operate, about the effects a company has on the environment and on the society; it helps a company to integrate this; but it is not an instrument that helps a company make an assessment on the main value drivers that informs investors,’ explained Ligteringen. For that to happen, ‘sustainability information needs to interface with other information flows that companies have, to come to an integrated thinking to be able to tell how the company is going to generate value in a different, sustainable economy’. That is where ‘integrated reporting’ comes in which, according to Ligteringen, takes holistic company

Future focus: (Above) Brazilian President Dilma Rousseff delivers a speech during Rio+20’s closing ceremony reporting a step further. Sustainability reporting is just a chapter of an integrated corporate report. But according to the International Integrated Reporting Council’s (IIRC) CEO Paul Druckman, who spoke to Accounting and Business in Rio, integrated reporting uses existing systems, such as greenhouse gas emissions reporting schemes and the GRI guidelines, to describe the strategy of a company. ‘We are sitting over the top of that to understand what the business is trying to do over the short, medium and long term,’ said Druckman. ‘And all of that is absolutely useless if all you get is just a good story.’ While at present there is no global standard for integrated reporting, the IIRC is working on a globally accepted integrated reporting standard bringing together financial, environmental, social and governance information in a clear, concise, consistent and comparable format to be released in late 2013. Druckman considers accountants to be central in the move towards integrated reporting. But to deliver, accountants must, he says, go beyond reporting on financial and manufactured capital, which has been their traditional role, and report on the other elements: natural, social, human and intellectual capital. ‘Accountants are in the prime position,’ he explained. ‘They need to have the breadth of mind to understand it.’ Carmen Paun, journalist based in Rio de Janeiro

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Twenty years after the first Earth Summit in Rio de Janeiro asked businesses to recognise environmental management among the highest corporate priorities, and 10 years after the second Earth Summit in Johannesburg committed governments to enhance corporate environmental and social responsibility and accountability, it is clear that voluntary commitments to sustainability reporting have not delivered the goods. When Bloomberg introduced environmental, social and corporate governance (ESG) issues in 2009 within its financial data, 75% of the companies surveyed did not publish any of that information. London-based Aviva Investors concluded that this was simply not good enough and convened the Corporate Sustainability Reporting Coalition aimed at pressurising governments meeting at the third Earth Summit in Rio to agree to a ‘report or explain standard’ on sustainability data for companies registered in their territories. ‘Our coalition is collectively asking participants at Rio+20 to commit to develop a United Nations (UN) Agreement on sustainability reporting so that we, as investors, can help guide the world towards a sustainable future,’ said a document circulated by Aviva Investors in Rio. The agreement would include two elements: the first was a commitment by UN member states to develop regulations, codes or listing rules encouraging the integration of sustainability issues in the annual reports of all listed and large private companies. The second was an opt-out alternative for companies that do not want to prepare such a report, provided that they explain their decision to opt out. ‘Companies will never voluntarily internalise external costs,’ explained Paul Abberley, interim CEO of Aviva Investors, who convened the coalition. Therefore we have to structure markets in a way that forces the internalisation of externalities. You can’t do that until you can measure them and understand what they are. Only then, you can have sufficient reporting; you can understand the scale of the problem and come up with market mechanisms

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to price them right. And that is one of the benefits of reporting.’ The coalition was hoping that a process would be put in place in Rio to create a convention on corporate sustainability reporting. While that did not happen, the final outcome document of the Rio+20, ‘The Future We Want,’ encouraged large companies to include sustainability reporting in their reports and called for governments and industries to develop models for integrating sustainability reporting into the corporate reporting practice. ‘Two years ago, I wasn’t confident that we would achieve anything in Rio,’ says Abberley, but the goal was so important, ‘it was all worth all the effort.’ Even though the coalition did not get exactly what it wanted, there was a sense that the need for corporate sustainability reporting has gained momentum at the global level. ‘The thing that concerns me now is how on earth do we keep the momentum going and avoid frittering the momentum that’s been built?’ he told an audience of coalition members and supporters in Rio. ‘From Monday, it all gets a bit messier.’ It is now exploring getting involved in the UN process of defining the sustainable development goals (SDGs), which should be ready by 2015. The SDGs are expected to take over from the current Millennium Development Goals (MDGs) and be the defining UN framework until 2030. ‘It would be entirely appropriate, I suggested to the coalition, to target 2015 as the next stage,’ said Derek Osborn in Rio, board member of the Stakeholder Forum, a branch of the coalition working to advance sustainable development. With the new proposed regulation on non-financial disclosure expected to be published by the European Commission this autumn, there seems to be a momentum to advance corporate sustainability reporting in the European Union (EU), said Abberley: ‘It might well be that in coming months, we try to make some real progress in Europe, and that may well provide an example and a template of how this can work for bodies more generally.’

02/08/2012 16:56



This is an edited excerpt from Sir Richard Branson’s book, Screw Business as Usual, published in November 2011. One-hundred per cent of the royalties are going to the Virgin Unite not-forprofit foundation. screwbusinessasusual

Doing good is also good for your business, says Sir Richard Branson. The new owner of Northern Rock recalls how Virgin Money banked on the philosophy


’ve always looked on my businesses not just as moneymaking machines, but as adventures that can, I hope, make people better off. The older I get the more I’m inspired to make business investments that can also change the world. There is a real opportunity for businesses and foundations to look at how we can use our investment portfolios as vehicles for change in their own right. There are tremendous opportunities in this area. At the moment, the buzz word – the new phrase – in the world for this type of investment is ‘impact investing’. During one of our leadership gatherings on Necker Island, Alex Friedman, who had recently left his job as CFO at the Gates Foundation, gave an inspiring presentation about the work he was doing to shift philanthropic dollars into investments that would deliver social and environmental impact. Alex wrote in a recent article in the Financial Times, ‘These days, it has become something of a trend to demonise capitalists and praise philanthropists. But if we are to make true progress in tackling our most pressing social

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problems and live up to our moral obligation to help those in extreme poverty, these two seemingly polarised groups need to come together in fundamentally new ways.’ At a broad level, he wrote, four steps are needed. First, foundations could carefully lend against a small portion of their assets not given away each year. Second, financial institutions have a unique opportunity to work with foundations to

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syndicate grant-making opportunities. Third, banks could develop a wider range of social sector finance products. Finally, governments could provide tax incentives for high-quality social impact investments both nationally and internationally. Inspired by Alex, we’ve been working with Virgin Unite, some large family foundations, financial institutions and the governments in the UK and the US to look at how we can help encourage financing to flow into investments that will be good for the world. We have the chance to encourage a whole new philosophy around this type of investment, one that gets people excited about meeting a need and delivering a solution – and making money at the same time. Everyone wins. One of the reasons I wanted to get into the banking industry is because I saw the money markets and finance as a way to build bridges between the social sector, big government and business. It’s the natural way in which Capitalism 24902 (see box below) should evolve for a fairer distribution of wealth. I’ve known Jayne-Anne Gadhia since she helped Virgin enter the financial services sector back in the mid-1990s. The business prospered and grew and in 1997 we launched the Virgin One account with RBS. RBS bought us out in 2001 and Jayne-Anne and her team stayed with the bank. I was sorry to lose them, and I said to Jayne-Anne, ‘If at any time you find you don’t like corporate life, give me a call.’ Six years later, she did just that. The timing couldn’t have been better for us. Virgin Money had by then developed three successful product lines: insurance, a credit card and a savings and investment division. But there was no real connection between them, either in the way they were organised or

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in the way they were marketed. So Jayne-Anne’s first and most important job was to come up with a holistic marketing message for those products. She said, ‘I initially started with a marketing thought – what is the thing that binds all these products together? And as we started to think about that, we realised we were looking for our “glue” in the wrong place. The products were the products; what bound them together was the people. Looking at Virgin Money as a community, rather than a profit-making vehicle, made the job of creating a distinctive brand that much easier. It freed us up to

you say to people developing a new product, “You need to tell us how this makes everyone better off”, it actually sets them thinking along lines that are good for the stability and sustainability of the business. We can’t charge one group of customers more than another or less than another. We can’t find a way to tack on a hidden charge. We can’t give duff or ill-considered advice. Why? Because none of those things make everyone better off.’ At a time of huge turmoil and a deepening lack of faith in banking and bankers, Jayne-Anne and I discussed the way banking should go.

‘NO ONE LEAPS OUT OF BED JUST TO READ AN EMAIL OR ANSWER THE PHONE. THEY GET OUT OF BED TO MAKE A DIFFERENCE’ think about what we wanted the bank to feel like. Because no one – no one, not even bankers! – leaps out of bed in the morning just to open an envelope or read an email or answer the phone. They get out of bed to make a difference. We wanted to make a difference we could be proud of and over a few weeks of discussions we hit upon a one-liner that summed up our aspirations. What we actually want to do is make everyone better off. We want to find ways of doing business that benefit both parties. We want to establish win/win business relationships. ‘Making this happen throughout the company had an extraordinary effect. In saying to the whole business, “We’re here to make everybody better off”, people were able to make their own decisions within a clear context that’s normally quite hard to pin down. If

Virgin Money’s clear brand goals have been like spectacles, bringing the whole operation into focus. Now they’ve begun to notice ways of using their existing business to drive quite unexpected change. Take, for example, the curve ball I threw at them in 2006. The London Marathon was looking for a new sponsor and one of my closest personal friends, Andy Swaine, mentioned this to me. I thought this was a great idea, as did Alex Tai from Virgin’s Special Projects Team – if only we could tie it in some useful way to a Virgin brand. Sponsoring a world class race and the world’s biggest annual fundraising event is not something you take on lightly, and certainly not something I would just drop into someone’s lap! Also, every Virgin company is very different. Some have long-standing philanthropic commitments elsewhere;


Virgin founder Sir Richard Branson has encapsulated his new approach to business in the name Capitalism 24902, which is the number in miles of the earth’s circumference. He says: ‘The name had to capture the new level of responsibility that each of us had for others in the global village and how this needed to be a movement that went beyond a handful of businesses or one country.’

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Virgin Money Giving – the donation platform for some 4,000 UK charities – is the official sponsorship engine for the London Marathon and gets up to 25,000 hits a day others are start-ups that are devoting every spare hour to their survival; some lack the resources to take on a task of this scale. All I could do was ask, ‘Jayne-Anne, the London Marathon sponsorship is available. Would you be interested in taking it on?’ Her silence spoke volumes. I have to admit my first reaction had also been ‘What has the London Marathon to do with a financial services business?’ Yes, the marathon is the single biggest annual money-raising event on the planet. It raises over £50m per year. But that in itself was a problem. Virgin Money is typical of the Group in that it punches well above its weight. It has three million customers, but only 450 staff (even fewer when I phoned JayneAnne that day in 2007). The London Marathon was a major investment. Unless the fit between Virgin Money and the London Marathon was watertight, Jayne-Anne could be staring at the loss of a lot of money. There was another problem which made the idea even more tricky. Small though it was, Virgin Money was still employing too many people. So how could Jayne-Anne consider asking people to go and at the same time take on a major philanthropic cause? Money is always tight, especially in relatively small companies. How could we actually make that very significant investment

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work for us and help our brand? Pondering it, Jayne-Anne suddenly had a light-bulb moment. Virgin Money wasn’t a health business or a clothing company. They did handle money, though, and they knew how to handle deposits and withdrawals. How did the runners who took part in the marathon handle money? How were all those thousands of individual sponsorship efforts processed? Jayne-Anne discovered that many of those transactions take place through an online charitable donation site called JustGiving. If you’re going to climb a mountain, or run a marathon, or bathe in beans, you can ask your mates to sponsor you through JustGiving. Your sponsor can make their financial donation through JustGiving’s online engine. It’s a nice idea, but there’s a problem. JustGiving is a commercial enterprise. For Jayne-Anne it was a heaven-sent opportunity. She realised that Virgin Money could operate a much better online donation engine. We had the hardware, the know-how, and we had the people – people who, only the day before, we had been thinking of making redundant. It was a brilliant solution – if she could get it to work. I love it when our Virgin machine moves smoothly into action to solve problems and make things work. In

record time, we set up Virgin Money Giving with a wonderful woman, Jo Barnett, at the helm. So, rather than put a lot of friends out of a job, we set them this great task of developing a not-for-profit online charitable donation system, and we made that engine, Virgin Money Giving, the sponsorship engine of the London Marathon. This provided a service for the runners and their charities, and made the Virgin Money brand really visible in a meaningful way. It justified and explained our involvement in the marathon. It gave us the natural, watertight fit we needed between the event and the brand. Virgin Money Giving has already grown to be the online donation platform for over 4,000 UK charities across many thousands of organised events and personal challenges. The 2010 London Marathon collected more sponsorship money than it had in any previous year. It even got me running. In the first year Virgin Money Giving collected £25m in donations. The Virgin Money Giving website gets up to 25,000 hits a day. And thousands of pounds have gone to charity. All of our people are enormously proud that we’ve done it. It’s been a real demonstration of what we mean by making money while doing good. At a time when banks were perceived as just being in it for as much money as they could screw out of the customer, Virgin Money was showing that profit wasn’t our only motive. They gave back and they had fun. Truly a win-win that once again illustrates how doing good things can also do good things for a business and the morale of its most important asset, its people.

Across its companies, Virgin’s global branded revenues were around £13bn (US$21bn) in 2011. Virgin Unite, its non-profit foundation, implements programmes and campaigns around issues such as health, economic empowerment, conservation and climate change.

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ACCA’s Accounting for the future is a worldwide event exploring the role finance professionals will play in building a stronger and sustainable global economy. ACCA champions the connected accountant and over five days we will harness the latest technology to bring together finance professionals from around the world to share and learn from their peers. Our experts will share with you the latest insights on how businesses and the corporate sector need to adapt to meet the future needs of stakeholders, regulators, the economy and the environment.


Taking the pulse of the global economy With business confidence now collapsing in Asia Pacific too, ACCA’s Manos Schizas reports on the gloomy mood of financial professionals Over 2,700 finance professionals took our Global Economic Conditions Survey for the second quarter of 2012. The news was definitely not good. As we had warned at the time, some of the apparent recovery in early 2012 was down to very transient sentiment that has since dissipated. But as much of the gain in confidence was down to improved fundamentals, optimism has not completely vanished. Then again, the global fundamentals have also deteriorated: liquidity and demand have tightened around the world, investment has taken a hit and, despite excess capacity, inflation has not fallen. More businesses failed in the second quarter of 2012 than in the first, although employment was reasonably resilient. Overall, the global economy is about as fragile as it’s ever been since the ‘green shoots’ of early 2009, with the developed OECD economies probably shrinking. The Americas, the Middle East and Africa continue to lead global recovery, as they have for the last nine months. The US is in fact looking decidedly healthy, with investment still growing and both demand and liquidity remaining relatively strong. However,


Once the undisputed leader of the global recovery, the Asia Pacific region now lags behind the worldwide average. Only 14% of respondents in the region (down from 23%) said that they were more confident now than they were three months ago, while 65% believed that the recovery was no longer on track, up from 57%. Singapore, Hong Kong and Malaysia appear to be lagging behind the rest of the region, and Australia and New Zealand are also underperforming. Inflation is still on the rise, although there is some evidence that business revenues are stabilising, while firms are adopting a wait-and-see approach with regards to investment and hiring. Only 2% of respondents in Hong Kong reported confidence gains in the last three months, the least confident market in our sample, compared with 22% in mainland China.

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there is a worrying slowdown in China, where both confidence and investment are falling despite an expansion in business opportunities. China’s slowdown, while not yet the ‘hard landing’ many fear, is very bad news not only for ACCA members in the country but also for China’s truly global supply chain, mainly suppliers in Africa and South Asia. Nor are regions that run a persistent trade deficit with China going to benefit. The EU, for example, has about

THE GLOBAL ECONOMY IS AS FRAGILE AS IT’S BEEN SINCE THE ‘GREEN SHOOTS’ OF EARLY 2009 €120bn of exports to China at stake, and since a lot of that is made up of high-tech industrial inputs, Europe’s exports to China are more incomeelastic than China’s exports to Europe. Encouragingly, though, accountants around the world continue to see opportunities for their businesses – more of them, in fact, even in troubled regions such as Europe. Fiscal policy remains a conundrum. Attitudes have continued to move against austerity as global growth continues to disappoint, yet, in the opinion of local accountants, some of the governments the world is counting on for stimulus may already be living beyond their means. US-based accountants are particularly hawkish, warning of a dangerous level of overspending; then again, so are their colleagues in China. In short, the global economy is still weak and could yet endure many more false starts. The most important lesson from the reversal may well be that relief should not be mistaken for recovery: finance professionals should trust the evidence of their own eyes above the hype. More at

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29 THE ACCA/IMA GLOBAL ECONOMIC CONDITIONS SURVEY – HOW TO TAKE PART The views of ACCA members receive widespread media coverage. The Q1 2012 survey was quoted in the press around the world more than 200 times.

So why not have your say in our next quarterly survey? Simply look for the link in AB Direct or watch out for the email invitation.

The survey is undertaken by ACCA in association with IMA (the Institute of Management Accountants), with respondents coming from both bodies.



Breaking down the ACCA Confidence Index geographically reveals some striking variations, with members in Africa still showing most confidence.

In China, business confidence is plunging and capital spending is heading still lower.

75 50 25 0


0 -10 -20 -30 -40 -50 -60 -70 -80

Q4 2009

Q1 2010

Q2 2010

Q3 2010


THE DANGER DOWNPOINT The ACCA Confidence Index correlates strongly with economic growth globally. A reading of below -13 suggests the economies of the developed world are contracting and the global economy is slowing to a halt.

Q4 Q1 2010 2011

Q2 2011

-25 -50 -75 Confidence

KEY: =Q1 2012

Capital spending

=Q2 2012

30 20 10 0 -10 -20 -30 -40 -50 -60 -70 -80 Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 Q2 2011 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012


Business confidence has gone futher into decline. The graphics show the percentage of respondents saying they have gained business confidence, minus those who have lost it.

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07/08/2012 11:08



Irish prime minister Enda Kenny talks to Accounting and Business about reputation, regulation and Ireland’s return to the financial markets – as well as the need for ethics in business


Ireland went from being the successful poster boy of Europe to being one of its most troubled economies. How have you gone about repairing Ireland’s reputation? A Last year, when my government came into office, I made it one of our top priorities to restore the good name of Ireland as a place of business and of investment. In this regard, the progress already made by Ireland in repairing our damaged economy is well recognised internationally. Visits to and from US president Barack Obama and Chinese vice president Xi Jinping have highlighted world leaders’ renewed faith in Ireland. This is reflected in significant progress in returning our economy to growth and in reforming our banking system. Step by step, we are bringing our public finances under control through our fiscal consolidation programme. At the same time, my government has brought a strong and determined focus to the agenda for growth and jobs. As a result, Ireland’s recent performance has separated us from many other European economies. We’re expecting a second year of economic growth, driven by exports. Our balance of payments is now positive. Employment grew during the last quarter in 2011, the first quarterly growth since 2007. Since my election, I have been conveying a clear message in all my international engagements: that now is the time to invest in – and benefit from – Ireland’s recovery. The commitment from the European heads of state and government

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Read my lips: in 2011, Kenny led his party to a decisive victory in the Irish general election, having promised that a Fine Gael government would not raise income tax at June’s EU Summit to break the negative link between the sovereign and the banks is having a positive impact on the market’s perception of Ireland. While the recent bond auction is an important step, the true indicator of Ireland’s success will be our full emergence from the bailout programme and the return to the international markets at sustainable rates. It is clear from that auction that investors are reacting favourably to the commitment by the heads of state and government to break the

negative link, to examine the Irish programme and that similar cases will be treated equally. The Irish economy is growing again, our public finances are under control and the government is using its strong political mandate to build upon this to deliver long-term, sustainable growth. Q Much of the collapse of the Irish economy can be traced to poor banking decisions and poor regulation. How has your government addressed these related issues?

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Seen here during his visit to China with the country’s premier Wen Jiaobao, Kenny promoted Ireland as a supplier of worldclass products and services and a viable location for Chinese investment

‘AN ETHICAL APPROACH TO DOING BUSINESS… IS NOT LIMITED TO FINANCIAL SERVICES, BUT SHOULD BE THE NORM ACROSS THE CORPORATE WORLD’ A The regulatory failures of the financial crisis have been the subject of extensive and objective analysis. A number of reports and investigations point out the problems to be addressed. Poor supervision, an overly deferential attitude by regulators, poor assessment of risks and a lack of follow-through on enforcement – all played a part in the financial crisis. New proposed legislation draws on the lessons from that experience. A new Central Bank Bill involves a careful overhaul of the statutory basis for the Central Bank’s regulatory powers. The bill brings clarity to the Central Bank’s ability to set requirements. It provides for good information flows and objective analysis to support regulatory supervision. Where things go off course, there is provision for prudential intervention and corrective action. Where the law is broken, there are effective and dissuasive, yet proportionate, sanctions. There are also provisions dealing with restitution and costs after the fact. There is a public consultation process currently open on further proposals for inclusion in the bill. Of course, legislation alone will not be enough to address the failures of the past. In recent years, the level of regulatory activity has intensified with

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increases in staff numbers and skill levels at the Central Bank. On-site inspections and review meetings have also increased. Q What lessons do you think finance professionals need to learn from the current economic difficulties in Ireland and beyond? A Everyone involved in financial services needs to consider how best to enhance its risk management function – there is a real need to monitor and plan for the worst-case scenario. The crisis made clear that, without contingency planning, organisations – both government and private sector – are not in a position to act quickly and effectively to address problems. An important change – which is being looked at, for example, in the context of remuneration – is to ensure that the time-horizon for decisions is sufficiently long. The crisis has shown us that short-term results can be deceiving in terms of an organisation’s actual financial position. A final point to consider is how company accounts can provide the best information to investors and regulators. The Central Bank here has published guidelines for the covered banks to follow in the development and application of their impairment provisioning frameworks.

Q Is there a need for greater attention to professional ethics, especially in the financial services arena? A It is important that all professionals act in an ethically appropriate manner. It is clear that a focus on profit to the exclusion of all else has not led to positive results for either individual companies or for the economy as a whole. The fitness and probity regime being rolled out by the Central Bank for the financial sector will seek to address some of these issues. A broader focus is required, which should of course include an ethical approach to doing business. This is not just limited to financial services, but should be the norm across the corporate world. Q Poor financial planning and excessively optimistic outlooks by major financial institutions played a part in the country’s current difficulties. How can that be prevented from happening again? A We can certainly point to a combination of factors that were responsible. First, it is now very apparent to all that the long period of financial prosperity enjoyed by Ireland lulled bank management into a false sense of security. This was not just a failing seen in Ireland of course – managers of large financial institutions all over the world generally forgot how to price risk effectively. Second, banks placed overreliance on their complex financial models and drew excessive comfort from what these were saying

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while common sense took a back seat. Third, we now know that there were mistakes made in the accounting and regulatory areas which prompted and enabled banks to hold in reserve less in the way of provisions and capital. Significant changes in the way banks are run and regulated have been implemented both in Ireland and across Europe and more are on the way to ensure that these failings are not repeated. For instance, more conservative provisioning guidelines

Q Some European countries are now starting to reduce their corporation tax rate to bring it closer to the Irish rate. Do you see this trend as a threat to foreign direct investment (FDI) in Ireland in the future? A We have found that the one thing the business community prizes above all is certainty. Ireland’s long-term commitment to the 12.5% rate, which has broad political consensus in Ireland as well as general public support, means that this rate is now

‘IRELAND’S LONG-TERM COMMITMENT TO THE 12.5% RATE… MEANS IT IS NOW SEEN AS PART OF “BRAND IRELAND” ACROSS THE BUSINESS WORLD’ have been implemented by our Central Bank while, at a European level, banks will no longer be able to ‘game’ their capital requirements through manipulating the value of their riskweighted assets as a new simpler leverage metric is in prospect. Q Has your government taken any significant initiatives to make the Irish economy more competitive? A It’s been one of our top priorities since taking office. There have been some recent improvements in competitiveness worth pointing out. For example, our unit labour costs have reduced, the productivity of the Irish labour force is over one-third higher than the EU average, our consumer prices fell in 2009–10 and have only grown at a comparatively low rate in 2011–12, and we have seen our energy costs coming more in line with EU average costs. As part of the Action Plan for Jobs 2012, the government is looking at the costs it can influence, either directly in charges imposed on businesses, or indirectly in dealing with bureaucracy and other administrative burdens. This includes legislating to reform our wage-setting mechanisms; freezing or reducing charges levied by government on business; and promoting supports to business for energy-efficiency and cost-reduction measures.

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regarded as part of ‘brand Ireland’ throughout the business world. The competitive rate is underpinned by transparent and easy-to-use corporation tax rules. However, the 12.5% rate is only one part of a wider policy mix in the taxation area, such as a rapidly expanding tax treaty network, R&D supports, an intellectual property tax regime, a preferential personal tax regime for foreign executives temporarily seconded to Ireland as part of an FDI venture, a holding company regime, and an efficient tax administration system. Q Despite Ireland’s economic difficulties, the pipeline of new FDI projects seems to be strong. How do you account for this success? A Last year saw a strong performance in the levels of FDI won by Ireland, with over 13,000 new jobs created across the 148 investments secured. Government policy is to build on the strength of our existing markets and diversify into new ones. Minister-led trade missions are an integral part of this process and work to expand Ireland’s exports to existing and new markets abroad. In all, 19 minister-led trade missions are planned this year to destinations such as China, the US, India, the UK, Russia and France. On a global scale, Ireland scores extremely well in many of the key

areas of importance to investors. For example, the IMD World Competitiveness Yearbook 2011 ranks Ireland first in the world for corporate taxes, first for business legislation for foreign investors and first for the availability of skilled labour. Q Earlier this year, the vice president of China, Xi Jinping, visited Ireland. Are you confident this evolving relationship will yield economic benefits for Ireland? A My visit to China in March, coming so soon after the successful visit to Ireland of Xi Jinping, was a great opportunity to take our relationship with China to a new level. My key aim was to develop stronger relations with China at the highest political level and to promote Ireland both as a source of world-class products and services and as a location for Chinese investment. I highlighted Ireland’s potential as a gateway to the European market of over 500 million people and our many strengths, such as our young, well-educated workforce and our strong capacity for entrepreneurship and innovation. I also stressed the potential for investment and economic cooperation in key sectors such as education, financial services, culture, tourism, life sciences, cleantech and agri food. A number of significant memorandums of understanding were signed during both visits and I witnessed the signing of more than €35m worth of contracts and commitments while in China. The culmination of my visit was the conclusion of a strategic partnership agreement, which sets out a framework to ensure mutually beneficial cooperation between Ireland and China in a number of important trade and investment areas. Q You recently launched a scheme called Succeed in Ireland aimed at attracting smaller and emerging firms to Ireland. How will it work? A Succeed in Ireland is a programme which provides direct incentives to members of the Irish diaspora and others across the world to create jobs in Ireland. The aim is to

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British prime minister David Cameron (left) greets Kenny as the leaders held talks on trade and investment links

target international companies and businesspeople, who would otherwise not be reached by the state enterprise agencies, to consider locating economic activity in Ireland, thereby creating new employment opportunities. The initiative will incentivise people around the world to be our eyes and ears on the global stage and help deliver new jobs and investment. This is an innovative scheme that offers a new channel to reach thousands of small-to-medium enterprises and spread the word about Ireland’s strong reputation as a location for business. You can read more about it at www. Q Has the government any specific plans for the shared services sector, which is seen by many as a major success story for Ireland? A In July 2011, I launched the strategy for the international financial services industry in Ireland 2011–16. The strategy recognises that the future growth of the International Financial Services Centre (IFSC) will depend to a significant extent on non-balance-sheet sources, and envisages that Ireland will prioritise its growth as a global provider of vital shared services for international firms. Across areas including technical, legal, accounting, advisory,

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The longest-serving member of the Irish parliament, the Dáil, since being elected in 1975 at the age of 24, Enda Kenny has led his party, Fine Gael, since 2002. An Irish Gaelic speaker from the west of the country, he became prime minister, or taoiseach, in 2011. He renegotiated the country’s EU bailout in 2011, describing it as ‘a bad deal for Ireland and a bad deal for Europe’, reducing the interest rate by 2% and extending the repayment period.

administration and asset management, firms can build on existing expertise in the servicing of both external clients and parent groups to promote Ireland as a centre of excellence in this arena. Ireland consistently ranks among the world’s leading locations for shared services for a number of reasons: the availability of highly skilled, multilingual employees across a range of disciplines, such as accounting, technology and healthcare; the competitive operating environment that exists in Ireland; the mature infrastructure that Ireland offers in technology, roads, air access and utilities; low corporate tax, which naturally

* * * *


supports the development of strategic centralised activities in Ireland; and the track record of major multinationals in Ireland that have, over the past 20 years, built a cluster of multifunctional, multijurisdictional and multilingual activities, providing comfort that a new shared services activity has a high probability of success.

Q Next year, Ireland takes on the presidency of the European Union. What will be your priorities for this period? A Growth, jobs and enterprise is what Ireland and Europe need to focus on. This will be the seventh occasion that Ireland has held the presidency, which will coincide with the 40th anniversary of Ireland’s accession to the European Union in 1973. The Irish government wishes to focus its presidency on advancing issues that will benefit all citizens of the EU. In this, our main objective will be to ensure that the presidency contributes to addressing the key challenge facing the EU today, by promoting sustainable and inclusive growth and jobs. Issues relating to economic governance, fiscal consolidation and financial regulation are also likely to figure prominently on the Irish EU agenda.

06/08/2012 14:50



An ever-growing remit [

The CFO emerges as the point person in anti-bribery compliance as the US gets tougher on enforcing the Foreign Corrupt Practices Act and authorises bigger rewards for whistleblowers, reports Cesar Bacani

At the third CFO Innovation Asia Forum in Singapore in June, the 300 or so senior finance executives who attended were particularly riveted by a presentation on how the CFO can ensure the company does not violate the US Foreign Corrupt Practices Act (FCPA), the UK Bribery Act and China’s emerging anti-bribery policies. It was not unexpected. At a roundtable discussion I moderated in Hong Kong a few weeks earlier, the regional finance director of an electronics company said she had been asked by the US parent to stop giving out moon cakes to celebrate Chinese New Year. Internal auditors believed the practice could violate the FCPA. Another CFO reported that her company had consolidated the various anti-graft provisions and designed a process taking all of them into account. Even China’s Criminal Law is in the mix. Beijing amended the law in May 2011 to prohibit giving ‘property to any foreign public official or official of an international public organisation’ in order to gain ‘illegitimate commercial benefit’. It remains to be seen whether the Chinese measure will have teeth. The jury is out as well on the UK Bribery Act. But enforcement of the FCPA has intensified of late, and many of the cases involved businesses in Asia. In 2004, the US Justice Department and Securities and Exchange Commission (SEC) launched just five enforcement actions between them. There were 40 actions in 2009, 74 in 2010 and 48 cases last year. Eight of the

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10 largest FCPA-related settlements happened in 2010; the penalties ranged from US$56m to US$800m. According to Growing Beyond: A Place for Integrity, a new study by Ernst & Young, 31 of the enforcement actions launched in 2011 in accordance with the FCPA were to do with activities in Asia, eastern Europe and Latin America. ‘Many of these

prosecutions were related to payments to employees or officials at state-run enterprises,’ noted the report. More than 90% of all reported FCPA cases involved third-party agents – including the ‘consultants’ often hired by foreign companies to help them navigate the byzantine ways of Asian businesses and governments. The whistleblowing provision in the US Dodd-Frank Act, which came into effect in 2011, is adding new impetus to FCPA enforcement. The law authorises the SEC to grant monetary rewards to individuals who provide high-quality original information that results in more than US$1m in sanctions. I spoke to Chris Fordham, managing partner at Ernst & Young and Asia Pacific leader of Fraud Investigation & Dispute Services, about the report. ‘It is often the culture here [in Asia] to make gifts,’ he said. ‘If within people’s minds there is the idea that making the gift is going to help to influence, then clearly there is an issue.’ Where does all this leave finance? ‘CFOs need to redouble their efforts to set the tone: they need to be trained, to increase their awareness and to clearly demonstrate support for initiatives to manage fraud, bribery and corruption risks,’ says Ernst & Young. ‘This is particularly relevant since, according to those interviewed, the CFO is most likely to have responsibility for [antibribery and corruption] compliance.’ From bean counter to business partner to graftbuster, the CFO’s remit just keeps getting bigger. Cesar Bacani is editor-in-chief of CFO Innovation Asia

02/08/2012 17:27


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06/08/2012 16:19



Greatness from small beginnings [

Accountants, who have a major role to play in helping Malaysia’s SMEs drive the country’s economic transformation, should get involved in the fine-tuning of the SME Masterplan 2012-20, says Errol Oh

For years, we have been reading and hearing that more than 90% of businesses in Malaysia are small and medium-sized enterprises (SMEs). That is somewhat of an understatement. In fact, according to the SME Masterplan 2012–20, released in July by the National SME Development Council, 99.2% of total business establishments in the country are SMEs. Such an overwhelming majority of SMEs is not unique to Malaysia. A 2010–11 European Commission annual report, Are EU SMEs Recovering From the Crisis? says: ‘SMEs remain the backbone of the EU economy. Given that 99.8% of all enterprises are SMEs – a ratio that has been fairly stable over the past years – the typical EU enterprise is an SME, or more specifically a microenterprise with less than 10 employees.’ The UK’s Federation of Small Businesses says SMEs account for 99% of all enterprise in the country. And a May 2012 small business report by the US’s National Economic Council, Moving America’s Small Businesses & Entrepreneurs Forward, points out that between 1993 and 2010, more than half of firms in the private sector had one to four employees, and 98% had fewer than 100 employees. Whether in a developed country or an emerging economy, SMEs are a decisive force. Clearly, Malaysia’s ambition to transform into a high-income

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nation by 2020 cannot ignore businesses that collectively contribute 32% of gross domestic product, 59% of employment and 19% of exports. That is firmly articulated in the plan: ‘Going forward, SMEs will assume a greater role in the economy, not only as an enabler, but as a key driver of growth as well as to achieve inclusive and balanced growth. SMEs are critical to the economic transformation as they form the endogenous source of growth and bedrock of private sector activity.’ So where do accountants fit into the plan? The document itself makes no direct

reference to the role of accountancy. Then again, it is a given that the profession can offer vital support for the efforts to accelerate the growth of SMEs while benefiting from the fruits of such a push. Practitioners have a symbiotic relationship with SMEs. This is evident particularly in the bread-and-butter audit market in Malaysia. As at June last year, 1,353 audit firms were registered with the Malaysian Institute of Accountants. However, based on the Audit Oversight Board’s register of auditors, only 82 firms have public interest entities as audit clients. This essentially means 94% of the local audit firms rely on SMEs for a chunk of revenue. There is certainly room for SMEs to improve with the help of accountants. The plan identifies access to finance as a key challenge faced by SMEs, particularly micro-enterprises. The constraints cited are ‘poor creditworthiness, weak recording of financial accounts or lack of business viability’. These can be fixed with accounting expertise and discipline. It is a good thing that the plan can be tweaked in response to environmental and structural changes. Accountants should make themselves heard during the fine-tuning process because SMEs need all the help they can get in helping to drive Malaysia’s transformation. Errol Oh is executive editor of The Star

08/08/2012 11:23



Hong Kong’s High Court made a landmark decision in July when it ordered the sports fabric maker Hontex International Holdings to pay back shareholders more than HK$1bn. It marked the first time that the equity markets regulator, the Securities and Futures Commission (SFC), had used section 213 of the Securities and Futures Ordinance to seek compensation for investors who had lost out due to market misconduct. The SFC said that Hontex’s prospectus overstated revenue and profit before tax for the three years leading up to its listing in December 2009. High Court judge Jonathan Harris granted the order for Hortex to make a repurchase offer to 7,700 investors at HK$2.06 per share, the level the share price reached at the time trading was suspended in March 2010.

The view from: Singapore: Philip Fong, managing partner, Harry Elias Partnership Q What are your top priorities at the moment? A Attract and retain good and dedicated people who share the firm’s core values of I-CARE: integrity, cohesion, accountability, respect and excellence. Q Are you seeing an increase in need from your corporate clients in view of economic uncertainty? A I think the uncertainty is a dampener on corporate activity. This is evidenced by the shrinking number of initial public offerings and merger and acquisitions activity in general this year. From the corporate work angle, there will be an overall fall in demand for legal services. Having said that, there is an increased demand for legal advice on the regulatory compliance front, given the increasingly stringent regulations for corporate governance as well as increased enforcement activity by the government. Q What is the biggest challenge you are facing? A Something all other local law firms are facing – increased competition from overseas lawyers, particularly from Europe. The legal market there is abysmal and their lawyers are coming out in force to this region to eat our lunches. Our government is actively encouraging this unilateral penetration.

PARKSON MOVES INTO SRI LANKA Singapore company Parkson Retail Asia has made a foray into the emerging market of Sri Lanka by agreeing to buy a controlling stake in Sri Lankan fashion retailer ODEL in July. Parkson will purchase a 41.8% stake in ODEL for 1.4 billion rupees, an announcement to the Colombo Stock Exchange revealed. The transaction will be followed by a mandatory offer to minority shareholders and a one-for-one rights issue to raise 2.9 billion rupees in capital for expansion. Since starting with one store in 1990, ODEL has grown to 15 stores, and in 2010 became the first fashion retail business to list on the Colombo Stock Exchange.

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37 Corporate The view from Philip Fong, Harry Elias Partnership; winning the competition for capital 41 Practice The view from Jim Woods FCCA, PwC China and Hong Kong; Mazars tackles Mongolia’s desertification

Q Any lessons learned from recent experience? A I have been with the firm for 17 years and I’ve learned that you can only depend on your young and fresh lawyers to a certain extent. Many lack people skills and drive but have high expectations for job satisfaction; the really good ones are in a minority. Sometimes you have to be your own hero.


Firm founded: 1988 Firm locations: Singapore and Brunei Darussalam Staff numbers: 60 lawyers, including 12 equity partners Latest book read: The Summons by John Grisham

07/08/2012 12:42



Capital competition There is real competition for capital, but companies can improve their chances of securing the right funding with some simple voluntary disclosures, says PwC’s Alison Thomas In the economic downturn and with the continued strain on the availability of financing, there is real competition for capital in the market. Investment professionals say that companies can improve their chances of securing the right funding at the right price with some simple voluntary disclosures.

Key issues Investors tell us that without good disclosure, ‘the cost of funding goes sky high’; companies that do not make their cash and debt disclosures clear and accessible risk a struggle to raise capital or borrow funds. Investors have highlighted three key areas from where management can make small changes to disclosures that would have a significant impact on their ability to compete for ever more scarce capital in today’s market: cash, net debt reconciliations and debt. So why are these disclosures important to investors, and what might good practice disclosure look like for your entity?

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Cash Cashflow information is critical for investors, not simply as a critical input to the valuation of entities but because it allows them to understand

management’s ability to service the entity’s working capital requirements and debt position, and any risks associated with it. Here are some areas where current reporting can be enhanced: Cashflow statement – historical cashflow data is the basis for investors’ assessment of the adequacy of future cashflows to meet working capital and funding requirements. Yet investors tell us that ‘understanding cashflow reporting is like doing a jigsaw with half the pieces missing and without the box’. Investors are not technical accountants. They would like more meaningful descriptions of the adjustments made to derive operating cashflow so that these can be related to items on the balance sheet. They also say they would find it more helpful for the reconciliation of profit or loss to operating cashflow to start at the operating profit line (or pre-tax profit line) rather than at net income. This would simplify the disclosure and remove the need for spurious reconciling items, which may need to be both eliminated and then added back to arrive at a total for operating cashflow.

02/08/2012 17:31


Capital expenditure – how much of an entity’s capital expenditure is required to keep things ticking over? How much is being used to grow the business further? Understanding the split between maintenance and growth capital expenditure is important to an investor. This is partly because it gives an indication of the growth opportunities available to management; but of equal importance in tough economic times, it gives insight into those expenditures over which management has discretion and those that would be harder to postpone. Most entities disclose one number for capital expenditure in the investing section of the cashflow statement (albeit split between tangible and intangible elements). Investors would like disclosure of capital expenditure to be separated into ‘maintenance’ and ‘growth’ spend, as investors see working capital as a key funding need. Segmental information – segmental cashflow information is highly valued. One analyst told us: ‘It is rare to see good cashflow reporting at segment level. When I see it, I sing hallelujah.’ Many investors believe that multisegment entities should use the reportable segment as the unit of analysis for providing cashflow information. Our research shows that, in addition to existing lines, the cashand debt-related lines that investors look for on a segmental basis include debt, operating cashflow, working capital and operating capital employed. Repatriation – investors need to see clear disclosure of any restrictions on the repatriation of cash that might impede the ability to meet future financing needs.

Net debt reconciliation An analyst recently told us: ‘Without a good net debt reconciliation, we are flying blind.’ It is an easy way of

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assessing whether an entity that seems to have had a significant increase in cash has, for example, achieved this only by taking on a corresponding increase in debt. Without a net debt reconciliation, investors struggle to understand the impact of foreign exchange movements arising on debt, the value of debt acquired or disposed through business combinations, the impact of fair value and fair value hedge adjustments. Net debt reconciliations are not required by financial reporting standards, but investors tell us that entities that provide them set themselves apart. While there is no standard definition of net debt, it generally includes the entity’s borrowings, including finance leases, less cash and cash equivalents. Some entities also include deficits on defined benefit pension plans and an adjustment for operating lease obligations. The inclusion of other debt-like liabilities provides additional insight into entities’ significant expected future cash outflows. This variation means that it is important for management to explain clearly what it means by net debt and to keep that definition consistent over time. Having an accounting policy for net debt would be very useful.

Debt In addition to the net debt reconciliation, investors would like to see enhanced disclosures around: Maturity information – investors tell us that they need a comprehensive maturity table for all material components of debt, showing both the contractual maturity of each type of debt and when management expects it to be repaid (if different). Rather than reporting using broad buckets (for example, two to five years), investors are looking for detail of the debt repayments that fall due every

year (for a minimum of five years), as well as underlying par values and currencies of debt. Investors find it difficult to reconcile the numbers presented in the maturity schedules to the carrying values in the balance sheet. It would be a significant improvement if management could help them to tie the two sets of data together, showing principal and interest payments separately, and reconciling to the balance sheet (that is, showing adjustments for measurement at fair value, discounting, fair value hedges, swaps etc). Covenant restrictions and terms – financial reporting standards require disclosure of any defaults or breaches of loan agreement terms that are not resolved by the period end. Additional detail of the terms and measurement of the principal covenants in place, not only when breached, provides investors with an understanding of the restrictions in place and the entity’s compliance. Investors focus not only on whether covenants have been breached, but what those covenants and restrictions are, and the risk that they may be breached in the future. Disclosures on the key covenants for an entity’s finances are of much greater value to the investor’s decision-making process than a statement that there haven’t been any breaches in the past. Details of average debt balances – Another easy win is to disclose average debt balances throughout the year, rather than just the year-end snapshot, to enable users to understand the debt position over the year. Alison Thomas is a corporate reporting specialist at PwC. For more information on the financial reporting areas of most interest to investors and how to improve those disclosures, visit

02/08/2012 17:31



You are our lifeblood


In his final column, ACCA president Dean Westcott reflects on his year in office and applauds the commitment of members

As this is my last column as president, l wanted to take this opportunity to say what an absolute privilege it has been to serve in ACCA’s highest elected office. It has given me an outstanding opportunity to see at first hand what a truly global organisation ACCA is. It is also clear, from the meetings and events in which I have taken part around the world, that ACCA has a great deal of influence in the global accountancy and financial community. What has also been striking is the number of ACCA members who are working in the most senior positions in organisations in all sectors. I have been fortunate to have met with chief executives of leading organisations, as well as government ministers, all of whom are ACCA members and – at the pinnacle of their careers – still recognise the value of membership. The year has clearly demonstrated to me that ACCA is nothing without its membership. I recently spoke in Malaysia about my journey to ACCA’s presidency, and a point that I made then, and that I want to reiterate now, is that members are the lifeblood of our organisation. The work you do, in providing excellent services and advice to the public, to corporate business, to small and medium-sized enterprises and to organisations in the public sector, helps to build our reputation. But it is also critical to have a membership that is engaged and involved in ACCA’s work. My own involvement began with local networks and I want to urge you to think about how you might devote some time to helping our great organisation go from strength to strength. I have been asked what the highlight of my presidential year has been. While that’s a tough question to answer, I would have to put the recent Council meeting in Kenya at the top of the list. This enabled me and my Council colleagues to see the outstanding work that is being undertaken by ACCA and its members in East Africa, and also allowed us to engage with a wide range of stakeholders in this very important region for ACCA. I want to thank everyone who made this event such a great success, along with the countless colleagues and members of ACCA’s staff team who have made the past 12 months so memorable for me. Dean Westcott is CFO of West Essex Clinical Commissioning Group, UK

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02/08/2012 17:35



Local accountancy firms in China have grown fast in recent years and are gradually narrowing the revenue gap with the Big Four international firms, according to a Xinhua report in late July. In 2011, the average revenue from mainland activities of the Big Four – Deloitte, KPMG, PwC and Ernst & Young – was 1.68 times that of the best-performing local Chinese firm, whereas in 2002 the gap was 4.06 times, according to Chen Yugui, secretary of the Chinese Institute of Certified Public Accountants. The Big Four have maintained their dominant position on the mainland, earning a total of 10 billion yuan in 2011, approximately 35% of the combined earnings of the top 100 firms in China. Shanghai

The view from: Hong Kong: Jim Woods FCCA, leader, Risk & Controls Solutions, PwC China and Hong Kong Q What projects are you currently involved in? A In preparation for a new financial year, I have been busy with several strategic planning workshops across mainland China and Hong Kong to engage with our people on the future direction of our practice. Q What do you enjoy about your work? A The chance to develop our people in areas they are passionate about, to unleash their potential. I enjoy working as part of a team to combat challenges and ultimately find a solution, building relationships and relishing in the diversity and different points of view that enable us to create the kind of value our clients are looking for. Q What lessons have you learnt in recent years? A A visit to Peru in 2008 was inspiring and lifechanging. While on a three-month leadership development programme, I was able to gain a better understanding of myself, learn what I stood for, appreciate the importance of being authentic, accept different points of view and realise that we can’t please everyone all of the time.


Global information services company Wolters Kluwer Tax & Accounting has acquired Acclipse, a provider of online accounting software to more than 1,000 accountancy firms in Asia Pacific, Australia and New Zealand. The deal was completed in mid-July. The New Zealand-headquartered Acclipse will become part of Wolters Kluwer’s Asia Pacific business, which is known as CCH. With the acquisition, Wolters Kluwer plans to expand its existing software products, including cloudbased solutions, for accountancy firms and corporate finance professionals in the region. The acquisition follows its purchase of Business Fitness New Zealand, a provider of practical content and workpapers to accountancy firms, last year.

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41 Practice The view from Jim Woods FCCA, PwC China and Hong Kong; Mazars tackles Mongolia’s desertification 37 Corporate The view from Philip Fong, Harry Elias Partnership; winning the competition for capital

Q What training is offered to your staff? A I’m a big believer in the 70, 20 and 10 rule. The 70% relates to real-life work experience – doing the job to enable us to learn from our mistakes. The 20% is about the coaching environment; we are fortunate at PwC to have fantastic coaches to ensure that Generation Y [staff] are developing in the right way. The 10% is in the classroom, where we offer structured programmes to ensure our people are armed with the right knowledge and theory.


Firm locations: Beijing, Hong Kong, Shanghai, Singapore, Taipei, Chongqing, Chungli, Dalian, Guangzhou, Hangzhou, Hsinchu, Kaohsiung, Macau, Nanjing, Ningbo, Qingdao, Shenzhen, Suzhou, Taichung, Tainan, Tianjin, Xiamen and Xi’an Structure of the firm: Partnership Favourite books: Health and fitness, including self-improvement, body, mind and soul genres

07/08/2012 12:45



Streams in the desert As part of Mazars’ carbon-compensation programme, a team from its China offices recently ventured to the over-farmed lands of Inner Mongolia on a tree-planting mission On any day of the week, Thomas Granjard, the Beijing-based financial adviser of international audit firm Mazars, can be found working alongside his team of accountants to solve clients’ accounting and tax problems. He joined the company in 2008 and is an expert in Chinese accounting standards and tax regulations. But recently the French accountant has had a different assignment: solving the desertification problem of China. In April, Granjard led a team of Mazars staff to Inner Mongolia to turn desert into farmland. They were participating in the Million Tree Project (MTP), a programme founded by green group Shanghai Roots & Shoots in 2007. By planting trees in the desertified land of Kulun Qi every April, the MTP aims to improve both ecological and human living conditions. It wants to plant 1 million seedlings by 2014 to fight global warming and restore over 666 hectares of land (around 1,000 football fields) to slow down the devastating desertification in the area. Climate change and land exploitation including over-grazing and over-farming have degraded the land of Kulun Qi from farmland to fragile soil, which is primarily sand or desert. Now the desertified area is expanding quickly. Sandstorms, caused by wind erosion, have also destroyed homes and forced many people to flee. ‘We’ve all seen how badly Beijing is affected with sandstorms every year. The desert is a problem that has consumed about one-third of China’s landscape and each spring it spreads further and further. The MTP aims to reforest the area, revitalise the land and block the sandstorms,’ says Thierry Labarre, senior founding partner of Mazars in Beijing.

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Major commitment Mazars, founded in France, has committed €20,000 (156,778 yuan) to fund the planting of 5,000 trees, which will help replenish 13,333 square metres of desert lands. The backing is part of a global carbon-compensation campaign advocated by Mazars in 2010. The vision came about after the company’s 2010 annual general meeting, which encouraged attendees to minimise carbon emissions to combat global warming. Since then, Mazars offices around the world have undertaken various carbon-cutting programmes. Labarre and Granjard became involved with the MTP in May last year after Mazars encouraged them to support a green project in China. Soon Granjard began researching China’s most critical environmental issues

online. The pair then shortlisted two environmental projects – one was the MTP, the other involved planting trees to help restore the natural habitat of pandas. The management picked the MTP. ‘It’s not just about trees and improving the quality of the air, but actually creating a much more fertile land for farmers to live off,’ says Mazars board member Ken Morrison, who also founded Mazars in Hong Kong.

Footprint calculation Deciding to become involved with the MTP led to a new way of life for the Mazars team. To discover the carbon footprint of the firm’s four China offices (Beijing, Shanghai, Guangzhou and Hong Kong), Granjard turned himself into a ‘carbon auditor’.


Mazars’ audit associate Maxine Shen was always passionate about saving the environment, but has never had the chance. So when she heard about the Million Tree Project (MTP), she did not think twice about signing up. But when she stepped into the planting site, she was taken aback. ‘It was a shock to learn the desert we were walking on was green farmland just a few short years before. The desert had taken over completely,’ says Shen, one of three Hong Kong staff on the MTP trip. The team saw first hand the effects of global warming – witnessing the life of deprived farmers, and felt the sweltering heat in the area. Another member of the Hong Kong team on the trip, Richard Cheng, a senior in the forensic department, said: ‘Local children told us that there were lakes and rivers, but now they are empty as the weather is getting hotter,’ Cheng says. To help out, the three worked hard to plant trees. ‘I was a digger. It was pretty hard work. I used a simple shovel to dig the hole, and we had to work fast,’ Cheng adds. The planting trip has changed the trio. Cheng told his friends about what he saw in Inner Mongolia to help them see the impact of global warming, and has encouraged them to join the MTP. Shen learned that people could make a difference. ‘We planted 400 trees in one day to stop the advance of the desert. I learned that people could actually achieve a lot within a short time if they actually put their minds to it,’ she says.

02/08/2012 17:32



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The Mazars team on site during their tree-planting mission in Mongolia. The 1.2 metre-high poplar seedlings were planted on the desert’s borders to keep it from spreading

02/08/2012 17:32



He added up electricity, gas and taxi bills, and worked out the number of trips staff took to and from work and on assignment, and their typical transport modes. Then, using a carbon audit methodology, he estimated the level of CO2 the activities of the company produced and worked out how many trees they needed to plant to offset the emissions. Around the same time, Labarre was creating a campaign to increase staff awareness of environmental issues. He then sent out an online quiz to all China staff to select those who would go on the tree-planting trip. Eight people were chosen based on who had provided the most creative and practical ways to reduce paper, water and electricity consumption at the firm. In April, Granjard and his team of flew to Kulun Qi for their three-day green mission. He was shocked to see the soil erosion when they arrived at the site. ‘I saw areas which had collapsed into small canyons overnight. People said the canyons were not there a few years ago. It made me wonder what was going to happen in this place in the future,’ he says.

One day, 400 seedlings After receiving basic tree-planting training, the team joined around 30 volunteers and planted 400 poplar seedlings on their first day. Poplar trees are fast growing, strong and effective at sequestering carbon. But planting in the desert is not easy. ‘Replanting is a very traumatic experience for trees,’ Granjard says, adding that spring planting works best. ‘If you plant the tree seedlings in summer, it only gives them a couple of months before winter comes. The more time you give the seedlings to find roots in the soil, the higher the chance that they will survive the winter.’ The planting crew followed instructions carefully, such as keeping the plants moist at all times as the sandy soil dries out quickly. ‘First there was a digger which dug the hole, which had to be about 1 metre square and 1 metre deep. The next person placed the tree into the hole. Next, another person added some

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The Mazars team also taught local children how to better care for their environment

moist soil, filling the hole by about 50%. Someone added water. Then more soil was added to fill the hole and finally more water,’ he says. They planted the 1.2 metre-high seedlings on the desert’s borders that were being degraded to keep the desert from spreading and to protect the neighbouring towns and cities like a wind barrier. They also left a gap of 5 metres between rows of trees to create farmland. ‘The 5-metre distance can be used by farmers to grow certain crops if they are given enough water. The trees will also bring the soil back together. This is the most amazing thing about nature,’ he says, adding that the crops will be shielded by trees on two sides from harsh winter winds.

Pruning and teaching On the second day, the crew went to see trees planted four years ago and cut new branches from trunk base to help them grow higher. On their final day, the Mazars team gave classes to children to raise their awareness of conservation and sustainability and

taught them ways to protect their own environment. The team will be able to watch how their trees grow via Google Earth and a forestry manager and local farmers will help monitor the soil and maintain the trees for 10 years. The project has helped Granjard and others at Mazars develop a passion for environmental protection. ‘Accountants have something to bring to sustainable development. We’re good with numbers, we know how to account for things like CO2 emissions. We really hope that we can contribute to protecting the environment,’ Granjard says. Meanwhile, Morrison is happy that the project has built greater depth of relationship among staff and community. He says that people have a responsibility to save the environment. ‘In the longer term, we cannot afford not to be involved in environmental issues as people, because we have a duty and a responsibility to create a better environment for the future.’ Sherry Lee, journalist

02/08/2012 17:33

ABCN Sep 2012 (China) ol_helen.pdf











5:50 PM


Technical update

A monthly round-up of the latest from the standard-setters SINGAPORE REVIEW OF SIBOR The Monetary Authority of Singapore (MAS) has directed banks to look into their processes regarding the setting of the benchmark interbank borrowing rates. It has also asked for an independent review. The probe will focus on two prominent rates in Singapore, the Singapore Interbank Offered Rate (SIBOR) and the Swap Offer Rate (SOR). More details are available at REPORT ISSUED ON CFOS ACCA and the Singapore CFO Institute have issued a report, The Value of the Modern CFO – Board Directors’ Perspective. The report is based on a roundtable discussion by board directors on the attributes, competencies, specific actions and deliverables expected from the modern-day CFO. The report can be downloaded from CHANGES TO QFB PROGRAMME The MAS has announced changes to its Qualifying Full Bank (QFB) programme to encourage foreign banks to deepen their roots in Singapore. The MAS will require existing QFBs that are important to the domestic market to locally incorporate their retail operations. In determining whether a QFB will be required to locally incorporate its

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retail operations, the MAS will review factors such as the QFB’s market share of domestic deposits. The MAS will consult QFBs on the criteria for requiring local incorporation. For QFBs that operate as local subsidiaries, a very small number may become significantly rooted in Singapore over time. The MAS will consider granting such QFBs an additional 25 places of business, of which up to 10 may be branches. This will be part of an overall package negotiated with these QFBs’ home countries which are free trade agreement (FTA) partners with Singapore. These QFBs will be able to operate up to 50 places of business in Singapore. More details are available at MAS AND BANK OF THAILAND The MAS and the Bank of Thailand (BOT) have signed a memorandum of understanding (MoU) to establish a reciprocal crossborder collateral arrangement. The arrangement will help maintain financial stability in both countries. Under this arrangement, eligible financial institutions operating in Singapore may obtain Singapore dollar liquidity from the MAS by pledging Thai baht or Thai government and central bank securities with the MAS. Similarly, eligible financial institutions operating in Thailand may obtain baht liquidity

from the BOT by pledging Singapore dollars or Singapore government and central bank securities. More details are available at CONSULTATION PAPERS ISSUED The MAS has released a consultation paper on the review of the Risk-Based Capital (RBC) framework for insurance business. The RBC framework was first introduced in Singapore in 2004. It outlines a risk-focused approach to assessing capital adequacy and seeks to reflect the relevant risks that insurance companies face. The MAS is reviewing the framework, given evolving market practices in the insurance industry and in international accounting and regulatory standards. The review aims to improve the comprehensiveness of the risk coverage and risk sensitivity of the framework, and is not expected to result in a significant overhaul. The consultation paper seeks feedback on the additional risks to be included, the methodology to better calibrate the risks covered, as well as the implementation schedule. It is available from www. and comments should reach the MAS by 25 August. Interested parties should email comments to The MAS has also released another two consultation papers, on technology risk management (TRM). The first is a set of enhanced

guidelines on TRM and the adoption of sound security practices. The second is a notice on TRM which sets out the legal requirements for financial institutions. The MAS proposes to issue the notice to define and enforce a set of mandatory IT requirements for the financial industry. It stipulates requirements for a high level of robustness and integrity of critical IT infrastructure and systems. It also specifies the requirement for financial institutions to implement IT controls to protect customer information from unauthorised access or disclosure. The consultation ended on 16 July. More details can be found at Joseph Alfred, policy and technical adviser, ACCA Singapore

HONG KONG CDTA WITH MEXICO Hong Kong signed a comprehensive double taxation agreement (CDTA) with Mexico in June 2012. This is the 25th CDTA concluded by Hong Kong and its trading partners. The agreement will come into force after the completion of ratification procedures on both sides. DIPN NO.49 The Legislative Council passed the Inland Revenue (Amendment) (No. 3) Ordinance 2011 in December 2011 to

06/08/2012 12:44


implement a budget proposal to extend profits tax deduction to capital expenditure incurred on the purchase of three types of commonly used intellectual property rights (IPRs): copyright, registered designs and registered trademarks. The budget proposal aims to promote a wider application of IPRs by local enterprises and facilitate the development of creative industries in Hong Kong. As such, in July 2012, the Inland Revenue Department released DIPN No. 49 to set out in detail its views and practices on the profits tax deduction relating to the purchase of these three types of IPRs. Details of DIPN No. 49 can be found at Sonia Khao, head of technical services, ACCA Hong Kong

MAINLAND CHINA FINANCIAL DISCLOSURE To implement the relevant requirements of the Guiding Opinions on Further Reforming the Issue System of New Shares (No. 10 [2012]), further improve the quality of financial information disclosure by companies undertaking an initial public offering (IPO), increase transparency, and promote the fulfilment of respective duties of all market participants in the issue of new shares, the China Securities Regulatory Commission has issued

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the following opinions on improving the quality of financial information disclosure by companies undertaking an IPO. I All market participants shall diligently perform their respective duties to effectively improve the quality of financial information disclosure. II Measures shall be taken to effectively solve the significant problems existing in the financial information disclosure by companies undertaking an IPO. III The accountability mechanisms shall be further improved and implemented. Sophia Zhao, technical manager, ACCA Beijing

MALAYSIA PRIVATE RETIREMENT SCHEME On 18 July, prime minister Najib Razak launched the final component of the private retirement scheme (PRS) framework, with the establishment of the Private Pension Administrator (PPA) and the approval by the Securities Commission (SC). The PPA will play an important role in the enabling infrastructure for the PRS. Account holders will have easy access to information and ease of transfers. For more on the PRS, go to TALENT WANITA JOB PORTAL The Department of Women Development of Ministry

of Women, Family and Community Development and Talent Corporation have launched the Talent Wanita portal, which aims to connect women with job opportunities that offer flexible working arrangements. The portal can be found at MFRS TRANSITIONAL PERIOD On 3 July, The Malaysian Accounting Standards Board (MASB) decided to allow agriculture and real estate companies (transitioning entities) to defer the adoption of the Malaysian Financial Reporting Standards (MFRS) for another year. Transitioning entities are those entities within the scope of MFRS 141, Agriculture and/ or IC Interpretation 15, Agreements for the Construction of Real Estate, including a parent, significant investor and venturer. MFRS will therefore be mandated for all companies for annual periods beginning on or after 1 January 2014. For more, go to www. PUBLIC RULING NO. 4/2012 On 1 June, the Inland Revenue Board (IRB) issued Public Ruling (PR) No. 4/2012, Deduction for Loss of Cash and Treatment and Treatment of Recoveries. This replaces PR No. 5/2005 issued on 14 November 2005. For more, go to www. KU_No_4_2012.pdf PUBLIC RULING NO. 5/2012 On 25 June 2012, the IRB issued PR No. 5/2012, Clubs, Associations or Similar Institutions. This explains the taxation of clubs, associations or similar institutions which are established and controlled by its members. For more, go to www. KU_5_2012.pdf E-FILING SYSTEM The IRB’s Organisational e-Filing (OeF) system has now been fully implemented. As a result, forms e-C, e-R and e-CP204 must be submitted using the company’s digital certificate except for those submitted by tax agents. A company can apply for an OeF pin number via Form CP55B via https://e.hasil. DORMANT COMPANIES Suruhanjaya Syarikat Malaysia (SSM) has introduced a moratorium period running until 31 December, to encourage directors and shareholders to strike off the names of dormant companies from the companies registry. A reduction of compounds or penalties will be an added incentive. For further details, go to Vilashini Ganespathy, head – technical and professional development, ACCA Malaysia

06/08/2012 12:44



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

More questions than answers The publication of non-binding Q&A guidance for users of the International Financial Reporting Standard for SMEs has raised eyebrows in some quarters, says Graham Holt

The SME Implementation Group (SMEIG) is a forum that considers implementation questions raised by users of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). It has published implementation guidance as a series of questions and answers. This article will detail the final published questions and answers to date.

Parent entities In some countries, parent entities prepare separate financial statements as well as consolidated financial statements. The first SMEIG Q&A was whether a parent entity, which is required to present consolidated financial statements in accordance with full International Financial Reporting Standards (IFRS), can present its separate financial statements in accordance with the IFRS for SMEs. The IFRS for SMEs is intended for non-publicly accountable entities that publish general-purpose financial statements for external users. If a parent entity does not itself have public accountability, it can present its separate financial statements in accordance with the IFRS for SMEs even if it presents its consolidated financial statements in accordance with full IFRS. The parent may use the IFRS for SMEs in its separate financial statements on the basis of its own public accountability without considering other group entities.

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A parent entity has public accountability where its own debt or equity instruments are traded in a public market (or it is in the process of issuing such instruments for trading in a public market) or it holds assets in a fiduciary capacity for a ‘broad group of outsiders’ as part of its main business. If a publicly accountable entity applies the IFRS for SMEs in its financial statements, it cannot describe those financial statements as complying with the IFRS for SMEs. However, a subsidiary that is part of a group that uses full IFRS is not prevented from using the IFRS for SMEs in its own financial statements as long as it does not have public accountability.

Public accountability The IFRS for SMEs identifies banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks as examples of the type of entity that ‘typically’ holds assets in a fiduciary capacity for ‘a broad group of outsiders’ as part of its main business. The second SMEIG Q&A was whether all those types of entities could automatically be assumed to have public accountability. There is no simple answer here, as judgment will be required to assess whether entities have public accountability. Part of the definition of public accountability relates to the ability of external parties that make economic decisions to demand reports

tailored for their particular information needs. Typically, depositors in banks, holders of shares in mutual funds, etc, are not in a position to demand such reports, so the entity is presumed to have public accountability even if it holds the assets for only a short time. ‘Broad group’ implies that the involvement of only a few individuals would mean that the entity would not be considered publicly accountable. However, there is no simple rule on what constitutes a broad group and so judgment will again be necessary.

Trading in a public market The third SMEIG Q&A continued with the theme of public accountability by considering how broadly ‘traded in a public market’ should be interpreted. Did it refer only to regulated markets or did it also cover other markets such as growth share markets and overthe-counter markets? ‘Public market’ is defined in the IFRS for SMEs as ‘a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets’. The definition includes all markets that bring together those capitalseeking investors that are not involved in managing the entity. The market must be accessible by a ‘broad group’ of investors. If the exchange is simply between parties involved in managing the entity, the market is not public. Advertising by a shareholder does not, by itself, create a public market; neither does the availability of a

02/08/2012 16:58

TO GET THE QUESTIONS GO TO financialreporting

Helen Brand Chief executive ACCA

A PARENT ENTITY MAY USE THE IFRS FOR SMEs IN ITS SEPARATE FINANCIAL STATEMENTS ON THE BASIS OF ITS OWN PUBLIC ACCOUNTABILITY published price mean that an entity’s debt or equity instruments are traded in a public market. There is no definition of ‘public’ in the IFRS for SMEs but it is usually considered to mean affecting a community as a whole; as set out above, it could be open to a broad group of outsiders, even if trading is infrequent.

Exemptions There are a number of exemptions in the IFRS for SMEs on the basis of ‘undue cost or effort’ or because the requirement is ‘impracticable’. The ‘impracticable’ exemption applies where an entity cannot apply it after making every reasonable effort to do so. However, ‘undue cost or effort’ is not defined and SMEIG was asked to explain the term. It involves a consideration of how users’ economic decisions could be affected by the non-availability of information and so requires judgment. ‘Undue cost or effort’ is specifically applied for some requirements but not all. Where ‘undue cost or effort’ is used in conjunction with ‘impracticable’, the application of the standard should be as if ‘undue cost or effort’ had been used on its own. The definition of ‘impracticable’ in

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the IFRS for SMEs is the same as under full IFRS and refers to effort and not cost. The inclusion of ‘undue cost or effort’ for certain requirements in the IFRS for SMEs is intended to point out that cost is a consideration. The International Accounting Standards Board (IASB) feels that a requirement would result in ‘undue cost or effort’ where the cost or the employee effort would be excessive in comparison with the benefits gained by users of the SME’s financial statements from having that information.

Which IFRS? Often a jurisdiction will require that a certain recognition and measurement policy is followed that is dealt with in full IFRS and not specifically covered by the IFRS for SMEs.The question then arises as to whether the SME in that jurisdiction can state compliance with the IFRS for SMEs. In the absence of specific requirements in the IFRS for SMEs, management must use its judgment in adopting a reliable and relevant accounting policy. The IFRS for SMEs sets out the following hierarchy to help decide the appropriate accounting policy to use: A) the requirements and guidance in the IFRS for SMEs dealing with

Dean Westcott President ACCA

Register and watch Helen and Dean answer your questions ACCA Engage 10 September 2012

02/08/2012 16:59



SOME BELIEVE NON-BINDING GUIDANCE IS INCONSISTENT WITH THE OBJECTIVE OF A SINGLE, STABLE, STANDALONE STANDARD FOR SMEs similar and related issues; and B) the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses and the pervasive principles in the standard. The IFRS for SMEs also states that management may also consider the requirements and guidance in full IFRS that deal with similar issues providing that they do not conflict. This requirement does not allow a free choice to apply full IFRS requirements when there is a specific requirement existing in the IFRS for SMEs. If the IFRS for SMEs contains different guidance to full IFRS, the entity will not be able to state compliance with the IFRS for SMEs unless the effect is immaterial.

IAS 39 vs IFRS 9 A related question has arisen with IAS 39, Financial Instruments: Recognition and Measurement. The IFRS for SMEs gives an entity the option of applying the recognition and measurement provisions of IAS 39 to all of its financial instruments instead of following the SME standard. The question arises as to whether an entity can choose to apply the provisions of IFRS 9, Financial Instruments. The IFRS for SMEs refers specifically to IAS 39

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and thus SMEs are not permitted to apply IFRS 9. The reason for this is that the use of IFRS 9 by SMEs would require a change to the IFRS for SMEs. The IASB intends to undertake a thorough review of the IFRS for SMEs and at that time it will also consider new and amended IFRSs that have been issued since the IFRS for SMEs was published, including the requirements of IFRS 9. The review is expected to be completed in 2014, so changes to the IFRS for SMEs would most probably be effective at a similar time to the effective date of IFRS 9. If an SME follows the recognition and measurement principles of IAS 39, there is a requirement that exchange differences arising on translation of a monetary item that forms part of a reporting entity’s net investment in a subsidiary should be recognised initially in other comprehensive income and be reported as a component of equity. The standard prohibits those cumulative exchange differences from being recognised in profit or loss on disposal of that net investment. Similarly, exchange differences arising on translation of a foreign subsidiary should be recognised in other comprehensive income but the standard does not mention recycling to

CPD units on the web

profit or loss on disposal. The question arose as to whether the cumulative exchange differences arising on translation are prohibited from being recognised in profit or loss on disposal of the subsidiary. The IASB has decided to prohibit all cumulative exchange differences recognised in other comprehensive income from being reclassified to profit or loss on disposal of the subsidiary. This requirement is a difference from full IFRS, and was drafted in order to eliminate the burden for SMEs of tracking the exchange differences after initial recognition.

Inconsistency The provision of non-mandatory implementation guidance by the IASB on the IFRS for SMEs has not been without critics. Some believe it is inconsistent with the objective of having a single, stable, standalone standard for SMEs. The IASB has recognised that providing less guidance than for full IFRS makes for greater diversity in practice on issues that were not addressed. By trying to remedy this, with non-binding questions and answers, it could be seen as calling into question the basic design of the standard and diluting the power of a single standard. 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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units on the web


Unpeel your competitive onion In the second article in his series on strategy for accountants, Dr Tony Grundy unpacks the tools, identifies customer value and ends up in a hot yoga pose

This article focuses on the need to explore the nature of the business you are in. It also considers the uses and abuses of positioning tools such as SWOT and gap analysis, and PEST and Porter environmental analysis. Customer value, competitor positioning and intent, competitive advantage and the ‘competitive onion’ are all explored. And the article ends with an explanation of how it all links to financial returns, using the Bikram yoga system to illustrate the concepts. In strategy, you need a clear notion of what business it is that you are in. Pursuing an answer may uncover that you aren’t just in one business, but in many. The curse of this is that separate

Strategy tools are typically matrixes, boxes or other models rendered as pictures to give a better and shared understanding of the complexity of strategy. They are essential, but without sufficient empirical evidence, reflective thought and challenge they can also be highly dangerous. The risks will be highlighted here.

Positioning tools Now take the businesses you are in, one at a time, and look at positioning using SWOT and gap analysis. SWOT analysis typically divides a box into four quarters to separate out a business’s strengths, weaknesses, opportunities and threats.

SWOT ANALYSIS IS OFTEN SUPERFICIAL, CAN BE DANGEROUSLY BIASED, DOES NOT PRIORITISE, AND FAILS TO EXTRACT THE ‘SO WHATS?’ strategies/cunning plans will be required for each one. The best way of identifying the businesses you are in is to look at different types of customers, needs and ways of meeting those needs. These elements can be mapped out on charts – for example, customer types against types of need – as a matrix. Doing this can lead to the discovery of new possible businesses. You may also find that your organisation has many businesses, that some are marginal, and that some might be divested.

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The advantages of SWOT analysis are that it is easy to use, familiar to most managers, puts issues into categories, is evaluative (strengths and opportunities are positive, weaknesses and threats are negative), and offers a powerful visualisation. However, SWOT is often superficial (especially when used in isolation), can be dangerously incomplete and biased, may lack sufficient evidence, does not prioritise, fails to extract the ‘so whats?’, and is seldom explicitly used to develop options.

To get more out of SWOT, it should incorporate priorities – eg by asterisking the most important elements. Also, the implications (the ‘so whats?’) of SWOT need addressing: What patterns are there in the SWOT/broad themes? For example, has the company lost its way competitively? Is it too slow and unresponsive? Is it unbalanced in some way, or is there a fault line in its leadership, culture and mindset? Are some of the threats areas of major weakness, increasing the company’s vulnerability? Are there specific opportunities where it is particularly strong and which might be candidates for offensive strategies? Gap analysis is the difference between where you want to be and where you are likely to be given the business’s current strategies. It is an essential way of framing the degree of stretch the organisation wishes to set itself, before conducting any strategic option evaluation. It is typically framed in terms of performance metrics – typically, sales or profit, although the metric can be market share, unit costs or gaps with competitors. Gap analysis is a way of assessing either the difference between where you are and where you want to be (snapshot), or the difference between where you are likely to be on current plans and where you want to be (future gap) based on the business’s projected future performance.


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

Gap analysis is probably more important than SWOT analysis, as you need to keep constant track of the value of your strategic options and their contribution to the assumed shifts in strategic performance if you are to meet strategic goals. Obviously, it is important that the strategic objectives set are not competitively unrealistic. But top managers frequently set an artificial stretch on these objectives for the managerial tiers below without giving them the support and coaching to come up with strategies that will actually bridge the gap. The result is that the business always delivers less than expected. This increases top-down pressure to deliver, reinforcing the negative cycle of behaviours. In short, if gap analysis is used in this way by the business it can be counterproductive.

PEST analysis In strategy the external environment is very significant. What business hasn’t been hit by the recession and now the euro crisis/government debt? Here, PEST analysis is helpful in picturing macro changes. The P stands for political (and regulatory) changes, E for economic, S for social (and demographic) and T for technological. As with SWOT, PEST analysis is often represented in a quartered box. PEST factors may be very big (the credit crunch is an obvious one) or slow-burners revealed through

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trends that are weak but which can still gather momentum – such trends need to be monitored and reflected on. It’s time now to home in on the more immediate industry/market you are in. Here, Porter’s five competitive forces (namely, buyer power, entry barriers, competitive barriers, substitutes, supplier power) have a huge influence on profitability. The accountant needs to know and differentiate them for each and every market the business is in, especially when planning and supporting key strategic decisions.

Five forces and a funeral Consider, for example, the funerals market in the light of Porter’s five competitive forces: customers haven’t got the time to shop around, the purchase is very emotional (low buyer power), there are psychological barriers to entry, there are no real substitutes, and rivalry is gentlemanly. The result? Superior returns! And if a funerals business had real competitive advantage, it would be an accountant’s dream. The definition of competitive advantage is: delivering better value to customers than your competitors can, or equivalent value at a lower cost. This definition is economic as well as financial. Strategy is also about customer value, cost and competitors. Understanding and focusing on latent customer value – which you satisfy but your competitors don’t or can’t – can also help spark ideas for ‘cunning

plans’ and strategic options. By understanding your positioning relative to your rivals in terms of customer value added and cost, you can generate some exciting new strategies. For example, in the late 1990s Tesco looked at some simple future-looking strategies for convenience formats (Express and Metro), home shopping and non-food (CDs, books, clothes, etc). By imagining it was travelling to the future (see last month’s article), Tesco saw the potential of these strategies and rolled them all out. Successful strategies are often simple but incorporate cunning – here it lay in the combination of these strategies and in Tesco’s drive and agility. Now Tesco is a target for others and it should be thinking about their intent. Sainsbury’s, for example, positions itself as delivering superior service, while Tesco seems to have focused on range/price and relentless productivity gains. Is Tesco vulnerable on service if the squeeze on incomes in the UK eases up? Markets change, and strategies may have to adapt with them. The strategy onion diagram on the next page brings all these models together with PEST factors and life-cycle effects. These all affect market growth, which in turn impacts the competitive forces toward the middle. Within the business itself consideration should also be given to the sustainability and renewal of competitive advantage: these have a huge impact on economic returns,

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including the way you continue to deliver superior customer value, and stay way ahead of competitors. Finally competitive advantage and change can be illustrated with a case study on ‘hot yoga’. Years ago Bikram Choudhury, an Indian yogi, formulated a series of yoga postures that take place in rooms heated to 105ºF. I became addicted to Bikram yoga in 2002 when there were four studios in London and few more in the UK; now there are over 20 in the capital and more than 500 worldwide in a franchised global brand. Bikram yoga is psychologically and physically challenging. It is also an attention-grabber, appealing to young, inner-city professionals seeking a wonder body. Classes are packed out. Last Saturday there were 70 in mine, with water and towels generating perhaps £1,000 in a 90-minute session. It’s a competitively attractive market where Bikram has real advantage. But recently several hot yoga studios have opened up in London, which threaten Bikram yoga’s future growth, margins and returns. The Bikram formula has not changed substantially in 10 years: is now a good time for the business to seize the strategic initiative again with a strategy review? Dr Tony Grundy is an independent consultant and trainer and lectures at Henley Business School in the UK

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The strategy onion Political factors

Economic factors Growth




Life cycle

Company and competitors



Technological factors

Social factors


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No nasty surprises Before investing in a Chinese business, make sure that you carry out comprehensive due diligence on your target. Stephane J Grand offers a guide on what to consider

When considering an investment in a venture operating in China, whether as a partnership, acquisition, shareholding stake, securities purchase or other, it is important to minimise risk, assess competitive advantages and identify growth opportunities by conducting due diligence. Corporate fraud is an international problem but recent cases in emerging markets have shown the considerable difficulty in obtaining and assessing company financial information and operations. Accounting irregularities have appeared in US-listed overseas companies, with the ripple effects reaching investors all over the world. Despite the perceived emerging-market risks, China remains a high-growth economy and is largely outperforming ailing European and US markets. Shrewd investors will continue to seek choice opportunities in the Chinese market as long as this growth continues. It is, however, prudent to take a multifaceted approach to due diligence to ensure that you gain a clear and well-rounded picture of a target investment. This article discusses some of the main types of due diligence that should be conducted in this environment. It will help investors avoid common pitfalls and adjust their approach strategy to take into account the unique nature of the Chinese business environment.

Basic checklist The following documents should all be covered to ensure that a foreign invested entity in China is operating legally and has the appropriate permits and approvals. Note the different requirements for representative offices (ROs), a wholly foreign-owned enterprise (WFOE) and joint ventures (JVs): articles of association (WFOE, JV) organisation certificate (RO, WFOE, JV) business licence (WFOE, JV)

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certificate of foreign * registration enterprises’ permanent office in China

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(RO, WFOE, JV) capital verification report (WFOE, JV) national and local tax certificates (RO, WFOE, JV) tax documents for any preference or exemption (RO, WFOE, JV) approval notice for bank account (RO, WFOE, JV) signature card for bank account (RO, WFOE, JV) office rent contract or certificate of real estate ownership (RO, WFOE, JV) contact details of financial department or cashier (RO, WFOE, JV) accounting policies (RO, WFOE, JV) customs documents (RO, WFOE, JV) copies of passport of the investor(s) or business licence of the parent company (RO) photocopies of ID card or passport of the chief of the board (RO) certificate of the chief representative salary (RO).

Financial Thorough financial due diligence is an important basis for understanding a company’s business operations and identifying potential accounting irregularities. It is particularly important to be alert to the practice of keeping multiple accounting books. Other important accounting considerations when operating in the Chinese business environment include: Analyse the fixed assets. Do they reflect the reality of the company’s operations? Are they accurately accounted for? Is asset depreciation accurate? Ensure that the company is the true contractual owner of the fixed assets. Check accounts receivables. Confirmation with clients is essential in order to double-check the target company’s explanations of total billing. This should also apply extra



scrutiny to a company’s aged receivables balance. Where applicable, suppliers should also be verified. The cash position should be confirmed through a letter from the banks; sending it to the regional headquarters may be preferred. Check other payables and liabilities. Analysis should be done on salaries, social insurance payments or liabilities such as pension payments for former employees. Has the business been accurately calculating its social insurance obligations? Look at business expenses and check the authenticity of invoices. Beyond accounting issues, China’s complex taxation system and regulatory environment require a close examination of a company’s overall situation and liabilities. The various possible corporate and legal structures each have different tax issues and risks to address. The tax environment is constantly evolving, and new national regulations may have different levels of implementation or amendments in various localities. Companies may be following legacy tax policies and may not have updated their payments to current policies and regulations. These legacy policies may contradict national regulations or be legally unenforceable. Unpaid tax obligations can significantly change a company’s profits and losses if it plans on coming into full compliance with tax regulations. It is also important to keep in mind the following questions when conducting due diligence on tax issues: How do China’s generally accepted accounting principles (GAAP) differ from the standards normally used by the investor? Could these issues create confusion about the overall financial position of the target investment? Do transfer pricing issues or exposure to transfer pricing apply to the company in question?

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are the applicable preferential * What tax rates based on the company’s industry or operational scope, and what is the extent and time length of these preferential rates? Is the company in compliance with all foreign exchange regulations? Is the company fulfilling its withholding tax responsibilities? If applicable, are all customs regulations being followed?

Operational and investigative Even if an investor conducts thorough financial due diligence on a potential target, investigative and operational due diligence can help verify a company’s provided documentation by means of first-hand inspections and assessments. Taking into account the potential difficulty in accurately assessing a company’s financial position in emerging markets such as China creates an even greater need for comprehensive operational and investigatory due diligence. Confining due diligence primarily to reviewing financial statements and other company documents is unlikely to provide all vital information for a potential investor, and is inadequate to provide a complete picture of a company’s operations. In addition to face-to-face meetings it can be useful to conduct independent investigations into a company’s suppliers and customers. Can you randomly choose some suppliers and customers to contact? Can you independently verify their volumes of sales or purchases from suppliers? Can you secure interviews with lower-level staff or security guards at factories or facilities? Sometimes interviewing lower-level personnel who have not been coached in what to say to investors can help in getting a truer picture of the target in question. An effective strategy to get the most out of site visits and investigative due diligence is to have a multifunction team consisting of operational, legal,

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environmental, financial and human resources experts. If you assemble a team with complementary specialities the combined intelligence can help reveal more information than may be gathered by individual analysis. A legal team can be crucial in investigating due diligence, but it is also necessary to do a thorough examination of a variety of important issues, including business structure and scope, intellectual property (IP) and land use.


Legal Legal due diligence can help determine a target’s attractiveness and ensure that all contractual agreements are solid and in order. Special focus should be given to the following issues while taking into account China’s young legal system: Check the company’s target structure/industry classification. Confirm that the company possesses all necessary business licences and permits. The ownership structure should be verified to determine if there are any hidden owners or partial shareholders. Special attention should be paid to this as verbal agreements can be legally enforceable in China. The Chinese government also has various classifications for industries: encouraged, neutral, discouraged and forbidden. Determining the classification of your target will help you determine if and with what stipulations an investment can be made, and help you identify any possible tax benefits that the target may be entitled to. Check land use rights. While land in China technically cannot be owned by an individual, the right to use land and own any property on that land can be purchased. Confirm that the company in question owns the land use rights itself and that the rights are not owned by third parties or parents/affiliates of your target.



Common problems include unenforceable informal arrangements between companies and local officials, land improperly zoned for current use, and mortgaged land and buildings detracting from the target company’s overall value. Check its intellectual property. Systems for IP protection have been strengthened in recent years but there is still progress to be made. Companies can underestimate the value of their own IP and so may not take the necessary legal steps to protect it. An investor should confirm that its target has proprietary rights to any technology when applicable and check all corresponding trademarks and patents.

Environmental Given China’s strict environmental standards and the focus in the 12th fiveyear plan, environmental due diligence should be conducted where applicable. Some important issues to consider in China include: ensuring that the company holds all appropriate environmental permits; examining any potential outstanding liabilities or costs due to environmental contamination or degradation ensuring that land included as part of any deal is not contaminated (soil sampling can determine this) clarifying what environmental management systems a company has in place in the case of land containing factories, examining wastewater management and waste disposal capabilities and procedures investigating any existing arrangements with a locality’s governing environmental body.

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Stephane J Grand is president, SJ Grand Financial & Tax Advisory

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18 October 2012 Four Seasons Hotel, Hong Kong Focus on finance leadership. ACCA chief executive Helen Brand and speakers from Accenture, Asian Corporate Governance Association, BlackRock, Daimler, Deloitte and others will explore the key challenges and opportunities facing finance leaders as they seek to drive business performance and shareholder return. Find out more, visit:

ACCA – the global body for professional accountants For further information, please contact



The secret to getting the best CPD Make sure you leave enough time to reflect on the learning you’ve done and fit it into a bigger development plan. Here are some tips We all know CPD is about learning and how that learning supports your career. But over the years we’ve noticed that not enough of our members reflect on the learning that they’ve done or try to fit it into a bigger development plan. Understandably, it is difficult to reflect on your CPD if you only think about learning towards the end of the year with the aim to gain the verifiable CPD units you need for your declaration. Courses are sold out in minutes and e-learning opportunities relevant to your career might not be available just at that time – not the best experience when all you’re trying to do is develop professionally. So why not use the summer months to learn – work tends to slow down and there are still plenty of opportunities for development.

Relevance, relevance, relevance If you’re an accountant and you want to develop in that role in the future, doing an evening course in oil painting will sadly not count towards your CPD. It might be a great experience, but unless you can prove it has contributed towards your career, you will not be able to use it towards your CPD. An online refresher in managing people can be very useful if you’re involved in managing teams or you manage your own practice; however, it’s hard to prove relevance if, for example, you’re just at the start of your career and your role does not involve any management. Relevance is the cornerstone of ACCA’s CPD policy, yet many members experience delays in their CPD review because they fail to demonstrate the relevance of their CPD activities to their current job or future career. If you work in a relevant role, your CPD will probably be mostly about

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maintaining technical ability and keeping abreast of industry developments. However, don’t forget your other professional skills. A course in presentation skills is just as relevant as a Microsoft Excel course if you have to deliver presentations for work. If you are not currently working in a relevant role and have moved away from accounting and finance, you can still gain CPD if you can demonstrate relevance to your current role. It’s important to note that members in practice continue to maintain competence in their areas of technical specialism and obtain an appropriate proportion of CPD in those areas.

Opportunities to learn Once you fully understand that it is relevance that counts, you can begin to think more imaginatively about how to obtain CPD as there’s a good chance that you are already doing much learning in your day-to-day work.

Day-to-day CPD Let’s take for example report writing. Was the subject matter new? Did you conduct any type of research (speak

with colleagues, business experts or do internet research) to do the report. All this can count towards your CPD as it is in essence new learning that is relevant to your career. Evidence can be provided – the report itself is evidence; additionally, the research notes can be produced, a diary printout or copy showing the time for research blocked off, or a colleague can corroborate that the learning took place. Check the examples of CPD evidence at

What’s the secret of great CPD? Plan in advance! Where do you want to be this time next year in your career? What is the relevant learning that can get you there? To determine relevance, ask yourself: 1 Was the learning activity relevant to your career? 2 Can you explain how you will apply the learning in the workplace? 3 Can you provide evidence that you undertook the learning activity? If you can answer with yes to all three questions, then one hour of learning equals one verifiable unit of CPD.

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ACCA news

SEEING AFRICA IN A NEW LIGHT At the biennial ACCA Council meeting held this year in Kenya, members discovered a continent that is open for business and ready to usher in a golden era ACCA’s 36-strong Council came to East Africa in June to discuss opportunities and challenges for the accountancy profession. The biennial meeting in Nairobi, Kenya, followed by separate visits to meetings in Ethiopia, Tanzania and Uganda, reflected Council’s desire for a clearer understanding of the rapid economic and business developments in Africa. ‘The only way to do this is to be here and to be here now,’ said ACCA president Dean Westcott at the gala dinner in Nairobi. ‘This way we can see first-hand how professional accountants working here create public value. And by public value, we mean working in the public interest, promoting responsible and ethical business, and supporting enhanced global economic performance.’ ACCA chief executive Helen Brand said: ‘As our governing body, Council is elected and consists of voluntary members who possess a global outlook that can only benefit further by meeting together in Kenya.’ The chief guest at the gala dinner was Dr James Mwangi, chief executive of Equity Bank in Nairobi. Mwangi made headlines recently when he was awarded the title of Ernst & Young World Entrepreneur of the Year 2012. As finance director and then chief

IEBC commissioner Albert Bwire, ACCA president Dean Westcott, ACCA deputy president Barry Cooper, and Uchumi Supermarkets CEO Jonathan Ciano (left to right) executive of Equity Bank, Mwangi grew the business from a small microfinance house that was ‘technically insolvent’ into Kenya’s largest bank. It is now a listed company and responsible for more than half of all bank accounts in Kenya.

Jamil Ampomah, ACCA director of sub-Saharan Africa


To mark the Council meeting in Africa, ACCA’s monthly magazine Accounting and Business published an Africa Special Edition. It is packed with interesting articles, which were highlighted by ACCA president Dean Westcott in his speech at the gala dinner. ‘It is a riveting read that’s challenged my thinking on a number of issues,’ he said. The editors include Alvin Chikamba, head of policy for sub-Saharan Africa at ACCA. It also includes a view from Japheth Katto FCCA, CEO of the Ugandan Capital Markets Authority and board member of the International Federation of Accountants. You can read the Special Edition at

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Also among the gala dinner guests were Rosemary Gituma and Abdulwahid Aboo, council members of the Institute of Certified Public Accounts of Kenya (ICPAK), as well as Vickson Ncube, CEO of the Pan African Federation of Accountants. ACCA has a long history of working in partnership in Africa, said Westcott, with learning providers, ICPAK, KCA University and Strathmore University. With the opening of new offices and a growing number of members, ACCA’s presence has increased rapidly in Africa. Member numbers stand at nearly 10,000 for sub-Saharan Africa, and some 82,000 students. ‘This growth could not have been achieved without the partnerships and alliances we have forged here,’ Westcott added. Members across Africa are supported by a team of full-time staff based in 11 African countries, from Botswana to Zimbabwe, and ACCA’s many partners. Africa’s businesses are becoming increasingly important international trade partners and its markets are increasingly attractive as an international trade proposition, said Westcott. ‘This is why professional accountants have a significant role to play in capacity building in Africa.’

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Referring to the report Making Capital Markets Work in Emerging and Frontier Economies (see box), Westcott drew guests’ attention to the Uganda Capital Markets Authority’s financial literacy work. The body is running a programme to train journalists in financial issues and how to report on capital markets without jeopardising or compromising their professional standards or journalistic independence, he said. ‘As ACCA members have told me, it is time for ACCA and the business world globally to see Africa in a new light. The continent’s economy is growing strongly and its prospects are bright, but it also faces significant challenges.’ As well as new member ceremonies, an employers’ roundtable was held in Ethiopia on the theme of ‘the role of finance professionals in an emerging economy’. There was also an event in Tanzania to launch the two reports on capital markets, while Uganda was the location for an event to discuss the issues relating to effective financial management and transparency. Jamil Ampomah, ACCA director of sub-Saharan Africa, said: ‘It is important Council members from all over the world come to Africa and understand the issues their Council colleagues face here on this continent.’ ‘We will be taking our learning, our understanding and the expertise gained while we have been here back to our own countries,’ said Westcott, ‘to spread the word that Africa is open for business and this is a golden era for Africa.’ Lesley Bolton, international editor

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Above: James Mwangi, Equity Bank chief executive Above right: Westcott on set with NTV host Dan Mwangi Right: Helen Brand, ACCA chief executive Far right: Alvin Chikamba, ACCA head of policy for sub-Saharan Africa


Two reports – The Rise of Capital Markets in Emerging and Frontier Economies and Making Capital Markets Work in Emerging and Frontier Economies – were launched during ACCA Council’s visit to East Africa. The Rise of Capital Markets reviews the academic literature on the development of capital markets, while Making Capital Markets Work is a collection of first-hand accounts and case studies from senior managers and professionals who are spearheading market development. Speaking at the press conference in Uganda, ACCA president Dean Westcott said: ‘Capital markets play an important role in promoting robust economic activity. Emerging capital markets are clearly an increasingly important source of finance to business. Broadening participation in company ownership, especially where the needs of minority shareholders are concerned, requires clear corporate governance, a responsiveness to the many needs of investors, consideration of independent representation on the company board, and transparency of decisionmaking in the interests of all investors and wider stakeholders.’ ACCA believes that capacity building around financial systems is essential. It allows capital markets to enable the most promising businesses – both large and small – to source funds more cheaply and reliably than would otherwise be possible. But in order to do this, these businesses need access to reliable financial information, which in turn depends on the skills and competences of professional accountants. Westcott concluded: ‘Our reports show that the perceived strength of accounting and auditing standards is a leading indicator of the health of capital markets and a strong predictor of their ability to drive economic growth.’ Both reports can be viewed at

06/08/2012 15:31


ACCA news

EXAMS FOR CFOs? The Singapore CFO Institute’s decision to look into developing a nonmandatory professional certification for CFOs received support from nearly six out of 10 CFOs at a CFO Connect networking lunch. A live poll was conducted at the lunch, organised by the institute and held on 22 June, on whether such a certification would be useful, given the increasingly complex role of the CFO. Of the 100-plus CFOs at the lunch, 58% agreed the move would be very useful; 42% disagreed. The certification under consideration would be similar to the Chartered Financial Analyst credential that has gained cachet in the fund management industry. During a panel discussion, Olivier Lim, chairman of the institute’s Advisory Council and chief investment officer at property developer CapitaLand, stressed that the institute was not proposing to make certification for CFOs compulsory. The council was

awaiting feedback on the issue to build consensus, he said. Speaking to reporters later, Lim said: ‘I don’t see certification occurring in the short term. It’s more us working together with third-party tertiary education providers to create programmes for people who’d like to move onto the path of a CFO, whether they are accounting-trained or not.’ Panel member Arthur Lang, CapitaLand’s group CFO, reckoned that certification would be helpful if it was not compulsory. He said that training should be made available to CFOs and financial controllers of certain groups of companies, such as small- and medium-sized enterprises and foreign companies listed in Singapore, including S-chips – China-based firms listed on the Singapore Exchange (SGX). While in favour of courses to help CFOs advance, fellow panel member Quek Suan Kiat, country manager and chief operating officer of Barclays



CFOs bogged down by accounting issues may find it hard to attend to strategic matters. ‘Arguably, the mindset when dealing with purely technical matters is different from negotiating a deal or persuading board members to invest in a project,’ the Value of the Modern CFO report said. One director commented: ‘The CFO is inherently in a Jekyll and Hyde situation. On the one hand, he or she needs to be quite outgoing to communicate effectively with major stakeholders; on the other hand, there is a need to focus on the details.’ CFOs must reconcile these disparate elements, the report said.

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Bank’s Singapore branch, said: ‘I don’t think it’s necessary to make CFOs take exams. They are already qualified.’ The panel’s lively debate centred on topics covered in a report that was presented at CFO Connect. The report, The Value of the Modern CFO – Board Directors’ Perspective, collated the views of nine directors who took part in a roundtable discussion in April about the attributes, competencies and specific actions expected from the CFO in the near future. The roundtable was organised by the institute and ACCA. They also produced the report. The role of CFOs in risk management was one of the subjects to come under the spotlight, with the panel debating the question, should CFOs double up as chief risk officers (CROs)?


From left: Basil Chan, Arthur Lang, Quek Suan Kiat and ACCA Singapore country head Darryl Wee take part in a lively CFO Connect panel discussion Among the naysayers was Lang, who said: ‘To have the CFO play the role of CRO alone is a risk itself.’ He said he was referring to total enterprise risk, not just financial risk. ‘When I talk about the total risk facing the company, I think it has to be shared with all risk holders. If the CFO is responsible for identifying, monitoring and ensuring there is risk compliance for all aspects of risks, it is an accident waiting to happen.’ One of the factors to consider is the size of the company. Quek said: ‘If your company is big enough, then it is good to have a different risk officer. But for medium-sized companies I don’t see why the CFO cannot handle these risks.’ He added that CFOs with big companies should nevertheless understand the various risks affecting the company, especially market risk. A quick poll of CFOs at the lunch event revealed that the majority did not think that it was a good idea for a CFO to assume the role of CRO as well. The roundtable of directors in April did not reach a clear consensus on this point, nor the issue of how Asian CFOs should act in the boardroom. Some

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directors said that Asian CFOs did not challenge their boards and CEOs as much as their counterparts in the West. Others pointed out that CFOs did not need to be so vocal in meetings as they could work issues out behind the scenes. ‘Nevertheless, it is important for CFOs to think independently and ask tough questions or they may lose credibility in the boardroom,’ the report concluded. As for the key attributes of a CFO, Quek listed the ability to work with the CEO as the most important. He said a CFO had to know something about finance, but needn’t be an accountant. Agreeing, Lang said: ‘I feel knowledge of accounting is but just one tool for a CFO. It’s not a prerequisite for a CFO.’ Basil Chan, founder and managing director of MBE Corporate Advisory, said it was extremely important for CFOs to understand the business model of the organisation they work for. ‘You don’t want a CFO who is just focused on reporting, compliance, risk management but a CFO that can really partner the CEO in terms of creating value for the organisation.’ In his opening address at the event, Lim said that since its formation last year, the institute had begun a journey to unravel the complex and evolving role of the CFO. As well as the research

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on directors’ views in The Value of the Modern CFO, the institute is collaborating with the Singapore Management University (SMU) to research how leading listed companies of various sizes have organised and resourced their CFO functions. The SMU will survey companies listed on the SGX and the research findings will be presented at the CFO Connect Symposium, the institute’s signature event, on 15 November. Noting the broad range of views on

the role of the CFO, Lim pointed out that the role was highly dependent on context. ‘The complexity of business, capital markets, regulatory frameworks, and risk and control pressures – to highlight a few – means that there is no such thing as the perfect CFO for all situations.’ Suki Lor, journalist

The Value of the Modern CFO is available at


Some of the key conclusions of the Value of the Modern CFO report: CFOs provide immense value to CEOs and their organisations. CFOs need to deepen their understanding of their companies’ business model to operate more effectively. They should spend time in different business units so they can gain multiple perspectives on issues to help develop their systems thinking. CFOs should engineer career pathways to ensure diversity of experience in various industries and national environments. They should also welcome more exposure to regional countries and not shun ‘hardship postings’ overseas. CFOs should have a good understanding of the risks that their organisations are exposed to, particularly financial risks in dealing with derivatives, taking into account Singapore’s growth as a global financial centre. They should also be conversant with the risks associated with venturing overseas. CFOs have often become CEOs, or been appointed as interim CEOs, suggesting that CFO skillsets resonate deeply with CEO skillsets. For CFOs of large organisations with adequate technical resources, leadership and soft skills are more important than technical knowledge. In such cases, CFOs need not be qualified accountants.

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06/08/2012 14:42




Around 25 new members attended a cocktail and dinner reception hosted by ACCA Singapore in July. The event was held at Novus Restaurant at the National Museum of Singapore. Wilson Woo, president of the ACCA Singapore branch, gave a welcome speech, sharing how members would benefit from their membership, but also encouraging new members to do their part in building ACCA in Singapore. ‘It is you who will continue to build ACCA through your commitment to professionalism and ethics, and whose excellence at the workplace acts as a standard for the quality of members everywhere.’ Wilson was joined by the rest of the committee, who each hosted tables. The celebratory affair was much enjoyed by new members, who appreciated the recognition of their achievement and the opportunity to network with fellow members in a festive atmosphere.


An ACCA Young Professionals Network (YPN) event was attended by nearly 40 affiliates and professional-level students. It featured a presentation from Adecco’s assistant branch manager, Brandon Yeo, who shared valuable information about the general market overview and some key details on the role of a financial planning and analysis manager. This was followed by a brief sharing of membership experience by president of the ACCA Singapore branch, Wilson Woo. Both presentations were followed by a networking session, which allowed trainees to discuss their career prospects with representatives from Adecco, and to talk to members of the local executive committee about how ACCA membership is an asset in career development. Woo also revealed how ACCA membership has helped him in his career.

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New members enjoyed networking at the Novus Restaurant


Committee members each hosted a table


Wilson Woo encouraged guests to get involved

08/08/2012 11:15



Do the right thing [

Few professionals embark on their careers with larcenous intent so it’s vital to maintain our values and integrity, says Wilson Woo

Recently, I attended the 2012 ACCA/ICPAS (Institute of Certified Public Accountants of Singapore) graduation ceremony. I must confess that as each graduate went up on stage to receive their certificate, my heart swelled with pride. Evident by the smiles on their faces was that sense of achievement of finally having attained an ACCA accreditation. That really meant something to me. These fine young ladies and gentlemen are moving into a new phase of their career now that they are qualified. They will have to shoulder more responsibilities and maybe assume new roles. But whatever that role, however similar or different they may be, there is one tenet we need to live by: the ACCA values and professional integrity. A few weeks back, I chanced upon an interesting report commissioned by the G30 after the 2008 financial crisis. Toward Effective Governance of Financial Institutions argues that, while governance structures and processes are important, they are merely structures and forms, and hence susceptible to failure. And the root of failures is, more often than not, traceable to human behaviours and values. To put it another way, governance systems are built around a defined architecture comprising hardware and software. The hardware refers to organisation structures and processes, while software includes components such as people, skills and values. While hardware is vital for the system, what really makes it tick is the software aspect. Thus, in the case of financial fraud and failures, it is always the people and their values who are the culprits. So, in our personal pursuit of excellence and career, let us hold dear what’s truly important in our accountancy journey: personal integrity and ACCA’s core values: Opportunity: we provide opportunity, free from artificial barriers, to people around the world – whether students, members or employees. Diversity: we respect and value difference, embracing diversity in our people and in our output. Innovation: we create new and unexpected possibilities, providing innovative solutions for the future. Accountability: we accept individual and corporate responsibility for our actions, working together to deliver a quality service and to promote the best interests of our stakeholders. Integrity: we act ethically and work in the public interest, treating people fairly and honestly; we encourage the same from others. We have read about enough corporate scandals involving corruption and embezzlement to know that the road to hell is always paved with good intentions. Nobody started out in his career with an aim to commit larceny. But many corporate scandals begin in small and seemingly innocent acts. Because temptation is present everywhere, we must maintain our core values and stay focused on doing the right thing. The arms of the law are long and will catch up with you at some point. And when that happens, to quote first century BC Latin writer Publilius Syrus, ‘What is left when honour is lost?’

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Wilson Woo is president of the ACCA Singapore branch

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07/08/2012 14:28


ACCA news

Accounting for the future Interactive event looks at finance professionals’ sustainability role ACCA is holding a worldwide event next month exploring the role finance professionals will play in developing a more sustainable global economy. Members joining the online interactive event, to be held from 8 to 12 October, will be given access to the latest research in accounting and finance. They will also be able to watch, hear and question experts who will be sharing the latest insights on how businesses need to adapt to meet the future needs of stakeholders, regulators, the economy and the environment. Topics will include risk management, valuation, corporate reporting, investor engagement and the green economy. Those joining the event will be able to network online with other attendees. The event will be brought to you via live webcasts and on-demand videos. There will also be events taking place in the UK, the US, mainland China, Hong Kong, Africa, Malaysia and Ireland. Registration is straightforward and will allow access to a variety of sessions that will develop knowledge and contribute towards CPD.

Inside ACCA 65 Wilson Woo When it comes to maintaining corporate governance, integrity is everything, says the ACCA Singapore branch president

08-12 OCTOBER 2012






the future is a worldwide ACCA’s Accounting for finance professionals event exploring the role and sustainable will play in building a stronger champions the connected global economy. ACCA ve days we will harness accountant, and over fi bring together finance the latest technology to the world to share around professionals from Our experts will share and learn from their peers. businesses and the the latest insights on how to adapt to meet the future corporate sector need regulators, the economy needs of stakeholders, and the environment. to you via live webinars The event will be brought and you can participate and on-demand sessions around the world. in events taking place information, visit To register, and for further forthefuture Topics to be covered include: sustainability investor engagement corporate reporting risk management






iPad app ACCA’s Research and Insights findings of the gives you access to the of our members risk management survey risk and explores what integrated in practice. You management looks like app for free via can download our iPad or just search pp, iTunes App Store. for ‘ACCA Insights’ in the

* 60 Open for business * * The **ACCA Council meeting in Kenya heard positive messages about the profession’s development in Africa valuation

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57 CPD Allow yourself time to reflect

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05 I 2012


62 ONE Exams forAL,CFOs? WEEK, GLOB D LIVE AND ON-DEMAN Delegates at CFO Connect’s working lunch polled on nonmandatory professional certification


The latest edition of ACCA’s Accountancy RIO CALLING Futures journal looks at current and future issues affecting business and the accountancy profession. Issue 05 includes analysis from Al Gore, former US vice president; Dr Yugui Chen, deputy president and secretary general of the Chinese Institute of Certified Public Accountants; and Professor Dr Vuong Dinh Hue, Vietnam’s minister of finance. Accountancy Futures is available now from


64 News round-upTHE FUTURE ACCOUNTING FOR New members welcomed at appreciation night


11/06/2012 11:48


ACCA has launched an iPad app that explores crucial trends and issues for business, economies and the accountancy profession. You can find it at www.accaglobal. com/insightsapp or by searching for ‘ACCA Insights’ in the iTunes App Store. It includes video interviews and podcasts from leading experts, interactive infographics and ACCA research findings. The first edition of the app also looks at how accountants in a wide range of roles contribute to managing risk. ACCA has also introduced a new Student Planner app, available free at the iTunes App Store.


ACCA deputy president Professor Barry Cooper FCCA has been awarded life membership of the Accounting and Finance Association of Australia and New Zealand (AFAANZ), the organisation that represents all accounting and finance academics in Australia and New Zealand. The prestigious award was made for his outstanding and exceptional contribution to AFAANZ, of which he has been both treasurer and Australian president. His work included the re-engineering of the body’s finances. Cooper is head of the School of Accounting, Economics and Finance at Deakin University in Geelong, Australia.


ACCA’s 107th annual general meeting (AGM) will take place on Thursday 20 September at 13.00 BST (12.00 GMT). The annual report and AGM papers can be accessed online at www. As usual, all members have the option of voting online. You will have been provided with your voting codes electronically or with the AGM papers posted to you. Visit to cast your vote.

07/08/2012 14:31

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AB SG (Singapore edition) – September 2012  
AB SG (Singapore edition) – September 2012  

AB SG (Singapore edition) of Accounting and Business – September 2012