Taxation

n Workshop

QUA
ALIFICAT
TION PR
ROGRAM
MME
 Module 14: Taxation Workshop

Contents

PROFESSIONAL WORKSHOP OVERVIEW 3

Workshop goal 4
Workshop structure and format 5
Learning outcomes 5
The role and responsibilities of a Workshop participant 6
Participant Workshop materials 6
Workshop assessment 7

PREWORK ASSIGNMENTS 9
Case Overview 10
Technical Session 1:
Important tax issues in Hong Kong (Part 1) 12
Technical Session 2:
Important tax issues in Hong Kong (Part 2) 13
Technical Session 3:
Tax planning 14
Technical Session 4:
Double taxation agreements and cross-border transactions 15

APPENDICES 16
Reflection and Next Steps handout 17
Core enabling competency skills summary 18
Ethics: Fundamental principles 20
Ethics: Addressing ethical dilemmas 23
Communication: The Three Pillars 26
Communication: Writing guidelines 28
Communication: Presentation guidelines 30
Critical analysis 32
Problem solving 36

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 Module 14: Taxation Workshop

Welcome to the M14 Taxation Workshop from the Hong Kong Institute of Certified
Public Accountants (HKICPA). This is part of a series of Qualification Programme (‘QP’)
workshops that are part of HKICPA’s commitment to ensuring that professional
accountants are prepared to meet current and future needs, both in Hong Kong and
internationally.

Before you attend the workshop, you should familiarise yourself with the contents of
this prework book. The workshop will be highly interactive, and you will be required
to participate and contribute to the day’s discussions and exercises. The information
in this prework book, including the assignments, will prepare you to participate fully
in the workshop, contribute more effectively and get more from the workshop.

Please take the time to read all materials and ensure you are fully conversant with
the technical information and enabling competences. The session associated with this
workbook assumes you have a full working knowledge of this material and you will be
called upon to demonstrate your mastery of the technical content as well as develop
and demonstrate your core enabling competences (‘CECs’). Ensure that you also
complete all/any self-assessment in advance and have read the relevant chapters in
the Learning Pack.

Workshop goal
The goal of the professional workshops is to give you an opportunity to explore and
understand the HKICPA QP’s CECs in the context of the technical material. These CECs
each play an important role in the career of a global accountant with the Institute’s
CPA designation.

There are many CECs that are important in a business setting and your future
accounting career. The QP, and the Introductory Workshop you have completed, will
focus on three: (1) problem-solving, (2) critical analysis and (3) communication. This
prework pack outlines these three CECs in detail so you can be familiar with them by
the time you attend your workshop. A skill summary of the CECs is available in this
prework book.

By applying these CECs to the technical content related to Taxation topics, you will
demonstrate your mastery of the material and develop a deeper understanding of
how problem-solving, critical analysis and communication support professional
accountants. Upon completion of the workshop, you should have a full
understanding of when, why and how to apply each of these skills. These tools will
help you approach real-life business situations professionally and systematically.

4
 Professional workshop overview

Workshop structure and format

On the day of the workshop, you will be assigned to a group, which you will work with
for most of the day. You will be working together on a range of collaborative activities,
including presentations, that will allow you to apply the CECs in a relevant context.
You will also contribute to larger discussions with the full workshop group.

Workshops typically include:

Introduction: This session is designed to bring the large group together to understand
the purpose of the workshop and establish expectations. In addition, it is a chance for
participants and facilitators to introduce themselves.

Ice breaker: This session creates an energetic learning environment that encourages
the groups to form an effective working relationship for the day.

Technical sessions: The active learning activities in the technical sessions are designed
to provide the participants with opportunities to develop and demonstrate their
understanding of Taxation topics and the CECs.

Reflection: Towards the end of the workshop, you will reflect on the activities of the
day and the importance of the CECs.

Workshop feedback: In the last session of the day, you will have the opportunity to
provide constructive feedback on the workshop via an online feedback form.

Learning outcomes

This workshop includes four technical sessions. In a general sense, upon completion
of the workshop, participants will be able to:

 Build enabling competences of problem solving, critical analysis and

communication skills within the context of the Taxation technical content.

Technical Session 1
 Explain the tax incentives available for research and development activities

 Evaluate and analyse conditions required to enjoy enhanced deductions for research
and development activities

Technical Session 2
 Anti-avoidance provisions and transfer pricing provisions on loan arrangement

Technical Session 3
 Tax planning on salaries tax – source of employment, fringe benefits etc

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 Module 14: Taxation Workshop

Technical Session 4
 Apply tax rules and relevant double tax agreements (“DTA”) to determine the
existence of permanent establishment

 Evaluate and analyse potential tax implications for the cross-border activities

The role and responsibilities of a workshop participant

As a workshop participant, you are expected to do the following:

Complete the Prework activity individually before attending the workshop.

Prepare according to your study plan. This includes reading the relevant prework
materials and completing any prework assignments in accordance with the
instructions therein – prior to attending the workshop.

Actively participate. On the day of the workshop, you should proactively engage with
your fellow participants during all team activities and discussions.

Seek to develop your skills. As you participate in the workshop, you should strive to
deepen your understanding of the CECs by contributing to all discussions and team
activities.

Observe the workshop rules. On the day of the workshop, facilitators will review the
rules of conduct for workshops.

Keep all workshop materials confidential. All workshop materials and topics (e.g.
activities, discussion points, questions/answers, etc.) must remain entirely
confidential. You may not share or discuss them with anyone outside of your
immediate workshop. Photography and recording of any workshop materials is
strictly prohibited, all cell phones and electronic devices (e.g. tablets, laptops) will be
allowed to be used for participating in the workshop, for viewing e-books and
workshop materials or conducting online researches for workshop activities only.

Use of digital devices. Subject to the approval of workshop facilitators. However,

photo-taking, video and audio recordings are prohibited. All phones and electronic
devices should be silenced before the workshop begins.

Participant workshop materials

This prework guide includes general information about the Professional Workshop,
background information of the case study and the prework requirements.
The Workshop will be conducted online using Zoom.
Prior to the Professional Workshop you should have completed the prework for this
Workshop contained in this prework guide. On the day of the Workshop, you should
bring along a hardcopy of your completed prework. During the Workshop, a facilitator
will check that you have completed the prework.

6
 Professional workshop overview

On the day of the workshop, you will receive further Workshop handouts using the
file sharing function in the Chat tab in Zoom which include additional case
information, questions and activity requirements.
All digital handouts must be deleted from all participant devices at the end of the
workshop.

Workshop assessment
Learning from the workshops is largely contributed by your preparation and
participation. To ensure an enriched learning experience and to achieve the
workshop’s learning objectives, participants are required to fulfil a set of assessment
criteria. The seven assessment criteria are:
1. Demonstration of analytical skills
2. Demonstration of problem-solving skills
3. Demonstration of communication skills
4. Preparation
5. Level of engagement/participation
6. Demonstration of technical competency
7. Attitude and behaviour
The assessment focuses on your demonstration of behaviour throughout the
workshop day. You must obtain at least 70% (7 out of 10 marks) to pass the
workshop. The rubric for the Workshop can be found below.

Professional workshop
Assessment Performance Exceed (2 marks) Meet (1 mark) Fail (0 mark)
criteria indicators

Demonstration of The participant has Participant Participant Participant did not

analytical skills developed demonstrated a demonstrated a demonstrate any
analytical skills. reasonable level of progress in analytical skills
analytical skills in developing during the day of
performing analytical skills in the workshop.
workshop activities. performing
workshop activities.

Demonstration of The participant has Participant Participant Participant did not

problem-solving developed demonstrated the demonstrated a demonstrate any
skills problem-solving application of the progress in problem-solving
skills. five-step problem- developing skills during the
solving process problem-solving day of workshop.
during the day of skills during the
workshop. day of workshop.

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 Module 14: Taxation Workshop

Assessment Performance Exceed (2 marks) Meet (1 mark) Fail (0 mark)

criteria indicators

Demonstration of The participant has Participant Participant Participant did not

communication developed demonstrated the demonstrated demonstrate any
skills communication Three Pillars of progress in communication
skills. Communications, developing skills during the
Written and communication day of workshop.
Presentation skills according to
guidelines during the the Three Pillars of
day of workshop. Communications,
Written and
Presentation
guidelines during
the day of
workshop.

Preparation The participant has N/A Participant has Participant has

completed the completed all completed some
prework and is well prework or none of the
prepared before assignments. prework
the workshop. assignments.

Level of The participant is N/A Participant was Participant took

engagement/ engaged in the engaged in the part in very few or
participation activities and with activities and with none of the
other participants. other participants. activities and was
not engaged with
other participants.

Demonstration of The participant has N/A Participant Participant

technical demonstrated the demonstrated a demonstrated very
competences technical skills reasonable little
required for the knowledge of the understanding of
learning activity. technical content the technical
being covered content being
during all covered during the
workshop activities. workshop.

Attitude and The participant has N/A Participant Participant

behaviour worked well with exhibited exhibits
team members, professional and unprofessional
respects facilitators, ethical behaviour and/or unethical
adheres to an during the behaviour during
ethical mindset and workshop. the workshop.
exhibits
professionalism.

Passing requirement: 70% (7 out of 10 marks).

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PREWORK
ASSIGNMEN
NTS

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 Module 14: Taxation Workshop

Case Overview

Goal: The prework assignments aim at providing workshop participants with a learning
experience where they can demonstrate and develop the core enabling competencies of
problem solving, communication and analytical thinking within the context of selected
taxation topics.
In preparing for the prework assignments, participants should read the following case
background, which is related to Technical Sessions 1, 2, 3 and 4.

Case Overview
Alive Group is a leading pharmaceutical conglomerate in the world. Alive Group’s
ultimate holding company, Alive GmbH, is a German based company and has been
listed on the Frankfurt Stock Exchange since the 1970s. Currently Alive Group’s
Chairman is Dr. Tobias Hoffmann.
Alive Group has several research and development (“R&D”) centres all over the world,
and it has just established a new R&D centre in Hong Kong on 1 January 2020, which
is called Alive Cancer Solutions (Hong Kong) Limited (“Alive R&D HK”). Alive Group
closes its accounts on 31 December every year.
Alive Group’s corporate structure is summarized as follows:

Alive GmbH
(Germany)

100%

Other R&D centres Alive R&D HK Manufacturing plants and

(all over the world, (Hong Kong, trading companies (located in
including China, USA, established on 1 China, Luxemburg, USA,
Germany and etc.) January 2020) Thailand and etc.)

IP IP ……………... IP

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 Prework assignments

Alive R&D HK has established a research laboratory and office in Cyberport for
carrying out R&D activities in Hong Kong in relation to the discovery and creation of
new drugs and treatments for combating various forms of cancers. From time-to-time
Alive R&D HK may also undergo ad hoc non-cancer related R&D projects (e.g. stem
cell technology, organ transplant technology etc). Alive R&D HK bears all the risks and
returns relating to the projects.
If a particular R&D project has become successful, Alive R&D HK would register the
intellectual properties discovered (“IPs”), and then grant the IP rights to its fellow
group companies (e.g. Alive manufacturing arms in China) and other 3rd party
manufacturers, and receive royalties in return.
At the moment Alive R&D HK holds the IPs directly, but in the future, for risk
management purposes, Alive R&D HK would use special purpose vehicles (“SPV”) to
hold the IPs generated from the R&D activities.
Currently Alive R&D HK has 50 employees in Hong Kong, in which 35 are scientists (all
are oncologists) under the R&D Department. There are two key personnel in Alive
R&D HK, and they are:
Prof. Gideon Sunway – Nobel Prize winner in medicine and formerly the Head of
Department of Medicine in a renowned university in the USA. He is one of the
statutory directors, and also the CEO and Head of R&D of Alive R&D HK. He receives
both director’s fee and employee’s remuneration from Alive R&D HK.
Dr Victoria Krolo – a German oncologist who originally worked in Alive Group’s R&D
centre in Germany and relocated to work in Hong Kong. She is now the Deputy Head
of R&D of Alive R&D HK.
Alive R&D HK has an in-house accounting department, and you are the accounting
manager.

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 Module 14: Taxation Workshop

TECHNICAL SESSION 1

Important tax issues in Hong Kong (Part 1)

Prework reading
 Read Chapter 3 “Profits Tax” of the Learning Pack, particularly the contents relate
to R&D expenditure under s16B of the IRO. You are also encouraged to read
DIPN55 “Deduction for Research and Development Expenditure” and Schedule
45 of the IRO.

Additional information and prework assignment

Alive R&D HK conducts R&D activities in Hong Kong, and these R&D activities could be
broadly categorized into two areas, which are cancer related and non-cancer related
projects.
For cancer related projects, Alive R&D HK would conduct the R&D activities in-house
by its team of oncologists. For non-cancer related projects, as Alive R&D HK does not
possess the required expertise in such areas, it would engage third party research
institutions to conduct the required R&D activities.
Required
Based on the R&D activities above, Prof. Sunway would like you to explain the
following:
1. What are the tax incentives/tax deductions available in Hong Kong to Alive R&D
HK?
2. What are the conditions required for the deduction?

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 Prework assignments

TECHNICAL SESSION 2

Important tax issues in Hong Kong (Part 2)

Prework reading
 Read Chapter 3 “Profits Tax” of the Learning Pack, in particular Section 3.5.3. You
are also encouraged to read DIPN13A “Profits Tax – Deductibility of Interest
Expense”

Additional information and prework assignment

As Alive R&D HK plans to launch several mega R&D projects in the near future,
substantial amount of capital will be needed for acquiring plant and equipment and
maintaining its working capital. Alive Group anticipates that Alive R&D HK would
require additional funds of HK$1 billion to finance these projects.
Required
Prof. Sunway would like you to explore the different options available for Alive R&D
HK to obtain the additional capital to finance the upcoming R&D projects, and briefly
discuss the pros and cons of each option.

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 Module 14: Taxation Workshop

TECHNICAL SESSION 3

Tax planning
Prework reading
 Read Chapter 4 “Salaries Tax” and Chapter 10 “Hong Kong Tax Planning Ideas
and Strategies” of the Learning Pack

Additional information and prework assignment

Alive R&D HK has been operating for some time, and the business grows favourably;
in addition, Alive Group wants to expand its R&D, manufacturing and trading activities
in the Asia Pacific Region.
To grasp the above opportunities, the management has decided to assign Ms Irma
Koch, the Chief Operating Officer (“COO”) of Alive GmbH, to oversee Alive Group’s
expanding business in Hong Kong and other countries in the Asia Pacific Region.
Irma will be relocated to Alive R&D HK from Germany, and during her assignment,
she requires to travel extensively across different countries and continues to report
to the management of Alive Group directly.
Requirement
Alive Group is now formulating Irma’s assignment agreement from both business and
Hong Kong salaries tax perspectives. Dr Tobias Hoffmann and Prof. Sunway would
like you to advise on, at this initial stage, the following questions:
1. What is tax planning?
2. What are the key steps and considerations for tax planning process?

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 Prework assignments

TECHNICAL SESSION 4

Double taxation agreements and cross-border

transactions
Prework reading
 Read Chapter 8 “Profits Tax Liabilities for Cross-border Transactions”, Chapter 10
“Hong Kong Tax Planning Ideas and Strategies” and Chapter 11 “Transfer Pricing”
of the Learning Pack.

Additional information and prework assignment

Alive R&D HK carries out a lot of business activities with its fellow group companies,
for example:
 Alive R&D HK grants the IPs to fellow manufacturing companies and receives
royalties in return
 Scientists from other R&D centres of Alive Group may from time to time provide
research support and consultation to Alive R&D HK. In return Alive R&D pays
consultancy fees to these R&D centres
 As mentioned before, the business in the Asia Pacific Region is growing. Alive
Group is planning to establish a regional headquarters in Asia, but is unsure
whether to establish the same in Hong Kong or Singapore
Before joining Alive R&D HK, Prof. Sunway was a pure scientist. But now, after
assuming his role as the CEO of Alive R&D HK, he spends most of his time managing
the company and only conducts limited R&D activities in Hong Kong (albeit he holds
the title of Head of R&D).
He is aware Alive R&D HK’s transactions with its fellow companies all over the world
may trigger international tax issues, but he is unfamiliar with some of the
terminologies and does not understand how such cross-border transactions would
have impact on the tax affairs of Alive Group.
Requirement
In view of the above, Prof. Sunway would like you to advise on the following:
1. What are juridical and economic double taxation?
2. What are the key functions and elements of a double tax agreement (“DTA”)?
3. As of today, how many DTAs Hong Kong has entered into with other
jurisdictions? How about Hong Kong’s main competitor, Singapore?

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 APPEN
NDICES

16
6
Appendix 1

Reflection and Next Steps: Handout 5.1

Use the space below to capture insights you have gained in today’s Workshop. Then,
capture two or three top-priority actions you will take or changes you will make to put
your insights to use.

What core enabling competences did we focus on today?

What are the three pillars of communication and how will knowing each of these three pillars
change your approach to communication?

The critical analysis guidelines were put to good use today. Give one example of how you plan
to immediately put these guidelines into use in your workplace.

Finally, state how the five steps of the problem-solving process will make a difference in how
you approach a situation in the workplace. Which step do you think will make the greatest
difference and why?

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 Module 14: Taxation Workshop

CORE ENABLING COMPETENCY

SKILLS SUMMARY

18
 Appendices

Core Ena
abling Compet
C tency skills summaryy
Co
ore Enabling Competenc
ces Communica
C tion: The Th
hree Pillars
 Your topic.
Critical
 Your au
udience.
Analysis
s
 Your pu
urpose
.

Time Proj
oject
Management Managgement
Communica
C tion: Writingg guidelines
s
 Be proffessional.
 Define your
y purposse.
Imaginee your readeer.
Ethics

Problem
Solving
Negotiation  Choosee and structu ure your con
ntent.
 Get to the
t point.
 Simplify
y, simplify, ssimplify.

Inn
novative
Communication
Th
hinking
Communicat
C tion: Presenntation guide
elines
 Imagine e your audieence.
Eth
hics: Fundam mental princ ciples  Stick to the basics.
1. Integrity  Keep slides few and d simple.
2. Objectivitty  Be ready for questio ons.
3. Professional compete ence and duue care  Speak with
w confiden nce.
4. Confidenttiality
Critical
C analy
ysis: Guidelinnes
5. Professional behaviour
 Identify the issue.
Eth
hics: Addresssing ethical dilemmas
 Researcch the facts.
1. Identify th he ethical dilemma:
 Determine relevancce.
 Mannipulation
 Infer ba
ased on adeq quate evidence.
 Omission
 Stay objjective.
 Conffidentiality
 Remain curious.
 Confflict of intere
est
 Raise the alarm??
Problem
P solvving: Processs
 Otheer
1.
1 Define the
t problem m.
2. Identify th he fundame ental princip le
2.
2 Determine the roott causes.
violated.
3.
3 Involve the right ressources.
3. Discover alternative
a solutions:
s
4.
4 Identify alternativess.
 Assess the severrity of the di lemma.
5.
5 Choose a solution.
 Identtify the legal issues.
 Identtify the parties affected..
 Docu ument the dilemma.
 Take an outsiderr’s view to se ee the
dilem
mma differen ntly.
 Seekk legal advice e.
 Inforrm the prope er authoritie
es.
 Otheer
4. Recomme end a solutio on.
5. Explain yo our choice.

19
 ETHICS:
FUNDAMENTAL PRINCIPLES

20
 Appendices

HKICPA has detailed five foundational principles to guide accountants in all their
dealings with clients and colleagues. A professional accountant in public practice
should not knowingly engage in any business, occupation or activity that would be
incompatible with these fundamental principles.

Integrity
This principle imposes an obligation on all professional accountants to be
straightforward and honest in all professional and business relationships. Integrity also
implies fair dealing and truthfulness. A professional accountant should not knowingly
be associated with reports, returns, communications or other information where the
professional accountant believes that the information contains a false or misleading
statement, contains statements or information furnished recklessly or omits or
obscures information where such omission or obscurity would be misleading.

Objectivity
This principle imposes an obligation on all professional accountants not to
compromise their professional or business judgement because of bias, conflict of
interest or the undue influence of others. A professional accountant should not
perform a professional activity or service if a circumstance, relationship bias or undue
influence could impact the accountant’s professional judgement with respect to that
service.

Professional competence and due care

This principle imposes the obligation on all professional accountants to:

 Maintain professional knowledge and skill at the level required to ensure that
clients or employers receive competent professional service.
 Act diligently in accordance with applicable technical and professional
standards.
 Exercise sound judgement in applying professional knowledge and skill.

Confidentiality
The principle of confidentiality imposes an obligation on all professional accountants
to refrain from:
a Disclosing outside the firm or employing organisation confidential information
acquired as a result of professional and business relationships without proper
and specific authority or unless there is a legal or professional right or duty to
disclose; and

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 Module 14: Taxation Workshop

b Using confidential information acquired as a result of professional and business

relationships to their personal advantage or the advantage of third parties.

Professional behaviour
This principle imposes an obligation on all professional accountants to comply with
relevant laws and regulations and to avoid any conduct that the professional
accountant knows or should know may discredit the profession. This includes
conduct that a reasonable and informed third party would be likely to conclude
adversely affects the good reputation of the profession.

22
ETHICS: ADDRESSING
ETHICAL DILEMMAS

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 Module 14: Taxation Workshop

Accountants must ensure that organisations document and report their finances in
complete accord with all relevant standards. However, whenever money is at stake,
ethical or even legal dilemmas may arise.
Throughout the Qualification Programme, you will be asked to consider the ethical
dimensions of your day-to-day work. You will identify ethical dilemmas, understand
their implications and determine an appropriate approach.
The five-step process below can help guide your initial steps toward resolving an
ethical dilemma:
I. Identify the ethical dilemma. Common ethical dilemmas include:

 Manipulation: Altering data to mislead or create a false impression

in others.

 Omission: Removing data to mislead or create a false impression

in others.

 Confidentiality: Misuse of, or failure to protect, sensitive or proprietary

information.

 Conflict of interest: The interests of one party conflict with those of

another.

 Raise the alarm? When reporting violations may bring serious

ramifications.

II. Identify the fundamental principle violated.

III. Discover alternative solutions. Common solutions include:

 Assess the relative severity of the dilemma.

 Identify the potential legal issues.

 Identify the parties affected.

 Document the ethical dilemma.

 Take an outsider’s view to think differently.

 Seek legal advice.

 Inform the proper authorities.

IV Recommend a solution.

24
 Appendices

V Explain your choice.

In the below link, there are some articles for your reference. The Hong Kong
Business Ethics Development Centre (HKBEDC) of the Independent Commission
Against Corruption (ICAC) has developed this series of feature articles in
consultation with the HKICPA. These articles highlight some common ethical
risks faced by different accounting professionals, namely external auditors,
internal auditors, financial accountants and management accountants, and the
legal obligations and professional principles they should pay heed to in tackling
these challenges.

https://hkbedc.icac.hk/enewsletter/accounting/index.html

25
 COMMUNICATION:
THE THREE PILLARS

26
 Appendices

It is challenging for CPAs to make themselves heard in today’s climate of over-

communication. To succeed, you will need to write effective proposals, reports,
emails and other documents, as well as make concise, vivid presentations. Regardless
of its form, every effective message rests on three ‘pillars’ of communication. Think
them through carefully both before, and while, you write for, or speak to, others.
Topic

Be clear about your subject matter. What is the essential information you want to
convey? It is easy to err on either end, of course – saying so little that your audience
cannot see its importance or so much that the importance is buried.
Audience

Knowing what and how much to say depends, in part, on knowing your audience.
How much do they already know about this topic? If it is a lot, do not cover the
obvious. If it is not much, include any information needed to clarify your main points.
Purpose

Finally, write with a clear purpose in mind. Even in a simple ‘FYI’ email, you often want
your audience to do something – support an idea, provide information, complete a
task and so on. Be very clear in your communications about the action or actions you
want your audience to take.
Knowing your purpose also helps you decide how much information to include. If
information does not clarify your main points, provide needed background or
encourage the audience to do something, leave it out. In general, the shorter your
communication, the better, as long as it achieves your purpose.
When these three pillars support your communications, you are much more likely to
achieve your desired effect.

27
 COMMUNICATION:
WRITING GUIDELINES

28
 Appendices

As in most professions, your success in accounting depends in part on your ability to

communicate clearly. The following recommendations will help you create polished
written messages.
Be professional

Maintain a professional tone in everything you write because everything your write
either builds or diminishes your reputation and your future. Keep in mind that,
regardless of your intended reader, any email can end up in anyone’s inbox.
Define your purpose

Often, you will want readers to take action, as we have said – to support a proposal,
provide information or take a step. Make your purpose clear early in the document, if
it is not in your first sentence. Then, add needed background or reasons for your
request or proposal.
Imagine your reader

Think about your reader before and while you write. Imagine what readers might say
in person and address likely questions or reactions. For a simple email, this process
can be quick. For a complex or controversial topic, take your time and get it right.
Choose and structure your content

Content and structure should reflect your purpose and audience. Include only
content – facts, ideas, data or anything else – likely to motivate a reader to do what
you want. Highlight benefits to the reader for taking action. Structure communication
for ease of reading. Consider breaking up dense paragraphs with numbered or
bulleted lists or, in longer documents, sub-headings.
Get to the point

Effective writing starts by drawing in your reader. A first sentence or paragraph

should lead the reader to the body of your message. Quickly explain why a reader
should care. In an email subject line, for example, ‘Team meeting postponed’ works
far better than the vague subject line ‘Team news’. Make your first sentence clear,
concise and to the point. Often, it clearly states your purpose in writing.
Simplify, simplify, simplify

Especially when communicating complex information, it is a good idea to ‘simplify,

simplify, simplify’. Readers want to understand quickly, often skimming for main
points. For those reasons, adopt a conversational tone, as much as possible, using
words understood by all. Business writing is no place for fancy language, convoluted
sentences or accounting jargon that some readers will struggle to understand.

29
 COMMUNICATION:
PRESENTATION GUIDELINES

30
 Appendices

Accountants often need to present technical or financial information to internal or

external groups, including clients. Let us consider what it takes to make a powerful
impact on your audience.
Imagine your audience

As you would for written communication, analyse your audience before you speak.
Are they experts? What do they expect from you? What will they do with the
information you provide? An important rule is not to talk over or under the level of
your audience. As a CPA, you are an expert in financial matters, which may or may
not be true for your audience.
Stick to the basics

It is always a good idea to stick to the basics in your presentation. If necessary, you
can provide detailed metrics later to anyone who wants them. For most people, even
experts, the most important numbers are enough. For a non-expert or mixed group,
use simple terms to explain what those numbers are and what they measure.
Keep slides few and simple

Make slides as few and simple as possible, given what you are trying to accomplish.
Speak to important points but avoid reading any slide aloud. Even experts usually
want only the highlights. If you are unsure how much to share, ask the group if they
would like more depth for a given slide. Keep your graphics simple. Fewer elements
make a chart or graph easier to understand. Simplify a spreadsheet before turning it
into a slide. Use minimal text, which takes less time for the group to process.
Consider building a graphic one section at a time as you explain.
Be ready for questions

As you prepare, look at your data from the listeners’ point of view and be ready to
answer any questions they are likely to ask. At the end of your presentation, and after
you explain anything complex or controversial, ask the group, ‘What questions do you
have?’
Speak with confidence

Do your best to show confidence in what you are saying. Listeners may depend on
the clarity and accuracy of your data to make financial decisions. Equivocal terms like
‘maybe’, ‘possibly’ or ‘it seems like’ communicate a lack of confidence in your data.
Check and double-check your data to be sure your numbers match in different
places. One person pointing out a discrepancy can undermine confidence in your
whole presentation.

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 CRITICAL ANALYSIS

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 Appendices

An ineffective CPA might think, ‘I just follow the rules. It is not my job to think
critically.’ However, nothing is further from the truth. How well you apply the skills of
critical analysis can make or break your career.
Critical analysis of an issue or situation focuses on facts, data or evidence. The best
critical analysis is objective, with as little affect as possible from your feelings,
opinions or biases. This is hard work made much easier when you apply the six
analytical techniques.
Identify the issue – What problem are you going to resolve?

A first step of critical analysis is painting a clear picture of the situation and the
people, group or issue involved. In any confusing situation, ask a few basic questions:
Who is doing what? Why is it happening? What is the result and how could it be
different?
Research the facts – Gather related information about the issue; apply a questioning
mindset to test current information (what, who, when, where, why, how)

When considering another person’s point of view – or developing your own – get the
facts straight. Supporting information can be inaccurate or come from a questionable
source. Look especially for any claims unsupported by factual data, a common sign of
an opinion reflecting a bias with little or no basis in reality.
Determine relevance – Manage and evaluate information from multiple sources and
perspective; pick out only the relevant information from the researched facts for
analysis

Not all the researched facts are relevant for analysing the issue. To decide what
evidence is relevant to a belief or assertion, weigh any supposed evidence against the
goal or purpose you are trying to achieve.
Infer based on adequate evidence – identify alternatives, weigh the cost and benefit,
forecast the results for each of the alternative

Inferring simply means to draw a conclusion based on available data, but it is easy to
go wildly wrong. If I see strange lights in the night sky, I might infer that I am seeing
visitors from another planet. On the other hand, daylight might reveal a high-flying
helicopter. Therefore, a reliable inference depends on your ability to consider all
relevant evidence.
Stay objective – Review and recognise any uncertainty and bias in the data and
assumptions; make evidence-based evaluative judgments

Even if our own biases are plain to others, they are often invisible to us. Critical
analysis requires objective evaluation. An ideal judge assesses conflicting claims, first
by identifying the biases that colour almost every one of them. Setting aside your own
biases is both difficult and vital to an objective evaluation of the views of others.

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Remain curious – Note any variance from time to time; be open to new perspectives

Skilled critical thinkers remain curious because they know how tempting it is to take
unfounded assertions at face value. As children, we were all curious to ask one ‘why?’
question after another. Do not be afraid to tap into your inner child. Continue to ask
‘why?’ and other questions about opinions, assertions, established processes and
other confusing aspects of your professional life.
Far from being a ‘nice-to-have’ skill, the ability to analyse complex subjects and
situations is vital for every competent CPA. While it is important to apply and refine
these techniques over a lifetime, the sooner you start, the greater the benefits to you
and your career in accounting.

Critical analysis guidelines in practice: An illustrative

example
Illustrative Case: Dennis, a Junior Accountant in a CPA firm, has been asked to give
his opinion on a personnel situation. The situation is this: Dennis’ CPA firm has the
budget to hire two additional staff to support the accounting department to help
offload the work currently being done by Dennis and his colleague, Rachel, so that
Dennis and Rachel can perform tasks that better utilise their experience.
HR has received plenty of qualified applicants. We have one applicant who is
overqualified for the advertised role. However, if the firm hires the one applicant, we
could obtain that applicant’s experience and insights into an industry the CPA firm is
currently lacking but the firm is interested in expanding into. Hiring the experienced
candidate would cost us as much as it would to hire the two staff accountants.
 Identify the issue – What problem are you going to resolve?

– Should we hire the two staff accountants or hire the one experienced
accountant with experience and expertise in an industry the firm is
interested in?

 Research the facts – Gather related information about the issue; apply a
questioning mindset to test current information (what, who, when, where, why,
how)

– Two staff accountants would perform the tasks currently performed by

Dennis and Rachel, freeing Dennis and Rachel to pursue work that better
utilises their experience.

– Hiring the experienced accountant would afford the firm experience and
expertise in an industry the firm is interested in entering. This experience
and expertise are currently lacking in the firm.

– The firm can only hire the two inexperienced staff accountants or the
experienced accountant.

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 Appendices

 Determine relevance – Manage and evaluate information from multiple sources

and perspective; pick out only the relevant information from the researched
facts for analysis

– The additional revenue brought in by the experienced staff members is

relevant.

– The additional revenue due to an unexpected new client by an existing

partner is irrelevant.

 Infer based on adequate evidence – Identify alternatives, weigh the cost and
benefit, forecast the results for each of the alternative

– Measure the productivity provided by adding two staff accountants in

additional potential revenue or reduced costs (i.e. an incremental change
in the operating income).

– Measure the additional revenue and market share potential provided by

the experienced accountant.

– Decide based on which decision provides the greatest value to the

organisation.

 Stay objective – Review and recognise any uncertainty and bias in the data and
assumptions; make evidence-based evaluative judgements

– Dennis is being asked to provide an opinion that impacts his future

workload, which may result in a bias in his opinion.

– The experienced candidate may not be interested in providing the

expertise/experience in the industry the firm is interested in expanding to.
Afterall, the candidate is responding to a staff accountant position
opening.

 Remain curious – Note for any variance from time to time, be open to new
perspectives

– It is important to remain curious about the:

 Potential to ask for additional funds to hire all three qualified

candidates; and

 The firm’s genuine interest in the new industry.

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 Module 14: Taxation Workshop

PROBLEM SOLVING

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 Appendices

Most of us have a basic ability to tackle problems. What is hard is quickly finding
solutions while involving others in meaningful ways. A clear, efficient process can help
everyone remain calm and productive under pressure.
PROBLEM SOLVING: PROCESS
I. Define the problem – Figure out what exactly the problem is; how does it hinder
your goals; why is it happening?

To find a good solution, it is vital to know where you are and where you want to
go. Only then can you close the gap between the two. Defining a situation in this
way also helps uncover ways to do even more with your solution than simply
closing a gap.

II. Determine root causes – What are the trigger factors causing the problem;
which factors are changeable and which are not? Establish cause-and-effect
relationships

You will find the best solution more quickly with accurate information about the
causes of the problem. Without knowing the contributing factors, you may find
yourself exploring options that do not address the real problem.

III. Involve the right resources – Consider the strengths, time, cost, etc. of each
resource that would be involved in the solution plan

Resources include time, cost and people, both internal and external. When you
involve the right resources at the right time in choosing the best solution, the
problem can be solved more effectively and efficiently. Understanding the
strengths possessed by you, your team, and your organisation will also help you
determine the best solution for your particular situation.

IV. Identify alternatives – Derive alternate solutions and consider perceived

benefits and risks

Having a range of creative options to choose from makes it easier to craft a

solution that takes things to a new level – and delights everyone affected by the
problem.

V. Choose a solution – Work on the solution with specific actions; check back on
the solution and revise the plan as needed

Once you leverage the team to choose the best solution, develop an action plan
that outlines accountability, resources and schedule. Once under way, measure
progress and maintain momentum by celebrating milestones and success.

These five steps can help you identify, analyse and solve persistent problems.

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Problem-solving process in practice: An illustrative

example
Illustrative Case: A press release just landed on the desk of Erik Tan, CEO of Software,
Inc (SI) announcing the acquisition of a thriving start-up software company, MovingUp
Software, by our greatest competitor, OnTop Software. The acquisition combines the
powerhouse in the industry, OnTop, with the entrepreneurial ambition of MovingUp
and leaves Erik wondering how his customers will respond.
SI specialises in payroll software, like OnTop. However, SI leads the industry in
integration capabilities with business finance software. Likely acquisition targets
include one of those business finance software companies.
PROBLEM SOLVING: PROCESS
1. Define the problem

a. An industry competitor has expanded their capacity, their resources and

their reach and Software, Inc is unprepared to do the same quickly.

2. Determine root causes

a. Competition expanded through acquisition.

3. Involve the right resources

a. Mergers and acquisitions require due diligence. One of the first actions
Erik should take is to have a finance team member perform due diligence
on the software companies of interest and explore others that are not
currently on the ‘of interest’ list.

4. Identify alternatives

a. Do nothing.

b. Increase marketing and sales efforts to keep existing customers and

potentially increase market share/revenue.

c. Acquire taxation software.

5. Choose a solution

a. Immediately increase marketing and sales efforts.

b. Set up an acquisition target after performing proper due diligence.

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