MY AB Accounting and Business

68 Pages·2015·10.85 MB·English

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Accounting and Business
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The magazine for fi nance professionals Y.A MY 10/2015
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Value of success g Forward thinker
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Smart strategies will give foreign us Datuk Alexandra Chin on her year ahead
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Centre of excellence Taking stock
Penang’s ambition to become an international SSO hub Hans Hoogervorst, IASB chairman, refl ects on the board’s progress
Think Ahead Indonesia Economic growth ahead Lawyer power Big Four fi rms are fl exing their legal muscle Think Ahead

Technical Sustainability reporting requirements Growth strategy Challenges for shared services in Asia
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Welcome
Welcome
IFRS comes of age – but still has work to do
A decade has passed since and the IASB needs to be patient. In this exclusive interview he
International Financial explains why the past 10 years of IFRS is a cause for celebration
Reporting Standards and why there was a need to issue a recent document addressing
became the widely accepted some misconceptions about the work of the IASB.
accounting vernacular for Also in this issue, we consider why Big Four fi rms in Asia are
listed fi nancial statements. Since the transition towards EU- diversifying into legal services and building legal muscle by
wide use of IFRS began all those years ago, 116 countries adding lawyer partners and acquiring legal fi rms. After a long
have adopted IFRS in full. To say that this has been a success hiatus of abandoning the legal market, many outright after the
is an understatement if you recall some initial reactions. Many Enron scandal in 2002, accountancy fi rms are fi nding that now is
local GAAP (generally accepted accounting principles) were the time to rekindle their legal strategies. Read more on page 28.
considered perfectly adequate, so why take the trouble to re- In our interview on page 12, we speak with ACCA president
educate fi nance professionals on a different set of standards? Datuk Alexandra Chin, who took up offi ce in October. Having
Of course, the benefi t of a common language for fi nancial notched up 32 years in public practice and set up her own
statements is a huge draw in this globalised age. Yet some thriving accountancy fi rm, Chin has a wealth of experience and
markets, such as the US, have still not fully committed to IFRS. knowledge to share. As ACCA’s fourth female president, she cites
Convergence between the Financial Accounting Standards women’s leadership as important for the growth of the profession
Board and the International Accounting Standards Board has and urges women members to inspire the younger generation.
failed for certain projects, such as fi nancial instruments, insurance You can read about her aspirations on page 22, where you’ll fi nd
and leases (while some successes can be celebrated in signifi cant details of an exclusive video on her inspirational career journey.
areas such as the revenue standard). As IASB chairman Hans
Hoogervorst points out on page 36, IFRS is important to the US Colette Steckel, Asia editor, [email protected]
Also from ACCA Accounting Channels and media
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Contents
News
AB MY Edition
6 News in pictures
October 2015 A different view of recent
headlines
Volume 18 Issue 9
8 News round-up
Asia editor Colette Steckel
[email protected] [phone] A digest of all the latest
news and developments
Editor-in-chief Jo Malvern
[email protected] [phone]
Focus
International editor Lesley Bolton
12 Interview: Alexandra
[email protected] [phone]
Chin We meet the new
Ireland editor Pat Sweet ACCA president
Digital editor Jamie Ambler
16 Progress in Penang
Video production manager Jon Gilmore
The second smallest state is
Sub-editors Annabella Gabb, Dean Gurden, Peter Kernan, becoming a hub for shared
Jenny Mill, Eleni Perry, Vivienne Riddoch, Rhian Stephens
services and outsourcing
Design manager Jackie Dollar
Comment
Designers Bob Cree, Robert Mills, Zack Starkey-McGrath
19 Manu Bhaskaran
Production manager Anthony Kay Govenment policy is
Advertising Richard McEvoy key to the turnaround of
[email protected] [phone] Indonesia’s economy
Head of ACCA Media Chris Quick
[email protected] [phone] Errol Oh
The regulator’s role is a
Printing Times Printers Pictures Corbis
delicate balancing act
ACCA
President Alexandra Chin FCCA
Deputy president Brian McEnery FCCA 21 Cesar Bacani
Vice president Leo Lee FCCA How to weather currency
Chief executive Helen Brand OBE
volatility in the wake of
ACCA Connect the devaluation of the
Tel [phone] renminbi
Fax [phone]
[email protected]
[email protected] 22 Alexandra Chin
[email protected]
ACCA’s new president
ACCA Malaysia looks ahead to her term
ACCA Malaysia Sdn Bhd
of office
(473007P)
27th Floor, Sunway Tower
86 Jalan Ampang Corporate
50450 Kuala Lumpur
1 800 88 5051 23 The view from Sharjeel
[email protected] Ali ACCA, senior ERP
consultant, Inbox Business
Technologies, Singapore,
plus snapshot of media
and entertainment
Accounting and Business is published by ACCA 10 times per year. All
views expressed within the title are those of the contributors.
24 Growing together
The Council of ACCA and the publishers do not guarantee the accuracy Retaining talent is a
of statements by contributors or advertisers, or accept responsibility for
any statement that they may express in this publication. The publication key challenge for Asia
of an advertisement does not imply endorsement by ACCA of a product
or service. Pacific’s maturing shared
service centres
Copyright ACCA 2015 Accounting and Business. No part of this
publication may be reproduced, stored or distributed without the
express written permission of ACCA. Practice
Accounting and Business is published by Certified Accountant 27 The view from
(Publications) Ltd, a subsidiary of the Association of Chartered Certified
Accountants. Michelle Lian ACCA,
29 Lincoln’s Inn Fields, Audit period client senior accountant,
London, WC2A 3EE, UK July 2013 to Rawlinson & Hunter,
[phone] June 2014
www.accaglobal.com 162,798 Singapore, plus snapshot
of forensic accounting
Accounting and Business 10/2015
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Contents
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technical articles
28 More to offer
Accountancy firms are
moving into legal services
Insight
32 The new economy
Success in South-East
Asia is more about value
than volume
35 Graphics A look at
women’s representation at
senior management level
36 State of play We talk
to IASB chairman Hans
Hoogervorst about the first
decade of IFRS
39 Planning ahead
Cynicism about budgeting
leads companies to 54 IFRS at 10 How
neglect its real value the annual report and
accounts have altered
41 All or nothing since the launch of IFRS
Companies should not
pick and choose from the 56 Auditing audit
OECD’s BEPS action points Malaysian authorities are
taking action to improve
44 Careers the quality of audits
Dr Rob Yeung on what
makes people employable; 58 High expectations
plus the perfect CV The changing role of
accountants offers new
46 Once upon a time opportunities in China
Storytelling can play a
key role in strategic and 60 Thailand gets serious
financial decision-making Wide-ranging tax reforms
are on the way
48 Agile methods
How scrum communication People
can speed up projects 62 Interview: Chris Forrest
The FD of Christie’s
Technical Decorative Arts on how he 65 Women in finance
49 Green standards balances the interests of Acknowledging the debt
A look at sustainability buyer and auction house owed to the Certified
reporting requirements Accountants Women’s
and practices ACCA Society 50 years on
64 News Mattel gains
52 Technical update Approved Employer status; 66 Update The latest
The latest on audit, tax ACCA/PwC skills workshop; ACCA/IMA survey of global
and financial reporting ACCA Fellows at UNITAR economic conditions
10/2015 Accounting and Business
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News | Pictures
► On air
Expansion plans for
the BBC World Service
include a daily news
programme for North
Korea as well as more
broadcasts to Russia,
India and the Middle East
▲ Good sports
Deloitte has been
appointed official
professional services
partner for the 8th
ASEAN Para Games,
which will take place in
Singapore in December
▲ Tough times ▲ Weather alert
China’s foreign exchange The strengthening
reserves posted their El Niño weather
biggest monthly fall on phenomenon, at its worst
record in August, as since 1998, has led to a
Beijing tries to halt a slide prolonged drought in
in the yuan and stabilise Thailand, reducing rice
financial markets exports by 18% this year
Accounting and Business 10/2015
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Pictures | News
▼ On the move
As refugees, mainly
from Syria, continue to
make the treacherous
journey to Europe, the
United Nations predicts
that 400,000 will arrive
by sea this year
▼ Star role ▼ Checking out
A new United Nations Supermarket chain
campaign, featuring stars Tesco has sold
such as Beyoncé, will Homeplus, its South
highlight its new goals to Korean business, for
eradicate poverty, fight £4.2bn in order to pay
inequality and combat down debt and help
climate change revitalise its UK business
10/2015 Accounting and Business
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8 News | Roundup
News roundup
This issue’s stories and infographics from across the Asia-Pacifi c region, as well
as a look at the latest developments affecting the fi nance profession around the world
Partners in excellence to US$33.2m in 2014, thanks to countries. Signatories regularly other stakeholder groups,
Deloitte has partnered with tax audit advice and guidance. report on their progress and including the preparers of the
the Singapore Economic initiatives in the four areas. fi nancial statements (CFOs
Development Board to launch Supply chain opens Communications on progress and their fi nance team), the
GovLab Singapore, a centre Asian corporates are are available by country and by directors, the investors and
of excellence that focuses increasingly engaging with industry for peer benchmarking the regulators,’ ISCA said. The
on research, collaboration receivables fi nancing, with the and communication at enhanced standards will take
and innovation in the public number more than doubling bit.ly/un-gc. effect from 15 December 2016.
sector. ‘It seeks to nurture over the past 18 months,
innovative yet practical ways analysis from East & Partners IASB seeks comment Still doing deals
for governments to radically Asia, a business banking Those wishing to comment on China’s recent fi nancial market
transform the way they deliver market research fi rm, suggests. the International Accounting woes were not refl ected
their services and prepare for It found that from January 2014 Standards Board’s (IASB) in fi rst-half M&A (mergers
the challenges ahead,’ said to June 2015, the number of work plan and priorities to and acquisitions) activity,
Philip Yuen, CEO of Deloitte corporates utilising the product 2020 have until 31 December which was the highest in 10
Singapore. Kelvin Wong, region-wide jumped from to do so. The IASB’s second years – equivalent to an 88%
assistant managing director 5.3% to 11.1%. Over the same Agenda Consultation, year-on-year increase – EY
at the Singapore Economic period, the percentage using launched in August, provides data shows. Companies
Development Board, said the inventory fi nancing has also an opportunity for interested from mainland China led the
initiative was a response to increased from 11.9% to 12.4%. parties to have their say on Asia-Pacifi c region in terms of
the unprecedented speed of Renewed focus on supply how the IASB prioritises value, with 1,393 deals worth
urbanisation and digitisation chain fi nancing comes in the and balances its work to US$247.6bn. Another 281
of the emerging middle context of higher forecast deliver International Financial M&A deals involved Hong
class in Asia, which ‘calls for churn intentions, with more Reporting Standards for Kong companies in the fi rst
innovative approaches to the than three in 10 corporates the world economy. IASB half, with deal values totaling
business of government’. surveyed saying that a change chairman Hans Hoogervorst US$97.8bn. Bob Partridge,
in trade fi nancier is either ‘very described this as ‘an important EY’s Greater China leader,
Tackling tax likely’ or ‘possible’. Lachlan opportunity for those with an transaction advisory services,
The Organisation for Colquhoun, chief executive interest in fi nancial reporting said that while a number of
Economic Co-operation and of East & Partners Asia, said to have their say on our future large mergers and corporate
Development (OECD) and the that supply chain presented priorities for the coming years’. restructurings took place in
United Nations Development a growing opportunity for Comment can be posted the region, driving the deal
Programme have launched Tax trade fi nanciers. at www.ifrs.org. See our value up across many sectors,
Inspectors Without Borders, an interview with IASB chairman companies are ‘not doing
initiative to help developing Sustainability pledge Hans Hoogervorst on page 36. deals for deals’ sake, but
countries bolster domestic More Singapore fi rms are are exercising a high level
revenues by strengthening committing to sustainable Reporting strengthened of discipline in selecting the
their tax audit capacities. business practice after another Singapore’s accounting right deals’.
OECD secretary general Angel seven companies agreed to regulator has approved
Gurría said during a launch follow guiding principles set the enhanced auditor Psychologists acquired
event that the partnership by the United Nations Global reporting standards issued Deloitte has acquired Kaisen
‘will signifi cantly extend the Compact (UNGC), bringing by the Institute of Singapore Consulting, a leadership
global reach of existing efforts the city-state’s total to 66. By Chartered Accountants (ISCA) consultancy of business
to build audit capacity while signing, they have pledged – a response to investors’ psychologists based in the
sending a strong message to align their operations in call for auditors’ reports to UK and US. The division will
of international support areas such as labour practices, be more informative and operate under the name
to developing countries’. anti-corruption measures and relevant. ISCA expects the new Deloitte Leadership. Clients
He added that evidence environmental protection. First standards will ‘reinvigorate’ will be offered a range of
gathered from real-time launched in 2000 with just over the audit process and change leadership services, including
cases in Colombia indicated 40 business members, the the manner in which auditors in-depth psychological
a signifi cant increase in tax UNGC has grown to more than communicate their work. profi ling and leadership and
revenue, from US$3.3m in 2011 10,000 members across 130 ‘This will inevitably impact management development.
Accounting and Business 10/2015
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Roundup | News 9
‘The vision for our business is
to offer full service leadership Are you ready for disaster?
capabilities for our clients
to drive measurable uplifts Natural disasters
in business performance,’
said Jason Geller, a principal Malicious attack
at Deloitte Consulting
and national managing Cyber attack
director of Deloitte’s human
capital practice. Confrontation
Crime fighter Legal
An ex-police force investigator
has been appointed as a Industrial
partner at KPMG Hong Kong
to focus on fi nancial crime Other
compliance and investigations.
David Cope moved from Bank 0% 100%
of America Merrill Lynch where
he was a managing director,
responsible for oversight of
programmes and processes Do not know Not considered Insuffi ciently Mostly Well
for anti-money laundering, major threat prepared prepared prepared
anti-bribery and corruption
and economic sanctions as
well as associated investigative Around 25% of North American CFOs believe that they are insuffi ciently prepared for
matters across Asia Pacifi c. cyberattacks and other malicious attacks, including terrorism and tampering, according to
Previously, Cope spent 17 years Deloitte’s second-quarter 2015 CFO Signals survey.
with the Hong Kong Police
investigating and prosecuting
complex fi nancial crime. ‘I look country head at CPA Australia. Mortgage alert Hong Kong’s luxury retailers,
forward to be able to share ‘CFOs need to focus on Ratings agency Standard but slowing economic growth
with our clients my experience developing the people that & Poor’s has warned that in the mainland and the
in addressing fi nancial crime, form it and the technology Hong Kong banks face recent devaluation of the
and working with them to that supports it.’ great risks from souring yuan have curbed their once
ensure that Hong Kong and loans if home prices keep voracious appetite for goods
China remain safe and sound Betting on austerity climbing at the current pace. ranging from cosmetics to
fi nancial centres,’ he said. The Macau government has Downgrading its outlook for luxury watches.
imposed austerity measures the city’s banking industry
Futureproofing CFOs in all its public departments from stable to negative, it says Currency cushion
Companies are urged to in order to tighten fi scal the risk of a sharp correction Most of the Chinese utility,
brace for a ‘war for fi nance spending. Savings of in home prices will escalate, infrastructure and non-
talent’, set to intensify over MOP1.4bn are targeted to infl icting losses on lenders as property companies analysed
the next 15 years as the be made in daily operations bad debts rise. Nevertheless, recently by Moody’s Investors
ASEAN Economic Community and unnecessary purchases. the agency believes that Service have suffi cient fi nancial
opens the door to greater The Offi ce of the Secretary Hong Kong’s banking system cushion to withstand a 10%
mobility of professionals in for Economy and Finance ‘continues to have among the depreciation of the yuan.
the region, according to a said that this was in response least risk by global standards’. This assumption includes the
report by CPA Australia and to poorer-than-expected depreciation that followed
PwC. The report, Finance gaming revenues. According Luxury dips the 11 August change in the
Futurescape 2030, suggests to the Gaming Inspection and Several luxury goods and mechanism for determining
that the role of the CFO will Coordination Bureau, gross jewellery retailers are scaling the daily fi xing rate of the
evolve towards increased gaming revenue in August back their operations in Hong Chinese currency against
business partnering, driving plunged 35.5% year on year Kong as fewer tourist arrivals the US dollar. ‘The 70
the new technologies agenda to MOP18.6bn. This took the eat into profi ts, according companies that we analysed
in their organisations, and a monthly average below the to The Standard newspaper. held 48% of their debt in
shift to better management of ‘red line’ of MOP20bn, hence Those who remain are currencies other than RMB
company profi tability. ‘There not achieving the minimum reportedly winning steep rental as of 31 December 2014,
is no one-size-fi ts-all approach estimate stipulated in the cuts from landlords. For years including offshore bonds and
for the fi nance function,’ Budget Amendment Law for mainland Chinese tourists have bank loans,’ said Clement
said Melvin Yong, Singapore the fi scal year 2015. been the main customers of Wong, a Moody’s associate »
10/2015 Accounting and Business
AP_newsroundup.indd 9 10/09/2015 15:01
10 News | Roundup
managing director. ‘Most of Overmatter:
that debt was unhedged.’ ▼ Looking forward
Toshiba’s new CEO Masashi
Feel the force Muromachi will consider
A survey of executives, board developing the company’s
members and academics healthcare arm
in the US shows how
companies are embracing
data and analytics in their
fi nancial reporting. Some
93% of respondents told
KPMG researchers that the
external corporate fi nancial
audit needs to evolve, with a
majority (58%) indicating that
technology is the force that
will transform the profession.
A third of respondents believe
that auditors should go
beyond certifying numbers,
and 59% think that while
the auditor role should stay
the same, how the role is Toshiba plans restructuring following poor results
performed should evolve.
Scott Marcello, KPMG’s vice Scandal-hit Toshiba fi nally issued its annual fi nancial results, which record a loss of
chair of audit, said that this 37.8bn yen (US$318m) for the year to March 2015. In July the then CEO and president
is just one example of how Hisao Tanaka resigned, and several other board members stood down, after an
technology and digitisation independent inquiry found that the company had infl ated its profi ts by US$1.2bn over a
are impacting accountants’ period of six years.
role as auditors. The survey The results had been due to be released in August but were delayed following the
was conducted in association discovery of new accounting errors, including incorrect impairment charges on fi xed assets at
Additional pictures for carousel:
with Forbes Insights. several subsidiaries and improperly timed booking of loss provisions at a US subsidiary.
At a news conference announcing the results on 7 September, CEO Masashi Muromachi
MIA’s new leaders promised to announce a restructuring plan for its semiconductor, PC and TV businesses by
Dato’ Mohammad Faiz the year-end. In addition, he said that the company would reconsider Tanaka’s plans to grow
Azmi, executive chairman Toshiba’s healthcare unit through acquisitions.
of PwC Malaysia, has been
elected as the new president
of the Malaysian Institute Fuelled for growth resources and propelled new A DeMarr. ‘An established
of Accountants (MIA). During a decade of boom entrants to the market to the small business may have
With more than 30 years’ times for the oil and gas fore,’ said Charles Dewhurst, larger credit lines and larger
experience in the audit and industry, middle-market global leader of the natural bank accounts, both of which
business advisory services companies have had some resources industry group make them more attractive
of fi nancial institutions, both of the greatest success at BDO. ‘Middle-market to a scammer. Why not steal
in the UK and Malaysia, in exploiting new energy companies have been some $50,000 if it takes the same
he has been involved in resources and capitalising of the greatest benefi ciaries of amount of work as stealing
the audits of clients in the on global appetite for this paradigm shift and, with $5,000?’ He adds that because
banking, healthcare, power inexpensive supply. According some smart planning, could small businesses may have a
and construction sectors. to BDO’s 2015 Global Energy be poised to emerge from the history of larger transactions,
Datuk Zaiton Mohd Hassan, Middle Market Monitor, these past year’s commodity price ‘a large wire transfer overseas
past president of the companies saw their median drop stronger than ever.’ doesn’t set off alarm bells’.
ACCA Malaysia Advisory daily production grow by 50% Roadblocks to crime the
Committee, is MIA’s new between 2012 and 2014, and Roadblocks to crime investigator recommends
vice president. She is a near-doubling of revenue Identity thieves ‘love small include shredding all sensitive
chairman of the Private — from a median of US$78m business’, according to a US documents, using very strong
Pension Administrator in 2012 to US$152m by the licensed private investigator, passwords (and changing
Malaysia; chairman of public- end of 2014. ‘A new order who reports that small fi rms’ them regularly), and keeping
listed company Dolphin for the global oil and gas data is easier for criminals to track of credit. ■
International; and a director industry has emerged over get into, and breaches are
of Sime Darby, BIMB Holdings the past decade as innovation harder to detect. Besides, it Compiled by Peta Tomlinson,
and Bank Islam Malaysia. unseated conventional can be lucrative, says John journalist
Accounting and Business 10/2015
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