Ab Int April 2017

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AB Accounting and Business

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The magazine for finance professionals 04/2017
AB Accounting and Business 04/2017

She whiz Buckle up
We talk to Rachel Grimes, who has made Holding your nerve in the face of
it to the top as IFAC president global political uncertainty
The right fit Chief enabling officer

How to tailor capacity building in African countries Sanjay Rughani, CEO, Standard Chartered Tanzania
Think Ahead Chain gang Finance turns to blockchain technology Revolving doors Why skills mobility matters Think Ahead
CPD technical The IASB’s Conceptual Framework Egyptian journey A profession on the move
INT_Cover.indd 1 08/03/2017 16:59

-UK_Ads-Apr17_600dpi.indd 12 06/03/2017 15:45
Welcome 3
Welcome
Riding out the volatility
Not so long ago, political Comprehensive Economic and Trade Agreement is expected to
risk was a concern only bring opportunities for those with the right skills and experience.
for companies investing in In our big interview this month, we speak to Sanjay Rughani,
developing countries. But the CEO of Standard Chartered Bank Tanzania, who crossed
amid the repercussions the divide after more than a decade in CFO roles. He thinks of
of the Brexit vote and the election of Donald Trump, its himself as a chief enabling officer, and harnesses his finance skills
relevance has spread. And with Germany, the Netherlands, in the job of CEO. Read his story on page 12.
France and possibly Italy all heading for the polls this year, We also profile Rachel Grimes, IFAC president and former
and populist rhetoric threatening the European Union and president of ACCA’s strategic alliance partner Chartered
the single currency, the uncertainty is set to continue. In an Accountants ANZ, whose belief in wider service to the
article on page 36, we look at what is at stake and what community was instilled in her by her parents (page 56).
companies can do to ride out the volatility. On page 60 we report on ACCA’s seventh public sector
Carried by the populist tide, countries that in the past conference, which took place in South Africa in February.
welcomed foreign talent are putting up barriers to mobility. Delegates learned how accountants can help shape the
As our article on page 16 reveals, however, as one door closes public services of the future, achieving value for money
another opens – some developing countries are taking up the and sustainability.
slack, making it easier for highly skilled professionals to move to Finally, on page 33, we look at approaches to building
their shores in the belief that fresh ideas will benefit growth. accounting and financial management capacity in Africa.
And it is not only developing countries that are laying out the
welcome mat – in Canada, as our columnist Ramona Dzinkowski Annabella Gabb, international editor
notes on page 20, the EU’s ratification of the EU-Canada annabella.gabb@accaglobal.com
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INT_Welcome.indd 3 08/03/2017 15:36

4 Contents
News
AB International Edition 6 News in pictures
April 2017 A different view of recent
headlines
Volume 20 Issue 4
8 News roundup
International editor Annabella Gabb
annabella.gabb@accaglobal.com +44 (0)20 7059 5081 A digest of all the latest
news and developments
Editor-in-chief Jo Malvern
joanna.malvern@accaglobal.com +44 (0)20 7059 5818
Focus
Asia editor Colette Steckel
colette.steckel@accaglobal.com +44 (0)20 7059 5896 12 Interview: Sanjay
Rughani Standard 6
Ireland editor Pat Sweet Chartered’s Tanzania CEO
Digital editor Jamie Ambler likes to think big
Video production manager Jon Gilmore
16 Halt! Who goes
Sub-editors Dean Gurden, Peter Kernan, Jenny Mill, there? No-entry signs
Vivienne Riddoch
may be going up in some
Digital sub-editors Eleni Perry, Rhian Stephens countries, but others are
welcoming talent in
Design manager Jackie Dollar
jackie.dollar@accaglobal.com +44 (0)20 7059 5620
Designers Bob Cree, Suhanna Khan, Robert Mills

Comment
20 Ramona Dzinkowski
Production manager Anthony Kay CETA will help to increase
anthony.kay@accaglobal.com
labour mobility
Advertising Richard McEvoy
rmcevoy@educate-direct.com +44 (0)20 7902 1221 21 Alnoor Amlani
Head of ACCA Media Chris Quick It’s time to stop the 16
chris.quick@accaglobal.com +44 (0)20 7059 5966 exploitation of Africa
Printing Wyndeham Group Pictures Getty
22 Brian McEnery
ACCA
President Brian McEnery FCCA Change in corporate
Deputy president Leo Lee FCCA culture must be top-down
Vice president Robert Stenhouse FCCA
Chief executive Helen Brand OBE
Corporate
ACCA Connect 23 The view from
Tel +44 (0)141 582 2000
Fax +44 (0)141 582 2222 Darshani Workman of
members@accaglobal.com Property Consultancy
students@accaglobal.com
info@accaglobal.com Services, Barbados, plus
snapshot of oil and gas
Accounting and Business is published by ACCA 10 times per year. All
views expressed within the title are those of the contributors.
24 Paper chase
The Council of ACCA and the publishers do not guarantee the accuracy
of statements by contributors or advertisers, or accept responsibility for Effective boards need the
any statement that they may express in this publication. The publication
of an advertisement does not imply endorsement by ACCA of a product right information 24
or service.
Copyright ACCA 2017 Practice

No part of this publication may be reproduced, stored or distributed
without the express written permission of ACCA. 26 The view from
Gregory Badley of
Accounting and Business (ISSN: 1460-406X, USPS No: 008-761) is
published monthly except July/August and Nov/Dec combined issues Gregory Badley, Canada,
by Certified Accountant (Publications) Ltd, a subsidiary of the Association
of Chartered Certified Accountants, and is distributed in the USA by
plus snapshot of tax
Asendia USA, 17B South Middlesex Avenue, Monroe NJ 08831 and digitalisation
additional mailing offices. Periodicals postage paid at New Brunswick NJ.
POSTMASTER: send address 27 Moving forward

changes to Accounting and Business,
701C Ashland Avenue, Folcroft PA 19032 USA Hazem Hassan, chairman of
ISSN No: 1460-406X Egypt’s professional body,
on the tough task ahead
The Adelphi, 1-11 John Adam Street,
London, WC2N 6AU, UK
+44 (0) 20 7059 5000
www.accaglobal.com Audit period 30 Standard bearer
July 2015 to IAASB member and former
June 2016
151,120 ACCA president Brendan 27
Murtagh on SME support
Accounting and Business 04/2017
INT_Contents.indd 4 08/03/2017 15:32

Contents 5
33
CPD
Get verifiable CPD
units by reading
technical articles
Insight
33 Individual approach
One-size-fits-all capacity
building will not succeed
in Africa
36
35 Graphics
A look at what CEOs are
thinking 56
36 Uncertain future
Elections in Europe could
have a signficant impact
on companies
39 Slow and steady

Blockchain will transform
accountancy – over time
42 Smart choice
Shared services may suit
aspiring CFOs 39
44 Careers
Be proactive, not
pushy; plus the perfect
international assignment
46 Delicate approach
Soft skills are vital for 60
change management
projects to succeed
People
48 Look ahead 56 Interview: Rachel
Successful leaders are Grimes We talk to the
prepared for change president of IFAC
Technical 46 ACCA
49 Grand designs 59 ACCA-X A brace of
A look at the key awards in London and
concerns around the Brussels for ACCA’s online 62
IASB’s Conceptual learning platform
Framework 64 Women in finance
60 Change agents A Dubai breakfast event
52 IPSAS 40 How the ACCA’s global public offered food for thought
standard aims to bring sector conference takes
clarity to public sector place in South Africa 66 Update
combinations The first of this year’s
62 Next step President’s Debates, which
54 Technical update The ACCA Qualification took place in Brussels,
The latest on audit, tax offers access to focused on social and
and financial reporting exemption-based MBAs natural capital
INT_Contents.indd 5 08/03/2017 17:00

6 News | Pictures
► Taxing times
Saudi Arabia plans to
introduce an IMF-
backed value-added
tax of 5% on certain
goods in response to
the continuing slump in
oil prices
▲ Water worry
Egypt and Sudan
are concerned about
modifications to the
construction of the
Ethiopian Renaissance
Dam, which Ethiopia did
not tell them about
▲ Shake on it ▲ Happy memories

Japan’s prime minister Barack and Michelle Obama
Shinzo Abe and US have signed book deals said
president Donald Trump to be worth over $60m with
have agreed to establish Penguin Random House.
a dialogue on bilateral The memoirs will focus on
trade between the two their White House years
countries
INT_Newsinpix.indd 6 08/03/2017 15:34

Pictures | News 7
◄ Picture imperfect
The role of PwC, which
oversees the Oscars
prizegiving process,
faces investigation after
La La Land, rather than
Moonlight, was initially
named Best Picture
▼ Tax jackbot ▼ High rise

Bill Gates, Microsoft Cairo is set to become
founder, has said a tax the world’s fastest-
on robots would be growing city in 2017,
needed to compensate with its population
for any tax deficit forecast to grow by half-
caused by jobs lost to a-million this year, from
automation 22.9 million in July 2016
04/2017Accounting and Business
INT_Newsinpix.indd 7 08/03/2017 15:35

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
Samsung arrest which it has written down. been frozen since 2013 as a On brand
Samsung’s interim chairman The company explained result of investigations. PwC PwC has been named
Lee Jae-yong has been that ‘the disclosed financial was appointed in 2015 to the world’s most valuable
indicted in South Korea figures are under review by audit the Vatican accounts, but professional services brand
on charges of bribery. The the independent accounting was reportedly removed last in the latest Brand Finance
company is accused of auditor, and there is the year amid a struggle between league table, and was one of
having made donations to possibility of amendment’. cardinals for control of the only 10 companies to receive
foundations run by Choi Soon- The crisis has led to doubts papal finances. the top score of AAA+ on its
sil, a friend of President Park about Toshiba’s commitment brand strength index. The
Geun-hye, in order to obtain to a major new nuclear IFAC endorses IR index was compiled prior to
government support for the power station in the UK. The The International Federation the Oscars, when the PwC
group’s restructuring two years company has also announced of Accountants (IFAC) has partners in charge of the
ago. Lee, who is deputising the sale of its medical endorsed the use of integrated winners’ details gave the
for his ill father Lee Kun-hee, equipment leasing subsidiary reporting. In its paper presenter the wrong envelope
denies the charges. Samsung to Canon. Enhancing Organizational for the Best Picture category.
also denies wrongdoing while Reporting: Integrated However, the firm has fallen to
accepting it made substantial Papal accounts frozen Reporting Key, IFAC said it 66th place in the table of all
donations to two charitable The Vatican has frozen ‘considers integrated reporting companies, from 57th last year.
foundations, but without more than €2m of allegedly as the way to achieve [a] more Accenture is 71st, up from 89th
expecting favours in return. laundered money after the coherent corporate reporting in 2016. Deloitte is 77th, down
Vatican Financial Intelligence system, fulfilling a need for a from 69th, while EY is 98th,
Toshiba delays results Authority noted suspicious single report that provides a down from 91st. KPMG is the
Toshiba has delayed activity. Pope Francis is fuller picture of organizations’ only one of the Big Four firms
publication of its third-quarter seeking to clean up the ability to create value over outside the top 100 global
results following increased Vatican and Vatican Bank time’. It added that it ‘strongly brands, at 124th, down from
pressure over the performance after international regulators supports’ the International 107th last year. Google is rated
of its Westinghouse nuclear and law authorities reported Integrated Reporting Council the world’s most valuable
subsidiary, the value of concerns. In all, €13m has (IIRC) and the IR Framework, brand – overtaking Apple,
and that it believes the which is now second.
integrated report can be
The gender gap: $2 trillion a year used as an ‘umbrella’ for an Risk the big concern
organisation’s ‘broad suite of Risk management is the
The latest PwC Women in Work Index reveals that gender reports and communications’. major concern of audit
pay parity could add US$2 trillion a year to female earnings. committees, according to a
The firm warns that on current trends it will take decades, Blockchain deal KPMG survey of more than
possibly centuries, before there is genuine pay equality. KPMG International is setting 800 audit committee members
Yong Jing Teow, co-author of the associated Closing the up Blockchain Node innovation and chairs in 42 countries.
pay gap report, said: workspaces in partnership More than 40% of members
‘There is much more with Microsoft to create believe their risk management
that businesses and and demonstrate uses for programmes and processes
governments could do blockchain technology. The first require ‘substantial work’, and
to address the causes are in Frankfurt and Singapore, a similar percentage admit it is
of the gender pay and another is planned for New increasingly difficult to oversee
gap, which are deep- York. Jens Rassloff, KPMG’s major risks. Audit committees
rooted. Policy levers global head of alliances, expressed general confidence
that improve access to said: ‘The Blockchain Nodes in financial reporting and
affordable childcare and the Microsoft alliance audit quality, but ranked legal
and shared parental enable fresh approaches and regulatory compliance,
leave have been shown to solving clients’ complex cybersecurity risk, company
to get more women in issues as well as opening the risk controls, tone at the top
quality work.’ door to new opportunities.’ and organisational culture as
See also page 40. among their top challenges.
INT_A_newsroundup.indd 8 08/03/2017 17:01

Roundup | News 9
Prize for ACCA-X announced the changes in his

ACCA has been highly Budget, which included a 10% Reach magazine
commended for its ACCA-X surcharge on the country’s
programme in the Best richest taxpayers. Reach magazine marks the launch of the strategic alliance
Training Initiative category at between ACCA and Chartered Accountants ANZ.
the 2017 European Association Greek debt warning
Awards, which took place in Debt relief by EU member Articles on a range of current issues highlight the common
Brussels. Reza Ali, director states is essential for challenges facing professional accountants across the
of new ventures at ACCA, Greece’s economy, which the world, whatever their role.
said: ‘The awards provided International Monetary Fund
an excellent platform to (IMF) says ‘cannot grow out
showcase the groundbreaking of its debt problem’. The IMF
work that ACCA-X is doing in argues that there must be
bringing financial literacy skills twin processes of economic
to a wider audience.’ ACCA reform and debt relief. An
also reached the finals of two IMF spokesman said that
other categories – Overall while domestic Greek reforms
Best Association and Best remain necessary ‘the high
Networking Event (for the societal costs have weakened
President’s Debate 2016). support [in Greece] for
ongoing reforms’, adding that
EY Indonesia audit fail ‘for the IMF to come on board Get the Reach magazine app for:
EY’s Indonesian member firm with a financing arrangement,
KAP Purwantono, Suherman that debt relief is equally
* iPhone or iPad
& Surja has been censured important as the agreement * Android
and fined US$1m by the US on the strong policies’. * Kindle
Public Company Accounting
Oversight Board (PCAOB) for Romanian retreat
audit failure, non-cooperation Romania’s government has Or read Reach online at accaglobal.com/alliance
and violation of quality abandoned proposals to
control standards. A US-based relax anti-corruption laws
partner who reviewed the after mass demonstrations for multinationals in the aid to tax collection and is not
2011 audit of the telecoms on the streets of the capital, country (to remove the latter’s connected with allegations
company Indosat informed Bucharest. Thousands of special privileges, in line of any criminal activity by the
the engagement partner that protesters flooded the streets with international standards). taxpayer. IRS is applying the
insufficient evidence had been demanding the retention of Left-wing political groups sanction from the first half of
provided about 4,000 leases laws disqualifying politicians campaigned against the this year.
for cellular towers. Despite who had taken bribes. With reforms as being too generous
the concerns, the regional President Klaus Iohanis to most businesses and likely Islamic finance backed
professional practice director backing the protesters, the to lead to budget deficits in Islamic finance has the
authorised the release of the proposals became a test many cantons. Pascal Saint- potential to reduce global
audit report. New audit work of strength between the Amans, head of tax at the income inequality, enhance
papers that hid the violations legislature, which brought Organisation for Economic Co- shared prosperity and help
were created in advance of a forward the plans, and the operation and Development the UN achieve its sustainable
PCAOB inspection. head of state. According to (OECD), said: ‘Switzerland’s development goals, argue
Laura Codruta Kovesi, the partners expect that it will the World Bank and the
India bans big money head of Romania’s anti- implement its commitments in Islamic Development Bank
India has banned cash corruption agency, nearly a reasonable timeframe.’ in their first global report on
transactions over Rs300,000 1,300 officials were prosecuted Islamic finance. With strong
(US$4,500) and is halving tax last year, including three Passports sanction links to the real economy,
rates for lower earners from government ministers, 17 US citizens with unpaid back Islamic finance can improve
10% to 5%. Finance minister lawmakers and 16 magistrates. taxes are poised to lose their the stability of the financial
Arun Jaitley explained: ‘The passports, under moves sector, while bringing into the
predominance of cash in the Swiss reject tax reform initiated by the Internal formal financial system people
economy makes it possible for Swiss voters have resoundingly Revenue Service (IRS). currently excluded from it for
people to evade their taxes.’ rejected a government Congress passed laws last year cultural or religious reasons.
India hopes to move the proposal to reform its that gave the IRS the power ‘By making people direct
basis of the country’s financial corporate tax system. The to revoke or deny passports holders of real assets in the
systems to digital transactions reform would have cut tax for individuals with unmet tax real sector of the economy, it
to reduce corruption as well rates for Swiss companies liabilities in excess of $50,000. reduces their aversion to risk,’
as tax avoidance. Jaitley to the same level as those The move is intended as an it added. »

10 News | Roundup
Africa ‘must go global’

Urban development in Africa Multinationals ignore writing on overseas assignment tax wall
will not be accompanied by
the same positive economic Businesses have yet to get to grips with the tax implications of increased global mobility,
achievements as in Asia unless according to PwC’s report, Managing mobility in a world shaped by BEPS. With the OECD’s
its major cities strengthen their Base Erosion and Profit Shifting (BEPS) project focusing on the tax implications of an
global links, warns the World increasingly mobile workforce, PwC found that only 9% of companies surveyed had changed
Bank. It predicts that almost the way they manage employees who work internationally. See also page 16.
200 million people will migrate
to Africa’s cities by 2025, but 71% of millennials 31% of companies
without better connectivity, say they want and don’t know the exact
expect an overseas number of their
efficiency and more assignment during employees working
investment, the continent will their career internationally
miss out on the dividends
of urban development. The
World Bank report Africa’s
Cities: Opening Doors to the
World warns that at present Mobility levels 20% of
the continent contains ‘local have increased by international
25% over the past assignments now
cities’ that trade locally decade, and could last less than 12
produced goods and services, grow by a further months, compared
and have little connection to 50% by 2020 with 10% in 2002
global markets.
MYOB buys PPS 89% of organisations

Australian accountancy 12.2% of plan to increase their
employees number of globally
business MYOB has acquired mobile workers over
work overseas
payment processing software every year the next two years
provider Paycorp Payment
Solutions for A$48m (US$36m). Source: PwC, Managing mobility in a world shaped by BEPS
‘We know from our clients
that cashflow is consistently
the number one pain point for impact from the Brexit vote. alternative investments and Newell Brands, American
small business operators, and Investors cite high volatility in infrastructure; technology, Electric Power and Johnson
we are delighted that we can currencies, commodities and manufacturing and mining; Controls International.
bring together a solution that capital markets as top risks for and aerospace, information
enables our clients to reduce foreign direct investments into and communications Global takaful
administration time and Europe, said EY. Andy Baldwin, technology, and renewables. Harmonisation of Islamic
costs, and improve cashflow EY area managing partner for The UAE’s banking sector is finance regulation and sharia
through the automation of Europe, Middle East, India also consolidating, with the compliance will be key themes
payment services for their and Africa, warned: ‘Europe National Bank of Abu Dhabi at the 12th annual World
businesses,’ said MYOB chief is in danger of developing and the First Gulf Bank coming Takaful Conference, which
executive Tim Reed. MYOB an emerging market together to form the largest takes place in Dubai in April.
revenues grew by 13% in the geopolitical risk profile without bank in the Middle East, with ‘The World Takaful Conference
year ending December 2016, commensurate returns.’ assets of US$181bn. will play a significant role in
to A$370m. shaping the global takaful
Sovereign funds merge BDO tops new client list [Islamic insurance] industry,
EU investment ‘on track’ A US$125bn Abu Dhabi state BDO won the most new US and I look forward to
Investors remain committed investment fund will launch Securities and Exchange discussing new strategies that
to Europe despite Brexit, in May. Mubadala Investment Commission audit clients last will unlock the true potential
according to EY’s 2017 Company is a merger between year, according to figures of the sector,’ said Abdulla
European attractiveness the sovereign wealth funds compiled by Audit Analytics. Mohammed Al Awar, CEO of
survey, Plan B… for Brexit: A Mubadala Development The firm won 32 new audit the Dubai Islamic Economy
boardroom view on Company and International engagements, a net gain Development Centre, which
investment and location Petroleum Investment of 10. Marcum also had a is co-hosting the conference.
strategies in Europe. Some Company, and will assist the net gain of 10 audit clients, The event is helping Dubai
56% of global investors plan state in moving its economy having won 18 new clients in in its effort to position itself
to expand their presence in away from oil dependency. The 2016. PwC did best in terms as the world capital of the
Europe, compared with just fund contains four investment of the market capitalisation Islamic economy. ■
36% last May. But more than platforms: petroleum of new clients, winning
70% of investors have felt an and petrochemicals; contracts that included Paul Gosling, journalist

-UK_Ads-Apr17_600dpi.indd 4 06/03/2017 15:44
12 Focus | Interview
Virtuous circle
Honorary ACCA member Sanjay Rughani, CEO of Standard Chartered for Tanzania, says
his background in finance underpins his leadership role
S
anjay Rughani ACCA is comfortable with leadership.
Not only is he CEO of Standard Chartered for Tanzania Sanjay Rughani spent eight years in
in East Africa, he is also deputy chair of the Tanzania audit before going into business,
Bankers Association and deputy chair of the Professional working first for a foreign exchange
Accountants in Business committee of the International trader, then for a stockbroker. He
Federation of Accountants (IFAC). He was nominated for
that last role by ACCA.
talks about his desire to ‘dirty your
hands’ – not just looking at the
CV
CEO commonly stands for chief executive officer, but Rughani numbers, but making them happen.
prefers to think of himself as the chief enabling officer. ‘It’s all From stockbroking, which taught him about a wide range
about achieving big,’ he says, ‘driving for a bigger purpose, of sectors and their strategies, he moved into banking.
creating success – inspiring and enabling things that have not yet Starting as a management accountant for Standard
been done.’ He sees the role as requiring thought leadership, Chartered – a position requiring finance and business skills
creativity and innovation, including testing out appetite for risk in – he became a regional finance manager for Africa and, in
order to maximise organisational, team and individual potential. 2002, the CFO in Tanzania. This kick-started a CFO career
He enables and makes connections in three areas: vision, of more than a decade before he moved into the CEO’s
performance and operations. chair in December 2015.
‘I’m the conduit for progress. The CEO’s role is about driving He is fascinated by the relevance of professional
and articulating the vision towards long-term organisational accountancy skills in business, hence his role at IFAC –
success,’ Rughani adds. He puts a major emphasis on performance he has been a member of its Professional Accountants
too – the numbers but also the efficiency and the client-centricity in Business committee since June 2015. ‘How do we
of the organisation. ‘Performance includes upholding and accountants have an impact in a business?’ he asks.
continuously improving high professional standards.’ ‘We need to think beyond accounting, into areas such
The final criterion in Rughani’s definition of the job of a CEO as technology, risk management, the environment and
is to deliver operational excellence. ‘You have to be efficient sustainable development. I am an advocate of the
and nimble and really drive the people agenda. As a CEO you accountancy profession but we need to make sure we
are in the people business. You lead the people and they drive remain relevant. As CEO I can see the changes and so
the organisation.’ can ask how accountants should prepare themselves to
Underscoring that is encouraging shared value and integrated support the business agenda.’
thinking. ‘What we do has a big impact on society, community and Rughani was granted an honorary membership
environment, and we have to be aware of that bigger purpose for following many years of collaboration with ACCA. His
the world we are in and tackle shared issues together.’ role as deputy chair of the Tanzania Bankers Association
involves dealing with corporate governance issues
CFO to CEO – the jump and developing the financial industry, and he will be
There is enduring fascination with making the switch from collaborating with regulators to help define Tanzania’s
finance to wider organisational responsibility – and Rughani banking regulatory journey. He says: ‘By sharing my
can speak from direct experience. A CFO brings certain skills experience of many countries, I am well positioned to
to the role of CEO, he says: being analytical; looking at the support the agenda in Tanzania.’
performance from a numbers perspective; knowledge of controls
and regulation; and independence of mind. It is also about
driving intellectual curiosity, thinking through the meaning of with ambiguity, whereas the finance role often has definite
the numbers, embracing technology. However, he notes that the answers that can be tested. The CEO needs emotional
job requirements for a CEO are much broader than for a finance connections with staff, clients and shareholders. They have to
chief, with many attributes built by engaging in the correct align key performance indicators to the demands of different
forums and reading widely. stakeholders. ‘The CEO needs the insight to create impact in the
CEOs are concerned with strategy and problem solving – short, medium and long term.’
often without a definite answer – so they must be comfortable However, Rughani’s background as a financial professional »
INT_F_Rughani.indd 12 08/03/2017 15:33

Interview | Focus 13
‘You have to
drive the people
agenda. As CEO
you are in the
people business.
You lead and
they drive the
organisation’

14 Focus | Interview
* Standard Chartered has more

than 1,100 branches, offices and
outlets in 67 countries around
Sanjay Rughani says the ACCA
Qualification is particularly relevant to
his work as a CFO and management
the world. accountant. ‘As an accountant, much
Basics of what ACCA teaches I used in my
Tips
* The Tanzania office opened in
1917. It employs 340 staff.
daily life,’ he says. ‘It is consciously
building a huge set of knowledge and
learning for its members across the world.
* It was the first international bank to introduce product

sophistication and services tailored to the Tanzanian
market. These include putting up the first ATM in
‘But what resonates about ACCA is the reputation it
has – the purposeful leadership has such integrity – and
the opportunity it brings. It is progressive, tracking global
the country, and launching the first ever Visa debit trends and responding to them.’
card, the Diva account (for women), and recently, Rughani also notes that ACCA’s thought leadership is
online banking for corporates and touch-ID mobile not just about business and finance but covers areas such
banking services. as shared values. He sees ACCA as a springboard for a
career beyond finance. ‘The finance profession is unique
* The bank has been working with the government

to promote the country’s economic growth and
development.
– every business or entity needs accountants. When you
know finance, there are many other careers you can take.
This profession connects you to your passion.’
still underpins his approach to the CEO role. ‘You are close to You would expect a senior banker to have had a varied career
numbers and to what the data is telling you. I have learnt to but the breadth of the experience – in roles and places – that
interpret what the economy, the markets and my company Rughani has packed in is astonishing. He admits to being ambitious
dashboards are saying from the purposeful angle of numbers.’ personally, and also wanting his career to be as diverse as possible.
He harnesses these numerical skills in dealing with the issues ‘All my roles have been about planning and seeing through what I
he faces as CEO, such as staff engagement levels, or customer wanted to do,’ he says. ‘It is about planning with purpose.’
satisfaction and loyalty, or what profit level means to his
shareholders. And of course, as an accountant, he brings Wider ambitions
professionalism and personal integrity to the CEO role. Having succeeded as a CFO, Rughani was ambitious to take
‘When people – whether staff or clients – see me, they always on the role of CEO. ‘I wanted to be a CEO seven years ago. I
recognise the financial professional. That cannot be divorced from took stock of my life, asking myself, “What does a CEO do that
me and so there is an element of trust and integrity because I was I would not immediately know how to do?”’
a financial professional who is now a CEO. The board is happy He came up with three answers: first was strategy and vision
because it sees that I am clear about numbers – very transparent. creation. Second, he says: ‘The CEO makes decisions around
‘One reason I chose the finance profession was because it ambiguity, while the CFO has a more structured life.’ So he
was comfortable with what I felt in my heart and it accords with became involved in a role that required him to learn about
my personal values.’ dealing with that ambiguity. Finally, he also saw that it was
These values provide stability in a world that is fast changing. key for a CEO to drive operational excellence, prompting him
‘You have new standards, new ways of looking at enterprise to consider how well he himself understood organisational
risk. You have new challenges, such as how to use technology to operations. His last three years as CFO was spent as Standard
reduce manual operations and move into added-value work.’ Chartered’s Africa head of shared services. ‘With that I could
As CEO of Standard Chartered Tanzania, Rughani is part of jump into a CEO role when the right time came.’
an organisation whose vision is to be the best international bank Rughani’s international experience was an essential part of
in Africa, Asia and the Middle East. ‘You set parameters around his career development. He says: ‘The world is clearly now a
what “best” could mean in terms of performance, shareholders global village, partly due to technology. My global experience
and giving value to clients,’ he explains. ‘You are constantly has taught me that there are no shortcuts in life, and as a global
looking at the changes in the landscape.’ player there is a lot of competition. Being part of this has also
He is determined to ensure that Standard Chartered in given me confidence: I am comfortable with the culture and the
Tanzania is a great place to work, reckoning that if staff and diversity anywhere [I work]. In a global role I can be inclusive, and
colleagues are inspired, they will give best value to the clients. that is close to my heart.’ He thinks this cross-border perspective
If that happens, then loyal clients should in turn give the bank has increased his creativity and desire to innovate.
more business, so driving a virtuous circle of performance within It also gives him a unique perspective on the future. Banks,
an integrated strategy. he says, are in for an exciting time, as long as they keep evolving

Interview | Focus 15
and stay relevant in a changing world. He has seen the banking means not pampering them but serving them with what they
landscape transformed from the time he first joined the sector, 18 need – and self-regulation, or being sensible about what you do.
years ago. ‘From an accountant’s perspective we’ve moved from As Rughani notes, the future of banking is tied up with mobile
a bean-counter role to value creation and business partnering. money and payments systems: ‘The banking world is going to
These days there is more emphasis on the ability to provide evolve into the digital space.’ Tanzania is one of Africa’s biggest
insights, and to manage risk, people and stakeholders.’ countries, with a population of 50 million, and has one of the
He was, of course, in banking throughout the global financial fastest rates of annual GDP growth in the world, at around 6%
crisis. When this took hold, in 2008, he was Standard Chartered’s for the past decade or so. That rate is set to continue, fed by
CFO for Ghana and West Africa. ‘It was a disastrous time. tourism (the wildlife is incredible) and natural resources (large gas
Suddenly, trust was lost. It was made out of multiple causes, reserves and fresh water), as well as by its strategic importance in
such as adverse micro-conditions, but also greed, and bad East Africa. So it needs a vibrant banking sector, which provides
governance and oversight. Multiple stakeholders did not take Rughani – and Standard Chartered, now in its centenary year in
the time to understand the implications of certain directions. Tanzania – with huge challenges and opportunities.
As a financial professional I was aggrieved; we are about good The talk is about digital, with regulation aligning the banking
governance and professionalism.’ and mobile phone industries. ‘We have the advantage of a late
It has to be significant that Rughani manages to draw positive mover,’ Rughani says. ‘We are leapfrogging the legacy systems.’
conclusions from his final reflections on that defining event, Tanzania may not yet have banking products as sophisticated as
which formed the biggest challenge in the corporate world for in Western Europe, but he expects that to change. ‘As part of a
a generation. ‘Many were impacted and hurt, but any crisis or global organisation, we can bring global knowledge driven by
challenge should be maximised and not wasted, and we should local talent – whether our clients are local or international.’ ■
learn the lessons,’ he says. For him, those lessons are around
ensuring financial stability, treating customers fairly – which Peter Williams, accountant and journalist

16 Focus | Skills migration
Continental drift
As the US and parts of Europe erect barriers against immigrants, developing countries
are exploring different ways of attracting high-skilled workers to their shores
‘There are
ominous signs
that the US and
UK may lose sight
of the economic
rewards of
welcoming
outside talent’
INT_F_skilledmigration.indd 16 08/03/2017 15:34

Skills migration | Focus 17
A
lexander Graham Bell, the inventor of the economic rewards of welcoming outside talent. This would
telephone, famously said that when one door create inefficiencies that would be harmful to companies,
closes another opens. This old adage looks countries and individuals. But it would also generate an
increasingly true today for internationally minded opportunity for countries or regions that are becoming
skilled workers like Bell, who migrated from Britain to more open to skilled outsiders.’
North America in his early 20s back in 1870. The ability of top professionals to move between
Freer movement of people is an idea that appears to borders has considerable benefits, economists argue. For
be going out of vogue in certain key regions of the world. a start it can quickly bring in skills and expertise that would
While the backlash against immigration in the US and often take many years for the education system or firms
parts of Europe has focused mainly on restricting entry of to generate. ‘If you have a shortage of accountants with a
lower-skilled or culturally distinct foreigners, experts fear specialised skill or experience, this is not something that
that it may also get harder for even top-tier workers to can magically be created in a rush,’ says Alex Nowrasteh,
move to where their skills are most in demand. But while an immigration policy analyst at the Cato Institute.
some rich nations may be raising the drawbridge, a range Individual workers, meanwhile, can typically command
of developing nations, especially in Asia, are making it higher salaries where their skills are most in demand. And
easier for highly trained workers to get visas and to have aside from the direct boost to economic output, nations
their qualifications recognised. appear to benefit from a spurt to creativity and innovation.
‘We are seeing something of a divergence around Research in the US, for example, found that around a
the world,’ says Gary Burtless, a labour market expert quarter of patents filed in the country had at least one
at the Brookings Institution in Washington. ‘There are non-citizen inventor. And over 40% of Silicon Valley
ominous signs that the US and UK may lose sight of the technology and engineering startups had at least one
immigrant co-founder between 2005 and 2012.
Ways and means

Countries can seek to attract global talent in several ways,
explains Kate Hooper, a policy analyst at the Migration
Policy Institute. ‘The visa system can make it easier for
companies to bring skilled workers into the country and
allow foreign graduates to remain in a country after
finishing their studies,’ she says.
Despite the well-documented benefits of skilled
migration, Hooper argues that governments need to strike
a balance, seeking to attract the brightest from abroad, but
not allowing companies to exploit the immigration system
to undercut the wages of local workers. In the US, several
allegations of abuse by companies have soured the public
mood towards high-skilled immigration. Back in 2015, for
example, entertainment group Disney came under fire for
allegedly using high-skilled visas (the H1B system) to import
lower-cost information technology workers, while dismissing
native workers. The outcry prompted changes at Disney.
IT outsourcing firms in the US have also been accused
of using H1B visas to replace skilled US citizens with lower-
wage foreigners. In response the Trump administration has
drawn up proposals to tighten rules on skilled immigration,
potentially raising the minimum salary companies must
offer foreign workers in order to qualify for H1B visas.
‘While some reform makes sense, the worry is that this
might go too far and choke off the supply of foreign talent
that US firms rely on,’ says Burtless. ‘This could easily spill
over into a kind of self-defeating economic nationalism.’
Meanwhile, immigration experts and recruiters worry
that the UK’s exit from the European Union could »

18 Focus | Skills migration
Movers and shakers

For those with a wanderlust, accounting is partly because the profession has largely because the visa system became
can be an ideal career choice. While struggled to attract sufficient graduates progressively more restrictive.’
some countries may start to curb access in recent years, and also because global Stevens also fears that Brexit has
to foreign skilled workers, accountants accounting firms reduced their intake of the potential to inhibit international
look set to remain highly mobile. trainees after the 2008 financial crisis. mobility. ‘It remains to be seen what
‘Accounting is an international kind of system will emerge after the UK
business language,’ says Dorothy Middle East beckons exits from the EU,’ she says. ‘Even so, it
Wood, head of education at ACCA. The appetite for accountants is is quite possible that the administrative
‘And for accountants with globally particularly intense in the Middle burden and cost of bringing accounting
recognised qualifications, like the East, where a number of nations have talent from the continent will increase.’
ACCA Qualification, there will remain been introducing VAT to compensate This would be a shame, she adds,
opportunities in a very wide range of for falling oil revenues and, in some since some more sluggish European
countries and regions.’ cases, rising military spending. In economies, such as Italy and Greece,
There are two main factors that particular, the Gulf Cooperation Council have an unusual surplus of qualified
should continue to make it easy for – including Saudi Arabia, Kuwait, professionals. ‘An Italian firm recently
accountants to indulge their wanderlust, Bahrain, Oman, Qatar and the United approached us to help find work abroad
says Abigail Stevens, founder and Arab Emirates – has been seeking for some of its accountants that were no
managing director of Think Global to reduce its dependence on oil and longer needed by the business.’
Recruitment. ‘For a start, accounting gas revenues. Despite these potential setbacks,
standards have become increasingly Still, there are parts of the world Stevens believes accounting will remain
international, which makes accounting where mobility has declined over the one of the most mobile professions.
skills and experience more portable,’ past decade, notably the US. ‘We ‘We considered moving into other
she explains. ‘Secondly, there is a global had a period of strong demand for areas of global recruitment, including
shortage of skilled accountants that is accountants moving into the US ahead information technology, the oil and
set to get worse – which would make of the 2008 crisis,’ Stevens says. ‘But gas industry, and law,’ she explains.
it even more damaging for countries international recruitment into the US ‘But none these have quite the global
to exclude much-needed talent.’ This never recovered from the recession, fluidity that accountancy possesses.’
impede the economically helpful movement of skilled workers. skilled workers from its own international diaspora,’ says Hooper.
‘At present this is a very low-friction system,’ says Nowrasteh. In 2012 China introduced a new law to facilitate the immigration
‘No visas are necessary and the EU’s Mutual Recognition of high-level professionals and a fast-track mechanism to process
Agreements ensure that the qualifications of overseas workers them. And four years later the government set up the country’s
are often recognised with little or no need for further testing first immigration office tasked with attracting overseas talent –
or work experience. Whatever emerges from UK-EU talks is relaxing requirements for permanent residence.
likely to represent a backward step, with greater administrative And the 10 countries of ASEAN – the Association of Southeast
requirements and costs associated with moving country.’ Asian Nations – have been trying to emulate the EU’s highly
If such traditional talent magnets as the US and UK become successful Mutual Recognition Agreements to ensure the freer
less welcoming, this could represent a human-resources windfall flow of skilled labour. These deals cover a range of professions
for countries that remain eager to attract overseas skilled from accountancy to architecture, with the goal of reducing
workers. ‘So far the likes of Canada, Australia and New Zealand the need for foreign practitioners to undergo time-consuming
are as eager as ever to bring in brainy outsiders,’ says Nowrasteh. and expensive assessments or training to demonstrate their
competence. ‘These deals are complicated to strike and have
Asia calling usually been confined to economic blocs or very trusted economic
Meanwhile, developing countries have been keen to reduce partners like the EU, Australia and New Zealand, and the US and
barriers to skilled workers. This is particularly true in Asia, Canada,’ says Norasteh. ‘They can have a hugely positive effect.’
where politicians have become more conscious of the adverse The future could be testing for globally minded companies
economic effects of ageing populations. Between 2010 and 2040 and workers. But there is at least the hope that more doors will
the World Bank estimates that the workforce in China will shrink open for skilled labour than are at risk of being closed. ■
by 10%. ‘Having traditionally been cautious of immigration, China
appears to be becoming more receptive, especially to high- Christopher Fitzgerald and Fernando Florez, journalists

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AllianceAd_UK_INT_IE.indd 2 17/01/2017 16:04

20 Comment | Ramona Dzinkowski
Trading places
With the Comprehensive Economic and Trade Agreement making it easier to work across
the EU and Canada, Ramona Dzinkowski offers a heads-up on employment opportunities
16,700 active job posts in the field and the

average financial job takes 46 days to fill.
The demand is heavily concentrated in
Toronto – the financial hub of the country.
The financial language spoken in
Canada is the International Financial
Reporting Standards (IFRS) and most
ACCA members will be technically
prepared for closing the books under
these standards. Those with oil and gas
expertise will have a specific advantage as
the Alberta oil patch reopens for business
after a long and dismal downturn of oil
prices. If you don’t mind the cold, Alberta
is the place to be.
According to Payscale.com, CFOs
in Calgary make the most money on
average at C$165,000 (€117,138) per year.
This compares with C$159,672 (€113,356)
in Edmonton, C$151,776 (€107,750) in
Toronto, C$150,494 (€106,840) in Vancouver
and C$137,191 (€97,396) in Montreal.
Each region also demands a slightly
Ramona Dzinkowski is a different skillset, for which a premium
Canadian economist and is paid. For example, in Edmonton
it’s financial analysis; in Toronto, team
editor-in-chief of leadership, business strategy, mergers and
the Sustainable acquisitions, and compliance (financial); in
Calgary, senior financial management; and
Accounting Review in Vancouver, strategic planning.
Meanwhile, the dominant trend in
finance and accounting is the integration
In February the EU ratified the in Canada, the greater the likelihood of digital tools and data analysis in many
Comprehensive Economic and Trade that Canadian-based employment sectors across the Canadian economy,
Agreement (CETA), opening markets opportunities will come their way. according to research carried out by
and increasing opportunities for At the same time, the Canadian labour Ranstad Interim Inc, a large recruiting firm
labour mobility between Canada and market is tight for experienced finance based in Toronto. The ability to analyse
the EU. At a time when protectionist professionals with specific skillsets, big data is rapidly becoming a chief
sentiment is alive and strong in some forcing Canadian companies to scoop responsibility in many finance jobs.
EU countries, this is a bold move. For up the talent as they find it. For example, ACCA members with experience
Canada, it gives rise to a collective sigh the latest CFO Alliance Canada study in big data and predictive analysis will
of relief as the free flow of goods and asked CFOs what they saw as the most have a leg up and, although not as
services north-south is at risk. significant challenge in 2017 – attracting common as in US companies, experience
So how might this affect ACCA and retaining talent topped the list. in implementing cloud-based finance
members? According to the government of So here are a few facts about the applications will be an asset.
Canada, CETA’s temporary entry provisions Canadian employment landscape for Finally, ACCA members who can
will make it easier for highly skilled accountants that ACCA members might help Canadian companies through any
professionals and business people to work find useful. regulatory, legal or tax complexities in
between the EU and Canada. Furthermore, According to recent data from certain regions in Europe will be highly
the more ACCA members are exposed to Payscale.com, over 675,000 finance and sought after, as this was the number one
Canadian clients, whether in their home accounting professionals live in Canada. problem area for Canadian companies
country or while working temporarily At any given time there are approximately entering new regions abroad. ■
INT_COM_RD.indd 20 08/03/2017 15:37

Alnoor Amlani | Comment 21
Opportunism knocks
From TV shows to natural resources, the cavalier perception and exploitation of Africa
has to stop, says Alnoor Amlani, and globalisation and technology might just help
In a recent episode of 20th Century

Fox’s popular American TV spy
series 24: Legacy (previously 24), a
counterintelligence agent briefing
US authorities on the possibility of a
terrorist attack by the show’s main
villain showed footage of masked
gunmen stalking and shooting their
victims in a mall, with images of
panicked crowds running for their
lives and parents trying to hide their
children. In the episode, the agent
says the attack was in Egypt where
more than 200 people died, including
18 Americans.
Almost immediately after the
episode aired, Twitter came alive with a
flurry of comments under the hashtag
#SomeoneTellFox. Outraged Kenyans
had recognised the footage in the TV
series as actual security camera film of real
people being killed in a real mall – the
Westgate Mall in Nairobi in 2013. The
attack had been covered on live television
across the world’s major networks, and
the security camera footage was also
used in a subsequent documentary Alnoor Amlani FCCA is an
produced by Fox.
Executive producers Evan Katz and
independent consultant
Manny Coto issued a swift apology, along based in East Africa
with a promise to remove the footage,
and Fox released a statement saying it
‘very much regret[ted] using it to depict a repurposed in this way if they had not including the latest growth products,
fictional act of terror on the show’. taken place in an African country? oil and gas.
But my question is this: would these What if the victims had been middle However, as has often been noted,
images of human suffering have been class and had families and friends in very little value is added to these
a position to actually watch Fox TV commodities in Africa. Resources are
programmes? Would the approach have mostly extracted and exported raw,
been different? creating zero jobs in Africa beyond
In the same way, the vast continent’s farming and extraction.
abundant natural resources have been Today the actors may be different, with
Resources are exploited over the centuries by people Americans, Chinese, Russians and Indians
mostly extracted from countries including Portugal, Oman, to the fore, but the stage is still Africa and
Britain, Germany and Italy, leading to the opportunism is still the order of the day.
and exported raw, forceful colonisation of parts of Africa and But perhaps this can change:
creating zero jobs its subsequent division into the countries technology and globalisation have
that exist today. provided an entirely new avenue for
in Africa beyond Countries in Africa still mostly intelligent Africans to access. If they
farming and produce the same basic raw commodities are connected enough to observe such
extraction that they were set up to produce in exploitation and dedicated enough to call
colonial times – crops such as cotton, it out immediately, this generation may be
cocoa, coffee, tea, tobacco and minerals, able to stop this activity. ■
INT_COM_AA.indd 21 08/03/2017 15:31

22 Comment | Brian McEnery
A question of culture
Improved corporate behaviour must come from the top – and accountants must be at
the forefront of change, says ACCA president Brian McEnery
If you’ve opened a newspaper over

the past week, month, year or even
decade, the chances are you’ve
encountered a horror story about
corporate governance, or lack thereof.
There have been many column inches
dedicated to high-profile examples of
moral failure from leading companies
and executives around the world,
and fewer focused on how we as a
professional community can address
such issues.
ACCA research shows that ‘tone at
the top’ is the most influential driver
of corporate behaviour: if leaders and
boards don’t prioritise culture, how
can everyone else be expected to do the
same? So inherently, the right corporate
governance – the set of principles
that govern ‘appropriate behaviour’
– must be accompanied by the right
corporate culture – demonstration of
the principles in action by those at the
top. The onus is therefore on executives
to lead by example and establish a
corporate culture that enables employees
to act with integrity when faced with
ethical dilemmas.
ACCA has been working on a way to
put this into practice for several years,
and has come up with a master ‘culture-
governance tool’ (see the backpage of the
February 2017 edition of AB), which lays and potentially address corporate culture companies in identifying a shortcoming
out the tenets for success. Our aim is for in the workplace. in corporate culture, systematically
this to assist ACCA members across all Cultural change must indeed be led approaching a solution or multiple
levels, sectors and organisations to assess from the top. Together, executives and solutions, and maintaining the good
board should begin by acknowledging culture once established. I encourage
any lapses in corporate culture, analysing you all to take a look, and consider
where the inconsistencies lie and giving whether it could be applied to
an open commitment to changing the corporate culture in your own
behaviour, starting with their own. The organisation. Accountants can be at
Diversity in an commitment must be followed through: the forefront of the corporate culture
organisation does if it is disjointed, short-lived or lacking revolution – so let’s lead the way! ■
in resource, it may have the opposite
not start and end effect on company culture and morale. Brian McEnery is a partner specialising in
at the board level And it must be holistic; diversity in an corporate restructuring and healthcare
organisation does not start and end at the consulting at BDO Ireland
but should be board level but should be carried through
carried through the workforce along with recruitment, For more information:
the workforce training, promotion and pay policies.
The culture-governance tool See ACCA’s culture-governance
is a fantastic resource in assisting tool at bit.ly/ACCA-cc-gov
INT_COM_pres.indd 22 27/02/2017 16:58

The view from | Corporate 23
The view from

Dashani Workman, senior accountant, Property Consultancy
Services, Barbados, and voracious devourer of audiobooks
within the real estate, hospitality and

financial services sectors.
What I enjoy most about my role

is building relationships with our
clients who tend to be high net worth
individuals hailing from as far as Europe
and North America. I keep up to date Snapshot: oil and gas
with a regular dose of AB Direct and
Accounting and Business, which make The negative effects of the oil and
effective reading, while CPD seminars gas downturn are clearly evident.
keep me up to date in the profession. But more positively, the downturn
has made the industry more aware
I have always enjoyed learning about of the need to increase its efficiency.
different cultures, having grown up in Internationally, efforts to
Guyana, a country of six ethnic groups. improve economic recovery in the
My first long-term job was in the This exposure and the study of Hindi sector have gained momentum.
finance department of a start-up and Spanish have given me a healthy Average lifting costs per barrel of
company in the technology sector. It appreciation for how culturally we can be oil are falling for exploration and
was the first internet services provider to so different, yet universally we are similar, production (E&P) operators, and
Guyana. With new technology, lagging striving for one thing: to be understood. greater collaboration is starting
legislation and uncertainty, it was a steep For this reason, I have always supported to appear across the industry.
learning curve for everyone. Working the idea of emotional intelligence, a Crucially, in the E&P and oil
closely with the finance manager exposed soft skill that I believe all leaders should services sectors, there is also a
me to the integral role that the finance possess and practise. need for more efficiencies, higher
function played in a business and I was productivity, increased innovation
inspired to pursue accounting. ACCA as a brand is recognised and and technological improvement.
respected worldwide, both in and out It has been a tough few years,
Since moving to Barbados, I have of the profession, for the professional but leaner businesses are now ready
worked with Property Consultancy rigour its members possess. The to grasp the opportunities arising
Services, a member of the Altman training involved in preparation for the from the ongoing low, but stable,
Real Estate Group and an affiliate of exams helps to develop many survival oil prices. And with increased deal
Savills. Principally, I lead a small team skills, such as critical thinking and good activity in 2017, we may be seeing a
to build and manage a department that time management. These and the other new phase of consolidation.
prepares annual financial statements and transferable skills I have developed Looking at the media, we could
files income taxes for a portfolio of clients over the years continue to serve me be forgiven for writing off the
well. But I believe that the greatest sector. True, we will never see a
opportunity my ACCA Qualification return to the boom days of $100+
offers is the flexibility to work within per barrel. However, through
I have always different sectors, as the fundamentals necessary change, adaptation
of accounting remain the same across and survival, what has emerged is
supported the industries. It allows you to move within an improved industry and a more
idea of emotional other areas of finance and enjoy multiple efficient business environment.
careers with one qualification. Finance professionals working
intelligence, a in oil and gas need sound market
soft skill that I Reading fiction and non-fiction is my knowledge, plus an ability to stand
believe all leaders passion, and this is how I attempt to
quench my thirst for knowledge. I also
up to the rigours of M&A activity.
should possess enjoy listening to audiobooks during long Alasdair Green, head of
and practise nature hikes throughout Barbados, or management consulting, Anderson
while driving to work or practising for my Anderson & Brown
first 5km run. ■
INT_YCORP_intro.indd 23 02/03/2017 11:03

24 Corporate | Effective boards
Audience gratification
Effective corporate governance relies on effective boards, which for their part rely on the
timely supply of information, so how can you make sure they get what they need?
Board effectiveness is a keystone

for good corporate governance. Flows to the board – key questions
Regulators promote high standards
around the boardroom table and 1. How do you ensure that as a non-executive director you have all the
constantly monitor developments to information you need, presented in an appropriate manner to enable you to
ensure that directors, both executive carry out your role?
and non-executive, can discharge their 2. Does the board decide on the information it needs from management to
responsibilities to the levels expected make informed long-term decisions for the company?
of them. 3. How have you influenced the content/length/structure of board papers over
Indeed, board effectiveness the past few years? What could be done to improve them further?
forms one of the main sections in the 4. Are your board information and agendas structured to reflect the interests
Organisation for Economic Cooperation and objectives of the board?
and Development’s (OECD) Principles of 5. How do you demonstrate the quality of board information and decision-
Corporate Governance, which was revised making to shareholders?
and endorsed by the G20 in late 2015. 6. What information sources (outside of board papers) do you have access to
These principles have been used as a and make use of to obtain a holistic view of the market and the industry? Does
template for good corporate governance the company furnish you with these resources?
around the world – they have been
adopted as one of the Financial Stability Source: EY
Board’s (FSB) key standards for sound
financial systems, and they have also been
used by the World Bank in more than 60 The reality is that the answer lies
country reviews. somewhere in between and can vary from
The OECD’s position starts from ‘With data- one board member to another. But, as the
the point of view that good corporate report says, timely, accurate and relevant
governance is not an end in itself, but
blending and information is the cornerstone of good
that it creates market confidence and visualisation tools decision-making. Indeed, a board can
business integrity. With corporate never be effective if its members are not
scandals rarely far from the headlines,
you can draw in supplied with the right information. As
there has arguably never been a external as well the OECD highlights in its principles: ‘In
greater need for raising the bar for
governance standards, and not just
as internal data so order to fulfil their responsibilities, board
members should ensure that they obtain
within large publicly listed corporations, directors can see accurate, relevant and timely information.’
but also within the largest privately where they stand’ Could the answer lie in the better use
owned companies. of technology? The rapid evolution of
But what does an effective board look data analytics is a double-edged sword.
like, and how can company directors, and On the one hand, it is now possible to
their stakeholders, be sure that even when It is the last theme that often gets access in real time detailed information on
they know what it looks like, they are able overlooked when board effectiveness company performance, but on the other,
to achieve it? is reviewed, yet it is an issue that raises it is possible to be so surrounded by the
some important questions (see box). trees of data that it becomes difficult to
Highlighting the relevant There can be a temptation to throw see the wood of the bigger picture.
A report from EY and the Investment anything and everything into board ‘The status quo today is that you
Association, titled Board effectiveness meeting papers so that no one can can take an issue, carry out an analysis,
– continuing the journey, highlights complain of not having access to shape it into a few key graphs, put them
a number of themes that impact the company information. But conversely, into a PowerPoint presentation, which
effectiveness of a company board. it can be equally tempting to provide is then sent to the board ahead of a
These include the roles of the chairman, only high-level information in the belief meeting, and then present it at the board
non-executive directors and investors, that, if directors require more information meeting,’ says Ian Spatz, practice lead
the importance of diversity, succession on particular points, they can simply ask at business and technology consultancy
and evaluations, and how information for it ahead of the meeting or request a Slalom Consulting. ‘But you often have
flows to the board. follow-up meeting. directors, especially those that are less
INT_YCORP_boardeffect.indd 24 08/03/2017 15:36

Effective boards | Corporate 25
connected to the core analysis, who want ‘There can be a lack of transparency separately, but with data-blending and
to make the right decisions, who want to and an inability to drill into the numbers,’ visualisation tools you can draw this
know what lies behind the numbers. This says Richard Fayers, practice area director external data into the same place so
is an important question, and often the of Slalom in London. ‘But now that that directors can see exactly where they
response is that an executive will go away boards are becoming far more liable, this stand. This will allow them to do their job
and investigate it and report back at the is a risk that they should not be exposed – to enquire and to challenge.’
next board meeting.’ to. You may think that the top numbers There is always the threat of data
Spatz argues that it should be look absolutely rosy, but when you drill overload, but as Fayers says, ‘you can
possible to drill into the numbers and into them you may find a particular site empower the board members with the
interact with them during the meeting. or product line that is not performing, ability to surface anomalies and issues in
Data visualisation is one tool that allows so it is very helpful to uncover that and an intuitive way so that they can quickly
individuals to do exactly that. ‘There is no to ask why.’ get to the answers’.
reason why boards should not be able to This ability to explore and understand This information will still need to
do this,’ Spatz says. the data, combined with techniques to be managed, but if presented in a
compare and contrast with competitors user-friendly, non-technical way, it will
Drilling down within the same market while accessing allow board members to ask what lies
But there is the view that headline other, external data sources, provides a underneath and see the answers there
figures that are presented to the board powerful route to a more effective board. and then, and that can only help make
are controlled by senior management, ‘Alongside the financial data, there them more effective. ■
which wants to place its own commentary may be macro-economic factors at play,’
around them. says Fayers. ‘You can get to this data Philip Smith, journalist
INT_YCORP_boardeffect.indd 25 08/03/2017 15:36

26 Practice | The view from
The view from

Gregory Badley ACCA, owner of consultancy Gregory
Badley, Canada, sees a bright future for sole practitioners
accounting, bookkeeping and taxation to

small businesses and individuals. Working
with small businesses you often find a
cavalier approach to record keeping, a
lack of basic business knowledge and
tight cash flows. On the other hand, you
do find a lot of client loyalty and referrals,
Snapshot: tax one generally creating the other.
digitalisation I firmly believe the future is bright for
The digitalisation of tax is a sole practitioners like myself. There
major global trend, which will will always be small businesses that need
have a significant impact on tax accountants to help them navigate the
professionals and their clients as world of business and taxation.
it continues to spread around the
world. Some jurisdictions are much Embracing and making use of
further advanced down this route I always had a love for numbers and technology allows us to service our
than others. did well at mathematics in school. After clients more efficiently and effectively.
Digitalisation is viewed as high school, I worked in various junior We can get more done in the time we
attractive for its potential to drive accounting positions while attending have. However, too much technology
down costs and heighten efficiency. night school and preparing for the many can also create issues of privacy and the
It is a less labour-intensive way accounting examinations that followed. vulnerability of sensitive information.
of helping governments gain I began with the London Chamber of
insight into their economies and, if Commerce and Industry accounting I enjoy the time flexibility my work
efficiently implemented, provides exams, followed by more examinations gives me, and knowing that the effort
an excellent return on investment in at the Association of Accounting I put in will ultimately be of benefit to
the front-end costs. Technicians. I completed my ACCA me and my business. I also enjoy helping
Tax digitalisation also aims to Qualification after attending college my clients through their tax issues.
offer a better service for business in London. On migrating to Canada, I
owners and citizens through the completed the Canadian and the USA The ACCA Qualification and training
pre-population of tax returns. accounting examinations. has without a doubt given me the
The role of the accountant confidence and skills required to
in areas of high digitalisation is I started my accounting practice hold some very senior positions, such
expected to move from preparer – Gregory Badley Professional as financial controller of one of the
of tax returns to reviewer and Corporation – full-time a decade ago. largest companies in Guyana. I was also
checker. As digitalisation and The services we offer are mainly deputy commissioner of Guyana’s Tax
artificial intelligence displace the Department, one of the high points of my
detailed number-crunching that career. I was able to relocate to Canada
the tax profession has previously on the basis of my ACCA Qualification,
been known for, the importance There will where I eventually ended up owning a
of excellent communication and successful accounting and tax practice.
interpersonal skills in the role of
always be small
the tax professional will increase. A businesses that Every year I attend various tax seminars
strong IT knowledge and the ability for my CPD. In addition, I read online
to analyse and evaluate issues, as
need accountants articles and magazines to keep abreast.
well as an eye for detail to interpret to help them
the complexities of changing
legislation, are also essential.
navigate the world My hobby is part-time stock trading
and I really enjoy reading books and
of business articles on this topic. I relax by watching
Mark Fielden, tax partner, and taxation TV, but my favourite shows are those that
Kingston Smith focus on businesses, such as The Profit
and Shark Tank. ■
INT_YPRAC_intro.indd 26 02/03/2017 11:03

Egypt | Practice 27
Quality time
For Hazem Hassan, president of the ESAA, there is an urgent need for first-rate
accountants in an Egyptian economy wrestling with structural changes
INT_YPRAC_Egypt.indd 27 07/03/2017 18:03

28 Practice | Egypt
The uprising of January 2011 and International Financial Reporting This year will see the introduction
the unrest that followed had far- Standards (IFRS) in practice at the time. of new regulations for the accounting
reaching ramifications for businesses However, it was not until the last quarter profession, primarily focused on
in Egypt, and for finance professionals of 2016 that the new EAS finally came into qualifications and mandatory training.
too. ‘It put the accountancy sector line with IFRS. ‘Right now, you can get an audit licence
temporarily on the back foot,’ admits ‘We agreed with the Egyptian Financial without having to pass any specific
Hazem Hassan, chairman of KPMG in Supervisory Authority (EFSA) that IFRS will professional examination. That will change
Egypt and president of the Egyptian be the basis for the EAS. [They should] be under the new regulations,’ says Hassan.
Society of Accountants and Auditors identical, in most cases a direct translation The new regulation will extend the
(ESAA), part of the International from English to Arabic,’ Hassan says. ‘We prerogative of the audit oversight board
Federation of Accountants (IFAC). had adopted IFRS as a solid guideline to oversee the quality of audit of all public
Prior to the uprising in 2011, numerous for standards, but due to political and interest companies and limited liability
reforms and new regulations had been economic changes we had not updated companies in addition to the companies
slated for introduction in line with these to reflect the many amendments listed on the stock exchange.
international best practices, but instability that had taken place internationally.’ ‘The closer our standards are to IFRS
delayed their implementation. Now That said, he stresses: ‘The new the better for Egypt, as it strives to be part
as Egypt is getting back on track, the standards are a great step forward in of the global business world and provide
accountancy sector faces a range of new improving the credibility of the financial legitimacy for the bourse,’ says Hassan.
challenges, not least as a result of last sector and the comparability of financial This is particularly important, he
year’s currency devaluation and other statements here with others outside stresses, as Egypt seeks foreign direct
structural reforms. of Egypt.’ A new Strategic Partnership investment (FDI) to help get the economy
Egypt’s accounting standards Agreement between the ESAA and back on track and provide jobs for a
were last updated in 2006, when new ACCA, signed last year, will further population growing by 1.2 million a year.
Egyptian Accounting Standards (EAS) bolster the sector (see the box on the FDI reached a high of US$11.4bn
were developed to take account of opposite page). in 2009, but then plunged in following

Egypt | Practice 29
ESAA and ACCA form strategic partnership

ACCA signed a Strategic Partnership Agreement with the Egyptian Society of
Accountants and Auditors (ESAA) in 2016. Under the agreement, ACCA will
provide support to the ESAA in enhancing its existing continuing professional
development (CPD) policy, developing its qualification syllabus and setting up an
examination questions bank. ‘This will make us a more efficient and professional
society,’ says Hassan.
ACCA will also evaluate ESAA qualifications for up to nine papers and will
support ESAA in developing its own technical-level qualification. ‘We lack such a
qualification. You either have a university degree or go for ACCA, ESAA, CPA or
chartered accountant exams. There is nothing in between at the technical level.
Any accountant who wants to display confidence and invest in his or her future
needs a recognised qualification,’ adds Hassan.
employed in business or working in faculty, in some cases as many as 52,000.

the profession, according to Hassan. ‘How can you give a proper education
However, most accountants engaged to 52,000 students?’ asks Hassan.
in audit lack a recognised professional ‘Universities should make fundamental
certification, having opted for the more changes to the curriculum, emphasise
traditional route – this route allows the practical aspect of accounting and
them to apply for a licence to audit offer a degree linked to a professional
small companies after five years of qualification like ACCA,’ he adds.
university study and training, and for a The ESAA has taken action in support
licence to audit joint stock companies of this goal. It recently opened a E£30m
after eight years. (US$1.6m) training centre in Cairo,
Hassan estimates that around 25,000 capable of training up to 500 people
professional accountants in the country, simultaneously in four different groups.
including 2,400 ESAA members, have an The years of unrest that followed the
international level of competence. ‘We 2011 uprising have been trying times for
need to increase the number of qualified accountants. But the past quarter has
accountants and the new standards brought new and different challenges.
state they must have a professional In November last year, the government
devalued the Egyptian pound from EGP9
years. In 2015, it rose again to US$6.9bn, to the dollar to EGP13; the rate has since
according to Egypt’s Ministry of stabilised at around EGP16 to the dollar.
Investment Data. A new draft investment ‘Right now, you The move followed the introduction of
law was prepared in December 2016 and a 13% value-added tax (VAT), a spike
awaits ratification.
can get an audit in customs duties of up to 60% and the
The new standards also include licence without removal of some fuel and food subsidies.
measures to improve financial reporting These developments would be
among small-and-medium-sized
having to pass tough under any circumstances, but
enterprises (SMEs). According to the any specific the devaluation coincided with ‘a great
Egyptian Banking Institute, the country’s
estimated 2.5 million SMEs must be
professional lack of foreign currency,’ says Hassan.
Egyptian businesses that import or have
brought into the formal economy – examination. fixed-asset equipment were unable to
currently, 60% are not formally recognised That will change’ settle their debts in foreign currency
as companies. to outside suppliers. ‘The liabilities in
In June last year, the Egyptian Egyptian pounds in foreign currencies
government announced an initiative almost doubled from one day to the next,’
to provide US$25bn to finance 350,000 qualification,’ he says. ‘I am sorry to say says Hassan.
small companies and create four million we have left it until 2017 to introduce ‘There is a big role for accountants to
new jobs over the next four years. While requirements for auditors to do so, but play in assisting management to make
the money is clearly welcome, ‘SMEs will better late than never.’ changes to the business model, and the
require skilled accountants for budgeting, Key to achieving this goal is managing forecasts due to changes in operational
management accounting and tax – but the number of accounting students to costs, sales and future earnings due to the
this is lacking,’ observes Hassan. ensure ‘quality, not quantity’. Some new exchange rate.’ ■
Egypt is not a country that is short universities have a very high number of
of accountants – it has over one million students studying in their commerce Paul Cochrane, journalist

30 Practice | Interview
The listening project

IAASB member and former ACCA president Brendan Murtagh FCCA is on a mission to
ensure that standard-setters understand the needs of small and medium-sized practices
Having been a founding partner of his

accountancy firm in Dublin, Ireland, Brendan Murtagh became a member of the International
in the 1990s, Brendan Murtagh has Auditing and Assurance Standards Board in January 2012,
personal insight into the challenges and having been nominated by ACCA. He began his accountancy
opportunities that arise for small and career with a mid-sized practice in Ireland, gaining his ACCA
medium-sized practices (SMPs). He now
shares his knowledge and experience
Qualification in 1991. He then founded his own Dublin-based
firm, LHM Casey McGrath, in the 1990s. He was ACCA Ireland
CV
with colleagues at the International president for 2000-01 and represented ACCA Ireland on the
Auditing and Assurance Standards Consultative Committee of Accountancy Bodies – Ireland from 1999 until 2014.
Board (IAASB), which he joined in He served as a member of the ACCA Global Council from 2000 to 2010 and as
January 2012. president for 2009-10.
As Murtagh notes, because of the
importance of the capital markets to the
public interest, much of international companies to the smallest businesses, in a particular audit, it is open to him to
standard setting is focused on listed and everything in between. The IAASB use the extended reporting. It’s a good
companies. ‘Bringing the non-listed is looking to see how that flexibility can example of scalability in the standards.
and SMP voice to the standard-setting be demonstrated, while at the same time If the market decides this is good and
process is really important,’ he says. ‘An maintaining the integrity of an audit. would like to see it for everybody, then
appreciation of how the world works ‘The IAASB continuously looks at the we will get that feedback in our post-
outside listed entities, including in the scalability of the standards and how this implementation review. Based on the
small and the medium firms, can provide can be enhanced, communicated and feedback from preparers, users and
further input on how changes may impact applied. In doing this it ensures that the others, we can determine whether we
that community.’ value of an audit is maintained together should retain the status quo or whether
The IAASB is attuned to the needs with the public interest and public extended reporting should be mandated
of SMPs and their SME clients, Murtagh confidence in the audit. The audit needs for all audits.’
believes. ‘In all its consultations it will to be comparable in markets around the Scalability will also be considered
specifically ask for views from SMPs,’ he world. It needs to be comparable for in the IAASB’s ongoing audit quality
says. ‘It will look to assess the impact on all stakeholders, whether to a bank or a project. Responses to its December 2015
SMPs of any proposals. We will look at the customer. If a stakeholder reads an audit Invitation to Comment on Enhancing
SMP perspective, along with the public report, they have to be able to understand Audit Quality in the Public Interest are
sector perspective, in the standard-setting and rely on it, irrespective of the nature, currently being considered. The quality-
process.’ That said, the IAASB’s starting size or complexity of the business or the control systems within firms present a
point will always be to consider the public jurisdiction from which it operates. The ‘major element’ of the project, Murtagh
interest and how proposed changes global application and comparability of notes. ‘The extent to which quality control
to existing standards or proposed new the standards across jurisdictions is one of systems and standards are scalable for
standards are serving the public interest. the reasons for widespread adoption.’ small firms is a significant element of the
‘The challenge then becomes how to foster feedback that has been received,’ he
consistent application within the various Flexibility and scalability says. Changing a quality-control system
environments where those standards are The outcome of the IAASB’s Auditor could be costly and time-consuming, so
utilised,’ Murtagh says. ‘This includes Reporting project provides an example of the IAASB will think about the impact
how they are implemented at an SMP the flexibility and scalability. The extended on SMPs. ‘What is encouraging to see is
level, but also at a much larger level. It is reporting requirement, namely the ‘key that, even in the detail of the consultation
therefore important to get an appropriate audit matters’ element of the new audit document, the SMP perspective is
and balanced representation of the SMP report, is mandatory for listed entity embedded throughout,’ Murtagh says.
perspective in the standard-setting process.’ audits but optional for non-listed. ‘That’s ‘Specific questions have been asked and
Murtagh doesn’t support a separate a clear example of how the needs and we’ve got insightful responses that will
regime for SMPs. ‘Globally it is generally challenges of the SMP community and help us develop our thinking as we move
accepted that an audit is an audit and the small and medium enterprises they to exposure drafts.’
there has to be a level playing field in act for are heard and responded to in the When it comes to maintaining
terms of what an audit means,’ he says. process,’ Murtagh says. ‘We now have appropriate audit quality, Murtagh
Auditing standards have to be fit for a balanced, scalable solution. If an SMP does not think that SMPs necessarily need
purpose across the range, from listed feels this is of value to the stakeholders to implement systems as complex as »
INT_AP_YPRAC_BrendanMurtagh.indd 30 27/02/2017 17:11

Interview | Practice 31
‘Standards have to
be fit for purpose
across the range,
from listed
companies down
to the smallest
businesses’

32 Practice | Interview
those used by the big firms. ‘The

audits SMPs are dealing with are, in the
main, less complex, may be smaller in size
and they are in a different environment,’
he says. ‘Therefore, the standard is
currently scalable to take account of the
size and complexity of both the firm and
the engagement. You need to be able to
document and evidence that audit quality
has been given appropriate consideration
and that the systems in place achieve
what is required. Enhancing this scalability
will be a feature of the revisions to the
quality control standards both at firm
level, in ISQC 1, but also at engagement
level, with ISA 220. This project is now
well under way with the project proposal
approved by the board in December 2016.
The project will see some very significant
enhancements to quality control including
the move to a risk-based model with the
Quality Management Approach, which is
based on the COSO framework.’
Beyond the auditors

Regulators have an important part to
play in quality control in making sure that
they don’t simply react to quality control
challenges in larger firms in a way that
imposes ‘what may not necessarily be an
appropriate remedial action in a smaller
firm’, Murtagh says. ‘It’s also important for The SMP perspective is also being a mid-sized firm and wanted to see
all stakeholders in the audit process to taken into account in the IAASB’s if I could do it myself,’ he says. He
understand their role in achieving audit project on data analytics, which has quickly proved that he could. He now
quality.’ The IAASB’s 2014 publication, A involved outreach and consultations. ‘As heads up his firm’s assurance function
Framework for Audit Quality, addresses a tool it is changing how we approach and works with both SMEs and some
these wider stakeholders and the various an audit,’ Murtagh says. ‘In the context larger corporates and subsidiaries of
elements of audit quality. ‘It recognises of SMPs, we have looked at whether multinational entities. He enjoys acting
that if we are going to address audit this presents any unique challenges or as a ‘trusted business adviser’, providing
quality properly, we have to recognise barriers. Some of the early indications holistic advice to help businesses grow.
that this goes much further than the suggest the opposite. In the SMP market, The knowledge and experience he has
auditors,’ Murtagh says. ‘Standard setters the level of data analytics involved gained from both his IAASB work and his
have a key role to play, but so do many would not necessarily have the same ACCA involvement – Murtagh is a past
other stakeholders in the process, such characteristics and complexities as ACCA president – have helped to attract
as those charged with governance in the that required for the larger end of the some larger clients than might otherwise
entities being audited, audit committees audit market. We are seeing that there have been the case. ‘It’s given me a slightly
and educators to name some. It’s are powerful data analytics tools in the different international perspective,’ he says.
about everybody doing something in marketplace. This could present an ‘I’ve had an opportunity to gain a greater
their element of the arena to improve opportunity for SMPs and the market understanding of different markets, not
audit quality.’ For example, the IAASB has responded. It’s then a personal just in Europe but in the US and elsewhere.
is in the early stages of a project and individual matter how firms and Ireland is a strong inward investment
on professional scepticism. ‘If you think individuals want to embrace this. From location for US companies. We have quite
about the formative elements of a the board’s point of view it is important a few US businesses as clients and, from a
challenging mindset, they come long that nothing in the standards inhibits cultural and regulatory perspective, I have
before anyone gets near an audit firm,’ appropriate innovation, in the context of a degree of understanding of their local
Murtagh says. ‘They come culturally, the audit, in this area.’ requirements and the differences from
socially and academically. A lot of the Murtagh’s insights and input to what we do here. That can be helpful and
foundation work is done before people the IAASB have been shaped by his it’s not always something you would find in
choose a career as an auditor. That’s own experiences of setting up and a smaller mid-tier firm.’ ■
one illustration of how there are many running his own firm, LHM Casey
stakeholders in audit quality.’ McGrath, in Dublin. ‘I qualified with Sarah Perrin, journalist

Capacity building | Insight 33
African solutions
Building crucial financial management and reporting capacity in Africa isn’t just about
importing good practice, but ensuring it’s needed and then customising it for each country
T
he moderation of growth across ▲ Train and sustain that an invariable reason for bank project failure
sub-Saharan Africa last year to 1.5%, Capacity building in is weakness in financial management capacity.
according to the World Bank, from an African countries works That, he said, was why the World Bank prioritises
average 5%–7% a year in the previous 10 well when based on a capacity building, including governments taking
years, may signal that the region needs to firm train-the-trainer system part in developing standards and competence
up its financial professions and institutions to in their own countries. ‘We need to develop
preserve its economic gains. capacity in smart and innovative ways to improve prosperity and
The World Bank has been working alone and with regional reduce poverty,’ he said.
organisations such as the African Capacity Building Foundation Bruce Vivian, senior manager for professionalisation at
(ACBF) to expand financial management and reporting capacity Afrosai-E, the English language subgroup of Afrosai, the African
in the region’s public and private sectors. The ACBF-coordinated branch of the International Organisation of Supreme Audit
Regional Capacity Building Project for Africa (funded by US$25m Institutions (Intosai), told the conference that standardisation
from the World Bank), for example, aims to build organisations can be tough in Africa because of the variety of legal traditions
and expertise that can promote economic and social stability; among the continent’s 54 countries. He said his organisation
engage with and regulate productive sectors; and track policy wants to develop an African solution to guide accounting
impact. Another example is the World Bank’s multidonor Trust sector capacity building that complies with standards such as
Fund for Statistical Capacity Building, which aims to boost the those from Intosai and the International Accounting Education
ability of developing countries to produce and use statistics to Standards Board (IAESB), but with enough flexibility to help
support effective economic development decision-making. make projects work locally.
ACCA’s recent Global Public Sector Conference in South In building financial management and reporting capacity
Africa debated the importance of this work in ensuring in Africa, Kabuya said initiatives should, first and foremost, be
sustainable growth. Patrick Kabuya, a senior financial based on evidence that training and resources are needed in
management specialist at the World Bank, told the conference ministries, agencies and other organisations. ‘We’re looking »
INT_I_CapacityBuilding.indd 33 08/03/2017 15:34

34 Insight | Capacity building
after a lot of money in sub-Saharan Africa, but we don’t have

the necessary financial skills. It is an onerous responsibility to The World Bank’s five key principles
develop the skills to manage these resources,’ Kabuya said,
adding that trained professionals should observe internationally 1. Design capacity building projects on the basis of
accepted standards and codes. evidence.
He also suggested that assessments for capacity building 2. Customise the strategy to a country’s particular needs.
projects should be based on the international PEFA (Public 3. Adopt the most suitable system for building capacity.
Expenditure and Financial Accountability) framework for 4. Ensure capacity gains are maintained and sustainable.
assessing public finance management performance. ‘This 5. Collaborate to maximise pooled efforts and avoid
provides a good understanding of the baseline of how strong or duplication.
weak the profession is in each country,’ Kabuya said.
Capacity building is more effective if national organisations
lead the process than when it is designed and imposed by an ministry permanent secretaries, with one award criterion being
international development agency. ‘If you are from a country, open merit-based promotion systems.
you will have a better grip on what is happening in that country,’ Gina Oleghe, a Nigeria-based consultant for HR Warehouse,
said Kabuya. ‘We don’t want to just bring good practice from said in the private sector too top management can help ensure
Zimbabwe into another country – you want the specific scenario new training and skills are used vigorously by setting a good
to be taken into account.’ example. She said: ‘If you have good corporate governance,
It is also important to maintain any capacity expansion that these skills will go down to middle management.’ FDs who turn
takes place. ‘We have to make sure it’s sustainable beyond up to work at 8am will have staff starting work early too; directors
the project,’ said Kabuya. ‘Training rolling in at 11am may not.
arrangements have to ensure that the Managers need to make sure
country has the domestic capacity technical and general skills developed
and resources to build more and
more capacity.’
‘Training should in training are practised and entrenched
on the job. Speaking to Accounting and
Jemima Mantey, the head of not end when Business, Oleghe stressed that financial
accounting at the Ghana College of professionals should also receive
Physicians and Surgeons, added that the project ends. soft skills training as well as technical
capacity building in Africa should be
based on a train-the-trainer system so
There should instruction so they can impart and use
new financial skills better. ‘You need
that it is not necessary to continually be continuous to get on with your team mates – that
return to the World Bank for training
opportunities. ‘Training should not
relationships to impacts on the bottom line,’ she said.
Kabuya stressed that such personal
end when the project ends,’ she help continuously smarts need to be applied when a
said. ‘There should be continuous capacity building project is being
relationships to help the country to build capacity’ developed and rolled out. Policymakers
continuously build capacity.’ should explain its benefits to encourage
In the public sector, one key officials and managers to take it
step is to ensure there are enough seriously, he said. ‘When dealing
jobs for well-trained financial professionals so their skills can with capacity building, many people don’t think of the bigger
be brought to bear, according to Jan Isaksen, an economist purpose – why we need that capacity. If they did, they would
with Norway’s CHR Michelsen Institute who has helped set up know that what they’re doing is all about serving the people.’
research institutes in Botswana and Namibia. He told Accounting Oleghe pointed out that capacity building investments can
and Business that senior politicians and civil servants needed be vulnerable in difficult times – and with commodity prices low,
to promote public capacity reforms. He noted that there were sub-Saharan African growth may continue to be anaemic this
plenty of donor-funded accounting and auditing courses for year (the World Bank predicts 2.9%). ‘Everyone wants to reduce
African students, but the problem was when they returned home costs,’ she said. ‘And the cost of capacity building is in the first
and sought work with a finance ministry: ‘They are not getting line for companies to say: can you reduce these costs?’ ■
a real job, because someone else has the position,’ he said,
blaming corruption and nepotism for the retention of unqualified Georgina Guedes, in Johannesburg, and Keith Nuthall, journalists
and unsuitable staff in key financial positions.
Some countries have escaped this trap, Isaksen said. He cited For more information:
Botswana for appointing an effective cadre of officials in key
public sector financial roles, and suggested one possible Africa- To find out more about ACCA’s Global Public Sector
wide solution would be to create international prizes for finance Conference, read the review of the event on page 60
INT_I_CapacityBuilding.indd 34 08/03/2017 15:34

Graphics | Insight 35
What CEOs are thinking

Nearly 1,400 CEOs responding to PwC’s global survey give their views on the impact of
globalisation and technological change on growth, talent, trust and society
Confidence in growth prospects falls CEOs’ top business priorities

This year marks the 20th anniversary of PwC’s global With the intersection between man and machine thought
CEO survey. It has found that growth in global trade to generate more value than either alone, CEOs see the
is slowing, and that only 29% of CEOs now have value of marrying tech with uniquely human capabilities.
confidence that global economic growth will improve.
44% Innovation 23%
29%
37% Human capital 15%
15%
18% 27% Digital and
technology capabilities 15%
2012 2013 2014 2015 2016 2017

Competitive
advantage 10%
For more information:
Customer
experience 10%
PwC’s 20 years inside the mind of the CEO: What’s next?
report is at bit.ly/CEO-20
The globalisation effect Trust in a digital age

CEOs were much more likely to agree CEOs think technology has made it harder to retain public trust. Data
that globalisation does more for resource security breaches, IT outages and automation are all big worries. Yet trust is
mobility than for social obligations. is also an opportunity – the single biggest enabler of corporate success.
It’s more
It’s harder for important to have
business to gain a strong corporate
and keep trust purpose that is reflected
in our values, culture
and behaviour
60% 44% How

‘It makes it easier ‘It closes the we manage
to move capital, gap between people’s data will
people, goods, info’ rich and poor’ differentiate
us
35% 28%
69% 93%
‘It enhances fairness ‘It averts climate
and integrity of change and 64%
global tax systems’ resource scarcity’
GL_I_graphics.indd 35 01/03/2017 13:26

36 Insight | Political risk
Hold on to
your hats
With elections looming in Europe and
populist parties on the rise, companies are
advised to prepare for a bumpy ride
N
ot long ago political risk was something to be worried
about only when investing in developing nations.
That changed in 2016 after the Brexit vote in the
UK and the election of Donald Trump in the US showed that
upheavals could happen in rich nations too. After a year
of turbulence, it is now Europe’s turn to go to the polls. In
Germany, Angela Merkel is battling to win a fourth term as
chancellor. Elections in the Netherlands, France and possibly
Italy have the potential to rattle businesses still more by
handing power to populist parties that favour a withdrawal
from the European Union or the single currency.
‘Investors and businesses may
need to brace for a rocky ride in 2017,’
says Stephen Brown, a European
analyst at Capital Economics. ‘While
Europe’s elections could go smoothly,
‘It is unlikely
they could also threaten the entire that any country
European project, and that would have
huge implications for the economy.’ will leave the
So how great is the danger and
is there anything that companies
eurozone in the
can do to prepare for possible next two years a reborn French franc or Italian lira –
turbulence ahead?
The main concern for businesses
but that doesn’t many would withdraw their savings
from domestic banks and deposit
is that financial markets are likely to mean Europe is them abroad. This capital flight would
respond swiftly to a rising threat to the then put strain on the banks, making
euro or to the EU itself. ‘There are a off the hook’ them less able to lend money. ‘Europe
number of increasingly well-supported suffered from exactly these problems in
political parties that want their nations 2010 to 2012 amid worries that heavily
to follow Britain’s lead out of the EU,’ indebted nations could be forced to
says Marc Chandler, chief currency strategist at Brown Brothers leave the currency zone,’ Chandler says. ‘The result was a serious
Harriman in New York. ‘If it starts to look more likely that one hit to growth.’
of these populist groups will gain power, the gut reaction of On that occasion the European Central Bank was able to calm
investors will be to sell the bonds of more vulnerable nations – the crisis, with the ECB president Mario Draghi promising to do
such as Italy or Spain.’ ‘whatever it takes’ to save the single currency.
‘The commitment to buy the bonds of vulnerable nations
The spectre of capital flight and push borrowing costs back down helped stop a vicious
This in turn would boost borrowing costs for governments and spiral,’ says Jacob Kirkegaard, a European expert at the Peterson
companies, a potential drag on growth. At the same time, Institute for International Economics in Washington. But he
if European citizens start to fear that their euros could be believes it might be harder for the ECB to ride to the rescue
exchanged for less valuable domestic replacements – such as again if populists win elections in 2017. ‘If the crisis is caused by
GL_I_PolRisk.indd 36 07/03/2017 18:19

Political risk | Insight 37
voters casting anti-euro votes, it is trickier to justify intervention eurozone to cope with future crises. ‘It was not easy to convince
to solve the problem,’ he argues. national parliaments to back the debt bailout that helped keep
Populist parties could damage the European economy even Greece in the eurozone,’ Brown says. ‘It will become more
if they aren’t able to form governments. ‘Although it is still highly difficult for Europe to help struggling nations if populists have
likely that no country will leave the eurozone over the coming greater strength in parliaments.’
two years, that doesn’t mean Europe is off the hook,’ says Capital To make matters worse, opinion polls are less reliable than
Economics’ Brown. ‘There are several ways in which these parties in the past, giving businesses and investors less chance of
could stunt growth without taking over the reins of state.’ accurately forecasting political outcomes. ‘If you trust the polls,
First, heightened risks of an exit could be enough to push up you might think that there was not so much to worry about in
borrowing costs in nations such as Italy. Rises in the Sentix euro Europe,’ says Kirkegaard. ‘For example, it would seem highly
breakup index – which surveys more than 1,000 investors on the unlikely that the French presidency will be claimed by National
likelihood that a member of the currency club will leave – have Front leader Marine Le Pen. The trouble is that investors and
been linked to rising bond yields in Europe’s periphery. Second, business have lost confidence in the polls.’
merely gaining seats in national parliaments would give populist The polling industry has suffered a series of high-profile
parties more ability to slow the pace of economic reform. recent humiliations. Ahead of the US presidential election,
‘The Netherlands, France and Italy are all badly in need of the Democratic party candidate Hillary Clinton enjoyed a
reforms to reduce restrictions on their labour markets, which commanding lead in the polls, with Trump only occasionally
hold back growth,’ Brown says. ‘That becomes harder if anti-euro pulling ahead. Largely on this basis, days before the vote,
populists have more heft.’ betting markets assigned him only a 20% chance of victory. Polls
Finally, the rise of nationalism could reduce the ability of the have also proved wide of the mark in the Brexit vote, the »
GL_I_PolRisk.indd 37 07/03/2017 18:19

38 Insight | Political risk
2015 UK general election and the 2016 Spanish general election.

Europe’s electoral flashpoints ‘The reliability of these opinion measures has been severely
compromised by the advent of the cellphone,’ Kirkegaard
Netherlands: general election explains. ‘People are less likely to pick up their cellphone to an
The eurosceptic Party for Freedom (PVV), which unknown number than with landlines, and so the response rate
campaigned for a referendum on leaving the EU, was in has been falling.’ A 2012 report from Pew Research, one of the
a strong position in the polls as Accounting and Business most respected pollsters in the US, showed a 9% response rate,
went to press. But while the anti-immigration party compared to nearly 40% in the late 1990s. In addition there are
looked capable of emerging as the largest single group in signs that the rise of ‘fake news’ is affecting political events in
parliament, in the runup to the election other major parties less predictable ways.
said they would refuse to join a coalition that included it.
Even if the PVV were to form a government, it would be Adjusting to new norms
hard to win a referendum to retreat from the EU. Around That raises the question of how businesses or investors can
77% of Dutch people say they support membership of the brace for a potentially turbulent year. One lesson that stands
single currency, according to Eurobarometer. out from 2016 is to hedge risk. ‘For example,’ says Chandler at
Brown Brothers Harriman, ‘a UK company reliant on imported
France: presidential election, April/May parts would have been disadvantaged by the fall in the pound.
The National Front’s Marine Le Pen has promised Stepping up currency hedging in advance of the event could
to reinstate the French franc and withdraw from the have delayed the pain and given them longer to adjust to a
Schengen agreement guaranteeing free movement of weaker sterling.’ Equally, some eurozone importers may now
people. If she carries through on either promise, many consider more active hedging against higher costs from a
economists believe it is doubtful that the EU could survive. possible fall in the euro in 2017. Companies vulnerable to rising
Polls showed that Le Pen may get most votes in the first borrowing costs, especially in Europe’s periphery, could consider
round of the presidential elections in April, with En Marche’s locking in interest rates on their debt for longer.
Emmanuel Macron running second and the Republican Of course, it is far from certain that 2017 will be a tough year
party’s beleaguered François Fillon hanging on by the skin for Europe. One point of reassurance, Brown argues, is that
of his teeth. However, the polls also suggest Le Pen cannot markets and economies may be more resilient than expected.
win the majority needed to take the presidency in the first Public support for the euro is still high, with 69% of French
round and that she would lose a second round against citizens and 77% in the Netherlands backing the single currency.
Macron. Even if Le Pen should win, she would probably ‘Even if populists win elections, they would face a battle to
lose a referendum on the EU or the euro – around 69% of win a referendum on the euro,’ Brown says. ‘It is possible that
French voters support the single currency. investors will take this into account and react calmly.’
After all, financial markets recovered swiftly from the
Italy: possible general election, first half of 2017 jitters that followed the Brexit vote and the election of
After Italians rejected constitutional reform in a Trump – in the latter case within hours. While uncertainty
referendum last year, calls have been mounting over elections in Europe will unnerve investors, it is
for an early general election. This could take also possible that markets and growth could emerge
place in the first half of 2017. Polls, as of early stronger. In 2016 voters in Spain opted for mainstream
February, suggest it could leave the Five Star political parties over the anti-establishment Podemos;
Movement (M5S), which has campaigned for a similar outcome in the rest of Europe would
a referendum on the euro, as the largest probably be helpful for the economy and
party, with public support of around 30%. markets. In the forthcoming German federal
Support for the eurosceptic Northern elections, the Social Democratic party’s
League, which also backs a public vote Martin Schulz – Merkel’s main rival – supports
on Europe, has been holding up. What’s higher government spending and is likely
more, anti-Europeans stand a better shot to put more emphasis on fiscal austerity
of winning an anti-European referendum in in peripheral European countries such as
Italy. Public support for the euro stands at Portugal and Greece. This could be positive
just above 50%. for growth.
Overall, the message for companies is to
hope for the best in the elections of 2017 and
► Message from Europe prepare for the worst. ■
A voter carries a rucksack expressing
opposition to the hard-right populist party Christopher Fitzgerald and Fernando Florez,
Alternative for Germany (AfD) journalists
GL_I_PolRisk.indd 38 07/03/2017 18:19

Blockchain | Insight 39
Chain reaction
For all the buzz around blockchain and its transformative potential for the profession,
accountants should bear in mind that it’s an evolution, not a revolution
‘L
ike a rush-hour gridlock trapping a Formula 1 race Billions have been poured into the development of
car,’ is how Harvard professors Marco Iansiti and blockchain by financial institutions, venture capitalists and
Karim Lakhani described the records of transactions governments alike in a frenzied and sustained period of
that underpin the world’s economic and legal systems and investment. Make no mistake, blockchain is in for the long
are threatening to clog up global financial networks. haul, and finance professionals, like everyone else linked to the
Real-time, global transactions taking place 24 hours a financial system, must adapt.
day, seven days a week and computer-generated trading
activities that are measured in milliseconds are just a Transforming the infrastructure
couple of examples of how today’s financial system is very One of those financial institutions making a bet on blockchain
different from just a few years ago. The challenge is to have fundamentally rewriting the rules of global commerce is Deloitte.
a system of administration that is trusted, transparent and The Big Four firm has invested heavily in the technology, and in
able to cope. With central clearing houses, accountants and January opened a new blockchain lab in Dublin, Ireland, which by
audit firms stretched to the limit in trying to keep up with the end of the year will be home to 50 developers and designers
increasing and changing demand, the arrival of a radical new who will work on the technology full time.
approach to the underlying support structure couldn’t come ‘We are still at the early stages of the adoption of blockchain
soon enough. technology,’ says David Dalton, a financial services partner at the
Enter blockchain, a system based on distributed ledgers firm. ‘But it is becoming increasingly clear that it is transforming the
and computational logic (see box) that could provide the infrastructure that underpins financial services and other industries.’
means to overcome the congestion, and on which the For the accounting profession, the impact could be
professors were focused. particularly fundamental, with blockchain finally superseding »
GL_I_Blockchain.indd 39 02/03/2017 14:44

40 Insight | Blockchain
a system of financial governance and control that’s been around better manage volume and scale (which is an area that can
for the best part of 2,000 years: double-entry bookkeeping. benefit from blockchain) and focusing on other activities
In a recent white paper, again published by Deloitte, the pertinent to the role of professional accountants. There
firm lays out scenarios for the impact blockchain might have. are aspects to understanding and driving a company’s
‘Companies would benefit in many ways: standardisation performance that are not directly definable from the ledger.
would allow auditors to verify a large portion of the most ‘Sensible valuation estimates might require an
important data behind the financial statements automatically,’ understanding of information outside a blockchain such as
it claimed. ‘The cost and time necessary to conduct an audit future outlook. Effective finance business partnering relies on
would decline considerably.’ human judgment and communication to balance priorities such
The paper goes on to explain how the impact of as supporting a business unit’s divisional growth ambitions,
blockchain on the accounting process, while fundamental, will alongside applying a risk, governance or ethical lens.’
be evolutionary rather than revolutionary. It can be gradually He is essentially referring to going beyond the literal
introduced within the chain of activities, bringing increased definition of a task. For example, conceptually, the
value and security along the way. But, claims Deloitte, ‘at the blockchain allows for all entries to be visible to the auditor
end of the road, fully automated audits may be reality’. in a transparent way. So it then becomes a question of
While the buzz surrounding blockchain is inescapable, understanding the extent and manner in which the auditor
and it’s clear that the technology is questions what is in front of them as
here to stay, we shouldn’t overestimate part of professional scepticism.
the speed with which it becomes Sticking with this audit scenario, it
embedded into our everyday business- isn’t outside the realms of possibility
to-business and accounting activities. for a company to want to understate
As the Deloitte paper points out, ‘It’s not going to its liabilities and not present what the
blockchain is bringing gradual, rather auditor might consider a ‘true and
than sudden, change to our world. solve everything, fair’ view. It’s the auditor’s job to look
Or, in other words, the technology will
bring foundational change, where an
and it’s important out for these things (and related party
accounts or other indicators) to suggest
entire system and way of working must to understand that certain areas need to be explored
be rebuilt over time.
This gradual pace of change is a
where it’s in more detail. In a blockchain world,
all this would depend very directly on
good thing, and will allow industries relevant and the absolute confidence that there is
and professions to adapt over time no way the company could exclude a
rather than being forced to react to the where it is not’ transaction on its distributed ledger.
immediate implications of a sudden Vaidyanathan says: ‘If you are relying
and disruptive technology change. on a bit of kit to tell you everything,
Narayanan Vaidyanathan, who that clearly has some implications. In
develops ACCA’s research on the future of accountancy, and general, technology works best when combined with human
is the author of its report on blockchain due out this month, judgment. It is possible that, in future, accountants may
explains that the technology has potentially far-reaching increasingly need to adapt from auditing the transactions to
implications for accounting and business, but needs a few providing some form of audit or assurance with respect to the
years to mature. ‘The headline message of the report is that systems that spit out the transactions.’
you need a measured approach to it,’ he says. ‘It’s not going
to solve everything, and it’s important to understand where it Innovation spreads
is relevant and where it is not.’ Deloitte isn’t the only Big Four firm to focus on blockchain;
This second point of Vaidyanathan’s is particularly days after its Dublin announcement, KPMG and Microsoft
important, given the membership of ACCA and the revealed that they were partnering on something called
fundamental role of the profession. There have been Blockchain Nodes, a series of innovation workshops focused
countless headlines about artificial intelligence and machine on the development of the technology.
learning leading to rampant job erosion, with accountants ‘The Blockchain Nodes will play a critical role in
often being squarely in the firing line. Similarly, blockchain identifying new applications and use cases that blockchain
has been cited as providing the essential component of trust can address,’ says Eamonn Maguire, head of digital ledger
that has traditionally been provided by accountants and is services at KPMG. ‘They will enable us to work directly with
required to facilitate a successful financial system. clients to discover and test ideas based on market insights,
Vaidyanathan explains: ‘We need to draw a distinction creating and implementing prototype solutions that use this
between revolutionising the transactional reporting cycle to innovative technology.’

Blockchain | Insight 41
Ratings and research firm Moody’s is another organsisation Projects worth knowing about
taking a keen interest in the potential impact that blockchain
might have on the global financial system, and last year Hyperledger An open-source collaboration project,
published a report highlighting what it believes to be the including stakeholders from finance, the Internet of
25 top use cases, categorised into four different types of Things, banking, supply chain, manufacturing and
stakeholder: financial institutions, corporates, governments technology. Members include Accenture, Daimler, IBM,
and cross-industry groups. Applications range from regulatory Airbus, American Express and Intel, among many others:
compliance and audit, financial management and accounting, hyperledger.org.
and trade finance through to supply chain management,
identity management and the Internet of Things. Ethereum An open-source blockchain platform that
But while the report clearly recognises the potential impact boasts smart contract functionality. First established by
of blockchain, it also brings a degree of realism. ‘There is Vitalik Buterin, a programmer involved in the explosion of
significant enthusiasm for the potential of the technology, but Bitcoin, in 2013: ethereum.org.
there is still a limited track record of large-scale blockchain
implementation in a regulated environment, and many hurdles UCL Centre for Blockchain Technologies A collaborative,
lie ahead before we see widespread applications,’ says Robard industry-oriented research centre based at University
Williams, senior vice president at Moody’s. College London: blockchain.cs.ucl.ac.uk.
A framework for adoption

Perhaps the best way of looking at the technology’s pace of
development and potential is to return to Harvard Business Distributed ledgers demystified
School (HBS) professors of business administration, Iansiti and
Lakhani. They have developed a framework for blockchain A distributed ledger is a database of assets or transactions
adoption that, while they conclude that the technology is that can be shared across multiple nodes in a network
‘decades’ from reaching its full potential, allows them to so that each participant has their own copy, with any
predict which kinds of applications will gain traction first. changes reflected in every copy almost simultaneously.
By analysing how foundational technologies take hold, Each transaction is recorded as a ‘block’ of data, and
Iansiti and Lakhani surmise that it happens in four broad each new block has an encrypted copy of the previous
phases, each of which is defined by the novelty of the block included within it. Blocks are then linked using
application and complexity of the coordination efforts cryptographic signatures to create a ‘chain’ of activity
needed to make them workable. Those low in novelty and or transactions that are time-stamped, distributed and
complexity are first to take hold, while those high in both tamper-proof. In short, it creates an incorruptible ledger
can take a great deal of time to become embedded into our of information.
lives. They have named the resulting quadrants single use
(low novelty, low complexity); localisation (high novelty, low
complexity); substitution (low novelty, high complexity) and
transformation (high novelty, high complexity). like lawyers and accountants? Before we get too excited
Bitcoin payments fall at the bottom end of the here, let’s remember that we are decades away from the
scale within the ‘single-use’ quadrant because they are widespread adoption of smart contracts.’
typically one-to-one in nature and used as a simple However, this doesn’t mean that accountants – in
alternative payment method. Within the ‘localisation’ practice and in business – shouldn’t be putting a great
quadrant, the professors point to private online ledgers to deal of thought into the subject right now. The HBS
process financial transactions; in ‘substitution’, to retailer framework can help in guiding that thought and lead to
gift cards based on bitcoin; and in ‘transformation’, to self- the beginnings of a strategic plan being put in place.
executing smart contracts. Nor, according to Vaidyanathan, should accountants be
On this last point, the implications for traditional fearful or suspicious of the technology: ‘If this plays out in
professions may be felt the most. ‘Smart contracts may the right way, it will be a huge advantage because it takes
be the most transformative blockchain application at the away from the professional accountant the relatively low-
moment,’ Iansiti and Lakhani wrote in a recent issue of the value tasks, and allows the focus to stay firmly on activities
Harvard Business Review. ‘These automate payments and the with a direct link to business value. What technology does
transfer of currency or other assets as negotiated conditions better than a human, technology should be allowed to do;
are met. The implications are fascinating. Firms are built on humans should focus on what humans can do better.’ ■
contracts. If contracts are automated, then what will happen
to traditional firm structures, processes and intermediaries David Rae, journalist

42 Insight | Careers
The shared option

Offering broader experience than a traditional finance career path, shared services is
becoming a smart choice for aspiring CFOs, especially as technology evolves
S
hared services has come a long way since it first emerged
as a finance model in the 1980s. The original idea was
to bring together the financial grunt work – common
transactional processes such as payroll, accounts payable
and purchasing – under one roof, resulting in less duplication
and lower costs. Over the past 30 years the shared services
model has steadily evolved, encompassing more complicated
and valued processes, disciplines beyond finance and, in
multinational organisations, an even wider geographical
scope. At its extreme, it has created the global business
services (GBS) organisation, covering tasks as diverse as
IT, human resources, procurement and sales.
The evolution of shared services has gone so far that
it is fast becoming an accepted career path for finance
professionals, muddying the traditional career trajectory for
those aiming for an eventual CFO role. Yet shared services
still struggles with an image problem, often seen as a dead-
end career that may fail to develop the skills and experience
necessary for a top-flight finance role.
Is that really the case? A new report from ACCA’s Talent
Equation series, Finance shared services careers: opportunity or
end game?, looks in detail at how shared services continues to
disrupt finance career paths, drawing on the insights of 250 shared
services leaders around the world. The results challenge some
commonly held beliefs about careers in this area, as well as putting
forward suggestions for improvements to finance career pathways.
The study shows that shared services roles have become an
attractive career choice for finance professionals. Increasingly, they
are choosing a role in shared
services, rather than ticking it off
the list of necessary experiences.
‘It’s no longer As one respondent said, shared
services is no longer ‘some place
some place you get pushed kicking and
screaming when you would rather
you get pushed be a “true” finance person’.
kicking and Of those taking part in the
study, 36% said that they had
screaming when taken their current shared
you would services or GBS role in order
to gain skills that went beyond
rather be a “true” finance, and 44% said their
decision had been motivated by
finance person’ a desire to work more broadly
across the business; 45% were
intending to develop a long-
GL_I_Talent.indd 42 28/02/2017 16:20

Careers | Insight 43
term career in business operations, whether that was shared

services, centres of excellence, or GBS. Shared services careers
‘Our findings confirm that finance leaders electing to pursue
shared services careers are challenged and engaged by the The ACCA report Finance shared services
variety these roles offer, and are not necessarily looking for a careers: opportunity or end game? makes several
path out,’ the report’s authors say. recommendations for employers that could improve the
A significant draw for those working in shared services is that value and contribution of their finance professionals:
finance mastery alone is not enough to be successful in their
role. Finance skills are important, of course, but broader business
* Formalise the career path By formally including
shared services on the finance career path,
skills – in particular, soft skills such as communication, change organisations make the talent pool much bigger,
management and customer interaction – are if anything equally broader and richer. Shared services experience gives
essential. Considering that soft skills are becoming a must-have finance professionals opportunities to work globally,
for finance professionals in business generally, a career path that manage large teams, enact change, interact directly
actively encourages their development has obvious attractions. with the business, and acquire not only finance but vital
Added to that, shared services is relatively unique within commercial skills. Smart finance organisations map
an organisation in that it routinely presents opportunities to these skillsets, and devise pathways that add value for
link processes across departments, geographical regions and the finance professional and the enterprise as a whole.
functions. Finance professionals working in this area have a wider
view of the organisation than they would in a traditional finance
* Demonstrate visible sponsorship When top
executives ‘have the back’ of shared services leaders,
function. To quote from the report again: ‘Thinking that finance the art of the possible when it comes to enterprise
shared services is not much more than the processing factory value creation increases exponentially.
of any organisation is a fallacy… shared services roles provide a
unique opportunity to build broad management skills as finance
* Look to increase scope and scale Finance
professionals’ career opportunities (and capabilities)
organisation structures become flatter.’ are expanded when their organisation adds
It is hardly surprising, then, that those working in shared processes, functions and geographies to shared
services are happy about their choice; 60% of those taking part services operations.
in the survey said they were satisfied or very satisfied with their
current role, and only 8% were unhappy.
* Value broader skills Think of finance shared services
as a business within a business. To be successful, it
must demonstrate customer service skills, and the
A place at the top table ability to manage change, to manage cost across
But not everything in the garden is rosy. The report points out the enterprise on a commercial basis, and deliver
that, in most organisations, shared services does not form part processes end-to-end to create efficiencies. When
of a formal finance career path. Unless such pathways track in attainment of these capabilities is put on par with core
and out of shared services to the retained team and back, there finance skills, the finance function can demonstrate
is a risk that shared services will be seen as the less varied, and much more value to the enterprise.
perhaps therefore less exciting, option for finance training. Only
20% of those taking part in the study felt that shared services
* Use shared services as your innovation lab Shared
services units have a unique opportunity to trial new
had direct representation at the top table in their organisation, technologies. As an added benefit, shared services
and a quarter believed that they had little or no corporate becomes an attractive career proposition to millennials.
influence. As one respondent said: ‘We need to change the
reputation. It is starting to improve. Culturally it is not seen by
our finance community as a place they’d desire to work as part strongly agreed that technology will allow shared services
of their career plan.’ professionals to focus on much higher value-added activity,
The report argues that finance shared services has begun ultimately putting to rest the ‘finance factory’ image. ■
to perform high-value, complex work only in the past decade.
‘It takes time to earn a seat at the table,’ it says, and delivering Liz Fisher, journalist
standardisation, compliance and cost reduction alone will not do
it. Its leaders need to explain, loudly, the value they create. For more information:
The game-changer could be technology. Automation
and artificial intelligence sit well within the shared services Find out more about what the next generation of finance
model, and the report argues that the continued march of and accounting professionals need to succeed at
technology could ‘reposition shared services from back office to accaglobal.com/thefuture
hotbed of innovation, underscoring the real, tangible business
value that shared services delivers to the enterprise’. Read ACCA’s report Finance shared services careers:
Almost 78% of those taking part in the study agreed or opportunity or end game? at bit.ly/ACCA-fssc
GL_I_Talent.indd 43 28/02/2017 16:20

44 Insight | Careers
Career boost
Be proactive, but not pushy, and you can make a real difference to your organisation,
says our talent doctor Rob Yeung; plus the perfect international assignment
to be proactive is more important now

Talent doctor: proactivity than ever. Technological disruption,
political and regulatory issues, and
customer demands continue to force
organisations to adapt and find new
ways of doing business. In such times,
there are many opportunities for
proactive individuals. Employers are
keen to hire individuals who are willing
to do more than what is stated in their
formal job descriptions; they want
people who have not only ideas, but
also the skills to implement them.
Show an employer that you have
a track record of fixing problems and
translating ideas into reality and you
will find yourself on the fast track to
advancement. Set time aside in your
schedule every week to think of some
action you could take that contributes
to the longer-term success of your
team or wider organisation. If you
don’t make it a priority and find the
time to do such thinking, you will
Dr Rob Yeung is an probably never get around to it.
organisational psychologist However, be careful to combine
your proactivity with sensitivity and
and coach at consultancy political skill too. Be too forceful with
Talentspace your ideas and you could be perceived
by your colleagues as interfering or
annoying. Bring your colleagues with
When I’m coaching people one-on-
one, I usually spend the final 10 to
* ways
‘I am constantly on the lookout for new
to improve my life.’
you and explain the benefits to them.
Get them feeling that they have a
15 minutes encouraging coachees
to write down actions that they
* even against others’ opposition.’
‘I love being a champion for my ideas, stake in what you are proposing. Learn
to be proactive and perceptive – not
proactive and pushy. ■
will take. No matter what issues or
opportunities they face, I often say
*Seibert
‘If I see something I don’t like, I fix it.’
and his colleagues administered
that doing something is frequently the questionnaire to hundreds of people
better than doing nothing. employed across a range of occupations Step forward
Research backs up the need to and within different companies. When
take action. Nearly 20 years ago, the researchers also collected data on Watch Dr Rob Yeung’s
researchers led by Scott Seibert at the survey participants’ salaries and their video on taking the initiative at
the University of Notre Dame created career progress, they unsurprisingly found bit.ly/Y-proact
a psychometric test measuring that more proactive individuals tended
proactivity, or the extent to which not only to earn more, but also to have
individuals take the initiative to attained more promotions than less For more information:
influence their work environments. proactive people.
The questionnaire asks people to The relationship between proactivity talentspace.co.uk
rate the extent to which they agree or and work performance has since been
disagree with statements such as: corroborated many times – and the need @robyeung
GL_I_CareersYeung.indd 44 28/02/2017 16:23

Careers | Insight 45
Excitement down under

Having the chance to do more The perfect: international assignment
challenging or exciting work is
the main reason accountants Overseas assignments can bring rich rewards for individuals and their employers, but making
and other professionals in the most of them takes foresight. The typical cost of moving someone from their home post
Australia and New Zealand to one overseas is said to be three to five times their annual salary, so before you take up a
look for another job. tempting offer, ensure you get a clear idea about the gains.
Nearly two-thirds (61%) of There’s a lot to be said for acquiring an international network of contacts, a global
respondents to a survey by perspective on your industry and skills in managing a diverse team, providing you have an idea
recruiter Hays cited this as about how you will leverage those advantages both on your assignment and on your return.
their motivation for switching Factor these gains into your forward plans for your career and think about the end-game.
roles, followed by a lack of Some experts argue that you shouldn’t spend too much effort on integrating on arrival. It
career development in their may be counter-intuitive, but your calling card is your fresh perspective and the opportunity
current workplace (60%), the that gives you to bring creativity to your new working environment. Once you’ve touched
potential of a salary hike (58%) down, stay curious, questioning and committed to working collaboratively.
and the possibility of a better Also remember to maintain links with your office back home and take up any opportunities
work-life balance (54%). to convey your experience. Companies routinely waste lots of money by neglecting to seek
Other factors that feedback. Taking the initiative on this will enhance your value to your employer.
encourage employees to start Above all, take the long view. The value you create goes beyond your own learning and
dusting off their CVs include a development, and will include new relationships, perspectives and visions for the company.
lack of recognition or reward
for completed work (43%), a
feeling that their current job is
too routine and is leading to
a stagnation of their existing
skills (41%), management’s
failure to communicate
business objectives to staff
(30%) and not being involved
in decision-making (24%).
Commenting on the
findings, Nick Deligiannis,
managing director of Hays
Australia & New Zealand,
says: ‘People managers take
the time to make sure they
recruit the right person, but compromised by other people projects or even when they £64,000 and £82,000 in 2017.
often spend very little time being insufficiently critical of evaluate projects in the past.’ Their skills are in demand
on their retention. Why don’t their projects and turning a because organisations want
more employers link the career blind eye to their flaws. Top salary gains them to review their financial
development of their staff and In contrast, project leaders Financial planning and analysis modelling and offer insight
the provision of new, exciting with a middle-ranking status managers can expect to on how to create efficiencies,
and challenging tasks with their typically produce the best command the largest salary improve productivity and drive
organisation’s overall goals?’ results because they do not increases in 2017, according profit performance.
get unconditional support to research by UK recruiter It should also be a good
Hindering success and so receive vital feedback Robert Half. year for financial controllers,
CFOs who are leading major that they can use for their Their job tops the list of who rank fifth on the list, with
projects such as transformation improved performance. 10 roles that are set to secure expected salaries of between
programmes could find their While status is beneficial the chunkiest salary gains this £59,500 and £72,750 and a
status is getting in the way of because it helps leaders to year, with pay rises expected predicted pay increase of
achieving the best results. get the necessary support for to be in the region of 5.8%. 4.3%. ‘With new regulation
According to research their project and speeds up the Next come senior operational and reporting standards,
by Balazs Szatmari, a PhD implementation process, the risk managers, who are in line such as FRS101/102 and
student at Erasmus University’s downside is it can allow senior for an increase of 5.2%, and changes to limited company
Rotterdam School of managers to get away with project managers in finance taxable benefits, there will
Management, projects led by bad ideas, bad execution and and accounting, who could be a premium for qualified
high-status managers are more framing their failures as success. take home an extra 4.9%. accountants who can
likely to fail than those led by Szatmari notes: ‘This is Robert Half says that help organisations remain
middle-ranking managers. something organisations financial planning and analysis compliant,’ says Robert Half. ■
Szatmari found that should be aware of when managers in large companies
leaders’ plans can be they assign the managers of should be able to earn between Sally Percy, journalist
GL_CAR_Loxton.indd 45 02/03/2017 14:43

46 Insight | Change management
CPD
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on this article at
accaglobal.com/abcpd
Softly, softly
All change management projects comprise ‘hard’ and ‘soft’ components, and it is a
failure to understand the latter that can really scupper the plan, says Alison Young
I
s every change management project different? It might So while it’s true that taking a cookie-cutter approach to
seem so on the face of it. There is a wide range of reasons planning and executing change is not going to yield success,
as to why change may be needed: the speed and elapsed we know that particular themes will crop up time and again, no
time from beginning to end will be unique to each situation; matter the nature of the change.
and how the change is implemented will depend on the Certain components of change management projects
characters responsible and the culture in which the whole are common to all: the need for a robust business case, the
change sits. And we all know just how idiosyncratic we articulation of tangible benefits, a realistic change management
human beings can be. plan with a shared set of tools and metrics, and a compelling
GL_I_Grundy.indd 46 03/03/2017 11:02

Change management | Insight 47
vision. Get any of these wrong and potholes will appear fairly of concrete next steps or certainty – need to trust their leader. The
quickly along the change journey. leader then has a key role to engender trust and so help employees
But there are also more elusive components that might be move towards a future that may seem somewhat unclear.
harder to control, such as leadership buy-in. If this is missing, the
change team might just as well pack up and go home. Manager’s role
Commitment to the change – both public and private – by But it’s not only the leader who needs soft skills; the manager
all the senior leaders is key. We know that employees rarely plays an important role too in translating the bigger change
follow what a leader says; they follow what a leader does – messages and overall direction of travel into the here and now.
what is prioritised, how resources are allocated, and the way Against the broader narrative of change, managers make
that decisions are made. If a leader is inauthentic in their a significant contribution to the change effort in creating clear
commitment, not only will it be obvious to those around them, it team and individual goals, providing consistency and staying on
will act like a warning signal, indicating to others that they should message without being dogmatic. They also need to nip in the
avoid committing to the change too. When faced with a leader bud any resistance to change, but equally challenge the change
who lacks belief in the proposed change, wait until they are team when proposed new local processes simply won’t work.
convinced, or move them aside or out. These change skills are critical: they help create a safe and
meaningful context for individuals and
Going soft teams who may be struggling to make
Beyond their innate belief in sense of the changes going on all
the proposed change and their around them. Furthermore, managers
commitment to it, leaders need a play a key role in helping their people
battery of soft skills if they are to lead It is as critical through the day-to-day emotional
change successfully. The good news journey of the transition to the new.
is that most of these skills can be to commit No change will be successful
learnt. And there’s no better training
ground to hone and develop new
resources to the without hefty doses of soft skills from
leaders and managers. If leaders are
leadership muscle than during a change development of found to be lacking in certain areas,
programme. In fact, getting real-time managers may be able to fill in the
feedback from colleagues and others soft change skills gaps to keep their team’s energy
gives a coach the perfect setting to help as it is to systems focused and correctly channelled.
a leader apply new learning to increase Training and development
their influence and effectiveness. or technology needs to be baked into the change
The so-called soft skills that leaders plan and valued as an important
need can be divided into two broad investment, rather than reached for as
categories: ‘outwards’ and ‘inwards’. an afterthought only when resistance
The outwards skills are the observable behaviours, including, for is becoming evident. It is as critical to commit resources to the
example, being visible to employees at all levels, being open development of soft change skills as it is to systems or technology.
to ideas in conversations (as opposed to shutting down ideas Supporting leaders and managers too little and too late is not
that run counter to the direction of the change), speaking with only a threat to the financial success of the change investment, it
inspiration and being real. can cause irreparable damage to individuals and to the culture of
Being authentic with others and learning how to communicate the organisation or department.
clearly using compelling ideas is achievable by even the most But the final word must go to employees themselves who
extreme of introverts. If big, staged events don’t bring out the best need their own skills to navigate the uncertainties and ambiguity
in a particular leader, then perhaps a smaller and more intimate of change. Without their resilience, their ability to be curious and
setting with employees might be a better option. open-minded, or their willingness to take responsibility and to
Most leaders don’t have a ‘be inspirational’ switch that they can speak up, perhaps no change would take place at all. ■
turn on when they need it. But with support, any leader can create
the context or situation in which they can be the best version of Alison Young is a consultant at change management specialist
themselves. And that is all that employees ask for – leaders can EchoChanges; echochanges.com
leave the superman or superwoman costume at home.
The ‘inwards’ skills are just as important but are less immediately
observable and are typically honed over time. They include Lights! Camera! Action!
resilience and humility – perhaps the yin and yang at the heart of
emotional intelligence. Arguably, these are skills that any senior Catch up on our collection of management
leader needs in any situation, but they are particularly important and strategy videos at bit.ly/Grundy1
during periods of intense change when employees – often devoid
GL_I_Grundy.indd 47 03/03/2017 11:02

48 Insight | Management and strategy
Seeing the future

In the third article in our series looking at what it takes to be a great leader,
David Parmenter discusses the importance of being prepared for and embracing change
M *
anagement guru Peter Drucker once said ‘the future be so bold and exciting in their own right that they would
is already here’. He was pointing out that signs of continue to stimulate progress even if the organisation’s
change present now are signalling the massive shifts leaders disappeared before they were completed
to come. Great leaders spend time looking for these signals
and then prepare the way forward for their organisation.
* be consistent with an organisation’s strategy.
One of the greatest BHAGs was former US president John
Drucker said that leaders need to organise themselves to F Kennedy’s: ‘I believe this nation should commit itself to
see the opportunities. He warned them not to be complacent, achieving the goal, before this decade is out, of landing a man
pointing out that it was inevitable that someone’s revolutionary on the moon and returning him safely to the Earth.’ This simple
idea is around the next corner. All organisations will face statement galvanised the whole American scientific community
times when change is catastrophic, and comes suddenly and for a Herculean effort.
forcefully. Insightful leaders have to see the warning signs
and make the painful decision to ditch businesses that were Outside-in
once successful but are now in decline. This allows them the Drucker said leaders needed to look at their organisation from
opportunity to move into new business areas where they can the outside in. They need to define their business from the
once again be market leaders. customer’s perspective. They also have to be aware of all the
Blue Ocean Strategy by W Chan Kim and Renée Mauborgne potential customers out there, asking how they can tap into
is the quintessential book on the topic of exploring new potential demand.
opportunities. They point out that it is easier to find new areas of He also said that great organisations should ensure senior
business (blue oceans) than fight tooth and nail for a dwindling management spend some time each year directly interfacing
market (red oceans). Stage show franchise Cirque du Soleil is with customers, eg having a week where they serve customers as
an example of blue ocean thinking. Dance, opera and circus frontline workers. After the hands-on week, senior management
were merged together into a great new spectacle where there are refreshed, look at the operations from an outside-in
were few competitors. As an added advantage, because all their perspective, are more aware of the bureaucracy that is getting in
performers are treated equally, they moved away from billing star the way and are a much tighter-knit team.
performers, with their high costs and associated demands. Leaders need to be aware of signs of corporate decay,
Leadership expert Jack Welch was at the forefront of many of indications that their organisation is on the slippery slope to
the moves that General Electric (GE) made under his leadership. oblivion. Check out Jim Collin’s How the Mighty Fall.
He saw change as an opportunity. He led the e-commerce
and Six Sigma revolutions that were to have such a profound Next steps
impact on GE. Welch is quoted as saying: ‘Control your destiny 1. Spend three hours a week looking for blue ocean opportunities
or someone else will’, ‘Change before you have to’, and ‘If you 2. Create a BHAG for your team
don’t have a competitive advantage, get out of the game’. 3. Email me parmenter@waymark.co.nz for a checklist on
‘seeing into the future’. ■
Big, hairy, audacious
Big, hairy, audacious goals (BHAG) were first mentioned in Jim David Parmenter is a writer and presenter on measuring,
Collin’s book Built To Last. Collins said BHAGs should: monitoring and managing performance
* be so clear and compelling that they require little or
no explanation For more information:
* fall well outside the comfort zone of an organisation’s staff,
although they should have reason to believe they can pull it off davidparmenter.com
GL_I_Parmenter.indd 48 02/03/2017 15:48

Conceptual Framework | Technical 49
CPD Grand designs

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on this article at
In the second in a series on the IASB’s changes to the Conceptual
accaglobal.com/abcpd Framework, Adam Deller examines some contentious issues
Some of the proposals from is replaced with the potential assets and liabilities will leave helpful and practical, even if
the International Accounting to require the entity to transfer these unaffected. The IASB has you’ve previously managed
Standards Board (IASB) for economic resources. explained that these standards without them.
updating its Conceptual The reason for this change don’t rely on an argument In the existing framework,
Framework for Financial is that some people interpret that items fail to meet the there are a few paragraphs
Reporting 2010 have led ‘expected’ to mean that definition of an asset or liability. outlining possible
to detailed discussion as an item can be an asset or Instead, the standards include measurement bases, but
revisions approach the liability only if some minimum probable inflows or outflows they are limited in detail.
completion stage. threshold were exceeded. as a criterion for recognition. The proposed changes, in
The IASB has proposed As the IASB has applied no The IASB believes that this chapter 6, will add an entire
changes to the definitions of such interpretation in setting uncertainty is best dealt section on the measurement
assets and liabilities in chapter recent International Financial with in the recognition or of elements in the financial
4 of the framework. To casual Reporting Standards, it has measurement of items, rather statements. Of all the
observers, it might seem altered the definition in an than in the definition of assets proposed changes in the
like some of these are the attempt to improve clarity. or liabilities. framework, this is the one
equivalent of repainting white The IASB has that is still under detailed
walls as cream; to other users acknowledged that some Practical additions discussion, so here are the
it might feel like a whole new standards do include No separate section on main decisions to date.
palette. probability criteria for measurement bases currently The first of the
The changes under recognising assets and exists in the Conceptual measurement bases discussed
discussion are explained in liabilities. For example, Framework, as it was thought is historical cost. The
the box on page 50. The IAS 37, Provisions, Contingent to be unnecessary. However, accounting treatment of this is
IASB has proposed a shift in Liabilities and Contingent when you’re undertaking a unchanged, but the framework
the fundamental definition of Assets, states that a provision project of the magnitude of now outlines that the»
assets and liabilities. While the can be recorded only if there redrafting the framework, you
concept of control remains, is a probable outflow of may as well put in some
the key change – alongside economic benefits, while IAS additions
the concept of a present 38, Intangible Assets, highlights that are
obligation for liabilities – is that for development costs to
the replacement of the be recognised there must
term ‘expected’. For assets, be probable economic
expected economic benefit is benefits arising from the
replaced with the potential to development.
produce economic benefits. The proposed
For liabilities, the expected change to the
outflow of economic benefits definition of
The IASB has

proposed a shift in
the fundamental
definition of
assets and
liabilities in
an attempt to
improve clarity
GL_T_Deller.indd 49 02/03/2017 17:03

50 Technical | Conceptual Framework
carrying amount of non- would acquire the asset (or

financial items held at historical incur the liability) at
cost is adjusted over time to current market prices;
depict the usage (in the form of by contrast, fair value
depreciation or amortisation) or and value in use are exit
items suggesting the historical values, focusing on
cost is no longer recoverable the values that will be
(impairment). Financial items gained from the item.
held at historical cost will
reflect subsequent changes Examples for guidance
such as interest and payments, In addition to outlining these
following the principle often measurement bases, the
referred to as amortised cost. framework discusses them
The framework also outlines in the light of the qualitative
three measurements of current characteristics of financial
value: fair value, value in use information. It stops short of
and current cost. Fair value recommending the bases that
continues to be defined as the items should be held under,
price in an orderly transaction but gives some guidance
between market participants. in the form of examples to
Value in use is defined as show where certain bases
an entity-specific value, and may be more relevant.
remains as the present value Relevance is a key
of the cashflows an entity issue here. As discussed
expects to derive from the in the revised framework,
continuing use of an asset historical cost may not
and its ultimate disposal. provide relevant information
Current cost is different from about assets held for a
fair value and value in use, as long period, and is certainly
it is an entry value. It looks at unlikely to provide relevant
the value at which the entity information about derivatives.
Definitions of assets and liabilities
Proposed supporting
Existing definition Proposed definition
concept
A resource controlled by A present economic

the entity as a result of resource controlled by the
past events and from which entity as a result of past
Asset (of an entity)
future economic benefits events
are expected to flow to the
entity
A right that has the potential

Economic resource to produce economic
benefits
A present obligation of A present obligation of An entity’s obligation

the entity arising from past the entity to transfer an to transfer an economic
events, the settlement of economic resource as a resource must have the
Liability (of an entity) which is expected to result result of past events potential to require the
in an outflow from the entity entity to transfer an
of resources embodying economic resource to
economic benefits another party
GL_T_Deller.indd 50 02/03/2017 16:39

Conceptual Framework | Technical 51
In both cases, it is likely that presumptions regarding is that income and expenses recycled. Sometimes the best
some variation of current value other comprehensive income should be included in the way forward isn’t necessarily to
will be used to provide more (OCI). While the conclusion statement of profit or loss seek the wisdom of crowds.
predictive information to users. reached remains largely the unless relevance or faithful
Conversely, the framework same, many commentators felt representation would be Middle ground
suggests that fair value may that rebuttable presumptions enhanced by including a The IASB has found a middle
not be relevant if items are change in the ground. The framework will
held solely for use or to current value of an now state that income and
collect contractual cashflows. asset or a liability expenses included in OCI
Alongside this, it specifically If you’re in OCI. should be recycled when
mentions items used in The second doing so would enhance the
combination to generate redrafting, you relates to the information’s relevance or
cashflows by producing goods may as well put recycling of items faithful representation. Items
or services to customers. in OCI into profit in OCI may not be recycled
As these items are unlikely
in additions that or loss. Under if there is no clear basis for
to be able to be sold are helpful even IAS 1, Presentation identifying the period in which
separately without penalising of Financial recycling should occur.
the activities, a cost-based
if you previously Statements, items These are the key findings
measure will probably provide managed without should be shown to date. In most cases, they
more relevant information, as them as reclassified into will be seen as minor changes
the cost is compared to the profit or loss, or not to terminology, or simply
margin made on sales. reclassified. outlining what already exists.
The recycling However, debate on the
Constructive criticism shouldn’t exist in the of OCI is a contentious issue. concepts of measurement and
Some key issues in chapter 7 framework. The IASB agreed, Some argue that all OCI items OCI is sure to rumble on. ■
on presentation and disclosure and has replaced them with should be recycled; some
have changed since previous stated principles regarding the that OCI items should never Adam Deller is a financial
drafts. Originally this chapter use of OCI. be recycled; and some that reporting specialist and
included two rebuttable The first of these principles only certain items should be lecturer
Switch
GL_T_Deller.indd 51 02/03/2017 16:39

52 Technical | IPSAS 40
Public relations
Thomas Mueller-Marques Berger and Serene Seah-Tan look at IPSAS 40, which seeks
to bring clarity to non-exchange amalgamations and acquisitions in the public sector
The International Public occur by mutual agreement

Sector Accounting of the parties involved, or
Standards Board (IPSASB) by compulsion (eg through
was tasked with developing legislation). Examples of public
accounting requirements sector combinations include
for the public sector that nationalisations and bailouts
would more faithfully – where a non-exchange
represent the nature of acquisition occurs without
the transactions actually the transfer of consideration;
happening in that sector. centralisation of government
One area of specific functions; and reorganisation
guidance that was lacking of government entities.
in the IPSASB literature until After ascertaining that that the combination is an identified. In other words, one
this year was organisational a transaction falls within amalgamation. Furthermore, of the parties to the transaction
restructures in the public the scope of the standard, if the combination is imposed would be deemed to have
sector. The private sector the next step is to assess by a third party without obtained control of any net
international accounting whether the combination involvement from the parties assets/liabilities transferred.
standards – International is an amalgamation or an to the combination, if the Usually, an acquisition requires
Financial Reporting Standards acquisition. In situations combination is subject to the voluntary participation by
(IFRS) – upon which IPSAS where nil consideration citizens’ approval through the parties involved. However,
are based (the relevant IFRS is paid to the recipient of a referendum, or if a in circumstances where, for
here is IFRS 3, Business the transferred net assets, combination under common example, a government
Combinations), do not deal where there is no identifiable control occurs, these may decide to nationalise
with the non-exchange nature recipient of the transferred circumstances would also a private sector entity
of amalgamations in the assets, or where consideration point towards the combination through legislation, against
public sector. The need for is paid not as compensation being classified as an the wishes of the entity’s
guidance has become more for the transferred net amalgamation. shareholders, the economic
urgent in recent years as assets, according to the An acquisition would substance of this combination
bailouts, nationalisations and standard this would indicate require an acquirer to be would be deemed more akin
restructures of government to an acquisition, as one
entities occurred in the wake party is gaining control of
of the global financial and another’s operations.
sovereign debt crises. The The gaining of control of
highly anticipated IPSAS operations by a party to the
40 was issued at the end of combination is an essential
January this year. element of an acquisition, but
the standard also states that
Affected transactions this ‘control’ criterion in itself
IPSAS 40 applies to is not sufficient to determine
combinations of assets and whether a combination is an
liabilities that constitute an acquisition; a consideration
operation. The standard of the economic substance of
defines an operation as an the combination is crucial in
‘integrated set of activities the determination.
and related assets and/ The differentiation
or liabilities that is capable between IPSAS 40 and IFRS
of being conducted and 3 is in the classification of
managed for the purpose combinations. IFRS 3, Business
of achieving an entity’s Combinations considers all
objectives, by providing goods business combinations to
and/or services’. A public be acquisitions, because
sector combination could ‘true mergers’ are very rare
INT_T_IPSAS40.indd 52 08/03/2017 15:35

IPSAS 40 | Technical 53
(virtually non-existent) in the

private sector. However, in
the public sector, mergers are
common. In the public sector,
there may be no quantifiable
ownership interests in a public
sector entity, which makes
it impossible to identify an
acquirer in such circumstances.
Two approaches
The classification of the
combination is crucial as the
recognition and measurement
criteria for the transferred
assets and liabilities are
different under the modified
pooling of interests approach
used for amalgamations versus
the acquisition method used
for acquisitions.
Under the modified
pooling of interests method,
the identifiable assets and
liabilities of the combining
operations are measured
at their carrying amounts in
the financial statements of
the combining operations at
amalgamation date, apart from
reasons for supporting the excess between consideration still failed to obtain them.
limited exceptions for licences
modified pooling of interests transferred (plus the amount As the accounting outcome
or similar rights, income taxes
approach, the IPSASB of any non-controlling interest of an amalgamation
and employee benefits. The
came to the view that the and fair value of an acquirer’s versus an acquisition is so
modified pooling of interests
modified pooling of interests previously held equity different, classification of a
method takes place at the
method is appropriate on interest for step-acquisitions), combination would require
date of an amalgamation,the basis that users are able and net amounts of the significant judgment by
consequently no comparative
to assess the performance identifiable assets acquired preparers.
information is required.and accountability of the and liabilities assumed. IPSAS 40 is effective from
An entity could voluntarily
resulting entity, without the annual reporting periods
choose to present prior period
entity having to re-measure its Fair value concerns beginning on or after
information without any assets and liabilities, and the During the consultation 1 January 2019 and entities
restatements, with explanation
amalgamation is portrayed as phase of the project, are allowed to early adopt
of the basis on which the
it actually is, ie a combination some respondents raised the standard. The standard is
information is presented.
of assets and liabilities from concerns on the difficulty of applied prospectively only to
Besides the cost/benefits
the date of amalgamation. obtaining fair values of an combinations that occurred
For acquisitions, item and suggested using after the date of application. ■
largely consistent an item’s previous carrying
with the amount as a proxy for fair Thomas Mueller-Marques
IPSAS 40 is requirements in value under the acquisition Berger, EY global leader for
IFRS 3, Business method. The IPSASB did not international public sector
effective from Combinations, agree and noted that using accounting, and Serene
annual reporting identifiable assets carrying amounts may not be Seah-Tan, director, financial
acquired and appropriate in all instances. accounting advisory services,
periods beginning liabilities assumed Therefore the exception to Ernst & Young Australia
on or after 1 are measured at using fair values would only
January 2019 and their fair values
at acquisition
occur in rare circumstances
and after an entity has made
The views reflected in this
article are the views of
entities can early date. Goodwill every reasonable effort to the authors and do not
adopt the standard or a gain from a obtain the fair values of necessarily reflect the views of
bargain purchase is the assets acquired and the global EY organisation or
recognised for the liabilities assumed, but its member firms
INT_T_IPSAS40.indd 53 08/03/2017 15:35

54 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
WTO
Saudi Arabia signs Gulf VAT deal
Trade remedies
Disputes can arise that impact Saudi Arabia has formally backed the Gulf Cooperation
on the economy and, if Council’s (GCC) agreement to establish VAT in all six
unresolved, can escalate and member states by 2018. All GCC states (also including
take longer to solve. They can Bahrain, Kuwait, Oman, Qatar and the United Arab
impact on UK access to other Emirates) have now signed. Next, the states will establish
markets and on other markets’ national VAT laws – significant given GCC governments
access to the UK. This is an have generally avoided taxing local populations. A common
important area as businesses GCC VAT rate of 5% is expected. More at bit.ly/2n6ufVS.
invest in export opportunities
and, where possible, need to
make that investment with a Commission has concerns Commission. More at bit. depositories. One change is a
degree of certainty. The WTO that existing rules make it ly/2k9e8sp. new regulation regulating the
has a series of remedies to ‘excessively complex and calculation of cash penalties
settle trade disputes. The UK costly for SMEs to comply with Romania corruption fears for settlement failures and
is likely, following its exit from their VAT obligations’. More at The European Commission operating depositories in
the EU, to use this framework, bit.ly/2if5TXN. has raised concerns about a member states. More at bit.
which covers anti-dumping, Romanian government decree ly/2mtgG5I.
subsidies and countervailing Hybrid mismatches that would decriminalise abuse Another new rule controls
measures and safeguards. EU ministers have reached of public authority offences reporting internalised
agreement on new rules involving less than 200,000 settlements, setting standards
Trade facilitation aimed at closing down ‘hybrid Romanian leu (US$47,300). ‘The for authorisation, supervisory
The trade facilitation mismatches’ with the tax fight against corruption needs and operational requirements
agreement came into force on systems of non-EU countries. to be advanced, not undone,’ for depositories – see bit.
22 February after two-thirds The law seeks to prevent large said Commission president ly/2n65U2G.
of the WTO membership companies from exploiting Jean-Claude Juncker. Ministers also accepted
completed their domestic disparities between two or technical standards on
ratification processes. Its more tax jurisdictions to Insolvency regulations applying position limits to
aim is to speed up the reduce their overall tax liability The EU Council of Ministers commodity derivatives. More
movement, release and – such tax avoidance within has approved a new law on at bit.ly/2meKNgX.
clearance of goods, including the EU was targeted last year insolvency proceedings.
goods in transit. More at bit. by an ‘anti-tax-avoidance This includes rules on which OECD
ly/1TRw3jW. directive’ adopted in July. jurisdictions govern the
If the new hybrid mismatch opening and subsequent Tackling Italy’s tax
Glenn Collins, head of directive is also approved by administration of crossborder The Organisation for
technical advisory, ACCA UK the European Parliament, it EU insolvency proceedings, Economic Co-operation &
would be implemented by and how foreign member Development has advised
European Union January 2020. Ministers also states should recognise those that Italy should enhance
agreed to temporarily exclude insolvency proceedings and tax compliance through
VAT reform consultation banks from these new hybrid their enforcement. The law greater investment in
The European Commission mismatch rules. More at bit. includes annexed lists of revenue collection IT and
has completed another ly/2lT86tY. insolvency proceedings and staff; lowering cash payment
consultation on European insolvency practitioners. More thresholds; and introducing
Union (EU) VAT reforms now MOSS report at bit.ly/2lTbsxa. property taxes based on
under consideration, this time A report detailing national updated cadastral values. The
seeking views of experts on rules applied in EU member Securities reforms advice comes in an OECD
current EU VAT rules for small states administering the mini The EU Council of Ministers economic survey of Italy. More
and medium-sized enterprises one-stop shop (MOSS) EU VAT has accepted European at bit.ly/1AWgTPI. ■
(SMEs) and possible changes registration system has been Commission reforms to EU
to these regulations. The released by the European controls on central securities Keith Nuthall, journalist
INT_T_update.indd 54 08/03/2017 17:02

55
INT55-RHP.indd 73 08/03/2017 14:38

56 People | Interview
Woman on a mission
As president of IFAC, CA ANZ member Rachel Grimes FCA is working to deliver a strong
standards-setting model that will support accountants in challenging times
In 2014, Rachel Grimes message resonated strongly accounting profession. Her sand in terms of standards
stood face-to-face with Pope with her. ‘I don’t want to sit on appointment comes at a time setting,’ she says.
Francis in the Vatican. The the sidelines,’ she says. ‘I want of significant change for the
meeting was, she says, an to get in and help. That’s my accounting profession, not Early influences
‘amazing and overwhelming’ standard modus operandi. I’m least as a result of technology Making a contribution to
experience. The leader of prepared to roll up my sleeves.’ disruption, which she wants society was instilled in Grimes
the Roman Catholic Church As a former president of the industry to be better as a child. She grew up in
addressed the delegation the Institute of Chartered prepared for. Sydney, where her father was a
of which she was part on Accountants Australia Another major challenge lawyer, and her mother a nurse.
the importance of the (ICAA), which merged in is the ever-growing global ‘My parents were dedicated to
accounting profession to 2014 with its counterpart regulatory burden, particularly community service,’ she says.
society. Grimes recalls: ‘He the New Zealand Institute of around standards and ‘They set a fabulous example
said, “You control the money. Chartered Accountants to frameworks. Grimes believes in trying to contribute as much
Don’t leave anybody behind form Chartered Accountants that the profession is on a as you can.’ At school fetes,
in the process, and be aware Australia and New Zealand strong footing and living up Grimes would help her father
of fraud and corruption.”’ (CA ANZ), Grimes recently to Pope Francis’ lofty vision. count the takings.
Grimes’ career has been became president of the However, she wants to use Starting her career at
defined by that broader International Federation her presidency to defend PwC, she worked in audit,
contribution to her profession of Accountants (IFAC), the against regulatory overreach. specialising in banking, but
and society, and Pope Francis’ global organisation for the ‘We need to draw a line in the also helped with other clients,
INT_P_Grimes.indd 56 08/03/2017 15:35

Interview | People 57
including the global sports work closely with someone

talent management company 2016 she deeply respected. In 2014,
IMG. ‘As a self-confessed Became president of IFAC IFAC was about to appoint its
sports nut this was heaven,’ first female president, Olivia
she says. 2014 Kirtley, who was also IFAC’s
Rob Ward, a former ICAA
president himself, now head
Appointed CFO, group technology
division, Westpac
CV first president from industry
and business rather than
of leadership and advocacy public accounting.
at CA ANZ, employed her as 2011 ‘I think Olivia is outstanding
a graduate. ‘Rob has been a Appointed president of ICAA and I knew she was someone
big influence throughout my I could learn a lot from,’
accounting career. I probably 2007-14 Grimes says. She put her hand
wouldn’t be sitting here today Director of M&A, Westpac (Sydney) up to work alongside Kirtley
without his guidance.’ as IFAC’s deputy president,
It was Ward who introduced 2006 and succeeded after a
her to the broader role an Appointed a director of ICAA rigorous selection process that
accountant could play. When included mock presentations
he was ICAA president, Grimes 2004 and press conferences, and an
would sit in on meetings with Appointed ICAA state chair of the NSW Regional Council eight-person panel interview.
him. ‘I saw a different side of As deputy president she was
accounting in terms of the 1998-2007 responsible for setting a three-
influence on outcomes, such as Numerous roles within BT Financial Group including M&A, year strategy for IFAC.
in meetings with regulators.’ Life Insurance and CEO’s office At the end of Kirtley’s
Grimes completed her ICAA two-year tenure as president
qualification at PwC, and sees 1994 in 2016, Grimes was elected
it as a passport to the world. ‘If Became an ICAA member (fellow, 2002) to replace her as the leading
you want to travel, having that voice of the accounting
qualification allows you to work 1990 profession globally. She has
anywhere,’ she says, adding Joined PwC moved quickly. By setting up a
that CA ANZ has members in technology advisory group, she
122 countries. has positioned the accountancy
Grimes’ initial goal was Grimes joined ICAA in New Zealand member bodies industry to manage the risks
to become a partner. ‘I had Australia in 1994, becoming a by aligning their education and embrace the opportunities
my blinkers on,’ she admits. fellow in 2002 and a director and technology platforms. of technology, particularly
But then wealth manager BT in 2006. In 2011 she was Grimes joined the IFAC artificial intelligence and
Financial Group approached appointed president, only the board in 2011. The goal robotics. The group’s first
her with a very interesting offer. second woman to hold the then was to provide greater meeting this year included the
She was torn, but decided to title. She laid the foundations representation of accountants CEOs of all of IFAC’s member
make the move. ‘The hardest for the successful merger from the business sector, and bodies as well as computer
path often works out the best between the Australian and she saw an opportunity to giant IBM.
as you learn the most,’ she Grimes says accountants
adds. ‘You need to challenge need to differentiate
yourself in different ways.’ ACCA/CA ANZ alliance boosts value themselves in a world where
After BT, in 2007 Grimes technology can perform many
became director of mergers This article is one of a number we are sourcing from core tasks in areas such as
and acquisitions at Westpac, ACCA’s alliance partners at Chartered Accountants ANZ. auditing, but where analysis
where she spent seven years The strategic alliance was agreed in June 2016 to deliver and high-level business
working on major transactions, value for members of both bodies. Benefits so far include: understanding remain crucial.
including the IPO of BT
Investment Management and
* access to each other’s CPD resources, increasing the
range of learning opportunities for members on a wide
‘People will always want that
face-to-face service. What
the merger of St George and range of topics and in a variety of formats skillsets do we have to build
Westpac itself.
In July 2014, she became
* Reach magazine, a special joint publication with insight
and articles sourced from both bodies, addressing
around young people so they
can deliver on that?
CFO of Westpac’s group challenges faced by professional accountants across ‘We need to make sure
technology division. ‘Westpac the world (see page 9) we are across things that
is an amazing organisation
that has supported me in each
* opportunities to attend face-to-face events held by
the partner body
are changing quickly, like
technology,’ she adds. ‘Data,
stage of my volunteering with
* the combined power of two strong brands for example, is the most
the accounting bodies, and
it complements my desire to
* joint research activities.
More at accaglobal.com/alliance
valuable asset of any company.
But it’s not on any balance
assist people,’ she says. sheet. How do we audit that »
INT_P_Grimes.indd 57 08/03/2017 15:35

58 People | Interview
and place a value on it?’the Public Interest Oversight regions and backgrounds Grimes firmly believes the
Grimes also wants to help
Board, are reviewing the from the accounting accounting profession is on
attract and retain young talent,
standards-setting model to profession are best placed track to live up to the message
and to recruit more women.
ensure the public interest to develop standards.’ of Pope Francis, and plans to
As ICAA president she metis being met and that the There is a fine line, she defend it staunchly during her
pioneering female accountants
industry has the most says, between creating tenure as IFAC president.
from across Australia. appropriate governance an ‘overly independent’ ‘The accounting profession
But her key ambition is
structure. Grimes says IFAC standards-setting model and is first class,’ she says. ‘A
to create certainty around
is always looking for ways to having the deep expertise profession, by definition, is
the setting of accountingimprove the standards-setting of accountants to draw something that’s ethically
standards and frameworks.process and has allocated on. ‘With ethics at the very based. The global accounting
The Monitoring Group of significant resources to this. foundations, accountants profession is strong, it has
international regulators and She warns against diluting operate within the public robust foundations and a solid
financial institutions, and
the role of accountants in interest,’ she says. ‘This framework for our members to
the standards- should never be forgotten.’ turn to in difficult times. The
setting model. member bodies are always
‘Accountants Knee-jerk reactions looking at better ways to
‘I don’t want to sit are experts in Another concern is to avoid support their members – that’s
their respective ill-considered changes to three million accountants
on the sidelines. fields,’ she says. the process in response to across the globe.’ ■
I want to get in ‘The technical events. ‘The model should
expertise is such not be constantly tinkered Ben Power, journalist based
and help. That’s that a lay person with to account for extreme in Sydney
my standard cannot assume that scenarios,’ she says. ‘Rather,
modus operandi. responsibility. It is
absolutely in the
the focus globally should
be the speed to market of
This is an edited version of an
article that was first published
I’m prepared to public interest that standards, and the adoption. in Acuity, the member
roll up my sleeves’ the best possible This will ensure that scarce magazine of ACCA’s strategic
individuals from capital is allocated to the alliance partner Chartered
diverse geographic most efficient users.’ Accountants ANZ
INT_P_Grimes.indd 58 08/03/2017 15:35

News | ACCA 59
ACCA’s X factor
ACCA-X, the learning platform and resource that serves 232 countries and territories,
wins prizes from PQ Magazine and the European Association Awards
ACCA’s online learning the interactive content.

platform has scooped up Celebrating its second
awards in London and anniversary in April, ACCA-X
Brussels, winning study has welcomed 175,000
resource of the year at PQ course enrolments from 232
Magazine’s awards ceremony countries and territories. The
in London, as well as courses prepare learners for
a ‘highly commended’ award Certificates in Financial and
for best training initiative Management Accounting
at the 2017 European and the ACCA Diploma in
Association Awards. Accounting and Business.
ACCA-X was recognised ACCA-X has a diverse learning
by PQ Magazine for providing community, including university ▲ Award-winning
high-quality, affordable and students, job changers, Training firm IAB’s CEO Malcolm Trotter (left) presents the
relevant financial literacy entrepreneurs and SMEs. PQ Magazine award to ACCA’s Mark Kennard
learning to people all around ‘The judges all agreed this
the world. It aims to change product has a “wow” factor
how accountancy is taught, that’s making a real difference,’ For more information:
through its use of online tutors said Reza Ali, ACCA’s director
who guide students through of new ventures. ■ For more information on ACCA-X, visit bit.ly/acca-x
INT_A_prizeACCA-X.indd 59 09/03/2017 11:27

60 ACCA | Public sector
◄ King’s speech
IIRC chairman Mervyn
King talked about
transparency
◄ On a mission
The World Bank Group’s
Patrick Kabuya spoke
about ending poverty
▲ Going public ► Driving force

ACCA’s Jamil Ampomah: ‘It’s ACCA’s Maggie McGee:
an exciting time for public ‘Global change will have a
sector accountants’ local impact’
A force for change

The public sector offers accountants the chance to help shape the public services of the
future, as delegates at an ACCA conference in South Africa found out
The crucial role of finance and donor agencies with long-term sustainability. Public financial reporting and how it
professionals in the public global public sector financial sector finance professionals can help increase transparency
sector was the theme of management experts, and was need to be able to navigate and accountability in the
ACCA’s seventh global public a great opportunity to network, the present, and prepare for public sector.
sector conference, which learn and share best practice. the future to ensure that the Maggie McGee, ACCA
took place in South Africa Opening the event, Jamil best value is obtained from director of professional
in February. Ampomah, ACCA director public funds.’ insights, presented ACCA’s
The two-day event, – Sub Saharan Africa, said: The keynote address was recent report, 50 drivers of
called Drivers of Change, ‘It’s an exciting time to be a given by Professor Mervyn change in the public sector.
included an extensive series professional accountant in the King, chairman of the King This is ACCA’s first global
of technical and inspirational public sector. There is a huge Committee and chairman of report to focus exclusively on
talks and activities. It brought opportunity to help shape the the International Integrated identifying the key factors that
together senior figures from public services of the future, Reporting Council (IIRC). He will change the public sector
governments, regulators achieving value for money and described the evolution of and assess how they will shape
INT_A_SApubsectorvr.indd 60 07/03/2017 16:36

Public sector | ACCA 61
◄ Speaking out ▼ Audit champion

Financial management expert Kimi Makwetu, auditor general
Stephen Emasu took part in a of South Africa, talked about
panel discussion on corruption the importance of audit
the future. Global changes will, another on the role of the in public service was chaired who also closed the event.
says the report, have a local Supreme Audit Institutions, led by Anthony Harbinson FCCA, ‘It’s important that finance
impact and governments will by Keto Kayemba, Uganda’s director of safer communities professionals in this vital sector
need to be at the forefront of assistant auditor general. for the Northern Ireland gather together to discuss
tackling their effects. An inspirational talk by Department of Justice issues and to understand
Kimi Makwetu, auditor Sibusiso Vilane, mountaineer and ACCA past president. where the profession is
general of South Africa, also and expedition leader, Panellists were Vickson Ncube, heading,’ said Ampomah. ‘The
spoke on the importance of outlined how professionals can chief executive, Pan African finance professional working
audit in the country, while become their very best for the Federation of Accountants, in the public sector will need
Lindy Bodewig, International challenges ahead in the public and Stephen Emasu, public to play an even more pivotal
Public Sector Accounting sector’s changing landscape. financial management expert role in managing challenges,
Standards Board (IPSASB) There was also an eye-opening and chairman of ACCA’s Global driving change and seizing
member and chief director presentation from Patrick Forum for the Public Sector, opportunities.’ ■
of the South Africa National Kabuya, senior financial
Treasury, delivered an update management specialist, For more information:
on IPSASB’s work. World Bank Group, who
Guests also took part in a outlined the bank’s support To gain CPD points, watch the recorded sessions on the
number of breakout sessions for governments in order to conference webpage at accaglobal.com/pub-sec-conf
including one on enhancing achieve its two main goals:
public financial management ending extreme poverty and Watch vox pops from the event at bit.ly/SAPSC-voxpops
in the public sector, led promoting shared prosperity.
by Vincent Tophoff, senior Meanwhile, a passionate Read the ACCA report 50 drivers of change in the public
technical manager, IFAC, and panel discussion on corruption sector at bit.ly/2lA9K7M
INT_A_SApubsectorvr.indd 61 09/03/2017 12:18

62 ACCA | MBA
Onwards and upwards

Your ACCA Qualification can lend further momentum to a climb up the skills ladder
through the range of exemption-based MBAs that are now available
ACCA members already business schools and colleges This can be done by seeking of learning, and can save a
hold a globally recognised around the world offering institutions that either have considerable amount of time
and prestigious professional a myriad of postgraduate a relationship with ACCA and money.
qualification. However, for courses, so choosing the right or offer course exemptions, The University of London
those with a thirst for more, one is important. Given the meaning that certain modules, offers a ‘pathway’ to ACCA
a postgraduate qualification work you have already put into usually in accounting and members, which will allow
can be attractive. passing your exams, using finance, can be dropped. This them to gain an MSc in
There are thousands of that knowledge makes sense. avoids tiresome repetition professional accountancy
INT_A_Postgrad.indd 62 06/03/2017 15:13

MBA | ACCA 63
while having to study only two case-by-case basis. skills and learning in new
modules. Jane Towers-Clark, The institution areas, and perhaps others
ACCA’s head of university will assess their ‘Getting just one on the course have their own
development, suggests prior learning and exemptions – in marketing,
this course is unique. ‘The potentially give
exemption means for instance.’
master’s takes the professional them advanced fewer exams and Clearly exemptions can play
qualification as its basis. Other standing. By an important part in helping
courses may offer exemptions, gaining this, the
more time to a member select a course
but the UCL offering is truly students could concentrate on and college. But potential
integrated. There is nothing fast-forward into the other subjects. students need to do a
else like this very different the second or third thorough investigation of the
model.’ It also represents semester. Most It also saves time options. Currently there is no
great value for money, costing importantly, the and money’ central database showing what
less than £3,000. ACCA member is exemptions are available and
gaining access to where, so, as with the Schulich
Substantial discount the top MBA in School of Business, members
For members able to make the country, and that’s worth Edinburgh Business School, must examine their options on
more of an investment, the quite a bit.’ like many others, has a global a case-by-case basis.
global MBA offered by Oxford element, with campuses in There are a variety of
Brookes University, which Reduced workload Dubai and Malaysia, and factors to consider. ‘A lot
has developed the course in This status can reduce the approved learning partners in of institutions charge for
association with ACCA, also credit hours on the MBA 35 countries. These partners exemptions,’ Towers-Clark
has real benefits. Members from 60 to 30. However, the teach the Edinburgh MBA. points out. ‘The member
are able to get exemptions criteria for gaining advanced ACCA members taking needs to clarify the exact
in two modules, which saves standing may also depend the course in Jordan or exemption, and whether there
them 30 credits in a course of on what other qualifications Zambia would still be able is an administration charge
180 credits. are held, such as an honours to apply for an exemption. too. Many of these costs
‘For non-ACCA students business degree. This will be ‘If they have the relevant change over time, so be sure
taking all the modules, the determined by the individual’s qualifications, then the request to get the latest information.’
headline figure is £14,850. assessment. Members can would always come back to It could be there is no price
For members it’s £10,600 – take a master of accounting Edinburgh, where there is a reduction for an exemption,
a substantial discount,’ says course in just eight months central panel,’ explains Brown. but by finishing the course
MBA subject coordinator instead of 12 if they satisfy more quickly, students could
Diana Limburg. the criteria. Do your homework save on, say, a term’s living
‘Those doing the full Not all institutions have A potential pitfall in taking costs – a sizeable amount.
programme usually take to have a partnership with exemptions is that there Spending less money and
30 months, but for ACCA ACCA in order to offer could be fewer networking seeking to finish a course
members it’s more like 24. exemptions. Edinburgh opportunities. If a student isn’t more quickly shouldn’t be the
Being able to apply learning Business School at Heriot-Watt doing a particular module, how only priorities for members.
straightaway is part of our University offers members do they meet those who are? The reputation of a college,
process. It’s a good thing to be exemptions from some of Limburg says this should its location, the cost of
able to have that MBA status its core courses. This can be not be an issue: ‘We’re careful living, student body, alumni
as soon as possible, six of real help, suggests senior not to overdo exemptions, and organisations and CPD points
months earlier than those teaching fellow Ken Brown. the flexible way we deliver the – all should be considered.
without the exemptions.’ He explains: ‘The full-time modules means you’ll meet a But the final objective is the
The Schulich School of MBA takes a whole year and great variety of people from qualification. ‘We don’t rush
Business at York University in requires nine courses. That’s many different backgrounds,’ people,’ says Limburg. ‘It’s
Ontario offers the highest- quite a heavy workload. If you she says. important to take the learning
ranked MBA in Canada. It also get just one exemption, that Towers-Clark doesn’t on board. It’s an incredible
has a partnership with ACCA. means fewer exams and more consider it a problem either, experience. The goal is to
Members applying to this time to concentrate on the ‘as long as the course is well achieve MBA-level thinking.’ ■
leading institution, which has other subjects. It also saves run’. She adds: ‘An exemption
further campuses in Beijing the students time and money.’ allows time to develop other Matt Warner, journalist
and Hyderabad, can find that
their qualification gives them For more information:
an advantage.
‘It’s a little different in Read more about the Oxford Brookes MBA at bit.ly/ACCA-OB-MBA
Canada,’ explains Jillian
Couse, engagement manager Find out more about the University of London MSc at bit.ly/ACCA-UL-MBA
for ACCA Canada. ‘The school
looks at individuals on a More on the Schulich University Business School’s MBA programme at bit.ly/Schulich-MBA
INT_A_Postgrad.indd 63 06/03/2017 15:13

64 ACCA | Diversity
The missing ingredient

Progress towards gender diversity on boards in the Gulf Cooperation Council region has
been slow, but is bolstered by the undoubted corporate benefits of female representation
Promoting women to
corporate boards in the
Middle East and elsewhere
can directly improve
profitability and change the
way a company approaches
its market, according to
participants at a recent
networking breakfast in
Dubai that was hosted
by ACCA.
In her keynote speech, Her
Excellency Sara Al Madani,
board member at the Sharjah
Chamber of Commerce
and Industry in the UAE
(and the subject of AB’s big
interview in the March issue),
said: ‘Studies have proven
there’s a huge lack of female
representation at board level,
not just in the Arab world but
globally. It’s a very male- in brainstorming sessions ▲ Women in finance
dominated area, regardless because they’re going to make The ‘Women in Finance: Beyond the Numbers’ breakfast event in
of whether the woman is this change with us.’ Dubai was the launchpad for the ACCA report of the same name,
professionally capable. According to an ACCA which revealed that just 2% of GCC boards had women members
‘The pressure is high report, entitled Women in
because women feel they Finance: Beyond the numbers, and the UAE). Women fill 17% they assume they don’t have
have to continuously prove that was launched at the of all executive roles in the that kind of experience. But it’s
themselves, and when that event, women account for a UAE and just 7% in Qatar. okay – neither do all the men.’
happens, the passion [for meagre 2% of board positions The report also revealed Getting more women
their career] dries up easily. across the six countries of the that across the region only at board level should be a
If we’re going to solve this Gulf Cooperation Council 13% of CEOs are women priority, she said. ‘Once that
problem, we need to involve (GCC – Bahrain, Kuwait, (compared with an average of happens, everything else will
a lot of men, and have them Oman, Qatar, Saudi Arabia 21% in all emerging market fall into place. The part-time
and developing countries) and and remote working, the
only 7% of GCC presidents of training, the pay and equality
the board are female. can all be addressed.’
The findings are based The UAE has already
on research carried out by made it compulsory for all
Deloitte Middle East and the state-owned corporations to
Pearl Initiative for ACCA. include at least one female
Clare Woodcraft-Scott, member on their boards. The
CEO of the Emirates legislation came into force in
Foundation for Youth December 2012, though the
Development, told the event results are yet to be seen.
participants: ‘There’s a reason
why not many women are on Not-for-profit leverage
boards. Men apply for a job One way women can get
when they’re 60% qualified for access to governance roles
it, but women will only apply is by joining the not-for-
when they’re 100% qualified – profit sector and leveraging
INT_A_DubaiWomen.indd 64 08/03/2017 17:44

Diversity | ACCA 65
positions there to build

experience for commercial,
paid roles, suggested
Woodcraft-Scott.
Having sat on both types
of boards, she believes
that financial literacy is
fundamental for such a
responsibility. ‘If you have
skills in finance, you already
have what it takes to be on
a board, because one of the
basic aspects of governance is
being able to read the balance
sheet,’ she said. ‘It’s very
easy to get stuck on a board,
particularly a male-dominated ► Top priority
one, if you cannot read your Clare Woodcraft-Scott:
balance sheet.’ once women are on
Cynthia Corby, partner boards, gender-based
at Deloitte Middle East and workforce issues can all
chair of the ACCA Women be taken care of
in Finance forum, noted that
women are major consumers looking at a male-to-female women remained committed Emirati woman, who will be
around the world and make ratio of 75:25,’ she said. ‘Even and motivated. ‘That was a key taking over from the end of
many purchasing decisions. in the government sector, part in retaining our senior-level 2017. ‘Women in this region
They can therefore bring which has the highest ratio of ladies,’ she said. are shining today, having
a completely different women in the UAE, I find more Jazla Hamad, audit been historically deprived of
perspective to the boardroom men, so I don’t know where manager at Deloitte Middle opportunity. When you give
and the way a company the women are.’ East, said her workplace has them a chance, they run with it
approaches its market. Corby urged women to always been flexible and that and take it,’ she said.
‘It’s been proven [through make more effort to upgrade female employees can take
global index provider MSCI] their skills: ‘Don’t sit and wait. longer maternity leaves than in Where and when
that companies with more Many of us work for large other companies. ‘Sometimes, The ‘Women in Finance:
women on their boards deliver organisations which have women will avail up to one year Beyond the Numbers’
36% better return on equity training and development and then come back,’ she said. breakfast event was held on
than those lacking board programmes. Find out what Hamad is currently the only 2 February at the Four Seasons
diversity,’ Corby said. they are and which one will female Emirati employee at hotel in Dubai and attended
Similarly, Al Madani noted make a difference to you, and Deloitte, where she manages by senior finance professionals
that gender diversity in ask for the opportunity to portfolios of clients and and leaders from the UAE.
finance has tangibly benefited attend that course.’ trains employees. She said: The gathering was
companies which have ‘In general, Emirati women supported by Deloitte Middle
achieved that on a large scale. Loyalty are not fully aware about the East, the Manchester Business
Nearly half of the finance When it comes to the opportunities that the private School Middle East Centre,
professionals (46%) interviewed longstanding issue of retaining sector can offer; they would the Hawkamah Institute for
in the ACCA study said that female executives, companies typically prefer to work in Corporate Governance, and
achieving gender diversity that are willing to be flexible the public sector due to the the 30% Club GCC (a volunteer
at senior executive levels is gain loyal employees in return. perception that it offers better organisation of business
becoming a priority for CEOs. For example, when Deloitte work-life balances. But times leaders in the Gulf Cooperation
However, 38% thought this is Middle East implemented its are changing; local women Council countries that
not the case yet. part-time policy, a number of are becoming selective of the promotes better representation
According to Léonie Tovell, female staff requested access positions they take and are of women on boards and in
managing director of Blink, a to the scheme. These women prioritising self-development.’ senior-level positions). ■
Dubai-based consultancy that proved their ability to serve a Woodcraft-Scott said
teaches communication skills portfolio and respond to clients that her successor at the Heba Hashem, journalist
and leadership to all types of while working part-time, and Emirates Foundation is an based in Dubai
organisations, women account validated the business rationale
for a small fraction of their for this type of policy, Corby For more information:
trainees in the UAE. ‘In terms told the audience. Eventually,
of the gender split of trainee the flexitime system showed Read the ACCA report Women in Finance: Beyond the
delegates, I would say we’re encouraging results as the numbers at bit.ly/ACCA-WiF
INT_A_DubaiWomen.indd 65 07/03/2017 16:35

66 ACCA | Update
Inside ACCA
64 Women in Finance
Nature’s numbers
Balancing Gulf boards Embedding natural and social capital in business decision-making
62 MBA partnerships
was the theme of the first of this year’s ACCA President’s Debates
Courses with exemptions
60 Public sector
Global conference ► Bring in
biodiversity
59 ACCA-X Phil Hogan,
EU agriculture
22 President commissioner, at
The culture revolution the debate
ACCA member
benefits
Employability
Membership improves
earning power and job
prospects on a global
scale.
Influence and
representation
Members play key
roles in representing
and developing the Social and natural capital making, and how that could public goods. But the devil
profession, backed by imperatives are increasingly help businesses make more is in the detail: it is always
cutting-edge research. seen as issues that sustainable choices. very nice to talk about public
businesses and investors Brian McEnery, ACCA goods, but it is worth asking
Knowledge and should manage and quantify, president, said: ‘The growing what exactly this means. How
connections panellists at ACCA’s recent interest in the concept of can we measure their value
Keep up to date with President’s Debate in natural capital is already and how can we all contribute
our publications and Brussels agreed. driving a wide range of to their provisions?’
social media feeds. Our However, they initiatives aimed at developing The debate recognised
events let you network acknowledged that these tools and frameworks for that the world is facing
with a large peer group. goals are not easy to achieve. accounting and reporting, as sustainability issues on a
The focus in accounting for illustrated in ACCA’s recent global scale, with biodiversity
Personal development natural capital is often on paper, Natural capital and loss and ecosystem collapse
CPD, training and career ecosystem services and the the accountancy profession. ranked as highly likely risks
progression support. challenges associated with But we need to do more, with high impact in the World
their valuation. The valuation and a meaningful measure Economic Forum’s Global
ACCA Careers of biodiversity has proved must be found to incorporate Risks Report 2017. Natural
Our careers portal gives even more challenging. biodiversity in the process.’ capital accounting should
guidance and lists job This year’s debate took In his keynote speech, improve the management of
vacancies worldwide. as its theme accounting for Phil Hogan, EU commissioner these risks.
public goods – the social and for agriculture and rural Panellists stressed that
Customer care natural capital imperatives. development, said: ‘We all tackling today’s ecological
Fast and efficient Policymakers, investors, agree that agriculture plays crisis is not only an
support around the land managers, businesses, a key role in the provision ethical issue. Preserving
clock, by phone, email natural capital specialists and of measurable global public the variety and abundance
and webchat. accountancy professionals goods and the safeguarding of of life on earth is also an
assembled to discuss how natural capital. Further policy economic imperative.
Go to accaglobal.com/ accounting can help integrate action is needed to strengthen The second President’s
memberbenefits the values and services of the ability of farmers and land Debate of the year will be held
nature into economic decision- managers to generate these in Dublin on 27 June. ■
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She whiz Buckle up
We talk to Rachel Grimes, who has made Holding your nerve in the face of
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The right fit Chief enabling officer

How to tailor capacity building in African countries Sanjay Rughani, CEO, Standard Chartered Tanzania
Think Ahead Chain gang Finance turns to blockchain technology Revolving doors Why skills mobility matters Think Ahead
CPD technical The IASB’s Conceptual Framework Egyptian journey A profession on the move
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The magazine for finance professionals 04/2017

AB Accounting and Business 04/2017

The right fit Chief enabling officer

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