CPDget verifiable cpd units by reading technical articles

ABSG SG.A

B a

cc

ou

ntin

g a

nd

bu

sine

ss 07

/20

12

the magazine for business and finance professionals accounting and business singapore 07/2012

WhAt lieS AheAD?acca conferences: the economy discussed

tAlk iS GooD acca/Kpmg report: improving investor relations

Careers tips to stay stress-freePraCtiCe the lure of virtual firmsintroverts not loud, just proud

ChAnCe for StArDom

supporting growth in singapore’s film industry

Al Gore’S 2020 viSion corporate reporting and sustainable capitalism

interview dr andreas raharso, hay groupeurozone assessing software risKteChniCal ifrs amendments

SG_cover.indd 1 15/06/2012 11:59

ACCA (Trim:192x260mm/Bleed:198x266mm)Ads-JulyAug12.indd 4 12/06/2012 15:11 Ads-JulyAug12.indd 5 12/06/2012 15:11AP_covers_JulyAug12.indd 1 15/06/2012 12:37

Memory loss is not usually something to be celebrated – however, the Hay Group’s Dr Andreas Raharso is advising fi nance professionals to ‘unlearn’ the old ways of doing business in order to be better innovators. See page 12

ANIMATED TRANSFORMATIONIn an attempt to spur growth and transform its image as a vibrant arts and cultural hub, Singapore has been investing in the film industry.

The city-state’s film and animation sector – while still in its infancy compared with the more mature markets of Hong Kong and Malaysia – is starting to get some traction. According to a study commissioned by the Media Development Authority (MDA) and conducted by the Asia Competitiveness Institute LKY-NUS, the sector contributed S$660m in revenue in 2010 and employed over 4,400 workers, up 19.5% on the previous year. The value-added contribution of the sector to the economy was estimated at S$210m.

Our cover story on page 16 looks at the complexities of developing the local industry, especially in terms of exploring the various revenue channels to sustain future growth. While local film productions have not done particularly well internationally, Singapore has succeeded in the world of animation.

The local animation industry was spurred on by the arrival of Lucasfilm, which opened a digital studio in Singapore in 2005. Today, there are more than 40 animation and special effects companies in Singapore, up from less than 10 in 2003.

Whether film or animation, local productions are still relying heavily on co-financing and/or grants from the MDA. It has co-invested a total of S$109m with the local industry since 2003 to undertake a total of 253 projects in film and television. This generated an additional S$320m of non-MDA funding, of which 67% came from overseas. The MDA has also made a broad shift since last September in its funding model, from co-investing to grants, largely driven by economic logic to sustain growth in the media sector through increased productivity.

On a separate note, Wilson Woo has taken over as branch president of ACCA Singapore. We extend our warmest welcome and his first column can be found on page 65.

Sumathi Bala, abeditor@accaglobal.com

TOWARDS TRUTHThe former US vice president, Al Gore, on ways to accelerate the transition towards sustainable capitalism by 2020.Page 24

DOMINO EFFECTA break-up of the eurozone could well have an impact on business systems – but with so much uncertainty risk-assessment is no easy feat. Page 28

ACCOUNTING FOR THE FUTURE

Join ACCA for a one-week live and on-demand event from 8 to 12 October. Topics will include sustainability, investors, corporate reporting and risk management. www.accaglobal.com/accountingforthefuture

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

3Editor’s choice

SG_B_Edletter.indd 3 15/06/2012 12:13

Audit period July 2009 to June 2010138,255

Features12 Learn to ‘unlearn’Business should break free from outdated thinking, says the Hay Group’s Dr Andreas Raharso

16 The bigger picture Singapore must invest in its burgeoning fi lm industry

20 Long-distance eventInternational sports fi xtures can be lucrative for host nations – if they’re well organised

22 Costing the earth The recent Earth Summit in Rio highlighted the key role of business in sustainability

24 A question of integration Compulsory integrated reporting is vital for sustainable capitalism, says former US vice president Al Gore

28 Business as usual? The fate of the eurozone will have a major impact on business systems globally

VOLUME 15 ISSUE 7

Asia editor Colette Steckelcolette.steckel@accaglobal.com +44 (0)20 7059 5896

Editor-in-chief Chris Quickchris.quick@accaglobal.com +44 (0)20 7059 5966

International editor Lesley Boltonlesley.bolton@accaglobal.com +44 (0)20 7059 5965

Singapore editor Sumathi Balaabeditor@accaglobal.com

Chief sub-editor Eva Peaty

Sub-editors Dean Gurden, Peter Kernan, Vivienne Riddoch

Design manager Jackie Dollar

Designers Robert Mills, Jane C Reid

Production manager Anthony Kay

Advertising James Fraserjfraser@educate-direct.com +44 (0)20 7902 1210

Head of publishing Adam Williams

Printing Times Printers

Pictures Corbis

ACCAPresident Dean Westcott FCCADeputy president Barry Cooper FCCAVice president Martin Turner FCCAChief executive Helen Brand OBE

ACCA Connectmembers@accaglobal.com +44 (0)141 582 2000

ACCA Singapore435 Orchard Road#15-04/05 Wisma AtriaSingapore 238877+65 6734 8110 info@sg.accaglobal.com

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 Certifi ed Accountant (Publications) Ltd, a subsidiary of the Association of Chartered Certifi ed Accountants.

29 Lincoln’s Inn FieldsLondon, WC2A 3EE, UK+44 (0) 20 7059 5000

www.accaglobal.com

AB SINGAPORE EDITIONCONTENTSJULY/AUGUST 2012

SG_Contents.indd 4 15/06/2012 14:49

TECHNICAL46 Update The latest from the standard-setters

48 CPD: IFRS amendments A guide to keeping on top of the changes

51 Strategy Our new series aims to make strategy work for you

54 Accounting solutions PwC experts answer questions on business combinations, goodwill and related party disclosures

BRIEFING06 News in pictures A different view of recent headlines

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

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

VIEWPOINT30 Errol Oh Three (quiet) cheers for introverts

32 Cesar Bacani Finance teams need to re-engage with their analytical skills

40 Dean Westcott It’s time the world woke up to Africa’s economy, says the ACCA president

33 CORPORATE33 The view from Marilyn Cheung of ikindof.com, plus news in brief

34 Taxing times A roundtable hosted by Accounting and Business and Thomson Reuters looks to the future

38 Fair share Companies are not making the most of what outsourcing has to offer

41 PRACTICE41 The view from Sajjad Akhtar of PKF-CAP, plus news in brief

42 Virtual reality The rise of the online accountant presents exciting opportunities

Regulars

CPDAccounting and Business is a rich source of CPD. If you read it to keep yourself up to date, it will contribute to your non-verifi able CPD. If you read an article, learn something new and apply that learning in some way, it will contribute to your verifi able 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 verifi able CPD. One hour of learning equates to one unit of CPD. For more, go to www.accaglobal.com/members/cpd

Your sector

WorldwideThere are six different versions of Accounting and Business: China, Ireland, International, Malaysia, Singapore and UK. See them all at www.accaglobal.com/ab

ACCA NEWS55 CPD Become a workplace mentor

60 Investor relations Companies must communicate more effectively, fi nds a new study by ACCA and KPMG

62 Brave new world An uncertain future was the focus of the ACCA Singapore Annual Conference

64 Work in progress Female representation on boards is still lagging behind, fi nds the Singapore Board Diversity Report 2011

65 Wilson Woo Sport and accountancy have more in common than you might think, says the new ACCA Singapore branch president

66 News Student numbers increase and online customer satisfaction grows

CAREERS56 Get happy! Feeling stressed? Help is at hand with our top tips

A guide to

SG_Contents.indd 5 15/06/2012 14:50

01A bird flies past as Venus crosses

between the Earth and the Sun, viewed from Beijing on 6 June. The planetary transit will not occur again until 2117

02 CEO of new no-frills airline

Scoot, Campbell Wilson (right), poses with his team after announcing the launch of the company, a subsidiary of Singapore Airlines

03 Shanshan Feng of Guangzhou

became the first-ever golfer from mainland China to win a major event, after winning the the LPGA championship

News in pictures6

AP_B_newsinpix.indd 6 14/06/2012 14:55

04 Singapore’s iconic Merlion

went under wraps on 15 June to allow its 40th birthday makeover to take place. The statue will be unveiled on 15 September after a thorough clean-up

05 Rock star and human rights

campaigner Bono was due to present Myanmar opposition leader Aung San Suu Kyi with Amnesty International’s Ambassador of Conscience award on 18 June in Ireland, during her first international tour in 24 years

06 A £400m bid by Malaysian

companies SP Setia and Sime Darby beat off challenges from 14 other bidders, including Chelsea Football Club, for the rights to London’s Battersea Power Station

07 Protesters in Barcelona

used pots and pans to demonstrate against the Spanish government’s agreement of a €100bn bailout of its banks by other eurozone countries

7

AP_B_newsinpix.indd 7 14/06/2012 14:56

1,432411345270200

14.3%11.8%5.0%3.6%3.2%

HOPE GROWS THAT GOOD TIMES ARE IN SIGHTCFOs in Singapore are still cautiously optimistic about economic growth prospects, with nearly half (47%) of them saying they expect to see economic expansion in the city-state next year. Sentiment among CFOs in many other Asia Pacific countries was even more positive, according to Global Business and Spending Monitor 2012. This fifth instalment of American Express/CFO Research’s global survey captured the views of 541 senior finance executives. Three-quarters (74%) of Singapore CFOs say they anticipate Singapore probably returning to robust economic growth in the third and fourth quarters of 2012.

ASIA PACIFIC RICHER THAN EUROPE BY 2016By 2016, the Asia Pacific region (excluding Japan) should eclipse both Western and Eastern Europe combined in wealth terms, according to Boston Consulting Group’s (BCG) Global Wealth 2012 report. Wealth in the region is expected to continue growing by double digits annually, with a projected compound annual growth rate of 11.1%, reaching US$40.1 trillion by the end of 2016. These gains, according to the report, should be driven largely by sustained GDP growth in China and India and overall stronger stock market performance.

The growth in wealth is reflected in an increasing number of millionaires in the region. While the number of millionaire households decreased by a combined 182,000 in the US and Japan last year, globally the number grew by 175,000, predominantly in developing countries, and China and India in particular.

The total number of millionaire households reached 12.6 million by the end of 2011, making up about 0.9% of the households in the BCG sample.

Singaporeans are richer than Qataris or Swiss, in terms of millionaire density.

53%The number of CEOs who see lack of skills as a major challenge, according to a PwC talent survey.

14THMalaysia’s ranking in the league of most competitive economies in the world.

HK$15BNAnnual tax take generated by Hong Kong Jockey Club.

21.3%The month of May saw GM China post a new record rise in car sales.

Mon

th

in fi

gur

es

CHINAUKGERMANYITALYFRANCE

QATARKUWAITUAEISRAELBAHRAIN

HOUSEHOLDS (000s) HOUSEHOLDS (%)

MILLIONAIRE COUNT CONTINUES TO RISE

AUSTRALIA

SINGAPORE

JAPAN

U

NITED STA

TES

IN

DIA

36%

47%

69% 78%

86%

5,134

1,587

3224.3%

9.5%

8.8%

2.9%

3.2%

5,1345,134US

1,5871,5871,587Japan

322Switzerland

Singapore

3.2%Taiwan

8.8%8.8%8.8%8.8%8.8%8.8%Hong Kong

SingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingapore188

TaiwanTaiwan246

SingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingapore

17.1%

Hong Kong212

News in graphics8

AP_B_graphics_08.indd 8 14/06/2012 14:55

81%Japan

23%China

49%United States

11%UnitedKingdom

25%Canada

35%Hong Kong

51%Bulgaria

2%Ireland

14%Czech

Republic

37%Singapore

50%Australia

34%Hungary

FISHING FOR TALENTAs the graphic shows, a substantial proportion of employers around the globe identify a lack of available skilled talent as a continuing drag on business performance. The global average is 34%.

According to ManpowerGroup’s 2012 talent shortage survey, shortages are most acute in Asia Pacific, particularly in Japan, where an ageing workforce exacerbates the problem. Surprisingly, despite the ongoing acute level of talent shortages, employers express notably less concern than they did last year about the impact that shortages have on key stakeholders such as customers and investors – perhaps representing a new normal. Accounting and finance staff ranked sixth in the top 10 jobs that employers are finding difficulty in filling.

Mon

th

in fi

gur

es

9

45%Almost half of financial institutions surveyed by consulting firm Protiviti say that extraterritorial compliance (such as FATCA, Dodd-Frank, Sarbanes-Oxley and Solvency II) now accounts for between 10% and 25% of their compliance budget.

WHO’S KING OF THE COMPETITIVE HEAP?IMD’s world competitiveness rankings for 2012 show the continuing power of the US, and success for the fiscally disciplined European economies of Switzerland, Sweden and Germany. Also clear is the inability of emerging economies to escape the turmoil elsewhere: mainland China, India and Brazil all fell back (to 23rd, 35th and 46th respectively), while Russia moved up just one place to 48th.

1 HONG KONG (1)

2 US (1)

3 SWITZERLAND (5)

4 SINGAPORE (3)

5 SWEDEN (4)

6 CANADA (7)

7 TAIWAN (6)

8 NORWAY (13)

9 GERMANY (10)

10 QATAR (8)

11 NETHERLANDS (14)

12 LUXEMBOURG (11)

13 DENMARK (12)

14 MALAYSIA (16)

15 AUSTRALIA (9)

16 UAE (28)

17 FINLAND (15)

18 UK (20)

INT_B_graphics_09.indd 9 14/06/2012 15:10

BRAKES ON ASIAN IPOS Motorsport company Formula One has delayed its Singapore initial public offering (IPO), worth up to US$3bn. This was the fifth big Asian IPO to be postponed or pulled in a week, as weak markets brought the global market for new listings to a halt. Worldwide, money raised from stock market flotations has slumped 46% so far this year compared with the same period in 2011, with investors wary of the eurozone crisis, China’s economic slowdown and the botched Facebook IPO.

NOT PLAYING BALLThe High Court has ordered Hong Kong businessman Carson Yeung Ka-sing, owner of England’s Birmingham City Football Club, to vacate and hand over a HK$300m property on The Peak to a bank within 56 days after he failed to repay a loan. The court heard the tycoon mortgaged his luxury house to Wing Hang Bank in 2010 for HK$50m – and was unable to repay the loan after his assets were frozen. Yeung, charged with involvement in a HK$700m money-laundering case, is due to appear in court in November, The Standard reported. Yeung’s lawyers have previously told media that their client intends to plead not guilty.

HK STUDENTS WIN KPMG TITLEA team of four students from The University of Hong Kong won the 2012 KPMG International Case Competition, beating teams from Spain, Sweden and Vietnam. It was the first time the event was hosted in Asia. The challenge, a global student recruitment initiative, drew some 6,000 students from over 300 universities in 24 countries to compete against each other, developing solutions to realistic business scenarios.

OLYMPICS PUTS UK ON MAPMiddle-class consumers from China and India are more likely to want to visit Britain as a result of publicity surrounding the Olympic Games, a Deloitte survey has found. More than 60% of respondents said they would buy more British products, and 77% want to learn more about the UK. Graham Pickett, head of travel, hospitality and leisure at Deloitte, said: ‘London 2012 clearly provides a direct opportunity for consumer businesses. However, the potential is there for a longer-term benefit too.’

LISTING RULES SET TO TIGHTENAfter completing their respective public opinion surveys on drafts of new delisting requirements, the Shanghai

and Shenzhen stock markets are due to enforce stricter rules for listed companies. The moves are aimed at improving market fairness. ‘The new rules aim to improve the quality of listed companies and strengthen protection for investors. But for them to be effective, there should be not only stricter supervision by the regulators, but also more supervision from the public and more involvement by the media,’ said Li Yongsen, a researcher at Renmin University of China’s Financial and Securities Institute.

MALAYSIA REINS IN DEBTMalaysia’s national debt will not exceed 55% of gross domestic product as part of prudent financial management policy, prime minister Najib Razak said at the opening of the Invest Malaysia 2012 conference. The government has also taken steps to reduce its fiscal debt in line with its commitment to ensure further growth, he said. Five new initiatives were announced to spearhead growth, especially in capital market development. The focus will be on small and medium-sized businesses, marketplace innovation and the development of new talent.

CHINA CONSIDERS GREEN POLICYChina is considering imposing a consumption tax on high-polluting, high-resource consuming products, according to sources close to the Ministry of Environment Protection. An unnamed official has told media that ‘green tax reform’ is one of eight measures being mooted during the 12th Five-Year Plan period (2011–15) to promote a greener economy. He said banks should also adopt a green credit policy to give favourable loans to green enterprises and limit credit access to high-polluting and high resource consuming enterprises.

AUSTRALIAN GROWTH RATE SOARSAustralia’s economy has ‘gone into overdrive’ as consumers spend large amounts on discounted retail goods and business investment soars. Treasurer Wayne Swan described the annual growth rate of 4.3%, the fastest

BIG FOUR UPBEAT ON CHINAPwC and Deloitte have reaffirmed their commitment to China. PwC chairman Dennis Nally said the firm will continue to expand its business in China, as it is positive about the country’s economic outlook.

‘We see two opportunities for PwC in China. One is to continue to help multinational companies to invest in China,’ Nally said. ‘Secondly, as Chinese companies continue to develop, helping them to go into new markets and understand local customs, rules, regulations.’

Deloitte CEO Barry Salzberg noted the ‘great opportunity’ China offers. Over the next three years, Deloitte is investing a fifth of its total expansion capital (US$750m) in China alone.

Deloitte CEO Barry Salzberg

10 News round-up

AP_B_newsroundup.indd 10 14/06/2012 14:54

P22

in four years, as ‘stunning’. ‘These figures send the loudest possible message to the world that Australia is the strongest performing developed economy, bar none,’ he said.

BANKS CALLED TO INNOVATEThe rapid growth of the Chinese banking industry may be hard to sustain due to the slowdown of the national economy, steady advances in market-oriented interest rate reform and tightened capital restrictions, an Ernst & Young report, 2011 Review of China’s Listed Banks and Outlook, has found. It concluded that Chinese banks must make it a top priority to change patterns of development, promote business transformation and offer diversified banking services to meet the needs of the real economy.

LAW SIGNALS END OF JVSGlobal audit firms in China would be required to take on more local hires under new regulation announced by the Ministry of Finance. The change means only partners with local qualifications will be eligible for top positions. The Big Four were among the first foreign accounting firms to set up joint ventures in China in 1992. Paul Gillis, an accounting professor at Peking University’s Guanghua School of Management, said that the phase-in period for the new rules (up to March 2018 in some cases) would give the firms plenty of time to adjust.

SECOND TAX PILOT ANNOUNCEDBeijing has announced a pilot programme to replace turnover tax with value added tax, to accelerate structural adjustments in the economy. The capital will be the second trial zone after Shanghai, and also focuses on the transport and service industries. A rate of 11% may be approved for the transport business while most modern service companies are likely to pay 6%. The government has vowed to accelerate the expansion of tax reform. So far, 10 provinces and cities have applied to do so, including Tianjin, Chongqing, Jiangsu and Fujian.

MORE WORKERS TO GO MOBILEForty per cent of the workforce in Asia Pacific excluding Japan (or 838.7 million employees), will be mobile workers by 2015, according to a report by the International Data Corporation. The report defines office-based mobile workers as those who spend most of their time in the company-provided office but who also sometimes work at home or in a third place. Tim Dillon,

IDC’s associate vice-president for Asia Pacific end-user and mobility research, said: ‘The convergence of devices, networks and applications has changed the expectation of any time, any device, anywhere.’

INVESTORS PART OF SUPER-RICHBusiness owners, real estate investors and professional investors are the wealthiest people in Shanghai, according to the Shanghai Wealth Report 2012, published by Hurun Report and the Australia-based independent financial adviser Gao Fu Wealth Management. The report found 370,000 people with 6 million

yuan (US$950,000) living in Shanghai today, or one in 65 people in a city with a population of 23 million. A total of 140,000 people in Shanghai have personal assets of 10 million yuan, an increase of 6.1% on last year, accounting for 13.7% of China’s high net worth individuals. Of the 8,200 ‘super-rich’ individuals in Shanghai, with assets worth 100 million yuan, 75% are business owners. Real-

estate investors account for 15%, and professional investors 10%.

CYBERCRIME ON THE RISECybercrime has risen over the last year to become the second most commonly reported economic crime affecting companies in the financial services sector, after asset misappropriation, which remains the most popular way of defrauding an organisation, according to PwC. ‘Recent cyber attacks have highlighted the risk to companies, with organisations having sensitive information assets damaged and/ or stolen,’ said Samuel Sinn, PwC China’s risk and controls solutions partner.

TARGETS PUT ETHICS AT RISKPressure to meet revenue growth is undermining senior executives’ commitment to compliance with policies and laws, according to Ernst & Young’s 2012 Global Fraud Survey, Growing Beyond: A Place for Integrity.

Close to half (48%) of Singapore respondents said that entertainment can be justified to win or retain business – a sharp increase from the 2% in 2010. Other ‘worrying signs’ include an increase in the number who stated that cash payments (20%, up from 12% in 2010) and personal gifts (12%, up from 2% in 2010) can be justified to win or retain business.

And while bribery does not appear to be as widespread in Singapore as elsewhere, the willingness of respondents to pay bribes or misstate financial performance for their business to survive the economic downturn has increased since 2010.

11AnalysisCARNIVAL OF IDEASThe Earth Summit in Rio highlighted that a responsible approach to sustainability is in the long-term interests of companies and their shareholders – and integrating material sustainability information into corporate reports should be key.

AP_B_newsroundup.indd 11 14/06/2012 14:54

Dr Andreas Raharso, director of the Hay Group’s global R&D centre for strategy execution in Singapore, is an

intellectual who does his best work away from the office. It is rare for him to arrive at his Keppel Towers base before noon – typically, he spends his mornings in a quiet place far from everyday distractions, getting his thoughts in order.

‘Creativity depends on being able to find peace and quiet,’ says the former dean of Binus Business School at Bina Nusantara University in Jakarta, who

does not carry a smartphone because he finds the multiple functions too distracting. ‘When you are constantly attending to operational details, you have no time to follow your ideas and think deeply about them.’

Some of the ideas he is working on certainly require deep thought. For example, the current focus of his research is the model of urban centres as the best target for companies seeking growth (see box, below). He is also examining the growing trend of ‘hollow’ organisations [that outsource many functions], which are now

having a profound impact on the way human capital is managed. And he is continually expanding on one of his favourite concepts, unlearning as the basis of innovation.

Unlearning in particular may sound counter-intuitive, but the whole point of it, says Raharso, is to replace an outmoded idea with something more appropriate to the time and situation.

‘The ability to win – the ability to innovate – depends on how good you are at forgetting, unlearning,’ he explains. ‘Today, things are changing so quickly that business models need to be replaced; forgotten; unlearned. But people are not doing this. You cannot blame them. Unlearning things is not natural to us. It is a human defence mechanism: people don’t like change.’

Impact on financeAversion to change, says Raharso, is a problem common to every sector – including finance. Many professionals in these fields, he suspects, are still clinging to their old job scopes despite the upheaval in the global economy and the increasing signs that these sectors need an overhaul.

‘There is a big debate in the finance communities about whether things are business as usual or whether there should be a complete change. And this is affected by where in the world you are standing. The closer you are to Wall Street, the greater is the pressure

THE VIRTUE OF FORGETFULNESSMany companies and fi nance communities are clinging on to old ways of doing things – when they should be ‘unlearning’ to get ahead, says the Hay Group’s Dr Andreas Raharso

‘Right now, every company is trying to be more competitive, and for that, they need a good strategy,’ says Dr Andreas Raharso. The question is how to design that strategy – typically, they tailor their strategy to the country in which they want to compete, be it Indonesia, Malaysia, China or Latin America. But this, he feels, is not correct.

‘In a lot of parts of Indonesia, there is no growth at all. In a lot of parts of China, you don’t want to be there – it’s a desert. They should not chase the whole country. Five years ago, companies started going for the cities, because that is where all the growth is coming from. For example, Paris controls about 5% of French gross domestic product (GDP); Bangkok controls about that much of Thailand’s GDP. Now, this makes sense, but aiming for just one city is too narrow. So what is the solution? The urban centre – the area surrounding the important city. For example, Klang Valley in Malaysia, Jabodetabek in Indonesia, the Pearl River Delta in China.’

But, he points out; no research has been done at all on how to win this urban centre. So, to fill this gap, he is now focusing on business strategies for companies to win over areas like Jabodetabek and the Klang Valley – which he feels will have a positive impact on the performance of a company.

*THE NEXT BIG THING: URBAN CENTRES

12 Interview

SG_F_Raharso.indd 12 13/06/2012 11:07

Dr Andreas Raharso, pictured in the St Regis hotel, Singapore

13

SG_F_Raharso.indd 13 13/06/2012 11:07

The CV2009–PRESENT

Director of the Hay Group’s global R&D centre for strategy execution (Singapore).

2008Senior consultant with Hay Group (Indonesia).

2006Dean of the Binus Business School, Bina Nusantara University (Indonesia).

2003Deputy head of the School of Marketing, International Undergraduate Program, Bina Nusantara University (Indonesia).

2002Partner at PT Asymmetric (Indonesia).

1999Vice president of finance and administration at BMS Sugar Refinery (Indonesia).

1997Head of the Executive Education Programme, Prasetiya Mulya Graduate School of Management (Indonesia).

1995General manager at ATD Resources (Singapore).

1993Financial specialist at Asamera Oil (Indonesia).

1992Research analyst at Merrill Lynch (US).

to change. You are forced towards a new type of business model. But the further away you are, the more likely it is that you are immunised from the financial trouble, and the less likely you are to change.

‘Here is an example of how change works. If you want to change one thing into another, such as water into steam, metal into liquid metal, or ice into water, what do you need? Heat. Pressure. Trouble. If there is no trouble, there is no change. In Europe and the US, they were lucky enough to have a lot of heat. There will be more change, very big change, and they will be much stronger. But in some countries, there was not so much heat. And so there is very little change.’

One problem he has observed – in Asia and other parts of the world – is that business leaders are not taking the first step to change. ‘I am not trying to blame anyone, but from my observation this is a global trend. The biggest challenge facing everyone now, from the CEO and CFO down, is how to quickly forget and unlearn [the old models]. There is a story about the master swordsman Musashi: he asked his teacher how he could become even more skilled. His teacher took a cup of tea and began pouring more tea into it. The cup overflowed, and the teacher said, “This cup is you. I cannot give you anything more, because you are already full.”’

Those with greater personal ability may be able to make their cup bigger; but Raharso’s own preference is to remove some of the tea, because it is no longer relevant. ‘If the landscape has changed, do you still want to keep that tea, that knowledge?’ he asks.

He cautions, however, that unlearning does not mean throwing out everything – and one reason for that can be found in the accountancy sector. ‘I believe that not all unlearning is positive. Take accountants in audit, they have been trained very well to guard the integrity

of the financial report. This is an area where you want to be very careful with how much unlearning takes place. You do not want to end up compromising the integrity of the financial report.’

Kick-starting change When it comes to innovation, research has a big role to play. Many people tend to misunderstand that role, says Raharso, because for them, research has connotations of theory, and theory is often assumed to be good only in the classroom with no application in the field. But this is not the case.

‘Only with good research do you have something to learn. How can you sense changes if everyone in your organisation just focuses on delivering business and not on observing the change in the environment?’ he says.

If asked to prove this, he likes to mention companies that have more than US$100bn in sales – IBM, GE, Unilever and so on – and point out that each of these has a research director who reports directly to the CEO.

‘Then I tell people, if you want to be like these companies, this is what you have to do.’

Actually getting people – and companies – to change, however, is easier said than done. Having spent some time researching cultural transformation, Raharso is of the opinion that changing an organisation’s practices is only the tip of the iceberg. ‘What people practise is behaviour,’ he explains. ‘Behaviour is controlled by norms; norms are controlled by values; values are controlled by beliefs.’

Trying to change behaviour is therefore most likely to meet resistance; trying to change the norm is not likely to be effective; but if you can find the right lever to touch a person’s belief, you will change that person. ‘I always say that you need the right story,’ says Raharso. ‘For example, a long time ago we believed that marketing was about customer

14

SG_F_Raharso.indd 14 13/06/2012 11:08

The basicsHAY GROUP Established in 1943, global management consulting firm Hay Group operates in 48 countries and deals with a broad range of issues faced by companies today, such as talent development and job evaluation. Its global R&D centre for strategy execution in Singapore carries out research on business strategy and implementation, covering topics such as mergers and acquisitions, globalisation, performance management and family owned businesses.

satisfaction. But lately we have realised that is not so, that customer loyalty is more important. This change came about because people began to hear stories about customer loyalty, and they started to believe in the stories.’

But the ‘right’ story, he cautions, is also going to differ between companies, countries and cultures. This is especially the case for global companies operating in a wide range of time zones and geographies.

‘From one country to another, there are different sets of beliefs. The recipe for unlearning, change and innovation in one country will not be effective if you export it to another country,’ he elaborates. ‘And that’s tough. When you know that something has been very successful, it’s difficult to understand when suddenly it stops working.’

Ironically, he adds, it is easier to spread new ideas further from home than closer to it. ‘Logically, we have learned from the past that you have to start with the closest geographical locations, because they might share the same culture and understanding.

But I found out that it’s actually easier to start far away.’ He therefore prefers to begin propagating new ideas in Europe and the US rather than in Asia, because organisations there find his views new and different and are more receptive. ‘It’s “tainted knowledge”,’ he says – ‘the belief that knowledge created by your own people is not really useful.’

Ultimately, the most important factor in change and innovation, whether for individuals or organisations, rests on one’s capacity to make paradigm shifts – to let go of obsolete knowledge and attitudes in order to gain new knowledge. And the place to start, says Raharso, is by not doing what everyone else is doing.

‘Don’t follow the trend,’ is his advice. ‘If you really want to become successful, look at what the trend is right now and then try not to follow it. Become a trend picker instead. Guess when, where and what the next wave will be, and you will ride the wave.’

Mint Kang, journalist

‘ACCOUNTANCY IS AN AREA WHERE YOU WANT TOBE CAREFUL WITH UNLEARNING. YOU DO NOT WANT TO COMPROMISE THE FINANCIAL REPORT’

15

SG_F_Raharso.indd 15 13/06/2012 11:08

Twins Zane and Zoey are the Dream Defenders – the last line of defence between the real world and

the nightmare creatures of the Dreamworlds. The young heroes, with help from their supercomputer Zeus, are the only ones who can stop the evil Icela taking control of children’s dreams and unleashing nightmares. The 3D animated series that debuted on US pay television last September has plenty of cool gadgets and enough scary villains to keep its young audience hooked for a while; there are plans for a series of ebooks, along with global licensing and merchandising.

But Dream Defenders was not created in a studio in Burbank, California. It was conceptualised and fully developed and produced by Tiny Island Productions, a Singapore company which has recently also been commissioned by the Cartoon Network to work on a 3D version of the television movie Ben 10: Destroy All Aliens.

The ‘made in Singapore’ movie label is still a relatively new one, but the film and animation industry is starting to get some traction. According to a study commissioned by the Media Development Authority (MDA) and conducted by the Asia Competitiveness Institute LKY-NUS, Singapore’s film and video sector (which includes animation) contributed S$660m in revenue in 2010 and employed more than 4,400 workers, up 19.5% on the previous year. The value-added contribution of the sector to the economy was estimated at S$210m.

Singapore’s films have made some modest inroads at international festivals – Boo Junfeng’s Sandcastle

contended for the Caméra d’Or award at the 2010 Cannes Film Festival, while Eric Khoo’s Tatsumi was in competition in the Un Certain Regard category at last year’s festival.

Yet, locally made films have not always done well from a commercial point of view, admits Daniel Yun, founder and CEO of Homerun Asia, a Singapore-based movie company engaged in the development, production and distribution of commercial films. Yun headed film production company Mediacorp Raintree Pictures for 11 years before

setting out on his own in 2010. ‘In the early days, Raintree charged ahead and created a semblance of a structure of an industry,’ he says. ‘There were hits and misses. Other film companies also played a big role, like Zhao Wei headed by Eric Khoo, which has probably been the most successful one – always careful with their budget but very creative.’

Others, Yun notes, have not fared so well. ‘We have already had some film companies that have come and gone,’ he says. ‘I think we’re at a transitional period now; it’s going to be swim or sink over the next five years.’

However, animated productions have fared better. Local production company Sparky Animation has co-produced Dinosaur Train with the US-based Jim Henson Company, selling to more than 20 territories worldwide, and worked on Mr Moon with Skaramoosh (UK) and

Title Entertainment (Canada), which sold to over 10 territories including Disney UK. Another Singaporean animation company, Scrawl Studios, has co-produced with Australia’s SLR Productions the preschool animated series Guess How Much I Love You – The Adventures of Little Nutbrown Hare, picked up by Disney Junior for broadcast in the US.

The local animation industry was spurred on by the arrival of Lucasfilm, which opened a digital studio in Singapore in 2005 and acted like a queen bee, bringing more players to

Singapore such as the Seattle-based DigiPen Institute of Technology, a leading computer animation and programming school.

Today, there are more than 40 animation and special effects companies in Singapore, up from fewer than 10 in 2003.

A question of investmentWhether film or animation, local productions are still relying heavily on co-financing and/or grants from the MDA. It has co-invested a total of S$109m with the local industry since 2003 to undertake a total of 253 projects in film and television. This generated an additional S$320m of non-MDA funding, of which 67% came from overseas.

Financing has been the main difficulty for the animation industry’s development. ‘Investors are still new

READY TO ROLL?Singapore’s infant fi lm industry is gaining international recognition and making a positive contribution to the local economy. But is local investor support enough to sustain growth?

‘INVESTORS ARE STILL NEW TO INTELLECTUAL PROPERTY INVESTMENT. THEY TEND TO HAVE A FIVE-YEAR EXIT STRATEGY WHICH IS TOO SHORT’

16

SG_F_film.indd 16 14/06/2012 17:20

Success story: Singapore’s Tiny Island Productions has achieved international recognition with (above) its 3D version of the Cartoon Network television movie Ben 10: Destroy All Aliens and (right) 3D animated series Dream Defenders, broadcast in the US

to IP [intellectual property] investment in Asia,’ explains David Kwok, CEO of Tiny Island Productions, pointing out that many investors find it hard to understand how a cartoon will make money. ‘Investors here often compare the possible returns to that of the property market, and they tend to have a five-year exit strategy, which is too short for our industry,’ he says.

Young filmmakers also find it hard to find private financing for their so-important first film, which can make or break a career, notes Singaporean film director Eric Khoo.

Last September, the MDA streamlined its funding schemes for the media industry from 46 to just five. There are now just two schemes to support content creation: development assistance, which provides targeted support of up to S$150,000 for story research as well as the refinement and

development of scripts; and production assistance, which offers up to 40% of the qualifying Singapore Spend (dollars spent in Singapore), with another 10% available for the next media project undertaken by the producer. A third scheme, marketing assistance, helps promote the consumption of Singapore content with grants of up to S$25,000, while the remaining two schemes, talent assistance and enterprise assistance, aim to create a conducive business environment for the media industry. A total of S$88m has been set aside for the five schemes.

‘The broad shift in the funding model from co-investing to grant dispensing was driven by economic logic,’ explains Kenneth Tan, assistant CEO (Industry) at MDA.

‘Moving forward, the way to sustain growth in the media sector is through increased productivity,’ he continues.

‘For productivity to go up, the focus should be on helping our media companies improve their quality of stories and upskilling talent across a wide range of skills. Under the grant schemes, the intellectual property rights to the content will now rest with the companies, giving them an opportunity to exploit and maximise their IP.’

Industry players have generally welcomed the move away from co-financing, which often came with many strings attached, towards pure grants. Jyotirmoy Saha, CEO of August Media Holdings, a local integrated media company which bought Scottish children’s content producer Red Kite Animation two years ago, says that these new grant schemes are ‘a fantastic evolutionary step-up’ from the previous co-financing schemes.

‘It brings us more in line with

Ben

development of scripts; and production ‘For productivity to go up, the focus

17

SG_F_film.indd 17 14/06/2012 17:20

relate to collaboration agreements struck between the MDA, RGM Group and private companies owned by former One North managing director Devesh Chetty.

The MDA has not always disbursed what it pledges, either. From 2008 to 2012, MDA pledged S$28.5m to support the production of a slate of projects with My China Channel, Salon Media, Infinite Frameworks and Hyde Park ImageNation, but only S$2.2m has actually been committed for 11 projects.

Sonia Kolesnikov-Jessop, journalist

Eric Khoo (pictured left with deaf-and-blind teacher Teresa Poh Lin Chan, star of his film Be With Me), is arguably one of the most successful contemporary Singaporean film directors. He put the city-state on the international film map with his first feature film Mee Pok Man (1995), which picked up prizes at the Fukuoka and Busan international film festivals. He was the first Singaporean director to be invited officially to the Cannes Film Festival in 1997, where a number of his other films have since shown in and out of competition. He has also produced, through his Zhao Wei film production company, Royston Tan’s 15, which was invited to be shown at the Venice Film Festival (2003) and Sundance (2004), and Boo Junfeng’s Sandcastle, which was selected for the 2010 Critic’s Week at Cannes. Khoo is currently working on the script of his next film, The Charming Rose, and is co-producing a supernatural thriller, Inside the Urn, directed by Gilbert Chan.

‘In terms of financing we’ve tried it all,’ he laughs. ‘We’ve worked with the MDA [Media Development Authority], the Singapore Film Commission, Raintree and we’ve had private investors. I think how you choose to finance a film really depends on what type of project you’re working on.’

Khoo believes that most of his films have been profitable because of their low budgets – on average S$500,000. ‘I think the main problem with a lot of Singaporean films is that they are done on too big a budget, like $1m to $1.5m,’ he says. ‘Given that a lot of them are tailor-made for Singapore and Malaysia and don’t travel beyond, they often find it hard to recoup their budget.’

In May, the MDA announced a new grant for first- or second-time directors in a variety of genres. The new talent feature grant covers up to S$250,000 of the production budget of a feature film. ‘This is great news for first-time directors because it means if they have the right budget they can cover 100% of their costs,’ Khoo says. ‘With the old system, they had to get co-financing; now they can give their full attention to the project without having to worry about getting more money outside.’

*ERIC KHOO: PUTTING SINGAPORE ON THE MAP

and not what is projected, he adds.Such checks and balances might

not have always been as strong as they need to be. The MDA is currently taking action against two Singapore subsidiaries of One North Entertainment (formerly RGM Media), the Australian talent management and executive production firm, for S$27.5m over undelivered projects and an unpaid loan. The tie-up with RGM Group was part of the MDA’s efforts to partner third-party companies to support the production of local film projects. One North has stated the company will defend the legal proceedings, which

countries where global producers usually make a beeline. I think it gives companies like ours the teeth to compete worldwide more effectively without having to part with too much,’ he says, pointing out that countries such as France and Canada, along with some other Asian countries, are already operating massive incentives that have supported the content development in their own markets.

Kwok believes that the new MDA grant structure has the potential to propel the local animation industry forward, making it more competitive and attracting big international projects. ‘With the grant supporting up to 40% of the production costs, it will give local companies opportunities to pitch for bigger projects in the West, particularly on the servicing side, because the grant can help lower our cost which we can pass to the client. And at the same time, it helps the company to build its track record,’ he explains.

Since the new structure launched in September, the MDA has received 376 applications and funded 107 film and animation projects totalling over S$1.9m. MDA’s Tan notes that so far more grants have been given out for development assistance (26) over production assistance (two). ‘One reason is because we don’t want our companies to rush into production but to spend more time developing the story,’ he explains. ‘If development assistance is successful, there will be projects that may well not even need MDA assistance any more.’

To obtain grants, companies must meet a clear set of criteria, with checks and balances in place to ensure the grant system is not abused. For example, in the case of development assistance for a script, payment will only be made once the script is completed. ‘The MDA would be making a creative assessment of the script. But we will want to see it has been done to the original specification the funding was requested,’ Tan explains. For production assistance, payments are according to what actually happens

18

SG_F_film.indd 18 14/06/2012 17:20

Swiss know-how

Independence

Tradition

Discretion

Customisation

Reliability

Asset Management Trusts & Foundations Multi-Family Office International Trade

Hong Kong Lugano Zurich Amsterdam Luxembourg Malta Dubai Sao Paolo Panama London

Address: 3204-05 32F Alexandra House, Central, Hong Kong Telephone: +852 31082720 Email: info@veco-hk.com www.vecogroup.ch

AB_2012.06-Veco Group SA.indd 1 2012/5/18 2:24:12 PM

Ads-JulyAug12.indd 6 12/06/2012 15:11

In 1851, when Prince Albert wanted to advertise the power of his wife’s empire, he decided to hold the Great Exhibition,

advertising it as displaying the works of industry of all nations. Culture featured as well, with Charlotte Brontë, Lewis Carroll, and George Eliot taking part, but there was no sport.

Today, a monarch’s spouse harbouring similar thoughts would almost definitely urge the government to bid for an Olympics or a World Cup. Indeed, as Queen Victoria’s great, great granddaughter celebrates her 60th year on the throne, it is debatable whether the events to mark that occasion will match those on display during the London 2012 Olympic and Paralympic Games.

Modern sporting events are seen by politicians as validating a nation, even one such as Britain. Former prime minister Tony Blair was only persuaded to back London’s 2012 bid when Tessa Jowell, culture secretary, told him that it would be a shame that Britain, with the then fourth largest economy in the world, could not bid for

the Games. Nelson Mandela felt South Africa had arrived when it became the first African country to stage the World Cup, and in Copenhagen in 2009, Brazilian president, Luiz Inácio Lula da Silva, shed tears after Rio won the right to stage the 2016 Olympics. As

he put it, ‘Everybody talks of Brazil as the country of tomorrow. Here in Copenhagen tomorrow has arrived.’

But while such sporting events may have taken over from expos, do they actually promote a nation’s trade? British politicians argue they do, and Britain is estimated to have won £2bn of business at the Beijing Olympics. Five years ago, Lord Tim Bell, Margaret Thatcher’s PR guru and chairman of Chime Communications, bought Fast Track, the sports firm set up by former Olympian, Alan Pascoe. Chime Sports Marketing is now the biggest sports business in

the UK and the fifth largest in the world. Lord Bell says: ‘Expos are old fashioned. Modern sporting events like the Olympics and World Cups do develop business. You only have to see what happened in Sydney or Beijing. Sports brings people together. Governments invest in

infrastructure, roads, transport links and all this contributes to a development of the business.’

Lord Bell’s words are echoed by those who run the British firm PKL, which provides temporary kitchens. Its growth is a fascinating story of how Olympics in one country can develop business in another. For PKL, it all started in 1998. The organisers of the 2000 Sydney Games had come to London searching for firms to construct temporary kitchens. PKL was introduced to them by UK Trade and Investment and constructed a

PLAYING THE GAME

LONDON 2012 IS EXPECTED TO BRING £21BN OFBUSINESS TO BRITAIN. BUT TO BENEFIT, A COUNTRYMUST ORGANISE THIS EVENT WELL

Hosting a large sporting event like the Olympics is a coup for any country, but what are the real benefi ts for business, asks sports journalist Mihir Bose

20

AP_F_sport.indd 20 15/06/2012 16:33

temporary kitchen at Sydney. Four years later in Athens, this went up to 30, followed by 26 for Beijing, although the number dropped to two for the 2010 Vancouver Winter Games, and one each for the Commonwealth Games in Delhi and the Youth Olympic Games in Singapore. But for London 2012, the firm is putting in 90 temporary kitchens.

Peter Schad, commercial director of PKL, says: ‘Major, modern, sporting events are the equivalent of the Victorian Crystal Palace exhibition, providing wonderful business opportunities.’

Many countries which have won the right to stage a major event have used it to publicise its expertise. Australia did that very well from the Sydney Games, but there is no evidence South Africa has received similar benefit from the 2010 World Cup.

Model countryBritain has arguably done the best following London’s success in winning 2012, particularly in the fields of public relations and marketing. Brazil, Qatar and South Korea used British know-how to construct their winning bids for the Olympics and World Cup.

One man who can speak with authority is Mike Lee, chairman of

Mihir Bose is an award-winning journalist, author and former BBC sports editor. He writes a weekly sports interview for the London Evening Standard and also writes and broadcasts on social and historical issues. His latest book is The Spirit of the Game: How Sport Made the Modern World. Bose, also a professional accountant, was consulted by ministers in the run-up to London’s bid for the 2012 Olympic Games. Follow him on Twitter @mihirbose

Vero Communications. He set up Vero following London’s 2012 bid, for which he was head of communications. An adviser to three winning bids – Rio 2016, Qatar 2022 and Pyeongchang 2018 – he says: ‘All of them are economically strong and see major sporting events as part of growth. But each of these countries has its own perspective. Qatar, having used its oil wealth to develop, sees the 2022 World Cup as part of economic diversification and to influence the worldwide community. South Korea wants to develop winter sports in the Pyeongchang region where there has also been much regional investment. Brazil, which is an emerging country and the sixth largest in the world, is expected to be the fourth largest by the time Rio hosts the 2016 Olympics. It sees the Olympics, and the World

Cup in 2014, as significant boosts to inward investment, growth of leisure and tourism and announcing to the world that the country has arrived at the top table.’

Brazilian estimates of the business these two major events might attract range from US$47bn to US$100bn. London 2012 is expected to bring £21bn of business to Britain.

But to benefit, a country must organise the event well, which the Indians failed to do with the Commonwealth Games in 2010.

Alan Pascoe, chairman of Chime Sports Marketing, says: ‘Had Scotland pulled out, there might have been a domino effect. In contrast, the Kuala Lumpur Games saw the Malaysian gross domestic product increase, and it provides a benchmark for what such events can do for a country.’

*ABOUT MIHIR BOSE

21

AP_F_sport.indd 21 13/06/2012 11:16

The Earth Summit in Rio de Janeiro in June was even more of a focus for the world’s attention than the

first UN Conference on Sustainable Development held in the same city 20 years ago. For one thing, there are about 1.6 billion more people in the world today. For another, the environmental agenda has moved even further towards the centre stage of politics, society and the corporate world.

Moreover, the environmental argument being put forward by mainstream stakeholders now is less about forcing big business to comply with rules, regulations and targets. It is much more to do with making the case that taking a responsible approach to sustainability is, in fact, in the long-term interests of companies and their shareholders.

A group known as the Corporate Sustainability Reporting Coalition (CSRC) has called on countries which attended the so-called Rio+20 event to develop a UN convention. This would require the signatories to compel company boards to think about the sustainability issues that affect them and to report on them in their annual report and accounts.

Institutional fund management group Aviva Investors, the global asset management business of Aviva plc, led the formation of the CSRC, whose

membership includes ACCA. Steve Waygood, chief responsible investment officer at Aviva Investors, says: ‘What we want is the board’s thinking. What we don’t want is the boards to simply delegate to their compliance teams that they need to report information that might be absolutely meaningless to their business.’

Made up of more than 40 financial institutions, non-governmental organisations, professional bodies and investors, the CSRC is looking for an integrated report that brings together the financial and material non-financial information that investors need to get a more holistic picture of a company’s performance.

One of the draft clauses in the Rio+20 final agreement read: ‘We recognise the need for a global commitment on corporate sustainability reporting which promotes and encourages large private and public companies to take sustainability issues into account… and to integrate sustainability information within their reporting cycles.’ Waygood says that, although a step forward, this wording does not give a strong enough commitment to be truly effective.

But overall, what effect does all this have on how corporates treat sustainability reporting?

Rob Lake is director of strategic developments at the UN-backed

Principles for Responsible Investment (PRI), a body led predominantly by pension funds and their fund managers. He says: ‘Significantly better information from companies about their sustainability performance and sustainability risk exposure is absolutely crucial to what PRI investors are trying to do.’ The PRI’s role, Lake explains, is ‘to find new and more effective ways to bring together and support groups of investors who want to take energetic action to exercise influence over companies’.

Different criteriaThe Johannesburg Stock Exchange (JSE) launched a Socially Responsible Investment (SRI) index in 2004. The criteria encompass a range of environmental, social, economic and governance indicators. While recognising that banks are different from mining companies or retailers, the criteria are not themselves specific tonnage targets, for example. Rather, they demand reporting on issues such as commitment

BEATING THE DRUMWith commercially minded investors joining in with ever louder calls for organisations to address sustainability issues, the Earth Summit in Rio highlighted the subject’s growing importance to the business agenda

22

AP_F_Rio.indd 22 13/06/2012 11:15

Rio calling: countries that do not heed the message risk falling out of step with the latest thinking on integrated reporting.

to use targets, identification of significant impacts, and outlines of processes, responsibilities and action plans.

Corli le Roux, head of the SRI and sustainability at the JSE, notes that take-up from the investor community has to date been slow. ‘There was little understanding of how sustainability could be incorporated into investment decision-making,’ she says. She adds that PRI has helped.

However, le Roux points out: ‘The index has been mostly driven from the issuers’ perspective.’ Between 85% and 90% by market capitalisation of the top 100 JSE-listed companies meet the criteria. While the criteria are continuing to evolve, this figure suggests that companies still have some way to go – and research suggests that JSE companies, for the most part, have yet to take real action by reducing their greenhouse gas emissions, for example.

While sustainability has long-term implications, not every investor plays

the long game. Savvas Savouri, chief economist at London and Dubai-based hedge fund Toscafund, says: ‘You can have those indices until they’re coming out your ears. They will always underperform because you’re putting a constraint on things. If you restrict your [investment] choice set, it will be inferior to a more general choice set.’

Lake says it’s not about pulling out of investments that don’t at present comply, but ‘trying to stimulate a much more productive dialogue between companies and long-term investors so companies understand that they have long-term allies in long-term investors’.

In fact, the evidence is that companies that do well from a sustainability perspective also do well financially. Generation Investment Management, co-founded by former US vice president Al Gore, recently published a paper, Sustainable Capitalism (see page 24), which suggests that environmentally conscientious companies can reduce cost of debt and face lower

capital constraints.In the private equity sphere, a recent

paper by Doughty Hanson & Co and conservation group WWF points to other research that suggests businesses that are committed to environmental, social and governance issues earn higher market valuations. The paper, Private Equity and Responsible Investment: An Opportunity for Value Creation, addresses the chicken-and-the-egg syndrome: ‘Companies lament that investors do not value their sustainability efforts, while investors complain that companies do not report sustainability initiatives in terms that they can value.’

There is still a long way to go. But now, thanks to the CSRC, governments are being called on to do something about the issue.

Andrew Sawers, journalist

A report on the outcomes of the summit will be published in the September issue of Accounting and Business

23

AP_F_Rio.indd 23 13/06/2012 11:15

Significant progress has been made towards improving the reporting of sustainability metrics, such as the Carbon

Disclosure Project and the Global Reporting Initiative. However, most disclosure is still not conducive to mainstream use by investors, since it typically lacks clear links with the company’s financial performance and long-term prospects.

Moreover, some companies that can measure non-financial data (many already do so for internal purposes) hesitate to publish any information that goes beyond regulatory requirements for fear it may help their rivals or increase their exposure to lawsuits. This is one of many reasons that new regulation must be enacted to level the playing field.

Few fund managers have analysts with the skills needed to perform

VISIONCompulsory integrated reporting and an end to quarterly earnings guidance will help achieve sustainable capitalism by 2020, say Al Gore and David Blood

Generation Investment Management recently published Sustainable Capitalism, a white paper that highlights the need for a paradigm shift to a more sustainable capitalism. It makes the economic case for mainstreaming sustainable capitalism by highlighting the fact that sustainability does not represent a trade-off with profit maximisation, but actually fosters superior long-term value creation.

In this article, which is based on excerpts from the paper, the firm’s founders, Al Gore and David Blood, look at integrated reporting and the default practice of issuing quarterly earnings guidance. These themes embody two of the five key actions that the paper presents to accelerate the transition towards sustainable capitalism by 2020.

Other key actions include the alignment of pay structures with long-term sustainable performance, the encouragement of long-term investing with loyalty-driven schemes, and the identification/incorporation of risks from stranded assets.

The paper defines sustainable capitalism as a framework that seeks to maximise long-term value creation by reforming markets to address real needs, while considering all costs and stakeholders in a world facing such challenges as climate change, water scarcity, poverty, disease, growing income inequality and urbanisation.

You can read Sustainable Capitalism, which includes footnotes not shown in this article, at www.generationim.com

24

AP_F_Gore.indd 24 13/06/2012 11:14

Former US vice president Al Gore (left) is co-founder and chairman of Generation Investment Management, a partnership focused on a new approach to sustainable investing. He is also chairman of the Climate Reality Project and author of Earth in the Balance, An Inconvenient Truth, The Assault on Reason, and Our Choice: A Plan to Solve the Climate Crisis. He is co-recipient of the 2007 Nobel Peace Prize for ‘informing the world of the dangers posed by climate change’.

David Blood is co-founder and senior partner of Generation Investment Management. Previously, he spent 18 years at Goldman Sachs, and served as co-CEO and CEO of Goldman Sachs Asset Management from 1999–2003. He is on the boards of Harvest Power, New Forests, SHINE, Social Finance UK, Social Finance US and the Nature Conservancy.

Former US vice president Al Gore (left) is co-founder and chairman of Generation Investment Management, a partnership Former US vice president Al Gore (left) is co-founder and chairman of Generation Investment Management, a partnership

bottom-up analyses of non-financial metrics. Understandably, most therefore look to third-party rating agencies to analyse company sustainability disclosures and provide ratings for them to interpret.

With more than 100 rating agencies providing such advice, there is significant variation in the quality and value of rating systems. We applaud the commitment that some mainstream data companies, such as Bloomberg and Thomson Reuters,

have made toward sustainability and support their efforts to increase standardisation and improve quality.

However, we believe that the best-run companies are those that are not only already making the links between sustainability and financial performance internally, but are also sharing those links in their investor communications.

Integrated reporting provides the framework to ensure that a company has a sustainable strategy and can improve internal decision-making by exposing itself to the discipline of the market. A handful of companies have already begun to make the switch

WHILE THESE ACTORS ARE PLAYING A CRITICAL ROLE,SIGNIFICANT CHANGE WILL COME ABOUT ONLYWHEN INTEGRATED REPORTING IS MANDATED

to the integration of sustainability and financial metrics in their annual reports, explicitly showing the link between the two and, in the process, reinforcing the business case for sustainable capitalism.

Given that privately held companies have a greater degree of flexibility in reporting, they are in a position to provide leadership in developing integrated reports. Many leading global private equity funds, such as KKR and Doughty Hanson, have already

taken steps to invest in improving the sustainability of their portfolio companies and are reporting on sustainability metrics. Funds could go further and persuade those companies comfortable with reporting the financial benefits of these activities to do so prior to going public.

We support efforts by Professor Bob Eccles at the Harvard Business School, the International Integrated Reporting Council, and Aviva Investors, who collectively are pioneering the field of integrated reporting. Yet while these actors are playing a critical role in shaping this nascent idea and encouraging voluntary action by

companies, it is clear that significant, widespread change will come about only when integrated reporting is mandated.

Although this policy intervention will vary country by country, securities regulators and stock exchanges are well suited to oversee the requirement for integrated reporting. In South Africa, the Johannesburg Stock Exchange set an exemplary precedent in its 2011 decision to require all listed companies either to produce an integrated report or explain why they were not doing so. Even so, the mandating of integrated reporting is just the first step, as reporting standards around ESG (environmental, social and governance) information and its link to financial metrics will need to be refined continuously.

What is critical is that the information provided is material to investors and relevant to the specific sector and company. ‘Cookie-cutter’ forms that do not take into account variations in what is most relevant from one sector to another are not adequate. Accountants must also work to provide assurance on non-financial information that is comparable to what they provide on financial metrics, and provide integrated assurance on both.

We propose that integrated reporting should be mandated for publicly listed companies by the appropriate regulatory agencies and we encourage these companies to take voluntary

25

AP_F_Gore.indd 25 13/06/2012 11:14

Earth Hour: on 31 March, Hanoi in Vietnam (pictured at start of article) and Asuncion in Paraguay (above) were among the places that turned off the illumination of public buildings for an hour as part of a global campaign to draw attention to the need to save energy to reduce global warming gases

action in the short term to provide integrated reports until such regulation appears. We also encourage investors, including private equity investors, to ask for integrated reports from their portfolio companies and incorporate this in their investment decisions. We also support the growing commitment by privately held companies to produce integrated reports.

Quarterly earnings guidanceAnother key action that will accelerate the development of sustainable capitalism by 2020 is ending the default practice of issuing quarterly earnings guidance.

In the modern world, we often appear virtually hypnotised by the short term in our politics, our culture, business and well beyond. In business specifically, the vast majority of managers are now clearly choosing short-term profits over sustainable long-term growth. We have long known that an important part of the reason for this distortion is that executives are encouraged – by investor behaviour, incentives and business cultures – to focus on the business’s short-term earnings.

Investors have become increasingly impatient with the CEOs of publicly listed companies who focus on longer-term value creation, and are too quick to penalise stocks for short-term underperformance, even if that occurs in the context of a long-term investment plan.

it leaves public companies less able to exploit new business opportunities.

Not providing quarterly earnings guidance would help some companies alleviate the pressure on managers to meet financial expectations on a quarterly basis, and allow them to focus on building the business for long-term profitability.

However, because most public companies provide quarterly earnings guidance, there is a ‘collective action’ problem for CEOs and boards that wish to end the practice. We applaud the few CEOs who, despite criticism, have decided to end earnings guidance and have talked openly about what investors should expect from the management time horizon. For other companies, quarterly guidance may be appropriate, but the decision to offer it ought to be part of a well-justified strategy and not simply an unthinking response to the prevailing habits of the market.

We propose bringing together a significant group of CEOs who have already stopped providing quarterly earnings guidance with others who pledge to stop doing so as a catalyst for change around this practice.

In many cases, a company’s ability to meet quarterly earnings guidance trumps the long-term performance incentives for CEOs and makes it much harder for them to focus investors on the long-term strategy.

An empirical investigation conducted by Murad Antia, Christos Pantzalis and Jung Chul Park reveals that shorter CEO decision horizons are in fact ‘associated with more agency costs, lower firm valuation, and higher levels of information risk’.

Research by John Graham, Campbell Harvey and Shiva Rajgopal shows that 78% of managers will reject a project with a positive NPV (net present value) if it lowers quarterly earnings below consensus expectations. And an astonishing 80% would focus on this recurring, short-term metric – at the expense of building long-term shareholder value – by making cuts in discretionary spending, including R&D and advertising. This kind of practice is managing for the short term, not managing sustainably.

Work by John Asker, Joan Farre-Mensa and Alexander Ljungqvist reveals that this value-destroying habit is clearly manifested in data showing publicly held companies invest at half the rate of privately held companies when the gains from such investments will not be realised on a quarterly basis. They also show that this applies when an individual company switches between public and private ownership. And they make the obvious point that

26

AP_F_Gore.indd 26 13/06/2012 11:15

Looking for helpwith compliance?We have the information you’re looking for.

Due to an influx of new regulatory requirements, hard copies not only need to be protected, but they need to be readily available in a variety of formats. We can provide retention policy consulting and industry benchmarks to help you enhance your compliance programs. With Crown, you will always have the information you are looking for.

The Information You’re Looking For.

Crown Records ManagementCrown Worldwide Building,

9-11 Yuen On Street, Siu Lek Yuen, Shatin, N.T., Hong KongTel: +852 2636 8388 Fax: +852 2637 1677

crownrms.com/hongkong

Storage of Cartons, Files, Documents & Electronic Media

Cataloging, Indexing & File Insertion

Scanning, Imaging, Data Extraction, Cataloging, Indexing, Data Storage & Hosting, from RMhost

Escrow Services

Secure & Confidential Waste Destruction

Consultancy & Benchmarking

Web-Based Access via RMinfo

C

M

Y

CM

MY

CY

CMY

K

Company secretary-advert 6 ACCA Perspective.pdf 10/23/2009 3:20:00 PM

Ads-JulyAug12.indd 2 12/06/2012 15:10

Predicting the future is a risky business, but it seems safe to state that the eurozone of the future will not be

like the eurozone of the past. How different it will be remains to be seen: Greece may yet leave, in an orderly or disorderly fashion; a €19bn bailout has been requested for the fourth largest bank in Spain, and its central bank has identified about €300bn in problem loans across the nation’s banks; a two-tier eurozone could emerge along with a super-euro currency; and the euro could collapse and push the world into years of depression and economic turmoil. The possibilities, it seems, are limited only by your imagination, or lack of it.

If the unthinkable does happen, it could be bad news for businesses inside and outside the eurozone, as various types of contagion seem likely to spread far and wide, and the accountancy profession will have its work cut out dealing with the fallout.

Tip of the iceberg‘Regulators and businesses will need to take a pragmatic approach,’ suggests Chas Roy-Chowdhury, head of taxation at ACCA. He says that even if just one country departs the currency bloc (arguably the least-worst scenario), then changes could be needed to statutory rules for accounting and tax, along with the many computer systems which reflect them; obvious challenges such as revaluing and repricing stock would be just the tip of the iceberg.

As a provider of financial products and services, Friends Life has to be particularly diligent when it comes to risk assessment, and it has already considered the implications that many

possible euro scenarios could have for its business systems. ‘We have reviewed customers in the eurozone and looked at the policy administration systems that feed into finance, because we knew that this was an area where developments could create a lot of work for us internally,’ says Will James, the accountant who is head of finance systems at Friends Life. But various other systems could be impacted too.

Which software and systems feel the impact depends on business sector and structure, geographical location, exposure to foreign exchange transactions, and the flexibility, sophistication and multicurrency capabilities of the software and systems in place. The list of possibilities includes accounts production, analytics, bookkeeping, business intelligence, customer relationship management, document management, e-commerce, finance, payroll, project management, treasury, tax and myriad spreadsheets – and not just inside your own business, but elsewhere in the supply chain too.

Friends Life has established that some of the systems that could be

NIGHTMARE OF UNCERTAINTYWhatever happens to the eurozone, one thing is certain: any changes will have a huge impact on business systems

*DON’T IGNORE THE RISKS‘Companies must not ignore worst-case scenarios, which, though unlikely, could be devastating,’ warns Nuno Fernandes, professor of finance at the International Institute for Management Development in Lausanne, Switzerland. He says that ‘business leaders must realise that there is a threat of the euro breaking up and of several eurozone countries reverting back to their former currencies’, and then consider both the direct and indirect potential impact.

Fernandes suggests a seven-step process as the basis for contingency plans (at http://tinyurl.com/6rfbsps), and he also has advice for accountants: ‘Assess the impact on the value chain, and develop a scenario analysis of how payment systems, internal control systems, etc, should function. Not having a contingency plan is bad risk management.’

28

AP_F_eurosoftware.indd 28 13/06/2012 11:13

NIGHTMARE OF UNCERTAINTYaffected are internal and some are not. ‘We have a lot of price feeds from external providers, and these are outside our control,’ explains James.

Risk-assessing software within the business is easier. Take finance. ‘We have worked with our software provider to look at areas such as the purchase ledger and expenses, and if we need to add or remove a currency, or cancel an original entry and then revalue it, we can do this fairly easily,’ James says. But that doesn’t mean everything could be done overnight.

Dean Dickinson, managing director for public sector and enterprise at Advanced Business Software (ABS), explains: ‘Once we know what the tax and accounting rules would be, we could probably make the necessary changes to our software and create the currency conversion tools for our customers within a week.’ That would at least allow the transition process to get under way. ‘After this, customers would need to test all their base data and feeder systems,’ says Dickinson, which could take longer. ‘In some businesses, you could be looking at two

or three months’ work,’ he says. There could be more

software challenges going forward too, relating

to historical information. ‘Outstanding

debts in euros may need changing to a new currency and then reconciling, and bank payments systems will have to change to cater for multiple currencies,’ says Stuart Anderson, director of sales and marketing at Pegasus Software.

Like ABS, Pegasus has plans to support its user base. ‘We would have to work with our customers to develop utilities to allow them to continue to trade, which could become a complex area to develop,’ says Anderson.

For businesses using a system without multicurrency features, it could all be a lot more challenging. There are plenty of programs (and gazillions of spreadsheets) that were never intended to deal with more than one currency. So single-currency software could create problems for businesses inside any country that leaves the eurozone, and for some of their customers and suppliers in other eurozone countries. ‘If you have opted for a self-build website or

low-cost e-commerce option, as a lot of small businesses have, you may not be able to do multicurrency price lists or sales,’ warns Mike Risley, commercial director at Nolan Business Solutions.

Payroll problemsEven software and systems that can deal with multiple currencies, their conversions and any complex triangulation involved may face challenges in areas such as payroll.

‘The conversion of currencies isn’t intrinsically a problem,’ says Iain Moffat, international director of MidlandHR, but ensuring the transparency and fairness of the conversion rates for affected employees could be. ‘A lot of payroll calculations are determined by retrospective detail, such as pay awards,’ he explains, ‘and this is an area that could drive some

significant change programmes.’ Software that saw you through the euro’s birth will probably

get you through its death, but Gary Turner, managing director of New Zealand software developer Xero, warns: ‘That was an orderly change and both currencies were retained in parallel for a period after the euro’s introduction to assist in

the transfer.’ This may not be possible going forward, and who knows how far the contagion might spread?

‘We have scenario plans in place for most eventualities, but

no matter what we do a risk will remain,’ says James,

‘because there are too many uncertainties.’

Lesley Meall, journalist

29

AP_F_eurosoftware.indd 29 13/06/2012 11:13

Comment

It is a popular notion that most accountants are introverts. Naturally, just about every list of the top jobs deemed suitable for introverts includes accountants and auditors. After all, how many extroverts are likely to fancy the idea of spending hours crunching numbers, preparing reports, analysing trends, poring through financial statements and running simulations?

And when you are an introvert, it is easy to be stuck with labels such as dull, quiet, unsociable, nerdy and shy. This is unfair, of course, but is what happens when people misunderstand introversion.

That may well be changing. A book titled Quiet: The Power of Introverts in a World That Can’t Stop Talking, came out in the US in January, and has become a bestseller.

The media has picked up on the buzz and the nature of introverts has become a subject of public discussion. Time magazine, for example, published a story that drew significantly from the book. That same issue also featured an essay by the book’s author, Susan Cain, a former corporate lawyer and negotiations consultant.

A video of Cain’s talk at the TED conference in February has received almost 2.3 million hits since it was posted in early March.

In an interview with CBS News, Cain explained that she was moved to write Quiet by the same mix of emotions – passion

In praise of quiet[Many introverts feel they must act like extroverts in order to gain validation, says Errol Oh, but thanks to a

new book by Susan Cain, this misunderstood personality type is fi nally getting the recognition it deserves

and indignation – she imagines drove Betty Friedan to write The Feminine Mystique, published in 1963.

Cain added: ‘Introverts are to extroverts what women were to men at that time – second-class citizens with gigantic amounts of untapped talent. Our schools, workplaces, and religious institutions are designed for extroverts, and many introverts believe that there is something wrong with them and that they should try to ‘pass’ as extroverts. The bias against introversion leads to

a colossal waste of talent, energy, and happiness.’

In other words, there is no need to

apologise for being an introvert. Introverts are not inferior to extroverts; they just function differently.

An extrovert is energised by interaction with others. On the other hand, to be at his best, an introvert typically needs to be alone with his thoughts every now and then. It is not that introverts are socially inept; they can give solid presentations, engage in public speaking and hold their own in conversations, but not on a sustained basis like many extroverts can.

However, there is a tendency for society to pay more attention to extroverts, and indeed, to be impressed by them. The failure to

appreciate the strengths of introverts can be costly. Their potential and contribution are often underestimated, and pressuring introverts to be more outgoing and collaborative may do more harm than good. Furthermore, the dominance of extroverts can lead to poor results because

extroversion at its extreme is characterised

by impulsiveness and recklessness.

It is all about balance. In her essay in Time, Cain points out that we would not want to live in a world entirely populated

by bold extroverts or cautious introverts. ‘The two types need each other. Many ventures are the result of

effective partnerships between introverts and extroverts,’ she says.

Errol Oh is executive editor of The Star

30

AP_COM_Errol.indd 30 13/06/2012 11:12

Ads-JulyAug12.indd 3 12/06/2012 15:10

Comment

I’ve had financial planning and analysis (FP&A) on my mind lately. In various interactions with CFOs, the conversation sooner or later touches on FP&A teams and how they are – or more often not – meeting new demands for insights from finance and the rest of the business.

The board and management want to know how the problems in Europe will affect the company’s bottom line, whether the firm is strong enough to withstand disruptive industry and technology trends, and what can be done to strengthen the financial supply chain in anticipation of more economic turmoil.

It’s a novel experience for FP&A teams used to primarily data-related requests, such as historical pricing data and analysis of variances in sales and profitability.

‘Finance professionals are being increasingly asked to deliver insights, not just data, but most FP&A teams tell us they don’t feel fully prepared,’ Michael Griffin told me. He is head of global research for the finance and strategy division of US advisory firm Corporate Executive Board (CEB).

The CEB recently completed a study on FP&A across the globe, including Asia. Among the key findings were:

*Only 5% of FP&A teams surveyed think they are effective in conducting analysis to support decisions that need substantial application of judgment.

*Only 5% believe they are effective in creating analysis that provides comfort about the relevance of long-term

strategy in light of market changes, and that inform decision-makers about emerging opportunities.

*FP&A performs well enough in most data-driven tasks, but it is under-delivering in judgment-based analysis, such as business unit scenario planning and risk-based forecasting.

According to the report, ‘Most FP&A teams are unprepared to shift

from core forecasting and budgeting roles to solving complex problems and influencing their companies’ revenue and profitability trajectories.’ Few have successfully transitioned from being a ‘source of trusted information’ to a ‘source of business insight’.

What can companies do? ‘The thing you really want to think about as CFO is how to create priority around the roles and expectations of your team,’ says Griffin. ‘Often what we find is that there isn’t a great deal of clarity around what skills we need to be

successful for FP&A, specifically.’It is more productive for CFOs

to improve training and recruitment in

subject areas such as macro and micro-indicator

selection, business unit scenario planning,

risk-based forecasting and long-range planning. FP&A teams must

also be given the tools to make judgment-based analysis.The CEB research also found that

effective FP&A teams ask questions that lead to deeper insight into business problems, determine what data is necessary before beginning a project, develop hypothesis about business problems to test through analysis, and prioritise timely analysis over ‘perfect’ analysis.

The effective team also identifies important insights in the data, summarises findings, makes practical recommendations and communicates the ‘narrative behind the numbers’.

‘It is time to put back the A – analysis – to FP&A,’ says Griffin.

CFOS everywhere could not agree more.

Cesar Bacani is editor-in-chief of CFO Innovation Asia

[Finance professionals must focus on judgment-based analysis and clear communication, says Cesar Bacani, but teams need help to become trusted sources of business insight rather than just information

Putting back the ‘A’ in FP&A

32

AP_COM_Cesar.indd 32 13/06/2012 11:12

CLASS ACTIONS PROPOSED Hong Kong’s Law Reform Commission has recommended that the city introduces class action lawsuits in a phased approach. On 28 May, the commission proposed a law to allow a group with the same complaint to sue through a representative. The commission suggested the system be initially applied to product liability and consumer fraud cases, before extending it to buyers of company shares and other securities. It also recommended an opt-out approach where those defined by a court to belong to the same class would be bound by the class action unless they opted out. The Department of Justice said it would take six months to assess the report and decide what to do.

FOOTBALL TYCOON TO LIST STMA Kuala Lumpur tycoon is set to list Malaysia’s lottery operator Sports Toto Malaysia (STM) on Singapore’s stock exchange. Vincent Tan, owner of the English football club Cardiff City, indirectly controls Berjaya Sports Toto (BToto) that owns the lottery operator via his flagship Berjaya Corp. STM is likely to be listed in November this year with a business trust structure, and could raise about US$1.89bn. Malaysia lacks a legal framework to support business trusts, but these were introduced in Singapore in 2004. A BToto executive director, Freddie Pang, said the business trust structure would allow STM to distribute surplus cash flows as dividends regardless of profits and there would be no gearing limits.

The view from: Hong Kong: Marilyn Cheung, founder, ikindof.com

Q What are your business challenges and opportunities in the coming one to two years? A We only soft launched our website in November 2011, so people haven’t heard much about what we are offering. We need to build this awareness from scratch. Nevertheless, we are confident that our online shopping business will do well – as an internet business with great potential.

Q What projects are currently in your inbox? A I am working with a medical doctor on developing our own brand of supplements and personal care products. I am promoting our website through networking, attending exhibitions and road shows. I am also working with some other companies and institutions to promote the green concept.

Q What are your skills in managing staff and managing your daily work? A I don’t really ‘manage staff’; I work with them. We have a daily briefing in the morning, then they go off to do what needs to be done. There will always be more work to do than one wants to accomplish, so I prioritise.

Q What do you enjoy about your work? A I like the exploratory and creative nature of this business. While working, I am incorporating my belief system and what I have been practising in my personal life.

Q What do you do outside work to de-stress? A Since I enjoy what I do, I don’t find it stressful! Every morning I practise healing and some kind of exercise, including stretching or jogging.

FAST FACTSHQ location: Hong KongFavourite book: Where Are You Going? by Swami Muktananda

33 Corporate The view from Marilyn Cheung of ikindof.com; tax roundtable on outsourcing; ACCA research on untapped outsourcing opportunites

41 Practice The view from Sajjad Akhtar of PKF-CAP; how accountants in the UK are cashing in on the trend

for online solutions

33Corporate

AP_YCORP_intro.indd 33 15/06/2012 16:35

Tax is top of the political agenda. Revenue-starved governments around the world are struggling to grab their ‘fair share’ of the total tax pot in an increasingly globalised and connected world, in which technology plays an ever greater role. Politicians, tax authorities and the media are all focusing on this hugely complex subject, driving change that is fast and sometimes unpredictable. The lines between planning, avoidance and evasion are consequently becoming more blurred. Caught in the crossfire is the tax director, who has to balance the competing demands of managing a company’s effective tax rate while ensuring compliance and managing tax risk – and with an eye fixed ever more firmly on PR.

Accounting and Business (AB), in association with Thomson Reuters, brought together a group of tax experts to pull together these developments and predict how these will affect the tax director of the future.

ABIt feels as if governments have declared war on companies

over their tax affairs. With attitudes of governments around the world to tax avoidance hardening, what impact will this have on tax directors?

CRC People and businesses are trying to navigate their way

through very difficult systems. But at the same time governments are saying: ‘Well, actually you should pay more.’ However, the reality is that the public and business are paying quite a lot more than governments think they do.

TWO I think that’s a good point. I’m not sure government

attitudes to tax avoidance have shifted, in that most governments have always said people should pay their fair share.

The tax director of tomorrowA daunting cocktail of complexity, challenge and risk is putting corporate tax departments under more pressure than ever, according to experts at a recent roundtable hosted by Accounting and Business and Thomson Reuters

I think that what has changed is the line. Things that historically might have been considered as tax planning are now considered as avoidance.

TWA Governments increasingly view tax planning as tax

avoidance. More importantly, the public is increasingly taking the same view. Even though companies may have a perfectly legal and defensible position under their right to minimise tax as much as possible, they are taking a public relations hit over it.

TD Companies are seeking to minimise their tax position

because they are competing in a global economy against other companies. But public outcry following the financial crisis gives permission to governments to increase regulation, including retrospective legislation. We have seen this recently with the banks and there was hardly any outcry.

GH The most interesting point about navigating this path is whether

the CFO’s view of the tax department will change. Most CFOs measure the tax department’s effectiveness through the lens of the effective tax rate (ETR) and in many respects by reducing it. This may well change to one of maintaining an acceptable ETR or to shift the focus to other measures altogether and perhaps looking at the management of taxes more widely.

SG I also think that the job spec of the tax director will change.

You assume that the tax director is

competent in assessing tax risk, but this has now moved on to reputational risk.

AL Tax directors are used to looking at technical risk. In addition to

reputational risk I think there is an operational risk. In order to manage reputational and operational risk, tax directors need to be more commercial. There is competition among governments to get their fair share of revenue and this is why transfer pricing (TP), for example, is increasing in prominence. This is a very challenging thing to tackle operationally. TP is embedded throughout the business units, so how do tax directors control that? They have to talk to the business units. They have to be ahead of transactions, which is not something the tax director has traditionally needed to look at.

TWATax positions used to be operated in a silo,

but you are now having to share data through transfer pricing, and you are now having to reconcile tax positions of multiple different regions in your operations. You have got to be able to have some visibility to be able to say you have the legitimate tax positions. I think that technology has to play a massive part in that. You need to dig down deeper into the data levels so that you have the visibility to make further reconciliations.

ABWhat will be the impact on tax directors as tax authorities

begin to reach beyond their borders, such as with FATCA (Foreign Account

‘THE REALITY IS THAT THE PUBLIC AND BUSINESS ARE PAYING QUITE A LOT MORE THAN GOVERNMENTS THINK THEY DO’

34 Corporate

AP_INT_YCORP_Roundtable.indd 34 14/06/2012 17:52

Chris Quick, chairman

TOM DUFFY (TD) Member of ACCA’s Global Forum for Taxation and a consultant at management consultancy Affecton. He spent 28 years with Shell, including a spell as head of UK tax from 1999 to 2005.

SIMON GODLEY (SG) Director at specialist tax recruitment consultancy Talentpool Selection. He trained with Arthur Andersen, and specialised in tax before moving into recruitment in 1996.

GARY HARLEY (GH) Head of indirect tax at KPMG, he set up the firm’s process and technology team five years ago. He had been with HMRC and Ernst & Young before he joined KPMG in 1999.

ALBERT LEE (AL) Leader of Ernst & Young’s EMEIA Tax Performance Advisory business. He has over 20 years of international tax experience spanning industry and the profession.

CHAS ROY-CHOWDHURY (CRC) ACCA’s head of taxation. He worked in public practice before joining ACCA’s technical department.

KINGSLEY SANSOM (KS) Head of operations for AIMS Accountants for Business. He has worked with the AIMS franchise network since it was launched in 1992.

TOM WALSH (TWA)Managing director and senior vice president of Tax & Accounting EMEA, Thomson Reuters, where he leads a team of 200 tax and accounting specialists throughout EMEA.

TIM WOODTHORPE (TWO) UK tax counsel at GlaxoSmithKline. He qualified as a solicitor at Slaughter and May before joining GSK as the global tax team’s in-house lawyer.

CHAIRMAN: CHRIS QUICK (AB) Editor-in-chief of Accounting and Business. He trained as an accountant at Arthur Andersen before entering journalism in the late 1990s.

*THE PARTICIPANTS

Tax Compliance Act) from the US, as governments struggle at a national level to deal with a globalised world?

CRC We have already seen global audits and one of the things

with transfer pricing, which we have always known, is that you never say one thing in one jurisdiction and something else in another. The two things must tie up. Sooner or later, one part of the world will catch up with another. You will need to be careful about how you provide information to any one tax authority because this could be shared globally. This will be much more the case going forward.

TWO Multinational groups are interconnected and global.

Tax authorities are increasingly dealing at that level as well, and not just those in the historically more developed countries. I think that developing countries are getting more sophisticated in understanding a lot of the more global issues.

TD A global company that operates on a global and local basis keys

into these authorities and their emerging views. Multinationals may have tax departments around the world, but they may not put a lot of effort into lobbying locally. Once they are part of a global tax department, if the centre says this is important they should allocate resources towards it.

35

AP_INT_YCORP_Roundtable.indd 35 14/06/2012 17:52

Albert Lee, Ernst & Young

Chas Roy-Chowdhury, ACCA

Tom Duffy, Affecton Kingsley Sansom, AIMS

TWA The technology ramification is that it needs

to be on similar data elements, on similar taxonomies, similar technology. This means tax directors need to change their reporting systems and processes because they are going to be sharing data with other countries.

TWO At GSK we found a lot of people in the business were

‘doing tax’, so we now have a global tax team that brings individuals into the tax reporting line rather than a local reporting line. We now have much more visibility locally and this allows us to standardise our approach much more.

ALWe’ve seen information exchange around the EU for a

while – for example, European Commission sales lists – but what about other jurisdictions?

GH I think there’s a desire but no mechanism at the moment,

although it’s not that far away. But it’s a one-sided equation at the moment – tax authorities are going after avoidance and treating avoidance as evasion, but there is not much simplification for business. I feel quite sorry for tax directors at the moment.

They are under siege and have to fight their corner while the organisations that could help more are not helping.

ABDoes this mean tax functions are becoming more expensive?

ALThat’s a good question. One of the skills some tax directors

have to learn is how to do more with less and build business cases. They know they need a more systematic and standardised approach, but feel helpless in trying to get a budget for this.

CRC Tax departments may be getting bigger, but I’m not

sure they’re getting more expensive – they could be outsourcing. There might be an expansion in the function but that does not necessarily go hand in hand with more cost. But sooner or later that increase in cost will come through as developing countries catch up and start becoming expensive.

AB A lot of debate focuses on large multinationals, but what

about SMEs? What pressures are they feeling in terms of aggression from tax authorities and the changing challenges of managing their tax?

KS Essentially, these are people who are just trying to make a

living. If they know the rules, they will pay their tax. But certainty has disappeared. My clients will sit there and see all the things that the multinationals are doing and ask why they are being hounded for a £5,000 VAT bill while an international company has paid hardly any tax in the UK.

GH Companies big and small face some of the same issues, it’s

just a matter of scale. It’s about understanding the rules. There’s a real challenge around keeping current with the rules and rates, not just in the UK but around the world.

CRC This is also a technology issue. For instance, in the UK

there is real-time information (RTI) coming in, which will also happen in other countries, and I just wonder if SMEs are willing or prepared or have started investing in RTI systems.

ABWhich brings us neatly to the next subject. How will the tax

director of the future be impacted by

36 Corporate

AP_INT_YCORP_Roundtable.indd 36 14/06/2012 17:53

caption style

Tim Woodthorpe, GlaxoSmithKlineTom Walsh, Thomson Reuters

Simon Godley, Talentpool Selection

technology, including XBRL, and does this add to the potential offered by outsourcing and shared services?

SGIf you’d suggested a career move into tax software 10 years

ago to a tax person, they would have asked: ‘Why would I do that?’ It seemed a very narrow niche area, but that has quickly changed. Tax directors now realise they have to seriously consider implementing better tax compliance systems, especially in big multinationals, systems for data collection, and streamlining the whole tax compliance process.

GHYes, but what surprises me is that you have global businesses

with global tax directors who are accountable for the tax worldwide yet have little or no visibility in the centre of what is happening on the ground across the taxes. I’ve seen some organisations go for the technology with all the bells and whistles yet as a starting point just basic visibility is the key to them really reaching out to the organisation to manage taxes effectively.

TWA Another slant on this is that a lot of organisations

have focused on ‘good enough’ tactics for technology for a long time. I just don’t think that cuts it any more, there’s too much change. It’s about getting the right technology.

CRC I think there are dangers in tax being hived off to shared

service centres. It is a cost saving, but perhaps businesses need to recognise it is a dis-saving because you could end

up with additional internal issues which may not be addressed. You might not have people within your business who can tell you exactly where you stand from a compliance point of view, articulating why you have got certain tax numbers, working out business-specific issues that affect your tax position. The finance director of the future needs to be careful and retain a significant part of the tax function within the business.

AB As well as being technology experts, do tax directors have

to be PR experts too? What happens when you have protests outside your offices or your shops?

CRC In some ways I think it would be good where you’ve got an

organisation such as UK Uncut protesting about an issue for the tax director to stand up and defuse the situation. But I’m not sure that there are many tax directors willing to do that. However, I think that is going to be forced on them in the future because they need to be able to get the information out to wider audiences. It could make the job more interesting.

GH There are some sectors such as oil and mining that I think are

very good at articulating their total tax contribution in their annual reports. I think that the tax director has got to be on the front foot with the board in terms of getting their message out to the public.

TWO We’ve also seen a trend of public relations being done

collectively, such as through the CBI. The challenge in making the proactive case is that a lot of tax issues are difficult to understand and convey. When the press is seeking to deliver a particular message, it is difficult to get across the detail. It is a challenge for the tax director to articulate and make the point while it’s a lot easier to attack something.

Philip Smith, journalist

Gary Harley, KPMG

37

AP_INT_YCORP_Roundtable.indd 37 14/06/2012 17:53

Today’s CFO operates in a challenging and complex environment. With continuing uncertainty on the horizon of the global economy, more than ever the CFO is in the spotlight to transform the finance function so it can support the business more effectively. But how successful are current transformation activities, and are shared services and outsourcing really living up to the promise?

A recent study from ACCA, Finance leaders on sourcing success, suggests that many opportunities remain untapped. Uniquely, the survey focused on how CFOs themselves viewed the success or otherwise of shared service and outsourcing (SSO) strategies, outlining the drivers behind SSO adoption and gauging how the business outcomes that were initially sought have shifted. Almost 500 CFOs and other finance leaders across the world participated in the study, which was complemented by in-depth interviews with leading brands such as Microsoft, GE and AOL. The outcomes make compelling reading

First it is important to note that not everyone has adopted SSO, even for transactional finance activities. Twenty-eight per cent of respondents

to the survey said they had not yet taken the plunge with remote delivery of some finance operations. For those CFOs that have, the survey suggests that shared services and hybrid models are the significant preference.

Partial penetration In many senses SSO has been an overwhelming success, particularly around transactional finance activities. Leading brands around the world have tapped into a compelling labour arbitrage and used SSO to drive process standardisation. But the survey also sounds a note of caution and suggests there is much more to do. Many CFOs are still not using remote delivery for transactional finance activities, and the promise of shifting the ‘higher value’ finance activity out remains just that, a promise, even with the largest businesses. Around 60% of respondents still keep higher value activities in-house.

The good news is that these findings don’t appear to detract from the attraction of SSO for CFOs. In fact, quite the opposite. The survey suggests most finance leaders have very high aspirations for the business outcomes that SSO can deliver, and – guess what? – these aspirations are getting higher.

CFOs cite the usual trifecta of business outcomes – cost reduction, efficiency and finance capability – as reasons for undertaking the journey in the first place but as they progress through the journey new priorities come onstream. Quality, scalability, transformation and talent quickly rise up the agenda as sought-after outcomes too. No pressure then?

As aspirations rise, the key question is whether CFOs believe SSO can deliver the outcomes desired. Here is the stumbling block – this survey suggests not quite. So this is a story of growing expectations not quite being matched. It’s a challenging picture with a consensus that effectiveness needs to improve. Not surprisingly, however, this survey suggests that it is those businesses with more longevity in their SSO relationships that typically see greater effectiveness.

The shape of successOf course, one of the critical questions in the adoption of SSO is what success actually looks like. There is much talk about going beyond cost reduction as the barometer of success, yet this survey suggests that measures of success remain in their infancy. Overwhelmingly businesses remain focused on measuring success through

Sourcing successCFOs have high and rising expectations of shared services and outsourcing, but new research shows many are not making the most of remote delivery, says ACCA’s Jamie Lyon

*WHAT DOES THE FUTURE HOLD?

* More CFOs aspire to implement SSO models

* Outsourcing of higher value finance activities is still untapped

* Efficiency, cost and capability are the initial drivers for adoption

* Model maturity drives effectiveness

* Cost won’t always be the highest priority for CFOs

* Focus of SSO is on quality, scalability, transformation and talent

38 Corporate

AP_YCORP_Lyon.indd 38 14/06/2012 15:25

two methods – cost reduction and the achievement of service level agreement. Fewer than one in six businesses adopt broader measures of success such as return on investment targets, profit contribution targets and net promoter scores. Just 5% of businesses attempt to link their SSO investment to shareholder value. Perhaps this is part of the problem.

Poorly monitored Unsurprisingly, these findings also correlate with the use of monitoring tools, which remain in their infancy. According to the survey, only 31% of businesses use finance dashboards to monitor the programmes, and even fewer use internal/external benchmarking or tools such as six sigma and lean processes.

These findings are consistent with ACCA’s previous study on SSO at the start of the year, which was reported in the February and March issues of Accounting and Business. That study concluded much more could be done to embrace remote delivery and capitalise on the benefits promised; change management and service experience in particular were cited as key challenges.

So where next? Well, it’s not all bad news. CFO aspirations remain positive 28%

Have not yet implemented SSO

40%Have had their current finance delivery model in place for more than five years

3/5CFOs use shared services or a hybrid of SSO models

50%Still keep their transactional finance activities in-house

*HOW ARE CFOs USING SSO MODELS?

and this is reflected in the desire for future investment in SSO, according to the survey. Put simply, those CFOs who have already invested in SSO expect to continue to add significantly to their investment. In contrast, those who haven’t adopted remote delivery as part of the finance solution are seen to be less bullish about investing in their current finance delivery model.

These findings should be seen as a wake-up call to those people involved in SSO delivery on a daily basis. The reality is that SSO won’t always be at

the forefont of the CFO’s mind, and won’t always be given the focus and priority it perhaps deserves.

There is no doubt that SSO has delivered significant cost reduction, improved finance processes and helped drive control transparency. Leaders in the SSO space need to continually restate and remind businesses and finance chiefs, and not just themselves, of the significant benefits already achieved. This is particularly true when making the business case for transitioning higher value finance activities and unlocking the value that SSO can deliver. Our survey suggests that some CFOs may need a little bit more convincing.

Jamie Lyon, head of corporate sector, ACCA

If you are a CFO or FD interested in this area and want to contribute to ACCA’s programme, please email jamie.lyon@accaglobal.com

TO READ THE ACCA REPORT GO TO www.accaglobal.com/transformation

39

AP_YCORP_Lyon.indd 39 14/06/2012 15:25

Roar power

[The emergence of Africa’s ‘lion markets’ sets another big cat loose in the global economy, says ACCA president Dean Westcott

For many years there was a favourite business saying that the African economy was a sleeping lion and the world would know when it finally woke up.

It may now be time for the rest of the world to wake up. The phenomenal growth in the continent over the past decade has outstripped that of East Asia, with the World Bank reporting that sub-Saharan African economies have been growing at rates that match or surpass the rest of the world. As a result many countries in Africa have earned the nickname of ‘lion markets’, putting them alongside the ‘Asian tigers’ and ‘Latin pumas’ as fast-growth economies.

The growth has led to many international agencies investing more in emerging African economies, which have defied the global economic recession and are providing some of the highest rates of return on investment in the developing world.

Through its long association with Africa – many of our African country offices were set up more than 50 years ago – ACCA has had a front row seat when it comes to the development of economies and the accounting profession on the continent. ACCA has 10,500 members and nearly 83,000 students in sub-Saharan Africa.

This is why we felt it was important this year to hold ACCA’s annual Council meeting in Nairobi, Kenya, due to take place as Accounting and Business goes to press. It will give Council members a better understanding of developments in Africa and how these impact accountants, and let them see what ACCA can do to support them.

Council will not only meet with ACCA members in Kenya, but see – through visits to Tanzania, Uganda and Ethiopia – how members in East Africa are contributing to the economy and profession in their respective countries. It will help Council to connect with ACCA’s partners, the profession and policymakers in the region, and to show how ACCA’s work is bringing value to employment markets.

Many stakeholders have told us that for Africa’s economic potential to be fully realised, strong national professions are essential. ACCA aims to continue to contribute to the development of national professions, working through its members to ensure that the lion markets continue to roar.

Dean Westcott is interim CFO, West Essex Clinical Commissioning Group, UK

Comment40

AP_UK_COM_pres.indd 40 15/06/2012 12:20

Q What is your outlook for the second half of 2012? A It will be difficult; the economic contagion in Europe and the continuing weak recovery in the US show no signs of ending. On top of that, China and India are both experiencing a sort of slowdown which may or may not be prolonged. It is not

possible for Asian economies to be immune from the slowdown’s impact.

Q What is your top priority this year? A In April, we merged our practice with HT Khoo & Associates PAC. We now have the challenge of integrating the two firms, ideally achieving complete integration by year-end.

Q What is one issue that you feel will be of concern to businesses this year? A Singapore has over the past few years become quite an expensive place to do business. For the past year, the inflation rate has hovered between 4% to 5%; and the Singapore dollar has been appreciating against the US dollar and pegged currencies, as well as other Asian currencies. Higher wages and salaries, transportation costs and a drop in relative productivity are all contributing to this.

Q Will anything offset this? A There are some signs the government is becoming more alert to the risks facing Singapore with a new focus on innovation. Incentives are being offered to encourage these aspects of business activity. There is also a boom in tourist arrivals and continued healthy foreign direct investment.

Q What’s new with the PKF International network? A PKFI is providing greater resources for member firms worldwide. We are quite excited about this plan, which includes the establishment of centres of excellence in many countries.

FIRM FACTSFirm structure: PartnershipNumber of partners: Three

PWC PAKISTAN MAY FACE CLAIMThe likelihood of PwC’s Pakistan branch being sued by the Afghan government increased following the leak of a report critical of the firm’s actions as auditor of Kabul Bank. The report, by security consultancy Kroll, points towards what Afghanistan’s finance minister Hazrat Omar Zakhilwal describes as at least ‘serious negligence’ by PwC firm AF Ferguson & Co, according to The Independent newspaper. Kabul Bank collapsed amid allegations of fraud in which US$900m went missing. The Kroll report also describes failings by the Afghan government’s Central Bank. AF Ferguson & Co reportedly responded to the allegations in a statement by saying the firm was not in a position to comment, ‘as we have not been involved in the investigation and are not privy to its findings’.

DELOITTE SET TO EXPANDDeloitte has announced plans to spend US$400m to hire more staff, deploy talent and expand its services in Asia over the next three years. The funds will be directed to expansion in China, India, Japan, South Korea and South-East Asia. In total, the Big Four firm has pledged to invest US$750m between 2013 and 2015 in 11 regional and national markets around the world, following its 2010–12 strategic market investment programme in which US$500m was committed. The other markets in which Deloitte plans to invest in between 2013 and 2015 are: Africa; Brazil; the Commonwealth of Independent States; Germany; the Middle East; and Turkey.

The view from: Singapore: Sajjad Akhtar, managing partner, PKF-CAP

41 Practice The view from Sajjad Akhtar of PKF-CAP; how accountants in the UK are cashing in on the trend for online solutions

33 Corporate The view from Marilyn Cheung of ikindof.com; tax roundtable on outsourcing; ACCA research on untapped outsourcing opportunites

41Practice

AP_YPRAC_intro.indd 41 15/06/2012 16:37

‘FOR THE GENERATION OF ENTREPRENEURSBROUGHT UP WITH GOOGLE, APPLE, AMAZONAND FACEBOOK, SHARING INFORMATION ONLINEWITH THEIR ACCOUNTANT IS AS NATURAL AS ONLINE BANKING, AND THERE IS A SIGNIFICANTOPPORTUNITY FOR ACCOUNTANTS’

Starting any new business in the current economy, let alone an accountancy firm, is a challenge. But three years ago, having sold his digital marketing agency Pure360, this is just what Darren Fell did – although Crunch is not typical.

A team of 50 physically located in Brighton on the south coast, Crunch describes itself as ‘the whole accountancy solution online’ that has ‘shaken up the dusty old world’ of traditional accounting. It has amassed 2,200 clients – freelancers, contractors, small web and PR agencies, locum doctors and other micro-businesses – since its launch in April 2009. For a monthly fee of £59.50 plus VAT, they get unlimited access to bespoke software and, via email, telephone or Skype, to an administrator and an account manager – the kind of human support Fell says you do not get from a regular accounting software provider.

They also get access to an accountant who oversees completion and filing of their company tax returns, accounts and annual returns. What they do not get is face-to-face contact but, according to Fell, this is the whole point. ‘Crunch replaces the pain of dealing with traditional accountants,’ says Fell. ‘Gone are the days of the dreadfully costly meetings.’

How does it work in practice? The idea is that they can create invoices, manage their expenses and calculate a real-time view of their business,

including what and how they pay themselves, from anywhere connected to the internet. ‘I can log in wherever I am and fire off an invoice,’ says Tim Spilman, director of TRS Technical and a Crunch client, who works in the events and entertainment industry and is ‘on the road’ two-thirds of the year. And what happens when clients have accountancy questions? ‘They ring up their account manager who books them in for a Skype, video- or tele-meeting with one of the accountants,’ says Fell.

Growing interest Spilman is among the new breed of entrepreneurs. A survey by international market research agency YouGov found last year that over a third of small businesses were ‘in the cloud’, using at least one internet-based application (excluding email), and a new survey from software company Sage has found that 42% of accountants say there is growing interest from clients in online collaboration. ‘For the generation of entrepreneurs brought up with Google, Apple, Amazon and Facebook, sharing information online with their accountant is as natural as online banking, and there is a significant opportunity for accountants here,’ says Jim Scott, managing director of Sage’s Accountants’ Division.

There is no doubt about it – the low-cost, volume-driven online accountancy marketplace is becoming

Being a virtual accountantWhile yet to take root in Asia, online accountancy solutions are growing in popularity in the UK. We look at how accountants there are cashing in on the trend

42 Practice

AP_YPRAC_virtual.indd 42 13/06/2012 11:19

big business and everyone wants a piece of the action. According to the research from Sage, nearly three-quarters of accountants predict that online services will represent the biggest shift in their working practices over the next three years and 41% say online will be a new offering for the next 12 months, with bookkeeping, final accounts and monthly management accounting as the top three services offered online.

London-based firm Goodman Jones seized the online opportunity five years ago, when it started to offer online bookkeeping as a ‘supplement’ to its advisory and tax planning services. ‘The tools have been around for a while, but it’s the growing awareness of cloud computing that makes it easier to introduce online accounting to our clients,’ says partner Philip Woodgate. ‘Five years ago we were having conversations just explaining what it was.’

The amount and type of online a practice can offer depends on its market positioning. ‘To supplement’ as opposed to ‘everything online’ is therefore what Goodman Jones does. ‘Our clients are large, so their needs are different and our approach is people rather than factory-based,’ says Woodgate. ‘Occasionally, you do need to sit down in a meeting and discuss risks and implications.’

So, if you service micro-businesses solely online, do you, in a perverse sort of way, almost wish your clients did not prosper? Perhaps, because otherwise, ‘As your clients and their needs grow and become more complex [think tax planning], what are you going

to do?’ asks Woodgate.There are tax-planning and tax-saving

opportunities with small businesses, too, but this is not something online accountants, on the whole, cater for. ‘It’s important that clients understand what they’re getting as part of the deal,’ says Woodgate.

Could the personal touch be missing when clients are serviced solely online? Fell disagrees. ‘It is the traditional accountant who is often not very good at customer service,’ he says. ‘They’re doing the technical work, the meetings, trying to win new business – they’re doing too much and are not very fast at getting back to clients. Our model separates these functions and makes the best use of everyone’s time.’

Human touchBesides, not all online accountants are the same. ‘It’s not enough to buy a piece of software and give it to your customers,’ says Fell. ‘You also need that human factor and the customer service that comes with it – it’s the “humans and software” business model of bringing people and software together that allows us to deliver good service at a fixed price.’

SJD Accountancy – which claims to be the UK’s largest specialist provider of fixed-fee accountancy services to contractors – is in a similar market but unlike Crunch, it operates firmly on the high street. But why should someone pay £110 a month (SJD price) when they can get the same service for £60? ‘It’s not the same because we do not operate from a call centre environment and you get to meet your accountant,’ says SJD managing director Simon

Dolan. ‘People don’t go to accountants to be told to do their own bookkeeping – they go for advice and to pay as little tax as possible.’

And does it even work that well? ‘Say, you’re sitting on a train on your way home and want to do your bookkeeping. You get halfway through, then go through a tunnel and you lose everything because there’s no Wi-Fi or the 3G is down. Or their site is down,’ says Dolan. ‘Because everything’s online, people have naturally assumed that it’d be great to get bookkeeping

43

AP_YPRAC_virtual.indd 43 13/06/2012 11:20

Clockwise from left: Rob Baldwin, KPMG; Darren Fell, Crunch; and Simon Dolan, SJD

online too, but it’s just the next spin.’The biggest worry, however, is the

security and integrity of the client data. ‘Online accountants tell you they can’t possibly get hacked. But if governments can get hacked, small private companies can too,’ says Dolan. ‘Bearing in mind the information they keep online – dates of birth, national insurance numbers, company names, home addresses, copies of bank statements – the hackers get everything they need to clone you with.’

What about anti-money laundering checks? ‘If you accept businesses that contact you by email, and if there’s no physical human contact and all you say is “pay us X and here’s the access code to our software”, then clearly there’s a risk,’ says Perry Burton, assurance partner at Grant Thornton. Fell disagrees: ‘Using every conceivable database, in about 25 minutes we collect 30 to 50 different pieces of information and compare it back to the potential client’s address – a far more detailed approach and way beyond what traditional accountants do.’

Global e-ccountantsWhile it is clear that online as the whole accountancy solution is currently limited to servicing small businesses and has bookkeeping at its core, bigger firms nevertheless also reap the rewards online can bring to their service offering. ‘We utilise the internet in the area of global compliance service,’ says Burton. ‘Multinational clients provide us with, and draw from us, information over the web.’ In effect, the central server works as an information exchange and documents repository – there is no software processing involved, he adds. ‘The clients use the server to electronically deposit information with us – as PDFs or spreadsheets – instead of sending it by email. And they can see online, in real time, where we are with the work.’

The real-time visibility is also key for KPMG, which introduced a web-enabled collaboration space to their clients nine years ago. ‘The number of users has doubled every year since 2006 and we now have over 12,000 in 140

countries,’ says Rob Baldwin, director of Global Compliance Management Services at KPMG. ‘What we do is far more complex than what Crunch does, but the principles are similar – we use the internet technology to get information from clients and to support the delivery of services.’ There has been a big shift in the recent years, especially in global tax compliance. ‘Heads of tax are not now just interested in fancy tax planning schemes – they’re more interested in what might come out of left field to upset the overall tax position of the group. They want and need the information at their fingertips to be able to plan ahead,’ says Baldwin.

Where are we heading to with online? ‘Smaller firms need to think how they can best use the tools to help their clients,’ says Woodgate. ‘The tools can be about much more than just data crunching and bread-and-butter work – they can be the basis for data analysis, for sharing information with clients, and this applies to working with larger businesses too.’

There is a growing emphasis on good compliance and non-financial reporting too – social responsibility or ethical reporting, especially in extraction industries like mining. ‘The press and the government cast some multinationals as evil organisations that aim to pay the least amount of tax, but most multinationals are actually keen to get it right and to be seen to be getting it right,’ says Baldwin. ‘So there will be more emphasis on systems, processes, adequate controls and transparency, and on being able to demonstrate that businesses are doing the right thing – online technologies can help with this.’

And what about Crunch? ‘By the end of the year we’ll have hired another 60 people and have 4,500 to 5,000 customers,’ says Fell. ‘In five year’s time, we want to be number one in the UK’s micro-business market with 12,000 to 15,000 customers, and will have gone into at least two other English-speaking countries.’

Iwona Tokc-Wilde, journalist

*FUTURE

73%Percentage of accountants who say use of online services will represent the biggest shift in their working practices over the next three years.

41%Percentage of accountants identifying online accountancy services as a new offering for the next 12 months.

Source: Sage survey

44 Practice

AP_YPRAC_virtual.indd 44 13/06/2012 11:20

Ads-JulyAug12.indd 1 12/06/2012 15:10

MALAYSIA

NEW PROJECTS ANNOUNCEDOn 29 May 2012, prime minister Najib Razak announced 21 new projects under seven National Key Economic Areas (NKEAs), expected to boost gross national income by RM4.59bn and create 39,918 highly skilled jobs.

Key updates on the progress made under the strategic reform initiatives (SRIs) include:

* Human Capital Development SRI: The recently gazetted Minimum Wage Act.

* Human Capital Development SRI: The addition of five more partners to the MyProCert Programme, aimed at upskilling Malaysians with professional certifications in ICT, to international standards.

* Competition, Standards and Liberalisation SRI: Establishment of the Competition Appeal Tribunal, with the exclusive jurisdiction to hear appeals regarding decisions made by the Malaysian Competition Commission.

* Competition, Standards and Liberalisation SRI: The development of 12 standards relating to light-emitting diodes were fast-tracked following the ban on incandescent lightbulbs beginning January 2014.

* Competition, Standards and Liberalisation SRI: Effected liberalisation

of nine services sub-sectors – accountancy/taxation services, courier services, departmental and speciality stores, incineration services, private hospital services, skills training services, telecommunications and technical and vocational schools – allowing up to 100% foreign equity with entry of foreign professionals permitted.

* Public Finance SRI: The Inland Revenue Board (IRB) and Royal Malaysian Customs Department implemented initiatives to improve tax administration and compliance. This resulted in tax revenue for the first quarter of 2012 of RM192.8m.

For more, go to http://etp.pemandu.gov.my

NATIONAL MINIMUM WAGEOn 1 May 2012, prime minister Najib Razak announced a minimum wage of RM900 a month for private-sector workers in Peninsular Malaysia and RM800 a month for those in East Malaysia. The wage applies to all sectors except the domestic sector. MASB ISSUES ED 76On 30 April 2012, the Malaysian Accounting Standards Board (MASB) issued Exposure Draft (ED) 76, Management Commentary (Guidance), for comments.

The aim of ED 76 is to provide a broad, non-binding framework for the presentation of

management commentary that relates to financial statements that have been prepared in accordance with Malaysian Financial Reporting Standards (MFRS). The deadline for comments is 30 July 2012.

For more, go to www.masb.org.my

PUBLIC RULINGS ISSUEDOn 3 May 2012, the Inland Revenue Board (IRB) issued Public Ruling (PR) No. 2/2012, Foreign Nationals Working in Malaysia – Tax Treaty Relief. This explains the application of tax treaty relief to foreign nationals from treaty countries seconded to Malaysia by non-Malaysian resident employers.

On 4 May 2012, the IRB issued PR No. 3/2012, Appeal Against an Assessment. This explains the procedure in respect of appeals against assessments made or deemed made and the requirements to be complied with when making appeals.

For more on PR No. 2, go to www.hasil.gov.my/pdf/pdfam/PR2_2012.pdf. For more on PR No. 3, go to www.hasil.gov.my/pdf/pdfam/PR3_2012.pdf

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

SINGAPORE

ACRA SEEKS COMMENTThe Accounting and Corporate Regulatory Authority (ACRA) is seeking public feedback

on proposed amendments to the Accountants Act. A consultation paper, summarising the proposed changes, was issued on 24 May. The consultation ends on 4 July 2012.

ACRA developed the proposed amendments in consultation with public accountants, audit firms, professional accountancy bodies, aspiring public accountants, universities and audit committee members.

The proposals aim to:

* Ensure good quality-control frameworks for the audit and review of entities that have a significant public interest.

* Enhance ACRA’s ability to inspect audit quality controls and policies of audit firms and require audit firms to improve, where necessary.

* Make practical experience in key audit functions a core requirement for registration as a public accountant.

* Clarify the scope of ACRA’s regulation.

* Enhance ACRA’s ability to respond swiftly to protect public interest and uphold public confidence, through the establishment of a special investigation process.

More details can be found at www.acra.gov.sg

SQP CONSULTATION PAPERThe Pro-Tem Singapore Accountancy Council (SAC)issued the Singapore Qualification Programme (SQP) discussion paper on

A monthly round-up of the latest from the standard-setters

46 Technical update

AP_T_update.indd 46 13/06/2012 14:45

18 May 2012. The paper sets out the pathway to becoming a Singapore professional accountant, and the Pro-Tem SAC invited all interested parties to contribute feedback towards the shaping and design of the SQP. The consultation ended on 15 June 2012.

The paper outlines each specific component underpinning the SQP framework and highlights particular areas. The paper also touches on important issues currently bring deliberated by the Pro-Tem SAC, including global recognition, international portability and the SQP administrator.

More details can be found at www.singaporeqp.com

XBRL FILING REQUIREMENTSOn 11 May, the Accounting and Corporate Regulatory Authority (ACRA) invited the public to give feedback and suggestions on proposed revisions to XBRL filing requirements and Exposure Draft (ED), ACRA Taxonomy 2012. The consultation ended on 11 June 2012.

ACRA implemented the filing of financial statements in XBRL in 2007 as part of the move towards enhanced business reporting and information flow. Today, close to 60,000 corporate financial statements are filed in XBRL annually.

The proposed revisions are therefore part of ACRA’s continual efforts to promote an environment of high-quality financial reporting and help strengthen Singapore’s position as a

trusted business hub.Earlier this year, ACRA

sought feedback from 80 organisations involved in the financial reporting supply chain to develop the proposed revisions. Through this revamp exercise, ACRA seeks to facilitate the preparation and filing of XBRL financial statements, and add further value to the flow of financial information by increasing the breadth and depth of XBRL data gathered. The public consultation paper covered two key areas:

* Proposed revisions to XBRL filing requirements to better meet the needs of preparers and consumers of financial statements.

* ED, ACRA Taxanomy 2012, in meeting the various disclosure requirements in Singapore Financial Reporting Standards (SFRS).

The proposed revisions are due to be implemented in the second quarter of 2013.

More details can be found at www.acra.gov.sg

Joseph Alfred, policy and technical adviser, ACCA Singapore

HONG KONG

FRAMEWORK FOR TIEASThe Financial Services and the Treasury Bureau has sought views on whether Hong Kong should amend the Inland Revenue Ordinance to provide a legal framework for entering into Tax Information Exchange

Agreements (TIEAs) with other jurisdictions.

Unlike Comprehensive Avoidance of Double Taxation Agreements (CDTAs), TIEAs are standalone agreements providing for exchange of information (EoI) in the absence of double taxation relief or other tax benefits such as lowering of withholding tax rates.

The legal framework for entering into TIEAs was recommended by the Global Forum of Transparency and Exchange of Information for Tax Purposes formed under the auspices of the Organisation for Economic Co-operation and Development (OECD). The proposal was made following the first phase peer review to evaluate jurisdictions’ compliance with the international EoI standard.

The consultation ended on 29 June 2012.

REGULATION OF SPONSORSThe Securities and Futures Commission (SFC) is inviting comments on its proposals regarding the regulation of sponsors, which proposed consolidating all key sponsor obligations in the Code of Conduct for Persons Licensed by or Registered with the SFC (Code of Conduct), including due diligence, reliance on experts and non-expert third parties, provision of information to regulators, record keeping and so on, as well as to clarify sponsors’ prospectus liability.

Comments are invited by 6 July 2012. The

consultation document can be found at www.sfc.hk

Sonia Khao, head of technical services, ACCA Hong Kong

CHINA

BUSINESS TAX TO VATThe leaders of the Department of Taxation of Ministry of Finance and the Department of Goods and Services Tax of the State Administration of Taxation have clarified the pilot scheme on switching business tax to VAT.

The leaders said that the pilot work in Shanghai was of national significance, as Beijing and other regions have also applied to take part in the trial. The departments will keep track of the pilot work in Shanghai, gradually expand the scope of the pilot and strive to achieve nationwide roll-out during the 12th Five-Year Plan.

They added that the current business tax exemption policy will partly remain valid, and will partly be replaced by the policy of refunding on collection once VAT is collected. This transitional policy offers support for sectors with a noticeable tax increase.

More than 170 countries which have adopted VAT have single tax rates and multiple tax rates. The pilot scheme will adjust the present two-grade tax rate to the four-grade rate. In the future, grades will be simplified.

Sophia Zhao, technical manager, ACCA Beijing

47

AP_T_update.indd 47 13/06/2012 14:45

ENTITIES SHOULD ENSURE THAT THE AMENDMENTSTO INTERNATIONAL FINANCIAL REPORTINGSTANDARDS DO NOT SLIP UNDER THEIR RADAR

The International Accounting Standards Board (IASB) is developing a group of projects that are likely to affect financial statements ending in 2015. However, in the meantime, there have been some amendments to International Financial Reporting Standards (IFRS) which affect year ends in 2012 and others that come into effect from 1 January 2013. Although these amendments have been in existence for a while, entities should ensure that the amendments do not slip under their corporate reporting radar.

There are amendments which relate to December 2012 year ends. For example, an amendment to IFRS 1, First-time Adoption of International Financial Reporting Standards, eliminates the need for companies adopting IFRS for the first time to restate de-recognition transactions that occurred before the date of transition to IFRS and provides guidance on how an entity should resume presenting financial statements in accordance with IFRS after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. An amendment to IFRS 7, Financial Instruments: Disclosures, introduces some additional disclosures that apply on the transfer of financial assets. The amendments allow users of financial statements to improve their understanding of transfer transactions of financial assets, for example, securitisations, including understanding the possible effects of any risks that may remain with the

entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

IAS 12, Income Taxes, requires an entity to measure the deferred tax

relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be subjective when assessing whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40, Investment Property. The amendment provides a solution to the problem by introducing a presumption that recovery of the carrying amount will normally be through sale.

In addition, there is an amendment to IAS 1, Presentation of Financial Statements, which applies from 1 July 2012. The amendments to IAS 1 retain the ‘one or two statement’ approach at the option of the entity and only revise the way other comprehensive income (OCI) is presented, requiring separate subtotals for those elements which may be ‘recycled’ (for example, cashflow hedging and foreign currency

translation) and those elements that will not (for example, fair value through OCI items under IFRS 9, Financial Instruments).

The revisions made to IAS 19, Employee Benefits, are significant, and will impact most entities. They come into effect from 1 January 2013. The

revisions change the recognition and measurement of defined benefit pensions expense and termination benefits and the disclosures required. In particular, actuarial gains and losses can no longer be deferred using the corridor approach.

New and revised standards on group accounting were published in 2011. IFRS 10, Consolidated Financial Statements, replaces IAS 27, Consolidated and Separate Financial Statements and SIC-12, Consolidation — Special Purpose Entities and sets out a single consolidation model that identifies control as the basis for consolidation for all types of entities. IFRS 11, Joint Arrangements, establishes principles for the financial reporting by parties to a joint arrangement, and replaces IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities, Non-monetary Contributions by Venturers. IFRS 11 reduces the types of

48 Technical484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848484848 TechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnicalTechnical

Preparing for changeDon’t let recent International Financial Reporting Standards amendments both current and future slip beneath your corporate radar, warns Graham Holt

GET VERIFIABLE CPD UNITSAnswer questions about this article online

Studying this article and answering the questions can count towards your verifi able 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

AP_T_HoltCPD.indd 48 14/06/2012 18:45

joint arrangement to joint operations and joint ventures, and prohibits the use of proportional consolidation. IFRS 12, Disclosure of Interests in Other Entities, combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities.

In addition, IAS 27, Separate Financial Statements, now has the objective of setting standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulation, to present separate (non-consolidated) financial statements. Financial statements in which the equity method is applied are not separate financial statements. IAS 28, Investments in Associates and Joint Ventures, covers equity accounting for joint ventures as well as associates. IAS 28’s objective is to prescribe the accounting for investments in associates and set out the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

All of the new group accounting standards have to be implemented together and apply from 1 January 2013. They can be adopted with immediate effect (subject to EU endorsement for European entities), but only if they are all applied at the same time. The European Financial Reporting Advisory Group (EFRAG) supports the adoption of the standards and

recommends their endorsement. However, it does not support the mandatory effective date of 1 January 2013; the field-tests it has conducted provided evidence that some financial institutions would need more time to implement IFRS 10, IFRS 11 and IFRS 12 in a manner that brings reliable financial reporting to capital markets. EFRAG recommends the mandatory effective date of the standards to be 1 January 2014.

A number of current IFRSs require entities to measure or disclose the fair value of assets, liabilities or their own equity instruments. The fair value measurement requirements and the disclosures about fair value in those standards do not always give a clear measurement or disclosure objective. IFRS 13, Fair Value Measurement, published in May 2011, deals with this issue. The new requirements apply from 1 January 2013, but can be adopted with immediate effect, again subject to EU endorsement for European entities.

In addition to the changes which will have an immediate impact, there is potential for significant change in practice because of current exposure drafts. The comment period for the updated exposure draft, Revenue From Contracts With Customers, closed recently. Most respondents agreed with many of the proposals, but some expressed concerns over the lack of clarity on how to identify separate performance obligations, the performing of the onerous assessment

TO GET THE QUESTIONS GO TO www.accaglobal.com/ cpd/fi nancialreporting

TO GET THE QUESTIONS GO TO cpd/fi nancialreporting

ACCA Engage September 2012

Submit your question and get an answer from the top!

Helen BrandChief executiveACCA

Dean WestcottPresidentACCA

AP_T_HoltCPD.indd 49 14/06/2012 18:46

CPDunits on the web

at the performance obligation level, and the volume of disclosures. The IASB and US Financial Accounting Standards Board (FASB) are beginning revisions and have indicated the effective date will be no earlier than 2015.

The FASB and IASB are proposing to fundamentally change the accounting for leases and are attempting to issue a second exposure draft by the end of 2012. The boards are proposing a ‘right-of-use model’ for lessees in which all leases are recognised on the statement of financial position at the commencement of the lease. A lessee would recognise an asset for the right to use the underlying asset and a liability to make lease payments.

The two key factors in initially measuring the right-of-use asset and lease liability are the lease term and lease payments. The lease term is to be the non-cancellable lease period, plus any renewal periods for which there is a significant economic incentive for the lessee to exercise the renewal option. Similarly, a lessor accounting model is proposed. Under this method, a lessor would derecognise the underlying asset leased and recognise a lease receivable measured as the present value of the future lease payments and residual asset measured on an allocated-cost basis. A lessor’s lease of investment property would utilise existing operating lease accounting but this is still in discussion by the Boards.

IFRS 9, Financial Instruments, is being developed in three phases: classification

and measurement, impairment and hedging. The IASB agreed in late 2011 to look at limited modifications to IFRS 9 for classification and measurement. This arose because of application issues with IFRS 9 – the need to consider the interaction between IFRS 9 and the decisions being made on the insurance project, and consistency with the FASB’s model on the classification and measurement of financial instruments. In December 2011 the IASB issued Mandatory Effective Date of IFRS 9 and Transition Disclosures, which amends IFRS 9 to require application for annual periods beginning on or after 1 January 2015, rather than 1 January 2013. Early application of IFRS 9 is still permitted. IFRS 9 is also amended so that it does not require the restatement of comparative period financial statements for the initial application of the classification and measurement requirements of IFRS 9, but instead requires modified disclosures on transition to IFRS 9.

Amortised costTo date, the Boards have decided that an entity should assess the cashflow characteristics of financial assets and its business model to determine which financial assets should be classified and measured at amortised cost. If the business model’s objective is to hold the assets in order to collect contractual cashflows, then amortised cost is used.

All financial instruments are initially measured at fair value plus or minus, in

the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs. A measurement category other than fair value through profit or loss can be used if the contractual terms of the financial asset result in cashflows that are solely payments of principal and interest on the principal amounts outstanding. The existing requirement under IFRS 9 that prevents the splitting of embedded derivatives from financial assets is to be retained. The IASB intends to expand IFRS 9 to add new requirements for impairment of financial assets measured at amortised cost, and hedge accounting. The Boards are continuing their discussions on development of the three-bucket expected credit loss impairment model. The IASB expects to publish an exposure draft in the second half of 2012.

It can be seen that when reviewing and preparing financial statements, difficulties arise in ensuring compliance with all of the various amendments being issued, deciding whether to adopt a standard early and determining whether the jurisdiction has actually approved the standard for use.

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

CPDunits on the web

50 Technical

AP_T_HoltCPD.indd 50 15/06/2012 15:15

CPDunits on the web

The aim of this series of articles is to lay bare the essence of strategy and show how it can be used by accountants in a very practical way. Along the way it will be demystified as much as possible.

Strategy is often clouded in unnecessary jargon. Strategy – such a simple term – has become entangled with confusion. As a result, people who deploy strategy terms end up saying things in real life that don’t have much real meaning at all. You may recognise this is what is happening when someone says something about strategy, and you simply don’t get it.

If you don’t get it, it doesn’t mean that you are stupid. It may well be that

the speaker is either using ‘strategy’ as an excuse to be vague or using terms that they don’t really understand. They may simply be trying to be clever or use the reference to strategy to get you to think in a particular way.

The complex and abstract language so often used in strategy is another problem. There are possibly 100 terms or more that get talked about in discussions about strategy; some, like ‘competitive advantage’, are useful and generally clear, but others such as ‘mission’ and ‘vision’ can carry

connotations that are simply too general and vague.

The number and ambiguity of these terms can make strategy hard to follow, so let’s make a start by defining just what is meant by ‘strategy’.

The road from here to thereMany of the possible definitions of strategy are abstract, such as ‘matching the environment’, or are concepts, such as ‘having an inimitable competitive advantage’. This kind of abstraction can quickly put people to sleep, so the first of my three complementary definitions is: strategy is how you get from where you are now to where you want to be – and with real

and sustainable competitive advantage. This definition has five ingredients:

* knowing where you are now

* knowing where you want to be

* knowing how you will get there

* basing the ‘how’ on competitive advantage

* making this competitive advantage genuine and durable.

For this, you need to have a very clear idea as to where you are right now – in other words, your strategic position. This means asking some key questions, such as:

* What is going on in the environment around your industry/market – the economy, the technology, and so on?

* How competitive is your market and what are its dynamics?

* How do your customers see your business and the value that it adds relative to your key competitors?

The other aspect here is that ‘where you want to be’ takes you into the future. Strategy encourages people to think future a great deal more than they usually do. Much of what goes on in everyday management is focused on the immediate: this meeting, today’s tasks, this week. But as is often observed, the future is so important because we are going to spend the rest of our lives in it.

Strategy serves a very real purpose by getting us to think about the future environment, future options, future competitive advantage and so on. Strategic thinking therefore means being able to travel imaginatively through time into the future.

In this definition the strategy itself is not just the strategic goals and is very much to be found in the ‘how’ itself.

At this point you might be thinking that what is being described here is implementation, which you have always thought of as operational and tactical.But it would be very odd if it were possible to say how a strategy would be implemented without explaing something about its tangible, operational action. Strategy must be specific and tangible; otherwise, how

THE SPICE GIRLS’ DEFINITION OF STRATEGY COMES INTO ITS OWN WHEN MANAGERS HAVE GOT ENTRENCHED IN THEIR EXISTING POSITION

Strategy without the guffIn the fi rst of a series of fi ve articles, Dr Tony Grundy sets out to make strategy a practical tool for accountants rather than a bluffer’s paradise

51Technical

AP_T_strategy1.indd 51 13/06/2012 11:18

will you achieve it and how will you know if it has actually happened?

What you really, really wantMy second definition pays homage to British girlband the Spice Girls: strategy is what you really, really want. This definition gets us to imagine a future world with strategic possibilities and where we can realise an exciting dream, but through realistic actions and activities.

This definition comes into its own when managers have got entrenched in their existing position and the mindset that goes with that. It encourages people to stand back and reflect (sometimes referred to as ‘helicopter thinking’) on what they wanted in the first place, rather than get too bogged down in the problems and issues of their current strategic position.

This definition lifts expectations about what can be credibly achieved. A strategy of the Spice Girls form still needs to be rooted in ideas that are grounded in real competitive advantage and are fully aligned – all the things external or internal to the business that are prerequisites of success (the so-called ‘alignment factors’) must be in place.

An example of a strategy based on alignment is that of James Dyson’s entry into the carpet cleaning market in the mid-1990s. His alignment factors were:

* the product had technology which made the vacuum bag obsolescent

* it had more suck

* it was designed to be a status item rather than be hidden in a cupboard – it was iconic

* it was patented

* for some years competitors tried to come up with a better bag

* its premium price positioned it as having a high value-add.

Subsequently many of these alignment factors were eroded and profits fell by 50% by the 2000s (although they have now recovered), highlighting the need to preserve the sources of real competitive advantage.

The cunning planMy final definition of strategy is the ‘cunning plan’ popularised in British TV comedy Blackadder. The cunning plan:

* works backwards from the result

* is fundamentally simple

* achieves its goals by a combination of obvious, and not so obvious, ideas

* isn’t particularly easy to imitate. The idea of the cunning plan is

relevant as many managers seem content with more or less any kind of strategic plan at all, whether it is a cunning one or not. But it is important to stress that average plans, or even plans that are slightly above average, simply will not do.

Over the years I have shown hundreds of accountants Back and Forth, the short film based on the Blackadder TV series. In it, Blackadder and Baldrick invent a time machine so that they can go back into the past and

steal things that can subsequently be sold as expensive items. Unfortunately Baldrick falls on the time controls and they zoom back in time before they know where the present (their ‘current position’) is. They go backwards and forwards through history but can’t find their way back, getting more and more frustrated in the process.

Eventually Baldrick comes up with a cunning plan: that they try to drown Blackadder to bring on a near-death experience so that he will recall every moment of his life including the original settings on the time machine. Blackadder, though, has an even better idea and tries drowning Baldrick instead (the ‘stunning plan’); Baldrick does indeed remember the settings and they return.

What is memorable about this plan is that it is not obvious. It is very clever, working back from the future desired state (memory recall) rather than planning towards it to try to get somewhere. That is truly cunning.

Strategic thinkingStrategic thinking can be defined as: the thinking processes that consider any complex situation from a variety of angles, seeking out options and evaluating them and their implications from differing perspectives in a novel way. Let’s first unpack the key ingredients in this definition:

* ‘thinking’ – this a structured and creative process which takes into account causality, the degrees of

GET VERIFIABLE CPD UNITSAnswer questions about this article onlineStudying this article and answering the questions can count towards your verifi able 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

52 Technical

AP_T_strategy1.indd 52 13/06/2012 11:19

TO GET THE QUESTIONS GO TO www.accaglobal.com/ab_tech

TO GET THE QUESTIONS GO TO

freedom and the constraints, and weighs up the pros and cons of alternative decisions

* ‘complexity’

* ‘looking at things from different angles’ – this can be from external and internal perspectives, over short, medium and longer-term time horizons, with different sets of assumptions, etc

* ‘options’ – distils possible choices into discrete and specific options

* ‘evaluating’ – assesses the options on the basis of multiple criteria

* ‘implications’ – looks at things like the investment required, the implementation needed, and how to influence stakeholders

* ‘novelty’ – the end goal is to come up with some cunning (if not stunning) ideas.

If strategic thinking is contrasted with more operational thinking, the differences can be listed as shown in the panel below. What becomes clear from this is that strategic thinking is qualitatively very different to operational thinking. It is far more ambiguous and can be challenging emotionally as well as politically.

Strategic conceptsSome of the most important strategic concepts include the following:

*Mission. The mission is the overarching purpose of the organisation – the kind of organisation it wants to be, what businesses it wants to be in, and its guiding philosophy. If a mission is to be of any use it is vital that it has some grounding in robust assumptions about the present and potential strategic position and is distinctive.

*Vision. The vision is a picture of either the environment (and our fit within it) or just of ourselves at some stage in the future.

*Objective. A strategic objective is one of the goals of the strategy. The objective should not be confused with the strategy itself; it is an output – and a very specific one at that. Strategic objectives can and should be broken down – for example, into compound sales growth, changes in relative

market share or other measures of relative competitive position, development of key capabilities and successful strategic breakthroughs.

*Strategic option. A strategic option is a way in which a strategy can be formulated so that it can actually be implemented. This means that the strategy needs to be sufficiently specific, not only in terms that allow it to be evaluated, but also in terms that allow it to be executed.

While I have presented these strategic concepts in the order in which they might appear in a plan, in practice they are more likely to be generated by looking briefly at objectives, evaluating options to arrive at strategies and only then setting final objectives, vision and mission so that the latter are realistic.

In summary, strategy can and should be demystified, its terms defined and explained, and strategies themselves based on a number of elements, especially the cunning plan.

The next instalment will take you further on a much more detailed journey in the demystification of strategy.

Dr Tony Grundy is an independent consultant and trainer and lectures at Henley Business School in the UKwww.tonygrundy.com

MANY MANAGERS SEEM CONTENT WITH MORE OR LESS ANY KIND OF STRATEGIC PLAN AT ALL, WHETHER IT IS A CUNNING ONE OR NOT

Operational thinking Strategic thinkinglinear iterative and unpredictabledeductive inductive and intuitivepreprogrammed creativeclear boundaries ambiguous and fuzzy boundariessafe anxiety-provoking

53

AP_T_strategy1.indd 53 13/06/2012 11:19

Q Entity A acquired entity B some time ago and recognised goodwill on that business combination. The goodwill

was then allocated to entity B’s two cash-generating units (CGU Y and CGU Z) based on the synergies that were expected to be derived from the acquisition. During the current year, entity A announced a restructuring plan of its global operations. The restructuring will result in most of CGU Z’s assets being transferred into a new division that is separate from entity B. CGU Z’s remaining assets do not support the originally allocated goodwill; management is therefore considering impairment. Is management’s thinking right?

A Not necessarily. IAS 36, Impairment of Assets, requires reallocation of purchased goodwill when an entity

reorganises its reporting structure, and that reorganisation changes the composition of one or more cash-generating units. The reallocation should be based on a ‘relative value approach’ unless management can demonstrate some other method that better reflects the goodwill associated with the reorganised units.

The restructuring of the CGU Z appears to be a reasonable trigger for entity A’s management to consider the reallocation of goodwill. The standard is not prescriptive about how this reallocation should be performed. If entity A’s management chooses the ‘relative value approach’ because there is no better method available, it must establish a reasonable method

Q XYZ Ltd has entered into an arrangement with its finance director in the year ended 31 December 2011. The entity is

in the process of relocating its head office and requires the FD to move to another location. It has agreed that it will purchase the FD’s residential property from her in the event that she is unable to find a buyer for it before 31 June 2012. XYZ Ltd is preparing its accounts for the year ended 31 December 2011. Is disclosure of this agreement required in the financial statements?

A IAS 24, Related Party Disclosures, includes members of key management personnel within the definition of related

parties. The standard also notes that ‘key management personnel’ includes all directors of the entity (whether executive or otherwise). So the FD is a related party of XYZ Ltd, and the agreement between the two parties should be disclosed in XYZ Ltd’s financial statements if it meets the definition of a related-party transaction.

IAS 24 was amended for annual periods commencing on or after 1 January 2011. As part of this amendment, a requirement was added for an entity to disclose commitments with related parties, including ‘a commitment to do something if a particular event occurs or does not occur in the future’. The arrangement for XYZ Ltd to purchase the property from the FD if she is not able to sell it should therefore be disclosed in the accounts under this requirement, even though the actual purchase of the property has not occurred during the financial year.

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

for determining relative value. The reallocation might be performed, for example, based on relative ‘value in use’ or ‘fair value less costs to sell’ measures or even on the existing carrying values of the two cash-generating units. It is likely that some – possibly all – of the goodwill in CGU Z should be transferred to the new division.

Accounting solutionsIn this month’s column, PwC authors answer technical questions on business combinations and the recognition of goodwill; and on related party disclosures

54 Technical

Keep up to date with the latest IFRS developments through PwC’s twice-monthly email update. It provides you with a summary of the latest issues and links to further guidance. To subscribe, email corporatereporting@uk.pwc.com requesting ‘subscription to mailshot’. Or sign up for the IFRS RSS feed at pwc.com/ifrs

AP_T_accsolutions.indd 54 13/06/2012 11:28

Do you remember the days when you were an ACCA student or affiliate, looking for support to help you gain the practical experience requirement (PER) of the ACCA Qualification and sign off your achievements? Now ACCA trainees are asked to find a workplace mentor – an individual who can verify their experience but also act as a guide to help them plan how they will achieve competences and to generally motivate and offer support.

At ACCA, we believe that members are our greatest asset and that mentoring is the best mechanism to ensure that the quality of our membership base in the future remains as high as it is today. We therefore put a lot of resource into making sure that members who act as workplace mentors are supported by ACCA.

Why become a mentor?Becoming a workplace mentor can have many benefits for you:

* coaching and mentoring can count towards your annual CPD requirement if you are learning relevant new skills that you can apply in the workplace

* you will reap the benefits of working with junior colleagues, who will become more able, enthusiastic and develop a better rapport with you

* you’ll develop the characteristics and behaviours required of today’s rounded business professionals and develop a wide range of transferable skills to use in your career

* from preparing for coaching or mentoring, through the session itself to your post-session review, you’ll improve both self-awareness and the ability to identify your own areas for development

* the achievements of your trainees will reflect well on your own leadership ability and potential.

What’s involved?The workplace mentor supports the trainee’s development in the workplace and reviews their progress and achievements at work.

As the workplace mentor, you should:

* help trainees identify which performance objectives to target

* advise trainees about performance targets to achieve and the date by which they should achieve them

* evaluate trainee progress on a regular basis

* review the answers given to challenge questions

* sign off experience and the performance objective if you agree that the standard required has been met.

Already a workplace mentor?If you’re already a mentor, signing off your trainees’ experience is now easier and simpler than before:

* the look and feel of the tool will be slightly different for you, but the process you follow in signing off PER will remain exactly the same

* access to My Experience is through myACCA just like before; and any information you and your trainee may have already entered has been transferred to the enhanced tool.

We will remind trainees regularly to update My Experience. Please help us reinforce this message by explaining to your ACCA trainee(s) that they should use My Experience to log regular updates. For

example, they can use the tool to log some months of relevant experience with an employer, even if they have not yet achieved any Performance Objectives.

For more information please visit www.accaglobal.com/wpm

Motivate, guide, supportIs it time for you to give something back to the profession by supporting an ACCA trainee as a workplace mentor? It’s easier than ever and can contribute to your own CPD

Do you remember the days when you were an ACCA student or affiliate, looking for support to help you gain the practical experience requirement (PER) of the ACCA Qualification and sign off your achievements? Now ACCA trainees are asked to find a workplace mentor – an individual who can verify their experience but also act as a guide to help them plan how they will achieve competences and to generally motivate and offer support.

At ACCA, we believe that members are our greatest asset and that mentoring is the best mechanism to ensure that the quality of our membership base in the future remains as high as it is today. We therefore put a lot of resource into making sure that members who act as workplace mentors are supported by ACCA.

Why become a mentor?Becoming a workplace mentor can have many benefits for you:

* coaching and mentoring can count towards your annual CPD requirement if you are learning relevant new skills that you can apply in the workplace

* you will reap the benefits of working with junior colleagues, who will become more able, enthusiastic and develop a better rapport with you

* you’ll develop the characteristics and behaviours required of today’s rounded business professionals and develop a wide range of transferable skills to use in your career

* from preparing for coaching or mentoring, through the session itself to your post-session review, you’ll improve both self-awareness and the ability to identify your own areas for development

* the achievements of your trainees will reflect well on your own leadership ability and potential.

MEMBERS ARE OUR GREATEST ASSET AND MENTORING IS THE BEST MECHANISM TO ENSURETHAT MEMBERSHIP QUALITY REMAINS HIGH

55

MY_A_CPD.indd 55 15/06/2012 16:37

How to beat burnout[Singaporeans are among the world’s hardest workers, often at the expense of their health – and

accountancy professionals are at particular risk. We offer some top tips on how to stay stress-free

Singapore is well known for its work-centric culture and a recent study has highlighted the extent to which employees are putting in longer hours than the worldwide average – often taking the office home with them.

According to the survey by serviced office provider Regus, about 19% of Singapore workers usually work more than 11 hours a day, almost double of the global average of 10%. In addition, about 50% of workers take tasks home to finish at the end of the day more than three times a week compared with 43% globally, the survey found. The only saving grace is that 31% of workers usually work between nine and 11 hours a day, compared with 38% elsewhere in the world.

Recent technological advances such as smartphones have made it easy to keep in touch with the office and on top of work around the clock. But if this hyper-connectivity eases communication, it can also be responsible for increases in stress levels felt by many people at all levels in organisations.

Tim Hird, managing director at Robert Half Singapore and Japan, believes that this pervasiveness of constant work connectivity has resulted in the ‘erosion of personal space, higher stress levels and an overall decline in the quality of life for employees’.

According to the 2011 Robert Half Workplace Survey, 69% of Singapore employees tune into work when they are out of the office or on holiday, higher than the regional average of 66%, while 66% of employees feel the need to be available in case of emergencies.

In the US, the National Institute For Occupational Mental Health notes that the long-term effects of overwork could be damaging both to workers’ health

and to overall productivity, as workers drive themselves too hard and become disaffected, depressed or even physically ill.

Hiroko Kobayashi, a counsellor at The Counselling Place in Singapore, says that she has seen an increasing number of people coming for counselling ‘not only for work stress but also to deal with other issues that are caused or affected by an increase in workload’.

‘Work stress can often trigger other issues such as low self-esteem, and impact existing family related issues, controlling issues and eating disorders,’ she notes.

The accountancy profession can be particularly stressful, especially during key reporting periods. ‘Staff working in professional services firms have always worked under a lot of quality, delivery and deadline pressures,’ notes Glory Sim, associate director in human resources at KPMG in Singapore. She experienced that burnt out feeling at first hand when she worked in audit and advisory.

‘Most people know that a highly effective and efficient professional has to have important skills such as time management, prioritising, delegation and managing the expectations of clients, superiors and colleagues,’ Sim says. ‘Over time, however, the amount of stress and the demanding nature of the job can lead to staff feeling burnt out.’

With this in mind, here are some strategies to help avoid the balance-sheet burnout.

1 Plan and prioritise your workload Planning your working day is key. Before you leave the office, run through what you need to do the next day, advises Joanne Chua, an associate director at Robert Walters Singapore.

Prepare a to-do list that encompasses anything that needs to be done and then prioritise the ‘must dos’ and ‘would be nice to dos.’ Don’t try to do everything at once, Chua says; rather, concentrate first on the most urgent task. ‘Productivity is not measured by the number of tasks you complete or hours you work but by the quality of work you produce,’ she points out.

The importance of time management cannot be overestimated. It enables you to accomplish much more in a shorter time and still have some bandwidth in reserve to take on things that may be more strategic, writes executive coach BH Tan, author of The First-Time Manager in Asia. In his book Tan advises against multitasking, as that generally makes you less productive overall: ‘You will inevitably become highly stressed, frenzied, distracted and irritable.’ He also advises against back-to-back meetings. ‘It is good practice to have some white space in your diary. It might be just a 30-minute slot, but use it to catch a breather and get some perspective,’ he says.

2 Learn to delegateDelegation is key to keeping stress levels in check, but you must make sure that you have the processes and the right people in place to manage any problems that could arise – and be ready to adapt to deal with any bottlenecks. The trouble is that too many financial executives feel uncomfortable delegating and when they do so, they continue to micro-manage. But Helen Sim, founding partner of accountancy firm ARK Alliance, believes that delegating doesn’t mean losing control. ‘To delegate is to release and relieve some responsibilities, but control must be instituted and maintained for delegation to be effective,’ she says.

56 Careers

SG_C_burnout.indd 56 13/06/2012 11:06

Ernst & Young everyone has a coach assigned to them, and both the staff and the coach bear the joint responsibility of listening, understanding and addressing concerns at work,’ says Loh.

A similar approach takes place at PwC, where every staff member on joining the firm becomes part of a ‘coaching group’. They receive on-the-job learning as well as meaningful team-based and one-on-one development and feedback time with their coaching partners and other senior members in the team.

‘We’ve found that the buddy system is an effective way of helping new joiners, whether fresh graduates or experienced hires, quickly settle into

life at PwC,’ explains human capital partner Deborah Ong.

‘As a peer, your buddy will be able to guide you on daily operational matters and share their own experience. Each member of staff will be assigned a career coach as well as a coaching partner. Between the two of them, they’ll provide ongoing on-the-job counselling with a focus on your development and welfare.’

This coaching and mentoring structure, Ong concludes, ‘Ensures the young professionals who join our firm do not feel alone when they need advice or solutions at work.’

Sonia Kolesnikov-Jessop, journalist

‘The common extreme of delegation is no trust and continuing micro-managing which results in duplication of efforts and, ironically, distrust and dissatisfaction among the staff,’ she adds.

3 Just say ‘no’You need to know your own limitations and learn to say ‘no’, so that you don’t take on unnecessary extra responsibilities, advises Kobayashi. Look at what you can control and accept that there are some things that you just can’t. Look at the uncontrollable and think what you can do to make a difference – see the problem or task from a different point of view, perhaps. Try to see positives and upsides, look at the bigger picture, manage your expectations and share your feelings with others, says Kobayashi. Don’t see asking for help as a weakness; it’s a strength!

4 Enjoy guilt-free breaksSwitch off when you are out of the office. ‘Your job engagement will not fail if you stop working for a few hours,’ says Sim. ‘Always remember that you are not a machine and your body needs the rest so it can recharge. You will come back to work with a more positive attitude, come out with better ideas and work more efficiently.’ 5 Maintain open communicationErnst & Young country managing partner Max Loh believes that, from an employee perspective, ‘it’s important to recognise that stress exists and it’s alright to feel stressed. The first step is to learn to address stress head-on and positively by recognising the causes of stress.’

The second step should be to reach out to colleagues and supervisors. ‘At

‘REMEMBER THAT YOU ARE NOT A MACHINE AND THAT YOUR BODY NEEDS TO RECHARGE. YOU WILLCOME BACK WITH A MORE POSITIVE ATTITUDE’

GOT ROLES TO FILL? Visit www.accacareers.com/singapore

57

SG_C_burnout.indd 57 13/06/2012 11:06

TO ADVERTISE CALL THE SALES TEAM ON +44 (0)207 902 1210

Move to the sound of a di�erent beat - your own.Enhance your career with opportunities within our global network of 2,200 o�ces and make others take note.

Visit us at www.maybank.com/mycareer

sg

ABSGCAREERS.indd 2 11/06/2012 17:01

TO APPLY FOR ANY OF THE POSITIONS BELOW PLEASE VISIT WWW.ACCACAREERS.SG

Public AccountAncy

You will direct and oversee the operations of the Professional Oversight Division (POD), Practice Monitoring Division (PMD) and Strategy and External Relations Division (SERD) in the regulation and facilitation of development of the public accountancy sector in Singapore.

SingAPore | ref: AcrAAccA002

RestRuctuRing AssociAte

The successful candidate will be working in a team to address restructuring or insolvency issues for our clients. The roles and responsibilities will correspond with the seniority of the position applied for.

singApoRe | Ref: kpmgsg02

Financial accountant

An excellent opportunity has risen for a Financial Accountant in a US MNC commodity powerhouse. The organization provides a strong platform with great mobility within the organization for the right candidate for further development.

Singapore | reF: FH 1204423

Financial analyst

Singapore Global Data is seeking highly motivated individuals to join their Fundamentals, Earnings and Estimates team and be responsible for working through the entire life cycle of company data on the Bloomberg terminal.

singapore | reF: 33251

RepoRting AnAlyst

The function of the role is to consolidate the reporting of APAC countries in preparation of submission to the global team. The position is the contact point for APAC; involved in the month end closing, variance analysis and ensure accurate and timely submission.

singApoRe | Ref: AC/JC18971

Full-time ACCA leCturer

Prepare teaching materials; Teach professional financial / accounting certificated courses (ACCA/CFA/CIMA/FRM etc).

Beijing/Chengdu/ShAnghAi | reF: ACCAKAPSg

“ACCA Careers gives me the latest and most varied range of job opportunities from all the major organisations and recruitment firms, along with great tips and advice to help me push my career forward.”

Ian Chadaway, Burgis & Bullock

OVER 26,000 ACCA MEMBERS AND STuDENTS HAVE REGISTERED THEIR CVS ON ACCA CAREERSEveryday on ACCA Careers on average we have....150 new candidates register11,352 page views44 new jobs posted253 job applications

Employers we are working with include Shell, PWC, Deloitte, KPMG, Jaguar Land Rover and BBC.

Fund ComplianCe

Global Investment bank with an established and growing presence in Asia – specifically Singapore – has a brand new opening for a Manager - Fund Compliance role in Securities and Fund Services Division.

Singapore | reF: SaYu–003

Tax SpecialiST

• Files monthly, quarterly, and year-end income and/or transaction tax returns.• Contributes to priority projects.• Researches tax laws and regulations.• Prepares and reconciles yearend taxes and makes adjustments

Singapore | ref: acca123457

To advertise with ACCA Careers there are 2 options, using our online self-service you can post a job right now at accacareers.com or you can contact our dedicated account management team on +44 (0)20 7902 1210

ABSGCAREERS.indd 3 11/06/2012 17:02

Companies in Singapore aren’t communicating enough to their stakeholders. At least, that’s what the results of a study by ACCA and KPMG seem to indicate. Making Stakeholder Communications Work, covering 712 companies listed on the Singapore Exchange as of 31 December 2011, paints a somewhat unflattering picture of how Singapore-listed companies handle their investor relations [IR].

Forty-seven per cent of companies do not make their IR contact information available in their annual report or on their website, while 56% do not disclose information about how their IR function is handled. Of those companies which do disclose it, the majority have only one person handling IR. And 63% of companies hold their annual general meeting in April, with 47% – 332 AGMs – squeezed into the last five business days of the month.

That last figure in particular, said KPMG Singapore’s head of markets Tan Wah Yeow, will potentially pose challenges to shareholders and directors with interests in multiple companies. ‘Companies should be encouraged to adopt principles of fair communication,’ he remarked.

His view was echoed by KPMG head of research Mak Yuen Teen, who led the study. Speaking at the launch of the study’s results in May at the Four Seasons Hotel, Professor Mak said that just as shareholders have voting rights in their companies, they also have information rights – but where voting rights are dictated by the number of shares one holds, the rights to information are under no such constraint.

‘[Shareholders] may have different levels of voting rights, but they all have the same rights to information,’ he said.

INVEST IN GOOD RELATIONS

According to Making Stakeholder Communications Work, 73% of companies report their financial results quarterly, and this may in itself be a reason for lapses in the quality of stakeholder communications. For one thing, there is a clustering of results announcements, a situation that KPMG head of research Mak Yuen Teen compared with taking the train during rush hour. As with AGMs, shareholders in multiple companies may not have the time to review as many results as they would like.

‘Quarterly reporting is very, very taxing,’ said Esther An, head of CSR at City Developments (CDL) – not only for companies, but for the analysts who have to go through reams of financial results. ‘We have a wishlist, and one of the items on it is to maybe have quarterly reporting down to half-yearly, or one-third.’

However, she acknowledged, it may not be feasible to extend the reporting period either. ‘I think it is very hard for the authority to go back to six months. But if it were six months, it would be much easier for companies. The auditors would also have more time.’

*A QUESTION OF TIME

Room for improvement One of the study’s more surprising findings was that almost half the companies did not provide contact information on the person in charge of IR, whether on their website or in their annual report. Professor Mak said that based on his experience, even where companies provide contact information, further testing proved that in some cases the contact was not valid. ‘It’s one thing to disclose their IR contact information and another to make sure it actually works,’ was his observation.

On top of this, over 20% of companies that maintained a website either did not have an IR link containing relevant information or had a link that ‘brings you nowhere’.

Professor Mak reserved his strongest criticism, however, for the 9% of companies, mostly small-cap, which apparently did not maintain a working website at all. Some foreign companies have websites only in their local language, rather than in English, even though English is the business language in Singapore. ‘It’s kind of difficult to imagine a listed company not having a proper working website which is accessible to most investors,’ he said.

The reason for this patchy content can perhaps be found in the resource constraints faced by many small- and some mid-cap companies. The majority of large-cap companies have a dedicated officer in charge of IR, and out of those mid- and large-cap companies that disclosed the size of their IR team, more than half have at least two people handling IR matters. But small-cap companies, which run a tight ship, tend to leave IR matters to the CFO or corporate communications team who have other major responsibilities.

Small-cap companies are also significantly less likely to disclose information such as their share price performance and dividend ratio in their annual reports. And while the majority of them post information such as their latest announcements, the profiles of their directors and their results announcements on their website, over one-third do not. There are even a number of small-cap companies which do not make their annual report available on their website.

Cost-effective communication A panel discussion on the study’s results turned up two key suggestions for companies that want to improve their stakeholder communications: leveraging websites and the media wherever possible.

‘Our website is the most cost-effective way to reach out to our audience, and it is a form of two-way communication as well,’ said panellist Esther An, head of CSR at City Developments (CDL). ‘We encourage them to contact us, and they can also engage us through email alerts which we use to send them information.’

Agreeing, Chow Kam Wing, executive director and CFO of Micro-Mechanics Holdings, said that his company’s website was the best way of reaching out to foreign investors. ‘We make use of our website in several ways,’ he elaborated. ‘We

ACCA news60

SG_A_KPMG.indd 60 14/06/2012 17:21

01 Delegates listened attentively to

speakers at the event, held at the Four Seasons Hotel

02 From left: Richard Dyason, Chow

Kam Wing, Esther An and moderator Ong Pang Thye

have an email alert; our IR page has all the reports and announcements; and we link to investor platforms.’

The media is also a very powerful tool for stakeholder communications, said Richard Dyason, general manager of the Securities Investors Association Singapore. ‘Looking at information which investors use to make investment decisions, media is the major portion of what retail investor’s use,’ he explained, citing SIAS research which found that over 70% of retail investors used the media as their primary source of information.

This is especially significant because of the high proportion of small shareholders – defined as those holding 10,000 or fewer shares of a company – in Singapore-listed companies. Making Stakeholder Communications Work found that this group makes up 52% of a small-cap company’s shareholders and 79% of a large-cap company’s shareholders on the average, making it imperative for companies to take them into consideration when communicating with stakeholders.

Beyond these two suggestions, however, the issue of constraints came up. While large-cap companies can hold roadshows, investor conferences and media and analyst briefings, these modes are generally ‘not realistic’ for small and mid-cap companies, said Professor Mak, and the panellists agreed with his assessment.

‘As a small-cap company, we cannot put too many resources into IR,’ said Chow. ‘IR is something we want to address; we want to sell ourselves, to let people know how good we are. But we are using investors’ money to do that. I don’t think it’s correct.’

And the resources required to meet investor demands are considerable, according to CDL’s An. ‘They want easy

ALMOST HALF THE COMPANIES DID NOT PROVIDE INFORMATION ON THE PERSON IN CHARGE OF IR

access to information, they want it accurate, they want to talk to the CEO, they want to talk to the chairman,’ she listed out some common demands. While CDL does its best to make the information easily accessible, fast and accurate, the effort is expensive at the very least, she said, going right up to the time spent by senior executives including the CEO and CFO. ‘When you talk about investment, I can’t put a price tag to it.’

Then again, this cuts both ways. Shareholders who do not receive sufficient information are apt to apply a discount to the company, observed Dyason. ‘Sometimes it can be quite steep,’ he added. ‘The key question here is, can we afford not to do this in today’s environment?’

Mint Kang, journalist

Making Stakeholder Communications Work is available at www2.accaglobal.com/stakeholder

61

SG_A_KPMG.indd 61 15/06/2012 16:39

Between economic uncertainty, increased regulation and the ever-present talent shortage, businesses are feeling the pinch – and, by extension, so is the accountancy profession. On the one hand, said experts and industry insiders at the 2012 ACCA Singapore Annual Conference – entitled Accountants for Business: Creating and Sustaining Value in Uncertain Times – the sector is facing credibility issues and increased regulation in the aftermath of the global financial crisis and the onset of the European financial crisis. On the other, businesses are doing badly and cutting headcounts, even as international mobility makes it harder to source finance talent.

But are things really that bad? It’s not the end of the world, said Tony Mallek, CFO at Singapore Press Holdings, pointing out that while companies may take convincing, the current economic troubles won’t completely kill business. ‘There is a danger of over-emphasising the European crisis,’ he said. ‘Even if the entire global economy slows down, there will still be niche opportunities.’

VALUE THROUGH UNCERTAINTYThe finance function also has a very

large role to play in keeping businesses going, agreed speakers and panellists. Darryl Wee, country head of ACCA Singapore, cited the restructuring of business models, regulation and compliance and risk management as just some areas where the function will make significant contributions. ‘Accountants are no longer just a cost centre – they have a positive effect on the bottom line,’ he said.

People are the keyThe bottom line, speakers said unanimously, is people. It is with quality people that auditors can help their clients get through uncertainty.

Unfortunately, not all companies recognise this. ‘Very often in bad times I see clients cutting resources,’ said Kon Yin Tong, managing partner at Foo Kon Tan Grant Thornton.

‘They cut the training budget for accounting and finance staff, they cut the headcount, they employ lower-quality people. That has a lot of implications for us.’

What companies do not realise, he said, is that human capital is in fact very scarce relative to demand. Finance professionals in particular are becoming more mobile even as compliance requirements become increasingly onerous. Rather than trying to downsize, companies ought to take advantage of the bear market to invest and make acquisitions – of people. ‘My advice is to look longer term, not just at the euro crisis to cut costs or the uncertainty to cut headcount,’ he said.

Agreeing, Ng Boon Yew, executive chairman of Raffles Campus, said that there will be a significant shift of economic activity from West to East, and that a similar shift will take place with talent mobility over the long term. Uncertainty notwithstanding, he was not in favour of the downsizing or right-sizing concept. ‘We all know that at the end of it, business exists where the market is,’ he said. ‘Instead of going out there and chopping heads,

one has to look at opportunities on a wider scale.’

Still, cautioned Stephen Tjoa, executive director for people, performance and culture at KPMG Singapore, any investment in talent should be done with care. ‘The push for us in the profession is to increase quality. It’s not just about the masses we recruit, it’s about making sure that we have the calibre of people that we want,’ he said.

In Singapore, that push is already being made. The Singapore Qualification Programme, which will allow people from a non-accountancy background to become qualified as accountants, is the latest big move, and will increase both diversity and volume by letting the accountancy profession attract the best brains from other sectors, according to Uantchern Loh, CEO of the Pro-Tem Singapore Accountancy Council.

Won’t these new accountants be even more mobile than the preceding generation of finance professionals, because of their wider experience? It will – but you have to be prepared to let them go, said Loh, so that they can come back better than before. ‘You cannot stop young people from wanting to see the world,’ he said. ‘If you don’t let them go, they will be frogs in a well.’

Rebuilding trustSpeakers brought up a variety of challenges faced by the profession, such as increasing regulation. This, suggested KPMG managing partner Tham Sai Choy, can be traced directly to the European financial crisis and the global financial crisis in 2008.

‘Everything that’s happening in the audit profession right now is about a lack of trust in the auditing profession and their ability to do the job,’ he said. ‘We are part of a system that is going to see more regulation, because there is this question of confidence. We have been beneficiaries of the system, and now that the system is facing scrutiny, we have to be part of the solution.’

Uantchern Loh, Pro-Tem SAC

ACCA news62

SG_A_Conference.indd 62 14/06/2012 16:42

To this end, he said, one of the most important things the profession can do is to engage with standard-setters. Quipping that he has yet to see an auditing standard that recognises the widespread use of internet banking, he pointed out that the new rules need to be relevant and up to date. But ultimately, the bigger goal for the profession is to help restore trust in the system and make it more credible.

In terms of credibility, Ng went further and cited the recently released results of the Ernst & Young 2012 Global Fraud Survey, which suggest that during bad times, people find morally ambiguous means of retaining

business – such as extravagantly wining and dining clients – more acceptable. ‘I think the key challenge in this time of uncertainty will hinge on the integrity of financial information,’ said Ng.

Loh had a slightly different take, however. ‘Uncertainty is not the challenge; the need to change is the real challenge,’ he said. However, in recent times the speed of change has accelerated to a degree that some people will find ‘very scary’.

‘We have to be cognisant of that,’ he remarked. ‘Expectations are changing, global needs are changing, companies are changing, and finance departments need to change along to meet expectations. It introduces a lot of discomfort when there is a lot of uncertainty.’

The finance function’s role in keeping businesses going was discussed by panellists

Tham Sai Choy, KPMG

Delegates enjoyed listening to a wide range of views

The new Singapore Qualification Programme (SQP) aims to put the accountancy sector on a par with other countries, according to Uantchern Loh, CEO of the Pro-Tem Singapore Accountancy Council.

With the SQP, Loh said, young professionals can become ambassadors for the sector. ‘We need them to go and work for three or four years in Germany or China and show the people there what Singapore is like. If we don’t send out our ambassadors, if we don’t equip them with the SQP and professional qualifications, we will never get anything back. Singapore will just shrink.’

*WIDENING HORIZONS

The last word came from Mallek: Maybe it doesn’t matter when this crisis will end. Life will continue,’ he said. ‘I think the opportunities created by the crisis will exist, and it’s up to all of us to identify and take hold of them.’

Mint Kang, journalist

63

SG_A_Conference.indd 63 14/06/2012 16:43

01 From left: Darryl Wee, country head, ACCA Singapore; Juanita Woodward, co-chair, BoardAgender; Junie Foo, co-chair, BoardAgender; guest of

honour Halimah Yacob, minister of state for community development, youth and sports; Laura Hwang, president, Singapore Council of Women’s Organisations; and Michael Zink, head of ASEAN, Citi, Singapore

CHANGE FOR THE BETTER Singapore may be progressive in many areas, but when it comes to female representation on the boards of locally listed companies, the city-state lags behind its nearest neighbours. The Singapore Board Diversity Report 2011, compiled by BoardAgender and the National University of Singapore’s Centre for Governance, Institutions and Organizations, found that the participation of women on boards in Singapore to be a mere 6.9% – while Malaysia and Indonesia boast 7.8% and 10.7% respectively.

Halimah Yacob, minister of state for community development, youth and sports, said the findings were dismal. Speaking at an ACCA/BoardAgender event recognising the support for diversity from top business and community leaders, she pointed out that diversity is a competitive advantage for companies that embrace it. So why is it not happening?

According to observers – some of them board members themselves – one major reason for the lack of women at board level is the clique-like structure of many boards. While ability certainly plays a key role in the selection of board members, one’s network is often a deciding factor.

‘The board is just another example of a club,’ said Addison James, CEO of Holmes & Marchant Asia Pacific. Like a club, he elaborated, everyone knows everyone else; the same faces are often to be found across multiple boards; and getting into that select group is no easy job.

It is a ‘closed circle’, confirmed Alliance Practice partner Luar Eng Hwa, who is also an independent director of several privately owned companies. But looking on the brighter side, he added, this circle is beginning to open up, and opportunities for women are appearing.

Best person for the jobExpanding women’s role in business is essentially about maximising human

capital, said BoardAgender co-chair Junie Foo. It is about ensuring that companies access the best leadership and talent, whether male or female, to maintain innovation, profitability and sustainability in today’s global economy.

‘Gender diversity in the workplace should be viewed as a business issue, not a gender issue,’ she said.

For example, Holmes & Marchant needs female input at all levels, said James. Citing research which estimates that women are responsible for 70% of all household purchasing decisions, he pointed out that ‘70% of the designs we make are seen by women’.

And even outside that, he added, the best performers tend to be women. ‘Women are probably better at marketing because they listen,’ he said.

Michael Zink, head of ASEAN at Citi, added: ‘If senior management does not reflect the marketplace in society, we are going to miss things,’ he said.

Gender diversity, he pointed out, is a matter of self-interest, and companies need to pursue it in a structured

manner – having an open and transparent selection process, putting in place programmes that will prepare people to lead and assigning mentors to promising leadership candidates. Mentors are particularly important not just for the guidance they provide: they are needed to push people forward over their own modesty.

‘Sometimes, people are hesitant to say, “Pick me”,’ Zink explained.

Halimah was more explicit: ‘I think occasionally we [women] need to blow our trumpet a little bit,’ she said.

Certainly diversity, at whatever level, requires a change of mindset – for businesses and their boards, and possibly for women themselves. It is not just about looking different, said Darryl Wee, country head of ACCA Singapore. It is about thinking different as well, and therefore gaining a competitive advantage.

‘A business which embraces diversity and values different perspectives and experiences stands to gain an edge over its rivals,’ he said.

Mint Kang, journalist

ACCA news64

SG_A_diversity.indd 64 14/06/2012 16:44

A race well run

Dear fellow ACCA members. It is with great pleasure to be your newly elected president of the ACCA Singapore branch. Like many of the past presidents, my key objective is to bring greater value to all ACCA members in Singapore.

As part of the position, I was told that I would need to contribute an article to Accounting and Business magazine. So here I am thinking of what to say in my first article.

Perhaps I should take this opportunity to share with you my passion. Ever since I was young, I have had a love affair with numbers. Naturally, being an accountant was my first and only career choice.

Sport is my next love; I enjoyed playing all sorts of games when I was much younger. Even now, with a busted knee and creaking back, I spend a good portion of my leisure time walking the green chasing after a little white ball.

But really, what do ACCA and sports have in common? It would be too presumptuous of me to claim to be the missing link. The common denominator lies… well, in numbers.

Think about it: Most sports use numbers to keep scores, though some have very unusual ways of counting. For example, whoever invented the scoring system for tennis was definitely not an accountant.

Similarly, games like golf go against the grain. While most sports required the player to reach a certain game point or attain the highest score, in golf, the lesser the points accumulated the better.

[Wilson Woo likens attaining ACCA membership to training for and completing a marathon – and urges members to be as proud of their certifi cates as those who run the 26-mile races as a hobby

Like those who keep score in sports, accountants deal with numbers all the time. Credit generally refers to positive numbers while debit refers to negative numbers. The rules are clear cut. However, gaining the ACCA Qualification is like learning a new sport. The beginning is difficult and hard. The more talented take a shorter time to reach their goals, while others might have to persevere for longer. Unfortunately there are also casualties along the way. Just like good sportsmen or sportswomen will attest, success only comes with a

great deal of hard work and determination. I still remember my experience of preparing for the ACCA examination many moons ago. The long hours of practice and conditioning one puts in are as punishing as training for a marathon run. It is not enough to arm yourself to the hilt with an arsenal of knowledge. Timing is also crucial. Just like peaking at the right moment on the race day, so too must the accountant be in top form on the day of the examination itself – especially the mental state of feeling totally confident in oneself.

Many ACCA members will agree that the feeling of becoming qualified as a member is similar to the exhilaration of completing a marathon. It is not important whether one emerges as a prizewinner.

Completing the ACCA Qualification is in itself a feat.

I have friends who are marathon runners and they are so proud of their achievement that they have their certificate of participation and number tags pinned up. I hope we, as ACCA members, are as proud of our own achievement – enough to have our certificate proudly displayed for all to see. After all, it too bears testimony of a great race ran.

Wilson Woo is president of the ACCA Singapore branch

me to claim to be the missing link. The Like those who keep score in sports,

great deal of hard work and determination. I still remember my experience of preparing for the ACCA examination many moons ago. The long hours of practice and conditioning one puts in are as punishing as training for a marathon run. It is not enough to arm yourself to the hilt with an arsenal of knowledge. Timing is also crucial. Just like peaking at the right moment on the race day, so too must the accountant be in top form on the day of the examination itself – especially the mental state of feeling totally confident in oneself.

members will agree that the feeling of becoming qualified as a member is similar to the exhilaration of completing a marathon. It is not important whether one emerges as a prizewinner.

Completing the ACCA Qualification is in

ACCA 65

SG_A_pres.indd 65 14/06/2012 17:22

65 Wilson Woo Sport and accountancy have more in common than you might think, says the new ACCA Singapore branch president

64 Work in progress Female representation on boards is still lagging

62 Brave new world An uncertain future was the focus of the ACCA Singapore Annual Conference

60 Investor relations Companies can do more, fi nds a new study

55 CPD Become a workplace mentor

Inside ACCA

ACCA has announced a significant rise in both its new student numbers and online service customer satisfaction at the end of the 2011–12 operating year.

Total increase in membership in 2011–12 has been 7,000 (up 4.8%) and over 70,000 new students have started studying for the ACCA Qualification. ACCA now has 154,000 members and 432,000 students in 170 countries.

Sustained investment in customer service over the past 12 months has seen customer service targets hit and an improvement in the online customer experience. In addition, ACCA has seen a significant rise in satisfaction with the public value created through its global policy positions and activities.

Helen Brand, ACCA’s chief executive, says: ‘ACCA’s results show that we continue to deliver towards our goal to be the leading global professional accountancy body in reputation, influence and size. We’ve seen strong demand for the ACCA Qualification, with significant growth in established markets – such as China, Singapore, Malaysia, the Caribbean and the UK – and in new markets too.

‘Members and students are now starting to see the benefits of investments made in recent years to improve our processes, IT infrastructure and customer service levels. This has included our customer contact centre, ACCA Connect, now open 24/7, 365 days a year.’

Key indicators include:

* 75% of students and 70% of members now say ACCA is easy to do business with online

* 85% of exam entries are now made through the ACCA website

* 90% of online student registrations are now completed within seven days.

Brand adds: ‘This is a good outcome. We know we need to go further to improve satisfaction ratings even more and have plans to increase our performance around service delivery, including the website.

‘I am particularly pleased to see that we are enhancing our global reputation through our policy and technical work. Council is clear that we must demonstrate public value in all that we do. We have outperformed our target in relation to employers believing that our global policy output brings public value.’

ACCA reviewsperformanceMore students, more members and more online customer satisfaction

SINGAPORE ELECTS OFFICERSThe 69th annual general meeting of ACCA Singapore was held on Tuesday 29 May and attended by more than 100 members.

Wilson Woo, partner in financial services at Ernst & Young, became the new branch president. Kaka Singh is the immediate past president.

Other serving officers include vice president Amos Ng Chiau Meng, CFO of Straco Corporation. Bernard Lee Tai Wai, senior partner of Audit Alliance, is honorary secretary. Victor Goh Yeow Kiang, director of restructuring and insolvency at Baker Tilly TFW, is honorary treasurer.

ACCA MAKES RIO CALL To influence policymakers and stimulate debate at the Rio+20 summit, ACCA has published a paper which looks at the integration of material sustainability information into the corporate reports of listed and large private companies.

The paper can be found at www.accaglobal.com/accountabilityRead our Rio+20 article on page 22.

COUNCIL NAIROBI-BOUND Economic growth and business opportunities and challenges faced in Africa and globally will be the central theme of ACCA’s Council meeting, to be held in Nairobi this month.

ACCA’s 36-member-strong Council is basing its biennial meeting in Nairobi before ACCA’s president, vice president and deputy president make additional visits in the region with ACCA senior staff, including chief executive Helen Brand.

Ethiopia, Tanzania and Uganda will be among the countries visited.See Roar Power, page 40.

From left: Victor Goh Yeow Kiang; Bernard Lee Tai Wai; Kaka Singh; Wilson Woo; and ACCA Singapore country head Darryl Wee

From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard From left: Victor Goh Yeow Kiang; Bernard

66 ACCA news

SG_A_backpage.indd 66 15/06/2012 14:40

ACCA (Trim:192x260mm/Bleed:198x266mm)Ads-JulyAug12.indd 4 12/06/2012 15:11 Ads-JulyAug12.indd 5 12/06/2012 15:11AP_covers_JulyAug12.indd 1 15/06/2012 12:37

CPDget verifiable cpd units by reading technical articles

ABSG SG.A

B a

cc

ou

ntin

g a

nd

bu

sine

ss 07

/20

12

the magazine for business and finance professionals accounting and business singapore 07/2012

WhAt lieS AheAD?acca conferences: the economy discussed

tAlk iS GooD acca/Kpmg report: improving investor relations

Careers tips to stay stress-freePraCtiCe the lure of virtual firmsintroverts not loud, just proud

ChAnCe for StArDom

supporting growth in singapore’s film industry

Al Gore’S 2020 viSion corporate reporting and sustainable capitalism

interview dr andreas raharso, hay groupeurozone assessing software risKteChniCal ifrs amendments

SG_cover.indd 1 15/06/2012 11:59