aat: the indispensable element t/dialoguemonthly loan repayment $3,000 wages $150,000 $4,000...

AAT: The indispensable element October 2009

T/DIALOGUEEntrepreneurship

From accounting to

2 From the President’s Desk

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HKIAAT News Reciprocal Membership Agreement with AAT Australia

HKIAAT Accounting and Business Management Case Competition – Open for entries!

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Cover Story Self-made success: a tale of entrepreneurship

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Learning Zone Professional Bridging Examination (PBE)

Paper II: Transfer Pricing – by Simon S P Lee

Paper III: Professional Ethics in Auditing – by Gordon Kiernander

Table of Contents

From accounting to entrepreneurship

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Honorary AdvisersPresident and Vice-Presidentsof the Hong Kong Institute of Certified Public Accountants

Board MembersJohnson C H Kong(President)Stella P L Cho(Vice-President)Andy T M Li (Vice-President)Chan Cheuk HayDoug OxleyThomas Y T WongLindy W W Yau

Staff Responsible Bo Bo F P Man(Assistant Director)Alison K Y Lee(Manager)Ester W K Chan(Assistant Administrative Officer)

October 2009Hong Kong Institute of Accredited AccountingTechnicians Limited香港財務會計協會有限公司27/F, Wu Chung House,213 Queen’s Road East,Wanchai, Hong KongTel: 2823 0600Fax: 2823 0606Hotline: 2823 0660Web: www.hkiaat.orgE-mail: [email protected]

(Circulation: 10,610 copies)

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Learning ZoneAccredited Accounting Technician (AAT) Examination

Paper 2: Marketing – by Sebastian Bombaci

Paper 6: What would you do if you got ripped-off in a beauty center? (Part II) – by Tony Chow

Paper 7: Accounting policies, changes in accounting estimates and errors – by Dr. M H Ho

Paper 8: Evolution of Information Systems – by David Chow

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Careers and LifestyleEmployer in the spotlight – K T Tam

Versatile AAT – Stephen Ho

Beacon for those led the astray

The Heart Types of Enneagram – by William Tong

Understanding people’s make-up to manage working relationship – by Weelan Ho

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2 From the President's Desk

From the President’s

Desk

T/Dialogue October 2009

Dear members and students,

There are signs that the worst of the global financial tsunami may have passed, yet recovery is not assured. In weathering these difficult economic times, members and students would be well advised to grasp every opportunity to upgrade skills and knowledge.

We understand that studying for a professional qualification is a big commitment, which is why we offer you support and guidance in a variety of ways. HKIAAT has worked closely with the Employees Retraining Board (ERB) to offer “Module Certificate in Accredited Accounting Technician Training” to help our students to better prepare for the AAT examination. The course for each module includes 48 hours of tuition and costs HK$2,750. However, we have worked with the ERB, who will sponsor this course. This means that the course fee can be reduced to an amazing HK$825 or even free for students whose monthly income falls below HK$15,000. You are encouraged to take advantage of this ERB’s sponsorship to equip yourself with our well recognized AAT qualification. In addition, you will also find this issue packed with plenty of useful technical articles that are relevant to your preparation for the coming examination.

We are constantly striving for better value for our members and students. Hong Kong is an international financial centre and our accounting professionals have also been recognized as among the best in the international community. Following the first Reciprocal Membership Agreement (RMA) with the Association of Accounting Technicians in the United Kingdom in 2006, we are delighted to announce that HKIAAT has signed another RMA with AAT Australia in September 2009. This is an important milestone as it signifies the recognition of the quality of our members, and gives employers further external assurance regarding the AATs we produce.

Looking ahead, the economic downturn may provide opportunities for entrepreneurship and innovation. With many firms scaling back and laying off staff, it can actually spark off a great opportunity for individuals looking to start a new business. In this issue, we interview three entrepreneurs and examine their businesses from the accounting perspective. You will see how adversity can create opportunities. These entrepreneurs were creative about assembling resources, and went after them with their knowledge and special skill sets. With careful budget planning, pricing strategy, cost management, as well as strong determination, their businesses can manifest into profitable ventures.

These stories tell us that success is not down to luck. During an economic lull, you need to think ahead and take wise steps. With the invaluable skill set acquired from the AAT qualification, you can ride the economic recovery with confidence.

Johnson KongPresident

3HKIAATNews

The HKIAAT is pleased to announce that it has recently entered into a reciprocal

membership agreement (RMA) with the Association of Accounting Technicians Australia (AAT Australia). This is the second RMA of its kind that the HKIAAT has signed with an overseas professional body, following the RMA with UKAAT signed in 2006. T h e R M A s i g n i f i e s that both bodies share c o m m o n i n t e r e s t s i n the advancement of the

Reciprocal Membership Agreement with AAT Australia

accountancy profession, and reinforce their mutual aim to maintain and strengthen the professional standard of accounting technicians.

Under the RMA, members of both bodies will be mutually recognized and members will

be eligible to apply for the membership of the other

body. We believe that the RMA will further enhance the status

o f H K I A AT i n t h e international arena.

Advertisement

4 HKIAATNews

HKIAAT Accounting and Business Management Case Competition 2009-2010 – Open for entries!


The HKIAAT invites e n t r i e s t o t h e

Accounting and Business M a n a g e m e n t C a s e Competi t ion 2009-2010. This is the eighth consecutive year that the competition has been held. A new format was adopted last year, when the contest attracted more than 1,000 students from secondary and tertiary schools.

Participating students, through the use of the information from a listed company’s annual report, will learn how to apply their accounting knowledge in developing business strategies that can sustain the company’s growth. As well as joining the free business seminars and workshop, which help participating students prepare for the competition, members of this year’s champion team of the tertiary institute group can win an

internship opportunity at Sa Sa International Holdings Limited, the selected corporation for setting questions.

A l l s e n i o r secondary school students and full-time, sub-degree tertiary s t uden t s a r e eligible to enter the competition. Tw o b r i e f i n g s e s s i o n s a n d repor t wr i t ing skil ls seminars will be held on 30 November 2009 a n d 5 J a n u a r y

2010. For further details, please visit www.hkiaat.org.

6 Cover Story

Ken Lai, one of the founders of Vow Production, says accounting knowledge is essential for running a business.


Self-made success:

a tale of entrepreneurshipAt every stage of life, there are some conventional

routes to follow. Some see working at large firms and moving up the corporate ladder as the best way to achieve career success. However, going beyond conventions does not mean the end of the world, as there is always another way out.

These days, despite tentative signs of an economic comeback, the employment market has not yet recovered. While job-seeking remains a tough task, more and

By Eddy Li

more people are starting their own businesses, enjoying working life in their own way.

Here we tell you a tale of entrepreneurship – of how brave and smart decisions led to the birth of three promising young enterprises. Mr Mingles Tsoi, a business consultant and trainer who is enthusiastic about young entrepreneurship, will share with us tips for setting up a successful business.

Kindred spirit. An ingredient to a successful businessThe road to entrepreneurship can be lonely. Greater rewards may result from forming a business partnership. Ken Lai, together with friends Gideon Tai and Lau Wing-tai - all feverish about film and media production - established their own wedding-movie production house in 2007.

The three were encouraged by a warm reception towards a self-produced wedding movie shot for Lau's own wedding. It didn't take very long before the trio recognized that the perfect business was on the horizon: more and more newlyweds are demanding personalized, unique wedding movies, and they aren't willing to settle for conventional videos that feature a simple slideshow of photos. That's how Vow Production came to life, where the three incorporate plots, twists and drama into wedding movies.

"We add value to our services by inserting creative elements into the movies," says Lai. "Since the production requires more labor hours, we can charge HK$16,000

7Cover Story

Start-up costs

Items Amount (HKD)

Equipment and software $100,000

Office decoration $30,000

Website development $10,000

Miscellanies (such as business cards, BR) $9,000

Total $149,000

Monthly operating costs

Expense items Amount (HKD)

Rental fee $12,000

Monthly loan repayment $3,000

Wages $150,000

Advertising and promotion $4,000

Material costs $5,000

Miscellanies (printing, electricity, etc) $6,000-$26,000

Total $180,000-$200,000

October 2009 T/Dialogue

to HK$20,000 per video production." He adds that the mass market usually prices its products at HK$10,000 or less for the making of a basic video. "Our customers are mainly couples aged 30 and above, with above-average incomes. Our pricing strategy is marketable and profitable." The team didn't overlook the importance of managing

account receivables and reducing costs. Customers are required to pay a

deposit equivalent to 50% of the total payment, and the remainder one week before the shooting.

"And to minimize costs, our staff are good at multi-tasking, handling various

tasks and projects simultaneously," says Lai, an accounting graduate who is in charge of the company's books. His two partners, Lau and Tai, are responsible for internal and IT operations, respectively. An administrative staff is on board to help manage the books, namely to input financial data and to monitor cash inflow and outflow. "Accounting knowledge is essential, but running a business also requires different knowledge, such as marketing; personal attitude is also important," Lai says. Like many young entrepreneurs, Lai and his teammates were worried about their source of funding. Instead of going for bank loans, they applied for the Design Incubation Program offered by the Innovation and

Technology Commission. The init iative offered them financial support with a one-year rental waiver, operational and advertising subsidies, which allowed them to set up an office at InnoCentre in Kowloon Tong. One year later, they applied for the Youth Business Hong Kong project offered by the Hong Kong Federation of Youth Groups and secured a further interest-free loan of HK$70,000. "Government subsidies have helped us a lot. If it weren't for the subsidies, we would have still been struggling with the business," Lai said. With the help of the subsidy, the company managed to break even within one year of i ts founding.

After about two years of operation, the team is now studying the feasibility of expanding business into production of movies that track the growth of babies from before their birth. The idea, which could materialize as early as next year, drew a word of caution from Mingles Tsoi, who warns of the immense time required to complete one job. "If the movie is to feature a pregnant mom through to the early days of the kid after birth, it will take the production team lots of time to finish one project," said Tsoi, who suggests the company may adopt a variation to the idea, such as offering parents lessons on video production, and post-production services.

COST SUMMARY FOR VOW PRODUCTION

8 Cover Story


With crisis, comes opportunityA great team can yield great success - but so can a one-man operation. The bursting of the information technology bubble in 2000 and the financial crisis sparked off by the SARS epidemic in 2003 dealt a double blow to Jackie Kung, who was then an IT professional ended up going back to school after losing her job. But as the Chinese proverb goes, “with crisis comes opportunity”. Kung grasped the opportunity and realized her dream.

Realizing that appearance-conscious women are willing to keep up their spending on accessories despite a sluggish economy, Kung studied jewelry design and production at Hong Kong Baptist University before setting up her own online platform to sell her self-designed, handmade jewelry products in 2006.

"I hope to create my own brand and a profitable business with the lowest cost possible, while at the same time, provide quality work," says Kung. "That's my dream." Creativity, marketing sense and IT know-how, however, deemed insufficient to yield a full-blown success, not least without the help of basic accounting knowledge. To better manage her business, Kung signed up for the Diploma in Accountancy at the Hong Kong School of Commerce and attained the AAT qualification in 2008, which eventually helped her further improve the operation of her own brand "6th June". "An online business model incurs little startup capital and reduces overhead costs such as rent, management fees and electricity fees," says Kung, who managed to break even in just one year. That way, with minimal cash outflow each month, she does not have to worry so much whether monthly sales are sufficient to cover her costs. "It also offers me flexibility in time management as a virtual platform frees me from the hassle of attending to a physical commercial space." An artist-cum-business owner, Kung controls inventories

Jackie Kung, owner of 6th June Handmade Jewelry, has created her own brand of jewelry sold through her online accessory shop.

by sourcing materials only when they start to run low, and contains operating costs by taking matters in her own hands without the need of middlemen and distributors. Not only did she set up, and continues to maintain her own company website, she designs, produces, packages, promotes and distributes her jewelry accessories herself, which secures Kung a monthly revenue of around HK$20,000, which can double over the Christmas period. Running a one-man-band operation unquestionably saves staff costs, which often account for a huge chunk of operating expenses. In Kung's case, as the only employee, she can pocket a monthly salary of about HK$6,000 - 50% of her monthly expenses.

But it's not necessarily a bad thing if Kung considers hiring an assistant or two to grow her well-established business, suggests Mingles Tsoi. Recruiting an extra pair

9Cover Story

Monthly operating costs Expense items Amount (HKD)

Salary for owner $6,000

Materials $600

Delivery charges $40

Consignment fees $5,000 *

Total $11,640

Start-up costs

Items Amount (HKD)

Web hosting fee $800

Materials $20,000

Miscellanies $4,000

Total $24,800


of hands will allow Kung to enhance

production efficiency and eventually grow

o rde r s f rom he r monthly average of 20, Tsoi advises.

But before thinking of expanding your startup

i n t o a 1 0 0 - s t r o n g w o r k f o r c e , m a k e s u r e y o u k n o w w h e r e m a r k e t

demand lies, adopt a competitive pricing strategy, and be able to differentiate one's products and services from the mass market. Kung is aware of an already crowded local consumer market, which is awash with an ample selection of low-end, cheaply priced accessories. She avoids the competition by positioning her products as high-end designs targeting overseas customers who are more willing to reach deep into their pockets; hence, higher margins and profits. Having the best from both the IT and business worlds, Kung also tailor-made her own database system to keep track of her inventories, financial data and customer records. Currently her database contains 500 members and customers. To expand her distribution channel and sales, Kung also

sells her products via an online consignment vendor. “The vendor, which has a huge customer base and offers services ranging from packaging to customer services and promotion to delivery, charges fees equivalent to a certain percentage of sales. Though the profit margin is lower, the increased sales volume will pay off,” Kung says. She also has plans to expand sales by providing special offers to local corporations.

"Many people think that accounting graduates will only pursue a career as an accountant or auditor, but choices are not limited to these. You will need accounting knowledge to help you with your daily operations if you run a business on your own," Kung says. " N o w I think having basic accounting knowledge would be good for entrepreneurs as this to a certain extent helps to manage costs, budgets, accounts and tax reporting. All these are important to a business operation."

* Fee payable to consignees is subject to sales volume.

COST SUMMARY FOR 6TH JUNE

10 Cover Story

The couple, both interested in floral design, enjoy their work despite long working hours.


Realize your floral dream Girls, at some point in their life, may have a romantic vision of having their own floral shop and cafe. Many may have let their youthful dreams fade away, but not Titima R., who together with her husband Gary Lee, founded their floral shop “My Dear Floral” two years ago.

"I have been interested in arts and handicrafts since I was a little girl. I thought it would be great if I could turn my hobby into a business so I can enjoy the process while making money," Titima said.

Like many others, cost efficiency is the couple's top concern. The pair rented office space in an old industrial building, where rents are substantially cheaper than those located at main street level. They choose Mongkok, because of the proximity to the flower market. Not only can they have easier access to fresher flowers, but they also save costs and time on transportation. "Hiring part-time staff is a way of minimizing costs, which will allow us to have greater flexibility in controlling costs," Lee says. "The part-timers are hired only when orders are received."

The couple, now employing 15-20 part-timers, say staff and rental

e x p e n s e s r e p r e s e n t s o m e 60% of the shop's monthly expense of about HK$50,000. In a bid to woo and retain

customers amid a relatively c rowded market ,

t h e t w o c o n d u c t market research

on a quar ter ly basis to ensure a compe t i t i ve pricing strategy

against other market players. They also carefully control their inventories by running through their stocks on a bi-monthly basis. With an efficient business strategy, they expect the business will break even by 2011.

Tsoi applauds the couple's decision to recruit part-timers to share the workload. In addition, he suggests that in order to boost profitability, the pair could consider offering training classes to recruit more helpers for floral design and flower care at low fees. The two can also study the feasibility of broadening their operations into mainland China, where westernized, high-quality floral services, banquet and wedding planning services are scant, Tsoi says. But before making the foray, they will have to be aware of the different accounting, tax and legal systems between Hong Kong and mainland cities. "The venture will be highly profitable, especially if they can attract corporate clients," says Tsoi.

11Cover Story

Start-up costs

Items Amount (HKD)

IT equipment and web development $52,000

Furniture, decoration $2,000

Miscellanies (Business cards, BR) $4,600

Total $58,600

Monthly operating costs

Expense items Amount (HKD)

Rental fee $15,000Loan repayment $4,000Materials (such as flower, deco materials, props) $5,000Wages $17,000Advertising and promotion $2,000Miscellanies $10,000Total $53,000

COST SUMMARY FOR MY DEAR FLORAL


The couple is also evaluating various alternatives to grow their operations as they are bracing for rising competition in the local market in the wake of increasing financial subsidies introduced by the government to encourage start-ups. The two are also participants in the Youth Business Hong Kong project. "Youth Business Hong Kong offers free accounting

support to us. Our mentor at the project is also an accountant," Lee says. "While we can handle basic accounting matters, we turn to our mentor for help whenever we face any difficulties." Passion is key to a successful and enjoyable business. As Confucius says, “Choose a job you love, and you will never have to work a day in your life.”

In view of uncertainties in both the economy

a n d j o b m a r k e t , M r. M i n g l e s T s o i , t h e P r inc ipa l Consu l t an t of PAC In terna t ional Consul tants company says that it is no surprise

to witness a trend of rising entrepreneurship among youngsters. The source of capital is usually the key concern for start-up, he remarks. Unless you are running a multi-million-dollar operation that is ripe to tap the equities market, Tsoi suggests other plausible alternatives to enlarge the capital base, including partnership and government subsidies. Bank loans, on the other hand, are another source of financing. Bank loan applications can be approved more easily if the business has been up and running for a few years, and has proven track record.

Tsoi also reminds new entrepreneurs to run detailed funding estimates, such as the need for capital expenditure on equipment, furniture, decoration and renovation. They should also prepare sufficient capital for cash outflow on recurring expenses such as rent, power and staff salaries. "Your business plan and budget are the roadmap for your success." advises Tsoi.

Prudence about cost savings can sometimes be a virtue. Leveraging on a home office, an online platform will vastly reduce rent expenses, thereby lending support to margins, Tsoi says. In addition, payment collection is just as important, as any delay could adversely affect cash inflow. "Some entrepreneurs may even forget to collect payment after providing services," says Tsoi, who suggests demanding deposits could be a way to go.

Tips to a successful business

12 Learning Zone


Transfer pricing is a popular topic in management accounting. It is concerned

with the price when one department (the selling department) provides goods or services to another department (the buying department). That is, one department generates revenue from the sales of goods or services and the other department incurs expenses from the purchases of goods or services. Transfer pricing is closely related to responsibility accounting in which each department is responsible for its cost, revenue, expense or investment return depending on the type of centre it is. Thus, transfer pricing effectiveness is essential to the success of the overall company. The related key issue is the determination of a transfer price which brings goal congruence to the company, and to the buying and selling departments, as all parties want to make a profit.

A department like the sales department which purchases goods and services may compare the prices of similar products in the external market before making its purchasing decision. If external prices are more attractive than internal prices, it may purchase from outside rather than from an internal department like the production department. Similarly, the production department may refer to prices of similar products before it decides to sell to the sales department since selling to the external market may be more attractive. This is the basic idea of market-based transfer prices.

(Relevant to Paper II – PBE Management Accounting and Finance) Simon S P Lee, The Chinese University of Hong Kong

In cost-based transfer pricing, the transfer price is decided by the cost of goods or services concerned. The cost calculation formula may involve variable costs, fixed costs, full costs or some other variation and it is somewhat subjective. Dual pricing is used to describe the situation in which the selling and buying departments use different transfer pricing methods. For example, the selling department may use full cost pricing while the buying department may use market pricing.

Another common transfer pricing method is negotiated transfer prices. In this method, departments negotiate between themselves to arrive at a transfer price.

Many f ac to r s a f f ec t t r ans f e r p r i c ing : Management efforts, especially between the departmental level and senior level; departmental performance; and autonomy need to be taken into as well as calculations.

Transfer prices often have tax issues when the intermediate product is being sold or transferred between departments operating under different tax jurisdictions. The company’s total profit will be maximized when the transfer price results in the departments with the lowest tax rate realizing the largest profits.

To read the complete article, visit the Learning Centre on our website at http://www.hkiaat.org/index.php/services/index/199/

Transfer Pricing

13Learning Zone


IntroductionThe general public demand professional accountants1 maintain a high ethical standard in order to maintain public confidence in the accountancy profession. Professional accountants are required to comply with the Code of Ethics for Professional Accountants issued by the Hong Kong Institute of CPAs. Any member that fails to comply is liable to be investigated by the Institute resulting in possible disciplinary action such as an order to remove the name of the member from the Institute’s membership register.

It is suggested that auditing candidates to study only Parts A and B of the Code as Parts C and D are mostly irrelevant to auditing.

Part A Fundamental PrinciplesPart A establishes the fundamental ethical principles that apply to all members as well as guidance on the threats and safeguards relating to those fundamental principles. Professional accountants are required to abide by the following five fundamental principles:

a) Integrity A professional accountant should be straightforward

and honest in al l professional and business relationships.

b) Objectivity A professional accountant should not allow bias,

conflict of interest or undue influence of others to override professional or business judgments.

c) Professional Competence and Due Care A professional accountant has a continuing duty to

Professional Ethics in Auditing(Relevant to Paper III – PBE Auditing and information systems)Gordon Kiernander CPA ACA

maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques.

d) Confidentiality A professional accountant should respect the

confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority unless there is a legal or professional right or duty to disclose.

e) Professional Behaviour A professional accountant should comply with

relevant laws and regulations and should avoid any action that discredits the profession.

A professional accountant has an obligation to evaluate any threats to compliance with the fundamental principles when the professional accountant knows, or could reasonably be expected to know, of circumstances or relationships that may compromise compliance with the fundamental principles. Many threats fall into one of the following five categories:

a) Self-interest threatb) Self-review threatc) Advocacy threatd) Familiarity threate) Intimidation threat


1. A professional accountant is a person who is member of the Hong Kong Institute of Certified Public Accountants

14 Learning Zone


Marketing(Relevant to AAT Examination Paper 2: Business Communication and Organization and Management)Sebastian A. Bombaci, CPA

The American Marketing Association (AMA) states that marketing1 is “… the activity, set of institutions,

and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large…”.

Communication is the most fundamental aspect of marketing. Companies need to know what products consumers want and how much they will pay for them whilst consumers need to know the value for money they receive from a new product.

The following five activities are designed to provide these key pieces of information to both companies and customers:1. Marketing2. Advertising3. Selling4. Marketing metrics5. Marketing research

1. MarketingMarketing is the development of the strategies that enable a company to sell its products (and services) by building product awareness. To achieve this aim marketing is separated into four main components: product, place, price and promotion. These are commonly referred to as the four Ps of marketing.

2. Advertising Advertising is the way that a company communicates its message to its customers. Advertising can be broken down into four key processes, which are based on the AIDA model. The AIDA model is based on producing a favourable response from a customer. The assumptions

are that the salesperson must gain attention, foster interest, stimulate a desire, and encourage action.

3. Selling or salesSelling is a company’s business process that puts the company in the best position to provide its products to the customer. Companies use a range of techniques to engage the purchaser, and these techniques are called sales promotions.

4. Marketing metricsMarketing metrics are very important as they are designed to measure the performance of a marketing campaign. Metrics are developed so that the success of a marketing plan can be determined over time.

5. Marketing researchMarketing research is the information that links a company’s products or services with its customers. The AMA has defined marketing research 1 as “… the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications…”


1. http://www.marketingpower.com/AboutAMA/Pages/DefinitionofMarketing.aspx

15Learning Zone


What would you do if you got ripped-off in a beauty centre? (Part II)(Relevant to AAT Examination Paper 6: Fundamentals of business law)Tony Chow, Lecturer BEIJING NORMAL UNIVERSITY • HONG KONG BAPTIST UNIVERSITY

Division of Business and Management UNITED INTERNATIONAL COLLEGE

Undue influenceThe courts have not given a precise definition of undue influence (doing so would restrict its applicability in other situations). However, undue influence generally covers situations where a party in a stronger bargaining position taking an unfair advantage of the other party by exerting improper pressure preventing him or her exercising his or her free judgment in making a contractual decision.

ClassificationsIn Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923, the court divided undue influence into two classes:

Class1–ActualundueinfluenceClass2–Presumedundueinfluence

In Barclays Bank plc v O’Brien [1994] 1 AC 180, the court further sub-divided Class 2 presumed undue influence into:

Class 2A – Presumed undue influence (where the relationship of the parties fall within the fiduciary categories in accordance of common law)

Class 2B – Presumed undue influence (where the relationship does not fall within the fiduciary categories but as a matter of fact, the relationships are of trust and confidence)

Burden of proof

Class1–ActualundueinfluenceThe victim who asserted the claim must prove that the

other party had actually exerted undue influence on him/her in entering into the contract.

Class2A–PresumedundueinfluenceThe courts have decided that certain relationships are fiduciary in nature. The dominant parties are presumed to have exerted undue influence on the subservient parties if the relationships fall within the special categories including: parents & children, doctors & patients, solicitors & clients, religious advisor & followers, trustee & beneficiaries. In these cases, the dominant parties have to prove that they had not exerted undue influence on the subservient parties.

Class2B–PresumedundueinfluenceIf the parties do not fall within the special relationship categories under class 2A, the presumption of undue influence still could hold if the victim could prove that she in fact deposed trust and confidence on the relationship with the wrongdoer.

• If the victim succeeds in proving that she deposed her trust in the relationship, then the wrongdoer has to prove the contrary in order to rebut the presumption of undue influence

• If the victim fails to prove she deposed her trust and confidence on the relationship, then the victim has to prove the wrongdoer had exerted undue influence.


16 Learning Zone

HKAS 8 “Account ing Pol ic ies , Changes in Accounting Estimates and Errors” prescribes the

criteria for selecting and changing accounting policies, changes in accounting estimates and corrections of errors so that the relevance and reliability of and the comparability of an entity’s financial statements over time and with the financial statements of other entities are maintained and ascertained.

Accounting policiesHKAS 8 defines accounting policies as “the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements”.

Management of an entity should select an accounting policy that complies with: • the accounting standards and interpretations dealing

with similar transactions • the recognition and measurement criteria for assets,

liabilities, income and expenses

HKAS 8 allows a change in accounting policy only if the change:• is required by a standard or an interpretation; or• i t will result in a more relevant and reliable

presentation of transactions and financial statements of an entity.

When an entity changes an accounting policy upon initial application of a standard or an interpretation, it shall apply the change retrospectively.

Accounting estimateThere are uncertainties inherent in business activities


HKAS 8 Accounting policies, changes in accounting estimates and errors(Relevant to AAT Examination Paper 7 – Financial Accounting)Dr. M H Ho, School of Continuing & Professional Studies, The Chinese University of Hong Kong

which means and that estimates are required in the financial statements. If changes in estimates are based on new information or more experience, the estimate may need revision and require adjustments of:• the carrying amount of an asset or a liability, or • the amount of the periodic consumption of an asset.

HKAS 8 states the effect of a change in an accounting estimate shall be recognized: • in the income statement in the period of the change

and future periods• by adjusting the carrying amount of the related asset,

liability or equity item in the period of the change, if applicable

Prior period errorsPrior period errors are omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that has been obtained and taken into account in the preparation and presentation of those financial statements.

Material prior period errors, as required by HKAS 8, are to be corrected retrospectively by restating:• the comparative amounts for the prior period(s)

presented in which the error occurred; or• the opening balances of assets, liabilities and equity for

the earliest prior period presented, if the error occurred before the earliest prior period being presented.


17Learning Zone

This article discusses the evolution of information systems, levels of management decision-making

and information systems that enhance the value of information.

From EDP to MISUntil the 1960s, information systems were mainly used for electronic data processing (EDP) purposes. In the 1960s, management information systems (MIS) were born to focus on developing business applications that provided managerial end users with predefined management reports that would give managers the information they needed for decision-making purposes.

By the 1970s, decision support systems (DSS) were providing managerial end users with ad hoc and interactive support of their decision-making processes.

In the 1980s, most top executives did not directly use either the MIS reports or the analytical modelling capabilities of DSS, so the concept of executive information systems (EIS) was developed. Moreover, breakthroughs occurred in the development and application of artificial intelligence (AI) techniques to business information systems. Expert systems (ES) and other knowledge management systems (KMS) also forged a new role for information systems.

The mid- to late 1990s saw the revolutionary emergence of enterprise resource planning (ERP) systems. Their primary advantage lies in their common interface for all computer-based organizational functions and their tight integration and data sharing needed for flexible strategic decision making.


(Relevant to AAT Examination Paper 8: Principles of Auditing and Management Information Systems)David Chow FCCA, FCPA, CPA (Practising)

Evolution of Information Systems

From MIS to e-commerceThe Internet and related technologies and applications have changed the way of operating businesses and people work, and how information systems support business processes, decision-making and competitive advantage. Today many businesses are using Internet technologies to web-enable business processes and to create innovative e-business applications. The Internet, intranets and extranets have together become the primary information technology infrastructure that supports the e-business applications of many companies.

Levels of management decision-makingInformation systems can support a variety of management decision-making levels and decisions. These include the three levels of management activity: strategic management, tactical management and operational management.

Information systems that enhance the value of informationA data warehouse is a central source of the data that can be used by managers for data mining, online analytical processing and other forms of business analysis, market research and decision support.

In data mining, the data in a data warehouse are analyzed to reveal hidden patterns and trends in historical business activity. This can be used to help managers make decisions about strategic changes in business operations to gain competitive advantages in the marketplace.


18 Careers andLifestyle

History of successBack in the 1980s, when HKIAAT was still called the Hong Kong Association of Accounting Technicians, Tam first noted this professional body offering recognition to mid-level accounting personnel. At that time, C K Yau & Partners was growing. Today it is a CPA firm employing around 50 colleagues with businesses in both Hong Kong and in the mainland. Service offerings have been expanded to include auditing, taxation and business consultancy as market demand diversifies.

Proven to be differentTam welcomes students who are studying accounting to visit the company or work part-time there during the summer break on a regular basis. “We value the efforts of the passionate and diligent students who form part of our team and encourage them to attain a professional qualification like AAT,” says Tam. He explains that AAT students who have worked for the company always prove themselves to be capable in many ways.

While AAT examinations are more popular among sub-degree holders and people starting out their accounting studies, AAT qualification holders work impressively well in showing employers that they are different. According to Tam, “AAT graduates tend to be more diligent in absorbing new knowledge when compared with their


Employer in the spotlight –

Driving the industry forward

As a local CPA firm that has long been keen to offer internship opportunities to AAT students, C K Yau & Partners CPA

Ltd. has provided many great chances for AAT students to grow with the team. K T

Tam, the practising director of C K Yau & Partners CPA Ltd and W H Lam & Partners

CPA Ltd, talks about how different intakes of AAT students have formed the base of the team, and the benefits that employing these

students brings to the company and the industry in general.

By Aldric Chau

K T Tam

19Careers and

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counterparts.” He thinks that AAT students tend to be more spontaneous in acquiring knowledge because they have a stronger commitment to the accounting field and devote extra time and effort to preparing for the examinations. “The self-motivated AAT students concentrate more on practical application rather than textbook knowledge,” Tam says.

“We need people equipped with practical skills and that’s why we particularly welcome AAT graduates who want to join us. AATs pick up the jobs in the early stage of on-the-job training faster and more easily. In mid-sized CPA firms like ours, pragmatic staff like an AAT student plays an important role.”

AAT graduate Stephen, who does an incredible job at the company, gives Tam further confidence in the AAT workforce. Stephen first joined the company three years ago as an auditing assistant. “After Stephen passed the AAT examinations, he has become something of an expert in technical auditing standards,” Tam comments. He believes that studying for the AAT examinations, the auditing paper in particular, teaches students the essential knowledge they need to handle auditing tasks and answer clients’ inquiries. Tam has subsequently assigned more complicated auditing jobs to Stephen to enrich his experience.

It’s not enough for an auditor to have strong technical knowledge, however; they need to meet clients regularly. Tam appreciates the way Stephen has gained confidence from his dealings with clients, and is impressed with his mature communications skills in explaining accounting concepts to people who do not share his specialized knowledge. “The way in which AAT students are tested to communicate accounting theories in examinations works well in grooming people with both technical and soft skills, such as Stephen,” says Tam.


Since the firm has started to have a regular intake of AAT students, Tam has become more familiar with AAT examination syllabus and opportunities the qualification offers. He believes that the AAT qualification coverage is all encompassing, introducing students to different aspects of the profession while exposing them to specialized areas such as auditing. Tam explains that this is very important because colleagues with the AAT qualification have to monitor a lot of backend auditing procedures. Some of them even play a supportive role assisting accountants in managing auditing projects. Tam is an employer who places a high value on dialogue with his team. They arrange regular meetings whether through on-job training and briefings, or the annual performance review session. This employer is convinced that interaction and understanding are the key elements in forging a bond with his team. And it is during this feedback collection process that AATs can learn most from how their performance is evaluated.

Stay connected with marketTam encourages AAT students to keep up their good work and live up to their employers’ expectations. One way of achieving this is to stay vigilant to changes in the industry. Accounting standards and industrial norms often change; this was particularly the case after Hong Kong accounting standards converged with international ones in 2005. Tam recommends that AAT students keep their knowledge up to date by attending seminars and reading journals to gather the latest market intelligence.

“Stephen is growing fast with his willingness to learn, well-developed people skills and accounting knowledge from AAT qualification. I am looking forward to employing more valuable AAT graduates like Stephen in the future.”


Currently Stephen is serves his employer as a staff accountant level II, mainly dealing

with taxation services. His normal duties include preparing taxation reports, handling clients’ inquiries regarding tax issues and drafting audit reports. Apart from taxation, the company offers services such as accounting and company secretarial.

Combining knowledge and experienceStephen first joined the company as a part-time intern; he was later recruited as an audit assistant and then promoted to his current position. All these moves somehow took him by surprise. “I never imagined I would be taken on in the first place but just thought I should give it a go,” says Stephen, who applied for an internship while he was studying at the Hong Kong School of Commerce (HKSC).


Get on the fast track to successOffered a permanent contract after internship, given yearly promotions for the three years he has been with the company, bright plans for further study – AAT graduate Stephen Ho’s success came not from luck but from years of hard work, dedication and a professional qualification critical to his career. He talks about how he paved his path to success with the AAT qualification.

By Aldric Chau

Stephen HoVersatile AAT –

21Careers and

Lifestyle

Ho finished a diploma in accounting run by HKSC, which was a continuation of his accounting and business studies at secondary school. The course, combined with his on-the-job experience every weekend, allowed him to learn about accounting from both the theoretical and practical angle. But to excel, Stephen emphasises that a professional qualification is essential.

A well-trusted qualificationHe decided to study for the AAT qualification, as this came highly recommended by his teachers and friends who knew about the industry. With his diploma at HKSC, Stephen was exempt from five out of the eight papers. The di l igent s tudent handled the three remaining papers – law, auditing and taxation – extraordinarily well.

“I wouldn’t even have been interviewed for my job if I had not had the qualification,” Stephen says. He believes the AAT qualification helped him get his foot in the door. It’s also excellent preparation for the degree programme which he is going to start in a few months’ time. And, above all, he realised the qualification also boosts his confidence in handling his job.

During his transition from internship to permanent employment, the nature of his job, workload and expectations from Stephen’s co-workers and bosses changed. He felt that the knowledge he’d gained from studying for the AAT qualification helped him get through the changes. “The wide syllabus coverage meant that I got to know about every aspect of our firm’s services: I learnt about everything from accounting and auditing to company law within a short period of time in my studies.”


Graduated from F.7 2003

Diploma in Accounting – Hong Kong School of Commerce

2003 - 2005

Internship - C K Yau & Partners CPA Ltd

2004 - 2005

Undertook and passed Accredited Technician Examination (ATE) (with exemption from five papers)

2005

Higher Group Diploma (International Accounting) – Hong Kong School of Commerce

2005 - 2006

Audit Assistant/ Staff Accountant Level I / Staff Accountant Level II – C K Yau & Partners CPA Ltd

2006 - current

Practical skillsStephen recalls that there was a time when he was asked to prepare an audit report and calculate how much tax the client had to pay. The task was made complicated because interest income was involved and the deposit has to be taxed against the company’s loans instead of profits. He remembered a special rule he had learnt from the AAT syllabus and applied it on the spot – and of course did a beautiful job that impressed his employer a lot.

Whi l e Hong Kong s tuden t s f ace keen competition fighting for a place in tertiary institutions, Stephen’s inspiring story proves that there is always a way to get there as long as you are aware of what you are aiming for, and find the right path to follow. This go-getting accountant advises people sitting for AAT examinations to take it easy. The secret behind succeeding in the examination is first to digest the knowledge from various subjects, then to try to link them up with what you see at work. "That’s the best way to use the foundational knowledge you pick up from your AAT qualification studies,” Stephen concludes.

Study & Career Path of Stephen Ho



At midnight Friday, it’s so quiet out there. While many people are already asleep and

dreaming, Richard Ng is still not home. He is an interior designer and a café owner, and is not really a night owl, but he manages to stay up late for a special date, every Friday night.

The voluntary “night-goer”It’s a date with a group of young night drifters at the “Youth Night Carnival” held in the Tseung Kwan O Stadium where they can speak their minds, and to play sports and healthy games together. Richard, one of the voluntary mentors of the Path Builders, a youth care initiative launched by the Government and the Action Committee Against Narcotics (ACAN), meets these youngsters every Friday night.

In many people’s eyes, the term “young drifter” is synonymous with the term troublemaker or even drug abuser. Richard disagrees, saying, “They are indeed no different from ordinary teenagers. With pictures of teens taking drugs or bullying in your head, you may not be able to imagine that they play basketball and aeroplane chess with me, but they do! Sometimes they misbehave just because they think nobody cares about them.”

Richard feels sad to see these young people, who we call at-risk teens, being labeled by the public. “We shouldn’t do that. If we really want to help them, we should try to understand them, show our care and give them support. All they want is our attention and concern. They just want us to know that they’re here.”

That’s why Richard insists on meeting these youngsters every Friday night, no matter how tired he is after a week’s work. “I have to listen to their voices, and let them know they matter, that they are somebody,” he continues.

Saturday morning sunshine gently wakes the world. At a time when most people are still in their beds, Richard is already up and about, ready to immerse himself in his work. Since he devotes most of his spare time to voluntary work, he almost has no private time for himself. What an iron man! But, is it worth it? What makes him choose to lead his life this way?

Beacon for those led the astrayA not-so-ordinary hero makes his mark in volunteeringBy Isabella Lam

Richard at the award presentation ceremony for the “Path Builders Exemplary Award”.

23Careers and

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About Path Builders“Path Builders” is a programme launched by the Narcotics Division and the Action Committee Against Narcotics (ACAN) in 2008 with a view to encouraging the community to play a part in order to help our young people. Participants of the programme may be individual, corporations or volunteer groups. They may take part in the programme by designing their own activities or initiatives including, but not limited to, becoming a mentor to the vulnerable youth, organising seminars for staff members, providing internship or vocational training opportunities to young people or providing financial support to anti-drug establishments or activities.

Everyone can join the Path Builders by completing the registration form on Narcotics Division’s website at: http://www.nd.gov.hk/Path_Builders/en/contactus/index.html

A burning sense of missionAccording to Richard, all that began more than ten years ago, when he was very much impressed by a radio show called “The Dipper” that explored teenage problems in Hong Kong. After listening to this, he then participated in a youth-at-risk probation scheme launched by the Social Welfare Department.

“I was convinced that the public’s indifference to those who are led astray only makes things worse. The group of troubled teens has long been pushed to one side and largely overlooked by the masses. Why are they being made to think there’s no love in this world, and taught to so be cynical about everything? There should be someone helping to get them back on the right track, and I hope with my limited power I can do all that I can to help these lost souls find their way.”

This has been Richard’s attitude right from the start. It is also the source of his perseverance and enthusiasm for the harsh yet meaningful mission that broadens his horizons, enables him to meet people from all walks of life, and motivates him to contribute more to our society.

When it comes to the prevalence of teenage drug abuse, Richard highlights the importance of social support, communication and care. In the meantime, he encourages teenagers to take up voluntary work, which he says can help them

develop positive values and can prevent them from being led astray.

“Nowadays, many teenagers sit in front of the computer all the time, and are isolated from the real world. It’d be great if these tech-addled teens can benefit from being volunteers, getting positive messages from the meaningful work.”

Richard also urges the public to discard their prejudices. “We need the whole community’s support to get things done. To foster a drug-free and caring culture, everyone should take part.”

With his years of dedication to troubled teens, Richard has recently been selected as one of the winners of the "Path Builders Exemplary Award". “I hope that more youngsters will benefit from Path Builders and build their own path to a bright future,” he concludes.

Richard and other volunteers meet teenagers at the mentor activity “Youth Night Carnival” late every Friday night.


We discussed the Enneagram framework in the last issue. The nine personality

types are further divided into three subgroups: Heart (2, 3 & 4) Head (5, 6 & 7) and Gut (8, 9 & 1). In this issue, we examine the Heart Types.

The scenarioElton, an accountant working under accounting manager Dionne, has an accounting supervisor Faye reporting to him on payables and receivables. He focuses on monthly accounts and cost analysis. Dionne has high expectations of Elton. Business has not been good and everyone is concerned about the consequences of this.

The managerDionne is very efficient and demands the same from her team. She is a “3, winged 4” an achiever, with a strong “romantic” inclination*. She is creative when analysing data and this is helpful in situations that call for her creativity to help make successful business strategies. Face is extremely important to her. She feels the need to


The Heart Types –

2, 3 & 4 of EnneagramBy William Tong

look smart by having answers ready at every business meeting. She requires Elton to “think” and provide her with the answers to questions that the general manager might ask in meetings. The annual budgeting adds to Elton’s stress. Dionne has a fabulous private life. She likes hanging out with friends and boasts about her successes. She

leaves the office every day soon after the official hour ends. She is carefully making her way towards financial controllership. Her efficiency and creativity are her trump cards.

The accountantElton is a very kind person. He is a “2, winged 1” helper, with strong principles. He likes helping people and justifies this helping attitude with his belief that help will be reciprocated somehow. He will therefore go out of his way to help others, including Dionne and Faye. He has a heavy work load; his monthly financial reporting schedule includes preparing a full set of accounts, estimating sales mid-month, and calculating key performance indices at the beginning of the month. He is also required by Dionne to upgrade the reporting format, and recommend new

「知彼知己，百戰不殆」《孫子兵法》“If you know your enemies and know yourself, you can win a hundred

battles without a single loss.” Art of War, by Sun Tzu

25Careers and

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accounting software. For the past six months, Elton has not been home for dinner during the week. Overtime is a preoccupation for him. He is not spending time with his girlfriend, whom he plans to marry soon.

The supervisorFaye is hard working, quiet and stays until very late to finish her work. She is a “4, winged 5”, a quiet romantic observer. Debt collection is becoming more difficult for her as business has slowed down. Life is harsh and she has no time to rest properly. She often stays late at work at the expense of spending time with her boyfriend because she cannot afford to spend time with him. She has recently been crying a lot and making mistakes – signs of stress and of being burnt out.

The dynamicsThe interpersonal dynamic is complex. Elton is sympathetic to Faye, accommodates her mistakes and takes time to help her handle difficult debt collections. He has been unhappy lately with Dionne’s harsh attitude – that she does not understand his problems and persistently presses him to provide analyses that are often not called for but serve only as extras that Dionne can take credit for. He feels that Dionne takes advantage of him and his team for her own benefit. Dionne feels that Elton and his team are not competent. She cannot understand why people work so slowly and carelessly. Faye feels uncared for, and that she is being used like a machine. Although Elton offers help often, Faye is worried about accepting this and risking her relationship with her boyfriend if she is seen as being too close to Elton.

The solutionThese three persons are in the Heart Type. They operate by using their “heart”, but with a different orientation. Being in the same group does not make the solution simple, straightforward and easy. A convenient starting point to resolve the entanglement would be to understand the motivation of these personalities. People pick their survival strategies unconsciously at a very young age and


that makes it hard to abandon them and form replacement strategies. It makes better sense to fine-tune instead. The solution comes when we demonstrate respect and openness to recognize that we all are on our journey to fine-tuning.

The gist of the problem lies in too narrow a focus on just one worldview, the inability to recognize inclusive possibilities, and the fear of accepting a possibility of fine-tuning for the better. Without external intervention, say from an executive coach, the resolution to the situation would have to rely solely on the emergence of an environment conducive to open communication so that expectations can be better managed. Every one may feel respected and motivated to work closely together as a team in a psychologically healthier workplace.

The solution comes from knowing the characteristics of Enneagram types so that we can be more accommodating of others and better able to adjust ourselves for the common good. Dionne the competitor needs to broaden her perspective to include her team and help Elton and Faye to be more effective. Elton needs to put a check on his helpfulness such that he can unleash Faye’s potential instead of doing her job. Faye needs to realize that she is responsible for her happiness rather than relying on others to care for her. Such realizations will naturally be followed by more appropriate actions to correct the situation.

* For the typology explanation, please refer to the T/Dialogue July 2009 issue.

William Tong is a professional accountant. He specializes in executive coaching and training in management soft skills. His expertise includes strategic planning, setting goals, and making things happen. He delivers cultural changes and helps people to excel in life. He can be reached at [email protected]


It takes all kinds of people to make the world go roundWe go through our working lives preferring to work with some kinds of people, while at the same time not being too keen to work with certain others. If we reflect on the reasons for these differing reactions, personality clashes come into mind.

It takes all kinds of people to make the world go round; in other words our world is full of people with different personalities, making human interactions complex and interesting. Factors influencing our make-upWe are all individuals. Each of us is different from one another. And yet, we do have certain things in common. An individual’s personality is both a consequence of their basic nature and subsequent development.

Right brain – left brainPeople who have a knack (aptitude) for numbers, are analytical, strong in logic, and inclined to be detailed-oriented are more predisposed to using the left hemisphere of the brain. Right brain people are often creative, able to conceptualize, and are more inclined to view things from a big picture, holistic perspective. Some people are very at home with being creative while at the same time being analytical and detailed oriented, indicating an ability to use and integrate both hemispheres

well. The great scientist, Edison, couldn’t have invented so many things had he not been creative, analytical and detailed- minded; after all, scientific experiments are detailed and laborious.

Whi le ind iv idua ls may have a cer ta in predisposed preference, it is important to recognize that latter day developments are equally important in shaping our character.

Extrovert – introvertThe person within you may be an extrovert or an introvert. An extrovert tends to be more open, more willing to communicate and perhaps more sociable. An introvert, on the other hand, is shy, is more reserved and restrained, and is quite happy working on his/her own. However, an extrovert is not necessarily a good communicator and there’s no reason to think that an introvert cannot communicate well. Communication is a learned skill. We learned how to communicate through socialization. Thus, while a person may be more introverted by nature, it is possible for them to learn to be more extroverted through learning socialization and communication skills. One’s behaviours do not necessarily reflect one’s innate preference, as skills can be learned.


Understanding People’s Make-up to Manage Working Relationships-including the one with your bossBy Weelan Ho

27Careers and

Lifestyle


The senses: auditory, visual, kinaestheticThe senses inf luence how one absorbs information and this has implications on the way one learns, works and interacts. A person who is visual absorbs and retains information best by using their eyes to look. An audio person learns through listening to the words. People who are kinaesthetically or movement-and-feeling oriented learn and absorb best through a hands-on approach, through doing. Understanding senses and using the appropriate approach is crucial to working with people.

Thinking - feelingThe thinking person can be more detached, rational, outcome-oriented and sometimes more cautious. The feeling person is more prone to exhibit emotions, can be impulsive, and prefers to talk through issues. For this kind of person, the process of discussions is as important, if not more important, than the outcome.

Implications for managing your bossObserving and understanding individual preferences help us formulate an appropriate work approach, making our interactions and working life easier; at the very least, it reduces the level of corrections and rework needed. Below are two examples used to demonstrate approaches used to manage a working relationship with a boss.

Example 1You have a boss who is a “left-brainer”: very detailed oriented, not a big picture person, absorbs information better through visual means and is impatient to take time to look through information.

Work approachThe best approach is to prepare a succinct write-up that highlights the issues, complications, questions and answers (solutions) with detail support attached in the appendix as a reference. You should include the relevant visuals for easy reading and understanding. If possible and if required, try to set a time in order to give a 10 minute briefing to the boss to keep him/her updated of the issues and progress. Most bosses like to feel in control, and would not appreciate being left out – or feeling as if they are being left out.

Example 2You have a boss who is a big picture guy: perhaps creative, but rather disorganized, and who enjoys talking through the subject matter.

Work approachIt is still good discipline to have a short and succinct write-up with the necessary visuals, but this need not be too detailed as your boss would not be interested in details. The short and succinct report serves as a structured note


(or reminder) in case the boss looses information along the way, since he is rather disorganized. You will need to discuss it through as this is the way he relates to best.

Compare, contrast and generalizationThe boss in example 1 wants to have information in order to feel in control, while the boss in example 2 wants to talk through the details in order to feel in control. The time taken to research and understand the ground work should be similar for both approaches. But it would take

more time to prepare a detailed report for the appendix needed in example 1.

The rationales behind the two approaches above apply

to other situations and can be generalized and adapted to working with peers.

In summary, understanding people’s personality and preferences, formulating an appropriate work approach, and being skilful in responding to people’s needs, are fundamental to managing effective working relationships.

Beware! Holding on to a “That’s me – I am born that way” mentality makes life difficult and tiresome for us. We need to learn to work with all kinds of people, particularly our boss. Usually we have to accommodate the boss, rather than the other way around. This is not to say that we “suck up” to the boss, but rather, that our boss has overall accountability and should therefore have the final say in how they want to receive information and ideas from us.

Weelan Ho is Principal of PGA Consulting Limited, Consulting Advisor to MR-Asian Consulting Limited, and Director of Ascent Global Service Pty Ltd (Australia). For more information, visit www.pgaconsulting.com.

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