GREEN ECONOMY

ACCA-WWF ROUNDTABLE ON SUSTAINABILITY

ONLINE MBAS FLEXIBLE DISTANCE LEARNING

PRACTICE EFFECTIVE LEADERSHIPOUTSOURCING CONTRACT SUCCESS

OPINION EARTH SUMMIT 2012

CPDget verifi able cpd units by reading technical articles

HIGH ACHIEVERBOARDAGENDER CO-CHAIR JUNIE FOO

EURO 2012 FOOTBALL AND FINANCE

MYANMAR CHANGE AND PROGRESSCLIMATE ASIA’S SHIPPING ROUTES

TECHNICAL REVENUE ACCOUNTING

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THE MAGAZINE FOR BUSINESS AND FINANCE PROFESSIONALS ACCOUNTING AND BUSINESS SINGAPORE 06/2012

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Junie Foo’s successful career has seen her rise to assistant general manager and head of multinational corporate banking at Tokyo-Mitsubishi UFJ. And her role as co-chair of BoardAgender enables her to put women at the heart of business in Singapore. Page 12

DEAL CENTRALSingapore’s Code on Take-overs and Mergers came under scrutiny in April when the Monetary Authority of Singapore (MAS) unveiled a wide-ranging revamp. The tougher changes come at a time when Singapore’s mergers and acquisitions (M&As) and regional scenes are sizing up to be quite the hotbed of deal activity this year (page 16).

After posting a record year in debt issuance so far, the region is also now keeping M&A bankers in South-East Asia busy after a rather lacklustre first quarter. With Singapore’s DBS Group Holdings’ US$7.3bn bid for PT Bank Danamon Indonesia, M&A volume in the region so far is now at US$23.7bn, the second-highest on record year to date since 2008, according to Dealogic. That’s also up 20% on 2011’s year-to-date volumes. There have been a total of four deals exceeding US$1bn in value so far in 2012.

The Code on Take-overs and Mergers was last revised in 2007; since then there have been a number of high-profile M&As. The MAS detailed a number of changes aimed at keeping pace with market developments, enhancing disclosure requirements and providing greater flexibility for shareholders and companies.

The codification and clarification provides transparency and greater certainty for the market and for professional advisers and industry experts. The key changes centre on strengthening the regulator’s ability to enforce firms to follow the rules. While not having a direct drastic impact on M&A activity in Singapore, the revision helps bolster the city-state’s status as an international capital market, while progressively improving corporate governance and disclosure rules.

And finally, this month is one of excitement and possibly a few tears among fans as the European football tournament – Euro 2012 – kicks off in Poland and Ukraine. In our feature on page 20, we consider the financial impact on host countries of holding such a prestigious event in the sporting calendar.

Sumathi Bala, abeditor@accaglobal.com

NEW DAWNA wave of political and economic change is set to transform Myanmar as it emerges from decades of isolation. Page 26

ALL CHANGEIn our technical feature, we look at the wide-ranging implications of the new exposure draft on financial reporting for SMEs. Page 51

EXPERT INSIGHTS

Join ACCA, IBM and the IIRC for a free, one-hour webinar as we explore how integrated reporting can enhance and consolidate your existing reporting practices.www.accaglobal.com/virtual

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

3Editor’s choice

SG_B_Edletter.indd 3 11/05/2012 15:30

Audit period July 2009 to June 2010138,255

Features12 TrendsetterCorporate banker Junie Foo is making sure that women’s voices are heard

16 Bed of roses M&A regulation changes will increase Singapore’s attractiveness

20 Golden goalsA look at what Euro 2012 hosts Poland and Ukraine stand to gain fi nancially

24 Positive outlook In his regular quarterly report, ACCA’s Manos Schizas sees a new-found optimism among professional accountants around the world

26 Myanmar’s moment How will the country develop as it emerges from isolation?

30 Keeping the romance Properly managed, business process outsourcing contracts should be happy marriages

VOLUME 15 ISSUE 6

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

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

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

Singapore editor Sumathi Balaabeditor@accaglobal.com

Chief sub-editor Eva Peaty

Sub-editors Dean Gurden, Vivienne Riddoch

Design manager Jackie Dollar

Designers Robert Mills, Jane C Reid

Production manager Anthony Kay

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

Head of publishing Adam Williams

Printing Times Printers

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

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AB SINGAPORE EDITIONCONTENTSJUNE 2012

SG_Contents.indd 4 11/05/2012 15:31

TECHNICAL46 Update The latest from the standard-setters

50 Accounting solutions PwC experts answer questions on accounting for joint ventures

51 Revenue revamp Proposed changes take account of the increasing complexity of contractual agreements

54 Expats and tax Foreign companies should be aware of the implications

BRIEFING06 News in pictures A different view of recent headlines

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

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

VIEWPOINT32 Cesar Bacani From number crunchers to business partners

40 Dean Westcott Integrated reporting will improve long-term performance, says the ACCA president

44 Errol Oh The vital role of audit

33 CORPORATE33 The view from Tang Choon Seng of Wearnes, plus news in brief

34 Growth market HSBC’s Billy Yeung on the bank’s role in leading China’s international emergence

38 Shipping news The opening of the Northern Sea Route is set to revolutionise freight transport

41 PRACTICE41 The view from Anthony Boswell of PwC, plus news in brief

42 Stand out from the crowd Managing partners must differentiate themselves from other professionals

Regulars

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

Your sector

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

ACCA NEWS60 CPD Getting into good habits

62 ACCA-WWF roundtable Is corporate Asia ready for the green economy?

64 Kaka Singh The ACCA Singapore president on the importance of an all-inclusive society of accountants

65 News Aspiring accountants rise to the challenge; vice president addresses UNCTAD; listen to investors, says report

CAREERS56 Go the distance The popularity of the MBA by distance learning is growing

CAREERS

SG_Contents.indd 5 11/05/2012 15:32

01 Colourful carp streamers flutter

over the Sagami River for Children’s Day. The carp is the symbol for the Japanese national holiday as it represents strength and success

02 More than 35,000 annual

passes have already been sold for Legoland Malaysia, said its general manager, Siegfried Boerst. The park is due to open in September

03 Socialist François Hollande was

elected president of France amid fears that his anti-austerity stance may stall Europe’s recovery

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04 Singapore tycoon Bill Ng withdrew

his offer for Scottish football club Rangers, citing ‘unwarranted and unexplained delays’ that made the bidding process ‘untenable’

05 Artist Edvard Munch’s

iconic artwork The Scream fetched almost US$120m at Sotheby’s in New York. The piece, one of four in a series by the Norwegian expressionist, is the most expensive artwork sold at auction

06 Singapore’s PM Lee Hsien Loong

was one of the latest statesmen to jump on the social networking bandwagon, joining both Facebook and Twitter. His Facebook page includes photos from his university graduation and wedding

07 A 50-metre high concrete

woodland will soon be one of Singapore’s newest tourist attractions. The Gardens by the Bay is due to open on 29 June

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ASIA SUPER WEALTHYThe Asian super wealthy remain optimistic that they’ll be getting richer than ever, according to the Knight Frank/Citi Private Bank Wealth Report 2012. Lorem ipsum dolor sit amet consectitur amet dolor sit amet lorem ipsum dolor sit amet consectitur amet dolor sit amet lorem ipsum dolor sit amet consectitur amet dolor sit

GLOBAL IPO ACTIVITYGlobal IPO activity fell sharply in Q1 2012, according to Ernst & Young’s IPO update. A total of 157 deals raised only US$14.3bn, down by 69% by capital raised (US$46.6bn in 296 deals) in the same period last year. Despite a tough start of the year, Hong Kong, Shenzhen and Shanghai stock exchanges were yet again among the top five global markets ranked by capital raised.

BEST FOR EXPATSSingapore is the most liveable city in the world for Asia expats, ranking well ahead of regional rival Hong Kong where the air quality is now among the worst in the world, according to HR consultancy ECA International

$53.8BNAnnual economic costs of disasters in Asia and the Pacific, according to the Asian Development Bank

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RICH PICKINGSAsia’s super wealthy are more confident of an even richer future than those in any other region, according to the Knight Frank/Citi Private Bank Wealth Report 2012. There are now more centa-millionaires (worth US$100m or more) in South-East Asia (18,000) than in North America (17,000) or Western Europe (14,000).

TOUGH TIMES FOR IPOSGlobal initial public offering (IPO) activity fell sharply in Q1 2012, according to Ernst & Young’s IPO update. A total of 157 deals raised just US$14.3bn, down by 69% by capital raised (US$46.6bn in 296 deals) in the same period last year. Despite a tough start to the year, Hong Kong, Shenzhen and Shanghai stock exchanges were yet again among the top five global markets ranked by capital raised.

CITY LIVEABILITYSingapore is the most liveable city in the world for Asia expats, ranking well ahead of regional rival Hong Kong where the air quality is now among the worst in the world, according to HR consultancy ECA International. The survey ranks cities’ overall liveability according to factors including climate, health services, utilities, sociability, personal safety and air quality.

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ALL CHANGE New research by KPMG and the Overseas Development Institute – the 2012 Change Readiness Index – has identified which developing and emerging countries are best prepared to respond to change. The impact of recent food, fuel and financial crises on countries around the world highlights the importance of adaptability.

FOOTBALL CRAZYAs the Euro 2012 football tournament kicks off this month in Ukraine and Poland, Deloitte has identified who’s winning in the money stakes in Fan Power: Football Money League. The latest edition found that the top 20 clubs had combined revenues of over €4.4bn in 2010–11. Loyal supporters, strong broadcast audiences and corporate attractiveness have helped the top clubs to stay relatively resistant during tough economic times.

STACKING UPSingapore, Beijing, Hong Kong and Tokyo are among the top 20 cities where international retailers have the largest presence. This is according to property consultant CBRE’s latest How Global is the Business of Retail? report. Almost half (47%) of the retailers in the survey are now present in the Americas, Europe, Middle East and Africa (EMEA) and Asia Pacific. US retailers are by far the most global, with 73% being present in all three regions.

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US SEEKS CHINA DIALOGUEUS Treasury secretary Timothy Geithner urged China to allow further appreciation of its currency against the dollar at the start of talks between the world’s two biggest economies. ‘A stronger, more market-determined renminbi (yuan) will help reinforce China’s reform objectives of moving to higher value-added production, reforming the financial system, and encouraging domestic demand,’ Geithner said. US officials have long accused Beijing of keeping the value of its currency artificially low to boost exports, leading to a massive Chinese trade surplus with the US.

IMPROVE LOCAL SKILLS, SAYS LEELee Hsien Loong, Singapore Prime Minister, has warned that the city-state’s tight labour market will push wages higher and also spark inflation. In his annual Labour Day message Lee said that higher wages will boost business costs, undermine competitiveness and quicken inflation. He added that local companies and workers must improve skills to increase productivity and help expand the economy. Recent government efforts to stem the inflow of foreign workers

have hindered the expansion plans of many companies.

VAT A MIXED BAG Shanghai’s value-added tax pilot project, launched in January, has received mixed results. Some firms and industries are benefiting from lower tax levels, while others are finding that their tax burden may actually increase. General VAT taxpayers who used to incur business tax costs embedded in or charged on the purchase of ‘in-scope’ services seem to benefit the most. Small-scale VAT taxpayers stand to gain, while companies undergoing the most significant operational changes are experiencing the most growing pains.

BANKS EASES MONETARY POLICYThe Bank of Japan further eased monetary policy, increasing its asset purchase programme by 5 trillion yen (US$77.5bn) to about 70 trillion yen. The central bank said that its board voted unanimously to keep its key interest rate unchanged at between 0% and 0.1%. The bank also said that it will expand its purchases of government bonds to those with longer maturities. It was already committed to boosting its asset purchase war chest to 65 trillion yen by the end of 2012.

EXCHANGES TO JOIN FORCESSingapore Exchange (SGX) and Bursa Malaysia are on track for a link-up in June that will enable stockbrokers to trade shares listed on the bourses without having to go through an intermediary. Asean Exchanges, a group of regional bourse operators, said: ‘Bursa Malaysia and Singapore Exchange will be connected first, with the Stock Exchange of Thailand added in August 2012.’ Through the trading link, investors in ASEAN (Association of Southeast Asian Nations) countries will enjoy a new ease of access to a wider investment selection, as well as tap the region’s growth opportunities.

INDONESIAN ACQUISITION HALTEDIndonesia’s central bank has rejected a US$7.3bn acquisition of Bank Danamon Indonesia by Singapore’s DBS until new rules covering foreign ownership are in place. Bank Indonesia said that it would re-evaluate a current rule that allows private investors – both foreign and Indonesian – to own stakes as high as 99% in Indonesian banks before assessing DBS’s planned acquisition. Bank Indonesia bank hopes the regulation will be issued by the end of May or early June.

FINE FOR ‘SUB-STANDARD’ WORKHong Kong’s securities regulator has fined a brokerage firm and revoked its corporate finance licence as it seeks to implement tighter control over share sales. Mega Capital (Asia) has been fined HK$42m (US$5.4m) for ‘inadequate and sub-standard’ diligence work and ‘failure to act independently’. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. Mega Capital has denied the charges. The fine is the largest so far imposed by the Securities and Futures Commission.

SHARE SWAP GROUNDEDAirAsia and Malaysian Airline System (MAS) have scrapped their proposed share-swap deal amid pressure from the workers’ union at MAS. The deal

10 News round-up

MAS GRANTS LOAN TO IMFSingapore joined the ranks of the Group of 20 (G20) countries by contributing a US$4bn (S$5bn) loan to the International Monetary Fund (IMF) to help troubled economies. This is part of the broader international effort to boost the IMF’s lending capacity, which managing director Christine Lagarde wants to increase by US$400bn. The Monetary Authority of Singapore (MAS) stressed that the contribution will be by way of contingent loans to the fund, and not directly to countries borrowing from it. ‘Hence, as with our permanent capital subscriptions to the IMF (or quota subscriptions), this bilateral loan will remain part of Singapore’s official foreign reserves,’ MAS said in a statement.

Christine Lagarde

SG_B_newsroundup.indd 10 11/05/2012 12:31

P20

was expected to reduce competition and help MAS, the national carrier, return to profitability. However, it had proved unpopular with the union amid concerns that the tie-up may lead to restructuring and job cuts. Tony Fernandes, CEO of AirAsia, and his deputy Kamarudin Meranun have both quit the MAS board. The pact had seen Tune Air, the parent company of AirAsia, exchange 10% of AirAsia shares for 20.5% of MAS stocks with state-owned Khazanah Nasional.

NEW BOARD FOR OLYMPUSOlympus shareholders have approved the appointment of a new board of directors at an extraordinary general meeting. The company had nominated new members to the board after all its previous members quit in the wake of an accounting scandal. It has admitted to hiding $1.5bn (£1bn) in losses for as long as 20 years. However, former chief executive Michael Woodford, who blew the lid on the scandal at the firm, has threatened to have the results annulled.

JAPAN TO AID MYANMARJapan will write off billions of dollars in debt owed by Myanmar and restart development loans, the leaders of the two countries announced, in a further move to end the South-East Asian nation’s isolation and strengthen its nascent democracy. The agreement to waive 303.5 billion yen (US$3.72bn) debt and overdue charges was reached during president Thein Sein’s visit to Tokyo, the first by a Myanmar head of state in nearly three decades, signalling its steady return to the international fold after decades of brutal military rule.

AUSTRALIA CUTS INTEREST RATESThe Reserve Bank of Australia has cut interest rates more than expected because economic conditions were ‘somewhat weaker’ than forecast. It added that inflation had also moderated in recent months. The bank cut its key rate to 3.75% from 4.25%, when most analysts were expecting a 0.25 percentage point cut.

There have been increasing signs that Australia’s economy is being hit by a slowdown in global growth, which has weakened in the second half of 2011 and is likely to continue at a below-trend pace this year.

TEMASEK TO SELL CHINA SHARESSingapore’s Temasek Holdings is seeking to sell US$2.4bn worth of its shares in Bank of China and China

Construction Bank, two of China’s biggest lenders. The move comes as shares in the two banks rose almost 14% this year. However, profit growth at Chinese lenders has slowed recently amid tight controls on lending in the country. This is the second time in 10 months that Temasek has sold shares in the two banks. It offloaded US$3.6bn worth of shares in the two firms in July last year.

HOME SALES DROPForeigners looking to purchase property in Singapore seem to have been hit hard by the 10% additional buyer’s stamp duty. Home sales

to foreigners plunged 78% in the first quarter of this year. Only 293 homes were purchased by foreigners, according to an analysis by the Dennis Wee Group. This is a sharp plunge of 78% from the 1,358 homes bought by foreigners in the fourth quarter last year. Home purchases by Singaporeans and permanent residents fell 12% and 7.5% respectively.

MINIMUM WAGE FOR MALAYSIAMalaysia has introduced a minimum wage for the first time in a move to support low-income households and amid speculation that the government may call elections soon. Private sector workers in peninsular Malaysia will receive a minimum salary of 900 ringgit (US$297) a month. Workers in the states of Sabah and Sarawak will get 800 ringgit. Malaysia, South-East Asia’s third-largest economy, has set a target to achieve rich-nation status by 2020. The lowest paid will now be guaranteed an income that aims to lift them out of poverty.

ASIAN CONFIDENCE SLOWLY RETURNING Asia’s economic growth probably troughed in the first quarter but a bounce-back may be muted, a Reuters poll showed. Although fear has faded over Europe’s debt crisis and a slowing US economy, both will still be a drag on growth rates in the region. Respondents in a quarterly survey of more than 250 economists refrained from slashing growth forecasts for the first time in a year, a sign that the outlook for Asia is more upbeat. ‘Confidence is slowly crawling back in’, said Frederic Neumann, co-head Asian economics research at HSBC. ‘We have seen in China [that] much more aggressive action has been taken to support growth.’

11

Sign of confidence: the East China Fair

AnalysisEVERYTHING TO PLAY FORWhen Euro 2012 kicks off this month, all eyes will be on hosts Poland and Ukraine. Apart from the kudos of hosting the world’s third biggest sporting tournament, what will be the financial impact on the two countries?

SG_B_newsroundup.indd 11 11/05/2012 12:31

Interview12

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Junie Foo loves a challenge, is not shy about taking on new responsibilities and is fearless when it comes to challenging

the status quo. Just as well.For not only is Foo the assistant

general manager and head of Multinational Corporate Banking at Bank of Tokyo-Mitsubishi UFJ, she is also co-chair of BoardAgender, an outreach arm of the Singapore Council of Women’s Organisations’ (SCWO) Women’s Register initiative.

Foo wants to help facilitate more opportunities for women to advance into senior leadership positions and encourage them to put their names forward to hold position on boards.

However, Foo’s own career in finance came by chance. ‘I’m an accidental banker,’ the petite Singaporean admits, saying she had initially hoped for a career in diplomacy and was studying political science and Japanese studies at the National University of Singapore (NUS), when she was ‘derailed’. An essay in Japanese on the Singaporean economy she had composed for a writing competition caught the eye of the deputy general manager of Bank of Tokyo. He invited her for a chat and then offered her a job in his corporate banking team when she graduated.

Culture shockFoo has never looked back and enjoys her work tailoring finance solutions to corporate clients’ needs, though she recalls her earlier years working in a male-dominated industry were challenging, especially when she was posted, at her request, to Tokyo.

‘I was the first Singaporean they posted ‘back home’. It was very exciting and they were comfortable sending me there because I spoke Japanese,’ she says. But she also recalls becoming more aware that as a woman she was being treated differently; for example being asked to wear a uniform in the office. She stood her ground on the issue, pointing out

that men didn’t have to wear one. She won the battle.

Back in the mid-2000s, when she was working for Standard Chartered, heading their regional Japan desk out of Singapore, she recalled being the boss of a young Japanese man she would sometimes take to meetings. ‘To go to Japanese companies with that young man was amusing. The companies just could not believe I was the boss, they would talk to him directly, ignoring me,’ she says, adding she remained unfazed and quickly made it clear who was in charge.

Responsibility and adventureLike many executives rising through the ranks, Foo seized opportunities to better herself. ‘I moved quite regularly between jobs, but each time it was because there was a new work opportunity, more responsibilities. There is a little part of me that is a little bit adventurous, too,’ she adds.

A sense of adventure was an attraction when she was headhunted to start a Japanese corporate desk in Singapore for the French bank Indosuez. ‘It was a challenge, but an interesting one, because Japanese companies don’t naturally come to a French bank, so you have to give them something more, that extra value-add,’ she recalls.

Later, greater responsibility was the main attraction for joining Citibank as she was given the opportunity to branch out beyond the Japanese corporate world. In 2009, she took the next big challenge with a move to ANZ to start a multinational corporate

WIDER AGENDAJunie Foo has carved out a successful career in corporate banking and now, as co-chair of BoardAgender, she is enabling more women to fulfi l their professional potential

The tips* Do not be too comfortable,

always challenge yourself so that you keep on learning.

* To have integrity is very important.

* Do not compromise on your core values.

* Keep an open mind, be fair.

* Give opportunities for others to succeed – leverage on the strengths of everyone.

13

SG_F_Foo.indd 13 09/05/2012 16:11

The CV2011

Joins Bank of Tokyo-Mitsubishi UFJ as assistant general manager and head of Multinational Corporate Banking.

2009Joins ANZ as head of multinational corporates

2003Joins Standard Chartered as regional account manager on the Japan desk.

2000Joins Citibank as vice president of global relationship banking.

1996Joins Indosuez (now Crédit Agricole) as assistant vice president of the North Asia desk.

1990Joins Bank of Tokyo as international officer.

desk there and finally came full circle in 2011 when she rejoined her first employer, which by now was Bank of Tokyo-Mitsubishi UFJ.

In her current role, Foo supervises a diverse team of 14 and oversees corporate business in 10 countries, from South Asia to Australasia.

Women’s workHer involvement with groups for women started a decade ago, when she joined the Financial Women’s Association of Singapore (FWA).

She became president of the FWA (2004-06), then followed with a stint as first vice president of the SCWO (2008-10). ‘The SCWO position gave me the opportunity to get to know people from different social echelons,’ she explains.

In March 2011, Foo put her energies into BoardAgender, SCWO’s initiative to raise awareness on the economic benefits of an inclusive, gender-balanced corporate world. While BoardAgender aims to encourage more women to contribute their expertise in the boardroom and committees, Foo quickly points out that it’s not a feminist organisation.

‘We are not a women’s rights movement. We want to show the benefit of a gender-balanced business: basically it’s good for business, it’s an economic imperative. It’s not about thumping on the chest saying “more women in the boardroom”. But if good women are attracted to an organisation that supports women’s talents, you’ll have lots of new talent coming into your organisation and there will be a positive impact on your organisation’s performance,’ she explains.

The Singapore Board Diversity Report, published last October by the NUS Business School’s

better represented in the boardrooms of local statutory boards than in the boardrooms of listed companies in Singapore – as of February, female directors held 19.8% of board positions on Singapore’s statutory boards. Foo says the results are encouraging, but adds that the number of women on boards is still too low when women represent close to 50% of the workforce in Singapore.

‘Women bring something different to the table. We don’t just react to situations. Men are less likely to want to cut their losses. They might continue on a downward trend whereas women are more risk averse,’ she explains.

‘You do see differences in how men and women assess situations and it’s good, because there are different ideas. We can agree to disagree but it’s always good to have both sides, different thoughts,’ she adds.

She points out that from an economic standpoint, companies with more women directors routinely outperform those with fewer.

‘Research has shown that having a more diverse board makes a company more responsive to market trends. lt also has higher returns on investment and equity,’ she says, referring to the 2010 Women Matter report by McKinsey & Company.

More influenceFoo says BoardAgender has been slowly expanding the scope of its activities. It is helping the Tripartite Alliance for Fair Employment Practices facilitate access for a study on women in leadership, and it has also been organising regular events, aimed at demystifying the boardroom.

‘We’ve had very inspirational lunch talks. On average, about 100 people

Centre for Governance, Institutions and Organizations (CGIO) and BoardAgender showed that gender diversity in Singapore Exchange (SGX)-listed boardrooms remained low across all sectors, with female representation at just 6.9% in 2010. This compares poorly with the 10.1% in Australia, and 15.7% in the US, both of which are far below the 40% in Norway. By sector, property as well as transport, storage and communications had a higher representation of women in their boardrooms (9.4%), while the lowest score of 5.2% went to the finance sector.

The latest NUS/BoardAgender research reveals that women are

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The basics BOARDAGENDERThe Singapore Council of Women’s Organisations’ Women’s Register initiative was conceived after a year-long public consultation in 2005 with study groups led by many prominent women.

The consultation found that there was a need for an initiative to reach out to women to inspire and lead them, as well as to educate and harness the power of women.

It has gone through a number of changes since its inception. It is now a platform for networking, education, mentorship, inspiration and the promotion of directorships for an extensive group of women of all ages.

As part of its evolution, a separate arm, BoardAgender, was launched in March 2011. At the launch, Yu-Foo Yee Shoon, former minister of state for community development, youth and sports, said that gender-balanced business was not only a matter of inclusiveness, and emphasised that it was a business necessity.

attend. It’s open to all and there are always a handful of men, but obviously, there are a lot of ladies, women in their late 30s or early 40s looking for the next step in their career.’

BoardAgender has also started a Champions campaign, aimed at applauding the efforts of 100 individuals, both men and women, who have supported policies that enable senior women to be in leadership positions.

Foo believes there is still a ‘long way to go’ for more diversity to reach the boardrooms in Singapore. BoardAgender is now conducting regular sessions with SGX-listed companies, as well as not-for-profit

ones, to discuss best practice and what their organisations are doing to promote diversity in the boardroom. ‘It’s a roundtable session over lunch, generally with people from HR, but it has proven quite effective to raise awareness,’ she notes.

Paradoxically, because she works for a bank Foo points out that it will

be more difficult for her to be on the board of a listed company, due to potential conflicts of interests, but she has been on the board of not-for-profit organisations in the past and has her eye on joining a new one in the not-too-distant future.

Sonia Kolesnikov-Jessop, journalist

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Significant changes to the Singapore Code on Take-overs and Mergers, issued by the Monetary Authority

of Singapore, were introduced in April. The move coincides with the announcement of several high-profile investments, as the city-state sizes up ways to become once more a hotbed for merger and acquisition (M&A) activities.

DBS Group Holdings’ US$7.3bn bid for PT Bank Danamon Indonesia and San Miguel Corp’s US$500m investment in Philippine Airlines signalled a promising start to the second quarter for M&A activity in the region, after a rather dull first quarter. In Malaysia, CIMB Group is also reported to be on the acquisition trail, looking for stakes in more of the region’s lenders, while media group Media Prima has indicated its interest to expand overseas via M&A.

According to Deloitte’s recent report, Riding the Dragon: Will Asian Mid-market M&A Prosper?, mid-market

M&A acquisitions of Asia-Pacific assets accounted for 32.4% of all mid-market M&A transactions globally in 2011. This represented more than 2,000 deals with a combined worth of US$143.2bn, down 3.6% on the previous year. In South-East Asia, close to 300 mid-market deals were undertaken last year, with a value of US$22.9bn, the report indicated.

According to the report, many of these transactions were buoyed by a relatively frothy valuation environment, a fact that Jeff Pirie, executive director in Deloitte Southeast Asia’s corporate finance practice, ascribes to increased overseas interest in the region. ‘Inbound interest from foreign corporations eager to gain some level of exposure to the region, combined with a relative dearth of quality targets for sale, means that crossborder transactions – when they occurred – tended to be at higher valuations,’ he explains.

With cash-rich companies looking to enhance their presence in Asia, the region is likely to hold on to its top

spot in terms of M&A volumes in 2012, and South-East Asia will get its fair share of interest.

Against this background the recent changes in Singapore’s Code on Take-overs and Mergers boost the city-state’s aim of cementing its status as an international capital market, while progressively improving corporate governance.

The changes help codify existing practices and enhance disclosure, while keeping pace with product innovation and market development. They bring regulation up to speed with recent product innovations and market developments, Pirie says, adding that they will ‘raise the bar for performance of those involved in takeovers in Singapore’.

Signifi cant changes to M&A regulation look set to help Singapore’s status as an international capital market fl ourish

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Keeping pace‘Singapore’s changes to the code were important to keep pace with international market developments,’

says Andrew Martin, principal, Baker & McKenzie.Wong & Leow.

In recent years, international markets such as Hong Kong,

London and Australia have made similar changes to reflect market innovation.

‘Such codification and clarification provides transparency and greater certainty for the market and

for professional advisers,’ Martin adds.

While not having a direct drastic impact on M&A activity

in Singapore, the changes do help codify and clarify procedures

and practices to get deals done,

says Stella Wong, corporate finance associate at Deloitte Singapore.

Luke Pais, Transaction Advisory Services partner at Ernst & Young Solutions in Singapore agrees, noting that while M&A activity is primarily driven by commercial and economic parameters, it is also influenced by many other factors. ‘A strong regulatory environment that offers clarity on various issues that impact deal structure is one of them,’ he points out.

‘The code was last revised in 2007 and while practice statements had been issued by the Securities Industries Council (SIC) since then to deal with specific issues like a takeover or merger transaction involving a REIT [real estate investment trust], the M&A market and transaction structures in Singapore and internationally have evolved,’ Pais explains.

He added: ‘Practice statements have now been incorporated into the code and more clarity has been given to deal with certain issues, including disclosure of interests in the offeree company.’

Martin also notes that the SIC had considered whether the use of certain derivatives and long options

is prevalent in Singapore takeover situations.

While it concluded that the use was limited, it has made certain important clarifications, notably from a

disclosure perspective.‘The revised code

includes a new definition of derivative to capture

instruments that are

cash-settled, and persons holding 5% or more in the offeree company’s issued share capital will be required to disclose dealings in long options and derivatives during the offer period,’ he explains. ‘Disclosure is limited to derivatives which cause the holder to have a long economic exposure to the underlying securities. The revised code sets out guidance on what constitutes dealings in relation to derivatives, including acquiring, selling, closing out or varying a derivative.’

Among the key changes is the clarification that the SIC may take further actions against a person who breaches the code, in addition to depriving him of his ability to enjoy the facilities of the securities market in flagrant cases. Benjamin Ong, M&A partner at KPMG Corporate Finance, considers this to be the most important change.

‘The code now provides for SIC to have recourse to further actions against the offender in flagrant cases and also states that advisers may be required to abstain from code-related work as a sanction,’ he notes.

‘It now also lists the rules for which a breach might result in SIC making a compensation order. This will make both offerors and advisers more mindful of adhering to the code and ensure better compliance and disclosure. It will also better protect minorities, particularly as SIC is now able to make compensation orders,’ Ong adds.

Other significant changes include updating the language to incorporate current practices on the takeover of REITs and business trusts, setting

17

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out when collective shareholder action

amounts to acting in concert, and dealing

with joint offers and the acquisition of derivatives,

explains Andrew Ang, deputy head of WongPartnership’s corporate/M&A

practice, and a leading expert in both domestic and crossborder M&A in Singapore and other jurisdictions in South-East Asia.

Clearer thinkingPais of Ernst & Young believes that there is now more clarity on issues such as joint offerors, disclosures of shareholdings by the offeror and transactions involving REITs and business trusts, ‘which are useful for practitioners in structuring and executing deals’.

‘Singapore offers a very favourable REIT and business trust environment compared to most countries,’ he continues. ‘Given the increasing prevalence of such companies in the market, we expect increasing M&A activity with these companies. The framework of rules laid out for REITs and business trusts will greatly assist practitioners in structuring and executing deals.’

The new code also clarifies what constitutes collective shareholder action. Now, when some shareholders have an agreement or understanding to requisition, or threaten to requisition resolutions at a general meeting with the purpose of seeking control of the board, they may be presumed to be acting in concert. Once the presumption arises, subsequent acquisitions of interests in shares by any member of the group could give rise to an obligation to make a general offer.

The new code also lowers the shareholding threshold, from 10% to 5%, for a person to be regarded as an associate. ‘Accordingly, any person holding 5% or more of the equity

share capital of the offeror or offeree company will be required to disclose dealings in the offeree company during the offer period. ‘The objective of this disclosure is to allow offeree company shareholders and the investing public to gauge how the trading in offeree company shares during the offer period has been affected by the trading of such shareholders. Investors buying shares in a listed company should therefore be mindful of the changes which are

in line with the statutory thresholds for substantial shareholding notification requirements in Singapore,’ Martin says.

KPMG’s Ong notes that these changes should not impact on M&A activity in Singapore as none is fundamental. ‘Better governance of the offer process and disclosure requirements’ can only be a positive development for the overall market.

Sonia Kolesnikov-Jessop, journalist

South-East Asian corporations are increasingly showing confidence in the economic prospects in the region, yet they are still treading carefully with merger and acquisition (M&A) activities. According to the third edition of Ernst & Young’s bi-annual South-East Asian Global Capital Confidence Barometer, large corporates are hesitant to engage in major M&A activities despite a more favourable deal-making environment. Only 48% of companies in the region – down from 53% in October 2011 – plan to pursue M&A activities in the next 12 months. This is still more optimistic than the outlook among global companies, with only 31% expressing the same interest.

‘There is a disconnect between the level of confidence in deal fundamentals, ie good cash reserves on balance sheets, stable access to credit and the high-growth prospects of the local economies, and the sentiments influencing decision making in the boardrooms of these companies,’ notes Harsha Basnayake, Transaction Advisory Services leader for Singapore and Southeast Asia at Ernst & Young.

‘The majority of respondents are also saying that they now see a good number of deal opportunities, good-quality businesses and chances of closure to be healthy,’ Basnayake says. ‘I think what we are coming to terms with is the new norm that is driving these trends: optimism and confidence about the big picture, but a sense of cautiousness in decision making.’

Among South-East Asian companies looking to pursue M&A activities, a majority 61% are driven by the need to access new markets, and are primarily looking at Asia Pacific as their key investment destination.

Thanks to its growth potential, Indonesia is now one of the top five investment destinations globally. Singapore and Vietnam, however, have lost some momentum for very different reasons, Basnayake says, explaining that while business-friendly fundamentals remain strong in Singapore, the relative high cost is a drawback, while in Vietnam market volatility is dampening investor sentiments.

According to data from Thomson Reuters, the total value of announced Singapore M&A deals in the first quarter registered a 36.5% year-on-year fall and a 24.6% quarter-on-quarter decline, to US$5.7bn. Singapore companies were also targeted less by overseas acquirers, with 30 inbound M&A deals in the first quarter compared to 50 in the previous quarter, while Singapore companies slowed down their buying spree abroad, with the overseas deal count falling to 68, although the aggregate value of these deals was 12.3% higher year on year at US$2.9bn.

*OPTIMISM GROWS IN SOUTH-EAST ASIA

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A&B June 2012 (Offshore) ol_output.pdf 2012/4/27 10:07:39 AM

Ads-June12.indd 5 09/05/2012 13:44

Many of the world’s top football players – Cristiano Ronaldo, Zlatan Ibrahimovic and Wayne Rooney to name

a few – will be taking to the pitch in the Euro 2012 tournament this month.

But it is not just the winning countries that will ultimately be revealed, but also whether Poland and the Ukraine themselves will be viewed as winners in having co-hosted a financially successful tournament without major logistical problems.

There those within UEFA that believe that simply staging the third biggest sporting tournament in Central and Eastern Europe for the first time represents a massive achievement – only the Olympics and the World Cup are bigger sporting events. David Taylor, CEO of UEFA’s commercial arm, UEFA Events SA, is among them. He believes ‘a very important decision was made to go to Eastern Europe for the first time in our history’.

Ultimately, delivering a successful tournament is vital to the self-confidence of the region to boost its profile and to potentially become a contender to host other major sporting events in the future. However, there is no escaping that finance is key.

Estimated turnover of €1.4bn for the 2012 Euro tournament can be broken down into four main sources: media rights (62%), commercial rights – income from sponsoring and

THE BEAUTIFULAs Euro 2012 kicks off, we analyse the fi nances of previous championships and the projected revenues to be generated by this year’s co-hosts, Poland and the Ukraine

A lot of red faces have been avoided after it was confirmed that all the tournament’s new-build stadiums are ready in time – but it was a close call for a while.

The construction of the spectacular 58,000-capacity National Stadium in Warsaw – scheduled to host the opening match between Poland and Greece on 8 June – has not been a smooth process. Delays put construction behind schedule, causing tensions between those involved and the Polish government. The 50,000-seat venue was finally opened in January 2012 with a ceremony, fireworks display and free music festival.

But as recently as February, problems continued to dog the stadium. It was due to host a Poland Super Cup match, but it was scrapped when police said they were unable to guarantee security because of communication problems inside the stadium – senior officials were forced to resign.

Mayor Hanna Gronkiewicz-Waltz said afterwards that all of these problems had been addressed and the police subsequently gave their approval for the stadium to be used. It will officially be handed over to UEFA on 9 May.

Meanwhile, in the Ukraine problems have also been evident, including fears over the launch of high-speed railways between host-cities and the finalisation of construction and renovation of a number of main roads.

Even UEFA president Michel Platini raised doubts over construction deadlines for the country’s four stadia to be used in the 31-game tournament, as they slipped behind schedule. Several alternative host nations were even mooted as fall-back options in the event the Ukrainian FA was unable to deliver on its targets to UEFA. Germany, Scotland and England were among the possibilities.

What should not be overlooked is the investment involved. A new international airport terminal has been built in Ukrainian capital Kiev, while Poland has spent €21.6bn on infrastructure, with Euro 2012 as the catalyst.

*DOWN TO THE LINE

merchandising (22%), hospitality (9%) and ticketing (7%). Official UEFA figures for Euro 2008 – the previous tournament in Switzerland and Austria – showed income totalled €1.3bn – a 50% rise over the previous tournament

in Portugal in 2004. Looking even further back, the 2000 tournament in Belgium and the Netherlands generated €230m, while Euro ‘96 tournament in England produced approximately €147m.

20

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The new National Stadium, Warsaw, Poland, sporting the country’s red and white national colours

21

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Poland and the Ukraine will be hoping footballing stars such as Cristiano Ronaldo prove enough of a draw

The rapid rate of revenue increase has been truly impressive, with the single biggest contributing factor being the massive increases in media rights revenues, which generated €801m in 2008 (up from €560m in 2004) and produced an operating profit of over €700m.

HatTrick scoreThese sizeable profits have been used to fund a multitude of worthwhile development projects, such as education and training centres across the 53 UEFA member associations through UEFA’s assistance programme called HatTrick.

Once these costs are taken into account, net profit for 2008 came in around €300m, which was then ploughed back into the game and used to finance all the youth and women’s competitions from 2008–12, refereeing and coaching programmes, and various administration costs.

Forward-wind to this summer’s tournament and UEFA originally stated in early 2010 that it expected revenues to be in the region of €1.3bn, again with the lion’s share coming from the sale of media rights.

A spokesman for UEFA told Accounting and Business that despite

the general economic conditions: ‘There has not been any decrease in the overall figures since the initial projections were made a little more than two years ago’.

However, ticketing is estimated to yield €125m (down €24m on 2008), while corporate hospitality is predicted to fall a massive €55m to €100m. This represents a sizeable drop and is perhaps the biggest single financial indicator that the event will be affected by the economic downturn.

Football finance expert Simon Chadwick, professor at Coventry

University, says: ‘The European Championship is becoming a phenomenon in its own right. It really is one of the premium sporting events in the world. The way it is packaging its sponsorship deals is similar to that used by the International Olympic Commission (IOC) and proving very successful. The marketing expertise is coming in from big international brands with extensive experience and commercial logic – and it is showing.’

Sharing the spoilsFor the four years following this summer’s tournament (to 2016), estimates suggest almost €500m

will be made available to the HatTrick programme and that

each national association will receive up to €9.4m. If the forecast

targets are met, it will also mean European Championship yield will have increased by more than 30 times over the last 20 years.

But while revenue growth has been impressive, there are dark clouds on the horizon that continue to threaten the 2012 forecasts.

The ongoing economic crisis is having an impact. Sports industry advertisers have slashed budgets, while sponsors and investors have reined in.

There is also the real prospect that corporate hospitality packages for the competition may not sell out. ‘The downturn has meant that boards of directors are looking

closer at the link between corporate activity and the bottom line. Senior staff are, therefore, having to argue a much stronger case and demonstrate tangible business links before

corporate hospitality is signed off’, says Chadwick.

‘UEFA are finding it no different to anybody else,

but the fact that the Ukraine and

Poland are not considered to have the caché of a Paris or Madrid and not considered

Budget incomeMedia rightsCommercial rightsCorporate hospitalityTicketingOverall turnover

CostsEvent costsSolidarity payments toUEFA associationsOverall costs

Net profit

2012 (est)8402901001251,355

TBCTBC

TBC

TBC

2008

8012941551011,351

-600-450

-1,050

301

*EURO 2012 AND 2008 FINANCES (€M)

22

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Officially licensed merchandise, such as logo-embossed footballs, is an integral income stream of any Euro competition

SIZEABLE PROFITS HAVE BEEN USED TO FUND AMULTITUDE OF WORTHWHILE DEVELOPMENTPROJECTS, SUCH AS EDUCATION AND TRAININGCENTRES ACROSS 53 UEFA MEMBER ASSOCIATIONS

has been a perceived failure by the host nations to whip up sufficient local buzz and tackle the overseas images and clichés of post-communist countries.

Taylor has already expressed his belief the 2012 tournament is not going to be the most financially successful tournament of all time – from a revenue or profit perspective. Playing down the importance of these issues, he says: ‘We could have gone elsewhere if that was our objective.’ Nonetheless, all eyes will be as focused on the performances off the pitch as much as the players on it.

Alex Miller, journalist

Germany, Spain, England, France, Republic of Ireland, Sweden, Poland, Ukraine, Portugal, the Netherlands, Greece, Russia, Czech Republic, Denmark, Italy and Croatia.

*EURO 2012 TEAMS

clients are prioritising the Olympics. ‘A lot of clients are saying they’re going to do the “big one” this year, as opposed to some of the more perennial events they normally do.’

Meanwhile, at the time of writing, general attendance tickets remain on sale, although only around 5%. Reports of extortionate hotel charges and airfares have certainly not helped. There are also very real concerns that many key roads in Poland simply won’t be finished in time.

Ukraine’s jailed opposition leader Yulia Tymoshenko’s ongoing incarceration hasn’t helped the country’s international image. And there

important growth markets hasn’t helped’, he adds.

There is also serious competition for Poland and the Ukraine from the Olympic Games in London. UEFA’s quadrennial showpiece begins just six weeks before the opening of London 2012, whereas four years ago the Olympics were hosted by Beijing, making it ‘rather more difficult to access from Europe’, Taylor adds. ‘These things inevitably have an effect.’

Big oneTony Barnard, marketing director at Prestige Ticketing, the London Games’ official on-site hospitality seller, says

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In his regular quarterly report, ACCA’s Manos Schizas sees a new-found optimism among professional accountants around the world

When the results for the third anniversary edition of the Global Economic Conditions Survey came in, I must admit I was sceptical. The share of respondents reporting confidence gains in their own organisations had nearly doubled from 16% to 29%, and while the majority (54%) still believed that the global economy was deteriorating or stagnating, that figure was down from 73% in the previous quarter. Fearing embarrassment, I started ticking off objections.

Turns out that the rise in confidence was not due to biases in the sample. Nor was it skewed by one or two days of positive newsflow; it was based not only on perceptions but also on fundamental improvements in demand, business dynamism and access to finance. It was reflected in rising investment and employment. It was consistent across regions and industries, although the Americas and Western Europe seemed to have benefited the most, as did manufacturers and distributors, particularly in the high-tech sectors. Business dynamism has risen the most in the Americas and Asia Pacific,

A NEW-FOUND DYNAMISM CANBE SEEN IN MANY DEVELOPING AND TRANSITION ECONOMIES

*THE VIEW FROM ASIAAcross the region, 23% of respondents reported rising business confidence, up from 11% in late 2011. About a third (34%) felt the state of global economy was improving or about to, up from 19%. Nonetheless, Asia Pacific recorded lower confidence levels in Q1 2012 than any major region, and only respondents in Europe were more pessimistic about the prospects of the global economy.

Malaysia and Singapore recorded the smallest confidence gains among major markets in the region, while the survey findings revealed a difference of opinion within Greater China. There is growing confidence on the mainland, outperforming all other Asian markets, strongly rising investment and an excellent outlook for employment, but also rising inflation and concerns about government spending. In Hong Kong, on the other hand, confidence and the outlook for investment are much weaker, and respondents call for an increase in government spending.

while Africa, still ahead of the rest on the confidence scoreboard, seems to be losing ground.

Governments have helped too, even though members generally think that many major economies, including both the US and its straight man, China, are overspending.

On the other hand, policymakers hoping to deliver growth despite austerity in Western Europe and

elsewhere have been frustrated in their efforts.

Much more encouraging is the fact that a new-found dynamism can be seen in many developing and transition economies, with businesses securing new orders where previously they would not have. In the Asia Pacific region and the Americas this has led to a bounce in investment and new hires. This is a very welcome trend; investment has been subdued since the end of the ‘green shoots’ stage of the global recovery, which lasted from mid-2009 to mid-2010.

This investment is focusing on two kinds of opportunities in particular. Customer insights, namely the need to understand and benefit from spending decisions under new constraints, is one; the other is supply chain optimisation through deepening relationships and a stronger focus on quality.

The dark side of this new-found dynamism, however, is rising input prices. If even this very timid recovery is accompanied by rising inflation, then a full-blown recovery is likely to provide a challenge for central banks and other policymakers. And when interest rates are forced up again, both business and sovereigns had better be ready.

*THE VIEW FROM *THE VIEW FROM *

24 Taking the pulse of the global economy

AP_F_GEC.indd 24 09/05/2012 15:09

-13THE DANGER DOWNPOINT

THE ACCA/IMA GLOBAL ECONOMIC CONDITIONS SURVEY – HOW TO TAKE PART

-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13-13THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER THE DANGER DOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINTDOWNPOINT

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The views of ACCA members are highly valued and receive widespread media coverage. The Q4 2011 survey was quoted in the press around the world

more than 500 times. So why not have your say? The next quarterly survey opens on 17 August. Everyone can participate – simply look for the link

in AB Direct or watch out for the email invitation. The survey is carried out in association with the US-based Institute of Management Accountants (IMA).

WHAT INFLUENCES CONFIDENCE?

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THE ACCA CONFIDENCE INDEXBusiness confi dence remains in negative territory. The graphics show the percentage of respondents saying they have gained business confi dence, minus those who have lost it

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

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

The ACCA/IMA Global Economic Conditions Survey follows 38 different indicators of trading conditions and firms’ responses to them, as well as two indices of business confidence and perceptions of the global economy. In the list of factors shown here, we’ve used statistics in order to tease out the effects of different aspects of the business environment, both positive and negative, on confidence.

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IREL

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IREL

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-7 -7 -7 -7 -7 -7 -7 -7 -7 -7IR

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ND

-7IR

ELA

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AN

D -7

IREL

AN

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EAST

ERN

EU

ROPE

EAST

ERN

EU

ROPE

EAST

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EU

ROPE

EAST

ERN

EU

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EAST

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EU

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EAST

ERN

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EAST

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EAST

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EAST

ERN

EU

ROPE

EAST

ERN

EU

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EAST

ERN

EU

ROPE

EAST

ERN

EU

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EAST

ERN

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EAST

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EAST

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EAST

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EAST

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EAST

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EAST

ERN

EU

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EAST

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EU

ROPE

EAST

ERN

EU

ROPE

-15

-15

-15

-15

-15

-15

-15

-15

-15

-15

-15

-15

EAST

ERN

EU

ROPE

-15

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ERN

EU

ROPE

EAST

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EU

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-15

EAST

ERN

EU

ROPE

EAST

ERN

EU

ROPE

-15

EAST

ERN

EU

ROPE UK

UK

UK

UK

UK

UK

UK

UK

UK

-17

-17

-17

-17

-17

-17

-17

-17

-17

-17

-17

UK

-17

UK

UK

-17

UK

UK

-17

UK

MA

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MA

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2 -2

2 -2

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NG

KO

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NG

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HO

NG

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NG

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NG

KO

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NG

KO

NG

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NG

KO

NG

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NG

KO

NG

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NG

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NG

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NG

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NG

HO

NG

KO

NG

HO

NG

KO

NG

HO

NG

KO

NG

HO

NG

KO

NG

HO

NG

KO

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-28

-28

-28

-28

-28

-28

-28

-28

-28

-28

-28

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

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SIN

GA

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SIN

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SIN

GA

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SIN

GA

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SIN

GA

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SIN

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SIN

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SIN

GA

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SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

SIN

GA

PORE

-41

-41

-41

-41

-41

-41

-41

-41

-41

-41

-41

-41

SIN

GA

PORE

-41

SIN

GA

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SIN

GA

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-41

SIN

GA

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GA

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-41

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0000-10-10-20-20-30-30-30-30-30-30-40-40-40-40-50-50-60-60-60-70-70-70-70-70-70

TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE TAKING THE GLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBALGLOBAL TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATURE TEMPERATUREGLOBAL TEMPERATUREGLOBALGLOBAL TEMPERATUREGLOBALGLOBAL TEMPERATUREGLOBALGLOBAL TEMPERATUREGLOBALGLOBAL TEMPERATUREGLOBALGLOBAL TEMPERATUREGLOBALBreaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index Breaking down the ACCA Confidence Index geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with geographically reveals some striking variations, with members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.members in Africa still showing most confidence.

Total Q1 2009–Q1 2012 sample: 20,881 responses from ACCA members around the world

11111 REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING REVENUES FALLING2222222 GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS GLOBAL ECONOMY SEEN AS

MAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESSMAKING PROGRESS3 3 3 3 3 NEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLINGNEW ORDERS FALLING4 4 4 4 4 4 4 VERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIESVERY GOOD POLICIES5 5 5 5 5 VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS VALUE-ADDED BUSINESS

OPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIESOPPORTUNITIES6 6 6 6 6 6 6 6 6 AUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITYAUSTERITY7 7 7 7 7 SECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORSSECTOR-SPECIFIC FACTORS8 8 8 8 8 8 8 8 POOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIESPOOR POLICIES9 9 9 9 9 ACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITALACCESS TO GROWTH CAPITAL10 10 10 10 10 10 BUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZEBUSINESS SIZE11 11 11 11 11 11 11 11 11 11 UNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERSUNSTABLE CUSTOMERS

WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT WHAT INFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCESINFLUENCES CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE? CONFIDENCE?

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The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey The ACCA/IMA Global Economic Conditions Survey follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different indicators of trading conditions follows 38 different 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25Taking the pulse of the global economy

AP_F_GEC.indd 25 09/05/2012 15:09

Myanmar appears to be leaving the past behind – and the resource-rich and geographically blessed

country has all the right ingredients for a prosperous future.

Industries, particularly oil and gas, mining and manufacturing, agriculture and tourism have exceptional potential and there are many opportunities for law firms and accountants who work with local and foreign companies and the government to get these industries running, growing and regulated.

‘[Myanmar is] one of the largest untapped sources of natural and human resources left. In particular, there is vast mineral wealth onshore that has not been explored,’ says James Finch, head of DFDL in Myanmar, one of the leading legal and tax firms in the country.

Labour costs are extremely low, but so too are literacy and education rates. But this will change with increased internet and mobile phone use.

‘The population exists on around a dollar a day. As this situation changes, there will be enormous markets that open up. One that is awakening now is telecommunications,’ says Finch.

Internet and mobile phone use still lags behind the rest of the world – Myanmar has the least phones per capita in the world. As Myanmar’s military government increasingly tolerates change, the cyber barriers limiting its population have been eased. The country’s firewalls have been lowered, opening access to social media sites such as Facebook and Twitter as well as international news sites. The government now

ASIA’S HIDDEN JEWELDecades of isolation have made Myanmar a mystery to the outside world. But could a new wave of political and economic change put an end to secrecy and repression?

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acknowledges the need for a local IT industry – if not for freedom of speech of its people then for the foreign investment opportunities that accompany well-established internet communities. In February, a conference run by tech lovers met not in Silicon Valley, Tokyo or even Beijing, but in the capital of Myanmar, Yangon, in an event sponsored by the country’s growing telecommunications industry.

Out of reachThat doesn’t mean people are automatically logging on, with most unable to afford inflated and exorbitant connection fees. Setting up an internet connection will leave you little change from US$850, and a mobile SIM card, costing no more than US$2 in some Asian countries, costs around US$700. However, the country plans to establish 30 million more GSM mobile phone lines in the next five years with the help of private companies, which may lower costs.

One Asian Tiger that has seen the benefits of telecommunications investment is Vietnam, which at the end of 2010 had an internet penetration of 31% and saw a 12,000% increase in usage between 2000 and 2012, according to official sources. That compares with a 205%

rise in Singapore and 1,767% in China. Vietnam has seen a more rapid growth of internet usage over the past few years than any country in the region – and not just in urban areas, with penetration at nearly 50% in smaller cities, according to market research group Cimigo Vietnam. Thirty per cent of Vietnam’s population of 92 million live in urban areas, while the other 70% reside in smaller cities and rural areas, although urbanisation and migration are changing those statistics rapidly. It’s easy to see how Vietnam’s telecommunications industry grew so rapidly and will continue to. Likewise, 30% of Myanmar’s population lives in urban areas – and the major cities will see dramatic uptake in internet and mobile usage in the next five to 10 years, followed by rural areas. It’s hard to get exact statistics, but it’s estimated there were only 110,000 internet users in the country of 50 million in 2010.

One company has already seen the potential: ‘A Fortune 500 American company (not named for legal reasons) has begun selling its big ticket technical equipment in Myanmar. We are setting up the legal structure for them to be able to do so,’ says Finch, who expects more Fortune 500 companies to follow suit.

* Population: 54.6 million

* Population growth rate: 1.07%

* Ethnic groups: Burman 68%, Shan 9%, Karen 7%, Rakhine 4%, Chinese 3%, Indian 2%, Mon 2%, other 5%

* GDP: US$50.2bn

* Imports: US$5.5bn

* Exports: US$9.5bn

* Inflation: 8.9%

* External debt: US$8.1bn

* Country land mass: 676,578 sq km

* Natural resources: petroleum, timber, tin, antimony, zinc, copper, tungsten, lead, coal, marble, limestone, precious stones, natural gas, hydropower

* Internet users: 110,000

Source: CIA World Factbook

*STATISTICS

Political reform: National League for Democracy supporters celebrate as they watch an on-screen ballot count indicating a strong return for the party in the parliamentary

by-elections. Democracy icon Aung San Suu Kyi (left) won a seat

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AP_F_Myanmar.indd 27 10/05/2012 12:05

In January 2012, eight companies were awarded 10 onshore oil and gas blocks, in the country’s biggest energy tender in years. Crude oil reserves in the country are estimated at 3.2 billion barrels and gas reserves at 11.8 trillion cubic feet – so far a largely untapped resource but one that’s caught the eye of investors from neighbouring China and India as well as Russia and Switzerland. The Ministry of Energy and Myanma Oil and Gas Enterprise are now looking at the next offering of nine offshore energy blocks to bidders – so the potential for foreign companies to make money in Myanmar is considerable.

If Myanmar is to continue attracting foreign investment it needs to continue legal and fiscal reform. Sean Turnell, associate professor at Macquarie University in Sydney says ensuring property rights for its citizens is the number one priority: ‘Burma [Myanmar] really needs to continue the reforms, above all, legal reforms and reforms that guarantee property rights. That’s a big problem: it’s the thing that has separated it from Vietnam and China.’

The other issue is political reform. ‘Right at the heart of Myanmar is the military spending as it dominates the fiscal issues. It’s military spending that is at the core of the budget deficit,’ says Turnell, an expert on Myanmar and South-East Asia. The nation’s annual estimated military spending is US$1.9bn, which is about 15% of the total budget and easily the biggest spending item in the budget, he adds. ‘Out of all South-East Asian countries it’s the only country that spends more on military versus all social spending [on education]. In the end it’s a political issue – the military apparatus is there for a reason, to quell dissent.’

Political reform‘The biggest change, to date, has been in the political arena and the world’s perception of this,’ says DFDL’s

Finch. With the National League for Democracy and its leader Aung San Suu Kyi victorious in the April by-elections, there is much excitement over the potential for change in the political arena and the move towards democracy. However, that excitement has been tempered by the fact that parliament is still dominated by military (they are guaranteed a quarter of seats in the lower house) and the pro-military politicians.

Jim Della-Giacoma is South-East Asia project director for the International Crisis Group, which offers independent advice to governments and international bodies on prevention and solution to deadly conflicts. He says: ‘As the president said in his inaugural address on 30 March last year, it is time to catch up with a changing world. To reform economically, there has to be political change to bring along all groups in society, including the ethnic minorities. Political change needs to be conducted hand in hand with economic change

and reforms to the economy that do not deliver results or have unintended negative consequences could affect political support for the government’s efforts. The two are intertwined and cannot be separated.’

DFDL’s Finch adds: ‘Much is still on the way in a business and commercial context. Because of the recent spate of interest, I am often asked by foreign companies if they’re too late to get in. I tell them the process of modernisation in Myanmar will take years and that those already in the market are only the earliest pioneers.’ Most of his clients are foreign companies and it’s likely to remain that way for some time.

History of wealthIt’s hard to imagine that Myanmar was once a prosperous nation – under British rule between 1824 and 1948 it supplied oil through the Burmah Oil Company. At one point it produced around 75% of the world’s teak and was the largest exporter of rice in the world – neighbouring Thailand now

Answer to prayer: the future is brighter for Myanmar now that EU and US sanctions are being eased

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claims that title. Until 1937 Myanmar was an administered province of India, when it then became a self-governing colony and attained independence in 1948. The well-documented 1962 coup d’état by General Ne Win and a number of other senior military officers led to the nationalisation of all industries and set the country on a path of stern military control and ‘socialism’. Still today, the country lags well behind those in South-East Asia – being the most isolated and arguably the poorest.

Myanmar borders five countries – Bangladesh, China, India, Laos and Thailand – and huge trade potentials exist within those countries alone. The Andaman Sea and Bay of Bengal are at its doorstep, which could potentially position Myanmar as the hub of Asia connecting South-East Asia and the pacific to China, India, and the Middle East. The country is about the size

of Britain and France combined – the second largest in South-East Asia – with a vast land area for agriculture. The Ministry of Agriculture and Irrigation estimates there are around 23 million acres of land left for crop cultivation out of a total 44.65 million acres – and it’s offering tax exemptions to entice companies to cultivate the land.

Currently Myanmar imports around US$5.5bn worth of goods, and exports US$9.5bn (see box, previous page) – a number that’s likely to shift. Total foreign direct investment (FDI) in Myanmar amounted to about US$40bn from about 1988 to late 2011, with most expenditures resource-based projects such as mining, power and oil and gas, Myanmar Investment

Commission (MIC) statistics show. The leading investors are currently China and Thailand. MIC deputy director general U Aung Naing Oo claims that at least US$4bn in FDI is due to enter Myanmar in the year 2012-13, which began on 1 April.

Tax breaksOn 28 January, the government announced a policy to give all foreign investors an eight-year tax break – a clear message to the international community that it welcomes foreign investment. Amendments to the Myanmar Foreign Investment Law 1988 have been drafted by parliament with the help of international consultants. Two proposals are on the table: one to extend the current tax holiday to eight years from the current three and another to extend it to five years.

To complement these tax breaks, the president, Thein Sein, has introduced a series of political and economic reforms related to anti-corruption and taxation. Foreign companies are being lured in by these incentives as well as improving infrastructure. ‘The infrastructure is slowly changing and has a long way to go… including the information highway, which now operates reliably, but slowly,’ says Finch.

Other changes are in the pipeline. ‘The MIC has streamlined its procedures for approval of benefits granted under the Myanmar Foreign Investment Law 1988. These will, when fully implemented, be a big step in cutting out the red tape. Practically every ministry has taken some steps to liberalise its procedures. Much

more needs to be done, particularly with respect to internal ministerial rules and regulations on projects that will promote the Myanmar economy,’ says Finch.

He recommends the government follow the IMF’s suggestion to unify currency exchange rates, ending a 35-year official peg and ‘pass the proposed amendments to the Myanmar Foreign Investment Law of 1988 currently before parliament, particularly the extension of the tax holiday to at least five years’. If that happens, and that is a big if, it will be the biggest economic shift by Thein Sein and the government of Myanmar after taking office last year.

‘The political and economic landscapes in Myanmar are changing very rapidly so serious investors will need to devote a substantial amount of time to trying to understand what’s going on. This will be difficult in part because the country is swamped with visitors trying to get a piece of the action, overwhelming government officials and private sector leaders who speak English [or other languages] well,’ says Lex Rieffel, a senior fellow and expert on South-East Asia at the Brookings Institution in the US.

However, the future is bright politically and economically – due to the lifting of sanctions. The European Union (EU), US and other Western nations this year started easing sanctions in recognition of recent moves toward political reform. In February, the EU suspended admission restrictions against Myanmar, allowing the 87 top officials from the country visas into Europe, but maintained a freeze on their assets. On 23 April, it agreed to suspend most of its sanctions (not including arms) against Myanmar for a year, despite a dispute over a parliamentary oath between the army-backed ruling party and Suu Kyi.

Asha Phillips, journalist

‘I TELL FOREIGN COMPANIES THAT THE PROCESS OFMODERNISATION IN MYANMAR WILL TAKE YEARSAND THAT THOSE ALREADY IN THE MARKET AREONLY THE EARLIEST PIONEERS’

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AP_F_Myanmar.indd 29 10/05/2012 12:05

VIEW AN ACCA/KPMG OUTSOURCING WEBINAR www.accaglobal.com/virtual

The relationship between an outsourced service provider and a client is like a marriage, whether the service provider

is a third party or a captive entity. At the start, both parties are flushed with happiness and hopeful their expectations will not just be met, but exceeded.

Unfortunately, as the relationship matures, satisfaction levels can drop. In outsourcing relationships, with both parties having typically committed to it lasting between five and seven years, this happens when there is misalignment between services agreed in the contract, services expected by the client, and the services actually delivered. This misalignment is sometimes exacerbated by the role of the ‘marriage arranger’ – represented in outsourcing by the specialist teams from both service provider and client who negotiate contract terms. The negotiators are not necessarily those who will be providing and receiving the outsourced service, thus increasing the risk of misalignment between client expectations and the service agreed in the contract.

For example, some services covered by the contract may be neither expected nor delivered, and are thus irrelevant. Other services may be agreed and expected, but not delivered. Service providers can also waste resources delivering services that are neither expected by the client nor agreed in the contract.

There is a sweet spot where the services expected by the client are both agreed in the contract and delivered by the service provider. The bigger the

sweet spot, the better. However, over a long-term relationship, careful management is required to avoid any creeping waste in service provision or growing misalignment between client expectations and service delivery.

Based on KPMG firms’ experience, value leakage in outsourced service relationships is most likely to stem from three core areas: operational, performance and portfolio management challenges.

Avoid duplicationOperational challenges arise, for example, due to the duplication of services provided by both service provider and client. To avoid this, attention needs to be given to redesigning and re-skilling the retained finance function, so that individuals are equipped for their new roles managing the service contract. Performance challenges can arise when problems are not managed or the service provider’s performance is not at expected levels. This could, for example, result from the high degree of personnel churn currently experienced by many service providers.

Turning to performance management challenges, value leakage can occur when service providers identify opportunities for improvements, but the client is unresponsive or fails to make adjustments. Improvement opportunities are likely to be identified once the service handover is completed and process standardisation achieved. Having analysed the client’s data, the service provider may gain new information that could be applied to

improve the service – but client action will often be required.

Existing contracts can be reviewed to identify where client organisations could be driving increased value from their outsourcing relationships. Reviews conducted by KPMG over the last 12 months, using our value assurance framework, reveal some typical areas of conflict between client and service provider. There are, for example, often issues around performance, with the credibility of performance metrics often challenged. This may be exacerbated by insufficient pre-contract baselining. Clients moving from a decentralised service delivery model to an outsourced model are unlikely to have the right baseline information available. This makes it difficult to set realistic baseline service levels for the provider, or to hold the provider accountable.

Lack of trustProblems arise with processes too, with efficiencies sometimes lost through clients’ failure to focus on end-to-end process optimisation. This can result from a lack of trust in the provider and an unwillingness to hand over certain processes.

KPMG’s reviews have also found problems in realising the full potential of outsourcing contracts. Some firms complain they are not receiving the levels of innovation outlined in their contracts; but service providers are dependent on client cooperation to help implement innovative ideas.

Other challenges arise in terms of a client’s ability to implement change globally. First-level savings can be achieved through labour arbitrage, but

KEEPING THE LOVEEntering a business process outsourcing contract is like agreeing to a marriage, says KPMG’s Claudio Altini. So it needs ongoing love, care and attention as it matures

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AP_INT_F_outsource.indd 30 10/05/2012 16:31

VIEW AN ACCA/KPMG OUTSOURCING WEBINAR www.accaglobal.com/virtual

achieving additional benefits requires more significant change. Unless these changes are made, service providers contracted to deliver cost savings will take the hit and suffer falling profit margins, with declining service levels certain to follow. Both parties must, therefore, agree in advance how they will work together to deliver additional savings beyond any easy, early wins.

Finally, problems with perception often occur. Many CFOs often comment that, from what they have heard, their organisation has a poor relationship with its service provider. On investigation, however, KPMG firms often find few significant issues; the CFO is simply picking up ‘noise’ within the system. Day-to-day minor issues do arise, just as they did before the outsourced service contract was put in place. The noise they create is amplified, however, because now an external party can be blamed.

Experience suggests that the higher up the organisation you go, the more

‘noise in the system’ occurs. Such negative perceptions are dangerous and need to be managed. If key stakeholders have poor opinions of the outsourcing relationship, it will

ultimately fail and achieving the expected value will prove impossible.

Claudio Altini, head of the business process sourcing practice at KPMG, UK

* It is never too late to establish a leading practice outsourcing governance team: a lack of governance can erode deal value by as much as 15%–20%.

* Realise that effective operations managers usually don’t make effective governance executives.

* Shadow organisations often exist in client organisations, increasing cost: root these out.

* Outsourcing governance teams should ebb and flow as needs change through transition and steady-state phases: make sure your teams flex accordingly.

* Learn how to track the value of your outsourcing relationship. Focus on the ‘what’ and not the ‘how’.

* Make sure your enterprise business intelligence and knowledge management initiatives include all data and information related to outsourced processes, and that it’s tracked throughout the lifecycle of the relationship.

* Track internal client satisfaction. Maintaining open dialogue and obtaining regular feedback from internal clients is key to maintaining expectations.

* Ensure you and your provider have aligned goals, or risk failure to deliver on the ‘intent’ of the deal.

* Determine your organisation’s level of trust toward its provider. Do whatever is necessary to maintain or regain trust to avoid diminishing value.

*SUCCESSFUL RELATIONSHIP GOVERNANCE

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Comment

I recently interviewed Robyn Denholm, executive vice president and CFO of US$4.5-bn-a-year Juniper Networks, and was struck once again by the transformative changes that the finance function is undergoing.

‘If you go back maybe 10 years, there was a very heavy focus on compliance and regulatory things,’ says Denholm, a fellow of the Institute of Chartered Accountants in Australia who was in professional practice before moving on to Toyota, Sun Microsystems and now Juniper, where she has been finance chief since 2007.

But she is also comfortable with the non-traditional roles that accountants are increasingly expected to play. At Juniper, she oversees not only finance but planning, real estate, information technology, business process re-engineering, field operations, investor relations and internal audit. What finance has done, she explains, is build up a very strong base of financial, compliance, regulatory and statutory talent and is now constructing a ‘very good business capability’ on top of that.

Some may not want to become business partners. That’s fine. ‘I know many good accountants who like doing accounting and don’t necessarily want to do planning,’ says Denholm. ‘We have different tracks, and they can move from one track to another.’

For those who embrace the evolving role, there is a lot to do. Finance at the global and regional levels is a key player in planning, says Denholm. ‘We do a three-year plan

Tracking fi nance’s transformation[The evolution of fi nance professionals from number crunchers to business partners continues, but it is

vital that key aspects – such as accounting integrity – should stay the same, says Cesar Bacani

at Juniper so we make sure that the resource alignment is there end to end [and] that we maximise the return from the products that we invent.’

Finance also analyses business conditions and prospects in conjunction with the sales leadership. Denholm adds: ‘My finance leaders tend to be quite operational, whether it’s

looking at the logistics of moving things into the region or working with manufacturing to make sure that all aspects of the operation are covered.’ All this is possible because of a 2,000-strong global shared services centre in India, which takes care of a number of compliance and transactional processes.

Talking to Denholm and other global CFOs, such as Ingo Bank of Philips Healthcare and Ray Leclercq, formerly of BT Global Services, I am convinced that the CFO’s leadership by example

and commitment are important pieces as well.

‘I’m not a traditional CFO,’ says Denholm.

‘I like spending time with our employees across

the world, I like working on strategy,

I like meeting with customers and stockholders.’ She is also

curious by nature and likes to learn new things. ‘I know personally that’s been a

huge part of my career. Starting in accounting, I continued to educate myself on accounting rules, at the same time understanding [the company’s] process, products and operations. I think all finance people are capable of doing that.’

Importantly, though, Denholm makes sure the integrity instilled in herself and her team is not set aside as finance’s role in the business expands. ‘It doesn’t matter if I’m doing strategy and planning; I have my fiduciary roots,’ she says.

In transforming finance, the more things change, the more they should also stay the same.

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

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AP_COM_Cesar.indd 32 09/05/2012 15:08

The Marina Bay Sands resort

Q What do you consider to be your key achievement at the company? A I have led the streamlining of its diverse businesses (more than 100 entities) into four core businesses. The group is today stronger and more focused, achieving record profits in the 2010 and 2011 financial years.

Q How has Wearnes changed over the years? A Wearnes was founded in 1906 by two brothers, as the automotive dealer CFF Wearne & Company. WBL Corporation (Wearnes) was listed in 1912 as Wearne Brothers Limited. Over the decades, Wearnes extended its activities and its ventures included investments in high-tech industries, engineering and construction, industrial equipment and supply, telecommunications, agrotechnology and property. Today, Wearnes’ core businesses are technology, automotive, property and engineering and distribution.

Q What are your priorities for the company? A To continue to grow its core businesses organically and geographically.

Q What challenges does the company face? A The group faces economic uncertainty, rising labour costs, increased competition and a talent crunch. However, our business strategies have enabled us to grow our businesses, while mitigating costs and optimising operational efficiencies with stringent management processes.

Q Where do you see growth for the group? A Buoyed by increasing affluence and sustained demand for luxury items such as automobiles and homes, and technological advances that drive demand for more consumer electronics such as smartphones and handheld tablets, we remain geared up to tap growth in these markets.

FAST FACTSRevenue for last financial year: S$2.2bn Number of staff: About 4,000 in 11 countriesFavourite book: The Bible; it is a source of great wisdom, encouragement and solace

GAMBLING PAYS OFF Singapore is poised to become the world’s second-largest gaming destination behind Macau, with gross gaming revenue expected to reach S$8.04bn (US$6.5bn) this year. This will overtake the predicted US$6.1bn total takings by casinos on the Las Vegas strip. Last year, analysts made a similar prediction about the earnings from Singapore’s two integrated resorts but the outcome fell short of their expectations. However, they are confident the target will be achieved this year if the strong earnings recently reported by Marina Bay Sands (MBS) resort can be taken as a guide. MBS raked in gross gaming revenue of over US$2bn last year, and posted net revenue of US$848.7m for the first quarter of this year. Its casino earnings have increased by 51% to US$701.3m.

TAX PLANS PUT OFF INVESTORSIndia’s plans to tax indirect investments and combat tax evasion could cause foreign investors to think again. The first provision gives India the power to retroactively tax the indirect transfer of assets. The second targets tax evaders through the General Anti-Avoidance Rule, which places the burden on investors registered in countries with special tax exemptions with India to prove they do not intend to explicitly avoid tax. Mark Mobius, executive chairman of Templeton Emerging Markets Group, says the reforms will harm investors’ confidence in India, and caused Macquarie Bank’s Asia hedge fund to exit its short positions in Indian single futures in March.

The view from: Singapore: Tan Choon Seng, group CEO, Wearnes

33 Corporate The view from Tan Choon Seng of Wearnes; an interview with Billy Leung, branch manager of HSBC Guangzhou; how global warming is set to help trade between Europe and Asia Pacifi c

41 Practice The view from Anthony Boswell of PwC; what managing partners need to do to make a difference

33Corporate

AP_YCORP_intro.indd 33 11/05/2012 15:18

34 Corporate

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LOCAL BANKS OUTSHINEUS IN NUMBER, BUTOUR GLOBAL NETWORKAND RESOURCES GIVEUS A POWERFUL EDGE

Billy Leung has had an illustrious career at HSBC, which was one of the first foreign banks to do business in China. Here he tells Accounting and Business about the opportunities and challenges the bank has in the region and internationally.

Q What are your priorities for this year?A As HSBC has a long-term corporate business priority of helping Chinese enterprises ‘go international’ – 60% of the top 100 mainland enterprises that have invested overseas have cooperated with HSBC – we will keep investing in crossborder service capabilities. For example, we have set up a China desk with designated teams and personnel to provide specialised services to Chinese enterprises in more than a dozen major markets around the world, with more to come in other markets. This will help provide better services for local Chinese enterprises to expand into overseas markets.

At the same time, we also hope to obtain more overseas mergers and acquisitions and other financing business from mainland enterprises. In Hong Kong, we will continue to help mainland enterprises to issue renminbi bonds, US dollar bonds and conduct other capital market financing.

Q What challenges do you face in achieving those aims?A The biggest challenge for HSBC, in order to develop the network and business in Guangdong province, is to recruit and retain the right talent – finance professionals with international vision and experience.

Another challenge is how to continuously improve our service, by introducing products that not only meet local customer needs, but also highlight the advantages of HSBC’s international financial services.

No boundariesBilly Leung, branch manager of HSBC Guangzhou, reveals how the bank intends to capitalise on China’s expected emergence as the leading trading nation

We must adapt to the demand from businesses and households for innovative, diversified financial services, due to China’s rapid economic growth.

Q China has two domestic banking giants – Industrial and Commercial Bank of China, and China Construction Bank – that garner the lion’s share of banking business in China. How does HSBC differentiate itself from the competition? A Local banks outshine us in the number of outlets and geographical coverage, but our global network and resources give us a powerful edge in expanding business and capturing new market opportunities.

In mainland China we currently have a total of more than 110 service outlets in 32 cities, leading all other foreign banks; across the globe, HSBC has about 7,200 outlets in over 80 countries and regions, making it one of the largest financial institutions globally. Its network covers most of the world trade volume and capital flow, thus helping customers benefiting from markets with faster economic growth.

Thanks to the Closer Economic Partnership Arrangement (CEPA) and the Economic Cooperation Framework Agreement (ECFA), economic integration between mainland China, Hong Kong, Macau and Taiwan is getting stronger, with frequent trading and huge volumes of cross-strait trade. We are the largest international bank in Greater China, with more than 270 service outlets. Due to this network, HSBC enjoys a large market share in financial services for the cross-strait economic and trade exchanges.

HSBC is leading the promotion of the internationalisation of the renminbi, with renminbi products offered in over 50 countries and regions in the

The tipsWhat advice would you give ACCA students who are hoping to develop their career in the banking industry?

*First, you should acquire the basic knowledge. Banking includes a wide range of specific businesses, with varying requirements for different departments and positions. You should determine your interest and career path early.

*Second, you should develop the ability for careful thinking and accurate communication.

*Finally, you should keep an open mind towards learning and be conscientious and responsible.

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AS CHINA’S ECONOMY BECOMES INCREASINGLYGLOBALISED, INTERNATIONAL BANKS WILL ENJOYA LOT OF DEVELOPMENT OPPORTUNITIES

The CV2009

Appointed branch manager of HSBC Guangzhou.

2006Appointed head of commercial banking at HSBC Guangzhou.

1998Joins HSBC Hong Kong as a trainee. Successively serves as account manager of personal financial services, regional manager of trade and supply chain department and manager of business development.

Billy Leung received his Master’s degree in financial management from the University of London and his Bachelor’s degree in economics from the University of Texas at Austin. From 2000 to 2004, he served as an instructor in The Open University of Hong Kong’s Department of Economics.

He is also a member of the 13th Chinese People’s Political Consultative Conference (CPPCC) for the Yuexiu District, Guangzhou, and the deputy director of the Foreign Bank Working Committee of Guangdong Banking Association.

trading nation in 2016, accounting for 12.3% of total global trade in 2026 (9.82% in 2011). Therefore, there is a lot for banks to do in term of offering

world, and renminbi services for retail and wealth management clients in 11 Asian markets.

With the growth of wealth, Chinese domestic households increasingly need overseas financial services. For example, HSBC expects the number of mainland Chinese students studying overseas to exceed one million in 2020, a 138% increase on 2008. In addition, more than 70 million Chinese mainland tourists travelled overseas in 2011, according to official statistics. Our premier wealth management services include services related to overseas study, immigration and investment.

Q Where do you see opportunities in banking for foreign banks such as HSBC in the future? And how do you see the development of HSBC in Guangzhou and Guangdong province? A According to forecasts from the HSBC Global Research team, the Chinese economy will maintain rapid growth in the coming years. In addition, as China’s economy becomes increasingly globalised, international banks will enjoy a lot of development opportunities in the Chinese market in both retail and wholesale banking.

On the retail side, China’s expanding wealthy population and the resulting demand for international financial services will bring great opportunities for the development of international banks.

HSBC research shows that the average sum of liquid assets of wealthy individuals exceeded one million yuan for the first time in 2011, which will further enhance the size of the wealth management market.

On the wholesale side, international banks also have many opportunities. In a new phase of economic globalisation, China’s development will depend on trade, investment and financing ability. According to HSBC’s projections,

China’s import and export volume will exceed US$6 trillion by 2015, a compound annual growth rate of 18%. At the same time, more of China’s trade surplus will be invested in overseas markets, with more than 80% going to other parts of Asia, Latin America, Africa and other emerging markets. Therefore, ample opportunities exist for banks to offer enterprises crossborder financing and financial advisory services.

Opportunities will also be brought by the internationalisation of the renminbi. HSBC expects the yuan to become one of the three trade settlement currencies. The offshore renminbi deposit and bond issuance business is also developing fast in Hong Kong. This gives international banks room to expand their trade financing and other services.

The Pearl River Delta region is one of the most developed regions for an export-oriented economy, with a high concentration of multinational companies, foreign invested enterprises and export-oriented local enterprises. HSBC can utilise its global network and international financial services expertise to financially support them in their bid to expand trade and make overseas investment overseas. Apart from serving corporations, our extensive global network and financial services expertise can meet the need that the rich have in the region for international banking services.

Q HSBC Holdings issued a global trade report in February 2012 that claimed that China would overtake the US as the largest trading nation by 2016. What implications will that have for the banking industry in China? And how might HSBC benefit? A HSBC expects China to overtake the US to become the world’s largest

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enterprises crossborder financing and financial advisory services.

Our trade-related services, number of outlets and network coverage put us in a better position to seize on the market opportunities brought by China’s trade growth. In 2011, HSBC’s trade-related service revenue in Asia Pacific region grew 28% over the previous year.

The basics HSBCHSBC, founded in 1865, was one of the first foreign banks to do business in China. It was also one of the first foreign banks to enter southern China, with offices set up in Shenzhen and Guangzhou in as early as the early 1980s.

After China’s accession to the World Trade Organisation, the development of HSBC in the mainland picked up speed.

It bought a stake in the Bank of Shanghai in 2001 and was allowed to offer foreign currency banking services to mainland residents and businesses in Beijing and Shanghai in 2002.

In 2004, HSBC began to provide renminbi services to local enterprises and became one of the first locally incorporated foreign banks in 2007.

Following local incorporation, HSBC China grew fast. In April 2007, it had 35 outlets and about 3,000 employees. Now it boasts 117 outlets in 32 cities and 5,500 people.

While more and more international companies are entering China, the pace of Chinese enterprises investing overseas is also accelerating. China is increasingly becoming a major trading and investment partner for many countries and regions in Asia and the world.

It should be noted that the trade and economic ties of the Greater China

region are getting closer. This will not only redefine the business strategy of HSBC in the Hong Kong market, but also become one of the main drivers of HSBC’s revenue growth in Asia and the global market.

Billy Leung was interviewed by Colette Steckel, Asia editor, Accounting and Business

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Despite the still contested debate about the extent to which greenhouse gas emissions from humans contribute to climate change, global warming is a reality. Nowhere is this more obvious than the Arctic Basin, where the melting of the ice sheets is viewed with increasing concern.

In 2011 the retreating ice reached its second lowest ever recorded level, some 310,000 sq km off the 2007 record low. The decadal reduction went from 10.2% in 2007 to a new high of 12% in 2011, according to the National Snow & Ice Data Center in Colorado. In addition, the Northern Sea Route (along the top of Russia) was open throughout last August and well into September. The ‘Amundsen route’ of the Northwest Passage (along the top of Canada) was also open for the fifth year running.

The opening up of the Arctic routes brings with it real opportunities for ships trading between Europe and China, with significant reductions in transit time and concomitant savings in both costs and emissions and the avoidance of piracy-prone areas off Somalia and the Straits of Malacca. The debate over the speed at which the ice will disappear from the Northern Sea Route is a strongly contested topic among the climate change community, with more conservative opinion putting the commercial reality out to the 2030–40 timeframe. However, recent classified studies within the UK’s

Ministry of Defence leaked to the Daily Telegraph last August place greater emphasis on an earlier opening up of the route, with a 2015–20 timeframe seen as a more likely scenario.

On a more basic level, there is little research currently in hand looking at the extent to which the Arctic Basin will be used by shipping, with the Arctic Council’s Arctic Marine Shipping Assessment (AMSA) issued in 2009 standing out as the most recent globally accepted detailed assessment. However, the report was based on a 2004 survey of shipping through the Northern Sea Route and the Arctic Climate Impact Assessment’s 2008 median ice extent.

Of course, the Antarctic Ocean also lies at a pole but conditions there are significantly different from the Arctic. The way in which the Polar Code is being developed treats the environment at both poles in a similar way despite the very real differences in the way in which it behaves. For example,

Antarctica is an ice-covered land mass with ice shelves extending outwards whereas the North Pole is covered by an iced-over central sea with land around the edges only. This makes for very different climate impacts yet little is done to differentiate the way in which the Polar Code is applied in each area.

The International Maritime Organization (IMO), in conjunction with the Institute of Marine Engineering, Science & Technology (IMarEST), classification society DNV and a number of other stakeholders, is developing the Polar Code regulatory framework. At present, it is focusing mainly on the requirements of ships that operate in or near ice conditions and the requirements of an ice navigator. Even though sea ice is retreating further and faster than ever, other considerations such as sea-air temperature differences, extreme wind speeds and visibility, despite their importance, are not receiving the same amount of attention. The Polar Code also fails to address

via Suez Canal via Northern Sea Route Miles Days Miles Days Savings (days)Japan 11,000 34 7,400 26 8South Korea 10,700 33 7,500 27 6China 10,500 32 7,900 28 4

Distances and times from Asia Pacific to Rotterdam in the Netherlands, based on 2011 transit times with some ice present. The likely increase in speed to 14 knots in the next five years would cut a further five days or so from transit times.

*OVER THE TOP

Northern liteThe opening up of the Arctic to shipping will bring big savings on the freight and carbon costs of transporting goods between Europe and Asia Pacifi c. Colin Manson reports

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Barren beauty: multiple exposure of the midnight sun in Alaska, 175 miles north of the Arctic Circle

View of Arctic Basin showing Northern Sea Route in blue and Suez route in red

the training requirements inherent in the current STWC mariner certification as well as the additional maritime pollution and safety of life at sea issues associated with such remote and difficult to police regions.

How will the changes to the Arctic affect the rest of the industrial world? With its opening up to sea freight, transit times between Europe and the expanding markets of Asia Pacific (notably China) will reduce significantly, albeit only during the summer months. At a recent conference on polar shipping held at IMarEST, there was much debate about the reduction in emissions, operating costs and transit times.

The transit times between the port of Rotterdam in Europe and Japan, China and South Korea have been calculated (see panel opposite) based on an average speed of just six knots along the north of Russia – a speed consistent with some ice being present throughout the voyage. Over the next five years or so, the extent of ice is expected to reduce, enabling the average transit speed to increase to perhaps 14 knots, which reduces the overall time considerably. The savings gained will include more than just the cost in operating costs, though – they will also include the carbon cost per tonne of cargo. At an average of, say, £50k per day, the northern sea route confers a freight saving of around £400k from Japan, which could rise to

perhaps £750k in the near future. The Arctic sea routes also remove

the need for vessels to pass through the Malacca Straits and the northwest Indian Ocean – both areas of endemic piracy. Without this risk, insurance premiums can be reduced significantly although this is partly balanced by the increased premiums associated with the risk of ice damage. Suez Canal transit charges are also likely to go on rising, although the Arctic routes may incur the cost of an ice breaker escort.

A widening windowAt the same time, stocks of components or finished goods can be reduced during the summer months although here again the weather in an individual year may affect that holding. However, as the ice melts ever faster in the near future, the open water season will increase from the current eight to 10 weeks up to perhaps four months. This would reduce operating costs significantly but require more detailed overview of the stock control process.

The IMO’s initiative in producing the Polar Code is a welcome step towards providing a regulatory framework for safe use of the Arctic Basin. However, to determine the true extent of the requirements and provide a robust yet flexible code, more research is desperately needed to generate better forecasts of the speed at which the ice will retreat, and hence the increasing availability of the Arctic routes as well

as the volume of shipping expected to take advantage of that availability.

Overall, the opening up of the Arctic Ocean and the Northern Sea Route represents potential savings in cargo costs, insurance premiums and stock holdings as well as a reduction in the carbon cost of goods both imported from and exported to markets in Asia Pacific. However, it needs the customer to be aware of these potential savings in order to ensure that freighting companies take proper note of the reduction in costs – they will be reluctant to do so as it will eat into their own operating model.

Only by a straightforward application of market forces will savvy customers ensure that their operating costs are reduced by insisting that carriers use the northern sea route. This will also improve their green credentials and raise their sustainability rating.

Colin Manson is the director of Manson Oceanographic Consultancy

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Integral benefi ts

[Focusing on integrated reporting at the Rio+20 summit will benefi t both companies and investors, says ACCA president Dean Westcott

Twenty years after the United Nations (UN) Conference on Environment and Development, Rio de Janeiro is again hosting a major conference – this time on sustainable development.

This gathering at the end of June – better known as Rio+20 – has two key themes: a green economy, sustainable development and poverty eradication; and the institutional framework for sustainable development.

ACCA is focusing on one area of the policy which is to be debated at Rio+20 – one which is of particular interest to the accountancy profession – this is the integration of organisational sustainability reporting requirements into corporate reports.

The aim of integrated reporting is to help corporate reports provide a bigger picture of an organisation, providing value to investors, businesses and the public. There is already a great deal of support for reform in the accountancy sector and wider business world, with organisations such as the International Integrated Reporting Council bringing investors and report preparers together, but support from the highest level at Rio+20 would be invaluable in moving integrated reporting forward and ensuring its worldwide spread.

We want Rio+20 to lead to a commitment by UN member states to develop frameworks for sustainability reporting at a national level. While a global framework may be more ideal, an international commitment to nation-by-nation reporting might be more realistic. It would allow countries to propose frameworks suitable to their own needs and it would establish, at the very least, an international acceptable level of reporting.

Making sustainability an integral part of the information presented to investors and the public would provide companies with an incentive to improve their own performance.

By integrating their reporting, we believe companies will also have the opportunity to see themselves in a whole new light: one that allows them to identify areas of efficiency or inefficiency like never before.

Integrated reporting can, ACCA believes, also help companies to develop more integrated strategies which can only help improve business performance in the long term.

Dean Westcott, ACCA president and interim CFO, West Essex Clinical Commissioning Group, UK

Comment40

AP_INT_COM_pres.indd 40 10/05/2012 15:11

Q What projects are currently in your inbox? A I am currently working on a number of different projects, including the unwinding of several derivative portfolios in which key counterparties are in some form of bankruptcy or administration, and a court-appointed receivership in which we have been tasked with protecting and preserving a large asset pool.

Q What do you enjoy about your work? A The challenge of solving complicated business challenges for clients, particularly when their investment is at risk.

Q What valuable lessons have you learnt? A At the end of every working day, I ask myself three things. One, what value did I add for my clients? Two, what did I do to enhance, grow or build a new relationship in the market? Three, what did I do to coach or build the quality of our team? If I can’t give myself three good answers, tomorrow I need to make sure I catch up.

Q What do you do to manage and motivate your staff? A First, I try to ensure we communicate with our team regularly and openly. Second, we try to reward those people who demonstrate all facets of the PwC Experience – based around valuable client and people behaviours.

FIRM FACTSTypical clients: Those in financial servicesFavourite books: Too Big To Fail: Inside the Battle to Save Wall Street by Andrew Ross Sorkin and Scar Tissue by Anthony Kiedis

RIVAL MAY HAIL FROM CHINAThe next large accountancy firm to emerge that could challenge the dominance of the Big Four will come from China, says Sir David Tweedie, former chairman of the International Accounting Standards Board. Sir David says the growth of accounting services in Asia, and China in particular, could fuel the rise of a fifth global firm in the region that would in turn help to break the Big Four’s oligopoly. Sir David, who was appointed as the new president of the Institute of Chartered Accountants of Scotland in April, told the Financial Times that attempts to intervene in the audit market, such as enforcing lead audit partner rotation, were less likely to succeed in breaking the Big Four’s stranglehold of the top end of the global audit market.

PWC MALAYSIA APPOINTS DUOPwC Malaysia has announced it is appointing Mohammad Faiz Azmi as the new executive chairman and Sridharan Nair as managing partner. Faiz and Sridharan will be taking over from Datuk Seri Johan Raslan and Chin Kawi Fatt – who had been at the helm for eight and 12 years respectively – when they assume their new roles on 1 July. Faiz has been with PwC Malaysia since 1993 and is currently the firm’s joint assurance leader in Malaysia and also PwC’s global Islamic finance leader. Sridharan joined PwC in 1994 and is a partner in the firm’s Malaysian assurance practice.

The view from: Hong Kong: Anthony Boswell, Business Recovery Services partner, PwC

41 Practice The view from Anthony Boswell of PwC; what managing partners need to do to make a difference

33 Corporate The view from Tan Choon Seng of Wearnes; an interview

with Billy Leung, branch manager of HSBC Guangzhou; how global warming is set to help trade between Europe and Asia Pacifi c

41Practice

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IN TOO MANY FIRMS MANAGING PARTNERS FOCUS ON THE PEOPLE WHO DON’T WANT TO GO WITH THEM, RATHER THAN THOSE WHO DO

The answer to this question has been at the top of the agenda of every managing partner (MP) we have worked with in our 20-year association with professional service firms. To answer the question and add to our anecdotal experience, we interviewed 150 practising and managing partners from accounting, law and consulting firms across Europe and the US.

Our model of what successful managing partners do describes the behaviours under four broad headings: setting direction, gaining commitment, execution and personal example. Each of the broad headings has a number of specific behaviours under it and, in this short article, we’ll highlight the behaviours from the model we believe are key. The fifth element, context, we’ll return to at the end of the article.

Create a compelling vision and get the partners on boardWith so many firms trying to do broadly the same thing and with differentiation in professional services only achieved through delivery, how the vision is delivered is the critical element. And, as the partners are the people who ultimately deliver the vision, they must be brought onside, which means involving them in the debate and decision-making process.

No MP should attempt to do everything and this is especially true when it comes to making sure the partners are onside. In every example we heard about, the MPs who succeeded in generating the commitment and participation of their partners started by getting the firm’s influential partners onside first and using them to influence the other partners. This is especially important in multi-office/multi-country situations, when it is impossible for the MP to attend all of the partner meetings and

engage in every debate about the right course of action. And, these debates must take place. In the truly successful firms, the partners were always involved in the discussions about the firm’s future. Sometimes the discussions were easy, often they weren’t, but, critically, at the end of the discussions, the partners ‘walked

together’ and focused as a group on delivering the vision (even though individual partners disagreed with some elements of the plans).

One of the key behaviours in the engagement process is to keep repeating the message about why and how. As all of the highly regarded managing partners said to us, ‘by the time you’re absolutely fed up of hearing yourself saying the same thing, the partners will just about have got it’. In nearly every firm we know, the partners prefer to focus their attention on serving their clients and not get involved in any firm-based activities, but when the managing partner is trying to ensure the firm is and remains ‘best in class’ they must keep the partners focused on the bigger picture.

Focus on the people who want to go with youIn too many firms managing partners focus on the people who don’t want to go with them, rather than those who do. In doing this, they inevitably reduce enthusiasm and momentum. The natural temptation in a partnership is to focus on the whole, but all of the research on creating and sustaining

change argues strongly for the opposite. In lots of initiatives we know, the managing partners have started with only about half of the partners clearly with them – but, crucially, they had clear plans about how to raise that figure quickly through their own efforts and those of the influential partners who were supporting the initiative.

Help the partners to be effective leadersAs stated earlier, the partners are the people who make the vision a reality and, in our experience, a lot of partners struggle in their role as owners and leaders. So one of the key tasks of any MP (and it’s what the successful MPs spent lots of time on) is helping their partners be better leaders. That means dedicating a lot of personal time to talking to the partners about their role, how they are doing and how the firm can help them. It is a time-consuming task, but all of the partners we spoke to said that the truly successful MPs knew the importance of the task, gave their time freely, and ensured the partners received the help they needed.

Never accept second bestNot every firm can be the market leader, but every firm can have a reputation for being outstanding at everything it does. The successful MPs understood this and never settled for second best, always exhorting the partners to find new and better ways of doing things. All of the MPs were trying to create a situation where

Standing out from your peersWhat do managing partners need to do to differentiate themselves in the world of professional services, ask Rob Lees, Derek Klyhn and August Aquila

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in our experience most people can’t. So the challenge for MPs is to develop a number of potential successors capable of addressing the different issues the firm is likely to face in the future – then choose the right one.

Rob Lees is a founding partner of Møller PSF Group and consultant to professional service firm leaders. He is also co-author of When Professionals Have To Lead. August Aquila is a speaker and consultant to professional services firms. He is also the co-author of Compensation as a Strategic Asset and Client at the Core, and CEO of Aquila Global Advisors. Derek Klyhn is a founding partner of Møller PSF Group. For a full copy of the study Leadership At Its Strongest: What Successful Managing Partners Do, on which this article is based, please contact Derek Klyhn at derek.klyhn@mollerpsfgcambridge.com

challenge was a natural part of their firm’s culture – but that never meant sacrificing things that were crucial to the firm and what it stood for.

Take tough people decisionsThe need for the managing partner to deal with underperformance came up in every discussion. Underperformance needs to be dealt with in line with the firm’s values and the individuals given help and support to turn things around. However, if they don’t, the successful MPs recognised the negative impact across the firm of not dealing with the issue.

Appoint the right person for the circumstancesOne of the things that great MPs do is plan their succession, which brings us back to context. While there are undoubtedly some people who can do everything regardless of the challenge,

Successful management model

Source: When Professionals Have To Lead by Thomas Delong, John Gabarro and Robert Lees

PersonalExample

Con

text

Context Context

Direction

ExecutionCommitment

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Comment

Oscar Wilde once observed that a cynic knew the price of everything and the value of nothing. What would he have said about how people in Malaysia view audit fees? It must be a maddening situation for auditors because many stakeholders do not seem to appreciate the relationship between the value and price of audits.

For that matter, there is considerable ambivalence about the importance of the audit function. It is often grudgingly accepted, particularly among small and medium-sized enterprises, because it is a statutory requirement for all Malaysian companies to be audited.

Most people agree that audited financial statements provide assurance to shareholders, tax authorities, lenders and suppliers, and the process itself helps improve record-keeping and internal controls. However, these factors are less persuasive when it comes to private companies whose shareholders and management are one and the same, or whose size and level of activity do not really need auditing.

In such cases, an audit opinion serves as little more than an expensive and superfluous endorsement of the accounts. This is why there has long been an intention to amend the law so that certain types of companies can be exempt from having to undergo statutory audits.

Things are less clear-cut with so-called public interest entities (PIEs), such as listed

Understand the value of audit[Audit plays a vital role in providing assurance, improving record-keeping and maintaining controls.

But as long as clients quibble over costs, the profession will continue to be undermined, says Errol Oh

companies, banking and financial institutions, insurers, broking firms and fund managers. Stakeholders demand that the financial statements of the PIEs are credible and useful. There is no doubt that auditors have a big role in this sphere. The question is, how do you evaluate this role? How much should a company pay for the services of its auditors? After all, an audit does not directly add value to a business, and it is difficult – if not impossible – to quantify the benefits.

Based on the principle that tax deductions are allowed only for expenses wholly and

exclusively incurred in the production of gross income, audit fees should not be tax deductible in Malaysia. Fortunately, fees can be deducted in tax computations. Nevertheless, this supports the perception that an audit does little to boost a company’s bottom line. It is no surprise then that a common complaint among accountancy firms is that they are grappling with audit fee pressure.

Clients tend to resist fee hikes and yet it is increasingly costly to conduct audits. With auditing and financial reporting standards more complex than ever, more work has to be done. Amid the war for talent, firms have to

pay more to recruit and retain good people. In addition, competition among firms is stiff.

Released in February, the World Bank’s report on the observance of standards and codes in the accountancy and auditing environment in Malaysia notes that audit fees are at ‘low levels’ and questions

whether quality audits can be performed.The report recommends

that hiring auditors primarily on cost grounds be discouraged, and that a review of practice in other jurisdictions be undertaken.And if all else fails, companies

should understand well an argument based on price and value – when an

audit failure occurs, more often than not, share prices plunge and value gets destroyed.

Errol Oh is executive editor of The Star

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INTERNATIONAL

FINANCIAL REPORTINGThe International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) have issued a joint update note setting out the progress made on convergence between International Financial Accounting Standards (IFRS) and US GAAP. The note primarily provides an update on the projects contained in the memorandum of understanding (MoU) between the two parties.

The note identifies that most of the short-term projects identified in the MoU have either been completed or are close to completion. One project, income tax, has been determined as being of lower priority than originally assessed and no immediate action is planned.

Of the longer-term projects, several are now complete but there are three where technical decisions have yet to be finalised – leases, revenue recognition and financial instruments. The note anticipates standards for these three projects will be issued by mid-2013.

For preparers and users of financial statements that apply the IFRS for SMEs, the IFRS Foundation has provided some new and updated guidance.

A revised version of A Guide to the IFRS for SMEs has been produced. The

guide is written in non-technical language and is intended to be used by lenders, creditors, owner-managers and other users of IFRS for SME financial statements.

Four final questions and answers have also been issued by the SME Implementation Group addressing the following:

* Application of ‘undue cost and effort’.

* Circumstances where a jurisdiction requires fall back to full IFRS.

* Fall back to IFRS 9, Financial Instruments.

* Recycling of cumulative exchange differences on disposal of a subsidiary.

AUDITINGThe International Auditing and Assurance Board (IAASB) has issued its annual report for 2011 entitled Foundations for the Future.

The report highlights the new and enhanced international standards issued by the IAASB, as well as implementation support and guidance material. The report also includes details of over 100 outreach activities undertaken in the year with investor groups.

Yvonne Lang, director, Smith & Williamson

MALAYSIA

SSM PROSECUTESThe Companies Commission of Malaysia (SSM) has prosecuted 9,806

companies and businesses where the officers of the companies and businesses have contravened the Companies Act (CA) 1965 and Business Act (BA) 1956 during 2011.

The three main common offences made by companies and directors under CA 1965 are:i Failing to conduct the

AGM as required under section 143(1). About 2,542 cases involved this.

ii Failing to lodge the annual return with the SSM as required under section 165 (4).

iii Failing to table the audited financial statements at the AGM as required under section 169(1).

The other three main common offences identified under BA 1956 are:i Conducting business

after the expiry of the business registration under section 12(1).

ii Conducting business without registering it under section 12(1)(c).

iii Failing to display the certificate registration of business under section 12(2).

The SSM has stressed that it will take action against companies, directors and officers of companies which fail to comply with the law.

For more information, go to www.ssm.com.my

GST BILL READING POSTPONEDThe second reading of the Goods and Services Tax Bill 2009, which had been

scheduled for 19 April 2012, has been deferred.

ACCOUNTANTS ACT 1967The Malaysian Institute of Accountants (MIA) has submitted to the government a draft of proposed amendments to the Accountants Act 1967, to tie in with the country’s Economic Transformation Programme. The act was last amended in 2001.

MIA president Datuk Mohamed Nasir Ahmad says that the legislative framework of the accountancy profession should be consistent with the changing capital market landscape.

The MIA intends to get the amended bill tabled in parliament before year-end after the accountant-general, Finance Ministry and Attorney-General’s Chambers give the green light. The changes centre on the following:

* Creation of an Investigation Committee, Disciplinary Committee and Disciplinary Appeal Board.

* Requirement for a competency assessment before admittance as an MIA member.

* Authority for the MIA council to make/amend certain rules without having to wait for a general meeting to approve them.

AMENDMENTS TO MFRS 1On 26 April 2012, the Malaysian Accounting

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

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Standards Board (MASB) issued amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (MFRS), providing relief to first-time adopters that receive a below-market rate of interest on loans from the government. Government loans with a below-market rate of interest, under MFRS 120, Accounting for Government Grants and Disclosure of Government Assistance, are measured at fair value on initial recognition.

The amendments add an exception to the retrospective application of MFRS. First-time adopters are required to apply MFRS 120 prospectively to government loans at a below-market rate of interest existing at the date of transition to MFRS. As a result, the corresponding benefit of such loan is not recognised as a government grant and first-time adopters shall use its previous carrying amount of the loan at the date of transition to MFRS as the carrying amount of the loan in the opening MFRS statement of financial position.

However, first-time adopters may choose to apply MFRS 120 retrospectively if the necessary information was obtained at the time of initially accounting for that loan. The option is available on a loan-by-loan basis.

Similar amendments are also made to FRS

1, First-time Adoption of Financial Reporting Standards, government loans (amendments to FRS 1).

The amendments are effective for annual periods beginning on or after 1 January 2013 and early application is permitted.

For more, go to www.masb.org.my, or email technical@masb.org.my

PRACTICE NOTE APPROVEDThe MIA has approved International Auditing Practice Note (IAPN) 1000, Special Considerations in Auditing Financial Instruments as Malaysian Approved Auditing Practice Notes.

IAPN 1000 provides important practical assistance to auditors when addressing valuation and other considerations pertaining to financial instruments.

IAPNs are non-authoritative materials that do not impose additional requirements on auditors beyond those included in the International Standards on Auditing (ISAs), nor do they change the auditor’s responsibility to comply with all ISAs relevant to the audit.

The practice note can be downloaded from www.mia.org.my

AMENDED PREFACEThe MIA has approved the amended Preface to the International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements.

The preface establishes IAPNs, a new category of pronouncements for issuing non-authoritative material. The preface has also been amended to remove International Auditing Practice Statements (IAPS).

For more information, go to www.mia.org.my

WITHDRAWAL OF IAPSThe MIA has approved the withdrawal of the following with immediate effect:

* IAPS 1000, Inter-Bank Confirmation Procedures.

* IAPS 1004, The Relationship Between Banking Supervisors and Bank’s External Auditors.

* IAPS 1006, Audits of the Financial Statements of Banks.

* IAPS 1010, The Consideration of Environment Matters in the Audit of Financial Statements.

* IAPS 1012, Auditing Derivate Financial Instruments.

* IAPS 1013, Electronic Commerce – Effect on the Audit of Financial Statements.

These are largely now out of date and inconsistent with the clarified ISAs.

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

SINGAPORE

ECI FILING WAIVEDThe Inland Revenue Authority of Singapore (IRAS) has simplified the reporting

requirements for estimated chargeable income (ECI) and the filing of income tax return, Form C, for small companies to reduce their compliance burden. Currently, all companies have to report their ECI within three months of the end of their financial year end. Companies without any taxable profit and no ECI are also required to do so.

To reduce compliance requirements for small companies with turnover not exceeding S$1m and no ECI will no longer need to file their ECI. The waiver will take effect from year of assessment 2013 for companies with accounting years ending October 2012 or after. With this change, 67,000 companies, or about 42% of all companies would not need to file their ECI, saving them one step in the overall corporate tax filing requirements.

INTRODUCTION OF FORM C-S From this year, year of assessment 2012, small companies with an annual turnover not exceeding S$1m will find tax filing much faster and easier with Form C-S, a new simplified income tax return for small companies. About 110,000 small companies, which constitute 70% of all companies, will benefit from Form C-S, as only essential tax and financial information will be required. It is estimated that they will spend only 10 minutes completing Form

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C-S, or half the average time taken to complete Form C. Companies that electronically file Form C-S will also be able to file later, by 15 December, instead of 30 November for paper filing.

For more information, go to www.iras.gov.sg

REVISED GOVERNANCE CODEThe Monetary Authority of Singapore (MAS) has accepted the recommendations made by the Corporate Governance Council on the Code of Corporate Governance, and has issued the revised Code of Corporate Governance.

The key changes focus on director independence, board composition, director training, multiple directorships, alternate directors, remuneration practices and disclosures, risk management, as well as shareholder rights and roles. However, the MAS will make two modifications to the recommendation relating to independence from substantial shareholders.

The revised code will take effect in respect of annual reports relating to financial years commencing from 1 November 2012. The MAS recognises that sufficient time should be given for companies to make board composition changes. Accordingly, the changes (with the exception of changes required as a result of the chairman of the board falling within the four

circumstances specified in Guideline 2.2 of the code), should be made at the annual general meetings (AGMs) following the end of the relevant financial year. A longer transition period will be provided for board composition changes needed to comply with the requirement for independent directors to make up at least half of the boards in specified circumstances (Guideline 2.2). These changes should be made at AGMs following the end of financial years commencing on or after 1 May 2016.

The council has informed the MAS that it will shortly be issuing guidance for boards on risk governance. This is intended to provide practical guidance on risk governance for board members. The MAS welcomes this initiative, as enhancing risk governance among listed companies wil help to strengthen overall corporate governance.

For more information, go to www.mas.gov.sg

Joseph Alfred, policy and technical adviser, ACCA Singapore

HONG KONG

DTA WITH MALAYSIAHong Kong has signed its 24th comprehensive agreement for the avoidance of double taxation, this time with Malaysia.

In the absence of the agreement, the profits of

Hong Kong companies doing business through a permanent establishment in Malaysia may be taxed in both places if the income is Hong Kong sourced. Under the agreement, any Malaysian tax paid by the companies will be allowed as a credit against the tax payable in Hong Kong in respect of the income. On the other hand, Hong Kong residents receiving interest from Malaysia are subject to Malaysian withholding tax, which will be capped at 10% under the agreement. The withholding tax is currently 15%. The Malaysian withholding tax on royalties, currently 10%, will be capped at 8% while the withholding tax on fees for technical services will be capped at 5%, which is currently 10%.

Under the agreement, Hong Kong airlines operating flights to Malaysia will be taxed at Hong Kong’s corporation tax rate, which is lower than that of Malaysia. Profits from international shipping transport earned by Hong Kong residents that arise in Malaysia will not be taxed in Malaysia.

The latest OECD standard on exchange of information is incorporated in the agreement. It will come into force after the completion of ratification procedures on both sides.

Sonia Khao, head of technical services, ACCA Hong Kong

CHINA

NATIONWIDE ROLL OUT OF VATLeaders from the Ministry of Finance’s Department of Taxation and the State Administration of Taxation’s Department of Goods and Service Tax are evaluating the pilot scheme on switching business tax to VAT in some regions and sectors.

The pilot in Shanghai has proved to be of national significance and Beijing and other regions have submitted their applications to participate in the trial. The related departments will keep track of the pilot work in Shanghai, summarise the experience obtained, and gradually expand the trial’s scope to achieve nationwide reform during the 12th Five-Year Plan.

To ensure the continuity of existing business tax policy, the current business tax exemption policy will partly remain valid, and will partly be replaced by the policy of refunding once VAT is collected. The transitional policy can be adopted to support some sectors with noticeable tax increases.

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

Sophia Zhao, technical manager, ACCA Beijing

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Q Entity A, a mid-size luxury goods manufacturing company, needs funding to market one of its key brands globally

that it has been selling on the local market for many years. Entity A enters into a joint venture agreement with a multinational distribution company, Entity B. At the inception of the joint venture entity (Entity JV), Entity A contributes its key brand in exchange for 60% of Entity JV’s share capital, and Entity B contributes cash for 40%. An independent valuation arrived at a fair market value of C1,500 for Entity A’s brand. Entity B therefore contributed C1,000 to the joint venture. The shareholdings are unequal, but both Entity A and B need to agree strategic financial and operating decisions unanimously. Entity JV therefore qualifies as a joint venture – to be precise, a jointly controlled entity – under IAS 31, Interests in Joint Ventures. How should Entity A and Entity B account for the transaction, assuming that both entities apply the equity method of accounting for jointly controlled entities?

A The initial cost of investment in Entity B’s books is a straightforward C1,000. But the accounting in Entity A’s books

is more complex. As the brand was developed internally, it is likely to have little or no carrying value on Entity A’s balance sheet. But when ownership of the brand passes from Entity A to Entity JV, it would meet the definition of an intangible asset under IAS 38, Intangible Assets, so it should be initially recorded

share of net assets as being C1,500. But, as the brand Entity A contributed had no value on its balance sheet, would this simply result in a ‘gain’ of C1,500 by forming a joint venture?

A The answer is ‘not quite’. The interpretative guidance in SIC 13, Jointly Controlled Entities – Non-monetary Contributions

by Venturers, only permits recognition of such gains up to the level of the equity interest held by other venturers – in other words, Entity A cannot recognise the unrealised gain on the 60% of the brand, which it effectively still owns through its stake in the joint venture. Under the equity method of accounting, the unrealised part of the gain is removed from the income statement and is instead eliminated against the investment in Entity JV. So at the inception of the joint venture, Entity A will recognise the investment at C600 – that is, C1,500 less the unrealised gain of C900 (C1,500 x 60%).

IFRS 11, Joint Arrangements, applies to financial years beginning on or after 1 January 2013. Both entities A and B should re-assess under the new guidance whether their involvement in the joint arrangement would give them the right to Entity JV’s net assets or rights to individual assets and obligations to liabilities. Assuming they conclude that the joint arrangement gives them right to net assets, the accounting would be the same as described above. This is because both entities would continue to apply the equity method of accounting, and the recognition of the unrealised gain would still be prohibited.

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

in the joint venture’s books at cost. In this case, ‘cost’ would be equivalent to the fair value of the shares issued by Entity JV – that is, C1,500.

Q At inception, Entity JV therefore has net assets of C2,500. Applying the equity accounting method in its consolidated

accounts, Entity A will recognise its

Accounting solutionsThis month PwC authors answer two questions on accounting for joint ventures under IAS 31, IAS 38, SIC 13 interpretative guidance, and IFRS 11

50 Technical

PwC’s practical guide to applying IAS 34, Interim Financial Reporting, is out this month, updated to reflect standards effective for 2012 year ends. It provides comprehensive guidance on IAS 34, an illustrative set of condensed interim financial information for a fictional existing IFRS preparer and a disclosure checklist. Copies of Manual of accounting – interim financial reporting 2012 are available to order from www.ifrspublicationsonline.co.uk

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CPDunits on the web

All change for revenue accounting?As contractual agreements become increasingly complex, the IASB and FASB are proposing signifi cant changes, explain Shariq Barmaky and Mohamed Ghamazy

Some of us were still in school when IAS 11, Construction Contracts and IAS 18, Revenue were issued in 1993. Since then, a number of amendments have been made to both IAS 11 and IAS 18 as a consequence of other new or amended International Financial Reporting Standards (IFRSs), and a number of revenue-related interpretations were issued, for example IFRIC 13, Customer Loyalty Programmes; IFRIC 15, Agreements for the Construction of Real Estate and IFRIC 18, Transfers of Assets from Customers.

However, these amendments and interpretations do not necessarily change the principles in IAS 11 and IAS 18. Therefore, essentially, we have been relying on the same principles for revenue accounting for almost 20 years, and any significant change is expected to have significant effects.

Reasons for the proposed changes to revenue accountingThe aforementioned standards and interpretations have been criticised as being difficult to apply to complex transactions. It should be noted that business transactions and contractual agreements have become increasingly complex over the years. Possible reasons for this criticism include lack of guidance for multiple element sales contracts and diversity in the interpretation of the meaning of ‘continuous transfer’ when applying IFRIC 15.

Enter exposure draft (ED), Revenue from Contracts with Customers. This ED is a result of a joint project between the International Accounting Standards Board (IASB) and the Financial

Accounting Standards Board, and one of the objectives in issuing it is to address the aforementioned weaknesses in the current revenue standards. When issued as a standard, the ED will replace the current revenue standards.

The proposals in the ED are meant to be the single standard to be referred to for revenue recognition applicable to a range of industries, companies and geographical boundaries and thus have far-reaching effects. In acknowledgement of this, the boards have hosted numerous outreach activities involving auditors, preparers, regulators and users from multiple jurisdictions.

In fact, the boards issued the ED twice – this was unprecedented. The first ED was issued in June 2010 and nearly 1,000 comment letters were received. In response, the boards decided to revise many detailed aspects of the 2010 proposals, although the underlying conceptual basis is unchanged. As a result of these changes, and the importance of the revenue line item to users of financial statements, the boards decided to expose the revised ED in 2011. The comment period for the ED ended on 13 March 2012.

Summary of key changesThe ED’s core principle is that ‘an entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services’. The impact of the proposals on revenue accounting is outlined below.

Identifying contracts with customersThe proposals would apply to an entity’s contracts with customers other than those within the scope of the leasing, insurance or financial instruments standards and non-monetary exchanges between entities in the same line of business, to facilitate sales to customers or potential customers other than the parties to the exchange.

The ED provides specific criteria for entities to consider in determining whether a contract exists. A contract can be written, oral or implied and must create enforceable rights and obligations between two or more parties.

The implication of this is that entities will need to identify all customer contracts and understand their key terms to ensure that the new revenue model is appropriately applied. This may include understanding the practices and processes for establishing contracts in an entity’s legal jurisdiction and the customary business practices of an entity and its industry.

Multiple element contractsThe ED lays out specific criteria as to when the individual element of goods and services in a contract should be considered separate revenue elements for accounting purposes, specifically when the entity regularly sells the good or service separately or when the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer.

The ED uses the term ‘performance

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obligations’ (POs) to identify each of those different revenue elements. The ED also includes criteria as to when multiple elements of goods and services are considered one PO, specifically when the elements are highly interrelated, integrated and the bundle is highly customised or modified. These proposed criteria are helpful over current revenue standards as they provide criteria to entities on how many ‘revenue items’ there are in a single contract.

The implication of the above is that some entities may identify more or less POs as compared with current practice. In addition, where some entities account for a bundle of goods and services as separate revenue streams (or one revenue stream) in current practice, they may end up having to combine those different elements of goods and services as one PO (or split them up into various POs).

In all the above cases, since entities may only recognise revenue as each PO is fulfilled, entities may experience changes to the timing of revenue recognition as a result of the proposals.

The ED also prescribes the method of allocating the transaction price for a contract to the individual elements in the POs, ie based on relative standalone selling prices of each PO in the contract, which is largely similar to the ‘relative fair values’ approach in current practice. The proposals are helpful in determining the amount of revenue to be recognised as each PO is fulfilled, as current revenue standards are silent in this respect.

Contract modificationsFor certain industries, modifications to the scope or pricing of a contract may be a norm – for example, variation orders. The ED specifies that, depending on whether certain criteria are met, such modifications may be accounted for either as separate contracts or part of the existing contract. There is no clear guidance for this under the current revenue standards.

A modification may be a separate contract if the modification results in a separate PO with pricing that is largely independent of the existing contract. Otherwise the modification is accounted for as part of the existing contract. In the latter case, the accounting gets a bit complicated depending on whether the modification is on prices alone, on POs alone, or both. This may change the timing and amount of revenue recognised.

The above proposals may require careful consideration by, for example, entities that engage in construction of assets or professional services.

POs satisfied over timeThe ED provides guidance that an entity must consider in determining whether a PO is satisfied continuously over time. This will have a bearing on whether the stage of completion method of revenue accounting can be applied to a PO and is a significant issue faced by many entities under the current revenue standards. The ED appears to articulate two broad concepts on this.

First, this happens when the entity’s performance creates or enhances an

asset that the customer controls as it is created or enhanced.

Second, this happens when the entity’s performance does not create an asset with alternative use to the entity – for example, the contract does not allow the entity to sell the work in progress to another customer or the work in progress is highly customised and would not be suitable for another customer – and at least one of the following criteria is met: A) the customer simultaneously

receives and consumes the benefit as the entity performs each task;

B) another entity would not need to substantially reperform the work completed to date if that other entity were to fulfil the remaining obligation to the customer (without having access to work in progress or any other asset controlled by the entity); or

C) the entity has a right to payment (assuming that the seller complies fully with its contractual obligations) for performance completed to date and expects to fulfil the contract as promised. If the customer cannot cancel the contract, or the full contract price is payable on cancellation, this would appear to meet the criteria. If the contract can be cancelled by the customer and a fixed amount is payable on cancellation, which is lower than the total contract price, this may not be considered to be sufficient to compensate for performance to date and therefore may not satisfy this criterion.

From the above, there is a subtle but significant shift in focus for construction-type activity. The existing

GET VERIFIABLE CPD UNITSAnswer questions about this article onlineStudying this article and answering the questions can count towards your verifi able CPD if you are following the unit route and the content is relevant to your development

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guidance in IAS 11 and IFRIC 15 focuses on whether an item is being constructed to a customer-specific design. The ED instead focuses on whether the asset under construction has ‘alternative use’ to the entity. This may result in a different analysis in some cases, particularly for some property contracts.

WarrantiesThe ED specifies that in some cases, warranties may constitute a separate PO to be accounted for as a separate revenue stream, instead of as a selling cost under current practice. This happens when the customer has the option to purchase the warranty separately, or when the warranty provides a service beyond assuring a good or service complies with agreed-on specifications. This may change the timing and amount of revenue recognised, particularly when the warranty price is significant and warranty term is for long extended periods.

Presentation of credit lossesWhere entities currently present credit losses relating to bad debts as an expense, the ED specifies that such credit losses will be presented as a separate line item adjacent to the revenue line in the income statement. This may have an impact on key performance indicators, for example gross margin ratios.

Onerous POsThe ED specifies that POs that are to be satisfied over a period greater than one year would be evaluated on whether they are onerous POs. This

is a test similar to tests of onerous contracts under IAS 37, Provisions, Contingent Liabilities and Contingent Assets, except that it is done at a PO level instead of at the contract level. An implication is that a ‘day one’ onerous provision is required on a multiple-element contract that is profitable as a whole, but has one onerous PO among other profitable POs within the same contract. Entities will need to evaluate each of their multiple-element contracts for such onerous ‘day one’ losses.

Contract costsCosts associated with obtaining and fulfilling a contract are capitalised under the ED when certain criteria are met. This may require new policies, processes and data in order to capture and amortise these costs.

Transition and effective datesAn entity would be required to apply the proposed revenue standard retrospectively, subject to the several optional reliefs. The IASB will not make a final decision on the effective date of the new standard until it completes its deliberations on the revised proposals in 2012. However, the IASB tentatively decided that the effective date of the proposed standard would not be earlier than for annual reporting periods beginning on or after 1 January 2015.

Other implications Entities may need to review their internal information systems to determine whether there is a need to modify their internal systems, controls and processes to gather necessary information to comply with the new

disclosure requirements and changes in revenue recognition and cost capitalisation in a consistent manner.

Entities may need to assess the implications of any potential changes to the presentation of financial results on key performance indicators (for example, gross margin ratios), covenants and existing contracts (for example, remuneration agreements). Entities may also need to consider if there are any further tax implications from the revised proposals. Stakeholder education may be necessary to explain any potential changes to the financial statements.

Entities will need to consider the effects of the revised proposals as they negotiate new contractual arrangements and modify existing agreements.

The application of various aspects of the revised proposal will require judgment and estimation.

Concluding commentsThe ED has been subject to significant debate, in particular around the area of continuous transfer of control. It will be interesting to see the outcome of the boards’ deliberation on these areas and how the final standard will be worded. At the time of writing, the boards have indicated that the final standard will be issued either in 2012 or 2013. Entities will have to start setting aside resources to carefully consider the implications of the requirements in the final standard.

Shariq Barmaky is partner and Mohamed Ghamazy is senior manager at Deloitte Singapore’s IFRS Centre of Excellence

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

TO GET THE QUESTIONS GO TO

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Expats and tax liabilitiesForeign companies must be aware of the tax implications of sending employees to work in Chinese affi liates, reports Charles Gong

China’s continuously booming market continues to attract foreign investors to the country to explore potential growth for their businesses. Recent years have seen the evermore common practice of foreign companies sending their employees to their Chinese affiliates to perform functions such as management, supervision and consulting under cross-border arrangements.

For a foreign company whose country of origin has signed a double tax agreement (DTA) with China, whether a China Permanent Establishment (PE) is deemed created is crucial in judging whether or not such foreign company has a taxable presence in China. As the Chinese tax authorities have stipulated more comprehensive laws and regulations applicable to crossborder employee assignments and tightened the scrutiny over such arrangements, the related China PE exposure is becoming a growing concern for either the foreign investors or their Chinese subsidiaries.

Overseas expat arrangementsUnder current business practices, there are three main approaches for foreign companies when implementing an overseas assignment arrangement in China, namely:

* Sole Chinese employment: the overseas expat employee under a sole Chinese employment arrangement is obliged to terminate his existing employment contract with the foreign company and enter into a new employment contract with the Chinese subsidiary subject to Chinese laws.

* Dual/split employment: if a ‘dual’ (or ‘split’) employment arrangement is adopted, the assigned employee is able to keep his employment relationship with the foreign company under his existing overseas employment contract while at the same time conclude a new employment contract with the Chinese affiliate in line with Chinese laws.

* Secondment: under a secondment arrangement, the assigned employee can work in the Chinese subsidiary under his existing employment contract with the foreign company.

Key factor The key factor for determining whether the three arrangements for overseas employee assignment will give rise to the existence of a China PE lies in the judgment over the ‘real employer’ of the expatriate employee. China has adopted the ‘substance over form’ principle under an approach consistent with the 2010 OECD Model Tax Convention.

If a foreign parent company assigns an individual to its Chinese subsidiary and one of the following conditions is met, the parent company is most likely to be considered the ‘real employer’ of the individual:

* The parent company has the right to direct the individual’s work and undertakes the relevant risks and responsibilities of the assignment.

* The parent company decides the number and the grade of the assigned individual.

* The salary of the individual is borne by the parent company.

* The parent company earns profits from the subsidiary by virtue of the assignment.

In light of the ‘substance over form’ principle, even under the above assignment arrangements where an employment contract is concluded between an expatriated employee and the Chinese subsidiary, or the employee’s remuneration is borne by the Chinese subsidiary, once the foreign parent company has control over the employee’s work in China and undertakes the related risks and responsibilities for the assignment, the foreign parent company is still deemed the ‘real employer’ of the employee. When certain other conditions are also met (as mentioned later in this article), a China PE is very likely to be constituted by the parent company with regard to the employee assignment.

On the other hand, if a foreign parent company assigns an individual to work for its Chinese subsidiary and the subsidiary has the right to control the work of the individual and undertakes the risks and responsibilities for such work, the Chinese subsidiary is regarded as the ‘real employer’ of the individual. The remuneration paid to the individual is then regarded as compensation reimbursement paid to the subsidiary’s own employee, no matter whether the payment is made directly by the subsidiary or indirectly via the parent company’s account. Thus, the foreign company is not in this situation deemed to constitute a PE in China in connection with such individual work.

Moreover, it is notable that, although the current related Chinese laws and

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regulations only cover PE determination with respect to crossborder assignments of employees between a foreign parent company and its Chinese subsidiary, it is believed that the principles shall also apply to any similar assignment between any foreign company and a Chinese company.

Other factorsIf a foreign company is regarded as the real employer of its employee assigned to China, there are two more conditions, as described below, which if either is met, such foreign company is deemed to constitute a PE in China under an overseas expatriation arrangement:

* The assigned employee provides services wholly or partly through a fixed place of business in China

* The definition of ‘a fixed place of business’ when deciding on the existence of a China PE comprises the following three features:

I a physical existence, referring to a certain space at the disposal of an enterprise, regardless of whether the enterprise owns or leases the space

II relatively fixed, with a certain degree of permanence – for example, a representative office, a branch or an office provided by service recipients for the individual’s exclusive use

III a place at which the business of an enterprise is wholly or partly performed.

* The assigned employee has stayed within the territory of China for a period or periods aggregating more than 183 days/six months within

any 12 months for the purpose of providing their services.

There is a strict calculation of 183 days (or six months under certain DTAs) for the determination of the existence of a China PE. The duration of the crossborder assignee’s stay in China for providing their services is calculated from the assignee’s arrival date in China until the date of the completion of their service in China, with days outside China excluded but holidays, weekends, vacations or other off-duty days in China most likely included.

OECD commentary coherenceA China PE of a foreign company related to its crossborder assignment of employees to China may be much more easily exposed than previously. The current interpretations of a China PE are generally based on the OECD commentary, which suggests that a taxpayer is able to invoke the OECD commentary for application to its case where the existing laws and regulations do not specify otherwise.

China tax liabilities and the PEIf a China PE is determined to exist due to overseas expatriation arrangements of a foreign company, the relevant income that the foreign company extracts from its Chinese subsidiary due to the expatriation is regarded as the PE’s revenue, including but not limited to management service fees and the expatriate individual’s remuneration, etc. Corporate income tax (CIT) at 25% shall be levied on the total income attributable to the PE. If the PE’s revenue is significantly

low or the attributable income cannot be verified to the tax authority’s satisfaction, the tax authorities may levy CIT on a deemed profit basis, ie the tax authorities would deem a margin based on the PE’s costs and expenses according to the following formula:Taxable income = costs and expenses / (1 – deemed profit margin) × deemed profit margin

The above costs and expenses of the PE include the individual’s remuneration attributable to the PE and other expenses of the individual such as travel and accommodation, office rent, etc. Pursuant to the relevant Chinese tax laws and regulations, the deemed profit margin shall be determined based on the following criteria:

* for construction projects, and design and consulting services, the deemed profit margin shall range from 15% to 30%

* for management services, the deemed profit margin shall range from 30% to 50%

* for other services or business activities, the deemed profit margin shall not be less than 15%

* if the competent tax authority is aware of evidence indicating that the actual profit margin of the PE is significantly higher than the above standards, the applicable deemed profit margin can be raised to a higher level.

Charles Gong is tax CEO, RSM China Certified Public Accountants, and managing partner, Zhongrui Yuehua Tax Advisory Company Ltd

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Long-distance relationship[Distance-learning MBAs, increasing in popularity, may provide a fl exible solution for time-pressed

professionals. But what is the reality – and do they really measure up against traditional programmes?

Deciding to study for an MBA is a big decision and it can be difficult to juggle work, family and study. For these reasons distance-learning business education is gaining in popularity and turning into something of a success story. For instance, according to the FT’s Online MBA 2012 Listing, SBS Swiss Business School offers a global distance MBA and currently has 387 students enrolled, 82 of whom are international, while 72 of the 117 students enrolled at Spain’s IE Business School on its global executive MBA are from overseas.

These days anyone from anywhere can do an MBA without having to physically turn up to a classroom and learn. Yet students who take their MBAs at a distance can find themselves facing a certain amount of snobbery from some employers – and full-time counterparts. So what are the advantages and disadvantages of distance or online learning, and do the rewards make up for any perception of inferiority?

The first thing to understand is the intrinsic and perpetual value of an MBA. Stacy Blackman, CEO of Stacy Blackman Consulting and MBA blogger, says: ‘An MBA is a clear stamp on a resumé that says an individual was screened by the very best, and made it through. It’s validation and a helpful tool for recruiters screening numerous resumés. Top employers still run heavy recruiting programmes on campus at business schools. It’s a big priority for them and for some it’s really the only way in to the company. Finally, most top companies are already filled with MBAs who are more than happy to network with and hire fellow alums.’

Paul Allen, associate director at Coutts & Co, is distance studying for an MBA at Durham Business School. ‘I

have always had a deep-rooted desire to challenge myself, perform and prove that the environment in your formative years needn’t be an inhibitor to your future success. The MBA was another personal challenge and one that I hope will afford me a degree of occupational flexibility. I’m a firm believer in giving yourself options, and I feel that an MBA can be an excellent way to demonstrate a broader understanding of business which can ultimately open the door to switches in occupation and industrial sector.’

While Allen admits that he underestimated the commitment to sustaining his studies while working full time, he has chosen to complete the course in the quickest time possible – two years – in the knowledge that he could extend his studies by an additional three years should he wish.

Flexible approach‘This flexibility is essential and, coupled with the support and availability of the tutors and access to the online learning resources, provided me with the confidence to pursue this method of study,’ he says.

The degree is broken down into core and elective modules followed by a dissertation. Each semester starts with the home delivery of the module notes and learning materials. The business school provides hard copies, CD media and online access to all course notes, which affords maximum flexibility.

‘My preference has always been for the hard copy materials as I can make notes easily and then draft practice papers from these,’ says Allen. ‘Given the nature of my job I spend a lot of time travelling and so planes and trains have been my primary place of study, with weekends reserved for exercise and assignment work.’

Modules are made interactive via a portal which facilitates learning. Here, group work can be undertaken where students can work together on a variety of tasks. ‘This is a key feature of the distance-learning medium, as part of the value in undertaking a traditional MBA is in the people that you meet,’ Allen says. ‘Developing networks and learning from other cultures and professionals from different industries needn’t be the preserve of full-time MBAs.’

Missing the energy?But Blackman has reservations. ‘I do not think that online MBAs are as effective,’ she says. ‘That’s not to say that there is not value there, but being in class, in person, meeting the teacher, the guest speakers and, perhaps most importantly, fellow classmates, is a huge benefit. The energy created by having so many people together in a room is enormous and exciting.’

This lingering question mark over whether online courses are ‘as good’ as classroom-based ones has meant that the more prestigious schools may have been slower in jumping on the bandwagon. But with the irrefutable advantages in terms of flexibility with both schedule and location, more business schools are signing up to it – with some offering blended schemes, a mixture of distance and classroom learning.

‘If you are going to invest time and money in an online MBA, you should evaluate it with the same criteria as you would an offline MBA,’ Blackman advises. ‘You would want to look at the programme reputation and career offerings following graduation, the strength of the alumni network. You should evaluate curriculum, teaching style, strength of faculty. Of course you

56 Careers LOOKING FOR A NEW JOB? Visit www.accacareers.com/singapore

SG_CAR_MBA.indd 56 10/05/2012 17:23

may decide that the convenience outweighs a lower ranking in some categories, but you absolutely want to take all of these criteria seriously to ensure a smart choice.’

‘I spent a lot of time researching business schools and MBAs, here in the UK, North America and Asia,’ says Allen. ‘International recognition of the school, degree content and quality were of primary importance to me. The various league tables – notably the Wall Street Journal rankings – confirmed the international pedigree of Durham Business School above and beyond anything. It also helped having access to international recruiters who spoke very highly of Durham MBA graduates.’

Allen has a final piece of incentive-led advice. ‘I took the decision to finance my own studies; I’m convinced that having skin in the game helps focus the mind!’

Beth Holmes, journalist

Prague-based ACCA member Jan Švorc is a manager in a Big Four management consulting department. He embarked on Durham Business School’s global MBA (finance) programme as a distance learner.

There are, he says, four key advantages to the programme: ‘good quality and reputation of the school, reasonable fee, flexibility and specialisation in corporate finance’.

Before enrolling, Švorc had studied for the ACCA Qualification, where preparations for exams were held mostly in distance-learning mode, although some classes were also available for the modules. ‘I was pretty comfortable with this way of learning as it brought the results and was suitable for me because of the flexibility,’ he says.

Švorc hopes that the MBA will bring two main benefits. ‘Firstly, I think it helps to consolidate and cement my knowledge in various managerial topics,’ he says. ‘My professional career brought a great deal of pieces of experience and managerial knowledge, but they were unstructured. Secondly, I have learned how to approach business research and build up my reports.’

To complete a typical module, Švorc expects to spend several days – ‘actually, nights’ – working on the formative assignment and about two weeks for the final one. ‘If there was an exam in addition, the preparation takes about 10 evenings and a weekend at minimum. It depends on the topic.’

Švorc admits that working full time and studying during the evenings and weekends has taken its toll on his social life. But his hope is that achieving an MBA will propel him to a senior position in financial management at a mid-sized, internationally operating company.

*CASE STUDY

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In addition to improving the focus of your career development, setting time aside for planning your CPD can save you money and time.

Plan to succeedIt is no secret that members who take time to identify their development needs in advance of selecting learning activities are more likely to put together a more effective development plan and obtain their CPD easily.

Planning your CPD early enables you to think strategically about which learning mediums will be the best fit for different areas of development. Face-to-face may be best for some types of learning, whereas e-learning, research or learning on the job may be more effective for others.

It is important to undertake CPD activities that are relevant to your role. Practising members should aim to ensure that an appropriate amount of their development is undertaken in their area of technical specialism. If your career has moved away from accounting and finance, you should undertake learning which is relevant to your new role. Remember that your CPD is about technical and non-technical areas.

You don’t need to leave all your CPD to the end of the year. Every year we

see a surge of CPD activity during the last quarter from ACCA members. This suggests that CPD may be viewed by some as something they ‘have to do’, rather than an ongoing process of professional development. CPD is really just a practical expression of professionalism, and something you are likely to be doing on an ongoing basis as part of your working life. Don’t forget you can include activities you undertake in the workplace; for example, briefing sessions, learning from experts, and coaching and mentoring.

Resources to help youACCA has developed several tools and resource web pages to help you succeed in planning your CPD.

* ACCA Compass is an interactive tool that allows you to assess your level of experience and skill and compare this to a recommended market average for 20 different job titles. ACCA Compass allows individual members to undertake a competence self-assessment process to encourage a more focused professional development, making it a perfect resource for the beginning of the CPD year.

*Acting as an electronic coach, the Professional Development Matrix (PDM) is designed to help you

identify your preferred learning style and the knowledge, skills and expertise you may need in either your current role or in roles which you are interested in for the future. It will also help you to produce a personal development plan.

There is also ACCA’s CPD i-guide, which you can use to coach and support you through CPD.

What happens next?We’ve talked about how to plan your CPD, but we would also recommend a learning cycle of Plan, Do and Review as best practice.

Doing your CPD is about carrying out the right learning opportunities. Once you know what you need to learn or develop, you can browse and select learning opportunities from ACCA’s new CPD online section. It’s a one-stop shop giving you access to articles, podcasts, online seminars, research and qualifications from our partners all in one place.

Reviewing your CPD activity involves thinking about what you have learned, how you will apply the learning, and providing evidence for it.

For information on CPD and the learning cycle, please visit our new and improved CPD section.

CPD: getting into good habitsACCA has developed several tools and resources to help members plan their CPD effectively, such as ACCA Compass and the Professional Development Matrix

60 ACCA

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Which should come first: financial returns or socio-environmental returns? The answer seems obvious, but as all too often happens in the balance between profits and sustainability, there is a gap between what companies aspire to and what they actually end up practising. It is this gap that gives rise to the question: is corporate Asia ready for the green economy?

Not really, say the experts. At the first ACCA-WWF green economy roundtable, held in Singapore in April, two things were clear. Business as usual is no longer viable – but making

the change will not be easy.The first issue, said Adam Tomasek,

the WWF’s managing director for Borneo and Sumatra, is that economic growth in Asia and worldwide is not what it used to be, leading to calls from civil society to have a greater say in decision-making. And in the Asia Pacific region specifically, growth has not been decoupled from resource use, creating a situation in which the depletion of natural resources directly impacts the economy.

As an example, Tomasek cited Indonesia and Malaysia, the world’s largest exporters of tropical timber and palm oil. While palm oil production is driving consumption in China and the major Western economies, production of tropical timber has been dropping over the last 30 years. ‘The resource base is no longer there,’ he explained. ‘As the natural capital base falls, so does economic output.’

At the same time, said Durreen Shahnaz, founder and chairwoman of Impact Investment Exchange, Asia faces humanitarian problems that are affecting the region’s ability to improve environmental governance. ‘Here in Asia, where most of the world’s population is, the situation is still quite dire,’ she pointed out. ‘We have almost 800 million people living on under a dollar a day, most people are going hungry, and you can see what that means for the environment [when people’s first concern is for survival].’

But Asia, added Shahnaz, also has the highest-net-worth individuals in the

world. The question, she said, is how to create equality out of this income disparity – one of the underlying precepts of the green economy.

A new mentalityIf Asia is to shift away from resource-driven economic growth, change must come on all fronts, agreed speakers. ‘It cannot just be expected that government will deliver the change, that the private sector will deliver the change by itself, or that civil society will just be involved and not an integral part of defining priorities,’ said Tomasek.

A mentality change is in fact already taking place among businesses, pointed out Holly Lindsay, country director for CSR Asia in Singapore. Citing a United Nations report on the green economy, she said that the private sector is projected to deliver the majority of funding for

sustainability initiatives. ‘Business is moving away from a

concept of “do no harm”, to actually doing good.’

Shahnaz also highlighted the emergence of social enterprises, financially sustainable organisations driven primarily by poverty alleviation, gender equality, inclusive growth and sustainable development. These, she said, differ from companies that are primarily market-driven and whose corporate social responsibility (CSR) efforts are marginal. ‘We need to look at these organisations and see how they can take over the economy,’ she said.

This is where investors need to change their mindsets as well, agreed speakers. However, Asian investors, unlike their Western counterparts, tend to prioritise financial returns over philanthropy. While socially responsible investing has grown dramatically over the last 15 years – from zero to US$7 trillion, according to Shahnaz – impact investing, or investing with a focus on the triple bottom line of financial, social and environmental returns, is still primarily the province of institutions. Retail investors have yet to pick up on socially responsible investment in a big way.

The perceived costs of shifting towards sustainability are a deterrent for many, said speakers, but it is possible to balance them out. ‘Financial cost is not more important than social returns,’ said Shahnaz. ‘We put equal weightage on all of them. And if an organisation is giving 20% to 40% returns, perhaps what they’re not doing is factoring in the social cost. Because there absolutely is a cost – an impact that should be taken into account.’

This, she added, is why a change in investors’ mindsets is so important. Investment is the ‘big stick’ that can

‘ACCOUNTANCY HAS A DUTY TO MEASURE ANDRECORD WHAT IS GENUINELY SUSTAINABLE ABOUTA BUSINESS’S PERFORMANCE, NOT JUST CASHFLOW.BUSINESS AS USUAL IS JUST NOT WORKING’

Preserve and prosperIt is vital for companies and investors to embrace the need to improve environmental sustainability, delegates at the fi rst ACCA–WWF green economy roundtable heard

ACCA62

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turn a social or environmental cost into a return for companies.

Step changesInvestment aside, businesses can balance out their costs by pursuing opportunities in the green economy, said CSR Asia’s Lindsay. They may even have no choice but to do so; the prices of natural resources have increased dramatically over the last decade and are likely to continue rising for the next 40 years. Businesses will need to adapt to these costs by implementing step changes and resource productivity and major changes in technology.

‘As resource prices increase, companies need to develop a more sophisticated understanding of their exposure to resources, including supply chain dependencies and regulatory risks,’ said Lindsay. ‘There will be significant regulatory change and societal backlash, I believe. We will see major resource shifts, and in this process there will be winners and losers. Many businesses will fail, and

jobs will be lost.’Balancing off this risk, however, is

the undeniable success of sustainable corporations, said Kevin Lee, sustainability manager for PowerSeraya. He cited the eighth annual Corporate Knights Global 100 Most Sustainable Corporations list, which found that the share value of sustainable corporations outperformed the MSCI All Country World Index benchmark by more than 11% over a period of five years. PowerSeraya itself, he said, has benefited from investing in green capabilities – by converting to the use of desalinated water from its own plant, it has attained a degree of self-sufficiency in an otherwise resource-intensive business.

Whatever the costs, there is simply no other option, said speakers – businesses must become sustainable all the way down their supply chain. ‘It’s not just about hiring more women and planting more trees,’ said Shahnaz. ‘The impact needs to be measured in terms of beneficiaries

along the whole chain. For example, if a company is cleaning up rivers in China, how does it impact the people who are actually using the water? The rural sector? Those 800 million people who are living on under a dollar a day – you simply cannot leave them out of the equation.’

That, hinted speakers, is exactly what has been happening so far: the broader impact of businesses’ operations had been left out of the equation, and people have only recently begun to realise the inherent problems with that. Rob Daniel, PwC’s technical adviser added: ‘Accountancy has a duty to measure and record what is genuinely sustainable about a business’s performance, not just cashflow’, he said, recommending that accountants should become more closely involved in issues such as policy and regulation development. He concluded: ‘Business as usual is just not working.’

Mint Kang, journalist

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An all-inclusive society of accountants is one where all members have opportunities to learn and gain better employment. It has to be different from the one we have today where we are not progressing enough, as noted by minister of finance Tharman Shanmugaratnam. In a recent speech he referred to middle-income Singaporeans who ‘want to progress and not stagnate in their careers’, and added: ‘Devising schemes of continuous education to help our mid-career professionals is an important priority for the future.’

Businesses continue to face challenging economic conditions, and the pressure is on our members to show that we can innovate and adapt. There are opportunities for the profession to improve its perceived value to business and stakeholders. There are also extensive opportunities for promoting the role of accountants in business, extending their reach and influence in large and small companies.

Taking a greater role in business strategy and covering a wider range of activities will enable accountants to be increasingly at the heart of business, instrumental in a new consensus on the need for long-term value creation. Developments such as integrated reporting and the impact of new technology mean that reporting is now less about ‘box-ticking’ and more about developing a real understanding of business, helping to support long-term thinking and increasing stakeholder engagement.

The new Singapore Exchange rules, requiring the strengthening of risk management and corporate governance expertise, compliance and regulations, provide additional opportunities. In this environment, members need to be skilled communicators; have the ability to innovate; embrace technology; and demonstrate ethics and impartiality, judgment and leadership.

Meanwhile, auditors must reinforce building relationships and trust, being more responsive to clients’ needs, and providing new and innovative services that make the best use of technology. They are involved in negotiating the relationship dynamics with their clients every day, not merely at a contractual renewal or crisis point. This means flagging up issues, interrogating financial information and identifying risk.

In order to be all-inclusive, we will need help. Here is how ACCA can be supportive: we have a dedicated team that works with a variety of employers in the development and career advancement of members through the ACCA Approved Employer programme.

Senior members can also help by being mentors. Mentoring has strategic benefits for businesses and it also works wonders for the individual, providing a crucial, critical friend in times of need to discuss successes and failures. It keeps alive a culture where everyone strives to do better.

Let us continue to work together!

Kaka Singh is president of ACCA Singapore

All in it together[To achieve an all-inclusive profession, accountants must

welcome the many opportunities on offer, says Kaka Singh

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01 Speakers at the ACCA-WWF green economy roundtable were

(from left): Adam Tomasek, managing director, Borneo and Sumatra WWF; Holly Lindsay, director, CSR Asia Singapore; Durreen Shahnaz, founder and chairwoman, Impact Investment Exchange Asia; and moderator Gordon Hewitt, sustainability adviser, ACCA

02 Darryl Wee, country head of ACCA Singapore, with ACCA-NYP Accounting Challenge champions from Ngee Ann Secondary School

ACCA news

SINGAPOREGREEN ECONOMY DEBATEDA high-level roundtable on the green economy was hosted by ACCA and the WWF on 17 April. The event brought together leading experts in the fields of business, accountancy, investment and non-governmental organisations to discuss the green economy and its impact, influence and effect on these specific groups.

Panellists provided insights on how governments are developing new policies for the green economy; how businesses are adapting the way that they operate; the risks and opportunities presented; how sustainability can lead to shareholder value; and the need for new business models and investment strategies as business-as-usual methods are no longer viable. To find out more, turn to page 62.

ASPIRING ACCOUNTANTS RISE TO THE CHALLENGETo inspire young people to consider a career in accountancy, ACCA and Nanyang Polytechnic (NYP) held the second NYP-ACCA Accounting Challenge on 27 March. In total, 198 students in 66 teams from 34 secondary schools pitted their business management and accounting skills against each other.

This fun and interactive competition is designed to showcase the dynamic aspects of the accountancy profession. The gameshow format covered areas such as financial accounting, management accounting, audit, tax, business environment and finance. After displaying excellent cooperation and quick strategic thinking, Team A from Ngee Ann Secondary School obtained the highest scores to emerge as champion. The team won S$800 in cash and a commemorative trophy.

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65 News Aspiring accountants rise to the challenge

64 Kaka SinghThe ACCA Singapore president on the importance of an all-inclusive society of accountants

62 ACCA-WWF roundtable Is corporate Asia ready for the green economy?

60 CPD Getting into good habits

Inside ACCA

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

Martin Turner, ACCA’s vice president, told the 13th session of the United Nations Conference on Trade and Development (UNCTAD) in April that high-quality accountancy, financial reporting and auditing can play a crucial role in improving economic performance around the world.

As part of the conference, held in Doha, Qatar, UNCTAD’s Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) held an event on 22 April focusing on the role of the accountancy profession.

At the ISAR event, Turner emphasised the importance of capacity building in the accountancy profession to ensure that there are the necessary number of qualified accountants to guide economic development in emerging markets at all stages of their economic growth.

He also focused on the crucial role of accountants in promoting sustainability,

drawing on material from a policy paper – The Role of the Accountancy Profession in Economic Development – that ACCA prepared to coincide with the event.

‘ACCA was pleased to be part of this high-level ministerial event and to have an opportunity to emphasise the crucial role we believe the accountancy profession plays in supporting sustainable economic development,’ Turner said. ‘UNCTAD-ISAR has been tireless in its efforts to enhance the capacity and ability of the global accountancy profession to help bring nations into the world economy. A key part of its mission is to promote globally sustainable economies, a goal which ACCA wholly endorses.’

During the event, UNCTAD launched its new Accounting Development Toolkit, comprised of an accounting development framework and a set of accounting development indicators. This is designed to provide guidance to policymakers on the current level of development of a country’s accountancy infrastructure in order to identify gaps, define priorities and help focus national efforts to improve.

The Role of the Accountancy Profession in Economic Development is available at www.accaglobal.com/accountancyrole

Crucial role for professionVice president Martin Turner addresses UNCTAD

INVESTORS’ VIEWS ‘LOCKED OUT’ Investors should be placed at the heart of global financial and accounting standards, say ACCA and Grant Thornton in a new report. However, it warns that investors’ views on shaping future standards are not being heard.

Putting Investors at the Heart of the Financial System (www.accaglobal.com/investors) is based on a series of roundtables for investors and investor representatives held around the world. It says that the piecemeal, fragmented way in which solutions to global economic uncertainty are proposed and the lack of focus on investors in the reform

process prolong global economic fragility, and proposes seven steps to improve matters.

‘Investors should be the primary focus for global financial and accounting standards, yet their voices are not being clearly heard,’ said Sue Almond, director of technical at ACCA, adding that ‘the investor community opinion isn’t necessarily homogenous, but this doesn’t mean all voices should be ignored’.

Doha, Qatar

Martin Turner

Sue Almond

66 ACCA news

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