Shared services - ACCA Global

16 Pages·2011·2.6 MB·English

Shared services
EmployEr
sharEd rElationship tEam
ssC lEad ContaCt
sErviCE foCus Laura Coughlan
Business relationship manager
01 4988914
KEy tEam ContaCts
With approximately 100 Shared Service Centres (SSCs) employing 35,000 people in
Ireland, ACCA Ireland has identified the sector as an important growth area for the Úna McShane
economy. ACCA Ireland members working in the sector are, in many cases, leading the Head of employer
relationships
way within large global organisations.
066 9158980
Of the SSCs operating in Ireland, approximately 70% provide finance and accounting
Brian Donnellan
services, creating a requirement for high-level financial expertise, which ACCA
Business relationship manager
supports through its flexible, global and accessible qualifications. 01 4988922
ACCA Ireland’s dedicated business relationship managers work directly with employers Helen Foy
in the SSC sector, forging closer relationships through a range of value-added services. Business relationship manager
Through this focus on shared services, we hope to share our commitment to working 074 9129846
with employers and ACCA members in this exciting and evolving field.
Shared services
(Left to right) Liz Hughes,
head of ACCA Ireland; Peter
Fagan FCCA; Tom Rushe
FCCA; Laura Coughlan,
business relationship
manager, ACCA Ireland;
Colm D’Arcy FCCA; Julie
Spillane FCCA; Jack Gogarty
FCCA; Caroline Curtis FCCA;
and Richard Lundon FCCA
sharEd sErviCEs
roundtablE
The first ACCA Ireland Shared Services *thEmEs from thE day
Roundtable, held on 6 May 2011,
brought together high-level FCCAs
within the sector in Ireland, sharing thE irish ssC as an EnablEr of growth…
perspectives on an area recognised
as being of strategic importance to Julie Spillane, Accenture
Ireland’s high-value services-driven I would see SSCs as being enablers in two ways. There is growth enabling
economy. The participants included: whereby, as the company expands, it doesn’t have to keep adding back-office
• Caroline Curtis FCCA, senior functions and can do things in a more streamlined and efficient way. But
director, Controllership Accounting & there is also the enabling that comes from working with the business – not
Reporting, EMEA, Yahoo; seeing your role as strictly back-office. For me, this is the major step up that
• Colm D’Arcy FCCA, director of SSCs have to make.
financial operations, Hertz;
• Peter Fagan FCCA, European Caroline Curtis, Yahoo!
financial controller, CIT; Six or seven years ago, the idea of an SSC was as an off-shore location that
• Jack Gogarty FCCA, director, pushed units. We use the term ‘centre of excellence’ in Yahoo! to challenge
Regional Finance Centre Europe and the idea that shared services is down the value chain. We see ourselves very
Eurasia, Coca-Cola; much as a core business support.
• Richard Lundon FCCA, chief
financial officer, IBM Ireland; Colm D’Arcy, Hertz
• Tom Rushe FCCA, director of The Hertz finance division in Dublin created its own mission statement and
finance, eSSC, Baxter; and, part of this is to be a revenue generator. There were some eyebrows raised,
• Julie Spillane FCCA, director, initially, as the SSC was seen as a cost. We highlighted all the financial
European Service Centre, Accenture. products and services we have helped to develop, and we are now recognised
The roundtable was chaired by Donal as having a distinct identity and a strategic importance within the corporate
Nugent, editor of AB Ireland. structure.
Shared principles moving up thE valuE Chain…
A common theme emerging from the
roundtable was the progression of the Tom Rushe, Baxter
shared service centre (SSC) from a We have found that, with any business acquisitions or divestitures over the
back-office function to an enabler of last five-to-six years, that the SSC has been at the centre of the integration
growth and product development. Key project from the start. We know the processes and we can get access to all
drivers of this process, as identified by the information. There isn’t another function within the company as well
the roundtable, included: placed as finance to take advantage of shared services to support such
• A culture of innovation in Irish SSCs, critical transactions.
focused on building relationships
and moving up the value chain; Colm D’Arcy, Hertz
• The availability of graduates with In an SSC environment, evolving a service is often a question of how well you
internationally recognised can mobilise a team to effect change and make it happen faster than it
accountancy qualifications, such as would have otherwise. The more projects you deliver on successfully, the
ACCA; more opportunities that come to you.
• The flexibility of the Irish workforce
and the attractiveness of Ireland as Richard Lundon, IBM
a place to locate; and, To play the role of trusted business adviser, SSCs need to build up
• A critical mass of SSCs in Ireland, relationships with the sales team and be there when they first engage with
supported by a pool of expertise of customers. In this way, you can really help to generate revenue and get deals
international calibre. across the table much quicker.
Shared services
thE appEal of irEland
SSCs. One of the key things it talked
as a loCation…
about was talent management, making
Caroline Curtis, Yahoo! sure good people are coming through.
The workforce in Ireland is very flexible. You find that, in other countries, people
Having a workforce that is willing to be aren’t as flexible about developing a
on calls at 7pm at night is hugely more rounded skillset as here.
valuable but not recognised as a selling
point. One thing I also feel we undersell Peter Fagan, CIT
is how geographically well placed we In the case of CIT, it’s taken us a long
are. In the morning you can call Asia time to get to where we are today, given sElling thE opportunity of
and, in the evening, the west coast of the complexity within our organisation sharEd sErviCEs as a
the US. and the increasing demands of the CarEEr…
regulatory environment in Europe. To
Jack Gogarty, Coca-Cola ‘lift and shift’ elements of that to, for Caroline Curtis, Yahoo!
There is a natural curiosity in the Irish example, an Eastern European location We probably need to work harder to get
workforce that leads them to challenge would require a lot of justification. across the message that working in
things and drive change. The quality of While Ireland may not be the cheapest shared services offers an incredible
the people, the mindset, the desire to place to do business, the skillset and opportunity – you get multiple
continuously improve and standardise the pool of talent you can draw on here exposure to different jurisdictions; you
things, on top of a business-friendly is very significant. get in on really interesting projects;
environment, were all part of the and you get to work with the front end
decision-making process for Coca-Cola. thE valuE of of the business from the start.
intErnationally
Richard Lundon, IBM Tom Rushe, Baxter
rECognisEd
The multi-national sector looks at We have an alumni of almost 20
qualifiCations…
Ireland and they see a well-educated people who used to work in the Baxter
labour pool and a controls-focused SSC, who now work elsewhere within
environment. It is, arguably, not the Caroline Curtis, Yahoo! the company. Showing this to
most cost-effective place to do To me, there is an integrity to the ACCA interviewees is an important selling
business, but we saw, in a recent IBM qualification. If you start some one in point.
report, that, despite the economic one role and want to move them to
challenges, Ireland was ranked as the another, with ACCA you can do that, Peter Fagan, CIT
number one destination, globally, for because it will not be completely Our head office function is in Blackrock
jobs by inward investment per capita. unfamiliar territory to them. and it looks after everything from
We have huge structural strengths and payroll, treasury tax, accounts payable,
assets in things like education, people Richard Lundon, IBM mergers and acquisitions,
and ease of doing business. Ireland, initially, was a cost play when reconciliations, tax and VAT. There can
it came to SSCs. Now, we have gone to also be a lot of travel involved. That
Tom Rushe, Baxter a quality play. By having the ACCA creates a lot of opportunities for your
Looking to the future, we are focusing, qualification, you know you are getting CV.
like every company, on drives for quality. You are also getting the
efficiency and cost reduction, while, at benchmark to measure other sKillsEts of a sharEd
the same time, enhancing the services qualifications against. sErviCEs aCCountant…
that we provide. There are lots of
opportunities to bring more work to Tom Rushe, Baxter Richard Lundon, IBM
the Irish team and, as that happens, By focusing on staff training and A shared services accountant is a
we’ll see the role of the SSC develop development and encouraging the well-rounded individual who has
further. pursuit of a professional accounting flexibility and communication skills. It
qualification, such as ACCA, we have is someone who can work with the
Julie Spillane, Accenture demonstrated that SSCs do need real business and with other accountants,
Accenture did the first ever survey on accountants with serious career who can stand in front of the guys in
Irish SSCs, comparing them to global aspirations. head office and make a
(Left to right) Jack Gogarty FCCA; Caroline Curtis FCCA;
Colm D’Arcy FCCA; Julie Spillane FCCA; Tom Rushe
FCCA; Peter Fagan FCCA; and Richard Lundon FCCA
Closing thoughts…
presentation,and, finally, one who is increased audit costs across non-US
willing and able to move comfortably entities have come about because IFRS Peter Fagan, CIT
from division to division. has changed the disclosure In an SSC, you can gain a huge amount
requirements. of experience in many areas in a
Colm D’Arcy, Hertz relatively short period of time, rather
For me, it’s about getting a person who …of irEland’s CurrEnt than hopping from company to
has accountancy skills but also the standing company.
ability to manage people in a
performance-based environment, often Julie Spillane, Accenture Julie Spillane, Accenture
across a wide spectrum of cultural I think it’s about managing the We have to understand that we can’t be
differences. We find one of the most communication channels. If all people cost competitive in some things in
important things is getting the job know is what they read in the papers Ireland and we need to let that go.
description right in the public domain. then you will have a problem but we That’s our only way to be credible
Until you do that, you find people may would, from a shared services about moving up the value chain.
not consider the role. perspective and a local manager level,
manage those relationships with the Colm D’Arcy, Hertz
Caroline Curtis, Yahoo! US and give them the other side of the Enabling is a growth process. It comes
You need accountants who know when story and I think that’s extremely back to project management and the
it is appropriate for them to make a important. You can’t deny the things ability to deliver. The more projects you
decision, who are not looking for that are happening but you’ve got to deliver on successfully the more
someone to tell them what to do all the balance it out. opportunities will come to you.
time.
Caroline Curtis, Yahoo! Tom Rushe, Baxter
faCing thE ChallEngE… For a lot of people I talk to socially, the Whether you decide to remain in
…of ifrs tax rate is an important thing. I don’t shared services or to use it as a
think we should underplay it. It is a gateway to another role, the experience
Julie Spillane, Accenture critical issue for Ireland Inc. What and respect that you attain from
IFRS is one of those areas that we in corporates don’t like is uncertainty and working in a highly-performing SSC,
shared services have to get out in front the one thing about the 12.5% rate is with other professional accountants,
of – we can’t wait for it to happen. We that it is certain. If you open that box cannot be overestimated.
have the academic qualifications and once then credibility is risked and, in
we need to build those skills and push my opinion, once that happens it’s Caroline Curtis, Yahoo!
them up the corporate ladder. over. We are at an inflection point as a
country with regard to negativity. We
Caroline Curtis, Yahoo! Richard Lundon, IBM need to start getting the good news
One of the challenges of IFRS is that it We need to stand firm. We have an stories out there. We have talent and
is purported to cost a lot more in audit educated, flexible, English-speaking ability and willingness, so let’s praise
hours and, therefore, costs. From a workforce and we have the low the positive.
corporate perspective, the message corporation tax and the time zone
that needs to be communicated, advantage. We have to spell out all of Jack Gogarty, Coca-Cola
globally, is that it’s not that Dublin has those advantages clearly. There is no recession in shared
become more expensive, it’s that services.
Shared services
A share of the action
Flexibility is the hallmark of the successful shared services accountant and
the career rewards are considerable for those with an aptitude for diversity
Is the shared services accountant a roles. ‘Accountants develop strong these skills in our teams to help lead
breed apart? The consensus view at technical skills coupled with an ability the conversion to IFRS. Operational
the recent ACCA Ireland Shared to prioritise to a degree that they most Excellence and Six Sigma skills are
Services Roundtable was that personal likely have not experienced in their always very useful, particularly when a
characteristics are crucial to success career to date,’ he says. Spillane centre has a global remit.’
in this field. The ideal shared services agrees, and sees building a talent base
accountant was seen to be an as a two-way street between employer Pathways
individual with good communication and employee. ‘We employ ambitious The dynamic career path that
skills and flexibility in their approach people looking to build their skills and accountants can hope to follow is one
to work; who can move comfortably experience. That means we have a of the attractions of the shared
from division to division within the responsibility to constantly innovate to services route. ‘In IBM, the Accounting
finance function; and has the ability to retain the best and brightest by
Shared Services Centre has proven to
manage diverse groups of people. keeping them engaged with their work
be a fabulous launching pad for
This rounded skillset means there is and our company.’
furthering careers,’ O’Brien explains.
no single defining attribute of a good
‘People have progressed into team lead
shared services accountant. ‘Strong Past experience
and management roles and moved on
technical accounting expertise is a When recruiting for the sector, certain
to areas such as finance and planning,
given but strong leadership, previous experience outside the field
pricing, tax, treasury and business
programme management, business can make a potential candidate
controls, as well as business
process re-engineering and relationship attractive to employers. ‘Where a
operations.’ Spillane highlights her own
management skills are also critical,’ shared services centre supports EMEA,
CV as an example of what is possible.
EMEA director for shared services and an ability to communicate in the
‘I now lead more than 1,000
Ireland finance director at Accenture language of the country you support is
employees, from Argentina to the
Ireland, Julie Spillane, says. critical. This, along with an ability to
remain technically flexible, allows a Philippines and six countries in
Opportunities to grow successful candidate to quickly between. This role means I now work
David O’Brien, EMEA software acclimatise to a shared services alongside our global vice presidents of
accounting projects manager, IBM environment and marks them out as a finance on business strategy, delivering
Ireland, believes that, by playing an potential top talent,’ O’Brien says. substantial savings to our bottom line
integral role in shaping and influencing For potential candidates, ‘staying every year. There are multiple career
how deals are constructed with clients, ahead of what is important to the options in shared services open to
the shared services accountant gains industry is key,’ Spillane adds. ‘Right people who take a flexible approach
invaluable opportunities as they now, IFRS skills are very important and and have a desire to continually build
progress their careers into more senior we are actively investing in building new skills.’
Ireland to the fore
Ireland is the location of choice for some of the most innovative global
companies in ICT, digital media, life sciences, engineering, business
and financial services, as Emmanuel Dowdall, IDA Ireland, explains
Ireland is home to many well- organisations to develop their SCCs. As Enabling our future
respected global shared services a gateway to the EU, Ireland has the It is essential that shared services
centres. The shared services sector in potential to carve out a niche in continue to be promoted at a national
Ireland is a key strategic component knowledge-intensive activities such as level as a progressive career choice for
of our economy with over 100 centres fraud, analytics, executive graduates. Irish SSCs focusing on
employing 35,000 people. Ireland not compensation and risk. talent management and collaborating
only offers an educated, skilled and with higher education institutions to
flexible workforce, it offers an Forum develop a pipeline of talent to perform
excellent track record of reputable The Shared Services Centre Forum was ‘value add’ services is the way forward.
service centres and a favourable established in 1998 with the aim of Finally, Irish SSCs are capitalising on
business environment. getting all shared services globalisation by adopting greater
Ireland also facilitates industry organisations to work together off-shoring capabilities for knowledge-
collaboration to ensure we continue to addressing common issues intensive support functions. Ireland
perform well and remain an attractive encountered at an operational level continues to promote itself as a
location for further investment in the embraced by both private and public desirable location for multinational
global shared services sector. sector organisations. In the wake of a organisations and economic
Additionally, Ireland allows companies global recession that has seen competitiveness. The following are
adapt their business models, with organisations across the board taking a some of the key marketing messages
many examples of traditional shared closer look at their back-office directed at those choosing Ireland as a
services companies transforming their processes, the SSC is an increasingly base for foreign direct investment:
operations to take on a more complex attractive option for those looking to
range of shared service activities. The enhance the efficiency of corporate • Competitiveness improving
country provides a flexible environment support functions. As the industry significantly – business costs have
allowing this transformation to happen. grows in Ireland, the forum is all become more competitive.
Today, shared service centres (SSCs) increasingly important in bringing • Exports continue to perform very
here design, own and run activities on these organisations together to address strongly (+9.4% in 2010).
behalf of their parent corporations, a wide range of issues with the focus • Our 12.5% corporation tax rate
predominantly on a global basis. on sharing experiences without remains – and will continue to
compromising the values or remain – at the heart of our
The future sensitivities unique to each member. strategy to attract foreign direct
Ireland is viewed as an extremely Run exclusively by the members, for investment.
attractive location for shared services, the members, with an elected steering • Government is committed to public
with over 25% of SSCs judged to be committee, the group comprises of finance and structural reform.
shared service masters, compared to senior executives from the member • The current global economic
just 8% of SSCs globally. SSCs organisations. Its existence is now situation hasn’t had any negative
reported satisfaction in Ireland and considered a competitive advantage for impact on the flow of companies
immediate ambition to expand and IDA in enticing new shared services investing in Ireland.
improve. In order to realise a high-value investment into Ireland. The forum • Ireland’s key strengths still remain.
shared service proposition, Ireland shares the knowledge and experiences
needs to focus on talent management. of member organisations by Emmanuel Dowdall is global head of
Integrated business services will maximising synergies generated from content, Consumer & Business
enable Ireland to attract new business, the combined interests of the group Services IDA Ireland. Email
and remain an attractive location for and organisations they represent. [email protected]
Shared services
Move closer
Ciarán Ó hÓgartaigh on the move from
US GAAP to IFRS and its significance to
the shared services sector
An increasing number of international The Securities and Exchange instructions in sectors such as oil and
companies are preparing their Commission has estimated that the gas, insurance, financial institutions
financial statements under average US company adopting IFRS and not-for-profits.
International Financial Reporting would incur costs of approximately As regards more specific differences
Standards (IFRS) rather than US GAAP. 0.13% of revenue. The operational between IFRS and US GAAP, the IASB
Since 15 November 2007, foreign efficiencies offered by shared service and the FASB have been working on
registrants on US securities exchanges centres may serve to mitigate some of ‘converging’ their accounting standards
may prepare their financial statements these costs. for over a decade. As a consequence,
under International GAAP (as defined the convergence of several standards
by the IFRSs issued by the IASB) Differences in approach has already been completed, including
without providing 20-F reconciliations. Sometimes the difference between ones on business combinations and
Further, in May 2008, the AICPA’s IFRS and US GAAP is called a fair value measurement. However, some
governing council approved ‘principles-based’ approach (IFRS) substantive differences remain. These
amendments to their code of versus a ‘rules-based approach’ (US include the valuation of non-current
professional conduct, which GAAP). This characterisation is assets, leasing, revenue recognition,
recognised the IASB as an somewhat simplistic as there are some and other comprehensive income. This
international accounting standard principles under US GAAP and some is not an exhaustive list and preparers
setter. rules under IFRS. It is fairer to say that of financial statements for entities
That removed a potential barrier to international accounting standards, in moving from IFRS to US GAAP should
the use of IFRS by US private general, provide less detailed guidance consult with their professional advisers
companies and not-for-profit than US accounting standards. This is as regards the details of particular
organisations, who now can choose particularly visible in the case of transactions.
whether to follow IFRS (although the revenue recognition, where US GAAP
numbers of such entities availing of provides detailed guidance notes based Measurement
this choice is very limited). Conversion on different types of revenue The discussion that follows focuses
to IFRS is not without cost, in transactions. US GAAP also provides briefly on differences between IFRS
particular IT and staff training costs. more extensive industry-specific and US GAAP requiring a change in
Fortunately, US GAAP requires that assets. IFRS allows the valuation of
entities using LIFO disclose the FIFO non-current assets under the historical
inventory value. Therefore, sufficient cost model or at a revalued amount.
information will generally be available This is unlikely to change in the context
to adjust the LIFO inventory values in of convergence between US GAAP and
US GAAP financial statements to the IFRS as US policy makers are wedded
FIFO values allowed by IFRS. to the reliability of historical cost in the
Impairment is another area of valuation of non-current assets.
difference in the measurement of However, given the choices allowed
assets: IFRS uses a single-step method under IFRS, entities moving from US
for impairment write-downs which GAAP to IFRS may continue to value
requires that impairment testing is non-current assets under the historical
performed if the impairment indicators cost model (as required under US
specified by IAS 36 Impairment of Assets GAAP) and still comply with IFRS
exist. US GAAP has a two-step (which permits the use of historical
approach which requires that a cost). Readers are advised to keep an
recoverability test is performed first. eye on the project through the
Impairment testing is only performed www.ifrs.org and
under US GAAP when it is determined www.iasplUS.com websites.
that the asset is not recoverable. This Ciarán Ó hÓgartaigh is professor of
makes impairment testing and accounting at UCD.
write-downs more likely under IFRS. Email [email protected]
Re-measurement
Development costs may also require
*aCCa
re-measurement under IFRS. Some
measurement rather than those that development costs must be capitalised advisory sErviCEs
simply require a change in under IFRS if specific criteria are met
classification. Changes in classification as set out by IAS 38 Intangible Assets.
are less problematic than Under US GAAP, with the exception of Unsure of the accounting for a
measurement differences. An example specified software development costs particular transaction? ACCA
of these include extraordinary items which are required to be capitalised provides a free technical advisory
which are not separately classified in under FAS 86, Accounting for the Costs service available to all members,
the income statement under IFRS of Computer Software to be Sold, Leased covering practical issues that they
while, under US GAAP, they are shown or Otherwise Marketed, all development may encounter in their work in the
below the net income. Measurement costs are expensed. This results in a areas of accounting, auditing,
differences are, potentially, more costly clear conflict between IFRS, which company law, reporting obligations
as they may require additional costing requires capitalisation in specified and investment business.
systems which recalculate the cost of, circumstances, and US GAAP, which Advice for Irish ACCA members on
for example, inventory or other assets. prohibits capitalisation except in any area of accounting is available
When measuring inventory under specified, limited circumstances. from Aidan Clifford by e-mail
IFRS, the use of ‘last in, first out’ There are, however, some differences [email protected] or
(LIFO) is specifically prohibited. Under between IFRS and US GAAP which, 01 498 8907. Advice can also be
US GAAP, companies have the choice while fundamental, do not necessarily obtained from ACCA UK on
between LIFO and ‘first in, first out’ require a change in measurement. This 00 44 207 059 5920 or from any of
(FIFO). While some discussion has is where IFRS is more promiscuous the ACCA technical advisers located
taken place in the US with regard to than US GAAP and, therefore, what is worldwide. We will tell you where the
the use of LIFO, it is likely to continue required under US GAAP is permitted latest standards are located, where
as an option under US GAAP, primarily under IFRS. The valuation of non- you can view worked examples and
for tax reasons. Therefore, entities who current assets is a good example of can talk you through particular
may have complied with US GAAP by this. US GAAP requires the use of the aspects of the requirement. All
using LIFO would be required to adopt historical cost model and does not queries are confidential.
FIFO or average cost under IFRS. permit the revaluation of non-current
Shared services
Dynamic currency
Dynamic currency conversion (DCC)
has its origins firmly rooted in Ireland,
where the concept was developed in
conversion the 1990s in a small town in Kerry.
It has grown to become a significant
business, which merchants have
sought to maximise and which the
Colm D’Arcy FCCA on a financial service credic card companies (VISA and
developed in Ireland of particular interest in MasterCard primarily) have tried
to minimise and standardise, with
the shared service environment varying degrees of success. The
concept is also presented under the
guise of ‘customer-preferred currency’
(CPC), as merchants have moved to
make the idea more palatable to their
customers.
DCC is only available where there is a
difference between the denominated
currency of your credit card and the
currency in which you are transacting.
So, if you have a credit card issued by
an Irish bank, DCC will only be possible
where you travel outside of the
eurozone.
How it works
In the past, merchants would simply
send their accumulated daily
transactions to an acquirer who would,
in turn, settle the next day in the
transacting currency. The acquirer
would then convert this transaction
into the card holders’ currency and
send this to the issuing bank for
settlement. Herein lies the opportunity:
the exchange applied includes an
uplift/administration fee, which is built
into the exchange rate. The rate of the
uplift applied differs, depending on the
issuing bank, but can vary from 1% to
4% worldwide.
Merchants have become much more
active now in performing this
conversion for the customer and,
thereby, removing the need for the
banks to undertake this task. Of
course, the merchants will also charge
for this and they can set their own rate.
The rules
This may appear very easy but there
are certain rules which the credit card
companies have put in place to try and