accountant middle east - july - aug 2013

SETTING STANDARDS IN FINANCIAL AUDITING & ACCOUNTANCY JULY ! AUGUST 2013

IFRS: WHICH WAY NOW? Investors should begin to evaluate their control involvement with investees under the new consolidation standard

WHAT’S MAKING RISK MORE RISKY? Qatar’s win to host FIFA World Cup 2022 means a great amount of organisational risks ahead for internal auditors

DEATH BY NUMBERS Investors have lost trust in company !nancial reports, according to new ACCA study

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BARRY

SALZBERG “I’ve been with Deloitte for more than 34 years and I continue to learn every day”

PUBLICATION LICENSED BY IMPZ

Joyce NjeriEditor, Accountant Middle East

PublisherDominic De Sousa

Group COONadeem Hood

Managing DirectorRichard [email protected] +971 4 440 9126

EDITORIAL

EditorJoyce [email protected] +971 4 440 9140

ContributorShane Phillips

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EDITOR'S AUDIT

3

CONTENTSJULY - AUGUST 2013

18WOMEN IN FINANCE: Mariam Al Rasasi – Finance Director of DP World

on how she has worked her way through the ranks to

international marine terminal operations.

30 INTERNAL AUDIT: Of ‘Big Hammours’ and audit power play –

Audit practice.

36 COVER STORY: Deloitte’s Global CEO Barry Salzberg – How

dollar worldwide company?

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184 July - August 2013

Current AffairsPr

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12 DIFFERENT DIMENSIONS:Leadership is us!

56 TECHNOLOGY TALK: Data risk soars

whitepaper tackles collection of forensic records in GCC.

72 BUSINESS INSIGHTS: Chemistry matters

74 INDUSTRY APPOINTMENTS: Revolving door

new industry hires.

26 CORPORATE TREASURY: Banking on the AMCT

70IFRS: What’s the fuss about IFRS 10?

new consolidation standard.

3 EDITOR'S AUDIT

6 NEWS & VIEWS: KPMG International in new leadership change – Chairman

10 BUSINESS PICTORIAL:

14 ACCA SURVEY:Death by numbers

22 WOMEN IN FINANCE: Shattering the glass-ceiling

34 INSURANCE MATTERS:Charting the road to mass markets

42 SPOTLIGHT ON QATAR: A player in transition – Putting

attracting attention on the world stage for all the right reasons.

From the Experts

Interactions

Leadership is about believing in an ideal, in a goal…

KPMG INTERNATIONAL IN NEW LEADERSHIP CHANGE

KPMG INTERNATIONAL’S Chairman Michael Andrew (pictured), has announced a number of changes to KPMG’s Global Executive Team, including the appointment of a new Deputy Global Chairman and two new regional Chairs.Current Deputy Global Chairman, Alan Buckle

will retire at the end of the year, after 32 years of service to KPMG. John Scott, who will remain Managing Partner of KPMG in Spain, has been appointed as the new Deputy Global Chairman with effect from October 1. John will also become the new KPMG EMA (Europe, Middle East and Africa) Chairman succeeding Rolf Nonnenmacher, who is retiring. Larry Bradley will succeed Joachim Schindler

on KPMG’s Global Executive Team as Global Head of Audit from September 1. And in addition to his current role as Managing Partner of KPMG in Singapore, Tham Sai Choy will become ASPAC

succeeding Hideyo Uchiyama (Managing Partner KPMG in Japan). Geoff Wilson, who recently retired as CEO of

KPMG in Australia will become the new Asia

to Hong Kong from Australia. Geoff takes over from Yap Chee Meng, who is retiring. Tham Sai Choy and Geoff Wilson will both join the Global Executive Team. John Applegate will become KPMG International’s new Chief Information

Stuart Campbell, who retires after 34 years with the KPMG network.

DFM hails UAE’s ‘Emerging Markets’ status upgrade

NEW IMA BOARD TAKES CHARGE

1,900 CURRENT REGISTERED MEMBERS OF IMA DUBAI - UAE CHAPTER

THE DUBAI Chapter of IMA (Association of Accountants and Financial Professionals in Business) has new members of the board, elected to steer the association’s projects and strategies for the next financial year.

The team, led by the President Karim Abdelhay (pictured), will be charged with keeping the association’s members updated with essential business knowledge, and help improve their skills through organising and sponsoring professional events. The chapter currently has more than 1900 members. The chapters

o!er a range of professional education programmes to earn NASBA-approved CPE credits, as well as leadership, mentoring, community service, and authorship opportunities. Membership in an IMA chapter is exclusive to IMA members. The 2013-2014 new board members include:

President

Treasurer

VP Professional Education

Communication

STATS FACT:

DUBAI FINANCIAL Market (DFM) has welcomed the Morgan Stanley Capital International annual market classification review to upgrade the MSCI UAE Index to ‘Emerging Markets’ status.

Essa Kazim (pictured), Managing Director and CEO, Dubai Financial Market, said: “We are delighted to

see the UAE market upgraded to “Emerging Markets” status, which reflects international investors’ confidence in our markets and their satisfaction with what we have accomplished. The reignited interest of local and foreign investors towards DFM since the beginning of the year underlines that what we have implemented caters to investors’ expectations and the attractiveness of UAE market to foreign investments.”

NEWS

& VIEWS


LA FEMME ATTRACTION

SAUDI WOMAN WINS ACCA GRANTA WOMAN from Saudi Arabia is one of five winners of this year’s Simpson Scholarship which gives a helping hand with expenses to gain the ACCA (the Association of Chartered Certified Accountants) Qualification.

The winners will have their exam fees, annual student or a!liate fees and membership admission fees paid for them by the scholarship fund for up to five years, or until ACCA membership is achieved, whichever happens sooner. BPP Learning Media, ACCA’s Platinum Approved Learning Partner (Content), is also providing them with study materials for every ACCA paper

they are studying. The 2013 winners are:

Arabia

Vietnam

Alan Hatfield, director-learning at ACCA, said: “Year on year the standards and talents of our scholarship winners and applicants get better, which makes it a tough decision in awarding the five scholarships. The judges looked for candidates who understood and would put into practice as an ACCA student and in their careers afterwards, ACCA’s core values such as opportunity, diversity and integrity.

THE PROGRESS of women in leadership across the Commonwealth could be improved by implementing a set of six simple policy and strategic measures, recommends a new report commissioned by ACCA

Accountants) and the Commonwealth Business Council (CBC).The recommendations are included in a

report called ‘Paving the way to opportunities: women in leadership across the Commonwealth.’ This comprehensive publication examines

what opportunities exist for women across the Commonwealth, how they are able to navigate to positions of power, and how this can be further supported by governments and businesses alike. Helen Brand OBE (pictured), chief executive

of ACCA, explains: “The six proposed recommendations are a systematic way to work towards and achieve diversity in the boardroom and senior leadership positions across the Commonwealth." "The report also looks at how we can

support the pipeline of talent, and for this support to happen we need to start early by enabling young girls to see and learn about women in positions of senior leadership as a part of their educational experience. Role models are important.”

The recommendations are:i) Create a database of women who are board-‐ready or have board potential ii) Support sponsoring initiatives iii) Build a research monitor across the Commonwealth iv) Raise career aspirations v) Create a media strategy vi) Share best practice across the Commonwealth

MECA Launches CFOs Mentorship ProgrammeMIDDLE EAST CFO Alliance (MECA) recently announced the launching of its long awaited CFO Mentorship Programme. The programme aims at providing leadership development opportunities to promising finance professionals across Middle East through mentorship to be provided by senior level accomplished CFOs. So far more than 50 CFOs from prominent companies and businesses have committed to volunteer as the CFO Mentors.

Saleem Sufi (pictured), the Founder and President of MECA

revealed the details of the programme recently, at an exclusive gathering of CFOs at Shangri-La Hotel in Dubai.

“The MECA CFO Mentorship initiative is more than a mentoring programme. We are starting a major long term initiative among the senior finance community in the Middle East that will not only

talent we produce but bring the CFO community closer through multiple long-term mentor-mentee relationships,” Saleem said.

CFOs and finance professionals wishing to join the programme as Mentor or Mentee can register at: http://www.mecacfoalliance.com/cfomentorship/

7

NEWS

& VIEWS

HORWATH MAK HONOURS TOP OFFICIALS

REPORTS MANIPULATION ‘POSING GREAT RISK’

Deloitte Tax Handbook out

member of Crowe Horwath International, recently honoured key government and business personalities at a networking event attended by over 500 invitees from across different industries in UAE. Ahmed Bin Sulayem, Executive Chairman,

Dubai Multi Commodities Centre Authority (DMCC), was named ‘Government Personality of the Year’ for his vision in driving DMCC’s initiatives in a wide range of commodity sectors. Sudhir Goyel (pictured centre), Co-‐founder and Managing Director of Gulf Petrochem Group, was recognised as ‘Businessperson of the Year’ for his achievement in the overall growth of the industry with leadership skills related to Financials & Funding, Strategic Planning and International Business Relations and expansion of the company’s business in the Indian subcontinent.The award for ‘Banker of the Year’ was

presented to Rick Pudner, Group CEO – Emirates NBD for his extensive contribution to the UAE banking industry, while James Mathew, Managing Partner, JAFZA Branch -‐ Horwath Mak, was

overall growth as well as serving as Chairman of the Institute of Chartered Accountants of India (ICAI) UAE (Dubai) Chapter. Dr Khalid Maniar, Founder and Group Chairman

of Horwath MAK, hailed the leadership of HH Sheikh Mohammed Bin Rashid, whose vision has hoisted Dubai on the world map -‐ from a pearl producing economy to the region’s busiest and

such leadership vision has always inspired him to grow Horwath Mak, which is now among top four

40% PROPORTION OF RESPONDENTS WHO REPORTED THAT SALES OR COSTS HAD BEEN MANIPULATED AT THEIR COMPANY

ONE IN five employees of American firms operating in Europe, Middle East, India and Africa are aware of financial manipulations in their company in the last 12 months, according to Ernst & Young’s Fraud Survey for 2013.

Alarmingly, at board and senior manager level the proportion is

reported more than 40% of respondents said that sales or costs had been manipulated at their company.

“Although the survey covered

American companies operating in the region, this should be a concern for the business community in this part of the

Vice President of International Development at IMA (Institute of Management Accountants).

“The possibility of inaccurate financial reporting could have far reaching impacts on the business community, which is why we cannot overemphasise enough the importance of having trained and certified professionals," he added.

STATS FACT:

the seventh annual Middle East Tax Conference, in a two day event, which brought together over one hundred Deloitte clients and partners to debate topical developments relevant to the region. Hot topics debated included trends in anti-avoidance initiatives, and tax treatments related to permanent establishments.

The highlight of the event was the release of Deloitte’s 2013 Annual Middle East Tax Handbook, underlining the most current tax rules and regulations impacting the region.

“In the last 12 months, significant developments, not

just in technical matters and tax administration, but also in the profile of organisations’ tax a!airs, particularly in relation to public and media scrutiny, have been witnessed,” said Nauman Ahmed, Deloitte Middle East tax practice leader.

“We all need to be alert to these shifts in focus,” he added.

Over the two day conference, a diverse range of timely topics were covered, such as country-specific updates, indirect taxation, European holding structures, aviation taxation, FATCA and compliance outsourcing.

NEWS

& VIEWS


HORWATH MAK HONOURS TOP OFFICIALS

REPORTS MANIPULATION ‘POSING GREAT RISK’

Deloitte Tax Handbook out

member of Crowe Horwath International, recently honoured key government and business personalities at a networking event attended by over 500 invitees from across different industries in UAE. Ahmed Bin Sulayem, Executive Chairman,

Dubai Multi Commodities Centre Authority (DMCC), was named ‘Government Personality of the Year’ for his vision in driving DMCC’s initiatives in a wide range of commodity sectors. Sudhir Goyel (pictured centre), Co-‐founder and Managing Director of Gulf Petrochem Group, was recognised as ‘Businessperson of the Year’ for his achievement in the overall growth of the industry with leadership skills related to Financials & Funding, Strategic Planning and International Business Relations and expansion of the company’s business in the Indian subcontinent.The award for ‘Banker of the Year’ was

presented to Rick Pudner, Group CEO – Emirates NBD for his extensive contribution to the UAE banking industry, while James Mathew, Managing Partner, JAFZA Branch -‐ Horwath Mak, was

overall growth as well as serving as Chairman of the Institute of Chartered Accountants of India (ICAI) UAE (Dubai) Chapter. Dr Khalid Maniar, Founder and Group Chairman

of Horwath MAK, hailed the leadership of HH Sheikh Mohammed Bin Rashid, whose vision has hoisted Dubai on the world map -‐ from a pearl producing economy to the region’s busiest and

such leadership vision has always inspired him to grow Horwath Mak, which is now among top four

40% PROPORTION OF RESPONDENTS WHO REPORTED THAT SALES OR COSTS HAD BEEN MANIPULATED AT THEIR COMPANY

ONE IN five employees of American firms operating in Europe, Middle East, India and Africa are aware of financial manipulations in their company in the last 12 months, according to Ernst & Young’s Fraud Survey for 2013.

Alarmingly, at board and senior manager level the proportion is

reported more than 40% of respondents said that sales or costs had been manipulated at their company.

“Although the survey covered

American companies operating in the region, this should be a concern for the business community in this part of the

Vice President of International Development at IMA (Institute of Management Accountants).

“The possibility of inaccurate financial reporting could have far reaching impacts on the business community, which is why we cannot overemphasise enough the importance of having trained and certified professionals," he added.

STATS FACT:

the seventh annual Middle East Tax Conference, in a two day event, which brought together over one hundred Deloitte clients and partners to debate topical developments relevant to the region. Hot topics debated included trends in anti-avoidance initiatives, and tax treatments related to permanent establishments.

The highlight of the event was the release of Deloitte’s 2013 Annual Middle East Tax Handbook, underlining the most current tax rules and regulations impacting the region.

“In the last 12 months, significant developments, not

just in technical matters and tax administration, but also in the profile of organisations’ tax a!airs, particularly in relation to public and media scrutiny, have been witnessed,” said Nauman Ahmed, Deloitte Middle East tax practice leader.

“We all need to be alert to these shifts in focus,” he added.

Over the two day conference, a diverse range of timely topics were covered, such as country-specific updates, indirect taxation, European holding structures, aviation taxation, FATCA and compliance outsourcing.

NEWS

& VIEWS


DELOITTE, IRTI TO RUN ISLAMIC FINANCE COURSES

DUBAI WOMEN COUNCIL IN PARTNERSHIP WITH PWC THE DELOITTE Islamic Finance

Knowledge Centre (IFKC) in the Middle East has signed an MOU of a collaborative training initiative

The initiative responds to calls from industry leaders and regulators to develop industry-based training programmes for the steadfastly growing industry of Islamic Finance and Takaful.

“This initiative between Deloitte

of collaboration among industry stakeholders to strengthen knowledge-sharing process and address the industry challenges and market practices. In particular it aims to streamline professional education and capacity building

Deloitte Middle East.

strategic partner to inspire and deliver cutting edge research, capacity building and information services in the area of Islamic economics and finance” said Professor Mohammad Azmi Omar,

The 2013 Stability report by the Islamic Finance Service Board (IFSB) states that ‘some of the remaining challenges to be overcome include the development of human capital which increases with the development of innovative Islamic financial products and services’.

DUBAI BUSINESS Women Council (DBWC) has announced that it has entered into a strategic Partnership Agreement with audit and advisory

Under the terms of the agreement, both parties will collaborate on cross-‐functional business development and provide mutual access to their services. They will use their respective social media channels and portals to jointly promote events, trainings, surveys and news. Raja Easa Saleh Al Gurg (pictured), President,

Dubai Business Women Council, said: “Through our partnership with PwC we look forward to opening up various growth opportunities for our members who continue to make value contributions to the socioeconomic development of the UAE through their roles as inspiring business leaders.” Founded in 2002, DBWC motivates women

to be productive members of the society, while encouraging role models to rise up from the ranks and inspire other women around the world, especially in the Arab region, to discover their true potential.“By joining forces with PwC we can also instill

a deeper sense of professionalism and global awareness through PwC’s extensive multinational experiences across multiple industries. Our

in promoting women entrepreneurship and empowering women to achieve their full potential. We look forward to a long and highly productive relationship with PwC.”

Accountants in blood donation drive AS A social commitment, the Emirates Chartered Accountants

drive during the Chartered Accountants’ Day, which is

Employees from di!erent banks and financial institutions, members of Emirates Chartered

and employees from di!erent companies joined together to show their commitment towards the worthy cause.

The event was held at the Blood Donation Section of Latifa

Hospital, Dubai. “Emirates Chartered

take up the initiative to once again prove that accountants are more than number crunchers,” said a

9

NEWS

& VIEWS

FOR A WORTHY CAUSE

An of!cial from the Emirates Chartered Accountants Group donates blood to mark the World Chartered Accountants day, observed annually on July 1.

POINT OF VIEW

RECOGNITION

The Chairman of Qatar’s Institute of Internal Auditors, Chris Adonis addresses the audience during the 3rd National Conference organised by the association in Doha, Qatar. The theme of the conference was on ‘The value of an effective Internal Auditing function.’

Chairman of the Institute of Chartered Accountants of India, James Mathew, presents an award to the Editor of Accountant Middle East publication – Joyce Njeri, at a recent event. This was in recognition of the support the magazine continues to offer the association and its members.

BUSINESS

PICTORIAL


FOR A WORTHY CAUSE

An of!cial from the Emirates Chartered Accountants Group donates blood to mark the World Chartered Accountants day, observed annually on July 1.

POINT OF VIEW

RECOGNITION

The Chairman of Qatar’s Institute of Internal Auditors, Chris Adonis addresses the audience during the 3rd National Conference organised by the association in Doha, Qatar. The theme of the conference was on ‘The value of an effective Internal Auditing function.’

Chairman of the Institute of Chartered Accountants of India, James Mathew, presents an award to the Editor of Accountant Middle East publication – Joyce Njeri, at a recent event. This was in recognition of the support the magazine continues to offer the association and its members.

BUSINESS

PICTORIAL


BUSINESS

PICTORIAL

ALL THE PRESIDENT’S MEN

HE Abdullah Bin Hamad Al Attiyah, Qatar’s President of the Administrative Control and Transparency Authority (front, 3rd left) poses with young military of!cers when he of!cially inaugurated this year’s 3rd National Conference hosted by Qatar’s Institute of

Internal Auditors in Doha.

BANKER OF THE YEAR

Rick Pudner (right), outgoing Group CEO of Emirates NBD bank is honoured for his contribution to the UAE banking industry, during an event hosted by audit and advisory !rm Horwath Mak.

MORE ON IFRS

A representative from Wiley presents a copy of the latest edition of IFRS paperback titled ‘International Trends in Financial Reporting under IFRS’, to Atiq Juma Nassib (right), the Senior Director, Commercial Services Sector, at Dubai Chamber of Commerce & Industry, during the World Accounting Summit held in Dubai recently.

GOVERNMENT PERSONALITY OF THE YEAR

Horwath Mak recently recognised Ahmed Bin Sulayem (centre), the Executive Chairman of Dubai Multi Commodities Centre Authority, for his vision in driving DMCC’s initiatives

in a wide range of commodity sectors.

11

LEADERSHIP IS US!

IS LEADERSHIP entrusted only to the ‘leaders’, I mean CEOs, CFOs, CIOs, presidents, sheikhs, prime ministers, preachers, high profile achievers,

celebrities, scholars, academics?

1.

2.

NUSRATE IBRAHIM

MANAGING DIRECTOR, NTI FZ LLE - TRAINING CONSULTANCY

Leadership is about believing in an ideal, in a goal…

DIFFERENT

DIMENSIONS

12

Nusrate Ibrahim argues that governance role is not a preserve of select individuals in the society…

July - August 2013

Accountancy Qualifications at Phoenix Financial TrainingPhoenix Financial Training, founded in 2006 by David Thomasson has achieved great success in the UAE and India as a UK oriented accountancy training provider. We offer a wide range of courses including ACCA, ICAEW & CIMA.

ProfessionalThese courses are delivered in the D.I.F.C. and World Trade Centre by carefully selected and approved tutors who are the envy of our competitors. With !exible payment options and course to suit a multitude of personal schedules, at Phoenix we always put the student "rst.

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CONTACT OUR OFFICE ON 04 401 9313 TO BEGIN YOUR CAREER

INVESTORS ARE less trustful of corporate reports since the global financial crisis with more than two-thirds saying they are

more sceptical about the information companies provide, according to new research from ACCA (the Association of Chartered Certified Accountants).

Nearly two-‐thirds of the 300 investors surveyed in ‘Understanding Investors: directions for corporate reporting’ have told ACCA that managers have too much discretion over the

majority of investors say they place more value on information generated from outside a company than on traditional corporate reports, such as the news and social media. Worryingly, 45%

There was a clear dichotomy for policy-‐makers

own investment decisions, yet 65% agreed that it created short-‐termism in the market as a whole and distracted management. Almost

reporting scrapped.

63% place greater value on information generated outside the company

93% expressed support for the concept of integrated reporting

The survey also revealed strong support for the role, of external assurance, which was seen

warnings and emerging risks and opportunities

outweighed assurance. And 41% wanted to see

45% PROPORTION OF SURVEYED INVESTORS WHO SAY THE ANNUAL REPORT ‘IS OF NO USE'

DEATH BY NUMBERSInvestors have lost trust in company !nancial reports, new ACCA study reveals…

ACCA

SURVEY

14 July - August 2013 15

Ewan Willars, ACCA director of policy, said:

information since the economic downturn. The decline in trust in corporate information

“But the research shows that while it’s easy to lump ‘investors’ under one roof, the reality is that different investors want different information

investors, such as hedge funds, want or need the same information as longer term investors, such

teams that support them may need to provide

needs of various investment groups, rather than

interest, they also recognise that this focus on

overall market’s long-‐term interests. There

investors are aware of the outcome of that kind

This poses a real challenge to regulators and policy makers in terms of their approach.

Though in Europe there are moves to remove

given the mixed feelings on the individual company and market effects it is seen as having. Accounting standard setters and regulators

of investors who see no use to annual reports and the distrust of management discretion over

they are to play a central role and have their voice clearly heard in the policy-‐making process, they

regime that gives investors the assurances they

The ACCA survey respondents represented a range of institutions, 150 of which each had more than $500m in assets under management, including pension funds, insurance companies,

advisors or analysts and corporate treasurers.

“The decline in trust in corporate information since the global financial crisis suggests there is a bigger role for audit to play in rebuilding confidence in company statements.”

ACCA

SURVEY

Many investors have become more sceptical about company-provided

since the global crisis, according to a new report authored by ACCA.

NEW RESEARCH from Grant Thornton’s International Business Report (IBR), a quarterly global business

survey of more than 3,200 businesses in 44 economies, reveals a dramatic reversal of fortunes for business leaders in the world’s two largest economies.

While US businesses are feeling more confident about growth in their operations and the economy, optimism amongst peers in China has slumped to the lowest level recorded in IBR history.

The IBR reveals that US business optimism climbed to net 55% in the second quarter of 2013, up from 31% in Q1, and the highest level recorded since 2005. This improving

expectations; net 59% expect to see revenues climb over the next 12 months, up from 46% in

three months previously.

By comparison, business optimism in China fell to just net 4% in Q2, down from 25% in Q1 and the lowest level since 2006 (when businesses

revenues (down from net 72% in Q1 to 60% in

Ed Nusbaum, global CEO at Grant Thornton, commented: “The divergence in the data is relative in that China is coming off a big high and the US off a deep low. Ultimately global growth prospects would be best served by a strengthening of both markets but broader macroeconomic trends are feeding into business sentiment.”

In the US, the Federal Reserve recently suggested it could wind up its programme of quantitative easing by this time next year if the economy keeps improving. Meanwhile rising house prices, increased construction starts and continuing strong stock market performance are helping to

“By contrast, China's economy is slowing. Exports grew by just 1% in May due to weakness in key markets such as the EU. And the new leadership appear eager to rein in credit growth with fears that a housing bubble is building. The downside of course is that this reduces the spending power

4% DROP IN BUSINESS OPTIMISM IN CHINA IN Q2 OF 2013

REVERSAL OF

FORTUNE? Grant Thornton’s global survey !nds US business sentiment on an upswing, while China slumps to lowest level…

GRANT THORNTON

SURVEY


While US businesses are feeling more confident about growth in their operations and the economy, optimism amongst peers in China has slumped to the lowest level.

of businesses and consumers and the People’s Bank of China has since had to inject liquidity into its banking system last month to stave off a credit squeeze,” Ed added.

Optimism has remained relatively consistent with Q1 2013 and has ranged from 88% to 86%. Revenue expectations have increased along with export expectations, which highlight a positive trend for the region.

The IBR also highlighted that the UAE government is extremely supportive of business diversification and that predominately UAE based businesses would want to diversify into the technology and Hospitality and leisure industries.

The IBR also highlighted that the percentage of businesses investing in research and development has increased from 18% in Q1 to 32%. This could see the emergence of new products and

the market, as research and development will promote innovation and therefore support in increasing revenue if researched, developed and implemented effectively.

Hisham Farouk, Managing Partner of Grant Thornton UAE commented, “Current trends in the United Arab Emirates makes this a great region for investment and opportunity. With the IBR highlighting increases in import, export and research and development, it further supports the ambitious plans within the UAE.”

“The UAE has increased international presence; which truly supports it being seen as the central MENA business hub for the world,” Hisham added.

The IBR highlights a positive increase in optimism for the USA in stark contrast to a slight decrease in one of the BRIC economies. However, change in business environment coupled with new regulation can alter deter businesses in relation to optimism. We believe that with actionable advice, coupled with reason and instinct, dynamic businesses can remain optimism even through challenging times with advisors like Grant Thornton.

in Q2 balanced out a slide in that of the BRIC economies. In the UK, business optimism

climbed from net -‐1% in Q1 to 34% in Q2, whilst

time in IBR history, rising to net 8% fuelled by the stimulus and reform measures of the new leadership, dubbed 'Abenomics'.

however, sliding to net -‐8% in Q2, down from -‐2% three months previously. Mirroring China, business sentiment dropped in the other three BRIC economies, meaning G7 business optimism

GRANT THORNTON

SURVEY

Hisham Farouk, Managing Partner - Grant Thornton UAE: “Current trends in the UAE makes this a great region for investment and opportunity.”

WOMEN

IN FINANCE

18

“This is a time of change. More Emirati women are taking up positions on corporate boards, thanks to our Rulers who have facilitated the path for us,” Finance Director of DP World tells Joyce Njeri …

MARIAM

AL RASASIWELCOME MOVE:

The debate about having women on companies’ boards is hugely welcome. However we should be careful and approach it in the perspective of merit and not be seen as a ‘token.’

July - August 2013

Women continue to aspire for leadership positions in all spheres of governance in both the government and private sector, however it has not been easy as many barriers still remain.

IN HER office, overlooking the Sheikh Zayed Road at the Jebel Ali Free Zone in downtown Dubai, Mariam Al Rasasi offers me coffee as we settle

down for this interview.

When I suggest that many Emirati women would dread to lead such a demanding, high profile finance role and would do anything to stay away, she retorts back quick in a f lash: “This is a time of change. More women are taking up positions on major finance roles and on corporate boards, thanks to our Rulers who have facilitated the path for us.”

A US CPA-‐qualified accountant, Mariam is the Finance Director of DP World, a conglomerate of international marine terminal operations, logistics and related services. The Group is a subsidiary of Dubai World, a global holding company that focuses on the strategic growth areas of transport, logistics, drydocks, maritime, investment and financial services.

Mariam is today one of the most powerful Emirati women in finance in the country. She graduated from the UAE University in the early 90’s and joined the telecommunication company -‐ Etisalat -‐ as trainee in the finance department. She worked her way through the ranks to head the department, after which she moved to DP World as the Finance Director in 2007.

Suitably self-‐deprecating, yet straightforward, she offers an exclusive interview to Accountant Middle East in a candid manner, and it is not hard to discern why, as head of finance of DP World, her outspoken mode naturally gives a certain weight to her decisions. Here are the excerpts from the interview.

Recently, His Highness Sheikh Mohammed bin Rashid Al Maktoum announced that his government has made a decision to make the representation of women in companies’ boards compulsory. As the Finance Director of DP World what is your reaction to His Highness Sheikh Maktoum’s decree?

I wasn’t surprised when I heard about His Highness’ decision. I think the decree was very timely. Statistics show that women graduates outnumber men by a ratio of two to one, and therefore we don’t want to risk wasting the talents of another generation of

women and leaving the board rooms of UAE organisations without the diversity of skills, talents and experiences.

The debate about having women on companies’ boards is hugely welcome. Past studies have shown overwhelming evidence that having women on boards, in leadership teams is good for business as it enriches decision making, enhances innovation and this will eventually make the UAE more competitive in the future. However we should be careful and approach it in the perspective of merit and not be seen as a ‘token.’

Change is occurring, but it is slow and the UAE boasts many talented, qualified and experienced women seeking and waiting to serve on boards. There are some organisations which have already started implementing His Highness’ directive, albeit on a smaller scale. This may have some drawbacks as boards that have never had a female director may

WOMEN

IN FINANCE

19

GENDER BALANCE:

Past studies have shown overwhelming evidence that having women on boards is good for business as it enriches decision making and enhances innovation.

invariably appoint a lone female which may lead to feeling of isolation and a sense of being seen as ‘a token’.

What can organisations do to prepare high-achieving women in their companies for senior roles and board positions?

If a company really wants to attract and retain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board ready”.

Achieving balanced boards requires a pipeline of women progressing through the ranks and therefore organisations need to develop a culture which recognises diverse talent and values different models of leadership. Companies should make serious interventions by introducing a range of innovative and f lexible work options for women.

As I mentioned earlier, greater gender balance in boards can help companies improve their organisational performance and operating results, however, there are companies that still have policies that discourage women from rising to leadership positions. Therefore companies looking to achieve a greater gender balance need to make serious interventions by introducing a range of innovative and f lexible work options for women and make themselves more female-‐friendly in terms of work environment, workplace culture and benefits.

How has women’s leadership roles evolved in the past couple of decades and what challenges remain?

Historically, in the UAE, as is in many other countries, leadership has carried the notion

of masculinity and the belief that men make better leaders than women is still common today. Women continue to aspire for leadership positions in all spheres of governance in both the government and private sector, however it has not been easy as many barriers still remain. These may be related to stereotypes, culture and cultural expectations, the choice and balance between work and family. Traditional beliefs and cultural attitudes regarding the role and status of women in society are still prevalent. Therefore, gender quotas, affirmative action, mentorship programmes and financial assistance should be deployed to boost women’s participation in all spheres of workplaces.

What in your view, is important and should be done further in order to get women better represented on boards?

It needs to start with women themselves. Many common explanations for why women don’t hold advanced positions within companies include reasons such as a lack of commitment, lack of ambition or leaving work to care for family. We need to rise above this and demonstrate that we can juggle all these responsibilities. Of

If a company really wants to attract and retain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board ready”

WOMEN

IN FINANCE

20

ATTRACTING TALENT:

Companies should make serious interventions by introducing a range of

work options for women.

July - August 2013

invariably appoint a lone female which may lead to feeling of isolation and a sense of being seen as ‘a token’.

What can organisations do to prepare high-achieving women in their companies for senior roles and board positions?

If a company really wants to attract and retain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board ready”.

Achieving balanced boards requires a pipeline of women progressing through the ranks and therefore organisations need to develop a culture which recognises diverse talent and values different models of leadership. Companies should make serious interventions by introducing a range of innovative and f lexible work options for women.

As I mentioned earlier, greater gender balance in boards can help companies improve their organisational performance and operating results, however, there are companies that still have policies that discourage women from rising to leadership positions. Therefore companies looking to achieve a greater gender balance need to make serious interventions by introducing a range of innovative and f lexible work options for women and make themselves more female-‐friendly in terms of work environment, workplace culture and benefits.

How has women’s leadership roles evolved in the past couple of decades and what challenges remain?

Historically, in the UAE, as is in many other countries, leadership has carried the notion

of masculinity and the belief that men make better leaders than women is still common today. Women continue to aspire for leadership positions in all spheres of governance in both the government and private sector, however it has not been easy as many barriers still remain. These may be related to stereotypes, culture and cultural expectations, the choice and balance between work and family. Traditional beliefs and cultural attitudes regarding the role and status of women in society are still prevalent. Therefore, gender quotas, affirmative action, mentorship programmes and financial assistance should be deployed to boost women’s participation in all spheres of workplaces.

What in your view, is important and should be done further in order to get women better represented on boards?

It needs to start with women themselves. Many common explanations for why women don’t hold advanced positions within companies include reasons such as a lack of commitment, lack of ambition or leaving work to care for family. We need to rise above this and demonstrate that we can juggle all these responsibilities. Of

If a company really wants to attract and retain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board ready”

WOMEN

IN FINANCE

20

ATTRACTING TALENT:

Companies should make serious interventions by introducing a range of

work options for women.

July - August 2013 21

Women’s progression in the top ranks of companies is increasing although some barriers still remain, including the more insidious organisational culture, which maintains workplace inequalities through institutional practices.

course we all want to be able to have balance in our lives. We want to rise to the top, but we don’t want to give up every other component of our lives to do it.

Serving on the boards of organisations can sometime be hectic, owing to characteristics such as excessive travel, working beyond contract hours among others. Do you think these facts act as an impediment to many women with the motivation and ambition to reach top-level management positions? What in your opinion is the biggest hindrance or barriers to women’s progression to the highest echelons of the corporate world?

Women’s progression in the top ranks of companies is increasing although some barriers still remain, including the more insidious organisational culture, which maintains workplace inequalities through institutional practices. If we are to move the dial in the right direction and increase the number of women in senior roles within our organisations, then these need to be revised. At the same time, women see balancing work and family as the biggest barrier. As a society and an advanced

economy, I believe it is vital that we find a way of better allowing individuals to raise families and fully participate in the workplace.

Is there any advice you can give to women who want to advance as leaders? Any key points to focus on?

The earlier you start with clear career development plan the better for your future growth, you must define your strength and always work to improve on your weak areas. Never stop exploring … and always maintain important professional networks.

In your opinion, what can facilitate the path to the top of the corporation for women?

While it’s not a new thing in the UAE to have women serving on boards, more needs to be done in order to have Sheikh Mohammed’s decree followed to the letter. First and foremost, this will require a significant shift in corporate culture and in the attitudes and behaviours of many towards the modern women.

People tend to over-‐play the challenge of a quota system and under estimate the benefits of change that doing something different can bring. Gender representation offers benefits like improved board governance, brings together directors with different perspectives, a deeper talent pool and a more engaged leadership team.

What do you enjoy most about serving on the Board of DP World?

I enjoy being part of very dynamic team where the learning never stops, we are continuously working towards implementing new initiatives, devising fresh strategies and afterwards celebrating that feeling of satisfaction when we see our dreams come true.

WOMEN

IN FINANCE

I HAVE deliberately chosen the statement ‘Don’t try too hard to be one of the boys’, as it represents a key message in a recent Deloitte

Survey of 15 Global Female Chief Financial Officers (CFO) conducted in January 2012 titled ‘The journey to CFO – perspectives from women leaders.’

The report continues to say: “Instead, develop

under-‐represented in senior executive positions

WOMEN

IN FINANCE

22

“Don’t try too hard to be one of the boys,” Deloitte’s audit partner Cynthia Corby, advices women in !nance and accounting careers…

50% REPRESENTATION OF WOMEN IN THE WORKFORCE IN DEVELOPED WORLD

SHATTERING THE

GLASS-CEILING

CYNTHIA CORBY

AUDIT PARTNER, DELOITTE ME

July - August 2013

I HAVE deliberately chosen the statement ‘Don’t try too hard to be one of the boys’, as it represents a key message in a recent Deloitte

Survey of 15 Global Female Chief Financial Officers (CFO) conducted in January 2012 titled ‘The journey to CFO – perspectives from women leaders.’

The report continues to say: “Instead, develop

under-‐represented in senior executive positions

WOMEN

IN FINANCE

22

“Don’t try too hard to be one of the boys,” Deloitte’s audit partner Cynthia Corby, advices women in !nance and accounting careers…

50% REPRESENTATION OF WOMEN IN THE WORKFORCE IN DEVELOPED WORLD

SHATTERING THE

GLASS-CEILING

CYNTHIA CORBY

AUDIT PARTNER, DELOITTE ME

July - August 2013

Though attitudes vary from country to country and industry to industry, women continue to be under-represented in senior executive positions and in the boardroom.

1.

2.

3.

4.

5.

Lord Mervyn Davies stated in his report titled,

WOMEN

IN FINANCE

23

senior executives, Deloitte synthesised critical

1.

2.

3.

4.

5.

The UAE has seen a large percentage of women going to college for higher education averaging a rate of 65%, followed by 61% in Canada, and 58% in both the USA and United Kingdom.

WOMEN

IN FINANCE

24

Rise in the non-traditional families: Women have started to actively contribute to household income.

July - August 2013

BANKING ON

THE AMCTWhen Lourie Kruger moved into corporate treasury with Kingdom Hotel Investments, enrolling for the ACT’s core quali!cation was a ‘no-brainer’, he tells Sally Percy...

TREASURE OF TREASURY

Lourie Kruger - Vice President, Treasury and Mergers & Acquisitions at Kingdom Hotel Investments (KHI): “Treasury is an exciting space, especially in the emerging markets.”

CORPORATE

TREASURY


“I’ve had the benefit of having some great bosses. My mentor on my graduate programme said: ‘This is your career and you need to take ownership. If you want something to happen, you need to make it happen yourself.’”

LOURIE KRUGER was already a successful banker with Standard Bank in South Africa when he switched to a career in treasury

in 2009.

After joining the bank as a graduate, he worked his way through the ranks until he and a colleague founded Standard Bank’s real estate investment banking division, which provided debt advisory services to the entire Sub-‐Saharan African region.

But Kruger had been weighing up a move into corporate treasury for a couple of years before he was approached about taking on a group treasurer role by his client, Dubai-‐based luxury hotel investment group Kingdom Hotel Investments (KHI).

Intrigued by the possibility of seeing ‘life from the other side’ and keen to apply the skills and experience he had acquired in Africa to the Middle East, Asia and Europe, he jumped at the chance.

“It was a combination of the right time and the right

“I was curious about the way corporates were looking at their businesses, managing risk and allocating capital. Lots of bankers have a morbid fascination with what’s happening on the other side of the table.”

Once he was installed in KHI’s treasury, Kruger was amazed by the scope of the role he had taken on compared with his experience in banking.

“It’s the sheer breadth of what a treasurer deals with on a day-‐to-‐day basis,” he says.

“I’ve never heard of any one individual who looks after such a range of responsibilities in a bank.”

He continues: “The eye-‐opener was not any particular issue, it was the fact that you have to deal with all of them, all of the time. You think that if you come from a banking background, you would be able to sit on the other side of the table, but there

For Kruger, the skills gap was centred on tax,

group (rather than hedging on a transactional basis, an activity he was familiar with from his banking

days). So he researched options that would enable him to brush up on those skills and he settled on the AMCT diploma following discussions with Gordon Drake, KHI’s CFO and a former treasurer.

International Treasury Management (CertITM) the most useful module of the AMCT, which is the ACT’s

“It has a broad-‐based approach to treasury,” he explains.

good information on cross-‐border cash payments.”

Juggling a demanding job (Kruger is now vice president, treasury and M&A at KHI) with studying the AMCT is challenging, but rewarding at the same time.

“As with all things that require a change in how you structure your day from a timing point of view, it requires a little discipline,” says Kruger.

“But you can start applying your knowledge and have more informed conversations almost immediately.”

Kruger has put his AMCT learning into practice in a number of different ways. It has helped him to set up teams within treasury and to put the right infrastructure and controls in place to allow for

It has also given him valuable knowledge on structuring businesses so that they are tax-‐

back to the centre. This is critical for KHI since it actively manages its cash across a number of different jurisdictions to optimise its balance sheet throughout the world.

There is a big opportunity cost to treasurers

observes Kruger.

27

CORPORATE

TREASURY

“Think of the amount of time it will take you to get to the same level of knowledge by doing it on the job and the potential risk that something might go wrong during that period. I think it’s a no-‐brainer.”

He values the fact that the ACT is a chartered body and appreciates how well regarded its diplomas are.

“There is a high level of recognition of these

build their own brand.”

Besides equipping him with valuable skills, Kruger thinks the AMCT shows that he is serious about a career in treasury, despite coming from a banking background.

“It takes quite a bit of work to get those letters after your name,” he points out.

challenges that I deal with on a day-‐to-‐day basis much more rewarding than where I was. Treasury is an exciting space, especially in the emerging markets.”

Although treasury as a business function is still a relatively new concept in the emerging markets, companies are “waking up to the fact that they need treasury skills”, according to Kruger.

This, in turn, will open up lots of opportunities for treasurers. He himself is proud of being part of a ‘world-‐class’ treasury team that works across different jurisdictions and has done a number of highly structured transactions in various exotic locations, such as Morocco and the Philippines.

He is also very excited about working in Dubai.

“Dubai has done a fantastic job in terms of

the Middle East and a gateway for investment funds

“Ambitious treasurers should think about moving into a chief investment officer role, rather than a CFO role, because it aligns slightly better with their skills and doesn’t burden them with the administrative tasks that CFOs have to manage.”

CORPORATE

TREASURY


The ACT is delighted to announce the dates of the next Middle East annual

builds upon the series of events we run across the GCC, providing the

and promote treasury best practice. Look out for the preview programme in May. For a glimpse of what to expect from this year’s annual conference take a look at the 2012 conference overview here: www.actmiddleeast.org/annualconference.Special rates are available for all Accountant Middle East readers. To submit your interest in sponsoring, exhibiting, attending or speaking at this year’s ACT Middle East Annual, simply visit the website: www.actmiddleast.org/annualconference2013 or email [email protected].

ACT Middle East Annual Conference 201326-27 November 2013 |The Ritz-Carlton, DIFC, Dubai

and business into Africa and Asia,” he says.

professionals and treasury professionals, in particular, is very good and it is getting better.” In addition, he notes that Dubai is a great base for travelling, which is his passion outside of work.

Although Kruger loves the diversity of being a corporate treasurer and has no plans to return to the banking world, his background is nevertheless an advantage in his new career.

looks at, judges and prices risk, whether that’s risk in a company or in an investment,” he explains.

“As that cuts across almost everything that a

constructive conversation between treasury and the bank.”

For the same reason, Kruger believes that

the issues their clients face.

“Bankers are always being driven to become more client-‐centric, and treasury is the touchpoint between corporates and banks,” he observes.

“It can only help bankers to understand how treasurers view the world. I almost think it should be mandatory.”

VALUE-ADD

Kruger values the fact that the ACT is a chartered body and appreciates how well regarded its diplomas are. “There is a high level of recognition of

market, which helps them to build their own brand.”

CORPORATE

TREASURY

YOU MAY know hammour as that delicious grouper fish that belongs to the sea bass family.

Whether it’s boiled, smoked or fried, hammour has become probably the most popular saltwater food fish in the Middle East, but at a recent Internal Audit event, the delicacy got a new meaning altogether.

In his characteristic style of address where he habitually captures the audience with his unique, interactive, simplistic yet most logical manner to drive the idea home, Abdulqader Obaid Ali laid bare the malaise that ails the modern Internal Audit function, particularly in the region.

During the annual conference in Doha organised by the Qatari Chapter of the Institute of Internal Audit (IIA), Abdulqader, who is the current

OF ‘BIG

HAMMOURS’AND AUDIT POWER PLAY

INTERNAL

AUDIT

30

Joyce Njeri tries to decipher audit jargon as President of UAE’s IIA - Abdulqader Obaid Ali - uses !sh analogy to address serious concerns a"ecting Internal Audit practice...

July - August 2013

It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region.

President of the UAE’s IIA, tackled the issue of how Internal Audit can support management with regards to building and maintaining good corporate governance practices.

For the entire morning duration, speaker after speaker bombarded the delegates inside the auditorium with mind-‐numbing technical lectures that sometime tended to get unexciting. But when Abdulqader arose to speak, he veered off the norm as he swiftly attached a wireless microphone on his snow-‐white kandura and proceeded down the staircase, where he roamed the f loor of the auditorium to ‘interact’ with the seated audience, rather than formally addressing them from raised platform. He did not hide his loathing of ‘Powerpoint’ style of presenting.

With a perceptible smile and a blade of satire that he meticulously combined to send his message across, Abdulqader lit up the faces of the audience with his ‘hammour’ analogy, which he used to describe the different relationships that exist in many organisations, emphasizing that Internal Audit function needs a complete overhaul.

The President has the sly faculty of making himself clearly understood. His thoughts are strong and powerfully joined together. His style of speech is mostly rhetorical, but precisely logical.

So, with hands thrust behind his back, he opened up the discussion in a splendid rhetorical style.

“Are auditors a part of the organisation or apart of the organisation?” he bluntly asked.

“It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region. Corporate governance is seen largely as the province of the ‘big hammours’,” he sent the crowd rolling with laughter, while referring to senior management.

“Good governance is a journey that begins with a broad, organisational perspective. While boards

senior leadership are often driving the course, this narrow view can restrict improvements to the corporate governance process.”

“Internal auditors should not be viewed as ‘small hammours’, as business leaders expect them to play a more strategic – rather than merely tactical – role in the governance process.”

Abdulqader cited recent regulations, including an emphasis on anti-‐fraud and whistle-‐blower provisions and the potential impact on the business market, which have compelled auditors to take a more active role in corporate governance.

“We have a long way to go, but making steady progress requires committed senior leadership, integrated planning, coordinated execution and constant monitoring by both the ‘big and small hammours’.”

Every point he touched upon was received with a thunderous applause of approval. It was replete with good humour, sound reasoning and spoken with that perfect command of the language that is, matter of factly, not so eminently common among most orators in this region.

“Investment decisions usually come from top management. Internal audit support is critical

INTERNAL

AUDIT

31

It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region.

President of the UAE’s IIA, tackled the issue of how Internal Audit can support management with regards to building and maintaining good corporate governance practices.

For the entire morning duration, speaker after speaker bombarded the delegates inside the auditorium with mind-‐numbing technical lectures that sometime tended to get unexciting. But when Abdulqader arose to speak, he veered off the norm as he swiftly attached a wireless microphone on his snow-‐white kandura and proceeded down the staircase, where he roamed the f loor of the auditorium to ‘interact’ with the seated audience, rather than formally addressing them from raised platform. He did not hide his loathing of ‘Powerpoint’ style of presenting.

With a perceptible smile and a blade of satire that he meticulously combined to send his message across, Abdulqader lit up the faces of the audience with his ‘hammour’ analogy, which he used to describe the different relationships that exist in many organisations, emphasizing that Internal Audit function needs a complete overhaul.

The President has the sly faculty of making himself clearly understood. His thoughts are strong and powerfully joined together. His style of speech is mostly rhetorical, but precisely logical.

So, with hands thrust behind his back, he opened up the discussion in a splendid rhetorical style.

“Are auditors a part of the organisation or apart of the organisation?” he bluntly asked.

“It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region. Corporate governance is seen largely as the province of the ‘big hammours’,” he sent the crowd rolling with laughter, while referring to senior management.

“Good governance is a journey that begins with a broad, organisational perspective. While boards

senior leadership are often driving the course, this narrow view can restrict improvements to the corporate governance process.”

“Internal auditors should not be viewed as ‘small hammours’, as business leaders expect them to play a more strategic – rather than merely tactical – role in the governance process.”

Abdulqader cited recent regulations, including an emphasis on anti-‐fraud and whistle-‐blower provisions and the potential impact on the business market, which have compelled auditors to take a more active role in corporate governance.

“We have a long way to go, but making steady progress requires committed senior leadership, integrated planning, coordinated execution and constant monitoring by both the ‘big and small hammours’.”

Every point he touched upon was received with a thunderous applause of approval. It was replete with good humour, sound reasoning and spoken with that perfect command of the language that is, matter of factly, not so eminently common among most orators in this region.

“Investment decisions usually come from top management. Internal audit support is critical

INTERNAL

AUDIT

31

for successful implementation, especially for a project that requires a large budget and affects operational processes. All these levels that make up the organisation need to work for the overall success of the business, otherwise the result would be a situation that’s akin to ‘a surgeon who did a successful surgery, but the patient died,’” he said to the amusement of the audience.

“The rewards of improved corporate governance encompass more than a greater sense of organisational accomplishment,” he added.

With hand gestures, eyes f lashing and occasional foot-‐thumping, the President used every body movement to express his ideas.

He observed that increased regulatory scrutiny as well as directives from executives to strengthen controls and improve risk management, has made the internal audit’s responsibilities grow exponentially in the recent years.

Speaking about usage of Information Technology, Abdulqader bemoaned the failure of internal audit departments to make good

use of technology to improve the quality and efficiency of its assurance and consulting work.

“While we now have audit software tools available, auditors are still using archaic and traditional ways of doing work,” he quipped, adding, “They need to catch up with the rest of the world by integrating technology in their audit process.”

Addressing the contentious ethical issues presented by ‘wasta’, Abdulkader rebuked the ‘wicked habit’ based on cronyism, favouritism, and nepotism in the hiring process, urging business leaders to recruit the right, competent and ethical people.

“We need to kill the culture of wasta!” he shot.

‘Wasta’ is an Arabic term widely used in the region to describe the unprofessional practice of giving preferential treatment to relatives and friends in employment.

“Nepotism, cronyism and favouritism have the greatest negative effect on the overall performance of the organisation. As leaders, we have the obligation to recruit professionals on merit,” he said.

As he continued with his address, the auditorium grew warmer and at this time people started raising hands to ask questions and the venue almost became an open house. Abdulqader spoke nearly 30 minutes, the allocated time, but it was obvious from the crowd’s reaction that many wanted him to continue.

The rewards of improved corporate governance encompass more than a greater sense of organisational accomplishment.

President of UAE’s Institute of Internal Audit - Abdulqader Obaid Ali addresses delegates in Doha, during the annual conference organised by the Qatari Chapter of the IIA.

32

INTERNAL

AUDIT

July - August 2013

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$20BnWORTH OF GLOBAL TAKAFUL BUSINESS BY THE YEAR 2017

CHARTING

THE ROAD

TO MASS

MARKETS

KEY FIGUREHEADS from the Islamic finance industry from across the world were brought together recently for the second

year, at an executive roundtable in Bahrain hosted by Deloitte Middle East’s Islamic Finance Knowledge Center. The event was supported by the Bahrain Economic Development Board.

The roundtable was held following the release of the new Takaful report by Deloitte titled: ‘The global Takaful insurance market: charting the road to mass markets’. The report studies the emerging regulatory and practice challenges that will impact the Takaful industry, as well as assesses the business structures and strategies, market developments and growth trends globally.

During the event, Deloitte experts were joined by national regulators, and executive Islamic bankers to discuss the report and focus on the regulatory

Middle East Takaful market as well as identifying potential business strategies in the region.

Latest industry data estimates that the global Takaful business will reach $20 billion by 2017.

The GCC market contributes more than 62% of the gross Takaful premiums globally and, led by Saudi Arabia, maintained the largest share of contributions, growing a further 17% to $5.7 billion during 2010.

Ten key challenges were identified that would significantly impact the future of the Takaful industry. These are grouped into five industry disciplines which are:

i) Governance and regulatory compliance: the report finds that more consistency of regulatory frameworks is needed, and optimising capital adequacy through consolidation will achieve growth and sound corporate structures.

ii) Risk management and internal controls: Making risk-‐based business a priority, unified with Takaful operators’ strategic planning, and improving risk and Sharia’ disclosures and governance.

Latest industry data estimates that the global Takaful business will reach $20 billion by 2017, with the GCC market contributing more than 62% of the gross Takaful premiums globally.

INSURANCE

MATTERS

34

New Deloitte report examines emerging regulatory and practice challenges faced by the Takaful industry...

July - August 2013

iii) Operational and Business Excellence: There is a need for new business models to accommodate wider niche markets and improved technology capabilities to achieve cost efficiency and productivity.

iv) Product governance and strategy: Improving product governance and product development processes, and placing emphasis on target markets, sales and distribution.

v) Capacity building: talent and leadership development: Switching emphasis to internal development to build specialised knowledge and refocusing on competency-‐based training and leadership programmes.

Deloitte’s report shows that the key to maximising industry potential lies in addressing challenges and issues that will better position the industry to reach mass markets and achieve organic growth and development.

It highlights that it is not sufficient for these challenges to be addressed or implemented without the commitment and support of boards and executives of Takaful firms who should enhance their risk management governance and controls processes.

The report proposes that the impetus of an enterprise-‐wide risk strategy should not be overlooked, and support and oversight from boards is a key driver for the implementation of an effective risk-‐based business in the Takaful sector.

During the roundtable, Dr Hat im El Tahir, Director of the Islamic Finance Knowledge Center of Deloit te Middle East , noted that: ‘Heightened focus on governance, f iduciary responsibility, r isk management and accountability are direct consequences of the global f inancial crisis and will l ikely present Takaful with challenging pract ice and regulatory issues during the next f ive years’.

In the Deloitte Middle East event, and under a specialised session on generating growth in the Takaful sector in the Middle East North Africa and South East Asia regions, presentations and discussions focused on the need for new business models to accommodate for wider niche markets, as well as regulatory, risk and sharia’ compliance issues.

A second session put forth a ‘Forward Plan’ where the main issues discussed were impediments to growth, as well as an analysis on the target market, and sales and distribution channels needed to achieve growth and profitability.

More than 40 participants from GCC countries and Malaysia attended Deloitte Middle East’s Islamic Finance Knowledge Center event in Bahrain, during which 10 guest Islamic Finance speakers shared their expertise and thoughts on the future of the Takaful market.

“The deliberations and discussions emphasised the imperative need for a continuous ‘knowledge-‐sharing’ and intellectual dialogues between industry stakeholders, to strengthen best practices in the Takaful landscape” added Dr El-‐Tahir.

INSURANCE

MATTERS

35

BARRY

SALZBERGHow did a working-class kid from a poor borough of New York City rise to become the Global CEO of Deloitte?

36

Barry Salzberg, Deloitte’s Global Chief

July - August 2013

MANAGING DIRECTOR, SHANE PHILLIPS CONSULTANTS

SHANE PHILLIPS

MOVERS

& SHAKERS

BARRY

SALZBERGHow did a working-class kid from a poor borough of New York City rise to become the Global CEO of Deloitte?

36

Barry Salzberg, Deloitte’s Global Chief

July - August 2013

MANAGING DIRECTOR, SHANE PHILLIPS CONSULTANTS

SHANE PHILLIPS

MOVERS

& SHAKERS

WITH HIS easy-going manner and affable Brooklyn accent, Deloitte’s Global Chief Executive Officer

Barry Salzberg immediately effuses friendliness, confidence and competency.

When not running one of the ‘Big Four’ professional service firms in the world, Salzberg sits as Chairman of the Board of the non-‐profit volunteer organisation -‐ United Way Worldwide -‐ and he also holds the same position at College Summit, a non-‐profit entity geared towards helping underprivileged students become college-‐bound.

So how did a working-‐class kid from a poor borough of New York City rise to become the leader of a multi-‐billion dollar worldwide company?

In an exclusive interview with Accountant Middle East, Salzberg gives us an insight into his background, his rapid ascension of the corporate ladder, and offers sound advice for anyone who wishes to do the same.

Born into a large, working-‐class family in Brooklyn, Barry Salzberg grew up in the dense, diverse environment that New York City

furnishes. His parents both worked as clerks, and he and his older sister were the first in his family to go to university.

Like many young people, Salzberg did not know exactly what his long-‐term career path would be; he even considered becoming a math teacher since that was his best subject in school. It was already halfway through his undergraduate studies when he decided to declare his major in accounting.

After graduating, Salzberg was hired in 1977 at Haskins & Sells (later incorporated into Deloitte) in Manhattan where he immediately felt like he’d “entered another world.” In this new and busy atmosphere he experienced what he calls “a real culture shock.” He describes that office as a “fancy formal place. So formal you’d get a mild reprimand if you were caught in the hallway without your jacket on.”

At first, it was almost too much for him, and he knew most people in the firm saw him as a young man likely to leave soon. This was a belief he also held, but for only a brief time. While his childhood in rough Brooklyn may not have given him the polish and schmoozing skills needed in upscale Manhattan, it did instill within him an invaluable trait that he

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37

WORD OF ADVICE:

“I guide my leadership style by the mantra of

continues to use: the ability to adapt. He cites his upbringing as one of the primary reasons he is so f lexible in changing situations and new environments.

“I adapted so well that even when I had an at tract ive of fer to leave the US member f irm when I was on the cusp of becoming partner, I turned it down. I knew that Deloit te, with its size, scope, and culture, of fered me unique opportunit ies to work with a diverse mix of great people and cont inuously learn and progress my career. And it was the r ight choice.”

This skill has served Salzberg over the years and in a surprisingly short amount of time – eight years – Salzberg rose from being a Certified Public Accountant fresh out of university to becoming a partner at Deloitte. From there he quickly ascended the corporate ladder to senior leadership roles.

When asked how he managed to advance so quickly through the ranks, Salzberg first credits his major supporter, his wife, Evelyn: “From the very beginning, [she] inspired me to dream big, rather than simply take a job that was comfortable. She said, ‘You're smart and you can do more with your career.’ And she was right.”

He outlines some strategies that he says can work for anyone wanting to move up in a company, regardless of his or her industry:

“First, make sure you’re always thinking about what’s right and never lose sight of your morals and ethics in your work. They should be the foundation of every decision you make. Second, don’t be afraid to voice your opinion. Everyone can lead, regardless of position. You shouldn’t wait for an invitation. People take notice of those who are willing to step up, and this is one of the things I look for in a strong leader. Third and finally, hard work and determination can take you a long way.”

Pertaining to his second point, Salzberg stresses the importance of making a name for yourself, for creating a brand: “You can’t advance if people don’t know who you are and how you add value. It’s critical to establish yourself as a specialist in a certain area, to become known for something.”

Like many young people, Salzberg did not know exactly what his long-term career path would be; he even considered becoming a math teacher since that was his best subject in school.

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July - August 2013 39

No man is an island, nor should he even try to be one. Salzberg recognises his early mentors for giving him the advice and guidance he needed to get his start. Halfway through his thirty-‐four year (and counting) career at Deloitte, Salzberg was heading the Tax department and bringing in the highest ratings each year. Instead of letting him rest on his laurels, Salzberg’s mentor, Bill Parrett, a former DTTL Global CEO, caught him one day and told him he needed to challenge himself for greater things.

Salzberg recalls; “He saw real leadership potential in me, but to reach that new level he said I needed to broaden my experience. Bill gave me much more than just the push I needed, he demonstrated something priceless—faith in me.”

This career-‐changing incident never left Salzberg’s mind and he continues to underscore the value of mentors and of mentoring in both his company and in his philanthropic work today. He says a mentor “is many things: a trusted ally, a sympathetic ear, an advisor, and sometimes an advocate” and the mentoring process is “the invisible glue of our culture, and it explains why I’ve always put a lot of energy into mentoring—even now as Global CEO. Both as a mentor and a mentee, these relationships have been among the most rewarding of my career.”

When making decisions within his business or anything in his life, Barry Salzberg looks at the big picture first, the global view. Ref lecting this large-‐scope perspective, he emphasises the importance of not becoming “siloed” in one department or another, but rather in cultivating “the ability to think across businesses and to be business-‐savvy broadly.”

He says that to be successful in a service industry, a person must acknowledge that good people skills are mandatory. In his own words; “It’s very important when you are in a people business, as we are, that your values are very much aligned with a people business.”

When asked at a recent university panel what excellent client service consists of, Salzberg quickly named four qualities: responsiveness, industry knowledge, understanding and perspective of the client’s business activity, and having the right team. He noted the

"Standing out from the crowd and making yourself invaluable to the company presents a challenge to new employees, but it is not something that should be disregarded."

primary focus should be responsiveness, as it ranks at the very top of client surveys as the most important differentiating factor in service providers.

Salzberg said, “Being responsive, (not just answering the phone when client calls) means being proactive, thinking about [the client’s] business, anticipating their needs, and getting out in front of it before they ask.”

Of industry knowledge, Salzberg says an employee needs to understand the industry the client is in and share with them benchmarks and best practices.

On his third point, having an understanding and perspective of the client’s business activity, he explains this as taking into consideration the client’s operational needs and internal organisational needs. Finally, Salzberg stresses the importance of having the right team, meaning that the best client service providers are the ones who have experts in specific areas and who, upon spotting a new need, will find someone to directly address that demand.

For the up-‐and-‐coming executive in any industry, the Executive offers this advice;

“I’ve joked that when I started at Haskins & Sells as a CPA, I was so green that I was ‘more likely to be making copies than making partner.’ But by my second year, I found my stride and started to rise through the ranks. My passion for my work and my dedication to my clients paid off.”

Salzberg’s advice for ambitious executives centres around his main tenets of embracing diversity, adapting to change and new environments, and championing new ways of thinking. He states that one must “encourage innovation and creative thinking. Consider what you can do to foster a culture where

MOVERS

& SHAKERS

it’s acceptable to try something new and fail, because thinking big and thinking outside the box will eventually pay off.”

Leading a team efficiently and effectively is key to a successful company and career. Salzberg once again highlights the strength of mentors as well as good leadership skills:

“Make sure you’re investing in and developing your people. Never solve a problem for someone on your team or project. Instead help them assess, analyse, and come to a solution on their own. Provide insights and observations, and prompt them by asking questions rather than giving them the answer. This is my approach to mentoring, and to projects presented to me for final approval that don't meet my standards.”

Standing out from the crowd and making yourself invaluable to the company presents a challenge to new employees, but it is not

something that should be disregarded. Salzberg directly declares that “it’s important to brand yourself. Make sure people know who you are. Be honest. Don’t be who you think people want you to be. Be yourself. Be unique.”

His next piece of advice rings true especially in light of the recent global economic crisis, and that is one of preparedness.

He says, “Always be prepared. It sounds simple, but it really pays off. I attended a training programme early in my career at Deloitte, and the partner teaching the class told us about the five P’s: Proper planning prevents poor performance. I guide my leadership style by the five P’s. You have to be prepared.”

Finally, as his last edict for success, Salzberg ties many of his ideas together in describing the significance of becoming a knowledgeable and f lexible leader in your field:

“Push yourself out of your comfort zone. Leaders can take multiple paths. The more experienced you are, and the more diverse experiences you’ve had, the better off you will be in terms of leadership roles. It’s okay to be uncomfortable. Don’t resist change. Don’t resist a different role or a different way of looking at things.”

“It’s important to brand yourself. Make sure people know who you are. Be honest. Don’t be who you think people want you to be. Be yourself. Be unique.”

STANDING OUT:

those who are willing to step up, and this is one of

40

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July - August 2013

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A PLAYER IN TRANSITION

Putting its immense wealth into good use, Qatar is attracting attention on the world stage for all the right reasons. Joyce Njeri recently toured the country on the invitation of the IIA-Qatar Chapter, where she got !rst-hand insight of how the internal audit function is furthering its cause alongside the economic growth of the tiny modern Gulf nation. Here are the excerpts of the interview carried out with some board members of the association…

Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy. As the Institute of

Internal Auditors work towards increasing its influence over public policy, how is the body responding to this growth by building a risk framework in the country?

A. The I I A c a n no t d i r e c t l y

Qatar relies heavily on expatriate labour. Human capital is intense, and many companies are feeling the pressure to up their talent management game. A particularly thorny, long-term threat to many companies has become

key skills are in high demand and short supply.

increased talent and labour risks?

DRIVING FORCE:

Board members of the Institute of Internal Audit-Qatar Chapter pose for a photo during the IIA’s recent annual conference held in Doha. The topic of the event was on ‘The value of an effective Internal Audit function’.

SPOTLIGHT

ON QATAR


A PLAYER IN TRANSITION

Putting its immense wealth into good use, Qatar is attracting attention on the world stage for all the right reasons. Joyce Njeri recently toured the country on the invitation of the IIA-Qatar Chapter, where she got !rst-hand insight of how the internal audit function is furthering its cause alongside the economic growth of the tiny modern Gulf nation. Here are the excerpts of the interview carried out with some board members of the association…

Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy. As the Institute of

Internal Auditors work towards increasing its influence over public policy, how is the body responding to this growth by building a risk framework in the country?

A. The I I A c a n no t d i r e c t l y

Qatar relies heavily on expatriate labour. Human capital is intense, and many companies are feeling the pressure to up their talent management game. A particularly thorny, long-term threat to many companies has become

key skills are in high demand and short supply.

increased talent and labour risks?

DRIVING FORCE:

Board members of the Institute of Internal Audit-Qatar Chapter pose for a photo during the IIA’s recent annual conference held in Doha. The topic of the event was on ‘The value of an effective Internal Audit function’.

SPOTLIGHT

ON QATAR


Qatar has become the most competitive economy in the Middle East. The World Economic Forum’s Global Competitiveness Report for 2011-2012 placed the nation 14th, overtaking other countries in the region including the UAE, Bahrain and Kuwait.

GEARING UP:

Following Qatar’s successful bid to host the 2022 FIFA World Cup, the Gulf nation is on the verge of an economic revolution. This means a great amount of organisational risks ahead for internal auditors.

Failure to manage risk in organisations

important?

SPOTLIGHT

ON QATAR

43

Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy.

opinion, should the internal audit function evolve to better serve the needs of companies

As auditors, we sometimes focus too much on the downside of risk and lose sight of opportunities. We are too concerned about maintaining ‘independence’ and are therefore incapacitated to advise management on the opportunities on the horizon.

SPOTLIGHT

ON QATAR


Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy.

opinion, should the internal audit function evolve to better serve the needs of companies

As auditors, we sometimes focus too much on the downside of risk and lose sight of opportunities. We are too concerned about maintaining ‘independence’ and are therefore incapacitated to advise management on the opportunities on the horizon.

SPOTLIGHT

ON QATAR


Chris Adonis, Chairman - IIA Qatar: “The IIA-Qatar is equipping members to assist their management and boards of directors, or the owners of family enterprises to ensure risk management is considered as part of the business plan and corporate governance.

According to a recent report authored by

more be determined by its ‘impact’ on the

skill the internal auditor should focus more on in the future? On the same note, do you think it’s necessary for internal auditors to

The impact of business failures and

governance environment?

internal audit and other assurance providers, such as quality and external auditors?

auditors should be looking at?

Qatar has become the most competitive economy in the Middle East. The World

Report for 2011-2012 placed the nation 14th, overtaking other countries in the region

see the biggest opportunity for internal audit to add value to organisations?

45

SPOTLIGHT

ON QATAR

came the recession and tough regulatory

organisations' changing needs, particularly

impacts the recession has had on the practice of internal auditing?

unrealised opportunities for internal audit?

hackers are stealing ATM card personal information from millions and using the

buildings are collapsing and putting people

Qatar doing to focus more on the rising

audit executives responding to today’s complicated risk landscape?

Hassan Al Mulla, President - IIA Qatar: “The IIA-Qatar provides seminars and training programmes on a regular basis to ensure the governance concepts are well understood by its members.”

SPOTLIGHT

ON QATAR


the internal audit function can’t settle for simply reacting to events; it must adopt a strategic mindset that is responsive to risks and helps ready organisations for

internal audit function doing to leverage its core competencies, develop trust-based relationships, and provide deeper insights to organisations?

Across industries and geographies, company stakeholders have become

been seeking to improve their ability to define and communicate a clear, f irm-

these rising stakeholder expectations by expanding the footprint of risks they cover across industries, geographies and company sizes?

The auditing profession has a system whereby it is mandatory for all members to continually be kept abreast of changes in the profession and requirements such as standards, practice advisories and guidelines.

Today’s global business community faces a more complex and uncertain risk landscape

critical risks facing organisations?

SPOTLIGHT

ON QATAR

47

S. SUNDARARAJAN

WE ARE in an era where organisations are growing ‘too big to fail’ - in size, operational complexity, global reach and

risk exposure.

In turn they exert ripple effects, both good and

this scenario the function of internal audit has

and consulting services that contribute to the

Is the internal auditor (IA), who is vested with the gigantic power of unfettered access

geared to play the role of a Business Partner? In the process of addressing this question, this

a)alongside the perceived and desired role of IA;

DIRECTOR, INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS, OMAN

b)

create sustainable value; and

c)end

being used so loosely and casually that it has lost its

Realisation (functional attributes+ functional

[(pre-‐purchase+ purchase+ post-‐purchase costs)-‐the total cost of ownership]

INTERNAL

AUDIT

48

Is the internal auditor, who is vested with the gigantic power of unfettered access to people and information, geared to play the role of a business partner? Professor Sundar asks…

HIGHER

CALLING?

July - August 2013

ROI COC

they do this to avoid rather than connect to IA?

Do people treat the IA as an outsider inside

of and hence following on the footsteps of external

effects of wrong doing-‐ to be a watch dog, if not a

deep psychological level both for the IA and the rest

we now proceed to consider certain issues relating

of sustainable growth and increased shareholder

accountable for it, just as they do with revenue

Firms need to understand risk and figure out how to measure risk management and hold managers accountable for it, just as they do with revenue growth and productivity.

INTERNAL

AUDIT

49

destructive, leading to wars of attrition that can be

a strategy, it will be very instructive to study the cases

unique and valuable position, involving a different set

“If there were only one ideal position, there would

(in the airline industry which is notoriously brutal,

it can choose not to, but it cannot do both without

need for choice and protect against repositioners

the new level

Adopt techniques to review and contribute to the

Develop deeper understanding of strategy

differentiation

A strategy is nothing more than a marketing slogan that will not withstand competition. A company can outperform rivals only if it can establish a difference that it can preserve.

50

INTERNAL

AUDIT

July - August 2013

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INVESTING

IN VALUEProfessor Sri Ramamoorti lists key areas where organisations need to pay more attention in, in order to remain viable in the long run…

PROFESSOR, KENNESAW STATEUNIVERSITY

SRIDHAR RAMAMOORTI

THE RECENT 3rd National Conference on Internal Auditing in the State of Qatar had the theme, ‘The value of an effective

Internal Auditing Function’, and I was invited to speak on the topic; ‘Working Towards Organisational Success.’ Upon ref lection, it occurred to me that the biggest challenge for organisations today is how to integrate governance, risk, and compliance (GRC) and in the process learn to balance value creation and value preservation.

Value creation is all about corporate performance while value preservation ensures that the organisation replicates its successful performance and remains viable in the long run.

If internal auditors can play a significant role in helping organisations with such GRC integration efforts, through carefully negotiating the accountabilities of various stakeholders with diverse interests and goals, they would be seen as key contributors not only to value preservation, but also to value creation. Certainly, they would be viewed as a function that is indispensable for the organisation’s long-‐term success.

Accordingly, I gave my presentation a subtit le, “Working Towards Organizational Success: Balancing Value Creation and Value Preservation.”

For several years now, management experts have been emphasising the same key factors for enhanced governance and management of organisations of the future. These include;

hierarchical arrangements;

nevertheless resilient environments;

decision-‐making structures; and

unexpected change, and possess the agility to adapt quickly.

With all the business uncertainties, risks, and challenges faced by global companies in the first decade of the 21st century, it is evident that organisations are keenly focused on creating and extracting value so as to remain competitive.

Nevertheless, sustainability concerns require an equal emphasis on preserving value over the long term—thus, taking excessive risks may temporarily yield high returns, but this is not a sustainable strategy.

It is important that the internal audit profession maintains relevance and renews the pursuit of its objective, which is, to add value and improve an organisation’s operations.

INTERNAL

AUDIT


The best way to assure superior governance and performance outcomes is by understanding, recognising, and communicating the organisation‘s culture and core values, as well as risk appetite and risk tolerance.

The need to exhibit superior corporate performance is of paramount importance because, in general, most companies wish to create value for their customers and clients. However, it is critically important that they simultaneously demonstrate the competitiveness and viability of their respective business model.

There is also an increasing recognition that corporate governance/culture and corporate performance may be inter-‐related; hence, the best way to assure superior governance and performance outcomes is by understanding, recognising, and communicating the organisation‘s culture and core values, as well as risk appetite and risk tolerance. And this is at the heart of GRC integration efforts. After all, a corporate culture embodies what it takes to succeed in a particular configuration of the global business environment.

In this brief article, I will attempt to to justify why an audit of governance structures and processes, perhaps preceded by an organisational culture audit, and performed by the internal audit function is worth considering.

The Institute of Internal Auditors (IIA) asserts that “internal auditing … helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

Many internal audit functions have primarily focused on providing management with assurance regarding the effectiveness of internal controls and perhaps even assurance regarding risk management efforts. However, internal audit functions may be correspondingly spending less effort on evaluating and improving their organisation’s overall governance processes.

Governance, according to the IIA, is “the combination of processes and structures implemented by the board in order to inform, direct, manage and monitor the activities of the organisation toward the achievement of its objectives.” Thus, internal auditors are called, in part, to help an organisation accomplish its objectives by improving the

effectiveness of the processes and structures implemented by the board.

These oversight responsibilities include directing, managing and monitoring the activities of an organisation. Yet, renowned authors Overmyer and Purcell note that very few internal audit functions are involved in auditing the governance processes of their organisations. Such an audit, which would include assessing executive management as well as board performance, could also identify entity-‐level governance challenges that could threaten the organisation’s future success.

These challenges might include weaknesses in ethical tone (at the top), misaligned executive compensation packages not serving to advance the organisation’s long term success, and ineffectual manager-‐director relationships. Such an audit could potentially ward off business crises by providing the board of directors and senior management with early, clear warnings and astute recommendations.

Indeed, it could be argued that the investigation by specially appointed committees in the wake of suspected governance failures are in fact ‘governance audits,’ only that they are conducted ‘after the fact.’ I am trying to propose governance audits that could be undertaken ‘before the fact’ so as to prevent catastrophic, entity-‐level risks destroying the entire organisation (for instance, Enron, WorldCom, Lehman Brothers).

The reality that meaningful governance audits are rarely undertaken today, could likely be traced back to the polit ical skill and organisat ional standing necessary to successfully undertake such an

INTERNAL

AUDIT

53

engagement . Yet , as noted above, such audits are implicit ly demanded in the very def init ion of internal audit ing.

Another major consideration is that, unlike routine audits that would fall under the category of ‘auditing by mandate’, any audit of senior executives and the board is best characterised as ‘auditing by permission.’

Essentially, there are three stages in undertaking and completing an audit of governance structures and processes of an organisation. First, the Chief Audit Executive (CAE) needs to possess enough relationship acumen in order to build rapport, develop, and cultivate healthy relationships with the executive management suite and the Board

The existence of robust relationships, as well as seasoned and mature professionals in the internal audit function, allows for effective communication that can inspire confidence and trust among the executive suite and Board. This in turn, enables the CAE to approach the topic of governance audit with these key organisational leaders, and take steps to seek permission to conduct a governance audit. Once the permission has been granted, the CAE, in conjunction with others, such as the General Counsel, can start planning the audit.

Second, the audit commences fieldwork, in order to support their reviews of governance structures and processes. This includes a thorough understanding of company policies and procedures, the organisational code of conduct, as well as any governance principles or best practices adopted by the organisation.

An audit can only be performed against a set of established criteria, so it is important to

have a set of ‘generally accepted governance principles’ (GAGP) that can form the basis for such an audit . Such governance principles and best pract ices could also be shaped and customised to the context of the organisat ion.

Auditing fieldwork in such a setting may involve extensive interviews with members of executive management and the Board; this could prove particularly difficult in the case of non-‐executive directors who have limited time and may be geographically dispersed among different locations.

Because the auditor(s) may come across sensitive and confidential information they must be extremely careful in carrying out a

The existence of robust relationships, as well as seasoned and mature professionals in the internal audit function, allows for effective communication that can inspire confidence and trust among the executive suite and Board.

INTERNAL

AUDIT


audit, communication skills of a high order are necessary for this purpose.

Finally, there is the reporting and

what was ‘agreed upon’ during the permission-‐seeking stage, the reporting and communications must be tailored to be understandable as well as actionable by the Board and executive management.

The recommendations of the report, if implemented and acted upon, must unambiguously lead to superior corporate governance outcomes. In this frame of reference, any ‘gotcha’ mentality must be completely eliminated, so that the reporting is constructive and designed to advance the interests of the organization. If such processes

get strengthened.

My presentation at the 2013 IIA-‐Qatar National Conference was in response to a call for research that offers insights on possible governance-‐enhancing roles for internal audit functions.

Specifically, I considered two important aspects of a governance audit. First, after introducing the concept, I reviewed key challenges facing internal audit functions considering a governance audit, whether focused on executive management or the board. Second, I invited audience input and feedback on how to equip and guide the internal audit profession in this pursuit.

One interesting suggestion was to consider supplementing internal audit’s lead by bringing in outside consultants/advisors to provide additional independence as well as expertise to the governance audit process.

With the internal audit profession maturing in some regions of the globe, it is important that the profession maintain relevance and renew the pursuit of its objective: to add value and improve an organisation's operations. With corporate governance audits successfully added to internal auditors’ portfolios, internal auditors could proudly describe their profession as one which protects global businesses from crises before they occur.

NOTE: This article is based on a working paper titled, “Auditing Governance Structures and Processes: An Agenda for Research” by

(2013). The working paper was presented at the 2013 Conference on Internal Auditing and Corporate Governance at the Norwegian Business School in Oslo, Norway.

An audit can only be performed against a set of established criteria, so it is important to have a set of ‘generally accepted governance principles’ (GAGP) that can form the basis for such an audit.

Internal auditors could proudly describe their profession as one which protects global businesses from crises before they occur.

55

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AUDIT

DATA RISK SOARS

WHEN A company’s management takes the serious decision to commission a forensic data collection, it

usually involves sensitive, stressful and potentially risky circumstances such as fraud, litigation or a regulatory breach.

The process involved, from a GCC viewpoint, is explored in a new Deloitte Middle East whitepaper titled ‘Forensic Data Collection in the GCC: Ensuring your electronic review doesn’t fall at

’.

“At this sensitive point in any company’s business, it is imperative that the management ensures that they get value for money, the right advice, the right solution and know how to avoid the whole process being undermined from day one,” said Rick Barker, director and Head of Forensic Technology at Deloitte Corporate Finance Limited, Middle East.

common scenarios that might necessitate a

international companies, usually with exposure to the US or UK, who would need to investigate allegations of prohibited activities in their local

reported to a regulator.

Typically this relates to allegations of bribery

with sanctioned countries. The second scenario is for companies in arbitration or litigation where there is a need to identify relevant documents or communications for disclosure.

a company’s management is investigating staff for misconduct and dishonesty, usually related to fraud or ‘kick-‐back’.

“When the management of a company deems forensic data collection to be necessary, they expect that the collection and review process will be effective and not expose them to further risk,” explains Barker, who advises companies in forensic data collection.

The Deloitte whitepaper also looks at a number of aspects in the collection process, in particular in relation to complying with data laws. The whitepaper notes that it is critical to take into consideration the complete scope of legal constraints of the jurisdiction in which the collection is undertaken, and potentially, any associated jurisdictions. It also answers the question of whether foreign laws can be ignored in the GCC during the process. Tips on how to go about seeking legal advice, as well as important recommendations for the technical aspects of data collection to ensure key evidence is not overlooked are also included.

Getting the forensic data collection right ensures

On this, Barker says that “With so much at stake, companies and their legal advisors cannot afford to make assumptions or make avoidable mistakes.”

TECHNOLOGY

TALK

56

New Deloitte Middle East whitepaper tackles collection of forensic records the GCC…

July - August 2013

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2013 Salary Guide | 10

ROBERT HALF FINANCE AND ACCOUNTING SALARIES (in USD)Job titleSize of business

% ChangeCFO

S/M --Large --

Finance DirectorS/M -

-Large --

Chief AccountantS/M -

-Large --

Financial Controller S/M --Large --

Assistant Financial ControllerS/M -

-Large --

TreasurerS/M -

-Large --

Assistant TreasurerS/M -

-Large --

Finance ManagerS/M -

-Large --

Senior Finance AssociateS/M -

-Large --

Tax DirectorS/M -

-Large --

Tax ManagerS/M -

-Large --

Senior Tax AssociateS/M -

-Large --

Senior Financial AnalystS/M -

-Large --

Financial AnalystS/M -

-Large --

Compliance DirectorS/M -

-Large --

Compliance ManagerS/M -

-Large --

Compliance OfficerS/M -

-Large --

ROBERT HALF FINANCE AND ACCOUNTING SALARIES (in USD)

ROBERT HALF FINANCE AND ACCOUNTING SALARIES (in USD)

KEEPING

UP WITH

IFRS

E-TOOLS, E-LEARNING, e-certification and webinars are just some of the buzzwords which can help you in mastering new

areas of knowledge. What took years to learn before can now be accomplished within a relatively short time.A couple of months ago I needed to obtain some more detailed information about corporate fraud and corruption reporting and analysis skills for a client assignment. I attended an industry seminar courtesy of the Allied Compliance

me useful hints and from there I searched the internet for appropriate tools.

I decided to prepare and take the examination

passed it!

Implementing new reporting standards in an ever changing landscape can be tough. Industry expert Kurt Ramin outlines some practical tools to consider while trying to make progress with these changes…

MBA, CFE, CPA, CEBS

KURT RAMIN

more client engagements.

afresh. Legacy has its problems.

and products

Decide on a your ‘tools’

the history of the International Accounting

IFRS

SPECIAL


COUNSEL: Please be careful not to waste your money attending IFRS courses that are being advertised by some companies; the most cost-effective approach is to pick an e-learning course from one of the ‘Big 4’ accounting firms.

as to gain an appreciation of the actual format

subscribe to the electronic editions.

couple of days.

get a good grip on the standards.

Checklists. I used these model statements to

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59

presentation and disclosure checklists

registration_es.asp

Course materials

Case studies

question bank to be distributed to all interested

translation methodology and technology to

reputable offerings.

The Ernst & Young Q2 2013, June 6, 2013

If you would like to keep up with IFRS and practice your social skills at the same time, participate in one of the IFRS LinkedIn discussion groups. However, you need to pick your involvement carefully as it could become a time-waster.

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excellent slide presentations and you can send

your leisure at a later date.

cities around the globe. This usually means

there as an expert.

TAKE THE TEST: TYPE INTO GOOGLE.COM: ‘IFRS 13’. HERE IS WHAT YOU GET:

61

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THE FAB ‘5’

THE CASE for IFRS 11 is not as complicated as IFRS 10.

First of all, under IAS 31 – the structure of the arrangement, that is, whether the arrangement is a jointly controlled asset/operation or a jointly controlled entity was the sole criteria for selecting a particular accounting treatment. The decision depended solely on the legal structure of the deal.

There could be two exactly similar arrangements but just because of the fact that in one case, an entity was incorporated and in another case, no entity was incorporated would result in a different accounting treatment.

Secondly, you had two possible accounting treatments for accounting for investments in joint ly controlled ent it ies. You could either use proport ionate consolidat ion, or as an alternat ive, account for the investment using the equity method. This choice was at the discret ion of the Company’s management .

As you are aware, the IASB is trying to restrict alternative treatments for similar transactions wherever possible to enhance comparability.

The IASB thus decided that the rights and obligations of the parties in a joint venture relationship should be the deciding factor for accounting treatment, rather than the legal structure or form of the vehicle used. Yes, in some cases the legal structure becomes decisive but broadly, the rights and obligations

In the !rst part of this series, we highlighted reasons why there was a need to relook at IAS 27, what changed and who should consider these changes closely. In this second instalment, Rakesh Pardasani makes the transition of IAS 31 to IFRS 11…

PARTNER - RSM DAHMAN

RAKESH PARDASANI

have to be first considered. Let’s have a look first at what doesn’t change.

Under IAS 31, the accounting treatment for an investment in a joint arrangement in the books of the parties depended mainly on the legal structure or form of the arrangement. If the parties to a joint arrangement came together

IFRS

SPECIAL


the legal form. Accordingly, IFRS 11 aimed to remove this anomaly.

Under IFRS 11, the decision on whether the arrangement is a ‘Joint Operation’ or a ‘Joint Venture’ depends not only on the legal form like in IAS 31, but on the rights and liabilities of the parties under the arrangement. The question to ask now is:

“Do the parties to the arrangement have an individual right to the assets and an obligation to the liabilities, relating to the arrangement? Or do the parties only have an obligation to the capital investment and a share in the profits / returns / net assets of the arrangement?”

On a simple reading it seems that the legal form itself will decide the above question. For instance, if there is a separate legal entity, the parties will only have a share in the net assets but if there is no legal entity, the parties will have an individual right to assets and obligations, and accordingly, it may seem that the provisions of IFRS 11 are not very different from IAS 31.

However, in many situations, it may happen that even though there is a separate legal entity, the parties do have a right to the underlying assets and liabilities of the legal entity. Take the example of a special purpose investment vehicle. Many times two parties come together to invest in a real estate project . They form a separate, preferably offshore, Company to hold the asset and they become shareholders in that Company.

In such a case, even though there is a separate legal entity, the rights and obligations of both parties are clearly laid out in the formation documents wherein both parties have a share in the underlying property that they are investing in and are individually responsible for their share of payments to be made for the project . Accordingly, this will fall under ‘Joint Operations’ under IFRS 11 but under IAS 31, it would’ve fallen under ‘Jointly controlled entities’.

Once you are able to determine whether the arrangement is a Joint operation or a Joint venture, the recognition of interest in the joint arrangement is pretty simple:

and established an entity which had a separate identity from the parties themselves, it would fall under the category of a ‘Joint Venture’. In other cases, where no separate legal entity was established, it would fall under ‘Jointly controlled asset’ or ‘Jointly controlled operation’.

As explained above, this could result in inconsistencies in application just based on

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63

i) Joint operations: A Joint operator will recognise its share of assets, liabilities, revenue and expenses in its own financial statements;

ii) Joint ventures: A Joint venturer will recognise only the net assets using the equity method in accordance with IAS 28.

In the first and second part of this ‘Fab 5’

series, we have tackled the two major changes in standards – IFRS 10 and IFRS 11. The third new standard IFRS 12 is primarily a disclosure standard and dictates the mandatory and recommended disclosures that are needed to be made in the financial statements of companies who have an interest in other entities. This covers interests that may be in a subsidiary, a joint arrangement, an associate or any other entity.

AREA

AREA

IAS 31

IAS 31

IFRS 11

IFRS 11

What is a Joint Venture / Joint arrangement

Definition of joint control

Terminology used for joint arrangements

Accounting for joint ventures (earlier known as jointly controlled entities under IAS 31)

IAS 31 laid down two essential characteristics required for applying this standard:A contractual arrangement; andExistence of joint control.

IAS 31 talked about joint control over the strategic financial and operating decisions.

IAS 31 had described 3 types of arrangements:Jointly controlled operations; jointly controlled assets and jointly controlled entities.

IAS 31 prescribed ‘proportionate consolidation’ of the assets, liabilities, revenue and expenses of jointly controlled entities. Alternatively, the venturer also had an option of using the equity method.

IFRS 11 discontinues the proportionate consolidation method. IFRS 11 only allows joint venturer to recognise its interest in a joint venture using the equity method in accordance with IAS 28.

The two essential characteristics remain the same under IFRS 11 as well.

There has to be a contractual arrangement; and

The arrangement should give parties joint control.

However, the definition of joint control has undergone a change as explained below.

In line with the change in definition of control in IFRS 10, IFRS 11 also defines joint control as control over activities that significantly affect the investee’s returns on the investment.

IFRS 11 essentially combines jointly controlled operations and jointly controlled assets under the same category because the IASB believes that these are very similar arrangements and the accounting treatment for both these arrangements is also similar.This however seems like just a change in terminology with no practical effect.

IFRS

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STAYING

ON TOP

AS BUSINESS has globalised, the accountancy profession has been forced to follow suit.

It is no longer possible to think in purely national terms; not only is trade increasingly international, but many companies are themselves now multinational with their operations spanning entire regions if not the world.

This is certainly the case in the Middle East, which not only thrives on global trade but is also home to regional and international finance and financial services hubs.

The development and widespread adoption of International Financial Reporting Standards (IFRS) has ref lected the internationalisation of accountancy. There are currently more than 100 countries that report under IFRS, including over two thirds of G20 nations.

In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre (DIFC). Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans to convert by 2015.

Regional Director of ICAEW Middle East, Peter Beynon, on how accounting bodies are delivering clarity and unity towards the adoption of IFRS in the region…

REGIONAL DIRECTOR, ICAEWMIDDLE EAST

PETER BEYNON

The development of IFRS also has to ref lect geo-‐political realities. For most of the last decade, the focus of the International Accounting Standards Board (IASB), which sets IFRS, was on converging with the US accounting standards, the US Generally Accepted Accounting Principles (US GAAP). There was a clear attraction to having a single, global, high-‐quality accounting language, but now that the US has postponed IFRS adoption yet again this is unlikely to happen in the immediate future.

Moreover, capital is moving eastwards. It is estimated that the Eastern hemisphere’s share of global GDP will exceed the West’s by 2015, for the first time in 500 years.

According to the IMF, Asia’s GDP will exceed the combined output of the United Stated

IFRS

SPECIAL


STAYING

ON TOP

AS BUSINESS has globalised, the accountancy profession has been forced to follow suit.

It is no longer possible to think in purely national terms; not only is trade increasingly international, but many companies are themselves now multinational with their operations spanning entire regions if not the world.

This is certainly the case in the Middle East, which not only thrives on global trade but is also home to regional and international finance and financial services hubs.

The development and widespread adoption of International Financial Reporting Standards (IFRS) has ref lected the internationalisation of accountancy. There are currently more than 100 countries that report under IFRS, including over two thirds of G20 nations.

In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre (DIFC). Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans to convert by 2015.

Regional Director of ICAEW Middle East, Peter Beynon, on how accounting bodies are delivering clarity and unity towards the adoption of IFRS in the region…

REGIONAL DIRECTOR, ICAEWMIDDLE EAST

PETER BEYNON

The development of IFRS also has to ref lect geo-‐political realities. For most of the last decade, the focus of the International Accounting Standards Board (IASB), which sets IFRS, was on converging with the US accounting standards, the US Generally Accepted Accounting Principles (US GAAP). There was a clear attraction to having a single, global, high-‐quality accounting language, but now that the US has postponed IFRS adoption yet again this is unlikely to happen in the immediate future.

Moreover, capital is moving eastwards. It is estimated that the Eastern hemisphere’s share of global GDP will exceed the West’s by 2015, for the first time in 500 years.

According to the IMF, Asia’s GDP will exceed the combined output of the United Stated

IFRS

SPECIAL


Qualifications are a way to attract the best and brightest of tomorrow into the profession; this is why ICAEW offers scholarships to high-flying Emiratis who want to enter the profession under the ICAEW Emiratisation Scholarship Scheme.

and Europe by 2030. It is likely that the focus of the IASB could increasingly shift away from its relationship with the US, and take greater account of the needs of its newer ‘constituency’ members as well as the development of business.

IFRS are not static; they also have to evolve to ref lect the realities of modern business. This is especially true after the economic shocks of the last five years, which have focussed attention on the way financial reporting is carried out.

An example of this is the current work on IFRS 9,

replace the IAS 39. Under the current standard, there are exacting rules-‐based criteria to meet to qualify for hedge accounting. This means that

some hedging arrangements that make perfect sense from the perspective of risk management are not eligible and are therefore not always accurately reflected in the accounting.

Under the new system, which introduces a more principles-‐based approach to this area, this will change, ultimately allowing companies to avoid artificial volatility in earnings. This is just one example; there are other areas of IFRS that could do with improvement, such as the way that company performance is ref lected in the income statement. Overall, it is vital that in order to encourage wider adoption, IFRS are of the highest possible quality, and this will require constant work and evolution.

So how is this change communicated? What can accounting bodies do to ensure that their knowledge, insight and technical expertise is available to members and stakeholders, and to inf luence the development of the profession overall?

ICAEW is a professional member organisation, and has a number of approaches to sharing thought leadership, industry and economic research and technical updates. The first is through a suite of internationally-‐respected IFRS qualifications.

In order to make sure these are available worldwide, they are delivered not just through classroom learning, but also online and with distance learning options available. New for 2013 will be a qualification in IFRS for Islamic Finance, which focuses on accounting for Islamic finance transactions from an IFRS perspective.

A key part of being a Chartered Accountant is a commitment to continuous professional

KNOWLEDGE-SHARING:

As one of the oldest professional accountancy bodies in the world, ICAEW has worked to help the accountancy profession develop for almost a century and a half.

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67

development. In order to help this process ICAEW ensures that the latest technical information, news and developments are widely available through online journals, factsheets and regular updates and by organising regular webinars.

Staying up to date means making sure these are also be delivered on mobile and tablet devices. A wealth of technical information as well as the latest in research and thought leadership is available through the Institute Faculties, which play a large part in co-‐ordinating events and publications to disseminate their work. For more in-‐depth technical enquiries, there is a library and information service and a separate enquiry service, and regular member alerts contain the latest headline developments with links to more information.

In this way we can ensure that our members are on top of change, and also have access to

are a way to attract the best and brightest of tomorrow into the profession; this is why ICAEW

want to enter the profession under the ICAEW Emiratisation Scholarship Scheme.

This has recently been recognised by the Bahraini government, who offer financial support through Tamkeen to bright students who want to undertake ICAEW qualifications. Further afield, ICAEW has launched a centre for accountancy training excellence in Malaysia this year together with leading universities and the Malaysian government.

ICAEW is also committed to supporting the wider development of the accountancy profession worldwide. One way in which the profession can help support economic growth is by working with regulators and policy-‐

makers across the world, sharing experience and expertise.

In the Middle East, ICAEW holds regular thought leadership sessions with the Dubai Financial Services Authority, as well as working with Hawkamah on Corporate Governance issues.

Training and knowledge-‐sharing is another area where accountancy bodies can support the wider profession, as demonstrated by the work of the GCC Accounting and Auditing Organisation. In 2013, ICAEW was asked by GCCAAO to help them set up a framework for a GCC-‐wide audit quality monitoring unit, and then to help establish the unit itself.

Aiming to ensure that audit quality is as high as possible across all six GCC nations

In 2013, the Chartered Accountants Worldwide initiative was launched to raise awareness of the work that chartered accountants do globally to underpin confidence in business and markets.

SETTING STANDARDS:

In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre. Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans to convert by 2015.

IFRS

SPECIAL


development. In order to help this process ICAEW ensures that the latest technical information, news and developments are widely available through online journals, factsheets and regular updates and by organising regular webinars.

Staying up to date means making sure these are also be delivered on mobile and tablet devices. A wealth of technical information as well as the latest in research and thought leadership is available through the Institute Faculties, which play a large part in co-‐ordinating events and publications to disseminate their work. For more in-‐depth technical enquiries, there is a library and information service and a separate enquiry service, and regular member alerts contain the latest headline developments with links to more information.

In this way we can ensure that our members are on top of change, and also have access to

are a way to attract the best and brightest of tomorrow into the profession; this is why ICAEW

want to enter the profession under the ICAEW Emiratisation Scholarship Scheme.

This has recently been recognised by the Bahraini government, who offer financial support through Tamkeen to bright students who want to undertake ICAEW qualifications. Further afield, ICAEW has launched a centre for accountancy training excellence in Malaysia this year together with leading universities and the Malaysian government.

ICAEW is also committed to supporting the wider development of the accountancy profession worldwide. One way in which the profession can help support economic growth is by working with regulators and policy-‐

makers across the world, sharing experience and expertise.

In the Middle East, ICAEW holds regular thought leadership sessions with the Dubai Financial Services Authority, as well as working with Hawkamah on Corporate Governance issues.

Training and knowledge-‐sharing is another area where accountancy bodies can support the wider profession, as demonstrated by the work of the GCC Accounting and Auditing Organisation. In 2013, ICAEW was asked by GCCAAO to help them set up a framework for a GCC-‐wide audit quality monitoring unit, and then to help establish the unit itself.

Aiming to ensure that audit quality is as high as possible across all six GCC nations

In 2013, the Chartered Accountants Worldwide initiative was launched to raise awareness of the work that chartered accountants do globally to underpin confidence in business and markets.

SETTING STANDARDS:

In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre. Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans to convert by 2015.

IFRS

SPECIAL


and Yemen, this is the largest such project that ICAEW has undertaken and a concrete demonstration of how professional bodies and policy-‐makers can work together to support business and drive economic growth internationally. With specific reference to IFRS, ICAEW has provided training to the Asian Development Bank in the Philippines, the Securities and Exchange Commission of Nigeria and the Institute of Chartered Accountants of Sri Lanka.

Capacity building is a further strategy whereby established bodies can help to strengthen nascent organisations in developing economies. By helping create and build national professional qualifications

and training, in line with international benchmarks, a high level of professional and technical standards can be encouraged. This in turn makes both national and international trade easier and means people can do business with confidence.

The World Bank recognises the importance of this work, and has sponsored ICAEW projects in countries as diverse as Botswana, Bangladesh and Croatia. Having made contact with national bodies, the next stage is to encourage sharing knowledge, strategies, and experience, which is the philosophy behind the Accountancy Profession Strategic Forums. So far this year there have been two already, one for national bodies of Central Europe, and one for the countries of the Former Soviet Union.

Finally, in 2013, the Chartered Accountants Worldwide initiative was launched to raise awareness of the work that chartered accountants do globally to underpin confidence in business and markets.

Accountancy is in many ways the keystone of the global economy; nearly all trade rests on trust in the financial reports. Chartered Accountants Worldwide aims to support the role that accountancy plays in driving growth.

If accountancy underpins trust in business, then it is vital that the technical aspects are up to date, fit for purpose, and constantly able to ref lect global economic reality. IFRS is a great example of how this works in practice; it is critical that finance professionals across the world are cognizant of the latest developments and up to speed with current thinking.

More widely, a global marketplace demands a level of unity and transparency between national, regional, and international accounting bodies, so it is important for bodies to work together to support and strengthen each other.

As one of the oldest professional accountancy bodies in the world, ICAEW has worked to help the accountancy profession develop for almost a century and a half. Although we cannot say what the global economy of tomorrow will look like, it is certain that robust, rigorous and – above all – trusted accountancy will be a key element of growth and prosperity for many years to come.

69

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WHAT’S THE FUSS

ABOUT IFRS 10?

A NEW consolidation standard has been long in the making.

Investors should begin to evaluate their control involvement with investees under the new consolidation standard…

Contracts of control with foreign owners in the Middle East are often complicated due to the foreign ownership laws and these arrangements are impacted by IFRS 10.

KPMG’S REGIONAL HEAD OF IFRS

YUSUF HASSAN

IFRS

SPECIAL


As many fund managers would be consolidating their funds as a consequence of IFRS 10, an amendment to IFRS 10 was passed by the IASB to allow investment funds to avail of a consolidation exemption on their funds.

CONNECTION:

In its new consolidation standard, IFRS 10, the IASB has stated that its objective is to develop a single consolidation model applicable to all investees. That model states that an investor consolidates an investee when it has power, exposure to variability in returns, and a linkage between the two.

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71

As many fund managers would be consolidating their funds as a consequence of IFRS 10, an amendment to IFRS 10 was passed by the IASB to allow investment funds to avail of a consolidation exemption on their funds.

CONNECTION:

In its new consolidation standard, IFRS 10, the IASB has stated that its objective is to develop a single consolidation model applicable to all investees. That model states that an investor consolidates an investee when it has power, exposure to variability in returns, and a linkage between the two.

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71

50%OF CFOS CONSIDER THEMSELVES BUSINESS DRIVERS, ACCORDING TO DELOITTE SURVEY

CHEMISTRY

MATTERS

CHIEF FINANCIAL Officers (CFOs) juggle with many diverse stakeholder personalities as part of their

job requirement, and often times, knowing how to interact with these individuals can mean the difference between success and failure.

As such, a framework identifying distinct patterns of behavior – dubbed ‘Business Chemistry’ – was created by Deloitte with the aim of not only improving individual

‘Business Chemistry’ is the product of the collaboration between Deloitte and scientists

leverages modern computational techniques to

Deloitte, the 'Power of Business Chemistry', these different Business Chemistry types are outlined

Business Chemistry uses a series of 70 behavioural questions to reveal four dominant personality patterns, which are:

i) Drivers: analytical thinkers who are intellectually creative and prefer experimentation over theorisation

ii)

adaptability allows them to thrive in multiple environments

iii)nuance, particularly skilled at understanding the broader context of an issue

iv) Guardians: people who prefer concrete reality, particularly skilled at providing structure and minimising risk

reveals that more than half consider themselves

As such, Business Chemistry as a tool can not only be used to help recognise personality patterns in colleagues – which would help gain insight into how to connect on a personal level and build

BUSINESS

INSIGHTS

72

Misreading personality leads to workplace ine!ciency, poor team dynamics and personal brand damage, according to Deloitte survey…

July - August 2013

CFOs who understand their own business chemistry are better suited to engage and influence stakeholders, manage team strengths and flex to multiple roles, as needed.

Business Chemistry are better suited to engage

“This report is particularly relevant to the Middle East region because of the additional

with people from a wide variety of cultural backgrounds” explains James Babb, Partner and

“Understanding the cultural differences between people on top of their individual personality traits makes it even more challenging for a

establish trust with them, communicate with

upon which to build a healthy chemistry within

Business Chemistry is not only about creating a personal advantage, but also about creating a competitive advantage by creating better alignment within teams, better engagement and relationships with stakeholders and a better understanding of how to change perceptions

It is crucial for the CFO to understand the cultural differences between the people he is working with as it establishes trust with them, it helps to communicate with them effectively, and also establishes the common bonds upon which to build a healthy chemistry within a culturally diverse team.

BUSINESS

INSIGHTS

73

Deloitte Corporate Finance Limited has announced the appointment of James Dervin as a Managing Director in the Middle East North

Africa Reorganisation Services team. James has been with Deloitte since 2005, initially based in London working in the Restructuring Services team. He transferred to the Middle East in early 2012 and over the last year has played an integral part in the rapid growth of the Reorganisation Services. The Deloitte Reorganisation Services team is a restructuring advisory business acting

entities and lenders of varying sizes, across all sectors in the GCC.

Malcolm Furber has been elected President of the Chartered Institute of Management Accountants (CIMA). Furber has been a member of CIMA’s

council for 15 years and was involved

and the review of its ethical code. He was previously chairman of CIMA’s Lifelong Learning Policy Committee and is also a regular speaker for CIMA globally on integrated business planning and performance management. In addition to Furber’s appointment, Keith Luck FCMA, CGMA, has been elected Deputy President, and Myriam Madden FCMA, CGMA, has been appointed Vice President. Luck has extensive experience in both the public and private sector and has been a CIMA speaker and an ambassador for the organisation throughout his career. In 2004 he was voted CIMA’s Business Leader of the Year for his pivotal role

Metropolitan Police.

KPMG Lower Gulf has announced the appointment of Sophia Yazane as a manager in its Tax department. Sophia has vast experience in advising on

cross-‐border mergers, acquisitions and corporate restructuring as well as holding,

investment structures for regulated and non-‐regulated investment funds and real estate structures. She also focuses on tax planning investment vehicles to preserve family wealth and minimise their tax burden and structuring of family estates for high net worth individuals. Sophia holds multiple Masters Degrees including, International tax law, Business and corporate law and Legal and Strategic Corporate Management. She will be based

Crowe Horwath has appointed Naresh Phanfat as its Associate Partner -‐ Corporate Finance. His domain expertise in this role will

include Corporate Finance, Business Valuations, Feasibility Studies, Business Plans, Intangibles & Intellectual Property Rights, Valuations, Purchase Price Allocations, Due Diligences, Mergers & Acquisitions. Naresh is a National Rank Holder Chartered Accountant from the Institute of Chartered Accountants of India,

Economics National Merit Holder, and a Mathematics City Topper. He has more than 14 years of prior international work experience with Standard & Poor’s India, PwC London, KPMG Corporate Finance Bahrain and Dubai World UAE.

Bob Hirth, a senior managing director with Protiviti, has been named chairman of the Committee of Sponsoring Organisations of the

Treadway Commission, the organisation that provides thought leadership and guidance on internal control, enterprise risk management, and fraud deterrence. During his career, he has served as executive vice president for global internal audit for Protiviti and is currently serving a two-‐year term (2012-‐2013) on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB). He is a member of Financial Executives International (FEI) and The Institute for Internal Auditors (IIA). In March 2013, Hirth was inducted into The Institute of Internal Auditors’ Hall of Distinguished Audit Practitioners.

Emirates NBD has announced that it has appointed Shayne Nelson as the Group’s new Chief Executive Officer. Prior to this appointment,

Shayne Nelson was the CEO of Standard Chartered Private Bank with additional responsibilities for the SME Banking section. He also served as the Chairman of Standard Chartered Saadiq Islamic Banking and the Director of the Standard Chartered Board for China. Shayne was a member of the Consumer Bank Steering Group, the Bank’s Executive Business Strategy Group and a member of the Bank’s Diversity and Inclusion Council. Shayne is a graduate member of the Australian Institute of Company Directors and an Associate Fellow of the Australian Institute of Managers.

APPOINTMENTSIf you have made a new appointment, promotion or have any relevant hiring

news, please email the details and a photo to [email protected]


INDUSTRY

APPOINTMENTS

Deloitte Corporate Finance Limited has announced the appointment of James Dervin as a Managing Director in the Middle East North

Africa Reorganisation Services team. James has been with Deloitte since 2005, initially based in London working in the Restructuring Services team. He transferred to the Middle East in early 2012 and over the last year has played an integral part in the rapid growth of the Reorganisation Services. The Deloitte Reorganisation Services team is a restructuring advisory business acting

entities and lenders of varying sizes, across all sectors in the GCC.

Malcolm Furber has been elected President of the Chartered Institute of Management Accountants (CIMA). Furber has been a member of CIMA’s

council for 15 years and was involved

and the review of its ethical code. He was previously chairman of CIMA’s Lifelong Learning Policy Committee and is also a regular speaker for CIMA globally on integrated business planning and performance management. In addition to Furber’s appointment, Keith Luck FCMA, CGMA, has been elected Deputy President, and Myriam Madden FCMA, CGMA, has been appointed Vice President. Luck has extensive experience in both the public and private sector and has been a CIMA speaker and an ambassador for the organisation throughout his career. In 2004 he was voted CIMA’s Business Leader of the Year for his pivotal role

Metropolitan Police.

KPMG Lower Gulf has announced the appointment of Sophia Yazane as a manager in its Tax department. Sophia has vast experience in advising on

cross-‐border mergers, acquisitions and corporate restructuring as well as holding,

investment structures for regulated and non-‐regulated investment funds and real estate structures. She also focuses on tax planning investment vehicles to preserve family wealth and minimise their tax burden and structuring of family estates for high net worth individuals. Sophia holds multiple Masters Degrees including, International tax law, Business and corporate law and Legal and Strategic Corporate Management. She will be based

Crowe Horwath has appointed Naresh Phanfat as its Associate Partner -‐ Corporate Finance. His domain expertise in this role will

include Corporate Finance, Business Valuations, Feasibility Studies, Business Plans, Intangibles & Intellectual Property Rights, Valuations, Purchase Price Allocations, Due Diligences, Mergers & Acquisitions. Naresh is a National Rank Holder Chartered Accountant from the Institute of Chartered Accountants of India,

Economics National Merit Holder, and a Mathematics City Topper. He has more than 14 years of prior international work experience with Standard & Poor’s India, PwC London, KPMG Corporate Finance Bahrain and Dubai World UAE.

Bob Hirth, a senior managing director with Protiviti, has been named chairman of the Committee of Sponsoring Organisations of the

Treadway Commission, the organisation that provides thought leadership and guidance on internal control, enterprise risk management, and fraud deterrence. During his career, he has served as executive vice president for global internal audit for Protiviti and is currently serving a two-‐year term (2012-‐2013) on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB). He is a member of Financial Executives International (FEI) and The Institute for Internal Auditors (IIA). In March 2013, Hirth was inducted into The Institute of Internal Auditors’ Hall of Distinguished Audit Practitioners.

Emirates NBD has announced that it has appointed Shayne Nelson as the Group’s new Chief Executive Officer. Prior to this appointment,

Shayne Nelson was the CEO of Standard Chartered Private Bank with additional responsibilities for the SME Banking section. He also served as the Chairman of Standard Chartered Saadiq Islamic Banking and the Director of the Standard Chartered Board for China. Shayne was a member of the Consumer Bank Steering Group, the Bank’s Executive Business Strategy Group and a member of the Bank’s Diversity and Inclusion Council. Shayne is a graduate member of the Australian Institute of Company Directors and an Associate Fellow of the Australian Institute of Managers.

APPOINTMENTSIf you have made a new appointment, promotion or have any relevant hiring

news, please email the details and a photo to [email protected]


INDUSTRY

APPOINTMENTS

Whatever kind of office space you want, you’ll only ever pay for what you use – nothing more. That’s true for small businesses looking for a base, bigger businesses looking for branch offices and global businesses seeking new markets.

If you need an office all of the time, or part time, we can help. If you need an office occasionally we can help too, and should you need the ultimate in flexibility, our 5 business centres in Abu Dhabi and over 30 across the Middle East give you a working base wherever and whenever you need.

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