CPD

AB Accounting and Business

Get verifiable CPD units by
reading technical articles

The magazine for finance professionals 10/2016

AB Accounting and Business 10/2016

Mountain rescue Generation Next
Is Switzerland a good model for the UK Young accountants reveal hopes and
of how to survive outside the EU? ambitions as ACCA reshapes qualification

Questionable ethics ACCA Qualification – the future

Bankers behaving badly Major innovations set the direction for tomorrow’s profession
Think Ahead Cambodia Casey Barnett on business schools and wrestling Interview Refat Jiwani, CFO, Aga Khan Museum, Toronto Think Ahead
CPD technical Capital structure of entities US elections The candidates square up

INT_A_cover.indd 1 13/09/2016 16:56

-UK_Ads-Oct16_600dpi.indd 1 14/09/2016 10:12
 Welcome 3

Welcome
Raising the bar

This month marks something view their remuneration and the potential impact of technology
of a milestone in ACCA’s on the profession. You can see the results and what this might
history as it announces mean in the future for employers on page 12.
significant innovations to its In two interviews in this month’s edition, the career journeys
qualification. of two members demonstrate the diversity of interests and the
Formally launched on 10 October, ACCA’s enhanced achievements of the ACCA family. On page 18, Refat Jiwani
qualification aims to address the changing needs of a rapidly FCCA, CFO of the Aga Khan Museum in Toronto, reflects on
evolving business environment and professional landscape. why he left the corporate life behind to pursue a later career in
The ground-breaking design for the final level of the ACCA philanthropy and the arts. The museum’s mission is to foster a
Qualification is the latest in a number of innovations that ACCA greater understanding of the contribution Muslim civilisations
has delivered over the past two years as it seeks to ensure the have made to world heritage. Meanwhile, on page 60, Casey
qualification remains as relevant and of as high a quality as Barnett FCCA, founder and president of CamEd Business School
possible. Read more on page 16. in Cambodia, describes his time at the Rio 2016 Olympics as the
We are also very excited to give members a sneak preview coach for that country’s wrestler, and his school’s sponsorship of
of the findings of ACCA’s soon-to-be-launched survey into many charities and sports.
attitudes of the next generation of professional accountants.
The Generation Next survey received a huge response, with just Lesley Bolton, international editor, [email protected]
under 19,000 ACCA students and members from 150 countries,
aged between 16 and 36, letting us know their hopes and
expectations for their careers, including what attracted them to
* Thank you to everyone who participated in the Generation
Next survey, including those of you who also sent in your
accountancy, how they see their career progression, how they selfies, some of which we have featured on this month’s cover.

Also from ACCA Accounting Channels and media

AB Direct
and Business Accounting and Business is more
Sign up for our weekly news and The leading monthly magazine for than just a magazine. You can read
technical bulletins at finance professionals, available in six us, follow us and engage with us –
accaglobal.com/ab different versions: China, International, and in more ways than one.
Ireland, Malaysia, Singapore
Accountancy Futures and UK. AB hub
View our twice-yearly research and See our new AB hub at
insights journal including discussion There are different ways to read AB. accaglobal.com/ab
on key themes facing financial Find out more at
professionals at accaglobal.com/ab AB app
accaglobal.com/futuresjournal Download from iTunes App Store,
Google Play or via the AB hub
Student Accountant
Access the magazine for About ACCA AB digital archive
ACCA Qualification and The latest issue and an
Foundation-level students at ACCA is the global body for archive of issues stretching back
accaglobal.com/studentaccountant professional accountants. We aim to to 2009
offer business-relevant, first-choice
Member benefits qualifications to people of application, Twitter
To learn more about the ability and ambition around the Accounting and Business tweets
benefits of ACCA membership, visit world who seek a rewarding at @ACCA_ABmagazine
accaglobal.com/memberbenefits career in accountancy, finance and
management. We support our 188,000 Videos and podcasts
ACCA Careers members and 480,000 students Look for links in the magazine or
Search thousands of vacancies and throughout their careers, providing go to accaglobal.com/ab
sign up for customised job alerts at services through a network of 92
our jobs site offices and active centres. Webinars
accacareers.com accaglobal.com On a raft of topical issues

10/2016 Accounting and Business

INT_Welcome.indd 3 14/09/2016 15:10

 4 Contents

News
AB International Edition 6 News in pictures
October 2016 A different view of recent
headlines
Volume 19 Issue 9
8 News roundup
International editor Lesley Bolton
[email protected] +44 (0)20 7059 5965 A digest of all the latest
news and developments
Editor-in-chief Jo Malvern
[email protected] +44 (0)20 7059 5818
Focus
Asia editor Colette Steckel
[email protected] +44 (0)20 7059 5896 12 Generation Next
ACCA’s new survey
Ireland editor Pat Sweet reveals what matters
Digital editor Jamie Ambler to younger finance
professionals
Video production manager Jon Gilmore

Sub-editors Annabella Gabb, Peter Kernan, Jenny Mill, 16 ACCA Qualification

Donatella Montrone, Vivienne Riddoch
Find out more about the
Digital sub-editors Eleni Perry, Rhian Stephens raft of innovations being
introduced
Design manager Jackie Dollar
[email protected] +44 (0)20 7059 5620
18 Interview: Refat Jiwani
Designers Bob Cree, Suhanna Khan, Robert Mills
CFO of the Aga Khan
Production manager Anthony Kay Museum in Toronto
[email protected]

Advertising Richard McEvoy Comment

[email protected] +44 (0)20 7902 1221 22 Ramona Dzinkowski
Head of ACCA Media Chris Quick Brexit isn’t the only thing
[email protected] +44 (0)20 7059 5966 making global finance
Printing Wyndeham Group Pictures Getty leaders restless
ACCA
President Brian McEnery FCCA 23 Alnoor Amlani
Deputy president Leo Lee FCCA How will the market
Vice president Robert Stenhouse FCCA respond to Kenya’s interest
Chief executive Helen Brand OBE
rate cap?
ACCA Connect
Tel +44 (0)141 582 2000
Fax +44 (0)141 582 2222 24 Brian McEnery
[email protected] ACCA’s new president
[email protected]
[email protected] looks forward to an
exciting year ahead
Accounting and Business is published by ACCA 10 times per year. All
views expressed within the title are those of the contributors.

The Council of ACCA and the publishers do not guarantee the accuracy
Corporate
of statements by contributors or advertisers, or accept responsibility for 25 The view from
any statement that they may express in this publication. The publication
of an advertisement does not imply endorsement by ACCA of a product Huzaifa Is-Haque of Merck
or service. Singapore, plus snapshot
Copyright ACCA 2016 of packaging
No part of this publication may be reproduced, stored or distributed
without the express written permission of ACCA.
26 Slippery slope
Accounting and Business (ISSN: 1460-406X, USPS No: 008-761) is
published monthly except July/August and Nov/Dec combined issues Was the post-Brexit fall in
by Certified Accountant (Publications) Ltd, a subsidiary of the Association
of Chartered Certified Accountants, and is distributed in the USA by
sterling a one-off event or
Asendia USA, 17B South Middlesex Avenue, Monroe NJ 08831 and part of a long-term slide?
additional mailing offices. Periodicals postage paid at New Brunswick NJ.

POSTMASTER: send address

changes to Accounting and Business,
Practice
701C Ashland Avenue, Folcroft PA 19032 USA 28 The view from
ISSN No: 1460-406X Jack Lo of AXA Asia,
Hong Kong, plus snapshot
The Adelphi, 1-11 John Adam Street,
London, WC2N 6AU, UK of risk assurance
+44 (0) 20 7059 5000
www.accaglobal.com Audit period
July 2014 to 29 On the horizon
June 2015
165,609 The Big Four embrace
cloud accounting

Accounting and Business 10/2016

INT_A_contents.indd 4 13/09/2016 16:55

 Contents 5

CPD
Get verifiable CPD
units by reading
technical articles

Insight
32 US elections
How might the outcome
affect the US economy?

35 Graphics
A look at ACCA’s
Generation Next survey

36 Bias and bonus

A study by CA ANZ looks
at the drivers behind
unethical behaviour

38 Forward thinkers
How strategic planning
and performance
management will change
in the future

40 Trending in tax
Increasing complexity will 54 A question of trust
need new skillsets The implementation of
a single set of global
42 Swiss role (model) valuation standards is vital
Does Switzerland offer
a template on how to 56 Technical update
survive outside the The latest on audit, tax
European Union? and financial reporting

44 Careers People
Dr Rob Yeung on decision- 58 King of sustainability
making, plus what makes a The man behind South
perfect public speaker Africa’s pioneering
code of corporate
46 The agile solution governance
How spreadsheet software
helps with strategy 60 In the ring How to
combine the roles of
48 In the right direction Olympic wrestling coach
Listen to your inner and business school boss
hedgehog
ACCA
Technical 62 SME conference 65 News
49 Capital structure of Accountants must direct Employers value ACCA-
entities A look at the SMEs to funding sources qualified staff; ACCA-X
challenges online study tool is altering
64 Sustainability reporting the educational landscape
52 Rules of engagement Proposals from ACCA and
Will new European Union the Climate Disclosure 66 Update New ACCA
audit rules drive SMPs out Standards Board provide a report highlights global
of the market? useful compass partnerships

10/2016 Accounting and Business

INT_A_contents.indd 5 13/09/2016 16:56

 6 News | Pictures

▼ Lungu back in
Zambia’s incumbent
president Edgar Lungu,
who ordered a national
day of prayer for the
economy last year, was
declared the winner of a
closely fought election

▲ Clouds lift
On the eve of the G20
summit in Hangzhou, China
and the US, the world’s
two biggest emitters of
greenhouse gases, agreed to
ratify the Paris climate deal

▼ Peace dividend ▼ Hives at war

Colombia’s Farc guerrilla Beekeepers in New
group has ended its Zealand want to stop
insurgency in a deal that Australian rivals using
will see the government the ‘manuka’ label and
invest US$40bn in areas restrict it to honey from
that have been blighted bees pollinating New
by guerilla violence Zealand’s manuka trees

Accounting and Business 10/2016

INT_Newsinpix.indd 6 13/09/2016 16:57

 Pictures | News 7

▼ Reds to go red?
Chinese state-owned
company Everbright
and private equity firm
PCP have made a bid
for Liverpool Football
Club, according to the
Financial Times

▼ Chequered flag ▼ FDI bonanza

US-based Liberty Japan premier Shinzo
Media has completed Abe pledged a further
an US$8.5bn deal to US$30bn in Japanese
take control of F1 motor direct investment in
sport. Former F1 boss Africa over the next three
Bernie Ecclestone will years at a development
stay on for three years conference in Nairobi

10/2016 Accounting and Business

INT_Newsinpix.indd 7 13/09/2016 16:57

 8 News | Roundup

News roundup
This edition’s stories and infographics from across the globe, as well as a look at the
latest developments and issues affecting the finance profession

Apple fined €13bn that collapsed in 2009 as the

The European Commission result of fraud at Colonial
has ordered Apple to pay BancGroup. The trustee
Ireland €13bn in back taxes had sought damages of
after allegedly benefiting from US$5.5bn, but the terms of
illegal state aid. ‘Member the settlement have not been
states cannot give tax benefits disclosed. PwC said: ‘The
to selected companies – this case was settled to the mutual
is illegal under EU state satisfaction of the parties.’
aid rules,’ said European TBW’s auditor Deloitte &
commissioner Margrethe Touche reached a confidential
Vestager. The commission settlement with the trustee
concluded that Apple paid an three years ago.
effective corporate tax rate of
1% in 2003 and 0.005% in 2014. MF Global suit still on Australia reconsiders ‘backpacker tax’
Sales profits were attributed PwC has failed to have a legal
to a stateless ‘head office’ that action relating to MF Global The Australian government is reviewing the so-called
‘existed only on paper and dismissed. PwC paid US$65m backpacker tax, which was to have been introduced in July
could not have generated such to settle a previous legal of this year. Holders of working holiday visas have been
profits’. Apple and the Irish action over its audit of MF able to earn A$18,200 tax-free, but the 2015/16 federal
government are appealing Global without admitting any budget included a measure to tax these earnings at 32.5%.
against the ruling. See also wrongdoing. The latest action The plans caused disquiet among some employers, who
page 56. was filed by the bankruptcy were concerned that it would prevent them from recruiting
plan administrator and backpackers to do jobs that Australian workers were
US in EU tax attack alleges that PwC was guilty of unwilling to do.
The US Treasury has attacked ‘extraordinary and egregious’
the European Commission professional negligence in
for setting itself up as a approving MF Global’s off- advisory business with an Blockchain endorsed
‘supranational tax authority’ balance sheet accounting exceptional level of innovative, Blockchain will become the
and unfairly targeting US practices. James Cusick, PwC client-focused service. We industry standard for digital
corporations. As well as trial counsel, said: ‘PwC stands feel there is a place in the transactions, under plans
instructing Apple to pay by its work for MF Global. market for a firm focused on being developed by UBS,
Ireland €13bn in back tax, the MF Global accounted for the entrepreneurial businesses, Deutsche Bank, Santander,
commission is investigating repo-to-maturity transactions delivering a personal service BNY Mellon and ICAP.
Amazon’s and Fiat Chrysler’s tax correctly. MF Global’s while harnessing the value- Visa is separately working
deals with Luxembourg, and collapse was caused by its enhancing role of technology.’ on transaction systems
has instructed the Netherlands own business decisions and using blockchain, which it
to recover between €20m and adverse market events, not any Deloitte turnover up 9.5% hopes banks will adopt.
€30m in additional taxes from accounting determination.’ Deloitte global revenues rose Citi, Goldman Sachs and
Starbucks. Member states’ by 9.5%, to US$36.8bn, in the JP Morgan are all developing
tax settlements involving Cogital takes on Big Four year ending May. Risk advisory their own platforms.
McDonald’s, Google and Former Deloitte global revenues were up 22.5%,
Microsoft are all under review chairman John Connolly has consulting 10.8%, and tax and €1.1trn more cashflow
by the commission. launched an accountancy legal 10%. The firm took on an Companies could release
firm, CogitalGroup, to extra 72,000 staff in the year. €1.1trn of working capital
PwC strikes TBW deal challenge the Big Four. The firm said that growth had by improving their credit
PwC has settled a court case Backed by private equity firm been supported by US$650m management functions,
over its audits of Colonial HgCapital, Connolly bought investment since 2008 and a according to a PwC review
BancGroup. A court action was London-based accountancy focus on fintech, new cyber of global working capital
brought by the bankruptcy firm Blick Rothenberg. intelligence centres and the performance. The review
trustee of Taylor, Bean & Connolly said: ‘We plan use of data visualisation in due looked at the operations of
Whitaker, a mortgage lender to build a different kind of diligence activities. more than 13,000 businesses

Accounting and Business 10/2016

INT_B_newsroundup.indd 8 13/09/2016 17:12

 Roundup | News 9

over a 10-year period. Daniel take up the role. Howitt is audits, and in auditing fair reduce its fiscal deficit and
Windaus, PwC partner and recognised as an architect value measurements in reform the economy. The VAT
lead author of the report, said of the EU’s non-financial 44%. Auditor independence introduction is one of the
that companies should relearn information directive and appeared to be impaired in measures agreed with the
the lessons following the 2008 has acted as a voluntary IIRC 7% of audits – down from 25% International Monetary Fund
financial crisis by tightening ambassador for the past five in 2014. ‘While there were for a US$12bn three-year loan
cashflow management. years. fewer independence findings, and for the World Bank to
it is very troubling that we release a US$3bn three-year
Needed: IR culture ExxonMobil probe continue to find auditors loan agreed late last year.
Instilling an integrated New York attorney general Eric assisting in the preparation Egypt’s budget deficit was
reporting culture requires Schneiderman is to investigate of the financial statements 11.2% of GDP at the end of
greater understanding of the ExxonMobil’s funding of lobby they audit or providing May this year.
importance of non-financial groups challenging climate bookkeeping services to their
resources, according to a change science. He told the audit clients,’ said PCAOB Trump to reform tax
study jointly commissioned New York Times that research deputy director Robert Maday. Republican US presidential
by ACCA, the International disputing climate change candidate Donald Trump has
Integrated Reporting could affect the valuation of India unifies sales tax proposed a top corporation tax
Council and the International energy companies’ reserves by India’s upper house of rate of 15%, and a one-off 10%
Association for Accounting trillions of dollars. He added parliament has approved the tax on US corporate profits
Education and Research. Yen- that any misrepresentation of introduction of a national, currently sitting offshore. ‘Our
pei Chen, ACCA’s corporate the research findings could unified, goods and services lower business tax will end job-
reporting manager, said: amount to ‘massive securities tax. It will replace different killing corporate inversions,
‘As integrated reporting fraud’. An ExxonMobil local sales taxes imposed by and cause trillions in new
filters through the corporate spokesman said: ‘ExxonMobil India’s 29 states. It is intended dollars and wealth to come
reporting system, there is a has included information that the new tax will be in pouring into our country,’ said
clear need to educate both about the business risk of place for the beginning of the Trump. Other ideas include
preparers and users in the climate change for many new tax year in April 2017. cutting income tax rates and
principles of IR. A vital part of years in our 10-K, corporate rationalising the number of
this is helping both groups to citizenship report and in other Egypt adopts VAT income tax brackets. Trump
understand and appreciate reports to shareholders.’ He Egypt has introduced VAT on also wants to abolish the
the relevance of capitals other added that the company sales at 13% this year, rising carried interest deduction
than financial capital.’ had included information on to 14% in 2017. The adoption that benefits private equity
business risk related to climate of VAT is a central element investors. See also US election
ACCA extends its reach change three years before the in the government’s plan to »
article, page 32.
ACCA’s membership and US Securities and Exchange
student numbers have grown Commission issued guidance.
by 5% worldwide in the last
year. Membership was up by Brexit to hit remittances
13,500 and student numbers The UK’s decision to leave
by 25,000 in 2015/16. ACCA’s the EU is likely to lead to a
integrated report shows it has sharp decline in the value
moved closer to achieving of remittances sent to
its 2020 vision by growing Commonwealth countries and
membership, influence and eastern Europe. Remittances
global spread. A strategic are worth four times more than
alliance between ACCA and aid to developing nations.
the Chartered Accountants The devaluation of sterling
of Australia and New Zealand has already cut the real value
helped strengthen ACCA’s of remittances sent home to
global footprint. many countries, including
Nigeria, India and Pakistan. Spain and Portugal given fiscal breather
MEP becomes IIRC CEO
Richard Howitt has been Broker-dealer audit flaws The EU has decided not to implement fines on Spain and
appointed CEO of the Some 96% of firms that audit Portugal for running excessive fiscal deficits. Instead the
International Integrated US broker-dealers are guilty of countries have been given new targets for reducing their
Reporting Council. He audit deficiencies, according deficits over a longer timeframe. Spain has been ordered
succeeds Paul Druckman, who to the US Public Company to bring its deficit back down to 4.6% this year, 3.1% in
retires as CEO on 1 November. Accounting Oversight Board’s 2017 and then to the prescribed level of 2% by 2018.
Howitt will step down as a annual review. Deficiencies Portugal has been instructed to eliminate its excessive
Labour Party member of in auditing revenue were deficit this year.
the European parliament to identified in 70% of reviewed

10/2016 Accounting and Business

INT_B_newsroundup.indd 9 13/09/2016 17:12

 10 News | Roundup

money-laundering regulations
The world’s powerhouse cities and economic sanctions,
according to a study published
China has claimed three of the top five spots (with Shenzhen ranked sixth) in an inaugural by the Arab Monetary Fund.
Global Cities 30 index. The US filled five of the top 10 rankings, while London made 10th More than a third of Arab banks
rather than an anticipated fourth following the UK’s vote to leave the EU. Compiled by have had their engagements
Schroders from an analysis of 161 cities, the index is based on factors such as projected with international banks
economic growth, the disposable incomes of citizens, and the working age of the population. reduced in the past four years.
‘The inability of banks in some
Arab countries to enter into
correspondent relationships
with foreign banks could have
a deleterious impact on trade
and remittances and ultimately
3 on real economic activity,’ said
Tianjin the fund.

Saudi FX ‘running out’

Saudi Arabia will exhaust its
foreign currency reserves
within five years unless it
tightens budgetary policy,
the IMF has warned. The fall
2 1 in global oil prices combined
New York Shanghai
with the cost of Saudi Arabia’s
engagement in the war in
4 Yemen has forced the country
Beijing to run a budget deficit of 20%
of GDP. Saudi foreign reserves
5
Dallas dropped from US$737bn in
2014 to US$555bn this year.
Source: Schroders Global Cities Index The military budget for this
year stands at US$56.7bn, and
accounts for a quarter of total
African union ‘unfeasible’ listings are misleading, as they dollars. Ben-Artzi had been a government expenditure.
African monetary union is not reflect currency fluctuations, risk officer at Deutsche.
feasible in current conditions rather than actual changes in IMF’s Greek doubts
as a result of the collapse in underlying economic activity, BDO US income up 23% The International Monetary
commodity prices and global and that the calculations are Revenues at BDO US rose to Fund made bailout loans
economic pressures, according methodologically incorrect. US$1.29bn, up 22.9%, in the to Greece even though it
to a communiqué issued by US dollar valuations of each year ending June 2016. The knew the rescue plans were
the Association of African country’s GDP are dated firm has now reported revenue unachievable, according
Central Banks. The AACB from the end of 2015, while growth exceeding 20% for to minutes of IMF board
has been working since 2003 exchange rate calculations are three consecutive years, and meetings. Comments from
towards achieving continental based on August 2016. revenues have more than IMF board members included
currency union and a common doubled since 2012. Revenues Brazil’s Paulo Nogueira
central bank by 2021. The No to US$16.5m reward increased by 31% in consulting Batista saying ‘We have
central bank governors now The internal whistleblower who and advisory, by 27% in tax serious doubts about the
believe that African states informed the US Securities and and by 17% in assurance. ‘The approach’, and Arvind Virmani
will not have met economic Exchange Commission of false increase has been fuelled both of India describing the rescue
convergence criteria by then. accounting at Deutsche Bank by impressive organic growth programme as ‘a mammoth
has turned down a share of a (13.9%) and our ongoing burden’ that Greece’s economy
GDP league ‘misleading’ US$16.5m reward. Eric Ben- expansion strategy (9%),’ said ‘could hardly bear’. Dominique
South Africa has regained its Artzi rejected the payment Wayne Berson, chief executive Strauss-Kahn, managing
title as Africa’s largest economy, in protest at the SEC’s failure officer of BDO US. director of the IMF at the time,
according to the International to punish senior executives reportedly insisted on the loan
Monetary Fund’s World at the bank. Deutsche paid a Gulf banks lose links being made to protect the euro
Economic Outlook. Nigeria US$55m penalty to settle SEC Foreign banks have loosened from potential collapse. ■
had bumped South Africa into charges that it had failed to their relationships with banks in
third place last year, with Egypt account for a material risk of the Gulf states and other Arab Compiled by Paul Gosling,
second. KPMG said that the potential losses of billions of nations because of fears over journalist

Accounting and Business 10/2016

INT_B_newsroundup.indd 10 13/09/2016 17:12

-Asia ads-Oct16_600dpi.indd 2 07/09/2016 12:28
 12 Focus | Future of the profession

Generation Next
The next generation of finance professionals is ambitious, highly motivated and under no
illusion as to the range of skills required of them in the future, a new ACCA survey reveals

Y
oung finance professionals are ambitious,
internationally minded and confident about the future Global trends
impact of technology – all characteristics that position
them well to face the challenges of finance and management Male and female members of Generation Next have a similar
in today’s world. perspective on the main benefits of a career in finance. Both
ACCA’s Generation Next survey, attracting responses from genders were most likely to have been attracted by the
almost 19,000 finance professionals aged 16 to 36 from 150 long-term prospects (marginally more important to women),
countries, finds that these leaders of tomorrow want to build long- followed by the opportunity to develop a broad range of
term careers and develop varied skills. ‘The hopes and aspirations skills (marginally more important to men) and the ability to
of the next generation of accountants are very different from their use their skills in a wide range of roles inside and outside of
predecessors,’ says ACCA’s head of corporate sector and author of finance (equally important to both).
the report, Jamie Lyon. ’They are very engaged, as the incredible Regardless of the size or nature of their entity, the
response rate to the survey shows, and make it crystal clear to their majority of Generation Next professionals aim to take on a
future employers what they want and expect from their careers.’ role in a different country or region at some point in their
According to the survey report, to be launched soon, career. Individuals working in Big Four firms were most
Generation Next professionals fully appreciate the value of a likely to want to do so, and those in small and medium-
finance career: the vast majority (85%) think that finance career sized accounting firms least likely.
experience will be valuable for leaders in the future. They also Technology is widely seen as an enabler rather than a
threat: while 57% of respondents agree or strongly agree
that technology will replace many entry level roles in
Gender attraction to careers in finance the profession, 84% believe that technology will enable
finance professionals to focus on much higher value-
added activity. This is encouraging given the growing
44% 42% Long-term career prospects
expectations that many employers, clients, regulators and
other stakeholders have of professional accountants.
Opportunity to develop a broad
38% 40% range of skills
Technology not feared
Ability to use the skills in a broad
36% 36%
range of roles both in and outside finance
4% ■ Strongly disagree
Technology will
Interest in the subject matter replace many
12% ■ Disagree
34% 31%
entry level 25% 27%
■ No strong feelings
26% 31% Prestige of the profession roles in the ■ Agree
profession
32%
■ Strongly agree
24% 27% Remuneration opportunities

20% 21% Portability of finance roles globally 1%

Technology will 2%
21% 15% Ease of getting and keeping a job ■ Strongly disagree enable finance 13%
42%
■ Disagree professionals to
14% 5% Portability of finance roles across industries ■ No strong feelings focus on much
■ Agree higher value-
added activity
42%
Aptitude for the subject matter
11% 10% ■ Strongly agree

Accounting and Business 10/2016

INT_F_GenNext.indd 12 13/09/2016 18:05

 Future of the profession | Focus 13

have leadership aspirations themselves: the great majority (87%) competencies that include technical knowledge and skills as well
aim to lead a finance team at some point in their career. as interpersonal behaviours. ACCA has identified seven such
As for their current situation, around half of Generation Next competency areas that include aspects such as digital awareness,
professionals think they have a good work-life balance: 53% of creativity, emotional intelligence and vision.
professionals at the top end of the 16 to 36 age range say they The opportunity to learn and develop such competencies
are satisfied or very satisfied with their current state, compared is the key factor in future professionals’ decisions to stay with
with 45% of the youngest professionals. But there is generally their employer (89%), closely followed by career progression
less satisfaction with remuneration. Overall just under a third opportunities and remuneration. However, it seems that many
(32%) of survey participants are satisfied with their remuneration, young finance professionals are a little disappointed by their
although older individuals are again more likely to be content. current employer: only 38% agreed that their current organisation
offers them opportunities to achieve their career goals.
Why finance? By a considerable margin, young finance professionals think
The young finance professionals surveyed by ACCA were most on-the-job learning is the most effective way to improve their
likely to be attracted to a career in finance because of the long- professional capabilities (selected by 52%), although many
term career prospects (43%). But many also value the opportunity also appreciate the value of mentoring, job rotations and
to develop a broad range of skills (40%) and use them in a wide secondments. Further professional qualifications are ranked
range of roles inside and outside of finance (36%). fourth in terms of effectiveness.
Such awareness of the value of broad skills and the variety of
roles in which finance professionals can act is encouraging, given Onwards and upwards
ACCA’s recent research into the skills and capabilities that will be Young finance professionals are ambitious and want to move
required of them in the fast-changing, complex modern world. onwards and upwards fast. Almost 50% of respondents to the
As identified in ACCA’s June 2016 research report Professional Generation Next survey have been in their current role for less
accountants – the future, developments in four broad areas – than two years, while only a minority have held the same role for
regulation and governance, technology, the expectations of more than five years. Most are expecting to be on the move in
stakeholders and globalisation – are likely to have a significant the near future: over a third of the young finance professionals
impact on professional accountants in future. If today’s emerging surveyed would like to change jobs in less than a year, and 70%
professionals are to thrive, they need to develop a range of would like to change jobs within two years. »

Career goals pursued

Role in a different country/region
Large corporate firm 13% 34% 43% 9%
Medium corporate firm 12% 35% 43% 10%
Small corporate firm 15% 32% 43% 10%
Small/medium accounting firm 24% 24% 41% 11%
Mid-tier accounting firm 15% 33% 43% 9%
Big Four accounting firm 9% 40% 43% 7%
Public sector 13% 32% 44% 11%
■ Never ■ Next career move ■ Later in my career ■ Not applicable

Role outside of finance/the accounting profession into more general business role
Large corporate firm 21% 13% 51% 15%
Medium corporate firm 24% 14% 47% 16%
Small corporate firm 28% 13% 44% 16%
Small/medium accounting firm 34% 11% 36% 20%
Mid-tier accounting firm 30% 11% 43% 16%
Big Four accounting firm 22% 11% 48% 18%
Public sector 26% 13% 44% 17%

■ Never ■ Next career move ■ Later in my career ■ Not applicable

10/2016 Accounting and Business

INT_F_GenNext.indd 13 13/09/2016 18:05

 14 Focus | Future of the profession

Two-thirds (67%) want their next role to be a promotion, the way finance professionals work. Manual bookkeeping will
although 33% see the value in a sideways move, which could give become a relic of the past, while complex processes such as
them new skills and business insights. They are willing to change the financial close will be increasingly automated. Technology
employers to achieve their goals – 61% expect their next move is also expected to support more real-time reporting and
to be outside their organisation. analysis, shaping the way that finance professionals and their
Moving between sectors at some point is widely anticipated organisations collaborate, communicate and report.
by young finance professionals: 73% of those surveyed aim to do Generation Next professionals are aware of such drivers for
so at some point in future. Similarly, four out of five Generation change. Most of those surveyed (57%) expect technology to
Next professionals surveyed would like a role in a different country replace many entry-level professional roles, but they aren’t fazed
or region at some point – and over a third hope to achieve this in by this. They see the benefits that technology can bring: 84%
their next career move. This high degree of interest in international agree that the growing use of technology will enable finance
experience indicates that younger finance professionals recognise professionals to focus on much higher value-added activity.
that, as affirmed in Professional accountants – the future, the world ‘It’s important that these young finance professionals take the
is far more connected than ever before. opportunities presented by developments in technology and
While young finance professionals value the long-term career become agents of change for their employers,’ says Lyon. ‘Those
prospects enabled by their qualification, they don’t necessarily who succeed in building the broad skills needed to thrive in the
expect to realise those prospects solely within the finance remit. global, fast-moving, data-heavy environment can look forward to
Over half (60%) would like to pursue a role outside of finance or becoming the finance and business leaders of tomorrow.’
the accounting profession at some point. This isn’t to say that Similarly, employers are encouraged to understand what
some would not return to finance after gaining new experience drives Generation Next professionals. ACCA’s research has found
in a different type of role. In fact, given the complex environment that they have a real appetite to learn and to progress, and most
in which finance teams operate now and will operate in future, are willing to move locally, regionally and internationally in order
gaining such broad experience can only support the effective to gain the development and career opportunities they seek.
performance of finance leaders. ‘Helping talented individuals to fulfil such developmental goals
In addition, many Generation Next professionals have could well be a more powerful retention lever than pure financial
entrepreneurial aspirations. Over half (60%) of survey remuneration,’ Lyon adds. ‘The more that organisations can
respondents anticipate leaving the finance profession to move develop stimulating career paths that provide broad business as
into a more general business role at some point in future. Even well as finance experience, the more likely they are to maximise
more (81%) would like to start their own business, typically later the potential of their Generation Next professionals.’ ■
on in their careers.
Sarah Perrin, journalist
Unfazed by technology
As highlighted in Professional accountants – the future, For more information:
technology is one of the key drivers for change in the finance
arena. Intelligent automated accounting systems, cloud See Generation Next shortly and Professional accountants
computing, and smart software and systems are already changing – the future now at accaglobal.com/thefuture

Today’s professional accountants look to the future

‘Professional scepticism will remain a key competency. We need to apply our sixth sense as accountants and auditors, and
move away from box ticking.’
Patricia Kintu FCCA, chief internal auditor, Office of the Auditor General, operations division, African Development Bank, Uganda

‘From 2020 onwards we will all be implementing international best practices in corporate governance.’
Theresa Okeyo FCCA, group internal audit manager, Standard Bank Group, Kenya

‘Professional knowledge is key. Accountants have to specialise.’

Seezan Choudhury ACCA, partner, ACE Advisory, Bangladesh

‘You need to be business savvy and analytical. You need to be able to translate data into information which will enable
decision-making in a timely manner.’
Lukman Ibrahim FCCA, former deputy CEO, Proton Holdings, Malaysia

Accounting and Business 10/2016

INT_F_GenNext.indd 14 13/09/2016 18:05

 15

10/2016 Accounting and Business

P INT15-RHP.indd 73 07/09/2016 14:17

 16 Focus | ACCA Qualification

What the changes mean for members

Together we’re shaping the future of the profession.
Insight from you – our global network of members –
inspired us to conduct our Professional accountants
– the future research, which defined the unique blend
of technical and professional skills and ethics that
professional accountants will need to remain relevant into
the future. Our members around the world recognise the
changes ahead and work hard to keep themselves, and
their organisations, ahead of the curve. We see this every
day through your commitment to your own continuous
professional development, and the increasing demand for
ACCA-qualified accountants in all sectors and parts of the
world. ACCA members continue to lead the profession.
You’re more valued and more in demand than ever.
Since 2014, we’ve been working in collaboration
with our members, employers and education providers
worldwide to evolve the ACCA Qualification. Together
we’ve designed a market-leading qualification that
develops the skills needed for the future but still retains
the high standards of rigour that you – and employers
– demand. Our latest innovations make us the very first
professional accountancy body to truly integrate deep,
broad technical skills and ethics with wider professional
skills and a real-world focus. It’s this blend of skills that
employers tell us they vitally need from newly qualified
professionals. So these latest innovations will set us apart –
making sure that, like today, the next generation of ACCA
members will continue to be the best trained and best
prepared professional accountants in the world.

Are new resources available for members?

Yes. Our Professional accountants – the future research
gives unrivalled insight into the future of the profession
and what it means for business, employers and individuals.
Leading on from this, we’ve developed our unique
professional quotients model that defines the skills
needed in the future. And a new interactive assessment
tool lets you rate your current competence against future
skills, and link to expert tips and relevant CPD. You can
access the tool at accaglobal.com/thefuture.

How have you ensured the same high standards?

We liaised with regulatory bodies and gained their
assurance that we’re testing students to the same high
ACCA members
standard. This ensures that our students and members are the best
continue to benefit from our current statutory and
education recognition. We also continue to meet
trained and
International Federation of Accountants standards and prepared in
the Strategic Professional exams have been benchmarked
at Level 8 on internationally recognised education the world
frameworks; this is equivalent to Master’s degree level.

Accounting and Business 10/2016

INT_F_NewQual.indd 16 14/09/2016 15:11

 ACCA Qualification | Focus 17

Introducing innovations to
the ACCA Qualification
ACCA’s Alan Hatfield unveils exciting changes to the qualification, designed to
equip tomorrow’s accountants with the skills they need in a changing world

W
hen you see the Strategic Business Leader – innovative case study
ACCA letters after a A new innovative case study uses real-world scenarios to set
professional’s name, you challenges that require students to use their combined technical,
know you’re looking at someone professional and ethical skills in the evaluation, synthesis and
with a great combination of presentation of their responses. Mirroring the workplace,
strategic thinking, broad, deep students will be required to present their answers to the standard
and up-to-date technical skills, employers expect from future business professionals.
the highest ethical standards and
a practical, real-world approach. Strategic Business Reporting
ACCA members pride themselves on We take the qualification’s current holistic view of reporting to
being ahead of the curve – helped new levels. The underpinning principles of corporate reporting
by our global network, professional remain, but these are enhanced by giving students the skills
insights and CPD resources. needed to confidently speak the language of business and
The ACCA Qualification is the essential foundation of every explain reports to a wide variety of stakeholders.
ACCA professional. Its continued evolution and relevance has
ensured that, throughout our history, we’ve developed the next Options exams – unique opportunity to specialise
generation of professional accountants with the skills the world Our Options exams remain available, offering the unique
needs. Since 2014, we’ve been carefully designing innovations to opportunity to specialise in areas of greatest relevance to a chosen
the ACCA Qualification. We consulted extensively with members, sector or career path.
employers, education providers and regulators worldwide, and
used the findings from our leading Professional accountants – the Integrated Master’s degree
future research. Already, many significant innovations to the ACCA The ACCA Qualification includes the world’s first Master’s
Qualification are in place, for instance: degree integrated with a professional accountancy qualification,
* our Knowledge exams that test early workplace application delivered with the University of London.
* our new Skills exams that use real-world technology
* our revamped practical experience requirements New Ethics and Professional Skills module
* our market-leading integrated BSc and MSc degrees. With our new Ethics and Professional Skills module, we’ll be the
So now we unveil our latest developments to the final level of the first to deliver a unique module that focuses on developing the
ACCA Qualification – the new Strategic Professional level, and complete range of professional skills employers have told us they
our new Ethics and Professional Skills module. need. Building on our pioneering Professional Ethics module, it
continues to develop the vitally important ethical behaviour and
Strategic Professional level judgment, complementing this with the broader communications,
With the Strategic Professional level, we’re setting a new commercial, innovation, analysis and evaluation skills vital for
standard by fully integrating deep, broad and relevant technical career success. ■
expertise with ethics and professional skills. Because every
element has a real-world focus, our students will be prepared Alan Hatfield is executive director, strategy and
to handle the challenges they’ll face in the workplace. The development, ACCA
result is strategic, forward-thinking professionals equipped with
the unique blend of skills needed to hit the ground running For more information:
– and add immediate value to their employers. The Strategic
Professional level is benchmarked at Master’s level on a number For more on the changes to the ACCA Qualification and
of education frameworks. Its innovative features are: our research, go to accaglobal.com/thefuture

10/2016 Accounting and Business

INT_F_NewQual.indd 17 14/09/2016 15:11

 18 Focus | Interview

The heart of the matter

Refat Jiwani FCCA, CFO of the Aga Khan Museum in Toronto, reflects on why he left
the corporate life behind to pursue a career in philanthropy and the arts

I
t’s not far from downtown Toronto to the Aga Khan
Museum. In fact, it’s only a couple of underground stops 2015–
away. But for Refat Jiwani FCCA, recently appointed CFO CFO, Aga Khan Museum
of the museum, the daily commute from his Ontario home is
not just a route connecting destinations but a link between 2011–15
continents – and above all cultures.
The son of an Africa-born mother of Indian origin and an
Director of finance, Aga Khan
Foundation Canada (AKFC)
CV
Indian father, Jiwani’s longer journey originated in Tanzania.
‘Our culture at the time,’ he says, ‘was that your parents had 2008–10
a very strong influence on your career choices. My father saw Regional executive officer (North America), Focus
my strength in maths and decided that I should become either Humanitarian Assistance
an accountant or an actuary.’ After finishing his secondary
education, Jiwani decided that the UK was the ideal spot to 2007–08
do his ACCA accountancy training, with a view to practising President and CEO, Orion Technology
eventually in North America.
Once he had completed his ACCA accreditation, emigration 2006
from England to Canada held out the promise of new Volunteer management consultant with Focus
opportunities for personal growth, economic independence Humanitarian Assistance, Tajikistan
and, perhaps more importantly, reconnecting with family. As he
explains: ‘I visited Canada several times because the rest of my 2001–05
family was there. I soon learned that it was a country with a good Vice-president and corporate controller, Industrial
standard of living, one that would allow me to participate in the Alliance Insurance Group
local culture while maintaining my own heritage.’
On his ACCA Qualification, Jiwani says: ‘The accounting 1999–2001
profession has been a great facilitator for my growth as an Vice-president, retirement and investment products,
executive. The profession itself has evolved over the years and National Life of Canada
I feel that having an ACCA accreditation has actually given me
what I would consider an MBA equivalent and more.’ 1987–98
Director, marketing administration, then vice-president and
About-face controller, National Life of Canada
Arriving in Toronto in 1980, Jiwani’s career began in a complex
corporate environment. His first job was as an accountant with 1980–86
Canadian insurer National Life. He spent the next 26 years Accounting manager, then divisional controller,
in progressive finance positions and line operations with the National Life of Canada
company but in 2006 did an about-face, leaving his role as a
highly paid executive to volunteer as a management consultant
with the humanitarian aid organisation Focus Humanitarian kinds of perks, and the next thing we hear is that you and your
Assistance in Tajikistan (under the auspices of Focus USA). wife are in some unknown country in central Asia as volunteers
Asked why he left the corporate life for philanthropy, Jiwani – what’s going on?” To this, I would reply: I made this decision
recalls his long-term plan: ‘I decided I would devote my first from the heart.’
25 years to learning, in order to be able to earn a living; the The inspiration behind his role as CFO at the Aga Khan
next 25 years working towards career progression and financial Museum lies in his long-term devotion to his faith, his belief in
independence; and the next 25 years giving back to society. the role of education in the advancement of a pluralist society,
To this day many of my friends don’t understand,’ he adds. and a sense of pride in the achievements of his culture.
‘They say, “You were at the prime of your career, you were a step He says: ‘Our mission is to foster a greater understanding
from the corner office, you were enjoying stock options and all and appreciation of the contribution Muslim civilisations »

Accounting and Business 10/2016

INT_F_Jiwani.indd 18 08/09/2016 13:52

 Interview | Focus 19

‘Having an ACCA
accreditation has
actually given
me what I would
consider an
MBA equivalent
and more’

10/2016 Accounting and Business

INT_F_Jiwani.indd 19 15/09/2016 13:47

 20 Focus | Interview

* The Aga Khan Museum is

a not-for-profit oganisation
primarily funded by Aga Khan
* Know the business: ‘If one wants
to work in the not-for-profit or the
charitable sector I think one first
Development Network (Aga needs to understand the business
Khan Trust for Culture) under the
leadership of His Highness Prince
Basics and the fundamental goals of
the organisation. You really
Tips
Shah Karim al-Husseini Aga Khan need to understand what it is
IV (born 1936), the 49th hereditary imam of the Shia that the organisation stands for, and you always have
Ismaili Muslims. to stay true to it.’

* Opened in Toronto in 2014, the museum houses

over 1,000 artifacts showcasing the arts of Muslim
civilisations from the Iberian peninsula to China.
* Know the measure of success: ‘I think it’s important
to recognise as a CFO that the measure of success
is different in the not-for-profit sector. It is long-term
impact versus profitability and shareholder value.

* The museum’s mission is to foster a greater

understanding and appreciation of the contribution
Muslim civilisations have made to world heritage.
That has very different offshoots in your day-to-
day work. Having said this, as a CFO you can’t lose
sight of the fact that the fundamental business
principles still apply.’

have made to world heritage. Through education, research

and collaboration with other museums and institutions, we
hope to foster dialogue and promote tolerance and mutual
* Know your staff and their purpose: ‘Coming into
this sector as CFO, you need to understand that
the individuals you are working with may not be
understanding of people. This is why we feel that the work of the business-minded, but rather programme-oriented.
museum is very relevant, not just today, but perhaps for decades Have the patience to train your employees in the
if not centuries to come.’ importance of fiscal responsibility, cash management
Jiwani realised from the outset that moving between sectors and the necessity to generate revenue to keep their
would not necessarily be easy. In fact, he says, it meant not just programmes up and running.’
a lifestyle change but also a significant change in management
styles, strategies and processes. Despite these differences, he
says, there are also many similarities. ‘I was surprised to learn that
the not-for-profit sector can be just as outcomes-driven as the
* Know yourself: ‘Before you decide to make a move
to a not-for-profit philanthropic organisation,
look at yourself in the mirror and ask if you are
insurance industry, just in another way. I have to admit that before in it for financial gain or whether you have a real
I joined the charities world, for some reason I didn’t see it as a passion for the cause, because it’s the passion that
competitive or high-performance sector. However, I learned very will keep you going.’
early on that this was a misconception. The sector as a whole,
and the Aga Khan Development Network in particular, is just as
competitive, definitely very high performance and, because we understand the impact that Muslim civilisations have had in
receive funding from many sources, very accountable.’ the development of our world over the last many centuries. So
at this stage, our impact measurements are more in terms of
More hands-on how many people we’ve reached, how many people come to
The big difference from a financial management perspective, the museum, how many people come to our lectures, seminars
he has found, is mainly a function of scale and the nature of and performances.’
the outcomes he is expected to manage. ‘In a relatively smaller The Aga Khan Museum, which opened in 2014, is the first of
not-for-profit, one has to be more hands-on, and the metrics we its kind in North America. With seed funding from its benefactor,
use to measure our success are really quite different. Although His Highness the Aga Khan, the financial foundation was there
the financials obviously matter, the real measure of value is the to build on from the outset, but the strategy for long-term self-
impact we have on the purpose that we serve.’ This, he explains, sufficiency wasn’t necessarily fully developed.
from a business perspective, is a long-term view, requiring As the museum becomes more established, Jiwani explains,
investments that aren’t often measurable in terms of return it will start gathering the metrics that will allow it to understand
on investment. how it is affecting people’s awareness of Muslim civilisations
For the museum specifically, the primary outcome is its and how it is influencing perceptions on why pluralism can be a
ability to educate. ‘We’re looking at the museum as being an strength to modern society.
avenue to help people understand that pluralism in society ‘Initially everybody was focused on getting the museum
is actually a strength. Very particularly, we want people to opened on time and getting it opened right. As with many new

Accounting and Business 10/2016

INT_F_Jiwani.indd 20 08/09/2016 13:52

 Interview | Focus 21

ventures, the focus was short term, without enough attention act right now. So these are all very different challenges and my
to business fundamentals. To get the same people to then turn role within that is dramatically different from the ones I’ve had
around and say okay, now we are in business, meant a change in an established organisation.’
in mindset,’ he says. ‘To this end, the biggest thing that I might At the moment, cash is very important to the museum, as it
have accomplished over the last year is to help make this would be for most new operations, and as Jiwani comments, his
happen. This is where so many years of experience as a finance main concerns are daily cash management, forecasting cashflow
executive in the insurance sector has really paid off.’ and managing infrastructure costs as the museum builds its
revenue base. It’s what you would typically expect to encounter
The road forward in any startup organisation, he says, but perhaps compounded
As a new venture, in terms of everyday financial management a little bit more because it’s a very different type of organisation
the road forward for the Aga Khan Museum will no doubt have and will take a little while to get its feet firmly on the ground.
many twists and turns along the way. As Jiwani explains: ‘We’re ‘That’s the biggest adjustment that I’ve had moving from
learning something new every day, including some lessons a large commercial enterprise to a startup not-for-profit,’ he
learned the hard way. Attracting members and new and repeat says. ‘And clearly the road ahead will lead to many new and
visitors is a fresh challenge, and fundraising and business rewarding challenges.’ ■
development is also a major undertaking.
‘Programming to stay true to our mission but also ensuring Ramona Dzinkowski is a Canadian economist and editor-in-chief
that we’re able to attract a growing audience is a fine balancing of the Sustainable Accounting Review

10/2016 Accounting and Business

INT_F_Jiwani.indd 21 08/09/2016 13:52

 22 Comment | Ramona Dzinkowski

Plenty to worry about

Despite good news in the US economy, global finance leaders are still feeling nervous
about the future, with Brexit a key factor, says Ramona Dzinkowski

hiring (49%), and making acquisitions

(38%). More than 75% of the European
CFOs expect the British referendum to
lead to similar calls for voting in other EU
countries and one in four forecast a hit to
their financial performance should the UK
ultimately leave the EU.
In other news, lawmakers have
concluded in principle that for companies
operating in the region, mandatory conflict
minerals reporting is indeed coming. In
June, MEPs and the European Commission
agreed that ‘all but the smallest EU firms
importing tin, tungsten, tantalum, gold
and their ores will have to do due diligence
checks on their suppliers, to stop this trade
being used to help fund conflicts and
human rights abuses’.
The provisional agreement requires
mandatory reporting from companies that
import the minerals and metals as raw
materials into Europe. Some estimates
suggest that the rules could affect roughly
Ramona Dzinkowski is a 900,000 European companies using the
Canadian economist and metals in auto parts, packaging, lighting
and other electronics, aerospace, and
editor-in-chief of construction industries, among others.
the Sustainable As to how this will affect the UK post
Brexit, according to partners at Crowe
Accounting Review Clark Whitehill, a London-based national
audit, tax and advisory firm: ‘If the UK
were to remain outside the EEA (European
The latest ACCA-IMA (Institute of survey, views around the economic outlook Economic Area) with no access to the
Management Accountants) Global for Europe are mixed, with 34% of CFOs single market, it would either have to go
Economic Conditions Survey has not being more bullish on Europe in Q2 than through a period of developing its own
resulted in the better news I had hoped in Q1. However, 30% were also more regulations, in which case the market
for, considering the uptick in the US pessimistic. The top four concerns were would remain uncontrolled for a period
economy. On the contrary, the Q2 economic uncertainty (42.9%), regulatory of time, or choose to adopt the EU
business confidence outlook report requirements (28.6%), government policies regulations as a matter of expediency. In
says there has been a general drop in (28.6%) and weak demand (28.6%). either case export to the EU would require
business confidence in OECD countries, So what are the risks ahead in the due diligence in line with EU regulations,
and not surprisingly the study cited wake of Brexit? The Duke survey showed to be conducted when the metal or
Brexit as a key factor. At the same time, an overwhelming majority (69%) of mineral was imported into the EU.’
the survey’s national results reflect the European CFOs rating the degree of Needless to say, the past two quarters
general nervousness of the markets and political uncertainty as either a ‘large’, have not been short on drama for the UK
business leaders alike, showing that UK or ‘moderate’ risk. Not surprisingly, the finance folks. ■
business confidence was at its lowest in top five political concerns were proposed
over four years. regulations, government gridlock or For more information:
For the European Union as a whole, dysfunction, potential for tax reform, and
it’s still a toss-up as to how it will fare in the upcoming elections. Consequently, The latest ACCA-IMA Global
the coming months. According to Duke CFOs say that their companies will be Economic Conditions Survey is
University’s quarterly CFO sentiment more cautious in capital spending (58%), available at: bit.ly/globaleconsurvey

Accounting and Business 10/2016

INT_COM_RD.indd 22 13/09/2016 09:43

 Alnoor Amlani | Comment 23

Stopping the clobbering

Previous efforts to cut high interest rates on commercial loans in sub-Saharan Africa have
had little success. Alnoor Amlani asks whether Kenya’s price cap will fare any better

Sub-Saharan Africa has some of the

highest interest rates in the world,
according to a study last year by
Investmentfrontier.com. Three of the
six countries with the world’s highest
interest rates are in sub-Saharan Africa.
The three are Malawi, Gambia and
Ghana, and they reflect the broad
picture in the region – and, indeed, the
wider African continent – of generally
high interest rates.
Interest rates in sub-Saharan Africa
are commonly above 20% a year for
borrowers, and the spread between
lending and borrowing rates is also
extremely high (8%-10%) compared with
spreads at commercial banks in other
regions of the world. Banks cite a high-risk
environment and high inflation as well
as financial volatility as explanations for
this situation.
Efforts to cut commercial lending rates
so as to encourage startup businesses and
to foster growth for small and medium-
sized enterprises (SMEs) have not typically
been successful in the past.
But in August this year, in an effort Alnoor Amlani FCCA is an
to change that, Kenya passed an
unprecedented law placing a nationwide
independent consultant
ceiling on loan interest rates and a based in East Africa
floor on deposit rates for all financial
institutions, thereby imposing a form of
price control on the banking industry. The a black market. Some bank collapses The real problem may be that banks
move threatens the traditional profit base in Kenya have highlighted the issue of are so risk-averse because they are not
of the region’s commercial banks because, undeclared deposits and parallel banking strictly local institutions. Many have
as the most developed economy in in the banking sector where depositors foreign investors or large depositors.
sub-Saharan Africa, Kenya sets the trend. pay to deposit instead of being paid The best alternative for many Africans
It could mean the same controls will be interest because their funds are ‘dirty’. needing to borrow are the savings and
imposed in other East African countries, These funds do not even have to be credit societies (Saccos) created to pool
especially as the region moves further lent onwards. Such distortions, if they people’s savings and share borrowing
down the road to monetary union and a are indeed widespread, could mean opportunities between them.
common market. that these regulations will do little to Saccos are exclusively local and
Kenyan commercial banks have moved bring new businesses to the market and because of their low operational costs can
quickly to publish a common lower encourage SMEs to grow. charge effective rates of less than 10%
lending rate of 14.5% based on the central What’s more, the regulations do not a year. However, they can lend only to
bank rate. Predictably, entrepreneurs have affect government borrowing. Banks individual members of the Sacco, so such
supported the legislation, more so since may therefore simply buy more Treasury loans tend to be for household needs. ■
some banks have indicated they will apply bills and avoid lending very much to the
the rate to loans too. private sector at all. For more information:
But analysts are watching closely. An It remains to be seen if the interest
ill-considered price cap in a relatively rate price caps will work in practice for the Read the Investment Frontier study
open market will often quietly turn it formal banking sector. at bit.ly/highest-rates

10/2016 Accounting and Business

INT_Com_AA.indd 23 13/09/2016 14:04

 24 Comment | Brian McEnery

In praise of advocacy
Beat the drum for your professional organisation, says incoming ACCA president
Brian McEnery, because ACCA offers a real opportunity in life to everyone

My first experience of advocacy came

very early in my life and from a source
very close to home. As a child, I was
lucky enough to see my brother, who
was four years older, working his
way through the ACCA Qualification
programme. Watching him, I could see
the benefits of the syllabus. In fact, it
was how my passion for business was
first ignited.
That is why I want to spend my year
as ACCA president inspiring as many of
you as possible into being advocates.
The day I became an ACCA member was
one of the biggest days of my life, and I
owe all this to seeing someone in my life
benefiting from ACCA before I did.
ACCA’s open access is an incredibly
valuable attribute, but it’s not enough for
us just to open the doors to everyone;
we also need to go out and welcome
people in!
The world is demanding more from
professional accountants than it ever
has before. The role has undergone a
complete transformation over the past
decade, with finance professionals going
on to become business leaders, trusted
expert counsel and key strategic advisers. 
But with this metamorphosis comes a
requirement for finance professionals to
equip themselves with a whole new set of
skills. And that is why it is so exciting that are being brought about by the 21st As for me, I have been a Council
this month sees the ACCA Qualification century’s disruptive economy. member since 2006. It’s an amazing
updated to ensure that it continues to Young people come in for a lot of experience – one that feels like
meet the new strategic challenges that criticism. There’s a phrase in Irish – ‘mol an being a non-executive director for a
óige agus tiocfaidh sí’, which, for those of multinational company.
you who aren’t fluent in Gaelic, translates It is an immense privilege to be able to
as ‘praise the young and they will thrive’. do this work for ACCA. After spending a
I believe that wholeheartedly. decade on Council I have learned so much
Many young people just need to be – above all to be open-minded and to work
given an opportunity to succeed and they as part of a team. This is the approach I am
Many young will take it. The opportunity I was given going to take during my year as president:
was ACCA, and by spreading the word, to be your representative, your advocate
people just need we can offer that same opportunity to and a mentor to our next generation of
to be given an thousands more young people around ACCA-qualified professional accountants.
the world. It’s a daunting task, but I hope I do you
opportunity to There are lots of different ways to be all proud. ■
succeed and they an advocate. If you want to get involved,
will take it I’d urge you to make contact with your Brian McEnery is a partner specialising in
local ACCA office, where the staff will help corporate restructuring and healthcare
you get started. consulting at BDO Ireland

Accounting and Business 10/2016

INT_COM_pres.indd 24 08/09/2016 15:18

 The view from | Corporate 25

The view from

Huzaifa Is-Haque ACCA, associate director – regional
finance (APAC), Merck Singapore, on being ambitious

is also a continuous focus on becoming a

high-performance organisation but with
the minimum resources available.

Primarily my role involves monitoring

financial performance, and identifying
and communicating issues and
recommendations in order to achieve Snapshot: packaging
our business objectives. I’m a finance
business partner to the Asia-Pacific The global packaging sector is a
regional team (with whom we support US$1 trillion industry globally and
the decision-making of regional leaders, growing at a steady 3% per annum.
through monthly reporting and ad hoc Consumer trends are big influencers,
information), and the country finance especially for food. Convenience,
team (assisting in preparation and analysis lifestyle and increasing disposable
of monthly results, quarterly forecasts, incomes in emerging markets are
Chartered accountancy is one of the budgets and the five-year plan), reporting fuelling an increasing desire for
most respected professions. I decided into the emerging markets division based packaged products.
to become an accountant when I was in in Switzerland. Packaging companies face
the eighth grade, driven by the success regulatory pressure to address
stories of a few accountants I knew, and Asia Pacific has high growth potential environmental issues. For example,
graduated with a bachelor’s degree for businesses across all industries. The there has been a big rise in the use
in commerce. After a long six months World Bank rates Singapore as the top of flexible packaging technology.
involving 40-plus job interviews, I landed a destination for ease of doing business so Producers are also very aware of the
job in my field of interest, with fast-moving it makes it a perfect place for a regional part they play in brand protection
consumer goods multinational Unilever. HQ. The globalised economy, political and development, although
stability, low taxes, cultural diversity, safe tobacco packagers selling into EU
Changes to business and the profession living environment and good quality of life countries now face an advertising
have been enormous. With technological make it a great destination. ban – an example of how health
advances and increased globalisation, the and wellbeing regulation plays
business environment has become much It’s difficult to pick a career highlight. a role. All these features require
more dynamic and fast-paced. In these While there are many proud moments investment in technology and plant,
challenging times of shrinking margins, in every role I’ve undertaken, I made which in turn makes a strong case
patent expiries and fierce competition, a significant impact as a supply chain for consolidation. While glass and
companies are emphasising efficiency finance manager, contributing to topline metal packaging is dominated
and effectiveness more than ever. There business growth, improving operational globally by large players in each
efficiencies and reducing costs that region, plastic and cardboard
eventually impacted the bottom line. production is more fragmented.
Mergers and acquisitions
With technological I’m ambitious by nature and I’m aiming specialists need to be strategic,
high. I see myself as a C-level executive numerate and analytical with a
advances and and/or an entrepreneur. I’d also like to global outlook. To understand
increased develop future talent; I want to coach and the pressures clients face, finance
make a difference in the society I live in. professionals need a mindset
globalisation, around brand development, plus a
the business I love nature and appreciate every little knowledge of manufacturing and
environment has thing. If I weren’t an accountant, I’d have
loved to have been an environmentalist.
engineering issues.

become much I’d make efforts to strike a balance Nick Wood, corporate finance
more dynamic between preserving nature and progress, partner specialising in packaging,
with increased emphasis on corporate Deloitte
social responsibility. ■

10/2016 Accounting and Business

INT_AP_YCORP_intro.indd 25 13/09/2016 14:04

 26 Corporate | Sterling

A long way down

While sterling’s recent slide is viewed by some as a temporary post-referendum
blip, many believe that it marks the acceleration of a century-long decline

The magnitude of sterling’s post-Brexit higher to around 7% of GDP. No large

slide was something that not even economy in the world has a larger current
most silver-haired financial veterans account imbalance as a share of GDP.
had witnessed before. The 8% one-day Even in absolute terms it is the second
decline against the dollar was the largest biggest globally, behind the US.
since the era of floating exchange rates ‘This is a key source of vulnerability,’ ‘The pound could
began in the early 1970s. says Marc Chandler, chief currency
For historians of finance, however, strategist at Brown Brothers in New
come under
there was a grim familiarity to the pound’s York. ‘If foreigners become unwilling heavy pressure
sudden slide. ‘Over the past century
sterling has been on a downward ladder,
to buy British assets – whether stocks,
bonds, or fixed assets – at the current
again once Britain
with large permanent steps lower,’ says price, sterling will need to fall until these formally requests
Rui Pedro Esteves, an associate professor become attractive again.’ With a deficit of an EU exit’
of economics at Oxford University. ‘The £32.6bn in the first three months of 2016,
pound has tracked the nation’s decline the UK needs to find around £500m every
from the world’s dominant economy to working day from overseas.
the humbler position it occupies today.’ meaning that Brits have been getting less
The question now is whether the lurch Deficit division from their investments overseas than the
lower in the pound was a one-off event Economists are divided over how country has been paying out to foreigners.
or marks the start of a more prolonged dangerous the deficit is likely to be. ‘This part of the deficit could
period of depreciation. And will a weaker Optimists observe that the deficit paradoxically be seen as a reflection
currency provide a welcome boost to should narrow smoothly without another of the UK’s recent economic strength,
British exports, or simply erode the real disruptive slump in the pound. While not its weakness,’ says Scott Bowman,
value of wages and accentuate the post- the UK suffered a series of current a UK strategist at Capital Economics.
referendum decline in growth? account funding crises throughout the ‘The relatively strong growth of the
Public enemy number one for sterling 20th century, the fact that it now has a UK economy and higher interest rates
could well be the UK’s ominously large flexible exchange rate is likely to reduce relative to Europe have meant that foreign
current account deficit – a measure of how the trauma from any adjustment. The investors have done well, while Brits have
much the nation is borrowing from the roughly 10% post-referendum fall in the got poor returns by putting their money
rest of the world to finance its imports and pound against the dollar should improve in slow-growing eurozone nations.’ The
other payments to foreigners. The shortfall the trade balance by making UK exports fall in sterling will now boost the domestic
of 5.4% of GDP for last year meant that more competitive overseas and also make value of corporate earnings, dividend and
the UK is more reliant on foreign funding imports dearer. In addition, a large part income payments from overseas.
than at any time since the 1940s. In the of the current account deficit derives Still, more painful adjustments may
most recent quarters the deficit rose even from a deteriorating income balance – also be needed. A slide in sterling after

Major sterling devaluations

1931 1949 1967 1992

UK had been overvalued The pound fell 30%. The Prime minister Harold Wilson UK was forced out of the
on the gold standard: pound had been overvalued sanctioned another drop exchange rate mechanism,
when the UK came off the when it joined the Bretton in the value of the pound a forerunner to the euro. UK
gold standard, the pound Woods system of managed due to a balance of was unable to sustain a link
slumped. exchange rates. payments crisis. to the deutschmark.

Accounting and Business 10/2016

INT_YCORP_Sterling.indd 26 13/09/2016 16:58

 Sterling | Corporate 27

the 2008 financial crisis had less of a full access to the European single market. international, deriving only around 20%
positive effect on the trade position than In 2014, for example, the UK attracted a of revenues from the UK on average,
might have been expected. When imports net £44bn, making the UK the number-one according to JP Morgan. Their earnings in
get pricier, it is not always possible to investment destination for Europe. sterling terms will be boosted as foreign
find immediate domestic substitutes. As Uncertainty could ultimately end up profits are translated back into the home
a result, the bill for foreign goods simply dampening appetite for other UK financial currency. This helps explain why the
rises and the deficit actually widens. assets, too. The UK’s appeal for fixed- UK’s benchmark stock index rebounded
As the real value of wages falls, living income investors is likely to decline if, as in the month following the referendum
standards deteriorate. expected, the Bank of England cuts rates outcome. Exporters of more price-
Second, a large share of UK exports to zero and resumes bond buying in order sensitive goods may grab a larger share of
are high-end, so the level of demand does to push down longer term yields. And foreign markets.
not rise sharply if the price falls. This is while foreign companies are reluctant to Still, currency weakness erodes the
especially the case for financial and legal sell their plant and equipment, investors global spending power of Brits, whether
services, which are two of the UK’s most in stocks and fixed-income instruments they are buying imported goods or
successful exports. ‘If the price of advice can exit the UK far faster. travelling overseas. Devaluation is also
on mergers and acquisitions goes down, it As Bank of England governor Mark questionable as a strategy for helping
is unlikely that a US multinational company Carney warned ahead of the referendum, business; instead of improving national
will decide to take over two companies the current account deficit makes the UK competitiveness it can lead to lazy
rather than one,’ quips Chandler. reliant on the ‘kindness of strangers’. And management, reducing the need to boost
in ‘febrile’ and ‘volatile’ market conditions, productivity and habituating firms to
Selling the family silver? investors may start to demand a higher sporadic sugar-highs from an exchange
The other side of the balance of payments risk premium for holding UK assets – rate improvement. ‘If this approach
equation looks even more threatening. pushing up the cost of borrowing for all. worked, Italy and Greece would be
A large current account is not so much The upshot is that sterling may well economic superpowers, since they used
a problem as long as foreign investors be resuming its long downward journey, this tactic frequently before joining the
purchase UK assets. ‘While running large says Esteves. ‘We could see something euro,’ says Chandler. ‘It merely enabled
deficits may be seen as selling the family a bit like Chinese water torture,’ he says. them to put off much needed economic
silver, they really become an immediate ‘The pound showed some stability after reforms to boost underlying efficiency.’
problem if overseas demand for a nation’s its initial post-Brexit slide. But it could More broadly, the exchange rate is a
assets dries up,’ says Esteves. come under heavy pressure again once reflection of a nation’s ability to project
Many economists fear that the Britain formally requests an EU exit, as its economic power around the globe. As
referendum outcome will make foreign weak economic data filters through, and if such the sliding pound is not a trend Brits
investors less willing to put their cash in the the UK’s negotiations with the EU lead to should regard with equanimity. ■
UK. One of the UK’s chief selling points for disappointing results.’
foreign companies was the combination A weaker pound will create winners as Christopher Fitzgerald and Fernando
of more business-friendly regulations and well as losers. FTSE 100 firms are highly Florez, journalists

10/2016 Accounting and Business

INT_YCORP_Sterling.indd 27 13/09/2016 16:58

 28 Practice | The view from

The view from

Jack Lo, regional head of tax, AXA Asia, Hong Kong,
on why taxation is no longer a technical issue

but also a political, economic and social

one. People used to discuss whether
tax planning is legal; now they debate
whether it is moral or fair.

All these have huge impacts on how

corporations should manage their
taxes. Strengthened international Snapshot: risk assurance
collaboration means more compliance
burden, heightened reputational risks and Risk assurance is fundamentally
the need for more refined and coherent about helping corporates make
group tax policies. These developments better, more informed decisions
provide better clarity on technical issues by assessing, planning for and
and facilitate the harmonisation of mitigating the risks they face.
international tax law. Twenty-first century risk is broad
and varies from one geography to
My role in AXA is to devise and I have to devote time to remaining up another. What is more, the business
implement tax strategies and to to date on ever-changing regional and world faces shorter risk cycles in
manage tax risks in the Asian region. global tax laws. While it is fundamental economic and geopolitical terms.
Communicating tax risks and suggesting to be familiar with European-oriented Regulation can impose a
alternative solutions as a business partner OECD tax trends, which are generally compliance risk. Technology can
are a challenging but exciting part of accepted globally, I need to appreciate also introduce uncertainty: drones,
my work. Mergers and acquisitions and address the fine differences in for instance, represent a risk to
work is usually the most complicated, the tax stances taken by Asian tax the aviation sector that is hard to
while transfer pricing requires a lot of administrations, such as those in China quantify. Fintech brings competitive
collaboration among different teams. and India. The world is changing every pressures to financial services – or
day and we need to embrace life-long an unfamiliar business model for
Taxation has definitely become one learning to help us adapt. those institutions that invest in it.
of the most discussed business topics The primary risk assurance
in recent years. It started with the For international insurers, Asia will task for corporates is to ensure
major tax cases relating to Google and continue to be the driver of growth due that their frameworks are suitably
Starbucks, followed by the OECD’s base to the low penetration rate of insurance designed, well implemented and
erosion and profit shifting action plan, the and the rising middle class. The latter effective. Highly regulated sectors
international push for tax transparency is closely linked to expected continuous such as financial services, energy,
and, most recently, the Panama Papers. economic growth and enhanced business healthcare and life sciences, tend
Taxation is no longer just a technical issue opportunities. With this outlook and the to be more advanced in their
accelerating modernisation of tax law understanding, but it can be
in Asian countries, I expect that more challenging in those boardrooms
multinational companies will demand where risk is less well accepted
seasoned tax professionals to help them and understood.
manage their affairs in the region. Professionals working in
this area need to be able to
People used to Outside work, I serve as a member operate at a very senior level
of the executive committee of a local with strong influencing skills
discuss whether charity for children with heart disease. and powers of persuasion.
tax planning is We face issues similar to those faced by They also need experience, a
legal; now they corporations, such as raising publicity,
enhancing our services, engaging
forward-looking outlook and solid
sector knowledge.
debate whether it members and developing strategic
is moral or fair partnerships. I consider it an important Katie Clinton, partner and UK head
part of my life to serve others as a of internal audit, KPMG
privileged member of society. ■

Accounting and Business 10/2016

INT_AP_YPRAC_intro.indd 28 13/09/2016 14:04

 Business solutions | Practice 29

Cloud control
The Big Four are leading the way in creating their own cloud accounting platforms,
with SMEs playing a key role as the innovative approach goes mainstream

Accounting software companies are integrated apps on an open platform, with He admits to being a bit surprised
increasingly encouraging businesses customisable dashboards. A collaboration that the push is coming from ‘Down
to move their finance functions to the between member firms, a handful of Under’, while noting that countries such
cloud. But what’s in it for accountants? startups and emerging technology as Singapore, China and Hong Kong
And why are accountancy firms companies in New Zealand and Australia, are ‘really watching with interest’ the
promoting the likes of Xero, MYOB, PwC’s Next is used by private businesses, Australasian experiment. He guesses it’s
Saasu and Reckon, when such programs families and individuals. It is expected to because uptake of cloud accounting tools
effectively let small and medium-sized filter up the chain to the more traditional is comparatively high in that part of the
enterprises (SMEs) take care of their Big Four territory of larger clients. world – around 20% of businesses in New
own bookkeeping drudgery – tasks ‘We’ve tended to start at the small Zealand and 10% in Australia.
usually outsourced to accountants? end of SME business because that’s The Next platform evolved as a result
The charge is being led by Australia where [cloud] penetration is taking of PwC partners’ realisation that the
and New Zealand, with even the Big Four hold,’ David Wills, PwC’s private clients’ market demanded more than merely
on board – stepping, seemingly, into leader, explains. ‘That’s also the part of cloud enablement.
the deep yet relatively uncharted pool the market that’s being most disrupted.’ ‘Our clients are looking for deeper
of SMEs. Enter the likes of PwC’s Next, As more and more add-ons enable a insights and the ability to get on the front
KPMG Agile and Deloitte Private Connect, more sophisticated analysis of what the foot in making decisions,’ Wills says. ‘They
with EY preparing a platform of its own. basics do, the platform will become more want the freedom to choose the cloud
relevant for the medium-sized business. tools that best suit their needs – whatever
PwC Next ‘You start with a minimum viable product they may be.
PwC’s Next was launched in February and you then evolve it in its sophistication ‘By using open architecture technology
2016 as a cloud-based business solution and complexity to other parts of the at the core of PwC’s Next, we’ve created
combining accounting tools and market,’ Wills says. a rich cloud ecosystem that goes »

10/2016 Accounting and Business

INT_YPrac_Big4Cloud.indd 29 06/09/2016 17:04

 30 Practice | Business solutions

beyond bookkeeping and accounting; it’s Deloitte Private Connect

a whole-of-business solution.’ When Deloitte launched Private
Next is not designed to be a ‘made- Connect, its cloud-based technology
by-PwC product’. (‘Our market reality platform targeting small businesses,
is that there are nimbler organisations in mid-2014, it was tapping an existing
already well advanced in terms of cloud client base of SMEs – privately owned
accounting,’ Wills says.) Rather, the vision enterprises, individual and family wealth
is to add value to existing cloud products, and not-for-profits. Deloitte Private, a
via analysis, scale and skill, and wrap it into parallel business established in Australia
an ecosystem that the firm’s accounting years earlier, already had more than 100
professionals can support and enhance. partners and 1,000 staff working
Next has multiple general ledgers nationwide. (Although
(including MYOB and Xero), with the rebranded as Deloitte
capacity to bring in others. Letting clients Private around
use tools they are already familiar with is 2009, the
an important design feature, Wills says. firm’s service
‘Even the cloud solution providers well for private
know that they won’t have something clients had
unique forever. We can’t be stuck in existed for
one dynamic. We’re not signing up to many years
exclusivity here; we’re letting the market before that.)
decide what’s best of breed. As long ‘It’s not as if
as we can provide a skillset over and Deloitte has entered this
above that, then we will add our own IP market off the back of these
[intellectual property] on top of it.’ cloud products; we were
The platform offers a single sign-on already there,’ says Adrian
to access all software and cloud-based Batty, national lead partner
tools, bank-level security, automatic data for business advisory services
transfer and a holistic view of an entire at Deloitte Private. ‘Our
portfolio in real time. Clients gain clarity involvement in some of the
around all their accounts, in consultation cloud solutions is a result of
with PwC advisers who ‘will help them us understanding what the
flush out what’s important to them’. marketplace wants us to do and
From a practice viewpoint, Next will streamlining our own business to operate
run in parallel with PwC’s existing way of more proficiently in that chosen market.’
doing business. ‘Some of our clients will The service began in Australia – quite
not embrace the cloud, and we respect possibly because of the sheer weight of
that,’ Wills says. But PwC will ‘continue to SME numbers there – but elements
share the virtues’ of the cloud – speed, of the private client concept are
cost efficiency and time efficiency – and being replicated in Asia-Pacific
Wills believes that, as cloud accounting member firms, Batty says.
penetrates the global arena, ‘Next will He expects that a
be more and more relevant for an ever version of Private
increasing percentage of our clients.’ Connect, even if

Clouds blow across from Australasia

PwC sees its Next platform as portable beyond its Australasian launchpad.
According to Siew Quan Ng, who leads PwC’s entrepreneurial and private
clients practice in Asia Pacific, the firm ‘is always looking at solutions to support
our fast-growing entrepreneurial and private clients, and will be looking at the
development of Next in Australia with interest’.
David Wills, PwC’s private clients’ leader in Melbourne, concurs that he’s
fielding calls from various network territories – from Poland to China to Canada –
who ‘love the vision’ and are ‘very happy for us to develop it and for us to share’.
While Australia and New Zealand are at the front of the development
process, Wills has no doubt about the growing global appetite. ‘All praise to the
Australian innovators that have had a crack at this,’ Wills says. ‘It’s great to be on
board at a time when they are breaking new barriers.’

Accounting and Business 10/2016

INT_YPrac_Big4Cloud.indd 30 06/09/2016 17:04

 Business solutions | Practice 31

branded differently, would be a logical

extension into places such as Hong
Kong, mainland China and Singapore,
each of which has a large number of
private sector clients. Already,
Deloitte Private Connect
has both a Chinese and a
Japanese services group,
Batty explains.
The move into cloud
services is one of the
results of Deloitte’s
looking to provide a
better experience for its
own practitioners as much
as for its clients. By letting
technology do some of the
heavy lifting, Batty says, it shifts
the role of a traditional accountant
from a scorekeeper of what happened in
the past to a strategist for the future.
‘A lot of accountants including
ourselves had been so busy
doing year-end accounting
and tax work that we
didn’t really have in partnership with Xero. Like Deloitte,
the time or KPMG already had an established,
the information ‘Even the cloud SME-focused business in Australia, so
at our fingertips the development of Agile was a natural
to have a solution providers progression, according to Michael Hine,
discussion with well know that a partner and practice lead in KPMG’s
our clients about enterprise team.
how to move
they won’t have Hine stresses that KPMG Agile
forward,’ Batty something unique is not about selling cloud services – the
explains. Cloud products, he adds, allow
both client and accountant to operate
forever. We can’t platform is leveraging technology so
that business processes can be executed
more seamlessly. And that frees up be stuck in one more efficiently. ‘This effectively allows
practitioners’ time to offer professional dynamic’ us to offer to the client an end-to-end
insights – ‘which is what the clients business administration service, right
really want’. though to the final compliance product,’
he says.
space more deeply. The The cloud will, however, affect
model could easily be replicated accountancy firms’ business, Hine
overseas, particularly in South-East Asian adds, including culling some of the
The move countries, which have big franchise and profession’s traditional roles. ‘That’s
into tailored cloud startup communities. the inconvenient truth of the cloud,’
services has also opened From a fee perspective, Deloitte he says. ‘Ultimately it will lead to a high
up unexpected new markets, Private Connect is a subscription service, degree of cannibalisation of what a lot of
Batty points out. An individual allowing Deloitte to compete on price accountants actually do at the moment.’
franchisee in a shopping mall or a with smaller accountancy firms. ‘We’ve Does that worry him? ‘It would if
small startup, for example, might not embedded so much technology and we weren’t responding to it,’ Hine replies.
have been on the radar of the Big Four process to do a lot of the manual effort ‘As long as we can find other ways of
firm, nor most likely could it offer services that we can compete on price with any adding value to our clients well beyond
at a price point they would expect. firm in the Australian marketplace,’ compliance, KPMG will continue to have
That scenario changes with Deloitte Batty explains. a different business. If we were relying
Private Connect. The franchisor can purely on compliance fees to generate
aggregate data across its whole fleet of KPMG Agile our revenue stream, then yes, it would
stores while the franchisee gets on with Meanwhile, KPMG’s Agile is a cloud- be very concerning about what’s likely to
its business. Dealing with the operators based service for processing, payroll, happen moving forward.’ ■
of co-investment startup hubs has also accounts payable and GST (goods
enabled the firm to penetrate the startup and service tax) compliance. It works Peta Tomlinson, journalist

10/2016 Accounting and Business

INT_YPrac_Big4Cloud.indd 31 06/09/2016 17:04

 32 Insight | US elections

The candidates square up

The radical nature of Republican contender Donald Trump’s policies means that the
2016 presidential election could prove unusually important for the US economic outlook

T
here is a paradox at the heart of US politics. When with only modest tweaks to existing policy, Trump has
choosing a president, Americans typically rank proposed a range of policies that would take Americans in
economic policy as their chief concern – a recent Pew an entirely new direction.
survey showed 84% considered this ‘very important’ to their
vote, higher than for any other issue. Yet except during a Walls and tariffs
crisis, US presidents do not run the show when it comes to At various stages of the primary campaign, Trump has proposed
either fiscal or monetary policy. a range of abrupt departures from economic orthodoxy – from
‘The Federal Reserve and Congress usually exercise building a wall across the border with Mexico and imposing
control, and presidents can struggle to get their way,’ says illegal trade tariffs on Chinese goods to removing 75 million
Ted Alden, a fellow at the Council on Foreign Relations and Americans from the income tax rolls and renegotiating US
a former Financial Times Washington bureau chief. ‘They can government debt.
be glorified lobbyists on many economic matters, such as the It is hard to predict in advance which policies Trump would
level of taxation.’ seek to implement as president. The property developer and
The limitations of presidential heft were underlined by a former reality TV presenter has no track record; he is the first
recent number-crunching from US investment bank Morgan major party candidate in 64 years to have no prior electoral
Stanley. Its team found that since 1970 only 35% of presidential experience. (The last was Dwight Eisenhower, the Allied general
election promises were translated into reality in the first year of who led the liberation of Europe during World War II.) Trump has
a new term – the period when commanders in chief are at the also backtracked on some more outlandish policy proposals –
peak of their influence. And that was even when Congress and including effectively defaulting on US government debt.
the White House were controlled by the same party. The success ‘It could well be that Trump is campaigning in poetry and
rate declined to just over 20% when the legislature was at least would govern in prose,’ says Mark Zandi, chief economist at
partially in the hands of the opposing party. Moody’s Analytics and a former economic adviser to John
What’s more, presidential outcomes have tended to be non- McCain, the 2008 Republican presidential nominee. ‘Still, there
events for financial markets. Going back to 1926, the average are a range of policy plans laid out in his manifesto that, even if
nominal return on the main US stock index was more or less the only partially implemented, could inflict substantial damage on
same in election years as in non-election years, according to the US economy.’
research from UBS, the Swiss bank. Trump’s stance on globalisation – immigration and trade – is
So does this mean that economists and investors can afford causing the most concern. Among the most radical elements is
to skip newspapers’ front pages his posture on immigration, which is
and move directly to the business key to US economic vibrancy, Zandi
pages? In many past contests, this argues. ‘The growth of the working-age
may have been the case. But this time
the potential impact of the outcome
‘There are a population is coming to a standstill
over the coming five to 10 years in
could be larger. range of policy the US,’ he says. ‘A flow of people
‘Normally, US candidates have from abroad is critical in maintaining
operated within a relatively narrow range plans in Trump’s sufficient workforce growth to keep
on economic and financial matters,’ says
Mark Calabria, a director at the Cato
manifesto that companies expanding inside the US.’
Few believe Trump could implement
Institute and a former top aide on the could inflict his plan to deport 11 million immigrants
Senate banking committee. ‘This time
you have a candidate – Donald Trump
substantial or his scheme to build a wall at the
Mexican border, both of which would
– who is far outside the mainstream, set damage on the require cooperation from Congress.
against an establishment candidate – Still, he has pledged to implement
Hillary Clinton.’ US economy’ a nationwide E-verify scheme to
While Clinton has laid out determine whether employees are
an incremental economic agenda, authorised to work in the US.

Accounting and Business 10/2016

INT_I_USelections.indd 32 08/09/2016 14:23

 US elections | Insight 33

‘If this were rigorously enforced it is possible we could see opposed to the Trans-Pacific Partnership (TPP), a deal between
between six million and seven million people voluntarily deport 12 nations that account for a massive 40% of world trade. But, as
themselves, since it would become far harder to find work,’ says secretary of state, Clinton had previously described the TPP as
Zandi. For context, this would represent a roughly 3% reduction the ‘gold standard’ of trade deals.
in the nation’s workforce, not counting the immigrants who ‘It is possible that she has backed away from this pro-free
would be discouraged from coming. trade stance under pressure from the left of the Democratic
‘The move could be more disruptive than the headline figures Party, as represented by her primary challenger Bernie Sanders,’
suggest,’ says Zandi. ‘A lot of other jobs in American firms, such says Alden. ‘Even so, her record suggests this is a tactical
as agriculture, landscape gardening and leisure, are reliant on position, and that after some additional tweaks, she would be
foreign workers. There would also be a hit to tax revenues.’ willing to approve the TPP.’
Alden also identifies this as a potentially serious economic Trump, meanwhile, has been more strident in his anti-trade
concern. ‘While it is possible to make a moral case for stricter rhetoric than any other candidate in modern US history. He
controls on undocumented workers, overall this would be a has accused China of keeping its currency artificially weak to
dramatic economic own goal,’ Alden says. ‘And the president promote exports, and has proposed a 45% tariff on Chinese
has greater sway over immigration than over tax.’ goods until the nation allows the renminbi to float freely. Tariffs
In contrast, Clinton has positioned herself as a proponent on Mexican goods would also rise by 35% unless the nation is
of immigrant rights and has promised to create an office of willing to renegotiate the North American Free Trade Agreement
immigrant affairs if she wins the White House. Clinton has also (NAFTA) deal, approved in 1993 by president Bill Clinton.
promised to create a pathway to citizenship for immigrants. Taken together these two countries account for around 35% of
‘While Trump would stem the flow of new workers, Clinton’s plan US non-oil imports. As a result, economists at the rating agency
could boost the workforce,’ says Zandi. Moody’s calculate that Trump’s policy would increase import
prices by 15% and US consumer prices by around 3%. ‘It is hard
Free trade out of vogue to imagine China or Mexico tolerating this, so we could expect
Many mainstream economists also fear that Trump’s trade policy retaliatory tariffs, leading to a global reduction in trade,’ says Alden.
could backfire on the US economy. Free trade is out of vogue Meanwhile, even without approval from Congress, Alden
in the US in general. Both Clinton and Trump have said they are argues, the president has considerable potential to spoil trade »

10/2016 Accounting and Business

INT_I_USelections.indd 33 08/09/2016 14:23

 34 Insight | US elections

▲ Head to head
Hillary Clinton (left) has
largely met her goal of
paying for her proposed
relations. ‘Presidents can launch “safeguard” tax initiatives, while Clinton’s plan, which includes a minimum
cases, invoking national security laws. They can Donald Trump’s plans tax rate of 30% for those earning at least
simply slap tariffs on imports by executive order, look likely to push up US$2m a year, is thought to be more neutral in
without the need for approval from lawmakers,’ the projected 2020 terms of budget deficits. (The Committee for a
Alden explains. ‘Even if such actions were ruled deficit to near-on 10% of Responsible Federal Budget has said Clinton
illegal by the World Trade Organisation, it can national income ‘deserves a lot of credit for committing to pay
take years for such cases to be resolved.’ for all her initiatives and for largely meeting
Zandi argues that the US would be jettisoning freer trade just at this goal’.) Moody’s economists estimate that Trump’s plan, in
the point when the benefits should be increasing. ‘The US has not contrast, would boost the projected 2020 deficit from around 4%
always been good at distributing the benefits of free trade across of national income to closer to 10%.
society or protecting those who have been left behind,’ says Zandi. Still economists are less concerned by Trump’s fiscal policy,
‘Still the process of globalisation has fostered the development of largely because it is assumed that even a solidly Republican
a large middle class in many emerging markets; now the US has the Congress would be unwilling to implement deficit-boosting tax
opportunity to sell more of the higher-end goods that the country cuts on such a scale.
produces best. The heavy lifting has already been done.’ Many economists worry, however, that President Trump would
In addition, trade wars can have a disruptive effect on have enough clout in trade and immigration to inflict serious
financial markets. This was the case in the US-­Japan trade fights damage to the outlook for US growth, inflation and employment.
in the 1990s. One reason the Clinton administration chose to Based on estimates by Moody’s economists, if Trump’s policies
seek compromise eventually is that the dispute was starting were implemented in full, the US would suffer a deep recession,
to unsettle financial markets, says Alden. ‘It is not at all clear with a peak-to-trough fall in GDP of roughly 2.5% and the
that Trump would be so pragmatic,’ he argues. ‘Markets hate unemployment rate peaking at 7.4% in 2021. Even a heavily
uncertainty. And we have never had a candidate so far out of the diluted version of Trump’s plan, the agency reckons, would cause
establishment in modern American history.’ US growth to come to a near standstill.
So the radical nature of Trump’s policies means that the 2016
Tax cuts election could be unusually important for the US economic
Trump has also proposed other economic policies that could outlook. ‘There is still a refusal among experts to believe that
shift the US economic outlook, most notably a tax cut that would the public could vote for such an insular and economically
be nearly three times the size of the iconic Bush tax cuts of 2001 self-defeating agenda,’ says Calabria. ‘But that is what pundits
and 2003. The plan would forgo US$9.5 trillion in revenue over a thought about Brexit too. A victory for the establishment – in
decade, more than 20% of projected federal taxes. (The average the form of Hillary Clinton – is not something that should be
tax cut to the top 1% of earners would be around US$275,257 a taken for granted.’ ■
year, according to the tax policy centre – while the bottom 99%
would receive an average tax reduction of around US$2,500.) Christopher Fitzgerald and Fernando Florez, journalists

Accounting and Business 10/2016

INT_I_USelections.indd 34 08/09/2016 14:23

 Graphics | Insight 35

Generation inspiration
The ranks of the finance profession are increasingly filled by ‘Generation Next’, so what
will it take to develop the leaders of the future from the new cohort?

A wide-ranging survey What are the best ways to learn?

With innovation and change creating a ‘new normal’, On-the-job learning ranks as the most effective learning
the opportunities for the profession have never been activity of all, but mentoring, job rotation and professional
greater. However, ACCA’s major study of Generation qualifications are also critical, survey respondents said.
Next – members and students aged 36 or under –
shows that tomorrow’s finance leaders are not going to
be attracted, nurtured or retained as today’s are. 52%
On-the-job learning

150 18,646
countries responses 27%
Mentoring

25%
23% Job rotation and
For more information: Further professional secondments
qualifications
Find out more in the Focus section of this edition

What is the big attraction of a career in finance?

The youngest respondents see the profession as a good skills-building platform for entering the business world, while the 24 to
30-year-olds, with some experience under their belts, are more concerned about prestige and remuneration. Older members of
Generation Next tend to be more concerned about skills portability across industries and sectors.

43% 40% 36% 33% 29%

Long-term Opportunity to Skills also apply to Interest in the Prestige of the

career prospects develop skills many non-finance roles subject matter profession

How quickly would you like to move on?

Over a third of the survey respondents said they would like to change jobs in less than a year,
a proportion that rose to 70% when the timeframe was extended to within two years. Finance
professionals are also prepared to move on from the company to achieve career goals, with
61% expecting their next move to be an external one, and 39% anticipating an internal role.

36% 70% 97% 100%

1 year 2 years 3-5 years More than 5 years

10/2016 Accounting and Business

GL_I_Graphics.indd 35 08/09/2016 15:21

 36 Insight | Ethics

Bankers behaving beautifully

A recent study explains how a range of factors can contribute to unethical behaviour in
financial services – and how they can be driven out. CA ANZ’s Lee White explains

Most people in business behave ethically. Of course, there But often, it’s not as simple as good versus evil. Research
are bad apples and, because of the media, the stories of suggests that many individuals who behave badly are often
those who don’t behave ethically are given oxygen, which unaware of the ethical implications of their behaviour. A study
creates a false stereotype. into ethics in banking and finance by Chartered Accountants
Australia and New Zealand (CA ANZ) looked specifically at what
it is that drives unethical behaviour and what we can do about
it. Who better to ask about ethics than 705 bankers and financial
practitioners around the world?
We identified a range of factors that contribute to bankers
behaving badly. In most instances, bad behaviour was found to
be not a conscious choice, but was justified in a range of ways
that allowed bankers to continue to believe in themselves as
ethical people.

Personal bias
For example, personal bias allows decisions to be framed in a
way that makes bad behaviour seem fine. This can be seen in
confirmation bias, when boards apparently miss evidence that
fails to back up their belief, and availability bias, in which only the
easiest or most recent information is the evidence considered.
These personal biases came into play for the banker Tom
Hayes, who was given an 11-year jail sentence by a UK court and
ordered to pay £878,000 for manipulating the Libor interest rate
on interbank loans. He justified his behaviour on the basis that
‘everybody was doing it’. This is a common form of bias, used to
explain away unethical behaviour.
However, it is not just bias that can lead to unethical behaviour.
The big bonus culture has been cited by experts as a driver of bad
behaviour in the financial services sector. More specifically, experts
point to misaligned incentives.
A catalyst for unethical behaviour can be where large bonuses
are awarded to individuals for certain outcomes irrespective
of how those outcomes were achieved. This misalignment is
reinforced when it is coupled with half-hearted censure for those
who are caught doing the wrong thing.
Initiatives such as A good example of this in Australia is the personal financial
‘ethical moments’ adviser. Here, advisers sell financial products to clients and
receive a commission from the product provider for doing so.
can help shift At what point does the client’s best interest suffer? I personally
decision framing believe that financial advisers should be paid to advise, and that
the client should pay for these services. That makes for a clean
to a more ethical transparent transaction, with no need for middlemen.
So what can be done to address the situation? To start
mindset with, almost everyone views themselves as behaving ethically
– even when they don’t. Our research highlights three factors
– structural, individual and social – that can consciously or

Accounting and Business 10/2016

GL_I_CA-ANZ.indd 36 08/09/2016 15:21

 Ethics | Insight 37

Strength in numbers
ACCA and Chartered Accountants Australia
and New Zealand (CA ANZ) announced in
June that they have entered into a strategic
alliance with the aim of adding value to
their members both locally and globally.
The alliance will enable both
organisations to strengthen their reach,
relevance and resources for members.
By sharing both bodies’ expertise across
geographies and sectors, the alliance will
create a stronger voice on behalf of their
combined 308,000 members and 480,000
students across 181 countries.
ACCA and CA ANZ are collaborating on
a programme of professional insights on
issues that affect accountants, and how the
profession needs to adapt to keep pace
and remain relevant to business success
in a fast-moving global economy. More
information about this research will be made available in AB ▲ Strategic allies
magazine and at accaglobal.com/alliance. CA ANZ’s Lee White with ACCA chief executive Helen Brand

unconsciously encourage unethical behaviour. Across these three Finally, the leadership of an organisation needs to address
areas our survey found that greater accountability, a more diverse ethics with an unwavering focus to help shift a corporate
culture and training in decision-making processes were seen as culture from one of benign neglect to a clear focus. This can be
the most effective ways to address the problem. encouraged by initiatives such as ‘ethical moments’ to help shift
decision framing to a more ethical mindset. This idea mimics
Training, incentives and leadership some companies’ ‘safety moments’ (a brief safety talk about
This translates into a range of responses. First, the ethical a specific subject at the beginning of a meeting or shift) and
capabilities of those working in banking and finance need encourages employees to share ethically based decisions before
to be better developed. Professional accountants have an every meeting. Getting employees to talk about ethics has been
extensive focus on ethics as part of their ongoing training, and shown to increase ethical behaviour.
the discipline of keeping such matters front of mind through
regular training supports ethical behaviour in real-life situations. Accountability
This type of training is about encouraging people to place less Ultimately what has clearly emerged from our research is that an
reliance on mental shortcuts when they are making decisions ethical culture of accountability is vital. If this becomes dominant
and helping to develop principled reasoning in which ethical in banking and finance, it will create a virtuous circle in which
considerations are part and parcel of cost-benefit calculations. It incentives and structural solutions such as regulation become far
is also useful to encourage a clear expectation from the top that less important. It may also help weaken some of the stereotypes
employees must always behave ethically and require them to that have only ever been true of a small proportion of people
undergo regular training that supports that expectation. working in banking and finance. ■
Second, the manner in which financial incentives such as
bonuses are awarded needs to include ethical considerations Lee White is CEO of Chartered Accountants ANZ
when performance is being measured. This is particularly
significant given that most incentive schemes in financial For more information:
services are based exclusively on market and profit measures.
The reputational risks of unethical behaviour are now well Read CA ANZ’s report Ethics in Banking and Finance at
publicised, so there is a clear cost in not addressing these factors charteredaccountantsanz.com
in incentive schemes. Also, of course, a purely financial focus
can misalign personal and corporate interests in other ways, Read more about the alliance between ACCA and
including corporate culture, health and staff turnover. CA ANZ at accaglobal.com/alliance

10/2016 Accounting and Business

GL_I_CA-ANZ.indd 37 15/09/2016 13:51

 38 Insight | Strategic planning

Forward thinkers
As part of our series exploring the trends most likely to shape the profession over the
next decade, we look at the impact on strategic planning and performance management

B
efore any organisation can achieve its vision, it needs
a clear strategy and defined metrics to measure its Expert views
performance. Strategic planning and performance
management are therefore vital. Professional accountants play ‘Accountants should not sit and wait. They should lead
key roles in these areas, including implementing performance the change.’
management systems, evaluating an entity’s strategic position Roman Fink FCCA, CFO, ČSOB Penzijní společnost,
and applying change management solutions. Czech Republic
Political and economic volatility, globalisation and new
business models and processes enabled by digital technologies ‘You need to be business savvy and analytical. You need
are creating an increasingly fast-paced business environment. to be able to translate data into information, which will
Organisations and the professional accountants working in enable decision-making in a timely manner.’
them therefore need to be agile, flexible and future oriented, Lukman Bin Ibrahim FCCA, former deputy CEO, Proton
according to ACCA’s research report, Professional accountants Holdings, Malaysia
– the future, which draws on extensive feedback from ACCA
members gained through workshops around the world. ‘Accountants need to be less focused on what happened
last year, what happened last month, and more aware of the
Responding to change strategic position of the company, where it is now, where it
CFOs are already seen by ACCA members as becoming more wants to be in the future – and not just the end of the year.’
proactive, acting as leaders and agents of change. They are Helen De Spretter FCCA, DEFRA, UK
thinking and acting more strategically, looking beyond the
finance function and the organisation, taking account of the ‘By 2020 everything will be about technology. As
wider business environment. They are also building wide-ranging finance professionals, we will need to have a broader
relationships inside and outside their organisations as they range of IT skills.’
monitor emerging trends and develop strategic plans. Edem Kugbey FCCA, head of internal audit, Food and
The enabling and decision-making support role of professional Drugs Authority, Ghana
accountants is also evolving. Alongside backward-looking internal
accounting metrics, product-profitability analysis and periodic
financial reporting, there is growing demand for information to competitors, suppliers and ‘big data’. They need to provide more
support smarter decision-making. Professional accountants need forward-looking information and almost real-time insights.
to analyse more strategic performance indicators and evaluate Digital technologies are having an impact – as enablers
extensive external information including cost trends, market share, and liberators – but they are not without risk. Many workshop

Top 10 competencies

* Contribute to the broader business conversation

* Follow developments in the wider business environment
* Corporate strategy
* Holistic performance management
* Knowledge of digital technologies
* Strategic management accounting
* Strategic human resources
* Data analysis
* Day-to-day resource management
* Project management

Accounting and Business 10/2016

GL_I_PATF3.indd 38 05/09/2016 12:01

 Strategic planning | Insight 39

participants expect more transactions and more complex

business processes to be automated, replacing entire tiers of
lower and middle management. Professional accountants need to
assess emerging technologies for their potential business impact.
Professional accountants must take an outward-looking
perspective that extends beyond numbers and a holistic view
that goes beyond the organisation. Playing a strategic role
increasingly requires at least a basic knowledge of non-financial
areas such as brand management and marketing, for example.
Workshop participants think that professional accountants need
to explore opportunities for synergies and strategic alliances with
organisations in other business sectors. They also need to think
innovatively about exploiting technology for process improvement.
Changing demographics, such as the growth in part-time
Deep dives
knowledge workers and multi-generational workforces, will also Key technical areas highlighted in
have an impact. The evolving environment will create specific
challenges for the traditional models used for training and
Professional accountants – the future
development. Outsourcing to offshore locations will result in explored in previous editions of AB
fewer opportunities for newly qualified accountants in most
developed countries, while increased automation will limit
opportunities in mid-tier roles. Professional accountants will need Introduction (AB June 2016, page 12)
to find new ways to gain the breadth of experience and expertise
Audit and assurance (AB June 2016, page 36)
they need to support career progression.
Changing finance models, such as the growth of outsourcing Corporate reporting (AB July 2016, page 38)
and offshoring, are also increasing the need for professional
accountants to develop new management and relationship skills. Financial management (AB September 2016,
page 36)
Planning for action
Participants in ACCA’s global workshops see finance being Risk and ethics (AB September 2016, page 38)
transformed by the shift from backward-looking financial analysis
to more holistic and forward-looking planning, forecasting and ➠ Strategic planning and performance
performance management. As boundaries between analysis, management
decision support and decision-making become blurred, so
professional accountants need to become more involved in Tax (AB October 2016, page 40)
taking decisions themselves. Workshop participants therefore
believe that professional accountants need competencies that
enable them to contribute to broader business conversations. capital investment and people. They will need capability in
They need to become more proactive, partnering with the strategic management accounting, including expertise in
business and developing and managing relationships with a creating forward-looking models to help to improve resource
broad range of stakeholders. Professional accountants will management and decision-making. Data analysis and project
need to be able to build alliances with others, present their management skills will also be vital.
arguments in a compelling way and deal constructively with Alongside the top 10 competencies, workshop participants
opposition and confrontation. identified additional skills and attributes that professional
Success for such professional accountants will also accountants in strategic planning and performance management
depend on their ability to follow developments in the roles will need to develop over the next five to 10 years. These
wider business environment and understand emerging include the ability to take a more entrepreneurial approach
trends in areas such as culture, demographics, politics, law, to risk and its management and to understand environmental
international relations and technology. They will need a sound regulations, sustainability and integrated reporting. ■
knowledge of digital technologies and how these could impact
on business strategy, business models, delivery mechanisms, Sarah Perrin, journalist
supply chains and customers.
Strategic planning and performance management roles will For more information:
require professional accountants to understand the importance
of human resource management, as well as broader day-to-day See more on Professional accountants – the future at
resource management issues around internal finance, budgets, accaglobal.com/thefuture

10/2016 Accounting and Business

GL_I_PATF3.indd 39 05/09/2016 12:05

 40 Insight | Tax

Trending in tax
As part of our series of articles exploring the developments most likely to shape technical
areas of the profession over the next decade, we look at trends affecting tax professionals

T
ax professionals play a vital role as advisers – to
clients, tax authorities and other stakeholders – and as Expert views
intermediaries between taxpayers and tax authorities.
Since the global financial crisis of 2007–08, the increased ‘It’s important that the people in tax are not just pure tax
profile of tax and the intensified focus on transparency have experts. It’s important to understand the business as well.’
heightened interest in the activities of tax specialists. Harry Charalambos Antoniou FCCA, global head of tax
Governments are finding it more difficult to devise, impose accounting and financial reporting, Zurich Insurance
and collect taxes due to a range of challenging conditions. They
face stagnant economies, the dominance of multinationals in ‘By 2020, specialisation in tax won’t be enough. The
the global economy, growing electronic trade, more mobile and professional of the future will need a background in
sophisticated taxpayers and competition with other national tax law, business, sales or IT.’
systems. At the same time political and public debate on the social Roman Ženatý, director, tax and legal department,
acceptability of tax planning – and where to draw the line between Deloitte, Czech Republic
this and ‘aggressive’ tax avoidance – have created ethical,
technical and practical challenges for taxpayers and their advisers. ‘Accountants need better analytical skills and a better
understanding of how to apply technologies such as
Responding to change big data and the cloud.’
Over the next five years, tax advice, compliance, reporting, Ian Baldwin FCCA, indirect tax manager, IBM UK
planning and risk management will become even more complex,
according to ACCA’s research report, Professional accountants – ‘The role of tax translation may gradually disappear in
the future. ACCA members participating in workshops around the the time of big data.’
world expect national and international tax conventions, laws and Julia Li, VP taxation, Citigroup China
regulations to become more intricate. Individuals working as tax
specialists will need strong general tax knowledge, but there is also ‘Base erosion and profit shifting is going to turn the tax
likely to be increased demand for specialists capable of tackling world upside down over the next decade.’
niche issues linked to particular sectors or types of transaction. David Sandison, MD, David Sandison & Co, Singapore
Professional accountants specialising in tax will need to see
the global picture, keeping up with information-sharing initiatives
such as the US Foreign Account Tax Compliance Act (FATCA) are likely to try to raise more revenue from indirect taxes and
and intergovernmental tax action such as the project to limit some jurisdictions, such as China and Singapore, may abolish
base erosion and profit shifting. Governments around the world direct personal and corporate taxation altogether by 2025.

Top 10 competencies in tax

* Communication
Global tax perspective
* Business attitude and awareness
* Technical tax expertise
* Risk assessment and management
* Professional ethics
* IT knowledge
* Advocacy and negotiation
* Laws and regulations
* Specialisation
*

Accounting and Business 10/2016

GL_I_PATF4.indd 40 06/09/2016 16:54

 Tax | Insight 41

Such developments will require tax professionals to develop a

different approach to tax management.
Business leaders increasingly expect professional accountants
to partner with the business and understand business challenges,
rather than focusing on the numbers. The same applies to tax
specialists. According to the research, tax professionals in both
business and practice expect to move beyond their traditional
roles as technicians focused on compliance and the past. They will
therefore need a deeper understanding of the organisations with
which they work and of the broader business environment in which
they operate. Tax professionals will be required to take a more
risk-orientated view of business and to collaborate in the design
and running of risk-management structures and controls.
The use of tax software and further automation of basic
Deep dives
processes will continue to shape the work of tax professionals, Key technical areas highlighted in
further removing mundane activities from their daily tasks.
Widespread access to ‘big data’ will also have an impact. A
Professional accountants – the future
decade from now, ACCA workshop participants expect that the explored in previous editions of AB
software tools used by taxpayers and tax professionals will be
significantly smarter – creating both opportunities and challenges.
They will enable more detailed analysis, but also potentially Introduction (AB June 2016, page 12)
enable non-tax professionals to conduct that analysis themselves.
Audit and assurance (AB July 2016, page 36)
Planning for action
Based on the views of ACCA workshop participants, the need for Corporate reporting (AB July 2016, page 38)
a more global tax perspective tops the list of key competencies
that tax professionals will need to develop over the next five to
Financial management (AB September 2016,
10 years. This reflects the many global trends in tax identified page 36)
above. Aligned with this global perspective, tax professionals
Risk and ethics (AB September 2016, page 38)
will need sound knowledge of local and international tax laws
and regulations, as well as strong general technical tax expertise. Strategic planning and performance
Some will need to specialise in certain subject areas, such as
management (AB October 2016, page 38)
corporate tax, indirect tax or group transactions.
Tax knowledge won’t be enough, of course. Workshop
participants expect tax professionals to need business awareness
➠ Tax
– a holistic view of the business, including an ability to interact well
with other business functions and to think and plan commercially
and strategically. Similarly, as with many other professional administrations’ electronic platforms. They will also need to be
accountancy roles, tax specialists will need to be competent in risk able to take advantage of digital technology and developments
assessment and management. They will need to understand the in cloud-based and mobile solutions.
tax-related risks of corporate structures, positions taken, existing Looking ahead over the next five to 10 years, ACCA workshop
and emerging regulations and shifting public expectations. participants identify the need for extra skills in addition to the
Communication skills will be vital for tax professionals to top 10. Tax professionals will increasingly be expected to show
help them manage relationships (with clients, tax authorities competency in areas such as the management of resources
and internal business departments) and explain tax matters to (people, projects, time, tasks and budgets), the movement of
non-technical stakeholders, including boards, management, goods and services (customs, and import and export taxes), the
investors, clients and the media. Similarly they will need interaction between direct and indirect taxes, workforce mobility
competency in advocacy and negotiation to support their work in and group transactions. ■
dispute resolution and problem solving.
Professional ethics are also expected to be increasingly Sarah Perrin, journalist
important over the next five to 10 years. Tax professionals will
need to think and behave ethically, with integrity and objectivity, For more information:
showing appropriate due care. In addition, all tax professionals
will need IT knowledge and capability, using specialist See more on Professional accountants – the future at
tax software for computations and analysis as well as tax accaglobal.com/thefuture

10/2016 Accounting and Business

GL_I_PATF4.indd 41 06/09/2016 16:55

 42 Insight | Brexit

Survival lessons
Can Switzerland, a non-EU member surrounded by a sea of European Union states, act
as an effective role model for the UK after its vote to exit the economic bloc?

I
n the UK’s referendum campaign on EU membership, the country’. In fact, Switzerland has since distinguished itself as
the majority of top financial thinkers forecast economic one of the world’s most successful economies. It has held the
woe if Brits opted to jilt Europe’s big economic bloc. The top spot in the global competitiveness rankings of the World
Organisation for Economic Co-operation and Development Economic Forum for seven successive years – the UK ranks 10th.
(OECD), the club of rich nations, predicted that by 2030 It has become a mecca for creativity, with more patents filed per
the UK economy would be up to 8% smaller than it would head than any other nation. And its per capita economic growth
have been within the union. And 10 winners of the Nobel has outpaced both the EU and UK over the past decade. 
prize in economics signed a public letter arguing that the UK However, Christian Jaag, managing partner of Swiss
was better off within the EU and that leaving would create Economics and a lecturer at the University of Zurich, says: ‘Not all
adverse effects that would ‘persist for many years’.  the keys of Swiss success can be copied. Still, the Swiss example
Whether or not leaving was the right choice, the UK has at does provide one possible route to success outside the EU.’ 
least one role model to consult for how to thrive outside the EU. 
When the Swiss narrowly voted in 1992 to remain outside Always open
the European Economic Area (a free movement zone of labour, Lesson number one, according to Jaag, is to remain open to
goods, services and capital that encompasses the EU along with talent. ‘Switzerland would not be anywhere close to where it is
Norway, Iceland and Liechtenstein), the nation’s pro-European today without foreign workers,’ he says. ‘The ability to tap the
economy minister warned that it would prove a ‘black day for top talent from around the world, including EU neighbours, is

Accounting and Business 10/2016

GL_I_SwissBrexit.indd 42 08/09/2016 15:22

 Brexit | Insight 43

part of the reason Switzerland has become such an appealing debt that is just 25% of GDP, according to the International
place to do business.’ The country hosts more FT Global 500 Monetary Fund. That compares with a debt burden of 81% of
companies per head than any other nation. GDP for the UK, which is close to the G7 average. This impressive
As of 2013, 28% of the Swiss population was foreign-born, the feat of fiscal probity has been achieved with relatively low
second highest proportion in the EU and far larger than the UK’s taxation, both on companies and individuals. ‘The UK vote gives
12.3%. A willingness to accept free movement of people was the government political cover to consider some bold reforms
also crucial to Switzerland winning access to the European single to boost productivity and create an even more business-friendly
market, which now accounts for 55% of Swiss exports.  environment,’ says Philip Shaw, chief economist at Investec. 
With around 44% of UK exports going to the EU and many Many aspects of the Swiss system will be hard, even
foreign investors using Britain as a bridgehead for their exports impossible, to replicate in the UK or elsewhere. One commonly
to the EU, losing unfettered access could prove economically cited reason for Swiss success is the high level of political
damaging. Formal negotiations on post-Brexit UK access have decentralisation; the country’s 26 ‘cantons’, or provinces, have
yet to start, but accepting continued free movement of people greater tax powers than the relatively slim national government.
is likely to be a condition of full trade access. ‘The problem for ‘Since companies and individuals can relocate between cantons,
the UK government is that free movement was seen to be one the system puts pressure on governments to be lean and
of the main reasons many Brits voted to leave the EU,’ says Marc efficient – offering high-quality services and low taxation,’ says
Chandler, chief currency strategist at Brown Brothers in New York. Jaag. ‘Having the spending power close to the people seems to
result in greater efficiency.’ While the UK could opt for greater
Nurturing skills fiscal decentralisation, it would be difficult to replicate the
The second main lesson from the Alpine nation, Jaag believes, Swiss approach. 
is its pragmatic approach to fostering a skilled workforce. ‘The Many economists believe Switzerland has succeeded despite
Swiss education system has been a key ingredient,’ he says. and not because of its rejection of European membership. The
‘Universities frequently develop skills that are not terribly helpful country endured sluggish economic growth in the 1990s. The
in the workplace. Instead of making a fetish out of university bursting of a property bubble may have been mostly to blame,
degrees, the Swiss have created an apprenticeship system that but the country’s exclusion from the emerging single market until
ensures young people develop practical skills in the workplace.’ 2002 may also have been a contributory factor.
About two-thirds of 15-year-olds opt to go into such schemes,
which often end in well-paid and respected jobs; around 58,000 A demographic bind
companies offer apprenticeships. The system is admirably In 2014 the Swiss narrowly voted for caps on immigration. Since
flexible, with apprentices able to go to university subsequently. It unfettered movement of people is a condition of Swiss access
helps explain why Switzerland has an extremely low youth to the single market, the authorities now face a tough balancing
unemployment rate, just 8.6%; in the UK it’s 14.6%. A host of top act. To ensure the continued expansion of the labour force in
Swiss executives began their careers with an apprenticeship. the context of an ageing population, Switzerland may need to
Following Switzerland’s lead, while not easy or quick, is ensure a higher rate of female participation in the labour market,
possible, says Jaag. ‘The tax system encourages companies to an area in which it lags most other European peers. Only about
operate such schemes, and the fact that apprentices can enter a fifth of mothers work full time, and fewer women get to the top
university later also helps create demand as well as supply. Still, compared with elsewhere in the continent. A 2014 Egon Zehnder
it could take a long time to convince European board diversity analysis
young people that such schemes are showed that only 13.9% of Swiss board
credible and not for drop-outs. Many seats were held by women, compared
people believe universities are the only
route to success.’ 
‘The UK vote with 20.3% in Europe as a whole.
Despite these provisos, Switzerland
Finally, the Swiss have been gives the offers food for thought for UK
paragons of self-control. The nation policymakers as they attempt to forge
has staunchly resisted populist government a future outside the EU. Some tough
measures that would have made life
harder for businesses, Jaag argues.
political cover years probably lie ahead for the UK,
with slow growth and a hit to consumer
In a national referendum in 2012 the to consider spending power. But if the UK can
country voted against a six-week
mandatory paid vacation. Earlier
some bold achieve even a modicum of Swiss
success, the Brexit vote may not prove
this year, 77% of the population reforms to boost quite as economically toxic as the
declined the offer of a guaranteed professional economists feared. ■
minimum income. productivity’
This discipline is reflected in the Christopher Fitzgerald and Fernando
public finances, with a net government Florez, journalists

10/2016 Accounting and Business

GL_I_SwissBrexit.indd 43 08/09/2016 15:22

 44 Insight | Careers

Career boost
Reflecting on events from a distanced viewpoint produces better, wiser decisions,
says our talent doctor Rob Yeung, plus what makes the perfect public speaker

the limits of their knowledge.

Talent doctor: decision-making They were also more likely to have
acknowledged that the future was
prone to change.
Follow-up studies have found further
benefits for distanced decision-making.
Notably, people who adopt it also
tend to be more open to alternative
viewpoints. In contrast, people who
hold an immersive viewpoint tend to be
more resistant to new information.
The implication is clear. When
weighing up issues and options, take
a more distanced perspective. Rather
than thinking about how circumstances
might affect you personally, pretend that
you are advising a friend or colleague.
Consider looking back on past
events from this perspective too.
Studies have shown that people who
reflect on past events – particularly
mistakes and failures – from an
immersive perspective tend to
experience more negative feelings.
Dr Rob Yeung is an Reflecting from the distanced
organisational psychologist perspective allows them to be less
emotional and more likely to identify
and coach at consultancy lessons they can apply in the future.
Talentspace To summarise: when it comes
to reasoning about the future or
reflecting on the past, imagine that
Imagine you are working in a boring, each different, additional instructions. you are considering the consequences
but secure job. You go for a job One group was asked to adopt what or lessons for someone else. Pretend
interview and are offered a position is known as an immersive viewpoint: you are an out-of-body observer of the
that could be exciting. But you’re not ‘Imagine the events unfolding before your situation. Do so and you may exercise
sure you have all the skills to succeed own eyes as if you were right there.’ The better judgment. ■
in the role. Should you stay where other was instructed to take a broader,
you are or take the riskier option? distanced viewpoint: ‘Imagine the
Some decisions matter more than events unfolding as if you were a distant Better decisions
most and the good news is that studies observer.’
suggest there’s at least one way of Participants were then interviewed and Watch Dr Rob Yeung
making better, wiser decisions. asked to reason aloud their thinking and expand on these themes at bit.
Research psychologists at the the transcripts of their responses were ly/ACCA-Yeung7
University of Michigan, Ann Arbor in then evaluated by two experts.
the US invited job hunters to ‘take a When the results were analysed,
few minutes to think about how the the researchers found that participants For more information:
current economic climate will impact who had been told to reason from the
you personally’. distanced perspective had done so talentspace.co.uk
The researchers then split the significantly more wisely. For example,
participants into two groups, giving they were more likely to have recognised @robyeung

Accounting and Business 10/2016

GL_I_CareersYeung.indd 44 08/09/2016 15:22

 Careers | Insight 45

Graduates for MENA

Youth unemployment is 28% The perfect: public speaker
in the Middle East and North
Africa (MENA), but accountancy Speaking in public is an aspect of business life that most people avoid. We’ve all heard
grads are in strong demand. witty, perceptive speakers and wondered how on earth we might reach their level. And
In a YouGov survey we’ve all had to listen too often to lacklustre, ill-considered ramblings from people we have
commissioned by Bayt.com, no desire to emulate.
31% of 4,000 young people But with so much
surveyed said getting hired in commentary and
MENA these days was ‘very analysis competing
difficult’. Youth unemployment for our time via social
in the region is almost double media, the ability to
the global average of 13%. speak well in public
More than half of young is becoming highly
candidates without experience prized. Happily, just
in the workplace felt this was like anything else,
impeding their chances. public speaking is a
However, Suhail Masri, skill, which means it
vice president for employer can be learned.
solutions at Bayt.com, told Francis Cahill
Gulf News there was still of Toastmasters
demand for newly graduated International
accountants, dentists and sales advocates jumping
engineers without experience. right in. ‘Speak in public whenever you get the chance,’ he says. ‘It doesn’t matter if it’s for 30
seconds or 30 minutes, step forward and take the opportunity.’
Soft skills for Australia The next step is to engage your audience. Smile and look them in the eye. If you speak
Accountants’ overall about what you know, you will be in control of your material.
personality and ability to fit in Be clear and concise – and funny if you can. Don’t overdo the jokes as they can become
is more attractive to employers a distraction, but a bit of self-deprecation or a personal anecdote is a time-honoured way of
than technical skills, according getting an audience onside.
to Hays Australia. Keep at it. ‘No matter how badly you feel it went – and it is usually never as bad as you think
In its Q3 assessment of – get up, try again and focus on improving through practice,’ says Cahill. And travel. ‘Don’t
the accountancy and finance always speak at the same groups. Go to the next town or visit groups you’ve never met before.
sector, the recruiter stated that It gives you new material, new experiences and new feedback.’ A virtuous circle in fact.
with digitisation soft skills were
becoming ever more important.
‘A newer trend has Uday Chawla, managing ‘This is new not only up legal services divisions and
been an increasing number partner at Transearch India, said for India, but even the US. taken work away from law firms
of employers looking for his firm had seen an increase Earlier, the hiring for C-suite by offering discounted fixed
candidates with excellent in multinational businesses finance roles favoured men. fees. In contrast law firms have
business development and seeking female candidates for But now it is based more on struggled to make the billable
communication skills,’ the finance roles at the C-suite level competence,’ said Chawla. hour model work.
report stated. in the last few years. Simon Curry, CEO of Nixon
Advances in technology Speaking to The Economic UK pay gap narrows Williams, said: ‘Law firms are
and the decline in fees for Times, Chawla said there was The pay gap between facing intense competition
compliance work means value- unprecedented demand. accountants and lawyers in the from accountants who are
adding consulting services After the appointment UK has narrowed to 13.7%, the moving into process-oriented,
are more important than ever. in July of Sarvita Sethi as narrowest margin since the high-street work. Accountancy
‘Employers want well-rounded Coca-Cola’s first female head 2007–08 financial crisis struck. firms are increasingly able to
accountants with good people of finance in India, Chawla’s According to research by undercut law firms by offering
skills,’ Hays noted. comments reinforce what The Nixon Williams, a provider a fixed-fee pricing model.
High demand has driven Economic Times described as a of accountancy services to This is appealing in a market
fierce competition for talent new trend among corporations contractors, the average pay that has become less willing
among firms, with supply to appoint women to the most for chartered and certified to accept the billable hours
struggling to keep up. senior finance posts. accountants is now £35,923 charged by many law firms.’ ■
In recent years India’s (3% higher than its 2007 peak)
Females for top jobs Hindustan Unilever, PepsiCo, while the median pay for legal Sally Percy, journalist
Multinationals in India Puma, Aditya Birla Group, professionals is £41,602 (2.4%
want women to fill top Vedanta, Castrol and EMC below its 2009 peak). For more information:
financial roles, according to have all appointed women to Nixon Williams says
a local recruiter. top positions in finance. accountancy firms have built accacareers.com

10/2016 Accounting and Business

GL_I_careersLoxton.indd 45 05/09/2016 14:47

 46 Insight | Management and strategy

CPD
Get verifiable CPD units
by answering questions
on this article at
accaglobal.com/abcpd

The agile solution

Management often eschews mundane spreadsheet software for strategic planning in
favour of more sophisticated platforms, but simple is agile, argues Dagmar Recklies

A
ccording to a 2014 survey by BARC Business warehouse solutions, such as calculations for new products and
Intelligence Forum, Excel is by far the most popular feasibility studies for strategic options. These calculations require
business tool for planning purposes in Germany, high levels of flexibility: they often come with many variables,
Austria and Switzerland, where the spreadsheet usage rate and the business case might still change, which will mean
is 86% as against 63% for specialised planning and business changes to the calculations. These auxiliary calculations would
intelligence tools. be disproportionally complex to integrate into the main system.
The reasons are straightforward: Excel is well-known software Business warehouse and enterprise planning systems
that sits on computers around the world. It is very flexible, allowing normally have finite levels of standardisation. This makes it
solutions to be created for many functions, such as questionnaire difficult to adjust calculations – for example, through various
design, analysis of large amounts of data, visualisation of results, project phases – so spreadsheet calculations can be a helpful
etc. Moreover, you can handle the whole process in-house – from alternative. An experienced user can easily adapt every part of
the initial design of input, to calculation and output, as well as the calculation without the help of an outside software vendor or
later adjustments. You don’t have to rely on an external software even a programmer. And spreadsheet tools support a number of
supplier who might disappear from the scene. variants and scenarios too. Used in this way, spreadsheets can be
But as we all know, Excel also has downsides: spreadsheet excellent support tools to facilitate strategic decisions.
tools are only as reliable as the data put into them. It is easy
to imagine the risks that arise from even small mistakes in Explaining the logic
spreadsheets that are used as the basis for planning and Starting from an empty sheet, the project team has to think
strategic decisions. As journalist and writer Tim Worstall has said, through the business logic of the particular option first. Only
‘Microsoft’s Excel might be the most dangerous software on the then can they model this logic with formulas and calculations.
planet.’ The European Spreadsheet Risks Interest Group lists They will immediately see the results of their calculations and can
various ‘horror stories’ on its website. test them against the expected business logic.
So does this mean that managers undertaking complex Spreadsheets are often criticised as being unhelpful for
calculations with wide implications should use a professional strategic planning. But this lack of sophistication can actually
software platform? Data warehouses and planning systems with benefit the project, as the team is forced to think through the
sophisticated capabilities for data analysis are far more reliable. whole business logic in every detail. Since they developed the
They normally have data interfaces with many parts of the whole calculation by themselves, they will be able to explain
organisation, which reduces errors in data entry and transfer. And every single aspect to other stakeholders. This will lead to a
all functions, including data retrievals, calculations and analyses, more insightful discussion with executives and decision-makers.
are professionally designed and tested. Conversely, the actual calculations within enterprise planning
However, businesses also have to perform many calculations software are often perceived as some sort of black box; few
that don’t easily fit into standard enterprise planning and data specialists would be able to explain them in detail.

Accounting and Business 10/2016

GL_I_Grundy.indd 46 05/09/2016 12:00

 Management and strategy | Insight 47

constantly upgrading their functionality and addingthroughout

value.
And
The same holds true
they need to.Spreadsheets
the organisation.
for discussing
Recently there arehas
any
likebeen
initiative
evidence
a common of
language.
*advantage.
by identifying
RBT suggestsfor
Write documentation that
the distinctive
tool calculates
allstrategic
where, how– and
tools. Use
and why.
performance
it to explainiswhat
improved
hard to imitate – resources
the

more
This isestablished brands spotting an decisions.
opportunity to take on
a huge advantage for strategic It also eliminates
*and skills an
Always organisation
have somebodyhas. elseIncheck
Airbnb’s case,
your toolthat
fromis:top to
the disruptors
a significant at their own
proportion game, such
of perceived as Ryanair
uncertainty recently
within the
* continuous
bottom. Thisproduct
may evendevelopment
be a job for external consultants. That
launching a service
financials. There maythat stillallows air passengers
be uncertainty about theto book hotels
assumptions
* low
way costs
you can eliminate existing errors, get valuable advice for
and parameters,
private rooms; butthetheairline
wholesaysteamit can
aimsagree
to become
on howthethe
* speed
improvements and significantly increase your tool’s credibility.
‘Amazon of thebe
project should skies’.
calculated.
* agility
Generously offer to explain your tool in any detail to
What may be needed in the future to protect dominant
Earning
market trust
share and a healthy operating profit margin, and to
*These
first-to-market
have might
advantage.
everybody interested.
looksure
to make a little
This is about credibility again. You also
brittle
that your and, aswell
tool is we have seen with
understood by all
promote
There is onefurther growth,
essential are:
pre-condition for spreadsheet tools to truly Ryanair’s newrecipients
users and proposition, thisresults.
of the dominance will be challenged.
* continuous
support strategic
creation
trust
product and service the
decision-making:
to widen margins
of all stakeholders
innovation
inch by inch
and audiences
and
tool itself hasnew valuethe
to earn
of the results. Only a tool
But
* as a
Do
cunning
customertests,
sensitivity or supplier,
resultsbreakthrough.
including
■
change as expected
or for
both, for now
limited I willDo
ranges. enjoy
yourthis
if you change particular input
values? Document the tests and tell everybody about them. ■
*
thatimproving
everybodycustomer
accepts as service
reliable will lead to a discussion that
* deepon
focuses
are and
some
thinking
phasing
to evaluate
the strategic
of global
established
issuesnew
bestdevelopment
strategies,
instead and prioritisation
of the calculations.
plans financial models.
practices for building
Here Dr Tony Grundy is an independent consultant and trainer, and
lectures
Dagmar at HenleyisBusiness
Recklies School
a consultant in corporate strategy, strategic
* local
Maketailoring
sure your oftool
the looks
service professional and trustworthy. positioning and digital communication
* continued
It has to work scanning
neatly for potential
without competition
any error messages. Have a For more information:
* making the brand
user-friendly interfacemore forfamiliar and meaningful
data entries and results. The actual For more information:
* reviewing
calculations
outgrow
Develop the
the boardtake
should
yourskills
ownof
to ensure
place on
the original
thatother
the business
founders.
sheets. doesn’t tonygrundy.com
*
In terms
Excel of management
tools
general
and rigorously theory,
system
Airbnb’s
apply
and structure for
strategic
it: colour codes,situation
namingis
See the European Spreadsheet Risks Interest Group’s
For previous Tony
spreadsheet horrorGrundy
storiesarticles on strategy and
at bit.ly/eusprig-horror
highlighted
conventions,by the ‘resource-based
formats, theory’etc.
table structures, (RBT) of competitive
Other users will management theories, visit accaglobal.com/abcpd
then find it easier to orient themselves in your tools. themanager.org

Take one
Accounting and Business has produced a series of video interviews with ACCA members from
around the world. See how they bring their professional skills to bear in their varied roles

* CFO of Singapore’s Land Transport

Authority Alice Tan FCCA on her
career journey
* Senior vice president of finance at Atlantis The
Palm Conor Lawler ACCA talks about life at
Dubai’s iconic resort
* Senior continuous improvement practitioner
at Shell US and ACCA USA vice chairman
Siobhan Pandya FCCA on thinking big
* CFO of England Rugby Steve Brown FCCA
talks rock bands and the Rugby World Cup
* Partner at PwC Nigeria Taiwo Oyedele FCCA
on making it to the top in Nigeria
Watch our
series of
* ACCA president Datuk Alexandra Chin FCCA
describes her inspirational journey
interviews
with
* EY Singapore partner Gajendran Vyapuri
FCCA talks about the global mobility that his
high-profile ACCA
members at
role and the ACCA Qualification afford him bit.ly/abinterviews

Have you got an interesting story to tell? Get in touch [email protected]

09/2016
10/2016 Accounting and Business

GL_I_GrundyCPD.indd
GL_I_Grundy.indd 47 47 21/07/2016 12:00
05/09/2016 14:49
 48 Insight | Management and strategy

Your inner hedgehog

In the right
What are you deeply
passionate about?

direction What can

you be
What
drives your
best in the economic
Sound lessons about getting direction in your life come world at? engine?
from various quarters. David Parmenter examines some
of those that will get you where you want to go

I
n his song Any Road, the late George Harrison wrote,
‘If you don’t know where you’re going, any road will Next steps
take you there.’ The statement is profound, and possibly
inspired by the dialogue between Alice and the Cheshire 1. Read David Keane’s book The Art of Deliberate Success,
Cat in Lewis Carroll’s Alice’s Adventures in Wonderland, and or Kerry Spackman’s The Winner’s Bible.
it has relevance today. With our fixation on immediacy, we 2. Start your treasure-mapping process. Email me
frequently confuse being busy – pushing texts and emails ([email protected]) for guidelines on how to
around the stratosphere – with forward momentum. Never prepare a treasure map.
have we been so active, yet so stationary.
In a recent address on ‘the art of deliberate success’, the
author and business coach David Keane asked: ‘What does success looks like – a treasure map – we will travel towards it.
success mean to you?’ It’s a question we should all ask ourselves. Take a sheet of paper and set out how you envisage success
Keane explained how clarity, priority and execution need to work – with your partner, your family, your friends, your health, your
together: for example, where you have clarity and prioritisation hobbies, your career and your retirement savings. State your
without execution, you won’t progress towards success. The goals and add pictures from magazines to help you visualise
sweet spot is where the three elements collide. the outcomes you seek. The more pictures the better. My first
Leadership coach Jim Collins called it finding ‘your treasure map had an image of a motorbike, a BMW 100RS, which
hedgehog’ – the place where you are untouchable. In his is quite rare. Two years later I owned an exact replica of that bike,
book Good to Great, Collins summarises the key to business in the same paint combination. Read any self-help book, ask any
success in a Venn diagram, which can be applied equally to us achiever, and they will tell you that visualisation is the key.
as individuals. The first circle in the diagram tells us to focus I discovered Kerry Spackman’s book The Winner’s Bible in
on an area where we can be a world expert. This is not as hard an airport bookshop. It describes a concept similar to treasure
as it sounds, providing you look for a field specific to your mapping – a folder that includes aspirational sayings and the
experiences, where you have already made progress. Make sure goals you have set for yourself. Each day you pick up your
it’s free from competing experts, then get your 10,000 hours into winner’s bible and read the pages that resonate that day. ■
that space as soon as possible.
The second circle involves identifying your passion. Where your David Parmenter is a writer and presenter on measuring,
passion and your expertise collide is an agreeable place to be – monitoring and managing performance
work and play merge. The third circle is economic demand: it is
simple common sense to focus on something others will pay for. For more information:

Turning point davidparmenter.com

I once attended a life skills course called ‘turning point’. It was
the first time I was exposed to the power of the subconscious David Parmenter gives masterclasses in London on 11 and
and its ability to pursue a target. If we have a vision of what 21 October, see bit.ly/parm-11oct and bit.ly/parm-21oct

Accounting and Business 10/2016

GL_I_Parmenter.indd 48 08/09/2016 15:27

 Financial capital | Technical 49

CPD Capital’s challenge

Get verifiable CPD units
by answering questions
on this article at
There are major challenges in reporting the capital structure of
accaglobal.com/abcpd entities, as Graham Holt explains

Often the advice given to to all companies and not included these disclosures
investors is to focus on just banks and insurance in IAS 1, Presentation of
cash and cashflow when companies. Users of Financial Statements,
analysing corporate reports. financial reports have rather than IFRS 7.
Insufficient financial capital diverse views about what IFRS 7 requires some
can cause liquidity problems is important in their specific disclosures
and sufficient financial capital analysis of capital. Some about financial
is essential for business focus on the entity’s liabilities; it does
growth. Any discussion of historical invested not lay down similar
the management of financial capital, some concern requirements for
capital is normally linked to themselves with its accounting equity instruments.
entities that are subject to capital, and others look to its The IASB
external capital requirements market capitalisation. considered whether
but the topic is just as the definition of capital
important for those entities Investor needs is different from the definition
that do not have any such Investors have specific but of equity in IAS 32, Financial
regulatory obligations. different needs for information There Instruments: Presentation.
about the entity’s capital are various In most cases disclosure of
What it is depending on the approach requirements capital would be the same as
Financial capital is defined in they take to the valuation for entities for equity but it might include
several ways. The term has of the business. For to disclose or exclude some elements.
no single accepted definition, example, if their valuation information The disclosure of capital is
having been variously approach is based on a about intended to give entities the
interpreted as the equity held dividend model, then a capital. In ability to describe their view of
by shareholders or equity plus shortage of capital may drafting IFRS 7, the elements of capital if this
debt capital including finance have an impact on Financial is different from equity.
leases. The definition chosen future dividends. Instruments:
can obviously affect the way in If, however, Disclosures, the IAS 1 disclosures
which capital is measured, and ROCE is used International As a result, IAS 1 requires an
that in turn has an impact on for comparing Accounting entity to disclose information
the return on capital employed the performance Standards Board that enables users to evaluate
(ROCE) figure. of entities, then (IASB) considered its objectives, policies and
An understanding of what investors need to whether it should processes for managing
an entity views as capital know the nature and require disclosures capital. This objective
and its strategy for capital the quantity of about capital. In any is gained by disclosing
management is important the historical assessment of the risk qualitative and quantitative
profile of an entity, the data. The former should
management and level include narrative information
of the entity’s capital is an such as what the company
IAS 1 requires an important consideration. manages as capital, whether
The IASB believes that there are any external
entity to disclose disclosures about capital capital requirements, and
information that are useful for all entities, how those requirements
although it does not intend are incorporated into the
enables users capital for those disclosures to management of capital.
to evaluate its employed in the replace the ones required Some entities regard some
objectives, policies business. There is
diversity in practice
by regulators as the latter’s
reasons for disclosure may
financial liabilities as elements
of capital while other entities
and processes for as to what different differ from those of the IASB. regard capital as excluding
managing capital companies see as As an entity’s capital does some components of equity
capital and how it not relate solely to financial – for example, those arising
is managed. instruments, the IASB has from cashflow hedges. The »

10/2016 Accounting and Business

GL_I_HoltCPD.indd 49 06/09/2016 16:59

 50 Technical | Financial capital

IASB decided not to looking information in the consideration of how much conversion of preferred stock,
require quantitative commentary when it is aware capital it has and its sufficiency the issuing of common stock,
disclosure of externally of trends, uncertainties for the company’s needs. or the use of the proceeds
imposed capital or other factors that The Financial Reporting raised by the offering for
requirements. It could affect the entity’s Council’s guidance on the the repayment of debt or
decided instead capital resources. strategic report suggests other purposes.
that there should that comments should The IASB does not
be disclosure Companies Act appear in the report on require such a table to be
of whether Additionally, some the entity’s financing
the entity has jurisdictions make arrangements such as changes
complied with any capital disclosures in net debt or the financing of
external capital part of their legal long-term liabilities.
requirements, requirements. In
and, if not, the the UK, section 414 Capitalisation table
consequences of of the Companies The annual report is not
non-compliance. Act 2006 deals the only document that
Further, there is with the contents of an investor may consult to
no requirement the strategic report and find details of an entity’s
to disclose the requires a ‘balanced and capital structure.
capital targets set comprehensive analysis’ Where the entity is
by management and of the development involved in a financial
whether the entity and performance of transaction, such as a sale
has complied with the business during of bonds or equities, disclosed, but it is
those targets, or the the period and the it typically produces a often required
consequences of any position of the capitalisation table by securities
non-compliance. company at the in a prospectus that regulators.
end of that period. shows the effects For example,
Examples Section 414 of the proposed in the US, the
Examples of some further requires transactions capitalisation table
of the disclosures that (to the extent on its capital is used to calculate
made by entities necessary for an structure. The key operational
include information understanding of capitalisation metrics. Amedica
as to how the the development, table lays Corporation announced
financial gearing performance or out the in February this year that
is managed, how position of the ownership it had ‘made significant
capital is managed business) the and debt advancements in its ongoing
to sustain product strategic report interests initiative toward improving
development, and how should include in the its capitalisation table,
ratios are used to evaluate an analysis using entity, capitalisation and
the appropriateness of the key performance but operational structure’.
capital structure. An entity indicators. It makes may It can be seen that
bases such disclosures sense that any analysis also information regarding
on the information that is of a company’s show an entity’s capital
provided internally to key financial position its structure is spread across
management personnel. should include a several documents including
If the entity operates in the management commentary,
several jurisdictions whose the notes to financial
different external capital statements, interim accounts
requirements would render and any document required by
an aggregate disclosure of potential securities regulators.
capital of little value, then the funding sources,
entity may disclose separate and the effect Debt and equity
information for each separate that any public Essentially there are two
capital requirement.
Debt and equity offerings will have. classes of capital reported in
Besides the requirements instruments can The table may financial statements – namely,
of IAS 1, the International
Financial Reporting Standards
have different present the pro
forma impact of
debt and equity. However,
debt and equity instruments
(IFRS) practice statement on levels of right, events that will can have different levels of
management commentary benefit and risk occur as a result right, benefit and risk.
suggests that management of an offering such When an entity issues a
should include forward- as the automatic financial instrument, it has to

Accounting and Business 10/2016

GL_I_HoltCPD.indd 50 06/09/2016 17:08

 Financial capital | Technical 51

determine its IAS 32 difficult, with the application of information about capital,
classification considers the of the principles occasionally and the diversity of business
either as debt substance of resulting in instruments models in an economy.
or as equity. The the financial that seem like equity being Capital needs are highly
classification that is instrument, accounted for as liabilities. business-specific and are
assigned can have a applying the Recent developments in influenced by many factors
significant effect on definitions to financial instrument types have such as debt covenants
the entity’s reported the instrument’s added further complexity to and the preservation of
results and financial contractual capital structures, leading to debt ratings. The variety
position. Classifying an rights and difficulties in interpretation and inconsistency of capital
instrument as a liability obligations. The and understanding. disclosures can complicate the
affects an entity’s gearing wide variety of The IASB has undertaken decision-making for investors.
ratios and results in any instruments a research project with the The details underlying a
payments being treated can make this aim of improving accounting company’s capital structure are
as interest and charged classification for financial instruments that therefore essential in helping
to earnings; classifying it as have characteristics of both them assess any potential
equity may be seen as diluting liabilities and equity. The change in an entity’s financial
existing equity interests. IASB has a major challenge flexibility and value. ■
IAS 32 sets out the in determining the best
nature of the classification way to report the effects Graham Holt is director of
process but the standard of recent innovations in professional studies at the
is principle-based and capital structure. accounting, finance and
the resulting outcomes economics department at
are sometimes surprising Diversity and difficulty Manchester Metropolitan
to users. IAS 32 does not There is a diversity of Business School
look to the legal form of thinking about capital, which
an instrument but focuses is not surprising given the For more information:
instead on the instrument’s issues with defining equity, the
contractual obligations. difficulty in locating sources ifrs.org

10/2016 Accounting and Business

GL_I_HoltCPD.indd 51 07/09/2016 12:15

 52 Technical | Audit rules

SMPs could face a squeeze

The new EU audit rules that came into force in June could have the unintended effect of
driving small firms out of the European audit market

Small and medium-sized small firms could be squeezed the European Commission, on several audit committees
practitioners (SMPs) could be out of the market. And this isstressed that the 15% fee and is a non-executive
driven out of Europe’s audit something of an irony, given threshold did not stop an audit director of financial services
market by new EU audit the reforms are meant to firm working for a client. It company Euroclear, said:
rules that came into force open up the audit of blue- merely triggered a procedure ‘It’s an important condition,
on 17 June. That was the chip companies beyond the whereby the client’s audit but not the key condition
message for a recent joint traditional dominance of the committee has to discuss – you wouldn’t overly focus
European Confederation Big Four accountancy firms – the matter with the auditor on independence.’
of Directors’ Associations PwC, Deloitte, EY and KPMG. and consider whether there For Boets, independence
(ecoDa)/PwC conference. Many conference speakers should be an engagement ‘is a state of mind’. Far more
The Brussels meeting forecast that the audit reformquality review by another audit important is that ‘there is a
examined the impact of EU directive would be more likelyfirm before the audit report certain dynamic within the
directive 2014/56 on statutory was issued, and whether the
to concentrate auditing work in group’. But she agreed that
audit, and on the audit auditor can continue. ‘It’s not a
the hands of these big players. an audit committee needed
committees at the heart of the Accounting and Business ban as such,’ he insisted. to have diversity in experience
reform. The law, which came asked a panel of experts at Gilly Lord, partner and head and that complementarity
into force in June, is designed the conference about this of regulatory affairs at PwC, between members was
to prevent conflicts of interest problem. Karin Bing Orgland, argued for competition. ‘It ‘the key condition for that
between auditors and their independent board member would be a better-functioning committee to be successful’.
clients. Its goal is to stop the for numerous companies such market if there were more
development of overly cosy as Norway’s Grieg Seafood firms,’ she said. Lord had heard Article 27
relationships whereby audit and DNB Bank, said: ‘I think there was a reluctance to go In his opening address Daniel
firms overlook discrepancies that might be an effect.’ outside the Big Four, but said Lebègue, chair of an ecoDa/
in order to keep hold of Others agreed that audit that a ‘helpful element’ came in PwC working group on the
lucrative contracts. contracts could increasingly article 16 of the directive, which audit reform, said there were
just rotate around the Big bars audit committees from concerns, especially in France,
Rotation Four, although one speaker excluding firms outside the Big about the regulation’s article
The directive covers all from the floor rejected this Four when inviting tenders. 27, which requires national
statutory audits, with a scenario as ‘ridiculous’, Nevertheless, one competition authorities to
complementary EU regulation adding: ‘Clearly there is a participant said he spoke monitor developments in
(537/2014) setting specific competition outside the Four, to a lot of audit committee the market for providing
requirements for auditing chairs of FTSE 350 companies
and size doesn’t equal quality.’ statutory audit services to PIEs,
public interest entities who reported asking for particularly the performance
(PIEs) – listed companies, Not a ban tenders from non-Big Four of audit committees. Then,
credit institutions, insurance Alain Deckers, head of audit companies but found ‘they’re under article 30, regulators can
companies and large and credit rating agencies at not interested’. In response, sanction audit committees that
organisations and businesses. another attendee fail to comply.
The regulation requires PIEs suggested: ‘You However, Lebègue
to change audit firm after 10 might need the remained upbeat, telling the
years at most, and for auditors Many speakers largest audit firms conference: ‘I’m sure we will
themselves not to rely too to deal with the find a pragmatic solution to
much on a single client for
forecast that largest PIEs.’ combine this basic principle
their revenues. the directive Some panel of good governance on one
This legislation makes it members side and the objectives of the
difficult for a single client to
would be likely downplayed the new regulations.’
contribute more than 15% of to concentrate emphasis in the PwC’s Lord was able
an audit firm’s income in any
three-year period, although
blue-chip audits in legislation on the
independence of
to suggest how the new
requirements would work in
there is no firm prohibition the hands of the audit committee practice based on experience
against this. Big Four members. For of audit reforms in the UK.
The unintended example, Inge In 2010, the UK’s Financial
consequence, however, is that Boets, who sits Reporting Council introduced

Accounting and Business 10/2016

INT_T_AuditRulesConference.indd 52 14/09/2016 15:11

 Audit rules | Technical 53

◄ Views from
Brussels
A conference in the city
was warned that the
new EU directive could
restrict the audit market

a tendering requirement for Extended reporting committee, adding: ‘But isn’t Also new is a system of
companies to put their audits Another UK reform similar to that a good thing?’ audit oversight bodies in the
out to tender every 10 years, the new EU rules is extended Perhaps the most questions member states with at the top
which has been ‘a really big auditor reporting – individually to land in the European the Committee of European
change in the UK market’. tailored reports setting out Commission’s audit inbox Auditing Oversight Bodies
Companies have gone from risks and responsibilities for cover restrictions on non-audit (CEAOB), which was due to
almost never changing their a particular audit. Lord told services that firms can offer hold its first EU meeting as
auditors to more than 120 the conference that in the to clients they audit, Deckers this edition went to press.
since 2010 putting their audit past audit committees did not told the conference. He Deckers said the aim was to
out to tender. question her audit plans, but acknowledged that this was involve national authorities in
The UK’s new tendering that has changed in the three ‘maybe something we need to CEAOB to ensure harmonised
rules have boosted the years since extended reporting do more work on’. implementation in the
role of audit committees, was introduced. member states. ‘We really
which now select auditors. Audit committees have Non-audit services can’t afford to have authorities
Significantly, Lord said that the started to respond differently The legislation imposes a cap across Europe taking
committees ‘have not been to audit plans as key elements on non-audit services of 70% conflicting decisions,’ he said.
overinfluenced by the cost of are made public. For the first of average statutory audit fees He added that assessing
the audit. Instead we’ve seen time the auditor’s view about paid for the past and future audit committee performance
audit committees get really the risks linked to a particular three years (so six years in was ‘not a legalistic,
interested in audit quality.’ company was going to be total) not only by the PIE itself compliance, tick-the-box
She added that this meant exposed, Lord said. but also its parent company sort of approach’. Some
the committee members She added: ‘Three years and subsidiaries. It also bans countries have already done a
came to ‘people like me’ and on we’re also starting to see audit firms from providing lot of work, and, through the
asked for advice about how some engagement from the tax, consultancy and advisory CEAOB, others could benefit
best to judge the quality of shareholder community on the services. Deckers, however, from their experience. ■
auditors. The result was ‘a audit report.’ Lord said that stressed that as the law is
virtuous circle’, with auditors this could mean an ‘awkward brand new, it is too early to Sara Lewis, journalist based in
competing on quality. moment’ for the audit assess its impact. Brussels

10/2016 Accounting and Business

INT_T_AuditRulesConference.indd 53 14/09/2016 15:11

 54 Technical | Valuations

Trust the numbers

The barriers to agreement on a global set of valuation standards are high, but moves
are under way among regulators to overcome them, as Ruth Preedy explains

Whether you’re acquiring Standards Board (IASB) now PwC partner Andreas
or selling a business, have a converged fair value Learn more Ohl says: ‘Robust technical
undertaking tax planning, standard, and many other standards are important to
preparing financial regulators have valuation as a ACCA and French improving financial reporting
statements, investing in priority for 2016. accountancy body valuations but are only part of
shares or buying your own But given the global CSOEC have launched the puzzle. Valuation models
home, the financial decision nature of business, why do an online Certificate are only as good as the quality
will be underpinned by a we still not have a global in Business Valuations of the information going into
valuation. But the wide set of valuation standards? course. Find out more at them. If the inputs are not
variety of valuation methods This would promote public accaglobal.com/certbv. supportable, the end valuation
and approaches employed trust in valuation and enable will still be of limited value to
globally makes it difficult consistency and comparability the public.’
for many international in financial reporting. First, there has to be Public trust in valuation
businesses to understand the The absence of a single a robust set of technical will require both the technical
true value of assets and to professional framework makes standards explaining how standards and the professional
trust the numbers. it more difficult for those who to value different types of framework to be consistent.
Valuation in financial hire valuation professionals assets for different purposes.
reporting has become a key and those who use their work This would include how the Progress
discussion for regulators to trust the number provided. valuation is performed, the The IVSC has stepped up its
around the world. The level of detailed analysis role to promote a robust set
Financial Accounting The way ahead required for different of global technical valuation
Standards Board (FASB) and Two types of valuation purposes, and what the standards. It is in the process
the International Accounting standard are needed. minimum content of a of improving and clarifying
valuation report should be. a set of standards through
Second, there has to be a series of exposure drafts.
Who’s who a professional framework It has set up a more robust
covering education, ethics, the standard-setting process akin
A range of valuation standards and professional level of work to be performed to that of the IASB, with IVSC
frameworks exist, but all have slightly different principles and CPD. chairman (and former IASB
and requirements. Some of the key players globally are: Many professional chairman) David Tweedie
* International Valuation Standards Council The council
produces international valuation standards (IVS) for
valuation bodies exist.
The most prominent are
heading up the move forward.
The IVSC has support from
asset valuation in the public interest. IVS compliance is the International Valuation some of the big valuation
generally voluntary. Standards Council (IVSC), and accountancy firms,
* The Appraisal Foundation The US-based foundation
sets the Uniform Standards of Professional Appraisal
The Appraisal Foundation
(TAF), the Royal Institution
many of whom have staff
seconded to or sitting on the
Practice (USPAP) for real-estate appraisers. Appraisers of Chartered Surveyors many boards and councils.
are licensed and certified by the individual states in (RICS), the CFA Institute, Two recent appointments
the US, but if they are involved in federally related the American Society – Howard Wetston, former
real estate transactions they must comply with federal of Appraisers (ASA) and chair and CEO of the Ontario
government-regulated USPAP. Valuers do not have to the Canadian Institute of Securities Commission,
belong to a professional organisation to offer valuation Chartered Business Valuators and Tom Seidenstein, vice
services in the public capital markets. (CICBV). Each requires president of strategy and
* Royal Institute of Chartered Surveyors The UK-
based institute produces standards covering all areas
different levels of study, work
experience and CPD. So
policy research at Fannie
Mae – illustrate the support
of surveying practice. RICS is working with more than while a global set of technical from high-profile individuals
100 professional and standard-setting organisations to standards would be a great and a real commitment to
develop international standards. Members of RICS are step forward, a valuation moving towards a global set
required to comply with the standards, and a regulatory that is robust needs to be of standards.
board monitors compliance. calculated by a highly trained One positive step has been
and qualified valuer. the recent harmonisation of

Accounting and Business 10/2016

AP_T_Valuations.indd 54 06/09/2016 15:02

 Valuations | Technical 55

valuation standards from TAF challenges. Even the TAF/

USPAP is designed for use in achieving global consistency
and the IVSC. The two bodies IVSC harmonisation report
the US and has to reflect US and comparability in
have set out the steps needed highlights some unavoidable
law and practice. accounting, have struggled
for dual compliance in a guide differences, such as the need
Valuations are used for to converge fully with US
entitled A bridge from USPAP for international valuation
many different purposes. GAAP. The most recent
to IVS, which is available at standards to be applicable
How to value something for example of this is the new
bit.ly/USPAP-IVS. across the globe, whereas
financial reporting could be leases standard, with the IASB
very different from and the FASB publishing two
Barriers valuing something different models.
A number of obstacles for tax. It is There are some significant
will make convergence A global set therefore difficult to barriers before a global set
in valuation standards a produce one set of of enforceable valuation
challenging path.
of valuation technical standards standards emerges. The IVSC
Valuation is subject to standards would that can be used in is taking positive steps and
national, legal, economic, every scenario. enrolling the help of some
political and cultural
promote public Convergence key players in the market, so if
systems, which differ trust in valuation has proved elusive there was ever a time to move
hugely around the world. and enable in other arenas: forward with this vision, that
These give rise to differing International time is now. ■
definitions and perception comparability in Financial Reporting
of value. The availability financial reporting Standards (IFRS), Ruth Preedy is a director in
and flow of information also while a fantastic PwC’s global accounting
varies, presenting other step forward in consulting services

10/2016 Accounting and Business

AP_T_Valuations.indd 55 06/09/2016 15:02

 56 Technical | Update

Technical update
A monthly roundup of the latest developments in financial reporting, audit, taxation and
legislation from the IASB, IFAC, European Union, OECD and elsewhere

European Union Expat business portal

Accountants can participate
Country-by-country in a European Commission
A European Commission ruling public consultation on a
that Ireland must recover up ‘single digital gateway’. The
to €13bn in back taxes (plus aim of the portal will be to
interest) from Apple has give reliable information
signalled a tough approach online about the regulations
from Brussels over alleged and procedures that apply
EU competition law breaches to businesses and people
associated with sweetheart tax seeking to work and live in
deals by member states. foreign EU member states.
The commission has More on the consultation is
concluded that, having routed at bit.ly/expat-portal.
most of its EU revenues into
two Ireland-registered Apple VAT on e-publications No VAT on resale of artworks
companies, the IT giant paid The European Commission
between 1% and 0.005% has launched a consultation The European Commission says that EU states cannot
corporation tax on that income into future rates of VAT on charge VAT on the resale of artworks. While resale
between 2003 and 2014. The digital publications supplied generates royalties for artists, the commission says VAT
earnings were subsequently electronically within the cannot be charged because there is no contract between
moved to the US to fund R&D, EU. These currently attract the artist and subsequent purchasers of an artwork after
and to an international ‘head standard VAT paid where the initial sale. It has threatened legal action against
office’ under no tax jurisdiction. a customer is based. Hard- Austria if it continues to charge VAT on such transactions.
The commission accordingly copy publications can attract More information on the EU legal framework for VAT is
ruled that Ireland had offered reduced or zero VAT rates. available at bit.ly/EU-VAT.
unfair subsidies and tax breaks In its consultation, the
to the company. commission asks whether EU
If other EU countries also member states should be able released a paper on how exchanging tax information
decide Apple should pay them to apply reduced or zero rates tax policy can help develop with foreign tax authorities
back tax, then the amount for electronically supplied sustainable and inclusive on request.
Apple owes in Ireland would publications, and how these economic growth. The paper, It has, however, advised
fall, says the commission. products should be defined. Tax Design for Inclusive Switzerland to adopt reporting
See bit.ly/Apple-ruling for The public consultation is Economic Growth, suggests mechanisms to allow bearer
more information. at bit.ly/epub-VAT. broadening the tax base, share owners to be identified
removing taxes that do not in all cases. And it wants
Austria tax rep rapped OECD redistribute wealth, making Berne to be more flexible in
The European Commission more taxes progressive, responding to tax information
has called on Austria to Tax and sustainability ensuring taxes promote requests based on tips
change rules that require non- The Organisation for training and employment, and generated from stolen data.
resident taxpayers to appoint Economic Co-operation and bringing informal sectors into More at bit.ly/Switz-tax.
representatives to administer Development (OECD) has the  system. The forum has also judged
their tax affairs. Because The paper is available at Albania, Cameroon, Gabon,
the rule does not apply to bit.ly/tax-growth. Pakistan, Senegal and St Lucia
residents (who are more likely Five-year plan to be largely compliant with
to be Austrian nationals), the Swiss tax transparency these tax information rules and
commission thinks it breaks EU IASB chairman The OECD’s Global Forum on the UAE ‘partially compliant’.
rules banning discrimination Hans Hoogervorst talks Transparency and Exchange of More information is
between citizens of different about his plan for his Information for Tax Purposes available from the forum at
member states. next five-year term has ruled that Switzerland bit.ly/OECD-GFT. ■
More on taxation in Austria bit.ly/HH-five-years. is now ‘largely compliant’
at bit.ly/Austria-tax. with the OECD standard for Keith Nuthall, journalist

Accounting and Business 10/2016

INT_T_Update.indd 56 13/09/2016 14:06

-INT_Ads-Oct16_600dpi.indd 1 14/09/2016 11:44
 58 People | Interview

The King revolution

South Africa’s groundbreaking approach to corporate governance was born out of
sweeping political change and the commitment of former judge Mervyn E King

T
owards the end The latest update, King IV, and managers, and there were during that conversation that
of this year, the which is expected to come no guidelines in place to help. I’d been approached to do
profession and theinto effect in the middle So the Institute of Directors this, and he said, “Do it, you’re
business world will be of 2017, will update the and the Johannesburg Stock the right man, but make sure
keenly watching South existing code to take into Exchange thought some had no one gets paid. They must
Africa, where the latest account new developments better be written.’ do this, hand on heart, in the
version of the country’s in corporate governance, interests of South Africa.” So
groundbreaking corporate including directors’ pay, Mandela mandate that’s exactly what I did.’
governance code, known as integrated reporting, In 1992, King was invited by He knew that the first King
King IV, will be launched.responsible investing, the Institute of Directors in report had to set the tone
The King reports and codes
mandatory audit rotation Southern Africa to chair the for the new South Africa. ‘It
on corporate governance – and tendering, information first official committee on was a time of huge political
King I, published in 1994,security and protection, and corporate governance. He change, so it had to be almost
followed by King II in 2002 and
board diversity. It is likely that, already had a strong record in revolutionary; it couldn’t just
King III in 2009 – are widely
as with the previous King social reform in South Africa; follow the financial aspects of
seen as encompassing the reports, its content will dictate after resigning his post as a governance. So we developed
best international practices in
the future direction of travel Supreme Court judge in 1980 what became known as
corporate governance. South
when it comes to corporate he became the first chairman the inclusive approach to
Africa’s inclusive, stakeholder-
governance around the world of Operation Hunger, a charity governance. Rather than an
orientated and integrated in the longer term. that feeds children in rural exclusive approach based
approach to corporate The ‘King’ of the four King areas. (He is now its honorary on shareholder primacy, the
governance has become reports and code is Mervyn E life president.) Mandela’s inclusive approach meant
influential around the world.
King, a former South African daughters worked for the that the board as a collective
Each of the King reports
Supreme Court judge who charity, and when Mandela was should learn about legitimate
has been hugely significant.
has chaired the committee on released from prison in 1990, and reasonable needs,
The first shifted the focus
corporate governance since King was one of 12 people interests and expectations
of corporate governance it was set up in 1992. The invited to meet him for lunch. of stakeholders – and take
firmly onto the stakeholder;
first report, he explains, was ‘Mandela said at the time account of them in its
the second introduced born out of the huge wave of that if it wasn’t for Operation decision-making process.’
sustainability into governance
democratic change that swept Hunger, the country would have
and reporting; and the the country in the early 1990s three million useless citizens,’ Game-changer
third led directly to the as apartheid was dismantled says King, ‘because if we don’t The first King report was
Johannesburg Stock Exchange
and Nelson Mandela was feed children under the age of published in 1994 and is
mandating integrated released from prison. three, their brains atrophy.’ widely accepted as the
reporting through its listing ‘In 1991-92 we were moving It was Mandela who helped game-changer in terms of
requirement in 2010. into democracy,’ King tells persuade King to accept corporate governance around
Accounting and the role of creating a code of the world, stressing as it did
Business. ‘We’d corporate governance for the the business life of companies
been a country new South Africa. and the impact of a wide
of unequal ‘When I got the call from group of stakeholders over the
opportunity and the Institute of Directors, I shareholder-focused emphasis
‘It was a time of suddenly we said I would think about it on the creation of value.
huge political were becoming a because I was very busy at the The King code is advisory
country of equal time,’ says King. ‘But then I rather than a legal requirement
change, so the opportunity. The got a call from Mandela. When but in 2009, when the third
first King report majority of my he wanted me to do him a King report was published,
fellow citizens favour, the conversation would its ‘comply-or-explain’
had to be almost had not been in generally start with, “How’s approach was replaced with
revolutionary, not the mainstream my favourite judge?” That an ‘apply-or-explain’ approach
just financial’ of the economy; usually meant I would end up to compliance, which until
they were going to doing a lot of work without then had been unique to
become directors remuneration. I told him the Netherlands. This allows

Accounting and Business 10/2016

INT_P_King.indd 58 14/09/2016 15:11

 Interview | People 59

► Sign of the times

The King report was born
out of the huge wave of
democratic change that
swept the country in the
early 1990s as apartheid
was dismantled and
Nelson Mandela released
from prison

companies to apply the sustainability in a separate the integration of economic, a path they had to follow, he
recommendations in the way chapter, as this encouraged social and environmental says: ‘It’s a question of value
they consider to be the best some companies to separate reporting, including an creation. If you have scarce
for the organisation but also to financial and sustainability explanation of the company’s natural resources, and you
explain any departure from the reporting. ‘Reporting in silos impact on the community. just focus on short-term profit
written recommendation. wasn’t reflective of what was King, who later became and concentrate on trying
King II, published in 2002, happening on the ground chairman of the International to get more dividends to
went even further than the because companies don’t Integrated Reporting Council, shareholders, you’re going to
first report by introducing operate with human capital in has continued to lobby for an destroy the company.
the concept of sustainability one room and financial capital integrated reporting framework ‘All of these factors are
into corporate governance in another,’ he says today. to support this approach. changing the way companies
– a direct result of King’s ‘It doesn’t work like that; ‘Sustainability reporting is are thinking. If companies
experience working with the there’s an interrelationship, critical but on its own it’s don’t think about value
United Nations on governance an interconnection between not sufficient,’ says King. ‘I creation in a sustainable
and oversight. ‘I thought we resources and relationships on can’t believe the traction manner, that company might
were reporting on companies a daily basis. That’s how the that integrated reporting has survive for the next three to
but not telling the whole story,’ concept of integrated thinking gained. It was a concept whose five years but it will become a
says King. and reporting developed.’ time had come.’ stranded business.’ ■
He later said he King III, published seven The King reports have
regretted that King II set out years later, recommended encouraged companies down Liz Fisher, journalist

10/2016 Accounting and Business

INT_P_King.indd 59 14/09/2016 15:11

 60 People | Interview

Lord of the ring

Casey Barnett FCCA was at Rio 2016 to coach Cambodia’s Olympic wrestling hope.
He describes how he juggles his sport with his day job of running a business school

Q: What is your day job a month) and had no funds Olympics. While our wrestlers Q: How is wrestling perceived
in Cambodia? for equipment, not even were unable to earn a medal as a sport in Cambodia?
A: I am the founder and shoes. When I became too in the regional competitions, A: Usually wrestling is only
president of CamEd Business busy to train, I assumed a role the international federation, practised during traditional
School, the leading business of supporting planning and United World Wrestling, religious holidays in Cambodia.
school in Cambodia and the fundraising. My role became was impressed with the It is a traditional sport and the
country’s only ACCA Platinum official when I was elected vice performance of our 48kg wrestlers don a traditional cloth
accredited tuition provider. president of the Cambodian woman freestyle wrestler Chov and wrestle on sand. There is
I came to Cambodia in Wrestling Federation. Sotheara and granted her a no tournament structure. The
1999. Cambodia suffered a place at the Olympics in Rio. competitors simply step into
massive genocide from 1975 Q: How do you juggle your I arranged for her to train in the ring and whoever dares to
to 1979 during which educated work and wrestling? South Korea and Vietnam, as challenge them will step into
people were specifically A: I was a coach for the those countries have a higher the ring as well.
targeted for killing. War in Cambodian Olympic team calibre of training partners. There is a religious
Cambodia continued up to and focused on coordination In the final months of ceremony called ‘Raising
1999 when the Khmer Rouge and planning rather than preparation, there were the spirit’ in June when the
finally surrendered. Because of daily training. I arranged for no surprises as Chov was a wrestlers will be possessed by
this legacy, there is a scarcity our Cambodian wrestlers seasoned athlete and we a local spirit before wrestling.
of technical skills. I founded to participate in regional were able to focus on drilling, It is not widespread as a
CamEd to help build the next competitions in Kazakhstan sparring and maintaining casual sport so the concept is
generation of accountants and Turkey to give them a nutrition to control her weight still new to most Cambodians.
and finance professionals in chance to qualify for the in the runup to the Games. I have been focused on
Cambodia. It is now the source wrestling for young people
of most recruits for the Big ▼ Putting the bounce into women’s basketball and over the past years I have
Four and many international Barnett with the winning team in CamEd’s first women’s sponsored an annual national
banks in the country. basketball tournament in November 2015 – the team went on to youth wrestling tournament
win the national university championships in June this year as well as wrestling workshops
Q: How and when did you
become involved in wrestling?
A: I am an American and
have wrestled since I was
seven years old. Wrestling is
not usually a casual sport so
I wrestled only until age 21,
as after university there were
very few opportunities to take
up the sport. But after arriving
in Cambodia, I was pleased
to learn that wrestling is a
traditional sport here. I trained
with the Cambodian team
in my free time from 2007 to
2008. I participated in the
Cambodian National Wrestling
Championship in 2008, placing
second in Greco-Roman
wrestling and third in freestyle.
Through training and
competition, I bonded with
the Cambodian athletes. I
sympathised with them as
they faced low salaries (US$65

Accounting and Business 10/2016

INT_P_Wrestling.indd 60 14/09/2016 15:11

 Interview | People 61

► Wild card in Rio

Cambodia’s Chov Sotheara (in red)
lost to Colombia’s Carolina
Castillo Hidalgo in the 48kg
freestyle wrestling at
the Rio Olympics

for young people. The sweat, tears and anxiety all ‘The competitors hinders it from
focus on youth provides our for just a couple minutes of simply step into gaining widespread
national team with prospective competition. Leading up to popularity.
wrestlers who can be identified the competition, there was the ring and
for their potential and trained. one wrestler in my athlete’s whoever dares to Q: What are your
weight class who got injured top tips for getting
Q: Of the athletes you have days before the competition
challenge them into wrestling?
worked with, who are you most and had to withdraw. Our will step into the A: Don’t be afraid
proud of? competitor from Vietnam to try wrestling!
A: Dorn Sov. He was a gold ended up being unable to
ring as well’ Wrestling is a sport
medallist in the 2015 South- make weight just hours before to make friends. It
East Asian Championships the competition. In the end, is one of the few
and also the 2013 South-East my athlete only had one Accounting Council of sports where you embrace
Asian Games. I was his training match, losing to a world-class Cambodia in promoting your opponent. As a martial
partner and competitor from wrestler from Colombia. International Financial art, it has proven effective,
2007 to 2009. Reporting Standards and IFRS with many wrestlers rising to
Q: What interesting activities for SMEs. As an adviser to the the top ranks of the Ultimate
Q: Why is it important to has CamEd been involved in? council I have participated Fighting Championship
participate in sport? A: Women’s sports are severely in international forums and other mixed martial
A: There are many great neglected in Cambodia and I such as the United Nations arts organisations.
reasons for people to am proud that over the years Conference on Trade and For parents, wrestling is
participate. First, sport I have sponsored women’s Development’s accounting a good martial art because
develops social skills, the football, basketball and conference, which is held it doesn’t involve striking,
ability to both lead and track. CamEd sponsors many annually in Geneva. which means less chance
cooperate with others. charities and sports, including of injury and less chance of
Second, it develops grit Cambodia’s first-ever women’s Q: How do you see the future getting into trouble. However,
and persistence, which university football tournament. of wrestling in Cambodia? wrestling is also the most
psychologists are increasingly Our women’s football team A: There’s a bright future physically demanding sport.
identifying as a key indicator even got the attention of for wrestling in Cambodia. Most wrestlers start in school
of success. Third, it provides Japan, which sent a women’s Ten out of 57 medals won wrestling programmes. For
exercise, which benefits both futsal team for a friendly match. by Cambodia in the 2013 adults, it’s hard to find a
physical and mental wellbeing. In addition to instruction, South-East Asian Games were wrestling school, but more
CamEd hosts annual forums from wrestling. This success and more mixed martial
Q: How would you describe on accounting and banking, helps support the popularity arts schools are including
your experience in Rio 2016? sponsors business research of wrestling in Cambodia. I wrestling classes. ■
A: Rio 2016 was an incredible and promotes accounting believe wrestling will grow
journey that embodied our standards. CamEd works steadily. But it’s a very difficult Interview by Monique
years of effort, time, money, closely with the National and intense sport, which McKenzie, ACCA

10/2016 Accounting and Business

INT_P_Wrestling.indd 61 14/09/2016 15:11

 62 ACCA | Events

Tell SMEs where to go

The message of a recent conference on European SME finance was that accountants
must guide their small business clients to sources of venture capital

Accountants and banks businesses in the European the EU’s capital markets union proposal is the first deliverable
both have a responsibility Union, SMEs often have rules to open up European under the commission’s
to direct their small and difficulty accessing finance, venture capital and social commitment ‘to power up
medium-sized enterprise especially since Europe entrepreneurship funds to and refinance venture capital
(SME) clients towards traditionally relies strongly on more fund managers, and markets’.
sources of finance, a Brussels bank lending. to expand the range of He added that the stressed
conference has been told. Rosana Mirkovic, head of companies that funds can situation of the banking
Rebecca McNeil, head of small business affairs at ACCA, invest in. system ‘shows we just need
SME lending at Barclays Bank, stressed that a large number McNeil complained that to put our shoulders to the
told the capital markets union of ACCA’s members worldwide companies looking to scale wheel’. He said the need is
conference on delivering either work at SMEs or are up often have to look outside to develop alternatives to the
new opportunities for SMEs their external advisers, and the EU, so innovative business bank loan channel, not just to
through venture capital: so are ‘acutely aware’ of the is increasingly going to the aid SMEs but ‘to work through
‘We all have the duty of difficulties faced in securing US, which ‘means we lose some of the legacy issues’ that
care – banks, accountants… financing. valuable business’ long term banks are struggling with.
to signpost SMEs to sources as those companies then base When it comes to SME
of finance.’ The lending myth themselves in the US. access to finance, Bohan
She was summing up the
But McNeil rejected claims Irmfried Schwimann, acknowledged there is ‘room
message of the conference,
made during the conference deputy director general for improvement even in
which was jointly organised by
that banks do not take risks. of the commission’s Grow countries like Germany and
ACCA, Barclays and European
She told attendees: ‘Well, we directorate, argued that there Austria’. He said that, in many
small business organisation
do.’ Opening the conference, is ‘a huge overleveraging’ of cases, external finance means
UEAPME (Union Européenne
McNeil had also attempted bank lending in Europe. While a bank loan or nothing at all,
de l’Artisanat et des Petites et
to dispel what she called ‘the the EU market is as big as the but borrowing from banks
Moyennes Entreprises). lending myth’ that banks do US, equity is only half the size, ties businesses into all the
Taking place in July, just
not fund SMEs, arguing that and critically, US SMEs receive stress of monthly repayments.
two days before the European
at Barclays opportunities for five times the funding of their He insisted that there are
Commission unveiled a funding were ‘plentiful’. She European counterparts. alternatives, and cited
revision of its venture capital
acknowledged that the picture Nor is that the only way in venture capital as one.
rules to make it easier for
might not be the same across which the US venture capital Like Schwimann, Bohan
investors to put their money
the EU as in the UK where market outperforms the EU highlighted the small size of
into innovative SMEs, the
some £100bn in bank financing equivalent. In the EU, funding EU venture capital funds and
conference looked at different
is available. is concentrated in just eight said: ‘It’s worth reflecting why
sources of finance for smaller
McNeil also noted that member states – Denmark, our funds never seem to get
businesses. Despite making
high-risk lending is less Finland, France, Germany, beyond €60m.’ And with 90%
up more than 99% of allavailable than in the past, as Netherlands, Spain, Sweden of those funds concentrated
overseas lenders and the UK. And Schwimann in eight member states, many
have pulled out, pointed out that the average businesses in other EU states
but argued in any European venture capital fund may lack access to capital.
case: ‘Venture was about €70m – ‘quite small However, Bohan was
capital markets compared to the US’. upbeat, telling the conference:
might well have ‘There’s a lot we can do,’
‘The EU venture been a better VC revamp starting with the European
solution for them.’ The revamp of European venture capital funds revision.
capital passport She insisted that venture capital funds aims to The existing passport
can be a game- venture capital was change all that, as Niall Bohan, arrangement – whereby those
changer for pan- the right solution
for scale-up and
head of capital markets at
the European Commission,
fund managers can see EU
funds getting investors on a
European venture startup risk. explained. Standing in for crossborder basis – is ‘a good
capital funding’ She welcomed an ill Sven Gentner, head of template to grow’. European
the upcoming asset management for the venture capital funds supply
proposals to revise commission, Bohan said the finance for projects across

Accounting and Business 10/2016

INT_A_SMEconference.indd 62 13/09/2016 14:05

 Events | ACCA 63

how to help family firms

with financing. ‘Here we see
venture capital is not always
very helpful,’ he pointed
out. He also argued that tax
regimes are often not very
helpful either as they push
SMEs towards loans.

Further challenges
Other problems flagged up
are SMEs’ unwillingness to
accept outside control by
investors and small business
owners having little time to
look for other funding sources
when a bank loan is turned
down. Huemer cited the UK’s
legal requirement for banks to
direct SMEs to another source
of funding when declining a
loan, but Hoppner said that
if an entrepreneur does not
approach a venture capitalist
‘he probably doesn’t deserve
the funding’.
Schwimann agreed, noting
that just googling ‘access to
finance SMEs’ would bring
information about where SMEs
can go to get funding, telling
the conference: ‘If you can’t
even get that information,
then you probably shouldn’t
have a company.’
Hoppner sounded warning
bells about a British exit from
the EU. Speaking just weeks
Europe, allowing private sector venture capital funds a fee, very important part to play, she after the referendum, she said
managers to provide expertise which ‘defeats the purpose’. said, claiming they were ‘the that the system in both the US
on a pan-European scale. Hoppner said she hoped missing link here in Europe’ and the UK was ‘way ahead’,
According to Bohan: ‘This the commission was going to compared to the US where and that Brexit was ‘very
can be a game-changer for address that in the proposal. they give money to SMEs. unfortunate’ given that three
venture capital funding.’ The EU executive body did just When asked by Mirkovic what out of four of the big European
Dörte Hoppner, chief that as member states will be it takes to be a business angel, venture capital companies
executive of venture capital banned from levying fees on Johnson replied that the best were in the UK.
organisation Invest Europe, European venture capital funds. were ‘serial entrepreneurs’. Hoppner said that the EU
agreed on the benefits of But Gerhard Huemer, had to make sure that the
the European venture capital Angels UEAPME director of economic European venture capital
funds passport, making clear Business angels – successful and fiscal policy, noted that market can continue ‘even
it was ‘not about creating companies and individuals while hi-tech businesses and if the UK really leaves’. But
a million new startups that that invest in and guide SMEs innovation were important Johnson saw Brexit as an
will all die soon’. Rather, it’s in return for a cut in the profits there are many situations opportunity and said that
a ‘marketing passport’ that – could also be a source of where SMEs need equity as soon as the referendum
frees investors from having funding. Candace Johnson, finance. Huemer stressed: ‘It result came through, she
to register in each country. president of the European is a problem of finance and had phoned the UK business
‘You just show your passport Business Angel Network many are going away from angels organisation to say ‘let’s
and then you’re good to go,’ (EBAN), said that business Europe because the finance is be even closer’. ■
she said. She identified the angels ‘bring experience, not available.’
problem as one of member expertise and – oh yes – He pointed to traditional Sara Lewis, journalist based
states charging European money’. Corporations had a SMEs and the problem of in Brussels

10/2016 Accounting and Business

INT_A_SMEconference.indd 63 13/09/2016 14:05

 64 ACCA | Sustainability

You say potato...

George Gershwin had plenty to say on the importance of shared terminology, delegates
heard at the launch of an ACCA/CDSB report on sustainability reporting

Pressure is increasing on Introducing the report,

companies to disclose their its author, Lois Guthrie,
sustainability performance founding director of the
as a mass of voluntary and CDSB, explained: ‘Sustainable
mandatory environmental reporting is moving in the
reporting guidance emerges right direction gradually, but
– but the lack of a standard the coordinates of the map in
terminology has led to which it is going are not stable.
confusion and complexity. ‘More work needs to be
This is the conclusion of done across the value chain
a new report from ACCA and technical dilemmas
and the Climate Disclosure need to be addressed such
Standards Board (CDSB), as materiality, boundaries,
Mapping the sustainability language and characterisation.
reporting landscape: Lost in There is lots of commentary
the right direction. on these matters but efforts
‘From the EU directive on to address the technical
disclosure of non-financial dilemmas need to be
information to the recently coordinated,’ she said.
created taskforce on climate- Guthrie chose to highlight
related financial disclosures, proposal four – ‘reciprocity’,
demand for effective when compliance with one
sustainability reporting has provision can satisfy obligations
never been greater, but the under another if the aims of
landscape lacks coherence and both are compatible – and six, not agree to say “soft red record of FTSE 350 companies
the resulting fragmentation ‘the model convention’. She fruit”?’ Guthrie said, alluding was ‘patchy’.
could result in it failing to live said that while it was important again to the song where Dutch liberal MEP Cora van
up to its potential,’ ACCA to cut down on clutter from Astaire and Rogers proclaim Nieuwenhuizen argued that
senior manager Jimmy Greer too many related laws or incompatibility just because a major obstacle to effective
told a roundtable in Brussels in requirements, companies they pronounce ‘tomato’ in sustainability reporting is
June. ‘The report makes a set should not just cut and different ways. ‘We need to the complexity of financial
of common-sense proposals paste; they should state such have a shared foundation reporting standards. ‘Not
aimed at ensuring that reciprocity to third parties on which to build corporate everything that is measurable
sustainability reporting can in writing. reporting in future.’ is of value and not everything
continue to help companies Others highlighted that of value is measurable,’
deliver a prosperous future.’ Call the whole thing off? while progress was being made, she said. ‘We must focus
The six proposals – Secondly, referring to the it was not enough, with Nicolas on relevant information for
leveraging shared objectives; famous George Gershwin Bernier-Abad, policy officer for investors and society, and not
mapping the landscape and song from the 1937 film Shall the European Commission’s add unnecessary additional
agreeing its components; We Dance, starring Fred directorate general for the administrative burden.’ ■
addressing technical Astaire and Ginger Rogers, internal market and services,
challenges; linking, aligning Guthrie said that if two saying the ‘headline takeaway’ Liz Newmark, journalist based
and reciprocating standards; approaches to sustainability from the climate reporting in Brussels
agreeing stewardship (or reporting were not quite the
responsibility) for sustainability same, you should not ‘just call For more information:
reporting; and developing the whole thing off’. Instead,
a model convention – offer companies should agree a Read the ACCA/CDSB report, Mapping the sustainability
the corporate world a ‘model convention’ embracing reporting landscape: Lost in the right direction, at bit.ly/
‘sustainability compass to common aims, principles, ACCA-Lost
navigate the constantly shifting reporting requirements and
corporate sustainability terminology to promote See also page 40 of AB‘s September edition, ‘Finding the
landscape’, the report states. policy coherence: ‘Why right path’

Accounting and Business 10/2016

INT_A_sustainability.indd 64 13/09/2016 14:05

 News | ACCA 65

The employers’ choice

Employers rate ACCA-qualified employees especially highly for the business and
technical skills they bring to the workplace

ACCA has received Not only do employers

extremely positive feedback have a positive view of the
from employers about the brand, they increasingly agree
value ACCA members bring. that the ACCA Qualification
ACCA conducts regular provides the relevant skills for
research among members their business (88%). After the
and students to hear your recent move to four examining
views on what ACCA does sessions, the proportion of
well – and not so well. It also employers who agree
surveys major employers of that the flexibility of our
accountants to hear about exams meets their needs
their experiences of ACCA in has risen by 12%, to 80%;
order to check that they are they also increasingly agree
getting the support they need that the qualification provides
and to find out about the value a rigorous assessment (86% as
that members can bring to against 82% in 2015).
their organisations. Employers also tell us
The latest survey, that the ability to demonstrate
conducted earlier this year, the right business skills
found that employers continue and technical knowledge
to rate ACCA as the leading is a key differentiator of
global accountancy body. ACCA staff. The valued
This means they appreciate skills include business
the global knowledge that partnering, connecting
members bring to their technical knowledge with
organisations, and are financial implications,
confident that ACCA members decision-making and
work to best practices and high problem-solving, writing and For more information:
ethical standards. They also presentation, performance
see ACCA as an innovative and management, and leadership See ACCA’s CPD programme for help in developing your
forward-thinking body. and teamwork. ■ professional skills at bit.ly/acca-cpd

Educational landscape reshaped by online ACCA-X programme

ACCA-X is proving that high-quality courses that offer There are two free courses (both cover financial and
an engaging digital learning experience can alter the management accounting – one introductory and the other
landscape of accountancy and business education, and intermediate) and three affordable (US$89 each) courses
enhance the business skills required by industry and (one on the accountant in business, another on management
employers, according to Reza Ali, director of new ventures accounting, and the third on financial accounting).
at ACCA. Ali said: ‘The courses have been designed to meet the
The demand for ACCA-X’s innovative online learning changing needs of students with career ambitions and
programme shows that high-quality courses offering flexible demanding lifestyles. We are proud to be able to offer an
learning are the way of the future. Speaking at the 14th innovative way of learning that ensures through global delivery
session of the United Nations Conference on Trade and that people can qualify for ACCA and pursue their career in
Development (UNCTAD 14) in Kenya held in July, Ali said: any country in the world. These courses firmly place ACCA at
‘ACCA-X has seen tremendous interest, with registrations the helm of 21st-century accountancy and business education.’
coming from 230 territories and countries around the world. In April, ACCA-X triumphed in the best e-learning and
The five courses – which include free and affordable courses – online education category at the International and European
have reached 108,000 registrations in the 15 months since first Association Awards held in Berlin, Germany.
being offered.’ Find out more about ACCA-X at bit.ly/ACCA-X.

10/2016 Accounting and Business

INT_A_news.indd 65 14/09/2016 15:12

 66 ACCA | Update

Inside ACCA
65 News ACCA is the
In the public interest
employers’ choice ACCA’s 80-plus global partnerships help build the profession
64 Sustainability
and improve financial capability around the world
Standard terminology
required
A vital part of developing
62 Access to finance a global accountancy
Directing SMEs to profession is to protect the
funding sources public interest, says ACCA in
its recent report Developing
24 President the profession.
Play your part as ACCA’s network with
an advocate governments, donor agencies
and other professional bodies,
ACCA member helps enhance trade, grow
the investment climate,
benefits promote ethical practices,
Employability support the development
Membership improves and implementation of
earning power and job global accounting standards
prospects on a global and, above all, protect the
scale. public interest.
Stephen Heathcote, ACCA’s
Influence and executive director for markets,
representation explains: ‘ACCA works in
Members play key collaboration with its partners
roles in representing to develop a profession that is
and developing the sustainable, delivers concrete
profession, backed by value for national economies,
cutting-edge research. and complies with international For more information:
standards and ethical practices.
Knowledge and ‘It’s through these global See the report Developing the profession at
connections partnerships that ACCA can bit.ly/acca-dev-the-prof
Keep up to date with support the development
our publications and of a robust and sustainable Find out more about ACCA’s capacity-building work in its
social media feeds. Our accountancy profession integrated report at annualreport.accaglobal.com
events let you network and help ensure there
with a large peer group. is a strong pipeline of through the South East Asia governance reporting into
professionally qualified and Prosperity Fund programme companies, and promoting
Personal development work-ready accountants.’ to build the capacity of accounting for SMEs.
CPD, training and career ACCA has more than 30 government auditors and It has also collaborated
progression support. years’ experience of working finance officers in Indonesia to with national bodies and
on donor-funded development implement International Public governments in Albania,
ACCA Careers projects and on self-funded Sector Accounting Standards. Mauritius, Singapore, the UAE
Our careers portal gives initiatives. These include ACCA has also worked and Vietnam on a broad range
guidance and lists job strengthening the national with the UN Conference on of capacity-building projects.
vacancies worldwide. Professional Accountancy Trade and Development Heathcote concludes:
Organization of Rwanda, and (UNCTAD) on a number of ‘Capacity-building work
Customer care an initiative supported by the projects including integrating cannot be done in isolation
Fast and efficient British Embassy in Jakarta environmental, social and and it’s through our 80-
support around the plus global relationships
clock, by phone, email that we deliver benefits
and webchat. About the AGM from joint certification to
capacity development,
Go to accaglobal.com/ A summary of the decisions taken at ACCA’s AGM on tuition support, and many
memberbenefits 15 September will be published in the next edition of AB. other areas of cooperation
and development.’ ■

Accounting and Business 10/2016

INT_A_backpage.indd 66 13/09/2016 14:05

UK_cover02-Oct16_600.indd 1 14/09/2016 10:33
 CPD

AB Accounting and Business

Get verifiable CPD units by
reading technical articles

The magazine for finance professionals 10/2016

AB Accounting and Business 10/2016

Mountain rescue Generation Next
Is Switzerland a good model for the UK Young accountants reveal hopes and
of how to survive outside the EU? ambitions as ACCA reshapes qualification

Questionable ethics ACCA Qualification – the future

Bankers behaving badly Major innovations set the direction for tomorrow’s profession
Think Ahead Cambodia Casey Barnett on business schools and wrestling Interview Refat Jiwani, CFO, Aga Khan Museum, Toronto Think Ahead
CPD technical Capital structure of entities US elections The candidates square up

INT_A_cover.indd 1 13/09/2016 16:56