What CEOs really think
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Successful CFOs-turned-CEOs share the importance of developing the people-oriented right brain to moving up the leadership ladder
Issue 1 / Volume 12 / January 2016
Plus:ProfileCICPA President Feng Shuping
Capital marketsChina stock market crash
LifeCPAs in love
January 2016 1
It is my honour and privilege to be elected as the Institute President this year, especially as the second woman to hold this position. I hope this helps reinforce the professions efforts in supporting women in the workplace. Indeed, the gender ratio of our membership has already reached 50:50, and the majority of students are female. We under-stand, however, that more needs to be done to help women reach leadership positions in both the profession and wider business. To be successful in todays complex business environment, company boards need to be multi-skilled and embrace true diversity, taking into account not only gender, but also age, culture, skills, experience and thinking style.
As I said to the media earlier, the Institute has six major tasks this year. Top of the list is our con-tinuing advocacy for audit regula-tory reform with a focus on three areas: the need to clearly separate sanctioning powers from those of inspection and investigation within the independent oversight body, which should also have adequate qualified audit professionals to effectively perform regulatory functions; the need to have sanc-tioning guidelines; and the opera-tional costs of the oversight body should come from investors. Before the relevant bill will be submitted
to the Legislative Council in Octo-ber, we will continue talking to the government and urge for these rea-sonable changes.
Second, we will continue to look into the review of the Professional Accountants Ordinance. There have been piecemeal revisions over the years, but to make the legislation, which has been enacted for more than 40 years, more relevant in the 21st century and in line with local and international best practices, there is a need for a comprehensive update. Consultations with members and stakeholders will be conducted as appropriate as this is an important issue with far-reaching impact.
Third, we will continue to liaise with the Ministry of Finance to establish a mechanism for Hong Kong regulators, including the Institute, regarding access to audit working papers. There has been good progress over the overall direction but since it involves a number of Mainland parties, reach-ing a final agreement takes time.
Fourth, is to review the qualify-ing process for our next generation of CPAs. To uphold the quality of CPAs and maintain our global recognition, we will improve our Qualification Programmes con-tent and structure to make sure our prospective members have the skill sets that meet the demands of employers and the global market,
as well as drive business growth and sustainability.
Fifth, we will keep on enhanc-ing our engagement and support to members, whether they are in prac-tice or in business, by offering more practical training, thought leader-ship events, recreational activities, as well as community services. All of these aim to help them achieve career success, work-life balance and strive to be socially responsible.
Last but not least, we will con-tinue to tailor-make services to different membership sectors such as our young members. The highly successful mentorship programme will begin the second matching this year to help aspiring members learn from their seniors in charting their career paths. There will also be other programmes supporting their specific needs.
With these six tasks running in full steam and other work to be done under the Sixth Long Range Plan, I look forward to another vibrant year at the Institute. Of course, your constant feedback is important so do give your views whenever we meet or via other communication channels such as our new Facebook page.
I look forward to meeting you at the Institute events and taking this opportunity, I wish you a fantastic new beginning in the New Year.
To be successful in todays complex business environment, company boards need to be multi-skilled and embrace true diversity.
ContentsIssue 1 / Volume 12 / January 2016
01 Presidents message
04 Institute news
06 Accounting news
10 From CFO to CEO Successful CEOs share their career development paths that went from CFO to the companys top position
17 Thought leadership: Bernard Chan The Chairman of the Hong Kong Council of Social Service on the need for companies to carry out socially responsible objectives
18 Leadership: Feng Shuping President of the Chinese Institute of CPAs discusses how the profession can help Chinas internationalization
25 How to Kriss Will on effective workplace flexibility policies
26 Getting Chinas rollercoaster under control Mainland shares spiralled downward at the beginning of this year, alarming the world. Whats next for Chinas stock market?
32 Success ingredient: Ma Chan-chi Deputy Chief Executive and CFO at China Construction Bank (Asia) shares how he went from bookkeeping to facing rapid changes in banking
38 Greater growth CPAs harness their romantic relationships to encourage mutual betterment
44 Benefits-in-kind capable of converting into money are taxable at the time of receipt Employers are required to report benefits received by an employee that do not take the form of money, and the process can be complicated
46 The role of internal auditors in enterprise risk management Amendments to the Corporate Governance Code, effective after 1 January 2016, can create value for organizations through internal auditing
49 Technical update Provision of non-assurance services to audit clients
50 TechWatch 158
26Getting Chinas rollercoaster under controlChinas stocks start the year with big tumbles. What's next?
About our nameA PLUS stands for excellence, a reference to our top-notch accountant members who are success ingredients in business and in society. It is also the quality that we strive for in this magazine going an extra mile to reach beyond Grade A.
President Ivy Cheung
Vice Presidents Mabel Chan, Eric Tong
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A PLUS is the official magazine of the Hong Kong Institute of Certified Public Accountants. The Institute retains copyright in all material published in the magazine. No part of this magazine may be reproduced without the permission of the Institute. The views expressed in the magazine are not necessarily shared by the Institute or the publisher. The Institute, the publisher and authors accept no responsibilities for loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in the magazine.
Hong Kong Institute of Certified Public Accountants January 2016. Print run: 7,050 copiesThe digital version is distributed to all 39,729 members, 18,260 students of the Institute and 2,252 business stakeholders every month. Subscription: HK$760 for 12 issues per year.See www.hkicpa.org.hk/aplus for details.
52 Books Green Giants: How Smart Companies Turn Sustainability into Billion-Dollar Businesses reviewed; Interview with author E. Freya Williams
54 Life and everything Gemstones and hiking trails as recommended by Institute members
56 A life in the day Nury Vittachi meets Florence Kong, Finance Director of 10 Design
18Leadership: Feng ShupingPresident of the ChineseInstitute of CPAs looks at the accounting professions growing influence in the countrys economic development
News Institute news Accounting news
The Institute elected Ivy Cheung as President for 2016, and Mabel Chan and Eric Tong as Vice Presidents, at its 43rd annual general meeting in December. Cheung is a Partner of KPMG. Since joining the Council four years ago, she has served on many committees, including as Chair of the Professional Conduct Committee, which is fundamental to the regulatory role of the Institute. Mabel Chan is Founder of Mabel Chan & Co. and Eric Tong is Audit Partner of Deloitte Touche Tohmatsu China.
Seven members were elected to serve on the Council for a term of two years. Newly elected but returning members to the Council are Mabel Chan, Jennifer Cheung, Nelson Lam, Patrick Law, Stephen Law and Kim Man Wong. Another newly elected Council member is Simon Wong. Elected members who will hold office for one more year until their two-year term ends are Raymond Cheng, Ivy Cheung, Stella Cho, Dennis Ho, Johnson Kong, Eric Tong and Richard Tse.
For lay members, the government reappointed Andrew Fung, Executive Director and Head of Global Banking and Markets of the Hang Seng Bank, and appointed Andrew Mak, a barrister-at-law who has been the Chairman of the Special Committee for Greater China Affairs of the Hong Kong Bar Association, for a term of two years.
Two continuing government-appointed lay members are Melissa Brown, Partner of Daobridge Capital, and a member of the Public Shareholders Group established under the Securities and Futures Commission and the Listing Committee of the Hong Kong stock exchange from 2006 to 2012, and Tam Wing-pong, a veteran civil servant who
Institute elects new leadership
Ivy Cheung (centre) together with Mabel Chan and Eric Tong at the AGM.
held the office of the Postmaster General before his retirement. They carry on with the second year of their terms.
The two ex-officio members are Ada Chung, representative of the Financial Secretary, and Martin Siu, Director of Accounting Services.
The Council has co-opted Alec Tong and Wendy Yung and they will hold office until the end of the next AGM.
CPAs go green at annual dinnerNearly 630 members and guests came together in December to enjoy an action-filled annual dinner themed CPAs
Go Green, tying in with the Institutes ongoing commitment to corporate social responsibility. Financial Secretary John Tsang Chun-wah was the guest of honour and International Federation of Accountants Chief Executive Officer Fayezul Choudhury was the special guest. Entertainment was provided by the young members band The Opinion and members of the Dance Interest Group and Singing Interest Group.
ObituariesThe Institute notes with regret the passing of Ngan Man-kuen, Wong Mo-ching, Suling, and Yeung Shiu-hung.
4 January 2016
Institute elects new leadership
Disciplinary findingsCheng Chi Pang, CPA (practising), and Leslie Cheng & Co.
Complaint: Failure or neglect to observe, maintain or otherwise apply professional standards issued by the Institute. Cheng was in breach of HKSA 220 Quality Control for an Audit of Financial Statements and/or the Fundamental Principle of Professional Competence and Due Care in paragraph 100.4 as elaborated in paragraph 130.1 of the then applicable Code of Ethics for Professional Accountants. Leslie Cheng & Co. was in breach of a number of auditing standards.
Leslie Cheng & Co. audited the financial statements of a Hong Kong listed company and its subsidiaries for the year end-ed 31 December 2009 and expressed an unmodified auditor's opinion. Cheng was the senior partner of Leslie Cheng & Co. who acted as the engagement quality control reviewer for the audit.
The Institute received a referral from the Financial Reporting Council regarding non-compliance with the professional standards pertaining to (i) recognition of depreciation and financial statement disclosure of plant and machinery; (ii) fair value measurements of shares issued as consideration for two substantial acquisitions; and (iii) determination of weighted average number of ordinary shares for the purpose of calculating the loss per share. The associated financial effects of the non-compliances were considered material to the 2009 financial statements. After considering the information available, the Institute lodged complaints against the respondents under sections 34(1)(a)(vi) of the Professional Accountants Ordinance.
Decision and reasons: The respondents were reprimanded. The Disciplinary Committee further ordered Cheng and Leslie Cheng & Co. to each pay penalties of HK$100,000 and HK$200,000 respectively. In addition, Cheng was ordered to pay the costs of the hearing totaling HK$10,250 and the respondents were ordered to jointly pay the remaining costs and expenses of disciplinary proceedings of the Institute and the FRC in the total sum of HK$280,788.70.
Choi Man Chau, Michael, CPA (practising), Chan Kin Wai, CPA (practising) and Pan China (HK) CPA Limited
Complaint: Failure or neglect by Choi and Pan China to observe, maintain or otherwise apply HKSA 230 Audit Documentation and 500 Audit Evidence and failure or neglect by Chan to observe, maintain or otherwise apply HKSA 220 Quality Control for an Audit of Financial Statements. Choi and Chan were also in breach in the Fundamental Principle of Professional Competence and Due Care in sections 100 and 130 of the Code of Ethics for Professional Accountants.
Pan China audited the financial statements of a Hong Kong listed company and its subsidiaries for the year ended 31 December 2010 and expressed an unmodified auditor's opinion.
Choi was an engagement director who signed the audit report and Chan was the engagement quality control reviewer.
The Institute received a referral from the Financial Reporting Council about non-compliance with professional standards in the audit work carried out by Pan China on the valuation of mining rights acquired by the company. After considering the information available, the Institute lodged complaints under sections 34(1)(a)(vi) of the Professional Accountants Ordinance.
Decision and reasons: The respondents were reprimanded. The Disciplinary Committee further ordered Choi and Chan to each pay a penalty of HK$12,000 and Pan China to pay a penalty of HK$50,000. In addition, the respondents were ordered to pay costs and expenses of disciplinary proceedings of the Institute and the FRC totalling HK$83,215.60, to be shared equally by them. When making its decision, the committee took into consideration the particulars of the breaches committed in this case, the respondents admission of the complaints and their conduct throughout the proceedings.
Poon Ming Pui, CPA
Complaint: Conducting himself in a manner inconsistent with the good reputation of the profession in breach of Statement 1.200 which applied up to June 2006, and failure or neglect to observe, maintain or otherwise apply Fundamental Principle of Integrity in sections 100 and 110 of the Code of Ethics for Professional Accountants which applied from July 2006.
Poon was a licensed person under the Securities and Futures Ordinance. From 2005 to 2011, he was employed in turn by two securities companies. During this period, Poon made several materially false or misleading declarations to his employers in which he failed to disclose securities trading activities he carried out through two of his friends securities accounts. The Securities and Futures Commission subsequently took disciplinary action against Poon, banning him from re-entering the securities industry for 10 months from January 2014. Poon reported the commissions disciplinary decision to the Institute during his annual membership renewal in December 2014. After considering the information available, the Institute lodged complaints under sections 34(1)(a)(vi) of the Professional Accountants Ordinance.
Decision and reasons: Poon was removed from the register of certified public accountants for one year with effect from 18 January and ordered to pay to the Institute a penalty of HK$10,000 and costs the disciplinary proceedings of HK$21,947. When making its decision, the Disciplinary Committee took into consideration the particulars in support of the complaint, Poons personal circumstances, previous similar cases and his submissions and conduct throughout the proceedings.
Details of the disciplinary findings are available at the Institutes website: www.hkicpa.org.hk.
January 2016 5
Apple CEO fights back against tax avoidance claims
6 January 2016
Apple pays every tax dollar we owe, said Apples Chief Executive Officer Tim Cook, in an interview with American news programme 60 Minutes, aired last month on CBS News. When confronted with the claims made by Congress against the companys accounting practices, Cook told the interviewer it is total political crap... Theres no truth to it.
The technology giant has been accused of storing an estimated US$181.1 billion in profits offshore, more than any other company. The tax analysis group Citizens for Tax Justice has calculated that Apple would owe US$59.2 billion in United States taxes if it didnt hold these profits outside the country.
Two-thirds of Apples revenue comes from overseas, Cook said. He added that while he would love to repatriate it, he cant because it would cost me 40 percent [in taxes] to bring it home. And I dont think thats a reasonable thing to do.
Cook also criticized the American tax code generally. This is a tax codethat was made for the industrial age, not the digital age, he said. Its backwards, its awful for America.
A 2013 Senate investigation found that Apple has structured two Irish subsidiaries to be tax residents of neither the U.S. nor Ireland, where they are incorporated. This arrangement ensures that they pay no tax to any government.
Most of Americas largest corporations maintain subsidiaries in offshore tax havens. According to Citizens for Tax Justice, at least 358 companies, nearly 72 percent of the Fortune 500, operated subsidiaries in tax haven jurisdictions at the end of 2014.
Approximately how old knotted string records known as khipus are. This month, archaeologists
discovered some khipus in the place where they were used, the New York Times reported, potentially helping
to fully understand the ancient Incan accounting tools for the first time.
Khipus were kept by the Incas to record the peanuts, chilli peppers, beans, corn and other items that
went in and out of agricultural storage houses.
A world of numbers
The increase in masters degrees in accounting awarded in the United
States for the 2013-2014 academic year, according to the American
Institute of CPAs. Masters degrees in accounting earned that year totaled
27,359, up from 20,843 a year earlier. In contrast, the number of bachelors
degrees in accounting fell by 11 percent to 54,423.
The number of credit cards owned by Walter Cavanagh of Santa Clara, California. Cavanagh has earned the Guinness World Record title of Mr.
Plastic Fantastic by keeping the most credit cards, amounting to a
US$1.7 million line of credit. The average American only has
about two credit cards, but has more than US$15,000 in credit card debt,
reported TIME earlier this month.
IMF chief warns of disappointing global growth this yearGlobal growth is set to disappoint in 2016 as a slowdown in China and higher interest rates in the United States take a toll on the world economy, warned Christine Lagarde, Manag-ing Director of the International Monetary Fund, the media reported last month. Writing in German newspaper Handelsblatt, Lagarde said growth in global trade has slowed considerably, while many countries still had weak financial sectors as the financial risks increase in emerging markets. All of that means global growth will be disappointing and uneven in 2016, Lagarde said, noting that mid-term prospects had also deteriorated due to low productivity and aging populations dampening growth.
Hong Kong IPOs to raise HK$280 billion About 115 to 125 companies are expected to launch initial public offerings in Hong Kong this year, raising about HK$260 billion to HK$280 billion, Deloitte Touche Tohmatsu told the Hong Kong Economic Jour-nal last month. On the other hand, about 380 to 420 companies are likely to list on the Mainland, raising 230 billion to 260 billion, Deloitte Partner Edward Au told the HKEJ. However, another potential interest rate hike in the United States in March or April is likely to affect investor sentiment in Hong Kong in the first quarter, he said.
Japan state-backed fund to support Toshibas restructuringJapan's industry ministry and a government-affil-iated investment fund will help Toshiba overhaul its operations by facilitating tie-ups with Sharp and others, the Nikkei reported last month. Toshiba is looking to merge its white goods segment with its counterpart at Sharp or another Japanese home electronics manufacturer, the newspaper said. The Innovation Network Corp. of Japan, overseen by the ministry, and Toshiba are discussing the specifics of an action plan to be set by March. Previously, the company said it intends to ask for a new 300 billion yen (US$2.49 billion) credit line by the end of this month to fund the large-scale restructuring.
Grant Thornton probed over Globo auditsThe Financial Reporting Council in the United King-dom is investigating Grant Thorton over the firms last two years audits of mobile technology company Globo, which went into administration in November last year after discovering financial irregularities in the previous month. The firm said that it shall continue to work actively with the FRC as they await whether or not the outcome of their inquiries will bring a formal case at a tribunal. Grant Thornton was announced as the auditor of the Greece-based company in March 2014, replacing BDO, which had only been in place for a few months.
January 2016 7
PwC pushes further into lawyers turfPwC has appointed a new head of projects, Damian McNair, in an attempt to further boost its legal capability within Australia, Accountants Daily reported last month. McNair will operate with his three-strong team of lawyers in Melbourne. The firms legal growth strategy, implemented over the past 18 months, is designed to build a high-quality legal team of more than 100 lawyers, with 20 to 25 partners, Tony OMalley, the firms Australia and Asia Pa-cific Legal Services Leader, told the publication. Weve probably been the most aggressive to date in the Australian market, which is a position were very happy to take, he was quoted as saying.
Hollywood awards season kicks off with EY EY oversaw the voting process for the Hollywood Foreign Press Associations Golden Globe Awards for the 43rd consecutive year on 10 January at the Beverly Hilton Hotel, Beverly Hills. Three senior EY professionals knew the results in advance and were on the red carpet with handcuffed briefcases that contained the names of this years Golden Globe winners. The measures put in place safeguard the accuracy of the results, maintain the integrity of the process and protect the results until the very moment they are announced from the stage, EY Partner Andy Sale said in a press release.
Singapore firms cautious about growthA census of accounting firms in Singapore found that most are cautious but remain positive about business growth ahead, reported The Straits Times last month. Conducted by the Singa-pore Accountancy Commission, the census indicated that the majority of the firms anticipate 1-5 percent in growth in the next 12 months. Despite the economic uncertainty, almost three in four firms among the 265 polled are expecting growth in their domestic revenue. Meanwhile, 28 percent of firms expect posi-tive revenue growth from work performed outside the country within the year.
Michael G. Oxley dies at 71 Former Ohio Congressman Michael G. Oxley, who helped write the landmark anti-fraud legislation, the Sarbanes-Oxley Act, died on 1 January at age 71. Oxley passed away after suffering from non-small cell lung cancer, a type of lung cancer seen in non-smokers. He led an effort to investigate failed energy giant Enron and helped cre-ate new accounting requirements in the 2002 Sarbanes-Oxley Act, following a wave of corporate scandals that brought down major corporations. The Ohio republican left Congress in 2007 after 25 years in the White House, where he devoted most of his time to issues involving corporate oversight and insurance protection.
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Michael G. Oxley
January 2016 9
Cover storyCorporate laddersCover storyCorporate ladders
A CEO has to balance different perspectives, and look at things from a macro point of view down to a micro one
10 January 2016
Top-notch analytical skills and a strong strategic mind-set are well-known characteristics of a chief financial officer, which are also important attributes for those who are looking to become chief executive officer. Robin Lynam talks to some successful CFO-turned-CEOs about their career development paths to find out what more is needed to become the final decision-makerIllustrations by Alex Nabaum
C PAs do not become chief financial officers by acci-dent. Clearly to rise to the top financial position in a success-ful company requires both ambition and application advanced busi-ness skills and rigorous discipline. For an executive who has suc-ceeded in climbing to that rung on the corporate ladder, what would he or she need to become the next chief executive officer?
A look at the Korn Ferry Institute analysis of sitting CEOs in the Forbes Global 2000 in 2015 shows that not many CEOs have a finance background: only 13 percent moved into that position from being the CFO of the same company, and only 18 percent had held a senior level financial officers position at any point in their careers before assuming their present roles. These numbers are virtually the same overall for 2013 through 2015, and improve only slightly among Forbes 500 CEOs.
So what are the secrets of those
who do succeed in rising to the top after serving as CFOs? The main difference between being CFO and going into the role of CEO is people engagement, says Antonio Manuel G de Rosas, CEO of Pru Life U.K., a leading life insurance company in the Philippines, and a member of the Hong Kong Institute of CPAs.
As a CFO you are the head of a large team but you are still somewhat of a doer to perform the finance function. But when you get to become CEO, while you have to understand the business very well and have the tools to drive it, the main element is people management.
Before joining Pru Life as CFO in 2007, de Rosas had served in the same position for 10 years with
Nippon Life in the Philippines, and before that for two years with the Asia Commercial Bank [now the Public Bank] in Hong Kong. After spending 15 years as a CFO, he says he had made a few adjust-ments when he was appointed CEO in 2010.
You train as an accountant and you are very analytical. When you become finance director you really have to understand every aspect of the business, but its very easy to be caught up in numbers and the technical aspects, he says.
For a CEO, developing more competencies in people-oriented right-brain areas and not just his or her technical left-brain skills is crucial. Its all about your people. You have to get the best team, and as you progress in the role, you have to learn not to micromanage. That was the transition I had to make from being CFO to CEO, de Rosas says. If you are a CFO in line for a CEOs position, you will have already been identified as
FROM CFO TO CEO
Its really about the ability to influence. That is a skill you must try to acquire.
January 2016 11
Cover storyCorporate ladders
very technically competent to run the business. My advice would be to develop people skills. Its really about the ability to influence. That is a skill you must try to acquire.
A new perspectiveIn 2014, when Institute member Tommy Kwok Yuen-keung became CEO of Casablanca Group a leading supplier of branded bed-ding products to the Greater China region he brought with him experience in a number of different business sectors.
He had served for three years as a CFO before establishing his own consultancy business, and was a consultant to the Casablanca Group on corporate restructuring, business development and finan-cial modelling before being invited to join them as CEO.
I had exposure from my early career to manufacturing, then infra-structure, corporate finance, IT and real estate, so the majority of indus-tries, except for this one a CEO role that is more to do with retail. Thats kind of challenging, but it is much smaller scale than what I have handled in the past, he says.
Kwok believes his financial background equipped him with many of the skills a CEO requires, but says he worked hard to extend his scope.
When I was a CFO I had to emphasize the finance perspec-tive, but now I have to balance
different perspectives, and look at things from a macro point of view down to micro. One thing that made me different from a normal CFO is that I have training in Blue Ocean Strategy [a theory of business building based on alter-natives to traditional marketplace competition]. I can put myself in different positions and see things in different perspectives, he says. This role is more challenging, but I find it interesting.
A visionary Institute member and CEO China for the Publicis Groupe, Eric Cheung, had been CFO China for JCDecaux for two and a half years before joining his present employer in 2009, originally as managing director.
After three years I was pro-moted to CEO, so for me the route was through different companies, he says. What I do here is very different from what I used to do when I was a CFO. I dont have a
background in procurement, or in human resources or law, and now I have a legal director, an IT director, and an HR director reporting to me. So in order to adjust to this new role I had to learn very fast.
Although it is generally agreed that successful organiza-tions require close cooperation between CEO and CFO, it is often assumed that the two roles impose essentially different perspectives on the business. A CFOs cost con-trol priorities, for example, may conflict with a CEOs aggressive business development plans.
Cheung, however, believes that the roles have more common ground than is sometimes sup-posed. I dont believe the ways of thinking are very different for a CFO and a CEO. The ways in which you resolve issues are quite similar. If a problem arises you have to look at different scenarios and options and do a pros and cons analysis before you come up with a solution, he says.
He adds, however, that there is a need to develop more detailed knowledge and understanding of the key functions within the company sales, marketing, IT, legal and so on, because as a CEO you will be managing the senior people and you have to understand what the other functions are doing, and the key issues that they have, and how you can help resolve them.
Also, after being in this role for
I dont believe the ways of thinking are very different for a CFO and a CEO. The ways in which you resolve issues are quite similar.
12 January 2016
For a CEO, developing more competencies in people-oriented right-brain areas and not just his or her technical left-brain skills is crucial
January 2016 13
Cover storyCorporate ladders
As well as being the public face of a company, the CEO is its voice, maintaining effective communication internally and externally
14 January 2016
seven years [including the manag-ing director phase] it seems to me that a difference is that when you are in the number one position in the company you need to have a more long-term view, he says. As a CFO the mission was to deliver that years profit targets, but when you take up the CEOs position you have to consider longer-term impacts. Of course, you have to achieve the profit targets for the year, but you also need to have a vision for the next five or 10 years and a clear plan.
Another essential quality for a CEO, he stresses, is an ability to communicate effectively, both within the organization and with a wider public, including other stakeholders in the business. There are many opportunities for a CEO to represent the organization, so communication skills are very important. Some CFOs may not be very gifted in communication and presentation skills, but they have to improve them, he says.
Being the voice George Hongchoy, Institute mem-ber, joined Link Asset Manage-ment Limited as CFO in January 2009, and made the step up to CEO in 2010. Link Asset Management
manages Link Reit a publicly listed real estate investment trust that has extensive holdings in retail and car parking space in Hong Kong and China. He says he initially found the exposure to public scrutiny his new role involved a challenge.
One difficulty in particular was becoming a diplomat and the public face of Link overnight. The role of CEO places me as the voice of the company, which is a skill that all new CEOs have to learn, he says. Being the CEO of Link, I have to lead and work with a far bigger team. Our stakeholder base is very broad, comprising investors, shoppers, tenants, and the commu-nity at large. Maintaining effective communication internally with staff and externally with our stakeholders is a priority in my role as CEO. On the positive side, my transition to CEO was easier as both offices are demanding in terms of ones ability to prioritize, make sound decisions and to think out of the box.
Read different types of books, suggests Hongchoy. They do not necessarily have to be related to your job and career choice, but rather they can help you be more inspired in your work. Be inspiring and motivating. Dont be afraid
to make mistakes and create what is needed to advance the business mission. Learn from others. Study real-life cases of business successes and failures, not just companies in your industry, but also those unre-lated to your business.
Preparing the mindset is also important. Successful business management takes leadership, which requires a broad inter-disci-plinary perspective to set the right goals for our teams and to inspire colleagues to deliver them. A finan-cial background readies one for the daily business challenges by cover-ing the different aspects of business management, including business strategy, corporate finance, the legal environment, risk manage-ment and corporate governance, to name a few, adds Hongchoy.
As de Rosas at Pru Life points out, the odds are not always against CFOs looking to make that next logical career step. Business is all about calculated risk, and one of the advantages you have as an accountant is that you know how to measure risk. Other disciplines may not have trained you to make that calculation. Its easier for us to make a decision on whether to pursue an opportunity or not.
He initially found the exposure to public scrutiny his new role involved a challenge.
January 2016 15
Thought leadershipBernard Chan
January 2016 17
Issues arising from economic and social developments such as globalization, inequality and new media are posing new chal-lenges for the business world. Faced with rising public expectations, many companies are asking whether the pursuit of immediate maximum returns is a sustainable, viable and responsible approach to business. They are realizing that valuing their employees, investing in the com-munity and maintaining a positive interactive relationship with the wider world are important to their long-term success. To bear social responsibility is no longer simply a public relations tactic; it is a neces-sary fundamental task.
A few years ago, the Hong Kong Council of Social Service conducted a survey of 1,000 Hong Kong citizens chosen at random. Of the respondents, 62 percent indi-cated they had heard of corporate social responsibility. Meanwhile, more than half said that, as con-sumers or job-hunters, they would give consideration to whether or not a company fulfils its social responsibility. In the opinion of the public, corporate social responsibil-ity not only covers product safety and customer protection but also minimizing damage to the environ-ment and caring for employees.
In Hong Kong, many compa-nies have traditionally focused on donating money as the main way of honouring their commitment to
the community. Every year, corpo-rations give billions of dollars in charitable donations. This perhaps reflects the attitudes of Hong Kong people, who are well known for their willingness to help others by donating money but perhaps traditionally not so much for volun-teering their time or lending a hand to strangers.
People are used to the giving culture, but they may not under-stand that corporate social respon-sibility is beyond giving money. To make our community and the world a better place, all of us need to think about how to address social issues, and this applies especially to business leaders.
As Chair of the Hong Kong Council for Social Service, I have been proud to take part in launching and developing the Caring Company scheme. Started in 2002, it encour-ages and gives public recognition to Hong Kong corporations that achieve outstanding contributions in caring for the community, employ-ees or the environment. Several thousand companies have now been awarded the Caring Company logo under the scheme, which also aims to promote more strategic partner-ships between the business and social service sectors in order to bridge the gap of social needs.
This year will see the introduc-tion by Hong Kong Exchanges and Clearing of the new environmental, social and governance reporting
standards. This is in line with global trends. It means that investors and the media and other stakeholders will have a clearer picture of how seriously each listed company is considering societys needs in the way it does business.
Professionals especially accountants are well-placed to contribute in this part with their expertise and experience in driving business success.
Meanwhile, even the basic practices like making cash dona-tions could, and should, come under greater scrutiny. This should encourage companies to ask more questions. Are their donations, employee-volunteer programmes and other activities effective? How are they helping? Do they actually change anything?
Hopefully, this will encour-age companies to re-examine their whole corporate social responsibility strategy. For example, they might consider the type of social issues they want to focus on whether it is poverty, education, environment, or healthcare services. They could then determine whether the activity is in line with their company values, direction, and particular industry.
Ultimately, companies should come to see corporate social respon-sibility as part of the corporate mission and long-term goals to increase shareholder value while playing a positive role in improving our society.
The Chairman of the Hong Kong Council of Social Service explains the strategic value of corporate social responsibility
Beyond giving money
Are their donations, employee-volunteer programmes and other activities effective? How are they helping?
Leadership prof ileFeng Shuping
As the Chinese Institute of Certified Public Accountants continues to play an important role in helping China become increasingly internationalized, its President, Feng Shuping, talks to A Plus about what that means for the nations CPAsPhotography by Jayne Russell
A YEAR OF GOING GLOBAL
I f there is a word to sum up what has been on the mind of the Chi-nese Institute of Certified Public Accountants in recent years and particularly in 2015 it is interna-tionalization.
In response to Chinas going out strategy and the One Belt, One Road initiative, the organization is encouraging accounting firms to join global networks, or develop member firms overseas, in order to raise their core competitiveness, and increase their capacity to serve their clients internationally.
Last year, we launched some activities that not only further con-solidate the convergence of certified public accountants practices with international standards, but also enhance their professional educa-tion, accounting firms internal governance and modernization of their professional service to match the needs of the market, says Feng Shuping, President of the CICPA, in an interview with A Plus.
Indeed, this concept of going global has been one of the objec-tives under the five core develop-ment strategies launched in 2010 by the CICPA following its fifth National Assembly of Delegates, which asserted the focus of build-
ing professional integrity and internationalization as the guiding principle for growth.
The five strategies include talent development, promoting bigger and more competitive accounting firms, convergence of international stan-dards, developing non-audit service, and information technology system construction.
As part of this, the CICPA has been instrumental in securing the policy support of the Chinese government. In 2007, nine govern-ment departments under the State Council, including the Ministry of Commerce and the Ministry of Finance, jointly issued Opinions on Supporting Accounting Firms in Expanding Exports of Account-ing Services
followed by the State Councils issuance of MoFs Opinions on Accelerating the Development of Chinas Accountancy Profession
in 2009.Both documents showed
Beijings determination to execute its national going out strategy and its full support for the accountancy profession to facilitate it, says Feng.
Currently, more than 70 Chinese
18 January 2016
Feng had worked in the Ministry of Finance since 1978, and had been promoted to Director of the Accounting Department and Assistant Finance Minister
January 2016 19
Leadership prof ileFeng Shuping
Feng is a member of the Financial and Economic Affairs Committee of the 12th National Peoples Congress
20 January 2016
firms provide various professional ser-vices to support the going out of Chinese enterprises. These include 41 firms that offer services to Chinese enterprises listed in the United States and 11 firms that provide audit services to H-share enterprises in Hong Kong. In 2014, these firms recorded 7.64 bil-lion yuan in revenue from their international service, up by 18.74 percent from last year, according to CICPA.
In addition, 72 Chinese accounting firms have established 45 overseas branches, member organizations and affiliated organi-zations by the end of 2014. Nine firms have joined the top 10 international accounting networks. Meanwhile, among those with securities-related businesses, 18 have joined 17 international accounting networks.
Some big home-grown firms have moved from solely joining international accounting networks to developing their own brands and networks by setting up overseas. Their influence in international accounting networks has increased accord-ingly, says Feng.
ShineWing, as an example of a Chinese firm that has gained increased recognition in the global market, became the first China-based accounting network to win the Rising Star Network award organized by the Inter-national Accounting Bulletin in October last year. According to IABs world survey 2014 and 2015, the firm ranked 19th among all the global accounting networks with a revenue of US$263.8 million, followed by Reanda International, which ranked 22nd with US$144.1 million in revenue.
Also, senior executives of the China offices of BDO, Baker Tilly, Crowe Horwath International and Grant Thornton now play an important role in the decision-making process within these international networks.
Forward-looking agendaDespite the Chinese professions increased influence and input, Feng believes there is still much work to be done. The profes-sion, she says, must reform and upgrade its services to capture the new opportuni-ties presented by Chinas innovation and development strategies as part of the 12th Five-Year Plan.
That includes the One Belt, One Road
infrastructure investment, reforming the government accounting system, develop-ing the financial market and implementing the so-called Internet Plus action plan, says Feng. According to a government work report issued at the National Peoples Congress in March last year, Internet Plus action plan seeks to drive economic growth by integration of Internet technologies with manufacturing and business.
The country has now formulated its 13th Five-Year Plan, the first under President Xi Jinping, which aims to realize its 100-year goal of building a moder-ately prosperous society. According to a statement issued after the meeting of the Political Bureau of the Communist Party Central Committee, the plan also acknowl-edges that China is entering a new nor-mal of economic development and facing not only great strategic opportunities but complicated and tough challenges.
That lays down the CICPAs blueprint for development to further expand the impor-tance of CPAs in the country and reinforce our professions development and direction, says Feng.
To cope with the new challenges and opportunities presented by Chinas new normal economy and the national going out strategy, the CICPA aims to speed up its integration with the rest of the world, with a focus on the following four areas: Enhancing accountants practice capabil-
ities, professionalism, professional ethics and level of professional judgment.
Promoting the establishment of profes-sional services market, studying the market demand and enhancing business development and innovation services to enlarge market supply.
Leveraging on the countrys new and open economy to promote the professions internationalization; enhancing firms internal governance to reach international level through serving the Chinese econ-omy and capital markets; helping firms adopt international advanced concept, standards and methods to render services; and strengthening the professions influ-ence on international matters.
Applying Internet Plus and big data tech-nology, as well as leveraging on informa-tion technology trends and prospects to set up the next five-year plan on the professions IT construction.
These highlighted areas will have an effect on the CICPAs more than 200,000 members (as of June 2015), 100,601 of whom are prac-tising CPAs. Together with other accounting personnel in the profession, it brings the total to more than 300,000. They provide profes-sional services to more than 4.2 million enterprises and public institutions, including more than 2,600 listed companies.
Over the past few years, the growth rate of the profession has consistently sur-passed its global counterparts, according to the organization.
In 2014, the profession accumulated 60.3 billion yuan in revenues. One of the fastest growing areas was consultancy, which saw its proportion surge to 30 percent in the same year, up from 16 percent in 2009.
Similar to other firms worldwide with the rapid expansion of their consulting busi-nesses, firms in China have been rapidly transitioning from doing traditional audit work to offering clients non-audit services. These include internal control design and appraisal, strategic management, merger and acquisition, due diligence, result assessment, investment decision, accounting, train-ing and other areas that help corporations enhance internal control, strategic planning, capital utilization, risk aversion and finan-cial risks management, says Feng.
She believes firms have to upgrade their
[The 13th Five-Year Plan] lays down the CICPAs blueprint for development to further expand the importance of CPAs in the country and reinforce our professions development and direction.
January 2016 21
Leadership prof ileFeng Shuping
management models, strengthen internal controls, quality controls and IT system, as well as create their own culture and brand in the process of helping clients going out.
Accounting firms should leverage on this special opportunity brought by the national going out movement and speed up their own processes to build an international network, says Feng.
They have to develop overseas branch offices, get familiar with international market operations and international standards, and enhance credibility in international markets so as to provide more thoughtful, efficient and profes-sional services.
Learning for lifeTo achieve such capabilities, it is impor-tant to invest in education, especially lifelong learning, says Feng. After more than 27 years of development, and especially after implementing a talent development strategy in 2005, she says the CICPA has managed to build up a lifelong learning system that provides continuing education to its members through long-distance (visual) training courses, face-to-face training classes, study classes and workshops.
Nowadays, through 31 local offices, the CICPA achieves nearly 20,000 enrol-ments to its training programmes every year, while the three national accounting colleges reach more than 6,000 enrol-ments yearly.
Through different levels of continu-ing education initiated by local offices, coupled with encouraging capable member firms to set up their own internal training, Feng believes that CICPA members have been effectively trained up to perform with the utmost integrity and professionalism. The institute itself sets a good example of a continuing profes-sional development system for lifelong
learning, she says.In addition, the CICPA has been work-
ing closely with the education sector to foster a new generation of quality profes-sionals. Since 1994, it has been setting up CPA professional courses in, and providing guidance and sponsorship to universities and colleges. Currently the CPA profes-sional courses are operating in 19 universi-ties and colleges with more than 6,000 students and more than 30,000 graduates.
In order to speed up the international-ization process, we take the job of training the next generation of accounting profes-sional very seriously, says Feng.
To foster fresh, international-compat-ible accounting talent, the organization has sent a total of 841 top CPA gradu-ates for overseas training in 10 batches and trained up more than 280 teaching personnel since 2005.
It regularly helps organize international exchanges for the professions top manage-ment and young accounting professionals, and also sponsored or subsidized members to secure overseas qualifications. Up to now, the CICPA has selected 350 leading talents in 12 batches for further training in order to foster a high-level of account-ing talent with a global perspective and enhanced strategic thinking.
While the road to internationaliza-tion may be long and winding, Feng is confident that her organization is moving towards the right direction.
This article is developed and trans-lated with permission from an original set of Chinese questions and answers provided by the Chinese Institute of Certified Public Accountants which is available from the A Plus website www.hkicpa.org.hk/aplus/2016/01/index.php. If there are different interpre-tations between the English ver-sion and the Chinese version, the Chinese version shall prevail.
22 January 2016
Accounting firms should leverage on this special opportunity brought by the national going out movement and speed up their own processes to build an international network.
January 2016 23
How to...Kriss Will
January 2016 25
Many people would like some flexibility in their work arrange-ments. Flexibility means differ-ent things to different people. It is worth considering the Oxford dictionary definitions when think-ing about what flexibility means: The quality of bending easily without breaking. The ability to be easily modified and willing-ness to change or compromise. All these elements are necessary when thinking about flexible work arrangements. Businesses need to think about what can be made to work while still meeting client needs. They also need to make it easy for their people to discuss and implement flexible work arrange-ment proposals, and leaders and managers need to be willing to change to accommodate changing work arrangements.
Here are a few thoughts about how to introduce sustainable flexible working arrangements in your firm:
Starting at the topToo often the fabulously worded work flexibility policies are purely aspirational. The reality is that people know that to make it work, it needs to start with the owners. Many of these people work full-time and full-on and see this as the only option. I know a number of business leaders who would like to work less or differently and take a commensurate income reduction yet are fearful of what this might mean for their stature in the eyes of their colleagues. By encouraging business leaders and managers to identify their own ideal working arrangements and working to incor-porate these into profitable resourc-ing models, I believe businesses
will have happier and more moti-vated leaders while also providing good role models for others.
A broad policy positionFor some people flexibility means being able to leave earlier one day per week to participate in activities of personal interest. For others it will mean working less than full-time so they can commit to carer responsibilities. For some it will mean working from different loca-tions. And sometimes it is a com-bination of all of these. A policy that tries to capture all the possible combinations of flexible working arrangements is not needed.
I have often argued that flex-ibility is a mindset, not a policy. I think the ideal policy wording for flexible work arrangements goes something like this: Come and talk to us about your ideal working arrangement and how together we can make this work successfully for you, for your team and for the busi-ness. We will listen. And we know your ideal will change from time to time keep talking with us.
Being open-minded is a good beginning. Being practical and hon-est about how the arrangement will operate is essential. Encouraging managers to consider how these arrangements could also benefit them personally will go a long way to making less than full-time/full-on arrangements normal rather than special.
Clear understanding of expectationsIt is critical to ensure there is a clear understanding about the expectations the employee has of the employer, and vice versa. This
understanding is reached through discussions about how flexible work arrangements will take place in practice rather than assump-tions. In my experience, the key areas to address when someone wishes to work less than full-time include: What are working hours what
does a full-time day equal in terms of hours and pay and how will work on non-working days be compensated?
Fee earning or work productiv-ity expectations
Salary structure day rate or hourly rate
Ability to work extra if needed yes/no/maybe/notice required
Availability to be contacted on a non-working day yes/no/when/how
Managing emails and incoming calls on non-working days who or how
Who is the back up in the team for urgent matters on non-work-ing days?
Any provision of home office equipment and payment for working from home costs?
If there is to be a trial period to assess the success of a changed working arrangement, param-eters for measuring success or otherwise, and what happens if it does not work out
Starting with an open mindset about possibilities rather than obstacles to flexible working arrangements will assist any busi-ness to attract and retain the high performing staff who seek flex-ibility. And keep in mind, full-time staff want flexibility too make sure your business supports this.
introduce flexible work arrangements
The people management consultant and Founder of Kriss Will Consulting explains how bringing in flexibility schemes to the workplace comes down to more than just policy
Capital marketsChina crash
Getting Chinas ROLLERCOASTER under controlMainland shares gyrated wildly as 2016 began, alarming investors and regulators. However, as George W. Russell reports, panic and policy risks should recede as Beijing allows market forces to gradually take the place of interventionIllustrations by Kouzou Sakai
A lmost as soon as the New Year began, Chinas stock markets plunged, trigger-ing circuit breakers that paused, then halted, trading in Shanghai and Shenzhen. The global reaction was swift and startling. While last summers collapse was blamed on irrational individual investors and ham-fisted intervention, the crash of 2016, it seemed, had deeper implications.
The big question was whether the plunge was a symptom of a general malaise in Chinas economy. Last December saw a slew of disappointing data: the producer-price index of wholesale prices declined, while both the Markit manufacturing and Caixin services purchasing managers indices slid.
Since the economic growth of Mainland China is slowing down,
it is no surprise that the market is going down as well, says Andrew Lam, Director of Assurance at BDO and a Hong Kong Institute of CPAs member. The Chinese stock market, in addition to being pulled down by domestic economic issues, is also reflecting the down-ward spiral of other international markets to a certain extent.
The macroeconomic factors that prevailed at the end of last year including the United States inter-est rate rise, the sharp depreciation of the renminbi and the decline in the price of oil have set the stage for great market volatility, notes Paul Lau, Head of the Capital Markets Advisory Group at KPMG China and an Institute member.
While investors were generally prepared for a rough ride across global financial markets as 2016 began, the magnitude came as
26 January 2016
January 2016 27
Capital marketsChina crash
a shock. The S&P 500 market valuation fell US$1.04 trillion in the first two weeks of the year, while Chinese investors unloaded US$590 billion in a single day. What happened at the start of 2016 was probably beyond the expectation of many investors, Lau says.
Moreover, the overall eco-nomic outlook, though far from weak, is more guarded than in previous years. (See Going global with both good news and bad on page 29). China is expected to slow down further in 2016, as a two-speed economy led by the service sector is unable to offset the weaknesses in the manufactur-ing sector, says Ben Luk, Global Market Strategist at JPMorgan Asset Management.
Yet long-term business confi-dence remains upbeat. China is as healthy as ever, Ronnie Chan, Chairman of Hang Lung Group, a major Hong Kong and Mainland property developer, told the For-eign Correspondents Club on 14 January. Even cyclical events can become serious, but China isnt going down in a systemic way.
Changing rulesOne explanation for such confi-dence is that analysts draw a dis-tinction between Chinas capital markets and the broader economic performance. We believe the
collapse of the stock market had very little to do with the actual economy, but rather the increased nervousness around policy mea-sures, says Luk at JPMorgan.
While regulators argue they need to rein in volatility and sustain valuations, arbitrariness only adds to the uncertainty, especially among inexperienced retail shareholders. I think many market participants have started to question the credibility of Chinese policymakers as to whether they can really manage the opening up of Chinas capital markets, says Lu Wenjie, H-share Strategist at UBS Securities in Shanghai.
That was evident last year, when retail investors egged on by officials who hoped invest-ment would boost cash-strapped companies ploughed 4 trillion yuan into stock markets through margin trading (borrowing money to buy shares). By the summer, the bubble burst amid margin calls, wiping out 30 trillion yuan. In response, Beijing spent 1.5 trillion yuan to support the stock market
and banned new share sales and sell-offs by major shareholders. The market continued to decline until September.
As the year began, investors were concerned that restrictions on sales by large shareholders (those with stakes of 5 percent or higher) were due to be lifted on 8 January, prompting a new wave of selling. Instead, the China Securities Regulatory Commission extended the ban for another three months and announced new share sales curbs to prevent large shareholders from selling more than 1 percent of a companys flotation every three months.
In addition, CSRC launched a circuit breaker to curb future plunges. Under this mechanism, a move of 5 percent in either direc-tion from the benchmark CSI300 Indexs previous close would trig-ger a 30-minute trading suspen-sion in the Shanghai and Shenzhen stock exchanges. A 7 percent rise or fall against the index would halt trading for the rest of the day.
The circuit breaker was deployed on 4, 5 and 6 January as investors sought to sell before it kicked in. On 7 January, when trading on the Shanghai exchange lasted only 29 minutes, the CSRC pulled the plug on the circuit breaker. The 5 percent and 7 percent thresholds set down by the Chinese authorities, for a tempo-
Even cyclical events can become serious, but China isnt going down in a systemic way.
28 January 2016
rary cooling-off period and a final suspension of trading, proved to be too narrow, says Lam at BDO.
Gaining knowledgeFrom an international perspec-tive, many of the rules governing Chinas stock markets appear to be capricious and unpredictable. Chinas government does not trust the markets, and the markets do not trust its government to set policy and establish rules predict-ably and transparently, asserts Larry Elkin, President of Palisades Hudson Financial Group, a U.S. asset management company.
The panic selling was sparked by an apparently abrupt change in policy, when Chinas central bank signalled a desire to see the yuan fall more quickly, adds Elkin, also a member of the New York State Society of CPAs. It was an echo of the turmoil that China set off with the devaluation last August.
To be sure, even Mainland observers acknowledge that stock market management can appear haphazard, but note that Chinese investors can be an unusual type of clientele. Even the regulators themselves are not experienced to handle the sometimes-chaotic response from retail investors in China so [there is a] trial and error process, says Lu at UBS.
Some observers stress the need
Going global with both good news and bad
Not so long ago, bad news about China was largely confined to China. But now that the country is the second largest economy in the world, trouble spreads quickly, and widely.
Plunges in Chinese equity prices have caused major swings in markets globally, and many have started to ques-tion the global outlook more generally, says Anders Svendsen, Chief Analyst at Nordea Bank in Copenhagen.
Global markets are much more sensi-tive to Chinas underlying fundamentals than in the past. One stark example is slowing economic growth 6.9 percent in 2015, the slowest in 25 years. Another is the collapse in global commodity prices, which is attributed to the slowing pace of Chinese gross domestic product.
The producer-price index, an index of wholesale prices, stood at -5.9 percent in December, according to the National Bureau of Statistics the 46th straight month of negative PPI. Weak demand has forced manufacturers to cut prices to attract business.
Chinas manufacturing sector contin-ues to contract: December marked the fifth successive month that factories shed jobs, while the consumer price index inflation rose 1.4 percent in the last year, well below the governments full-year target of 3 percent. Analysts
say rising deflationary pressure will pose a major risk in 2016.
Meanwhile, the yuan has lost 5 percent of its value since August 2015 and Chinas foreign-exchange reserves fell US$108 billion to US$3.3 trillion in December 2015.
However, Chinas balance of trade remains a bright spot. Exports in Decem-ber declined 1.4 percent year on year, much better news than the 8 percent fall expected by The Wall Street Journals sur-vey of economists. And some analysts are relatively sanguine on the outlook for con-sumption. Higher domestic demand will allow for a rebound in imports, progres-sively reducing the trade balance surplus, says Mahamoud Islam, Economist for Asia at trade credit insurer Euler Hermes.
GDP growth is set to remain resilient in 2016 (6.5 percent) and 2017 (6.4 percent), as a result of gradual accelera-tion in domestic consumption supported by public expenditure, says Islam. His projections are backed by consensus forecasts on GDP growth.
While annual growth in the 6 percent range is a slowdown for Chinas economy and one that might be accompanied by further yuan weakening and declining for-eign exchange reserves overall growth remains robust by world standards. A crisis in China remains a low-probability event, Lim Say Boon, Chief Investment Officer of DBS Bank in Singapore, noted in an advisory on 11 January.
January 2016 29
Capital marketsChina crash
30 January 2016
for more investor education. In the long run, I think if there are some rules introduced to limit the ability of major shareholders to sell, its more on an educational basis, says Edward Au, Co-Leader of the National Public Offering Group at Deloitte China and an American Institute of CPAs member.
Although China is the worlds second-largest economy and the China stock market is quite big, it is immature relative to Hong Kong, Au adds, noting that A-shares those of Mainland companies that are traded on the Shanghai and Shenzhen stock exchanges were created only about 25 years ago. Retail inves-tors thinking is more short-term, more speculative, more aggres-sive. The goal is to get the market to stabilize and not be subject to irrational sell-offs.
Au suggests that shareholders should be encouraged to better understand the consequences of selling shares and the market should know their motivation. There really needs to be more
education regarding why retail investors sell, whether they are lacking confidence in the market or simply realizing a return.
Lighter touchMany observers say Chinas capi-tal markets are making progress, even if it is slow. They are mov-ing towards the direction of being more transparent and market-driven under Beijings reforms, says Lau at KPMG. With the expected launch of the registra-tion-based initial public offering regime in 2016, the IPO applica-tion process will be streamlined and over time it will be largely up to the market to determine and justify stock valuations.
The Chinese populations accumulation of wealth over a prolonged period of high economic growth has fuelled the stock mar-kets gains in recent years. In June 2015, before the summer collapse, the total value of Chinese stocks rose above US$10 trillion for the first time, making it more than double the size of the Japanese market.
The Shenzhen exchange began trading unofficially in 1987 and the Shanghai bourse opened in 1990. However, in 2015, only 7 percent of urban Chinese owned shares, according to Citibank data, with most investments held as property and bank deposits.
More recently, many Chinese investors have turned to wealth management products because they see the stock market as not only unpredictable but overvalued. Lu at UBS notes that the A-share small-cap ChiNext index is now around 80 times price/earnings, compared with the equivalent Hong Kong index trading at only about 20 times price/earnings.
Thus the markets might need to brace for further drops before theres any chance of reaching an attractive equilibrium. Chinese A-shares remain overvalued because of the governments intervention to stave off market collapse last summer, Arthur Kroeber, Managing Director of Dragonomics, an independent economic research firm in Beijing, wrote in a note to clients this month. Until share prices are allowed to find their true level, the market will be jittery.
While the government could act more decisively to prevent further sell-offs, economists are betting that Beijing might govern the markets with a lighter hand in 2016. The bottom line is not more strong policy stimulus, forecasts Helen Qiao, Greater China Chief Economist at Bank of America Merrill Lynch, but that the government will allow the market to play a more important role.
The goal is to get the market to stabilize and not be subject to irrational sell-offs.
January 2016 31
Success ingredientMa Chan-chi
Ma Chan-chi started small at a big Hong Kong bank and today holds top positions at CCB (Asia).
He tells Cathy Holcombe his route from junior bookkeeper to CPA to CFO in a fast-growing and
increasingly complex financial sectorPhotography by Jayne Russell
32 January 2016
Ma also sits on a number of Hong
Kong advisory and industry association
committees, such as the Hong Kong
Institute of Bankers
January 2016 33
Success ingredientMa Chan-chi
34 January 2016
M a Chan-chi remembers filing a four-page report when he was section head for the regulatory report-ing team at the first bank that he worked for. Today there are more than 10 such regulatory reports that need to be filed, and some of them are more than 20 pages. So you can see the difference 30 years ago comparing with nowadays, says Ma, Deputy Chief Executive and Chief Financial Officer at China Construction Bank (Asia), and a member of the Hong Kong Institute of CPAs.
There are a number of reasons for the growing complexity, starting with rapid technological change that has been challenging, particularly in the Mainland where banks such as CCB traditionally faced with limited competition, but now deal with constant change in relatively unregulated new frontiers.
I think that you have heard of some non-banking corpora-tions, which have expanded into financial services by providing e-commerce services, says Ma. They have introduced e-payment or mobile payment services, which have huge implications on the future of banking industry.
Ma also cites the dynamic changes that have been seen in accounting standards, such as IAS 39 Financial Instruments: Recognition and Measurement, introduced in 2005. Now his team is preparing for the introduction of IFRS 9 Financial Instruments. Both standards are very compli-cated and sophisticated, involving a lot of model design and numerical analysis, he points out.
Regulatory challenges have also been magnified in recent years, especially after the Hong
Kong Monetary Authority imple-mented new anti-money launder-ing and anti-tax evasion rules.
Finally, Ma has faced the challenge of implementing a new organizational system developed by the parent company. This comprehensive system spans all banking activities, from front to back to middle office. As the largest overseas arm of the CCB group, the Hong Kong operation is playing a large role in overseas implementation, and has commit-ted commensurate staff resources.
Ma, who currently oversees sweeping functions in todays intensely complex regulatory, tech-nological and accounting environ-ment, looks back on how he first gained entry to the world of banking with a simple skill-set: bookkeeping and typing.
It all began for him with a qualification he obtained from the London Chamber of Commerce and Industry, a common ticket for youngsters to get in the door at big company, when Ma graduated from secondary school in the late 1970s.
Most people at that time were not wealthy and the parents usually wanted their children to have a
stable job, to work in a large or repu-table company, Ma explains.
His LCCI qualifications for bookkeeping and typing landed him a position at a sizable local bank, where he was assigned to the accounting department straight out of secondary school. That is where I started my accounting career, he says.
Ma expected, however, that he would never get far without higher educational qualifications. So in time he started part-time studies at Hong Kong Polytechnic, where the business school prepared students for the Chartered Institute of Bank-ers qualification.
The banking diploma in turn allowed him to sit for the Institute exams. Still working, he studied in his leisure time or in the 90-min-ute ferry ride from his home to Central. After four years, in 1991, he obtained his CPA qualification. No secret but to work hard, he says of juggling a full-time job with an ambitious academic schedule.
Ma believes his accounting background not only qualified him to later take on senior roles like being a CFO, but also to deal with the myriad operational, functional and competitive challenges in the fast-changing financial industry.
To be a qualified accountant I think we should have good analyti-cal skills, logical thinking, a strong accounting concept and knowledge, good management skills and, of course, a good internal control sense, says Ma. All these char-acteristics can help me manage my current scope of work.
Moreover, as a freshly minted CPA back in 1991, the qualifica-tion helped him get a promotion that set his career path on a sharply upward trajectory.
Non-banking corporations have introduced e-payment or mo-bile payment ser-vices, which have huge implications on the future of banking industry.
When CCB (Asia) took over the
Bank of America (Asia) operations,
there were 17 branches and
about 700 staff. CCB (Asia)s
number of staff has nearly tripled
now and as of June 2015, it had HK$500 billion in assets, a growth of more than 10 times since the
January 2016 35
Success ingredientMa Chan-chi
From front office to new frontiersThings began to move quickly for Ma though he still managed to find time to pick up a masters degree in business administration from the University of Strathclyde in Scot-land in 1995.
He was promoted to head the treasury administration team responsible for treasury finance, product controls and operations. This familiarized him with many different types of banking busi-nesses, from front to back office, from asset management to insur-ance and treasury settlement, and from systems accounting to risk management and internal control mechanisms.
Later, he was seconded to work in London, widening his experience further. By the mid-2000s, he was given a breakthrough assignment: to set up a locally incorporated bank in China in 2007.
At that time, China was allow-ing foreign banks to enter to set up locally incorporated banks instead of just allowing to operate as branch, recalls Ma.
Once he finished with this milestone assignment, Ma stayed in China, joining another sizable local bank. His first mission there was to set up another locally incorporated bank in Shanghai, which made him one of the first individuals to have experience in setting up two Mainland-incorporated banks.
Meanwhile, Chinas major financial institutions were expanding outside the country. China Construction Bank, the Mainlands second largest bank by assets already had operations in Hong Kong since 1995. It took
over Bank of America (Asia) in 2006, which was later renamed China Construction Bank (Asia) in the same year. I understood the expansion of CCB (Asia) would be very fast. And also provide me with a platform so I can use my previous experience gained both in Hong Kong and China, says Ma, who moved to CCB (Asia) in 2010. And honestly, after working for four years in China, I also wanted to move back to Hong Kong to spend more time with my family.
When CCB (Asia) took over the Bank of America (Asia) operations, there were 17 branches and about 700 staff. CCB (Asia)s number of staff has nearly tripled now and as of June 2015, it had HK$500 billion in assets, a growth of more than 10 times since the acquisition.
CCB (Asia) integrated with CCB Hong Kong branch in 2013 to achieve synergy, but still has two banking licences, which were neces-sary to support the rapid growth of the business. After the integration, CCB (Asia) expanded Mas role to Deputy Chief Executive, in addition to his CFO role.
A key factor in CCB (Asia)s expansion is the clout and massive operations of the parent company, which funnels business opportu-nities and expertise to its Hong Kong subsidiary. Policies such as renminbi internationalization and One Belt, One Road also facilitate cross-border business flows for CCB (Asia).
In 2014, Ma became company secretary for China Construction Bank. He also sits on a number of Hong Kong advisory and industry association committees, such as the Hong Kong Institute of Bankers
and the Banking Industry Training Advisory Committee.
Complicated challengesAs Ma observes, banking has become much more challeng-ing over the past three decades. Indeed, the industry has become so complex that young recruits can no longer hope to get in the door with a bookkeeping qualification. Moreover, even those with all the right stuff are less likely to do what Ma did as a young man: to stay with the same bank, working long hours and in many different
I understood the expansion of CCB (Asia) would be very fast. And also provide me with a platform so I can use my previous experience gained both in Hong Kong and China.
36 January 2016
posts so as to comprehensively master the business.
We find it sometimes difficult in recruiting experienced accoun-tants or getting the university graduates with accounting degrees to join the banking profession, notes Ma. I think some of the new generation are not willing to work in banks, which is a demanding job with long hours, many busi-ness targets to meet, ever-chang-ing regulatory and accounting standards, and with technology moving faster than before.
When Ma first entered the pro-
fession, he felt very lucky to get a job with a big bank. At that time in Hong Kong it was not easy to find a good job, he says. In contrast, the new generation is confident enough in their prospects to resign on a whim and maybe take a holiday and then come back and find another job.
This is a Hong Kong-wide prob-lem but PRC-based banks such as CCB (Asia) might have an advan-tage in meeting the challenge. Ma is exploring the idea of migrating some back office jobs to China Con-struction Banks massive Mainland
operations. While human resources costs in Shenzhen, Shanghai or Beijing are similar to Hong Kong, locales in other large but more remote cities, such as Chengdu or Chongqing, have good talent pools but potentially less pricy and more flexible young professionals.
We are just undergoing some reviews to ease the working pres-sure in Hong Kong, says Ma. While recruitment and human resources are yet another challenge for him, he has acquired a lot of practice in dealing with rapid and far-reaching change.
January 2016 37
Work-life balanceCPA couples
I t wasnt love at first sight but Gary Au has been supporting Fiona Li in her endeavours from the very start. He first saw Li as she ran to the finish line of the Walk Up Jardine House fundraising event, which took place where Au previously worked in the finance department. The corporate volun-teer was stationed on the 49th floor of Jardine House and when Li, who was representing the Hong Kong Institute of CPAs team, ran up the last steps of the race, she could hear someone yelling, Go CPA! Go!
At that time, I didnt know Fiona yet, says Au, a member of the Institute and now Manager of Finance and Operations at information technology company SUNeVision Holdings, but when I saw a CPA approaching the finish line, I had to cheer for her. Au was later introduced to Li, Internal Audit Manager at CITIC Pacific and an Institute member, at a re-union party for participants of the Institutes singing contest where they both recalled their attendance in the Walk Up event. Au entered the singing contest but while he didnt make it past the preliminary rounds, ended up making new CPA
friends who love to sing. These friends knew Li from the Dragon Boat Interest Group and invited her to the reunion for some CPA socialization.
Some CPA couples, like Au and Li, inspire growth in one another. Whether they attend Institute events together or explore the professional skills of their partner and apply it to their own work, these CPAs are more than husband and wife they enrich each other to become better individuals.
After I found out that the CPA from the charity run was in fact Fiona, my first impression was that she was very sporty, active and immensely selfless for joining voluntary services to represent the Institute, says Au. In addition to the fundraising event, Au and Li realized they were both part of the Institutes Accountant Ambassa-dors programme.
We really wanted to conduct a Rich Kid, Poor Kid session together to let secondary school students to have more financial management knowledge, says Li. However, after we enrolled a few months before the event, a business trip came up and we
Relationships are about more than understanding and commitment between two people the best ones lead to creating something greater than the sum of their parts. Tigger Chaturabul talks to CPAs who have gone on to achieving more by doing so as a couplePhotography by Juliet Shayne Lui
38 January 2016
My first impression was that she was very sporty, active and immensely selfless for joining
voluntary services to represent the Institute.
Gary Au and Fiona Li at the park
January 2016 39
Work-life balanceCPA couples
missed that opportunity.Unexpected disruptions to their
schedules are something that Au and Li jointly understand. We really speak the same [CPA] lan-guage and even when we cant be together for our important dates, we understand that, says Au.
As they got to know each other more through outings organized by their CPA friends, Li learned that Au was good at badminton. I was a member of the Bad-minton Interest Group and I told him we sometimes played with other CPAs. After that, he joined ASAP, says Li. I joined because I liked badminton, Au declares with a smile.
Although Au and Li have dif-ferent interests, one of them can usually be found in the crowd shouting words of encouragement to the other. During international dragon boat festivals and open races in Tsim Sha Tsui, Au is on the sidelines supporting the Insti-tutes Dragon Boat Interest Group and cheering for Li.
Similarly, Li will be there for Au during the Standard Char-tered Hong Kong Marathon as he runs to beat his best times in 10 kilometre and half marathon races. The HKICPA is a member of the Recreation and Sports Club for Hong Kong Professional Bodies, which awards participants of the Standard Chartered marathon out-standing runner awards. I won the team relay and individual award in 2013, explains Au.
The differences in their job roles and tasks allow the couple to really understand the kinds of pressure their other half faces at work. Fiona is an internal auditor so she knows how much tension there is for me to make sure the
Li and Au with their 11-month-old daughter Stephanie
40 January 2016
figures are 100 percent correct, says Au.
The pair continue to participate in voluntary services with the Institute and their own firms, with Au sometimes joining activi-ties hosted by Lis company as a couple. Giving back to society is one of our common interests, says Au. I like people who are helpful and do community services, says Li. Gary joined many volun-tary activities organized by the Institute so he was invited to be a speaker at a young members event about making a difference to soci-ety. Hes amazing actually.
Mind and spiritJulian Sun and Alisa Lee met at a cross-church ecological day trip in 2006 to Tap Mun Island, known for panoramic sea views and camp-grounds. They are both Christians and members of the Institute.
Sun is an Information Technol-ogy Project Manager at a multi-national law firm, specializing in finance software, while Lee is an Audit Learning Manager at Grant Thornton. When she first introduced herself, I was surprised to learn that she was not only a qualified CPA but also studying theology for a Christian studies di-ploma, says Sun. It was a unique thing about her because even as a busy CPA, she was able to find time for this, and its actually unre-lated to her career.
During the trip, Lee remembers taking a boat out to view coral species in protected Hong Kong waters. Julian was a group leader during the trip and his sincerity made me feel like I could fully trust him, she says. As we got to know each other, we realized our backgrounds were even more
Julian Sun and Alisa Lee met on an ecological trip organized by their churches
January 2016 41
Work-life balanceCPA couples
42 January 2016
similar, in that we both came from non-Christian families and were each others first partners. Their beliefs led them to be quite seri-ous about being in relationships, choosing to refrain from dating if they werent completely sure if it was love. I always wanted my partner to be a Christian, says Lee. When Julian turned out to be a CPA, it was a bonus.
Before the couple got married in 2009, they often went to church activities together, whether it was chaperoning teenagers at an event or attending a Stephen Tong bible study. Tong is an influential theo-logian, pastor and evangelist who heads the Reformed Evangelical Church of Indonesia.
The best use of their time, however, is when they can date and earn continuing professional de-velopment hours at the same time. Sun is a member of the Institutes Information Technology Interest Group and when they hosted a site visit to Ngong Ping 360, Lee couldnt resist the urge to join in as well. They took us to visit the depot of the cable car, understand how the wires work and take a ride for a practical session on technol-ogy, Sun explains.
We try to go to these fun Institute events together but when its something more serious like an IFRS update, we take turns because we want someone to send our daughter, Isabeth, to sleep, says Lee.
The parents keep a close eye on their five-year-old to predict her future habits. Judging from the way she spends points in iPad
games, were worried she might really spend a lot later, laughs Lee. As CPAs, we have a similar budgeting mindset when it comes to family matters so we will teach her to save and not get into buying luxury things too early.
One of their relationship quirks is their tendency to use account-ing jargon to communicate in daily life. For example, when our daughter did not perform as ex-pected during a school interview, we simply said to each other that we need to make a provision on this event, explains Lee.
While their similarities are a great source of strength for the couple, their differences were also a point of attraction when they got to know more about each other. In our house right now, all of my daughters toys are on the floor and my husbands toys are stored near the ceiling, Lee says with a smile, referring to the Gundam figurines and models Sun has been collecting. It was quite cute to know about his interests when we started dating and he used to intro-duce all the different models and roles to me, including Japanese cartoon songs and how their mean-ings have changed over the years.
Lee has also taught Sun useful things about her accounting field, which is vastly different from Suns IT specialization. Since she is in audit, I asked her about things related to internal control, he says. I can use this internal control concept to build up soft-ware that can improve the corporate governance in my company.
I always wanted my partner to be a Christian. When Julian turned out to be a CPA, it was a bonus.
Lee and Sun enjoy taking the opportunity to date and earn CPD hours simultaneously
January 2016 43
Determining the taxability and timing of taxation of non-cash benefit granted to employees depends on the peculiar nature and circumstances under which such ben-efit was provided. Taxpayers should seek professional advice where necessary.
Taxability of benefits-in-kind received by employeeBenefits received by an employee that does not take the form of money are often called benefits-in-kind. These benefits count as income from employment and are chargeable to salaries tax if they took the form of moneys worth. A benefit would be regarded as constitut-ing moneys worth if it is capable of being converted into money either by sale or some other means in the employees hands or involved the discharge of an employees personal liability.
Where a benefit takes the form of an asset, which can be converted into money, the amount that is treated as earnings for
salaries tax purposes is the amount that the employee could get for the item if he or she were to dispose of it as soon as it came into their possession, i.e. the second-hand value.
Where a benefit involved the discharge of an employees personal liability, the amount of the liability so discharged by the employer would be regarded as constitut-ing moneys worth and thus a chargeable benefit.
The Institutes questions It is common nowadays for employers to provide their employees with their own products free-of-charge to promote their brand names, e.g. mobile companies pro-viding mobile phones to their employees. While the employees are not required to return the products to their employ-ers upon cessation of employment, employers would usually impose certain restrictions on the assets granted, such as requiring the employees to undertake that they would solely use the products themselves and would not resell the products to third parties.
The Institute asked, whether the IRD would agree with their views that these benefits-in-kind would be treated as non-taxable on the grounds that they are not convertible benefits (as the products are not intended for re-sale by the employees) and they do not represent a discharge of the employees personal liability (as the employer directly provides the products to the employees).
In the event the IRD considered that the products granted constitute moneys
worth benefits that are liable to tax, the Institute asked whether the taxing point of time would be deferred to the time of ces-sation of employment. The Institute con-sidered that this would be the case as the employee has undertaken not to resell the products received while he was employed. The restriction to resell would only be lifted upon cessation of employment.
As regards the employers reporting obligation, the Institute noted that the resale values of the benefits granted were usually small, or even nil in some cases. To ease the administrative and report-ing burdens of employers, the Institute requested the IRD to give practical guidance on reporting such benefits in the employers returns. Apparently, they were suggesting to the IRD to consider discharging employers from reporting benefits-in-kind with taxable values below certain threshold.
Taxability of benefit grantedThe IRD responded that unless covered by specific provisions, benefits-in-kind received by employees would be treated as taxable income pursuant to the prevail-ing tax code and case law principles. That means, the benefits received are assess-able if such benefits were capable of being converted into money, through sale or some other means, or involved the discharge of a personal liability of the employee.
Applying the principles to the above example, the IRD considered that if the employees were allowed to use the
Benefits-in-kind capable of converting into money is taxable at the time of receipt
Kathy Kun and Patrick Kwong explain how determining the taxability and timing of taxation of non-cash benefit
granted to employees can be a complicated process
44 January 2016
products provided by the employers for private purposes free-of-charge, and the employees were not in any way able to convert the benefit into money, the IRD agreed the benefit was not be chargeable to tax.
On the other hand, if the ownership of the products was transferred to the employees, and the employees were not required to return them to their employ-ers when they left employment, the IRD took the view that the benefit received was chargeable benefit liable to salaries tax. The amount subject to tax would be second-hand value of the products at the time of receipt.
As such, the taxability of such benefits hinges on whether (i) ownership of the products concerned was passed to the employees; and (ii) the products were con-vertible into money. The resell restriction attached to the products was only a factor for consideration but was not conclusive.
Timing of taxationThe IRD reiterated that the taxing point of time is when the benefit is received by the employee. If the ownership of the products was passed to the employee at the time of its provision, the benefit was accrued to the employee at the time of receipt of such products. The undertaking made by the employees not to resell the products was again, a factor for consideration only but was not conclusive.
Whether and when the ownership of an asset was passed to the employee are pri-marily questions of facts which depend on the peculiar circumstances of each case.
In this regard, the IRD pointed out that the letter of acknowledgement of receipt of the asset and the related terms signed by an employee would serve as a piece of evidence to show when and whether the ownership of the product was passed to the employee.
Employers reporting obligationBeing an administrator of the tax law, the IRD stressed that it was bound to admin-ister the law as it was. As required by the law, employers are obliged to file proper and correct employers returns in respect of remunerations accrued to their employ-ees and to maintain the records required for this purpose. Therefore, employers
are required to report benefits-in-kind that are moneys worth provided to their employees. And the reportable amount is the second-hand value of the relevant products based on their best estimation. Neither the quantum of a taxable remu-neration nor the administrative burden on the employer in keeping the records would justify concessionary treatment.
Kathy Kun is Tax Senior Manager and
Patrick Kwong is Tax Executive
Director at EY
January 2016 45
The Hong Kong stock exchange concluded the consultation paper on risk manage-ment and internal control and amended the Corporate Governance Code, which becomes effective for accounting periods beginning on or after 1 January 2016. HKEx emphasized that internal control is an integrated part of risk management and the internal audit function plays an impor-tant role in ensuring the effectiveness of a listed companys risk management and internal control systems. Although risk management is not a new idea to profes-sional accountants, what exactly should internal auditors do to address these changes and create values for its organization?
Enterprise risk managementOrganizations face uncertainties, which emanate from the inability to determine the likelihood of an event and the associ-ated impacts. Uncertainties, which can be further classified as risk and opportunity, may erode or enhance value. Enterprise risk management allows management to effectively deal with uncertainties and eventually enhance the organizations capacity to build value. ERM is defined as follows by the Committee of Sponsoring Organizations of the Treadway Commis-sion: ERM is a process, effected by an entitys board of directors, management and other personnel, applied in strat-egy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide rea-sonable assurance regarding the achieve-ment of entity objectives.
According the ERM Framework issued by COSO, ERM assists an organization to align risk appetite and strategy, and to enhance risk-response decisions. It also helps to reduce operational surprises and losses, providing integrated responses to multiple risks. Eventually, it may allow management to seize opportunities and improve deployment of capital.
Responsibilities of the board and managementResponsibilities of the board and man-agement on ERM are clearly stated in the international frameworks (such as the ERM Framework) and the Corporate Governance Code.
Generally, the board should oversee the ERM by: Knowing the extent of ERM within the
organization; Reviewing the risk portfolio of the
organization and considering it against the risk appetite;
Understanding the changes and sig-nificant risks the organization is facing; and
Considering whether the risk responses are appropriate or not.
Management, on the other hand, is directly responsible for the ERM. They are responsible for the design, implementa-tion and monitoring of it. There is no rigid definition of management, but it normally includes the chief executive officer (who has ultimate ownership responsibility for the ERM), chief financial officer (who has responsibility in handling financial report-ing risks and compliance risks) and chief
operating officer (who is responsible for handling operation risks).
Role of an internal auditor Due to the new demands from the board and management, the role of an internal auditor shifts from a control-focus advi-sor, to a consultant who creates value by supporting the organizations objectives, monitoring enterprise risks and ensuring the effectiveness of the internal control framework. Internal auditors should con-sider whether the upcoming activities will affect their independence and objectivity or not.
Core internal audit roles in regard to ERMThe Institute of Internal Auditors states that Internal auditing has a core role with regard to ERM, which is to provide objective assurance to the board on the effectiveness of risk management. The IIA Position Paper: The Role of Internal Auditing in Enterprise-wide Risk Manage-ment suggests that internal auditors can provide the following assurance activities: Giving an assurance on the risk man-
agement processes; Giving an assurance that risks are cor-
rectly evaluated; Evaluating risk management
processes; Evaluating the reporting of key risks;
and Reviewing the management of key
Determining whether the ERM is effective is a judgment resulting from the internal
The role of internal auditors in enterprise risk management
Roy Lo looks at how internal auditing can create value for organizations amid changing reporting requirements
46 January 2016
auditors assessment showing that: Organizational objectives support and
align with the organizations mission; Significant risks are identified and
assessed; Appropriate risk responses are
selected that align risks with organiza-tions risk appetite; and
Relevant risk information is captured and communicated in a timely manner across the organization, enabling staff, management and the board to carry out their responsibilities.
Apart from assurances provided by the internal auditor, the board should obtain assurances from other sources such as management, external auditor and legal advisors. Under the Corporate Governance Code, the management should provide a confirmation to the board on the effective-ness of risk management and internal control systems.
Other consulting activitiesIn the early stages of introducing ERM to an organization, internal auditors may act as a project manager to provide consult-ing services for improving the governance
and risk management process. When risk management embeds in normal opera-tions, internal auditing roles should shift back to assurance roles. The IIAs position paper suggests that the following consult-ing roles, with appropriate safeguards, can be taken up by internal auditors: Developing risk management strategy
for board approval; Championing establishment of ERM; Maintaining and developing the ERM
framework; Consolidating the reporting on risks; Coordinating ERM activities; Coaching management in response to
risks; and Facilitating identification and evalua-
tion of risks.
Appropriate safeguards include but are not limited to: Management remains responsible for
risk management system; Internal auditors responsibilities, plan
of work and the responsible teams should be properly documented;
Internal auditing should not manage risks on behalf of managements, it should instead provide advice and guid-
ance to management on its decision making;
Internal auditing cannot give assurance on any part of the ERM framework in which it is responsible for.
Last but not least, the position paper suggests that internal auditors should not undertake the role of: Setting the risk appetite; Imposing risk management process; Managements assurance on risks; Making decisions on risk responses; Implementing risk responses on man-
agements behalf; and Accountability of risk management.
ConclusionInternal auditors can assist an organiza-tion to achieve its objectives by not only utilizing its process or control-based knowledge, but also risk-based knowl-edge. In addition, by facilitating the man-agement on risk assessment, consolidat-ing key risks faced by the organization, evaluating ERM and enhancing the inter-nal control systems, internal auditing can create value for the organization.
Roy Lo is Managing Partner at ShineWing
January 2016 47
Audit firms have traditionally provided their audit clients with a variety of non-assurance services that are consistent with their skills and expertise. This is an efficient and effective way for companies to take advantage of the knowledge that their external advisors have of their business and operation. In addition, an independent viewpoint from external advisors can often shed light on specialist areas or intractable internal issues within an organization. Common non-assurance services pro-vided by audit firms include: Company secretarial services Accounting and bookkeeping
services Taxation services Valuation services Information technology system
However, providing non-assurance services to audit clients may create threats to the independence of the audit firm. The threats created are most often self-review, self-interest and advocacy threats.
Ethical requirements under the Institutes codeThe Hong Kong Institute of CPAs Code of Ethics for Professional Accountants sets out the ethical requirements in relation to the provision of non-assur-ance services to audit clients. Practi-
tioners are reminded of the following considerations when providing non-assurance services to an audit client: Audit firms should perform threats
and safeguards evaluation before accepting an engagement to provide a non-assurance service to an audit client. If a threat is created that cannot be reduced to an acceptable level by the application of safeguards, the non-assurance service should not be provided.Firms are reminded to document the relevant facts and circumstances and the determination on the threats and safeguards evaluation.
Under paragraph 290.162 of the code, audit firms shall not assume a management responsibility for an audit client. Assuming a management responsibility for an audit client creates threats that would be so significant that no safeguards could reduce the threats to an acceptable level. However, activities that are routine and administrative, or involve matters that are insignificant, generally are deemed not to be a management responsibility.
If a firm is deemed to be a network firm, the firm shall be independent of the audit clients of the other firms within the network (unless otherwise stated in the code). The independence requirements that
apply to a network firm shall apply to any entity, such as consulting practice or professional law practice, which meets the definition of a network firm. For further guidance on networks and network firms, please refer to paragraphs 290.13-24 of the code.
The code contains more stringent independence requirements in respect of audits of public interest entities. There are limitations on the type and extent of non-assurance services that can be offered to audit clients that are public interest entities. For example, audit firms are prohibited from providing bookkeeping and accounting services, and tax calculation services to audit clients that are public interest entities, except in emergency situations. Firms are reminded that public interest entities include all listed entities and any additional entities, or certain categories of entities, that they determine to treat as public interest entities.
When the total fees from an audit client represent a large proportion of the total fees of the audit firm, the dependence on that client and concern about losing the client creates a self-interest or intimidation threat. Firms should evaluate the significance of such treats and apply appropriate
Provision of non-assurance services to audit clients
48 January 2016
This article is
safeguards. If an audit client is a public interest entity and, for two consecutive years, the total fees from the client and its related entities represent more than 15 percent of the total fees received by the firm, the firm is required to disclose to those charged with governance of the audit client such fact and the safeguards applied.
Members are advised to read the code for details of the independence provisions. Small- and medium-sized practitioners can also refer to Ethics Circular 1 Guidance for Small and Medium Practitioners on the Code of Ethics for Professional Accountants issued by the Institute for more guidance on the adoption of the code on the provision of non-assurance services to an audit client.
Update to the independence provisionsIn July 2015, the Institutes code was updated in response to the International Ethics Standards Board for Accountants pronouncement on Changes to the Code Addressing Certain Non-Assurance Ser-vices Provisions for Audit and Assurance Clients. The update aims to reinforce the independence provisions in the code and at the same time, promote greater con-sistency of application of the provisions.
The revised provisions include:
Removal of provisions that permit-ted an audit firm to provide certain bookkeeping and taxation services to audit clients that are public inter-est entities in emergency situations;
Providing new and clarified guidance regarding what constitutes manage-ment responsibility; and
Providing clarified guidance regarding the concept of routine or mechanical services relating to the preparation of accounting records and financial statements for audit clients that are not public interest entities.
The above revisions also include corresponding changes to the codes non-assurance services provisions with respect to other assurance clients. The changes will be effective on 15 April, except for the changes to the independence requirements for audit engagements and review engagements (i.e. section 290 of the code) which will be effective for audits of financial statements for periods commencing on or after 15 April. Early adoption is permitted.
January 2016 49
Update no. 176 contains revised 1.101A Guidelines for the Chairman and the Com-mittee on Administering the Disciplinary Committee Proceedings Rules.
Invitations to comment on IASB exposure drafts(i) IFRS Practice Statement: Application
of Materiality to Financial Statements The draft guidance, in the form of a draft practice statement, has been developed in response to concerns that management are often uncer-tain about how to apply the concept of materiality and therefore use the disclosure requirements in the stand-ards as a checklist.
Whether information is material or not depends on a range of factors and entity-specific circumstances, and is a matter of judgment. Deter-mining what information is material also requires an understanding of the users of the financial statements and the decisions that they make based on those financial statements.
Improving the quality and quantity of disclosures requires joint efforts by auditors, regulators, companies and standard-setters. The International Accounting Stand-ards Board has therefore consulted with the International Auditing and Assurance Standards Board and the International Organization of Securities Commissions during the development of the draft practice statement.
The draft guidance on materiality complements an amendment made to IAS 1 Presentation of Financial Statements by the IASB in 2014, which clarified that companies do not need to apply the specific disclosure requirements in standards if the related information is not material. It also specified that a company should consider whether to provide additional disclosures when compli-ance with the specific requirements would be insufficient in disclosing material information. Comments are requested by 22 January.
(ii) Transfers of Investment Property (Pro-posed amendment to IAS 40) The exposure draft proposes a narrow-scope amendment to IAS 40 Investment Property to clarify the guid-ance on transfers to, or from, invest-ment properties.
Paragraph 57 of the standard provides related guidance. However, it does not specifically address whether a property under construction or development that was previously classified as inventory could be trans-ferred to investment property when there is an evident change in use.
The IASB proposes to amend paragraph 57 of IAS 40 to: State that an entity shall transfer
a property to, or from, investment property when, and only when, there is a change in use of a prop-erty supported by evidence that a change in use has occurred; and
Recharacterize the list of cir-cumstances set out in paragraph 57(a)-(d) as a non-exhaustive
list of examples of evidence that a change in use has occurred instead of an exhaustive list.
Comments are requested by 19 February.
Audit and assurance
Institute comments on IAASB exposure draft The Institute commented on the Interna-tional Auditing and Assurance Standards Board exposure draft on Proposed ISA 810 (Revised) Engagements to Report on Summary Financial Statements.
Though the proposed ISA 810 does not contain all the enhancements from ISA 700 (Revised) Forming an Opinion and Reporting on Financial Statements such as the statement about independence and other relevant ethical responsibili-ties or the disclosure of the name of the engagement partner of listed entities, the Institute agrees with the IAASBs approach to revising proposed ISA 810.
The form and contents of the sum-mary financial statements are set out in the companies regulation. The regu-lation requires that the auditor forms an opinion as to whether the summary financial report is consistent with the relevant financial documents or report-ing documents from which it is derived and whether it complies with the requirements of relevant legislation. The auditor is required to state whether in his or her opinion the summary finan-cial report is consistent with the annual financial statements, directors report and auditors report, and whether the auditors report concerned is qualified
The latest standards and technical developments
50 January 2016
or otherwise modified. Upon finalization of the proposed ISA
810, the Institute would supplement it with local guidance to reflect the require-ments set out in the regulation.
Professional accountants in business
HKEx reports on implementation of Corporate Governance Code and Corporate Governance Report Hong Kong Exchanges and Clearing has published the findings of its latest review of listed issuers corporate governance practices, entitled Analysis of Corporate Governance Practice Disclosure in 2014 Annual Reports. The review analysed the 2014 annual reports of 1,237 listed issuers, covering the financial period from 1 January to 31 December 2014.
Findings of the review included the following: 35 percent of issuers complied with
all the code provisions. 98 percent of issuers complied with
70 or more code provisions, out of 75. Issuers with a larger market capitali-
zation achieved a higher overall com-pliance rate than those with a smaller market capitalization.
The review also included HKExs com-ments on the quality of the explanations in relation to the five code provisions with the lowest compliance rates.
IFAC releases new thought paper setting out a vision for integrated thinkingWith an aim to facilitate the contribution of professional accountants to integrated thinking, and help align capital allocation, corporate behaviour, financial stability and sustainable development, Interna-tional Federation of Accountants has publisheda new thought paper: Creating Value with Integrated Thinking: The Role of Professional Accountants. The paper sets out a vision for integrated thinking and
explores what professional accountants working in the public and private sectors can do in practical terms to facilitate it in their organization, regardless of whether their organization is planning to publish an integrated report.
The paper identifies five key elements, which, if implemented, can lead to more effective organizations. This ultimately provides the basis for shifting from todays financially oriented reporting to integrated reporting. The paper also discusses how integrated reporting improves and is improved by integrated thinking. It also explores what integrated thinking involves, as well as its chal-lenges and how they can be overcome, and advances a meaningful understand-ing of its role and power.
Restructuring and insolvency
Financial Institutions Resolutions Bill introduced into the LegCoThe government has introduced the Financial Institutions Resolutions Bill into the Legislative Council. The bill aims to establish a framework for dealing with systemically important financial institutions that face financial distress, so as to reduce any risks to the stability of the financial system as a whole. The proposals seek to implement international standards promulgated by the Financial Stability Board. The
Institutes Restructuring and Insolvency Faculty made a submission during the consultation phase of the proposals.
New arrangement for nominated insolvency practitioners to attend the first meetings in bankruptcy and liquidation casesThe Official Receivers Office informs the Institute that, after reviewing the current arrangements and considering creditors interests and rights, as well as the need to ensure smooth meeting pro-ceedings, it is proposed to introduce new arrangements for permitting nominated insolvency practitioners to attend the first meetings in bankruptcy and liquida-tion cases. The new arrangements will take effect on 1 February.
Announcements by the Inland Revenue Department Hong Kong has signed an agreement
on the avoidance of double taxation with Romania.
Inland Revenue (Amendment) (No.4) Bill gazetted. The bill aims to intro-duce tax concessions for corporate treasury centres, enhance the interest deduction rules for intra-group financ-ing and clarify the tax treatment of regulatory capital securities issued by banks, in compliance with Basel III requirements.
LegCo question on corporate treasury centres.
Taxpayer given immediate jail term after review of sentence for falsely claiming self-education allowances.
Please refer to the
full version of
available as a PDF on
the Institutes website:
January 2016 51
The publication of E. Freya Williamss book about how companies can embrace sustain-ability and still grow profitably is timely. From this month, the Hong Kong Exchanges and Clearing sets a tighter Corporate Gover-nance Code and imposes stricter obligations for environmental, social and governance disclosure for listed companies.
Williams, whose book profiles nine groundbreaking companies, agrees that tighter ESG disclosure mandates can spur change in corporate conduct to mitigate the effects of climate change (see author interview on next page). Her basic criterion to be included as a green giant is that a company generates US$1 billion or more
in annual revenue directly attributable to a product, service, or line of business with sustainability or social good at its core.
Some of her chosen nine are global names, such as IKEA, Tesla Motors and Unilever. Others, such as Chipotle Mexi-can Grill and Whole Foods Market, are familiar mainly to residents of the United States, while Natura Cosmticos is based in Brazil. Three are included because of specific business lines: General Electric (Ecomagination), Nike (Flyknit shoes) and Toyota (Prius).
Inevitably, some of the companies have hit bumps since the book was published: Chipotle shares have plunged in the wake
of bacterial outbreaks at its restaurants, sales of Toyotas pioneering Prius hybrid-powered car have begun to decline and Whole Foods revenues and share price fell sharply in 2015.
Though devoted to sustainability, Wil-liams, an Ogilvy veteran whose back-ground is in marketing and branding, is no wide-eyed hippie. She notes that to qualify as a green giant, a company has to pres-ent a sound economic plan. For example, the compelling business case at Chipotle a fast-food chain selling responsibly sourced food is a US$9 burrito.
Williams stresses the importance of engaging financial professionals and is
Author: E. Freya Williams Publisher: AMACOM Books
After hours Book review Life and everything A life in the day
Title: Green Giants: How Smart Companies Turn Sustainability into Billion-Dollar Businesses
Taking giant steps for sustainability
52 January 2016
IKEA is among the nine businesses that Williams
calls "Green Giants" because they offer a
product or service with social good at its core
a convert to integrated reporting. An integrated report helps you get beyond the act of faith to a measurement framework with clear goals and metrics, and the ability to understand whether the new business model is actually working.
Given the concentration on the western hemisphere, there is little mention of the Asia-Pacific region, except to note that Natura declined to enter China, a huge potential market, because the company has an ethical commitment against animal test-ing of cosmetics, which Beijing authorities insist upon.
To be sure, it helps to be the boss. Steve Ells founded Chipotle and was able to unilaterally change from factory farming to pasture-raised meat. But some compa-nies changed due to more subtle pressure. Williams charts the career of Hannah Jones from BBC radio reporter to her present role as Nikes Chief Sustainability Officer. Nikes Flyknit woven material technology produces much less waste than other methods.
Another important part of the sustain-ability case is making an effective presen-tation. Williams contrasts the subtle sus-tainability message of the (until recently) wildly successful Chipotle with the failure of the trans-Atlantic vegan Otarian group that played videos of slaughterhouse pro-cessing in its restaurants and whose owner harangued potential investors about the evils of meat.
Armed with plenty of evidence that companies that lead in sustainable, social and governance policies report higher stock values than their less sustainable com-petitors, Williams presents a convincing case for businesses to at least address the options they have for reducing their impact on our planet.
Altruism doesnt even have to be the prime motive: GE CEO Jeff Immelt, under pressure from clients such as utilities and railways that needed to meet new emis-sions and fuel consumption regulations in the European Union and India, pushed development of the Ecomagination line of products, which are designed with better environmental performance.
In 2013, E. Freya Williams was working at advertising giant Ogilvy & Mather and searching for an answer to the question Can purpose and profit co-exist? for an essay. I needed a better answer than efficiencies, savings and corporate reputation to convince the naysayers, she says from her office in New York.
She stumbled on the information that Chipotle Mexican Grill, a restaurant chain, had surpassed US$2 billion in revenue in 2012, despite sourcing its raw ingredients from ethical (and more expensive) sources and using its advertising budget to advocate for sustainable agriculture.
Chipotle was bigger than Burger King. I felt this was information that could help change the entrenched belief that sustainability is somehow antithetical to business, she recalls. Chipotle [and eight other companies that Williams found] prove its a way to make money, and a lot of it.
In the nine cases outlined in Green Giants, a strategy for sustainability has been driven by one person often, but not always, a chief executive or founder. Besides courage, commitment and conviction, a key personality trait I identified that the leaders share is their contrarian streak, Williams observes. My hope is that many more business leaders will embrace the opportunity and that contrarian streak will become less important.
Such leaders were also able to engage their organizations to turn their visions into reality. These types of com-
panies also attract like-minded employ-ees who want to play a part in their suc-cess, she says, adding that engagement must extend to the chief financial officer and the finance department.
The CFO plays a critical role in align-ing these agendas, and helping measure the business case. Nike is a strong example of a company that reorganized to enable this to happen. At Nike, CFO Mark Blair is a key player in the success of the sustainable business strategy.
Her thesis is that this is the future of business, she says. As investors increasingly equate sustainability with business perfor-mance and demands for disclosure and account-ability increase, it will become part of the core of the role.
Williams praised the Hong Kong Exchanges and Clearing for intro-ducing a stricter Corpo-rate Governance Code and tightening envi-ronmental, social and governance disclosure.
This can help enormously, she says. The Green Giants have done what theyve done voluntarily, and succeeded anyway, but it works better when the playing field is even. The transparency that disclosure encourages is extremely healthy.
She was recently appointed Chief Executive Officer of Futerra, a sustaina-bility strategy and communications firm with offices in New York, London and Stockholm. My focus for the time being is ensuring that business leaders hear about the new billion-dollar business case for sustainability.
Author interview:E. Freya Williams
January 2016 53
Life and everythingAs recommended by Institute members
Venues for good company and good food by Keith Siu, Chief Financial Officer at Maxims Caterers Ltd.
Lawrys The Prime Rib is my most-visited prime rib house in Hong Kong and the perfect location for family gatherings. Prime rib is served in a silver cart that goes around the tables and my children love the actions that come with the Spinning Bowl Salad and Baked Alaska with table side service. Weekend brunch here is also one of our favourites as well as
meeting friends at happy hour to catch up over a glass of wine from their extensive wine collection.
Sabatini is where my wife and I had our first date and it easily became our favourite. We visited the one in Rome and found the ambience and experience very consistent here in Hong Kong. The place
gives a true Italian vibe and offers great wine and tasteful music performances.
Yakitoritei is great for casual gatherings at the yakitori bar. Im interested in the vibrant ambience and it becomes a chill-out joint for when I think of grill specials like oysters and chicken inner organ dishes; not everyones cup of tea but I quite enjoy them.
Trail running is an ideal hobby for anyone living in Hong Kong because even the most beautiful and hilly routes are easily accessi-ble from urban areas. Weekly runs not only enable one to maintain a healthy physique, but are also enjoyable social activities that bring like-minded people together.
Route for beginners: One of the most interesting routes I would recommend starts in Central and ends at The Peak. Start by taking the mid-levels escalator up to the very top then start running until you arrive at the intersection between Conduit Road and Kotewell Road; then go up Hatton Road to reach The Peak. It only takes a few hours and best of all, the routes proximity to the city means you get a lovely urban
sightseeing experience in addition to all the natural scenery on the way to The Peak.
Tips: Whether youre a beginner or an experienced runner, its important to take certain precautions before embarking on a hike or a run. First and foremost, never go alone and always be sure to let your family or friends know which route you will be taking. Make sure to be well-prepared for the journey by planning carefully and bringing essential supplies such as water, energy drinks, food, a fully charged phone, spare clothing, a first aid kit, flashlight, etc. Dont forget to practise beforehand by going to the gym or if time is tight, by occasionally taking the stairs instead of the lift!
Edwin Yeung, an Institute Oxfam Trailwalker team member and Managing Director at Edwin Yeung & Company (CPA) Limited, recommends the best paths for hiking in Hong Kong
Lawrys The Prime Rib
54 January 2016
Hamilton Cheng, Finance Director and Company Secretary at Chow Tai Fook Jewellery Group, with gift-giving tips for the season
GoBeach retreats and green getaways in Bali by Honnus Cheung, Chief Financial Officer at Travelzoo Asia Pacific
Valentines Day is coming! No gentleman would deny that picking the right present for your beloved can be a very demanding task. Diamonds are always the preferred choice. However, focusing only on colour, clarity and carat may no longer be enough to surprise or satisfy your beloved nowadays, as these are just native traits of diamonds.
In contrast, cutting is a more cultured character deep inside the heart of a diamond, which manifests the differences in brilliance and beauty.
Recently introduced to Hong Kong, Hearts on Fire a premium diamond brand from Boston is well-known for the worlds most perfectly cut diamonds selected from less than
0.1 percent of the worlds highest quality rough diamonds. More importantly, they are carefully cut with the brands secret recipe, the Hearts and Fireburst pattern, which can be seen in every single diamond, creating an amazing phenomenon of light. You can always find another diamond of the same colour, clarity and carat but you can never find one that sparkles in the same way as a Hearts on Fire diamond!
No matter how you celebrate perfect moments with your beloved, acquire something exceptional. This season, I have picked the Lorelei Diamond Right Hand Ring and the Illa Comet Pendant. I believe the lace and star in the design can further highlight her irresistible feminine charm.
1. Lorelei Diamond Right Hand Ring2. Illa Comet Pendant
Trips to Bali are known for being both spiritual and cultural adven-tures. Nicknamed for being a living postcard, the Indonesian island is home to stretches of white sand and tropical greenery, perfect for a relax-ing weekend away from the city.
Where to stay:Desa Seni is a village resort and a yoga centre thats self-contained. A variety of retreats based on your individual needs and goals are offered in a lush community of antique wood homes and organic gardens.
Hanging Gardens of Bali offers an immersive experience in a natural tropical environment with 44 private villas built into the mountainside.
The luxury 5-star hotel offers award-winning spa treatments, gourmet dining and cable cars to get around the vertical resort.
Where to eat:Rock Bar Bali at the Ayana Resort offers an unbeatable view of the sunset with an open-top bar 14 metres above the Indian Ocean. Its the perfect set-ting for a romantic night by the sea.
Merah Putih puts a twist on classic family-style Indonesian food with a menu that serves traditional regional dishes. They are simply cooked to highlight locally sourced produce and modern culinary creations that fuse together traditional ingredients with contemporary flair.
Venues for good company and good food by Keith Siu, Chief Financial Officer at Maxims Caterers Ltd.
January 2016 55
The Hong Kong humourist meets Florence Kong, Finance Director of architectural firm 10 Design
56 January 2016
A life in the day. with Nury Vittachi
A rt and money need each other. When you give money to artists, you are yourself doing an artists work, said Dutch painter Vincent van Gogh. Good business is art, pop-art stylist Andy Warhol added, years later.
The relationship between fine art and making a living were among the considerations in the life of a teenager Florence Kong when she was making choices for her future.
She was the daughter of Kong Lap-fung, a successful artist, and she grew up in a home full of beau-tiful Chinese art. Florence herself inherited a love of art and design, and also loved music. Yet she didnt feel drawn to becoming an artist herself. She had set her heart on a professional career, and saw herself in a smart suit, making big strides in the world of commerce.
So in the end she chose to study accountancy, choosing it as a solid base for working in a variety of dif-ferent professional fields but she vowed never to forget her love for art and music.
Florence worked hard at univer-sity and won a place at the Hong Kong offices of Arthur Andersen, one of the worlds biggest account-ing houses at the time. And from there, she took a familiar path. After getting a few years experi-ence in professional practice, she took the big leap into the commer-cial world. In 2004, she became the financial controller for Asia for RMJM Group, one of the worlds biggest international architecture firms at that time.
Of course it was exciting to work as a key member of a busi-ness team, but there was something else that made her new role special: she was once again surrounded by super-creative individuals, people for whom the visual arts were really important. It felt right.
Life was good and became even better when she made two major creative productions of her own: she had a baby girl, followed two years later by a boy. That was a signal to take a break from work and become a full-time mother.
But her special skill of being a successful financial controller for a creative team meant that she could not hide her talents permanently. Later, former RMJM colleagues contacted her to become a founder member of 10 Design, an independent architectural design firm, branded simply as 10.
This was a new start-up, she said. However, the depth of the knowledge and experience of these founders was enormously rich.
Starting a creative design business from scratch was a challenge. But the venture has been a solid success: 10 now has studios in Hong Kong, Shanghai, Edinburgh and Dubai, with more than 130 architects and designers on its books.
Im really lucky to be able to find a perfect match between work and passion, being surrounded by innovative and award-winning designs at my workplace, she said.
Thankfully, the ethos of the team at 10 is to respect members work-life balance. That means
that despite the companys steady expansion, Florence gets time to spend with her children, who are now eight and six, and go to con-certs and shows with her husband, who also loves culture.
And she also can indulge her own artistic abilities, singing in choirs, which perform regularly in Hong Kong and the Mainland.
Recently, Florence travelled to one of her fathers painting exhibi-tions in China and met some of his students. She was intrigued to learn that some of them were retired partners from Big Four accounting firms in Hong Kong.
It seemed that after a long career steering the flow of finance, they wanted to focus on something a little more holistic.
It could be that they instinc-tively recognized what another professional-turned-artist, the lawyer Louis Nizer, once said: He who works with his hands is a labourer. He who works with his hands and his head is a craftsman. He who works with his hands and his head and his heart is an artist.
Nury Vittachi is a bestselling author,
and TV host. He wrote
three storybooks for
the Institute, May
Moon and the Secrets
of the CPAs, May Moon
Rescues the World
Economy and May
A heart of art