Accountant Middle East - January 2014 by CFO Middle East

CHARTERED ACCOUNTANT OF THE YEAR PwC Partner - Amanda Line - stamps her stature and position in the profession as she snaps up ICAEW ultimate crown

FLYING HIGH

James Rigney of Etihad Airways is named ICAEW ‘CFO of the Year’ after airline delivers $4.8 billion in revenues

CITI ROUNDTABLE

CFOs and Finance Managers engage in stimulating debate on Credit Risk and Debt Collection procedures

DUE DILIGENCE

The application of ‘Discreet Science’ has become a commonplace service in major transactions and disputes

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editor's audit

Chairman Dominic De Sousa

Rosier outlook for 2014

Group CEO Nadeem Hood

THE NEW Year has just begun which also means the season for economic forecasting is here. Judging from the forecasts coming out of the financial sector, the consensus outlook seems pretty upbeat.

EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105

Analysts and market insiders believe that the imminent integration of the Dubai Financial Market and its Abu Dhabi counterpart, the recent Expo 2020 bid win and a strong rebound in real estate, will usher in an unprecedented new economic growth phase in the UAE.

Group Managing Editors Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Georgina Wilson-Powell georgina.powell@cpimediagroup.com +971 4 440 9105

No doubt this is an encouraging way to start the New Year.

Editor Joyce Njeri joyce.njeri@cpimediagroup.com +971 4 440 9140

Being a critical component of the UAE’s economic development, the financial and accountancy sector is aligning itself with this expected boom, with consultancy firms, banks, financial services companies and other allied businesses reportedly increasing their headcount by recruiting the best talents in the industry.

Contributor Shane Phillips ADVERTISING Group Sales Director Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Commercial Director Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 PRODUCTION & CIRCULATION Production Manager James P Tharian james.tharian@cpimediagroup.com +971 4 440 9146 Database and Circulation Manager Rajeesh M rajeesh.nair@cpimediagroup.com +971 4 440 9147 DESIGN Head of Design Fahed Sabbagh fahed.sabbagh@cpimediagroup.com +971 4 440 9148 Designer Froilan A. Cosgafa IV froilan.cosgafa@cpimediagroup.com Photographers Jay Colina Kader Pattambi DIGITAL SERVICES Digital Services Manager Tristan Troy Maagma Web Developer Abey Mascreen online@cpidubai.com +971 4 440 9100 Published by

Speaking of talent, on the special evening of 11.12.13, the accountancy and finance industry once again witnessed exceptional individuals, teams and firms being honoured during the 3rd annual Institute of Chartered Accountants in England and Wales Excellence Awards event that was held in the UAE’s capital Abu Dhabi.

Held every year, the high profile awards ceremony proved a great success, with over 500 movers and shakers from across the Middle East’s accountancy and finance sector gracing the event. The awards attracted a high number of very impressive entries, with winners being unveiled in 11 categories.

On a personal level, it was a tremendous honour for me to be recognised as the ICAEW ‘Financial Journalist of the Year’.

Carving out my journalism career in the financial sector is more than a day job for me. It’s a passion. It calls for analysing technical information and skillfully breaking it down for readers to understand, in order to show that finance issues come to play even in the most mundane areas of our life, such as grocery shopping, purchasing property, or even paying road levies when passing through toll gates. This ‘ordinary phenomenon’ is what inspires me to go beyond the numbers and report issues through the eyes of ordinary citizens. We also have exclusive interviews with some of the top ICAEW winners including James Rigney, the Chief Financial Officer of UAE’s top carrier Etihad Airways who took the ‘CFO of the Year’ gong, and Amanda Line, a Partner at the Big 4 firm PwC, who was declared the ‘Chartered Accountant of the Year’. Read their inspiring stories in our ‘Awards Special’ section. Happy New Year!

Joyce Njeri Editor, Accountant Middle East

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CHARTERED ACCOUNTANT OF THE YEAR PwC Partner - Amanda Line - stamps her stature and position in the profession as she snaps up ICAEW ultimate crown

FLYING HIGH

James Rigney of Etihad Airways is named ICAEW ‘CFO of the Year’ after airline delivers $4.8 billion in revenues

CITI ROUNDTABLE

CFOs and Finance Managers engage in stimulating debate on Credit Risk and Debt Collection procedures

DUE DILIGENCE

The application of ‘Discreet Science’ has become a commonplace service in major transactions and disputes

PUBLICATION LICENSED BY IMPZ

Subscribe now

www.accountancyme.com 3

Contents JANUARY 2014

Main Features

Cover Story:

Awards Special:

Citi Roundtable:

Chartered Accountant of the Year – Award winning PwC Partner – Amanda Line - shares her thoughts on learning, business development and the power of certifications to change lives.

Flying high – James Rigney of Etihad Airways is named ICAEW 2013 ‘CFO of the Year’ after airline delivers $4.8 billion in revenues. Putting a leash on credit – For your company to maintain reputable image, excellent service standards and stay in business for the long term, you need to keep a close eye on your trade debtors.

January 2014

Current Affairs 6 News & Views:

Deloitte launches course for Saudi hires – Analyst Induction Programme brings an international dimension and experience-sharing insights to young Saudi nationals, provides them with consulting competencies learning.

News & Views:

Profession Watch

When numbers don’t add up – Inconsistent capital ratios is as big an issue for banks as unfinished accounting standards, says Robert Hodgkinson, the ICAEW executive director.

Due Diligence:

The art of due diligence – Application of ‘Discreet Science’ has become a commonplace service in major transactions and disputes.

Corporate Governance:

Professional Development:

Setting priorities right - Omani business leaders vote to elevate accountability and transparency to top of corporate agenda.

ICAEW EXCELLENCE AWARDS:

Extensive coverage of the spectacular moments from the Accountancy & Finance recognition ceremony in Abu Dhabi ranges from interviews with individual winners, to corporate success stories, including: Etihad’s James Rigney runs away with ‘CFO of the Year’ gong

PwC Partner Amanda Line clinches the coveted honour of ‘Chartered Accountant of the Year’ ICAEW CEO Michael Izza on transparency of financial reporting and audit work Colourful photos of guests and overall winners

Joyce Njeri, the Editor of Accountant Middle East magazine poses with her award shortly after being declared the 2013 ICAEW ‘Finance Journalist of the Year’.

Staying competitive - In its latest quarterly Economic Insight report, ICAEW says Middle East states must invest in education in order to diversify.

Industry Appointments:

Revolving door - Find out the latest movement of professionals between roles, companies as well as new industry hires.

Special Reports 35

Mergers & Acquisitions:

Bridging the gap - Are Boards and CFOs in the Middle East aligned when it comes to M&A? Deloitte survey investigates.

Budget Insight:

Audit Insight:

Dubai launches smart fiscal model - Pioneering initiative expected to promote financial sustainability in the Emirate.

Sustainable visibility audit - When a recruiter or company owner uses Google or a social network to research a list of potential hires, how do you stack up? 5

News & Views

DELOITTE LAUNCHES COURSE FOR SAUDI HIRES

BUILDING ON its current nationalisation programmes, Deloitte ran a nation-wide recruitment campaign in 2013 in Saudi Arabia to identify young talented Saudi men and women and train them to join its consulting business in Saudi Arabia and the Middle East. Those who passed the rigorous screening and testing were offered to join the firm and underwent training to qualify them as new business analysts at Deloitte Consulting. A part of this on-boarding process was a three week intensive regional resident training course, “Deloitte Analyst Induction Programme”, which has just concluded in the UAE. The comprehensive Deloitte Analyst Induction Programme brought an international dimension and experiencesharing insights to young Saudi nationals, to provide them with consulting competencies learning, as well as on-the-job training, to acquire a professionally rounded career in consulting to private and public sector clients across the region. “Deloitte’s Analyst Induction program aims to equip newly hired Deloitte consultants with all the necessary tools and know-how to succeed in the consulting field. By providing international training, the programme’s end result is enhancing the skills of young talented Saudi men and women, thus multiplying their career advancement opportunities,” explains Bakr Abulkhair, Member of the Board of Directors of Deloitte Middle East and Chairman and Managing Partner at Deloitte & Touche Bakr Abulkhair & Co. 6

January 2014

ACCA ACCREDITS DAFZA DUBAI AIRPORT Freezone (DAFZA) has been accredited as an Approved Employer – Professional Development by the Association of Chartered Certified Accountants (AACA). This award recognises that DAFZA is ensuring that its finance professionals who are members of ACCA are given the support to develop and maintain the knowledge and skills needed to succeed in today's dynamic and demanding business environment. “Althoughw DAFZA already functions at an international standard, our status as an approved employer of ACCA, adds to our credibility and reinforces our commitment to further support and encourage our staff in their training and development,” said Amna Lootah, Executive Director of Finance, Sales and Customer

Relations at DAFZA. Susie Isaacson, Head of ACCA UAE, who presented the accreditation to DAFZA (pictured), said, “We are delighted to have been able to award DAFZA with the accreditation Approved Employer – Professional Development. DAFZA has met stringent requirements, which show that its development programme meets our global standards, and ensures that finance professionals will be very supported through their career.”

NASDAQ, PwC HOLD SEMINAR ON IPO ISSUANCE PROCESS PwC AND Latham & Watkins teamed up with NASDAQ Dubai to hold a seminar on how to carry out initial public offerings (IPOs), in response to rapidly growing interest from companies in raising capital on the region’s international exchange. More than 80 executives of potential issuers and experts from advisory companies attended the ‘IPOs on NASDAQ Dubai – A Guide’ seminar, which focused on the advantages of going public on the exchange as well as explaining the IPO process and regulatory framework. Companies that attended are based in the GCC region, India and Europe and are active in sectors including

energy, IT, property, construction, trading, media, manufacturing, metals and agriculture. Hamed Ali (pictured), Chief Executive of NASDAQ Dubai, said: “We are seeing strong growth in the number and quality of companies approaching us about going public. This seminar provided valuable advice from capital markets professionals of the highest calibre to help companies understand the benefits of the IPO route, as well as the preparation needed and the practical steps to be taken.” NASDAQ Dubai is preparing to hold further forums on IPOs in 2014 at the request of potential issuers and advisers.

News & Views

LISTING OF ABU DHABI GOV’T BONDS GETS NOD THE DEPARTMENT of Finance (DoF) has announced that the Securities and Commodities Authority (SCA) has approved the secondary listing of Abu Dhabi Government’s bonds, which are due to mature in 2014 and 2019, on the Abu Dhabi Securities Exchange (ADX). The approval is an important step towards completing the legal and administrative procedures required for DoF to gain listing on both the London Stock Exchange (LSE) and ADX, which will enable investors to trade Abu Dhabi Government bonds directly through the ADX and the LSE simultaneously. HE Hamad Al Hurr Al Suwaidi (pictured), Chairman of Abu Dhabi Department of Finance, said: “The listing of Abu Dhabi Government bonds on both ADX and LSE will help to create a more attractive investment climate in the Emirate. It also confirms Abu Dhabi’s position as an international and regional financial centre that provides investors with various options in the stock and bond markets.” The bonds, worth $3 billion, have been listed on the LSE since 2009 and were issued in two tranches, each worth $1.5 billion. The first tranche is set to mature in 2014, and the second in 2019. The Emirate of Abu Dhabi has successfully established confidence among investors and its economy, which has been granted the (AA) credit worthiness classification, is ranked as the most creditworthy within the Middle Eastern region. In addition, Abu Dhabi sustained its classification as one of the most risk-free economies in the credit market and the most able country to meet its financial obligations during the second quarter of 2013, ranking among the top 20 of the world economy’s credit list.

WHEN NUMBERS JUST DON’T ADD UP INCONSISTENT CAPITAL ratios is as big an issue for banks as unfinished accounting standards, said Robert Hodgkinson (pictured), the ICAEW executive director, at a joint ICAEW/ IFRS Foundation conference in London, recently. He lamented that the lack of consistency and reliability of capital ratios represents as big an issue for banks as the unfinished accounting standards. “Improving requirements for financial instruments accounting following the global financial crisis has become a rather tangled and frustratingly slow process. In an ideal world, we would have liked to have seen a final revised financial instruments standard by now. We have repeatedly urged the standard setters to complete their work on impairment as a matter of priority,” he said. The interaction between accounting standards and bank

regulatory capital requirements has complicated the finalisation of the financial instruments accounting standards. “One of the reasons why there has been so much pressure on financial reporting standard setters over the financial crisis has been the impact of accounting on regulatory capital. It is increasingly clear that bank capital ratios are neither as comparable nor as reliable as they should be, irrespective of the accounting treatment,” Robert added.

CIMA’S MAGAZINE GOES DIGITAL FINANCIAL MANAGEMENT, CIMA’s member and student magazine, is now available to download as a free app. Available on iOS and Android devices, the app can be downloaded from the Apple App Store, Google Play and Amazon. It will be updated monthly with all Financial Management content, plus additional features including videos and study material. The app has been launched in response to member feedback which highlighted high demand for

content in digital form. As a result, from January 2014, all members and exam complete students will receive a printed copy of Financial Management magazine six times a year, and all members and students will be able to access new content on a monthly basis through the FM app. CIMA Executive Director, Penny McLoughlin stated: “I am delighted that CIMA’s award-winning magazine, FM, has gone digital. The new app will allow readers greater interactivity with articles, infographics and video. Moving into 2014, CIMA will continue to use new technology to provide better study support and connections with the global CIMA CGMA community.” 7

News & Views

'IFRS DOESN'T CONTRADICT ISLAMIC LAW' THERE ARE no legal constraints which prevent Saudi Accounting Standards converging with International Financial Reporting Standards (IFRS), the business reporting standards used around the world, a conference in Riyadh has been told. More than 400 business leaders attended the event organised by the Saudi Organisation for Certified Public Accountants (SOCPA) and ACCA (the Association of Chartered Certified Accountants) in the Prince Sultan University recently. A panel of experts discussed the feasibility of converging Saudi Accounting Standards to IFRS and looked at the impact of convergence, with listed companies scheduled to begin reporting their annual performance under IFRS from 2017. Responding to a question which asked whether IFRS requires a change in Saudi laws or contradict Shariah/ Islamic laws, Dr Ahmad Bin Abdulla Al-Meghames (pictured), the Secretary General of SOCPA said: “SOCPA has already consulted their legal advisors to check if any IFRS contradicts local regulations and Shariah/ Islamic law(s), and it was informed that no IFRS contradicts with aforesaid laws, based on initial studies). However, SOCPA may require additional disclosures to be presented in the financial statements, in case local regulations need supplementary data.” He also outlined how SOCPA has already communicated the details of IFRSs/ SOCPA standards convergence project to Department of Zakat and tax (DZIT), CMA and MoCI; had discussed their concerns and obtained their general consent that their rules and policies did not contradict with IFRSs. Meghames confirmed it was a two way process of communication with all stakeholders, where SOCPA was contacting the regulating bodies, and invited stakeholders to provide their input to SOCPA directly. 8

January 2014

DEAL TO ENHANCE ISLAMIC FINANCE TRAINING THE DELOITTE Islamic Finance Knowledge Centre (IFKC) has signed a Cooperation Agreement with the Finance Accreditation Agency (FAA), an organisation supported by Bank Negara Malaysia and Securities Commission Malaysia which promotes leading practices in Islamic Finance training development. The initiative aims to provide Quality Assurance and Accreditation in Islamic Finance Executive Education by having Deloitte IFKC professional training programmes benchmarked against best practices and adhere to the highest standards of quality through reviews by international experts around the world. This collaboration with the FAA complements Deloitte’s existing capacity programmes with industry stakeholders. The programme strives to enhance opportunities for practitioners in the Middle East and elsewhere to benefit from an

international quality assurance framework developed for the financial service industry. “Our capacity programme strategy aims to work diligently and closely with the Islamic finance industry and help diffuse high standards of good practices in all aspects. This programme has particular emphasis on quality of professional training and executive education,” said Joe El Fadl, Financial Services Industry leader, Deloitte Middle East. “In today’s highly dynamic and evolving financial system, establishing business relations to strengthen the financial institutions cannot be overemphasised. FAA enters this significant partnership to reach this goal which supports the agenda in bringing the best practices to the industry at the same time promoting quality learning within the Financial Services Industry,” said Dr Amat Taap Manshor, Chief Executive Officer of the FAA.

DFM ACCREDITS NEW FIRMS DUBAI FINANCIAL Market (DFM) has announced that “Al Dhabi Brokerage” and “Securities & Investment Company UAE” have been accredited to provide Margin Trading, lifting the total number of DFM brokerage firms providing this service to 11 companies, 8 of them have been accredited since the beginning of 2013. The exchange is currently processing similar applications from other brokerage firms in collaboration with the Securities and Commodities Authority (SCA). Margin Trading permits brokerage companies to fund a percentage of the market value of securities traded,

and secure as collateral for the same securities or any other collateral as required by the SCA’s license. Margin Trading service providers on DFM: COMPANY 1 2 3 4 5 6 7 8 9 10 11

EFG-HERMES UAE BROKERAGE Al Ramz Securities Direct Broker For Financial Services NBAD Securities Finance House Securities Company Al Ansari Financial Services ADIB Securities Mena Corp Financial Services Vision Capital Brokerage Company Al Dhabi Brokerage Securities & Investment Company UAE

News & Views

DELOITTE’S NEW UNIVERSITY DFM INAUGURATES TO SERVE EMEA REGION TRADING FLOOR AT VARSITY

DUBAI FINANCIAL Market (DFM) recently inaugurated its educational trading floor at the American University in the Emirates (AUE). The educational trading floor at the AUE is the latest of a chain of similar floors, building on the success of the first educational trading floor, inaugurated at Dubai Men’s College early 2012, as well as supporting two similar floors at Sharjah University in collaboration with the Securities and Commodities Authority (SCA), which have been widely praised by students and lecturers for its key role in promoting financial knowledge and merging theoretical studies with real life experience. The educational trading floors aims to strengthen the educational process through linking both the theoretical and practical sides and offering students the opportunity to learn through an interactive approach. As a micro version of DFM’s main trading floor, the new educational facility at AUE includes screen and ticker directly linked with DFM's trading engine to display trading activity and real time market data. Essa Kazim, Chairman of DFM said: “This initiative is a key pillar of the DFM educational program aimed at preparing the new generation of investors. The students can follow live trading and participate in the DFM Stock Game and win competition prizes. Most importantly, the planned workshops and seminars will provide them the opportunity to directly interact with financial experts.”

DELOITTE HAS launched Deloitte University Europe, the Middle East and Africa (DU EMEA) to help staff – and ultimately clients – navigate market changes and stay on the leading edge of learning and innovation. DU EMEA’s curriculum is tailored to the region’s needs to deliver cuttingedge learning that will develop the next generation of international business leaders and advisers. Located in Belgium as a regional hub to serve Europe and the Middle East, the university builds on the success of Deloitte University (DU) launched two years ago in Westlake, Texas, USA (pictured), which has been attended by more than 50,000 people from over 70 countries. An example of the innovation and learning the university will deliver is the Deloitte Client Experience Labs, which also opened at the DU EMEA facility. Along with the learning programmes delivered at DU EMEA, the Lab will provide a semi-permanent environment for clients and staff to collaborate on

innovative approaches to address complex business problems. During his opening speech, Deloitte Global CEO Barry Salzberg, shared the story of the founding of DU in the United States. “Deloitte University is more than a physical location—it represents the global expansion of a different, and we think better, way of doing business. As a professional services organisation, we need smart, well-trained people to serve our clients across borders,” he said. As with DU in the United States, DU EMEA courses will be led by current Deloitte leaders who will share their knowledge and on-the-job experiences in a tailored classroom setting.

CIMA OFFERS REDUCED FEE THE CHARTERED Institute of Management Accountants (CIMA) has reduced its registration fee to AED 250 for a limited period. All the registrations will also have an additional saving with their annual subscriptions waived off until December 2014. The professional qualification aimed to help students develop their business, finance and management accounting skills is also available across CIMA centres in Saudi Arabia, Qatar, Bahrain, Oman and Kuwait including United Arab Emirates. Students can opt from various flexible study options relevant to their technical ability and professional capacity. Upon successful completion of various levels of the programme,

students will receive globally recognised titles, leading to acquisition of CIMA membership, and will be qualified to work across various departments in an organisation, not just in finance. Geetu Ahuja, Head of GCC, CIMA said, “A management accounting qualification is regarded highly by employers around the world for its relevance to business. The GCC region is no different as it faces a high demand for skilled staff to oversee business strategies and finance. One of our key goals is to address this demand by offering the most relevant international accountancy qualification for business performance and finance management." For registration or further information, visit www.cimaglobal.com 9

BUSINESS PICTORIAL

FINANCE FINEST: Winners of the ICAEW Middle East Accountancy and Finance Excellence Awards are all smiles as they show off their gongs during the prestigious ceremony at the Ritz Carlton Hotel in Abu Dhabi.

RAFFLE DRAW: Tareq Al Ameri, the CEO of Yas Marina Circuit, picks the lucky number during the grand-prize draw for a chance to win a ticket to the Yas Premium Corporate Driving Experience.

10 January 2014

BUSINESS PICTORIAL

JUST FOR LAUGHS: Clive Anderson, one of Britainâ&#x20AC;&#x2122;s most famous and well-loved personalities kept the crowd entertained with his no-holds-barred witticisms.

REASON TO SMILE: ICAEW Middle East staff members revel in the delight of hosting a successful awards ceremony.

Corporate governance

COMPANIES ADOPT REPORTING PROCEDURE New KPMG survey shows corporate responsibility reporting is now a standard business practice worldwide.

EPORTING ON corporate responsibility (CR) is now a standard business practice worldwide, undertaken by almost three quarters (71 per cent) of companies, according to the 8th KPMG Survey of Corporate Responsibility Reporting published recently.

The challenge for companies is to use the Corporate Responsibility reporting process to identify the most important environmental and social issues for their business and stakeholders.

The 2013 edition of the KPMG survey marks 20 years since the first survey was published in 1993. This year the research is more extensive than ever, covering the top 100 companies by revenue across 41 countries, a total of 4100 companies. The 1993 survey looked at companies in just 10 countries.

Based on KPMG’s survey the number of companies reporting on CR has increased by 7 percentage points since 2011. Among the world’s largest 250 companies (the G250), the CR reporting rate is 93 per cent.

“Companies should no longer ask whether or not they should publish a CR report. That debate is over,” said Yvo de Boer, Global Chairman Climate Change & Sustainability Services.

71% Companies worldwide undertaking corporate responsibility reporting 12 January 2014

“The important questions now are ‘what should we report?’ and ‘how should we report it?’ The challenge for companies is to use the CR reporting process to identify the most important environmental and social issues for their business and stakeholders. They can then bring those issues into the heart of corporate strategy to manage risks, unlock opportunities and build long-term value.” CR Reporting in the UAE The 2013 survey includes data on UAE companies for the first time. The results show that CR Reporting in

the UAE has progressed at a slower rate than in the rest of the world. Only 1 out of every 4 UAE companies surveyed (22 per cent) are reporting on corporate responsibility, compared to the global average of 3 in 4 (71 per cent).

The lack of regulation which mandates CR reporting is likely to be a core reason why CR reporting is not common practice for UAE companies. Whilst CR reporting in the UAE is therefore a voluntary activity, 16 of the 22 reporting companies have stated that they have a CR strategy in place. This shows that the majority of UAE companies who report on CR are doing so as part of a strategic approach that identifies the CR issues which matter most to their business. Andrew Robinson, Partner for KPMG in the UAE, observed that “these UAE companies have identified that CR reporting is the means by which a business can understand both its exposure to the risks of social and environmental changes and its potential to profit from the new commercial opportunities.”

About the Survey This KPMG Survey of Corporate Responsibility Reporting 2013 is published primarily for business leaders, company boards and CR and sustainability professionals. It provides a snapshot of current global trends in CR reporting with benchmarks, guidance and insights to help companies worldwide determine their own approaches to CR reporting and to assess and improve the quality of their reports. This year the survey, which has been regularly published since 1993, covers a record 41 countries and 4100 companies across 15 industry sectors.

The growth in the number of countries and companies covered in this survey is just one indication of how CR reporting has evolved into a mainstream business practice over the last two decades. Download a copy of the KPMG Survey of Corporate Responsibility Reporting 2013 here: www.kpmg.com/crrsurvey

ACCOUNTANCY & FINANCE AWARDS

Michael Izza, Chief Executive of ICAEW: “We started these awards three years ago because we believed it was time we celebrated the role of the Accountancy and Finance profession in the Middle East.”

REWARDING

EXCELLENCE ICAEW Chief Executive urges promotion of transparency through financial reporting and audit work; as Middle East’s best and brightest finance professionals are recognised.

14 January 2014

S THE Middle East moves to assert its position as one of the world’s fast growing financial markets, competition to recruit and retain financial talent has never been tighter like it is today, Michael Izza, the Chief Executive of Institute of Chartered Accountants in England and Wales (ICAEW), has said. Izza was addressing delegates during the third annual Middle East Accountancy & Finance Excellence Awards, at the Ritz Carlton in Abu Dhabi. Organised by the ICAEW and sponsored

ACCOUNTANCY & FINANCE AWARDS

by National Bank of Abu Dhabi and the PIC Group, the awards recognise the best and brightest in accountancy, finance and business.

“We started these awards three years ago because we believed it was time we celebrated the role of the Accountancy and Finance profession in the Middle East – and those who are contributing to it, like financial journalists and training providers,” Izza said.

Women in finance The 2013 awards saw a strong representation of both men and women, with Izza saying the balance was testimony to the achievements of both sexes in business, “because women are becoming increasingly active in finance in many parts of the Middle East, as they are all over the world.”

Finance and accountancy is a profession that is having a huge impact in terms of diversifying and developing the economies in this part of the world. “Over the next few years, we are aiming to increase awareness and understanding of the accounting and finance profession in this region, as well as supporting a sustainable finance profession here,” the CEO added. Izza called on finance employees to gain professional qualifications, saying it sharpens skills and helps improve the quality of service they render to the public. “A strong professional education is good for one’s career. I think you can see that by looking at the number of qualified professionals at the top of the tree. For example in the UK, 81% of FTSE 100 companies, have an ICAEW Chartered Accountant on the board,” he said. “Finance and accountancy is a profession that is having a huge impact in terms of diversifying and developing the economies in this part of the world. Abu Dhabi, like other parts of the region, is taking great steps towards the promotion of

Peter Beynon, Middle East Regional Director for ICAEW: “The exemplary performance of the 2013 winners offers a demonstration of the very best practices that the whole profession can emulate.”

a knowledge-based, diversified economy and we are supporting those steps to the best of our ability through our work with the ADAA (Abu Dhabi Accountability Authority), Mubadala (private company), Taqa (Abu Dhabi government energy company), NBAD (National Bank of Abu Dhabi), Agthia Group (a large hospitality company),” he added. Confidence in business Commenting on the awards, Peter Beynon, ICAEW Regional Director Middle East, said, “A strong accountancy and finance profession is the backbone of sustainable economic growth. Recognising the region’s best talent - the finance professionals who are daily delivering confidence in business - is important, because their hard work and dedication can often be overlooked. The fact that they are demonstrating the highest professional and ethical standards is what underpins economic growth and we are delighted to give them the credit they deserve.” “This year’s awards programme grew significantly in terms of the level of participation and the quality of submissions. The exemplary performance of the 2013 winners offers a demonstration of the very best practices that the whole profession can emulate.” Industry professionals from across the Middle East attended the gala event, which included British radio and television presenter and comedy author, Clive Anderson. Winners were 15

ACCOUNTANCY & FINANCE AWARDS

Accolades were awarded in 12 categories, including new categories for Excellence in the Development of the Country’s Future Business Leaders, Internal Audit Excellence, and Accounting for Sustainability.

Women are becoming increasingly active in finance in many parts of the Middle East, as they are all over the world. selected by a judging panel comprising 11 of the region’s most respected industry professionals, among them Dr Al Zarouni, Deputy Group CFO of NBAD and Mark Beer OBE, Registrar at Dubai International Financial Centre (DIFC) Courts and former CEO & Chairman of the British Business Group for Dubai & Northern Emirates. Accounting for sustainability Accolades were awarded in 12 categories, including new categories for Excellence in the Development of the Country’s Future Business Leaders, Internal Audit Excellence, and Accounting for Sustainability.

Among the winners of the 2013 awards were: H.E. Riyad Abdul Rahman Al Mubarak, Chairman of Abu Dhabi Accountability Authority for his Outstanding Contribution to the Accountancy Profession; James Rigney from Etihad Airways for CFO of the Year; and Amanda Line, from PwC Academy Middle East for ICAEW Chartered Accountant of the Year. Abdullatif Al Mahmood from Ernst & Young Bahrain was recognised as Young Accountant of the Year, while the Editor 16 January 2014

of Accountant Middle East magazine - Joyce Njeri - was named the Financial Journalist of the Year.

The new award categories, which ICAEW says demonstrate commitment to the development of local finance and accountancy infrastructure, went to TAQA for Excellence in the Development of the Country’s Future Leaders; Etihad Mobily for Internal Audit Excellence; and GASCO for Accounting for Sustainability.

Celebrating the best Steve Rigby, Divisional Manager of PIC-Group Western Asia & India, Gold sponsor, added, “The Middle East Accountancy & Finance Excellence Awards offers a fantastic platform through which regional progress within the profession can be showcased to business and government leaders, locally and internationally. We would like to thank ICAEW for this initiative as it helps reinforce the attractiveness of Middle East markets for foreign direct investments.”

The Middle East Accountancy & Finance Excellence Awards are organised by ICAEW – a world leader in the accountancy and finance profession with over 140,000 members across the globe. The awards were launched in 2011 to celebrate the very best in the accountancy and finance profession in the Middle East and have become a key date in the annual calendar of regional business leaders.

ACCOUNTANCY & FINANCE excellence awards: the winners

CFO OF THE YEAR Winner: James Rigney Shortlisted: Frank Nelson, Talal Al Mamari, James Rigney Award sponsor: EY Judges’ Comments: The recipient of this award has consistently complemented and supported the CEO’s and board’s vision and strategy by providing support in meeting the organisation’s goals and objectives. He has contributed to delivering financial growth during the past year, demonstrated success in overcoming significant business challenges or barriers, and shown examples of team leadership and superior management in addition to demonstrating commitment to the company’s financial best practices and accounting standards. This is an individual who has shown commitment to increasing shareholder value and returns for the company and has shown success as a strategic visionary for the enterprise.

FINANCIAL JOURNALIST OF THE YEAR Winner: Joyce Njeri Shortlisted: Business Breakfast Dubai Eye, Joyce Njeri, Stefania Bianchi Award sponsor: Taqa Judges’ Comments: The recipient of this award is widely respected by peers and the business and finance community and is acknowledged as being able to provide leading commentary on the region’s financial and business developments. This is a person with the ability to identify trends in the region, anticipate change, analyse stories and explain issues to a general audience with an accessible and informative discussion style. So much so that support for this particular nomination was overwhelming.

ACCOUNTING FOR SUSTAINABILITY Winner: GASCO Shortlisted: NBAD, NCB, GASCO, Agility Award sponsor: Agthia Judges’ Comments: The recipient of this award has produced a report which shows the organisation’s clear commitment to achieving a balance in its long-term responsibilities resulting in sustainable financial, social and environmental activities and contributions. The report provides a clear and transparent view of the organisation’s performance and communicates the procedures, processes and controls which are embedded into its operations and which promote and ensure sustainability throughout the organisation. 18 January 2014

ACCOUNTANCY & FINANCE excellence awards: the winners

BUSINESS FINANCE TEAM OF THE YEAR Winner: Ooredoo Qatar Shortlisted: Ooredoo Qatar, Emirates Airlines, Aabar Investments Award sponsor: PwC Judges’ Comments: The recipient of this award has been one of the world’s fastest-growing companies since 2005 and has a customer base of more than 93 million. This is an organisation with a business finance team which has proven itself to embody the best in teamwork resulting in superlative end results due to the development and implementation of robust and innovative approaches. The individuals comprising this team have, over the course of the year, shown themselves to be flexible in their approach to business and supportive of each other, working hard to reach the organisation’s objectives while maintaining a positive team dynamic and spirit.

CORPORATE FINANCE DEAL OF THE YEAR Winner: Creation of Emirates Global Aluminium Shortlisted: Merger of Aldar & Sorouh, Restructuring of GIH, Creation of Emirates Global Aluminium Award sponsor: The Abraaj Group Judges’ Comments: This award goes to an innovative business deal driven by a goal of providing clear benefits to the region and its economy by bringing inward technology, jobs, rewards and acclaim. This is a deal which has shown evidence of strong teamwork and dedication on the part of all those individuals and organisations involved in its successful completion and which has been built on a foundation capable of bringing continued value and increased financial strength to all its stakeholders.

ICAEW CHARTERED ACCOUNTANT OF THE YEAR Winner: Amanda Line Shortlisted: Nauman Asif Mian, Bustam Al Janabi, Amanda Line Award sponsor: Michael Page Finance Judges’ Comments: The recipient of this award is an ICAEW qualified chartered accountant who has demonstrated a high-quality approach, through personal values and working practices, to exceed challenging targets. This is an individual who has shown superior leadership and management skills and who is such an inspiration to peers that the judges’ decision was unanimous. 19

ACCOUNTANCY & FINANCE excellence awards: the winners

EXCELLENCE IN FINANCIAL REPORTING Winner: DP World Shortlisted: ENBD, Oman Tel, DP World Award sponsor: KPMG Judges’ Comments: The recipient of this award is one whose financial reports explicitly illustrate the organisation’s longterm direction in addition to the necessary short-term strategic priorities. The report also provides a clear analysis of the company’s principal risks with information on how these can be mitigated and managed as well as clarity in the reporting of the organisation’s financial performance, its approach to sustainable development and how this links to its strategic ambitions and, finally, an explanation of how the company’s governance structure operates effectively.

YOUNG ACCOUNTANT OF THE YEAR Winner: Abdullatif Al Mahmood Shortlisted: Nandita Ramanathan, Abdullatif Al Mahmood, Shifa Siddiqui Award sponsor: Chalhoub Group Judges’ Comments: The recipient of this award holds both excellent academic qualifications and employer recommendations. This individual possesses the commitment and determination required to achieve great results, both personally and professionally, in an every-increasingly competitive global marketplace driven by maturity, technical ability, relationship management skills, outstanding drive and an unwavering determination to succeed.

INTERNAL AUDIT EXCELLENCE AWARD Winner: Etihad Mobily Shortlisted: Abu Dhabi Education Council, Etihad Mobily (KSA), Ma’aden (KSA) Award sponsor: Deloitte Judges’ Comments: The recipient of this award boasts an internal audit function which enhances corporate governance, risk management and assurance, is a catalyst in the development and implementation of policies, systems and processes to enhance conformance and performance, and proactively and effectively contributes to the management of business risks to enhance the ability of its organisation to weather adverse economic conditions.

20 January 2014

ACCOUNTANCY & FINANCE excellence awards: the winners

EXCELLENCE IN TRAINING & DEVELOPMENT OF FINANCE PROFESSIONALS Winner: Yusuf Hassan from KPMG Shortlisted: Yusuf Hassan from KPMG, Dubai Port World, Dubai UAE, Dubai Financial Services Authority Award sponsor: Nexia International Judges’ Comments: The recipient of this award has shown an unfaltering commitment to staff’s continuous professional development by providing time, resources and on-going support. The training provided has been shown to be of a consistently high quality, fit for purpose, employing the most efficient and effective use of resources resulting in highly skilled individual staff and teams who are able to benefit partners and other stakeholders alike.

EXCELLENCE IN DEVELOPMENT OF THE COUNTRY’S FUTURE BUSINESS LEADERS Winner: TAQA Shortlisted: TAQA, Dubai Financial Services Authority, Bahrain Institute of Banking and Finance Award sponsor: ICAEW, British Embassy in Abu Dhabi Judges’ Comments: The recipient of this award is an organisation which has adopted a vision for localisation in the region and has created a strategy to support this initiative. It has developed programmes, policies and procedures to successfully achieve localisation commitments and has demonstrated consistent efforts in the recruitment, training and development of locals to enhance their vocational and technical skills and which facilitate continued personal development and career advancement.

OUTSTANDING INDIVIDUAL CONTRIBUTION TO THE ACCOUNTANCY PROFESSION Winner: HE Riyad Al Mubarak, Chairman of the Abu Dhabi Accountability Authority Award sponsor: ICAEW Judges’ Comments: The recipient of the award is an individual who is a champion of accountability and transparency for Abu Dhabi. Who is ahead of the game on regulating the audit market as evidenced by the publication, under his direction, of the ‘Statutory Auditor Appointment Rules in 2008’ which requires mandatory retendering of the audit for subject entities every four years and the exclusion of any audit firm attempts to undercut competitors by significantly reducing the costs of their services. 21

ACCOUNTANCY & FINANCE AWARDS

Amanda Line, PwC Partner: “In order to be successful, you have to find something you’re passionate about.”

22 January 2014

ACCOUNTANCY & FINANCE AWARDS

EDUCATION: THE FOUNDATION OF

SUCCESS

In awarding Amanda Line the 2013 ICAEW ‘Chartered Accountant of the Year’ award, the judges were unanimous: The recipient of this award has shown unfaltering commitment to professional training and development. This, as Accountant Middle East finds out, is her passion play.

“ SHANE PHILLIPS Managing Director, Shane Phillips Consultants

I HAD always wanted to start my own business but it wasn’t until I worked for a couple of companies that didn’t care about their customers… that I felt compelled to start my own business so I could give customers what they deserved. That’s what has driven me in every business that I’ve started,” says Amanda Line, Partner at PwC’s Academy Middle East. She continues; “Today I run a business within a global professional services firm and not only are we providing really great service to our clients, we are making a difference in the MENA region by providing world class training to a population that has not always had access to such globally competitive education. That’s what drives me.” Amanda, a lifelong champion of education and training has just received the 2013 ‘Chartered Accountant of the Year’ award, conferred upon her by the Institute of Chartered Accountants in England and Wales (ICAEW).

Her enthusiasm ripples through her words as she describes her career of helping people build the skills they need to be successful, and, in turn,

building stronger businesses and economies. Here we learn more about this passion for continuing education and qualifications as Amanda talks about her early years, first businesses, and current projects.

An early spark “In order to be successful, you have to find something you’re passionate about,” Amanda says, her voice strong and lively.

She acknowledges that she was lucky in that she found her passion early on, very early on. She recounts a memory from her childhood, describing how she held a sale of her unwanted possessions to her younger siblings, even having them wait outside her bedroom door for the ‘big’ event to begin.

It’s this youthful interest and a knack for business that Amanda remembers starting her down her career path. And, she adds, she learned a valuable lesson about ethical business when her parents reprimanded her upon discovering she’d sold her brother her broken watch. While the thrill of making a sale hooked her on business, she also “learnt at an early age that selling a quality product is very important.” 23

ACCOUNTANCY & FINANCE AWARDS

The golden key of qualification Her real start, she says, was her professional qualification with the ICAEW. She considers this as the crucial foundation upon which all of her success has been built. “In London, I started working after school instead of going to university, and got my ICAEW qualification. It was the best thing I ever did. It’s amazing that you can remain so grateful of something you did 25 years ago. How many people look back on their university degree and think ‘Wow that had such an impact on my career’?”

She laughs that in her personal life her own children, nieces, and nephews would say that she is “boring on the subject of getting a professional qualification” in that she constantly reminds them of how important these certifications are in any chosen career path.

Anis Sadek, Managing Partner at the Dubai office of Deloitte

However, her professional trajectory has not been linear, but rather more project-based, as she uses her talent for recognising opportunity for growth and improvement and then capitalises on those prospects. The first of these ventures took place in Singapore where she and her husband moved after she qualified in London. While he worked for Singapore Airlines, she started her own financial training company. It was here she put her professional training into practice: by observing the demographics of Singapore where people “want professional qualifications and are prepared to work hard.”

She continues, “I looked around at the other training providers and they were just not delivering good quality training. I knew I could do better.”

Seven years later, after expanding her business into Hong Kong and Shanghai, she sold it to training giant, Kaplan Inc, and began her next chapter in the Middle East. Upon moving to Dubai, Amanda and her husband started a sandwich business called Dante.

Although it was fun and enjoyable because she “loves food and eating”, she didn’t feel like she “was making a huge difference [and she] didn’t find it a very sustaining business.” While it was fulfilling 24

January 2014

on a personal level, one where she learned new facets of her own strengths and weaknesses, she also realised that she loved the business of education and training more. The choice to return to her original ethos was an easy one to make.

Opportunities abound It was the right time for this return; the Middle East was seeing a marked growth trend in education and training beyond the traditional institution of university. Local companies were seeing the value of training & development and over the last decade have been investing in this area heavily.

Amanda says, “The reason I joined the PwC’s Academy is because over the last ten years in the Middle East the focus on training has increased ten times…but there’s still a lot to do. There’s still a gap between the knowledge and skills that people have when they leave university and those they need to be effective in the workplace. In my

"At PwC Academy, we are making a difference in the MENA region by providing world class training to a population that has not always had access to such globally competitive education."

ACCOUNTANCY & FINANCE AWARDS

area, finance, that is particularly the case. So I am definitely driven by the opportunity that arises from that.”

Now PwC’s Academy is one of the fastest growing divisions of PwC in the Middle East and that only underscores the importance of training and development in the MENA region.

Amanda describes the innovative forecast for the New Year: “We are opening in KSA [this year] and we are launching a new certification with ICAEW - an Accounting Skills Certificate in Arabic. This is the only certification for entry level finance professionals available in Arabic. We believe it will go a long way to filling the gap in fundamental level finance skills that currently exist.” Amanda remarks that at PwC’s Academy they have the ethos of a quality brand and because they constantly work with businesses, they’re not “just standing up and teaching a topic; but relating that topic to real-life business” and bringing that experience of business into the classroom.

“We are opening PwC Academy in KSA [this year] and we are launching a new certification with ICAEW - an Accounting Skills Certificate in Arabic. This is the only certification for entry level finance professionals available in Arabic.” As far as raising the children, Amanda describes exhausting days from dawn until far past dusk: “I’d go to work in the morning, come home for a couple of hours in the afternoon to spend time with the kids, and then go back to work and teach a class from 7 to 10pm,” she recalls. However, her husband’s schedule with the airlines was flexible, and she says that helped immensely during those initial years.

While the Academy trains clients, Amanda’s passion lies in the training of young professionals starting out their careers and she says that with around 70% of the population in Saudi Arabia alone being under 30, giving young people the skills they need to succeed in the business world is a top priority. Of course, the challenge in the emerging markets is you can’t move fast enough, Amanda says.

Some of the regulation and process around the education business makes it tough to establish new businesses. She explains that “having built a training and development company from scratch on an international level, I can intuitively see the opportunities in the market and it seems that no matter how fast I am moving, I am not moving fast enough to capture all that the market has to offer.” Support system No person can do it all alone, especially if that person moves to a different continent, starts a new business, and gives birth to three children in a span of five years. Amanda smiles and says, “I think my biggest supporter is my husband. We have had to be a team. He turned down two promotions when he was in Singapore to keep his flexible work pattern. That would have made it very tough to run the business.”

Amanda’s passion lies in the training of young professionals starting out their careers. She says, giving young people the skills they need to succeed in the business world is a top priority.

ACCOUNTANCY & FINANCE AWARDS

She counts herself lucky because her husband was the breadwinner at that early stage and she didn’t have the stress of an all-or-nothing business gamble, nor the stress of living on an austere budget. Amanda knows that not everyone is lucky to have such a set-up, but she encourages women who do have a husband earning the primary income to take advantage of their situation and recognise that they can take a risk that others may not be able to.

And if things fail? She says, “I’m not so proud that I was ashamed to fail; I was happy and eager to give it a go. When I look back on it, there were of course times when things weren’t going so well, but never that gut-wrenching how-am-I-going-to-feed-myfamily type of stress.” Changing individuals, changing the world Amanda’s bottom line in her life’s work is education. She grows emphatic as she says, “[Education] changes people’s lives and if you change lives, you can change whole economies.”

“If we can give people better skills and qualifications, we will influence not only their personal growth and development, but also the economies in which they live and work. And that is a wonderful thing to say that you’re involved in.”

She adds that although a life of leisure and rest is sometimes attractive, the opportunities in the training field are “too compelling” for her. At every mention of training and skills-building, Amanda becomes even more animated, and it’s clear she has indeed found her true passion in life.

“Over the last ten years in the Middle East the focus on training has increased ten times… but there’s still a lot to do. There’s still a gap between the knowledge and skills that people have when they leave university and those they need to be effective in the workplace.” 26

January 2014

Amanda was uncomfortable talking about her most recent accolade of ICAEW ‘Chartered Accountant of the Year’ as she prefers to shy away from the limelight. She acknowledges that while it’s nice to be recognised, she says what’s really important is the chance to highlight the growing opportunities for women to succeed in the fields of finance and accounting. Overall, the ICAEWs awards ceremony, the fast growth of PwC’s Academy, and the fact that we now have women winning accounting awards in the Middle East… all highlight the huge strides the region is making and confirms that the UAE continues to be the MENA region’s leader on so many levels in the finance profession.

ACCOUNTANCY & FINANCE AWARDS

FLYING HIGH

Etihad Airways’ James Rigney named ICAEW’s Middle East ‘CFO of the Year’ after airline delivers $4.8 billion in revenues.

28 January 2014

ACCOUNTANCY & FINANCE AWARDS

Joyce Njeri Editor, Accountant Middle East

S THEY say in financial lingo, there’s strength in numbers.Therefore, it’s not hard to see why Etihad Airways’ James Rigney, easily trounced competition to emerge the 2013 ICAEW ‘CFO of the Year’. Rigney won the award after a year in which Etihad Airways delivered $4.8 billion in revenues and tripled net profits, to $42 million, in only its ninth year of operation.

The UAE’s major airline now has a portfolio of more than 60 national and international financial institutions, providing more than $7 billion in financing. In the last 12 months, it has taken minority equity stakes in Air Serbia, Jet Airways and Darwin Airline, adding to previous investments in airberlin, Air Seychelles, Aer Lingus and Virgin Australia. Period of growth Last month, Etihad Airways announced orders for up to 199 aircraft and 294 engines, worth $67 billion at list prices, to support its strategic growth plan for the next decade.

In an exclusive interview with Accountant Middle East, Rigney was quick to attribute his win to the combined efforts of his entire team at Etihad.

“I am honoured to accept the ICAEW Middle East CFO of the Year award on behalf of the much wider team, within Etihad Airways, the Abu Dhabi Government and our financial advisors, particularly PwC and KPMG, who have helped us deliver over the seven years and in particular, over the last 12 months.

$4.8bn Etihad Airways profit revenue in financial year 2013

“As we look ahead, we know that we must redouble our efforts, as Etihad Airways and its partners enter a period of even greater growth,” he added. Here are the excerpts of the interview.

.Congratulations on being named Middle East CFO of the Year, especially when competition for the coveted title was so tough. What does winning the award mean to you?

Receiving this accolade, especially from a respected association such as the Institute of Chartered Accountants of England and Wales, is certainly an honour. It’s an acknowledgement for all the hard work and success demonstrated by Etihad Airways in last few years. However, this could not have been achieved without the continued support of the entire Etihad Airways finance team, the Board of Directors, our shareholders, and of course our consulting partners at PwC and KPMG.

.Going back in time now, share with us the reasons you entered the award in the first place and what you were hoping to achieve.

I was actually nominated by PwC, our consulting partner, so it was a pleasant surprise to find out about the award. Now you have been declared the CFO of the Year, what would you do differently in 2014?

Over the next year, we must continue to meet our commercial mandate, grow our business and deliver profitability. Essentially, this has been our mission since we launched operations 10 years ago and today, despite our transformation into a business with annual turnover of over $6 billion and the fact that Etihad Airways is now part of a growing group structure with minority equity investments in other carriers, those objectives remain the same. Even when faced with ever-present challenges such as geopolitical volatility, ongoing operational factors and a very competitive commercial environment, we have achieved our objectives by focusing on strong governance, transparency and accountability. This approach will continue in the future, as we work across the business to drive revenue growth and maintain the low cost base we have achieved by rigorous financial discipline. As the CFO of Etihad Airways, what does your work entail?

There are several different aspects to my role, from maximising our economies of scale and reducing costs, to ensuring sufficient funding and working capital to meet our business needs. 29

ACCOUNTANCY & FINANCE AWARDS

individually for the performance of the company. We work closely in an ongoing review of how the business is tracking to ensure we don’t slip either in terms of revenue performance or cost discipline, irrespective of external factors.

The continued support from our shareholders, the board, and our strategic partners, is also fundamental in delivering on our mandate and financial targets. The role of CFOs has broadened and is now much more about setting the benchmarks so that the overall targets the board has set for the company can be achieved. Can you share with us about these changing roles? There is no question that the CFO’s role is changing. Risk management, technological innovation, and sustainability are just some of the areas driving expansion of the CFO portfolio.

We also run cyclical reviews allowing us to independently benchmark Etihad Airways against best in class peers. Industry benchmarks are key for us and that enables us to identify opportunities. Overall, I think the CFO of the future will inspire change through influencing behaviour, creating centres of excellence, and encouraging collaboration across the enterprise.

James Rigney (right), is presented with his ‘CFO of the Year’ award by Bassam Hage, EY’s Regional Managing Partner for Markets.

I am also responsible for developing a strong corporate governance framework, protecting the business from volatility – such as fuel, forex and interest rate hedging – and managing the integration of our equity alliance partners.

With the business model we have adopted, one of partnerships and equity alliance, I am also focused on ensuring our investments deliver benefits to Etihad and Abu Dhabi.

The relationship between the CFO and the CEO is integral and is based on transparency and trust. While the CFO focus is necessarily on cost, it must also embrace innovation, efficiencies and driving overall profitability. The mind-set needs to be more strategic and commercially focused.

At Etihad Airways, the members of the senior executive team are accountable jointly and

The most significant cost to affect an airline is fuel, which accounts between 38 to 42 per cent of its cost

CFOs are ultimately evaluated by the company’s overall performance. If performance falls short, the CFO is usually the scapegoat. As the CFO of one of the biggest airlines in the region, how do you deal with performance pressure?

January 2014

On the same issue, today, CFOs are generally expected to ensure the cost efficiency of the finance and accounting function, while providing strategic business guidance and advice to the CEO. In your opinion, how has the relationship between the CFO and the CEO changed over the recent years?

As organisations today work towards managing risks and cutting down unnecessary expenditure, what do you regard as the critical operational areas to be watched in the everyday running of an airline business?

ACCOUNTANCY & FINANCE AWARDS

base. This means airlines are always vulnerable to increases in price. To counter this risk Etihad Airways has implemented a highly successful fuel hedging programme since 2006. Currently we are hedged at 80 per cent which protects us against volatile market shifts and ensures management can plan accordingly.

In addition to fuel hedging, we achieve scale and savings by working closely with our equity alliance partners – airberlin, Air Seychelles, Virgin Australia, Aer Lingus, Etihad Regional (operated by Darwin Airline) and Jet Airways – as well as with our more than 40 codeshare partners. The benefits derived from the equity alliance include joint procurement, cross-utilisation of aircraft, joint training of pilots and cabin crew, shared sales forces in common destinations, and dual focus on revenue growth and cost reduction.

The partnerships have brought considerable benefits to Etihad Airways’ financial results, with codeshare and equity partner revenue in

Q3 of 2013 up 36 per cent to $247 million and partner contributions representing 23 per cent of the total. What is most important to you as CFO when it comes to building a successful finance team at your organisation?

“Over the next year, we must continue to meet our commercial mandate, grow our business and deliver profitability. Essentially, this has been our mission since we launched operations 10 years ago,” James says.

The most important thing is to build a team with balanced set of competencies to deliver the strategic acumen the airline is needs. This includes innovation, technical and non-technical skill sets, focus on sustainable profitability, open to chance and much more.

“Even when faced with ever-present challenges such as geopolitical volatility and a very competitive commercial environment, we have achieved our objectives by focusing on strong governance, transparency and accountability.”

ACCOUNTANCY & FINANCE AWARDS

One of the best things in my role is the unflinching support from our shareholder, board of directors, and the PCEO, which is a key enabler in effectively delivering on our commercial mandate. Please share your key career moments in the journey to becoming a CFO.

There are many career defining moments for me in the journey to becoming a CFO at Etihad Airways. I joined Etihad Airways from Gulf Air, where I was the Head of Corporate Strategy, and played a role in the team responsible for the creation and implementation of the Project Falcon programme between 2003 and 2005, repositioning the business on a commercial platform.

I joined Etihad Airways in 2006. Since then my team and I have played a key role in the 2007 financial restructuring of the airline, the conclusion of financing deals in excess of $7 billion, in addition to implementing a fuel hedging programme, and the development of a world-class reporting system and strong corporate governance. "There are several different aspects to my role as the CFO of Etihad Airways, from maximising our economies of scale and reducing costs, to ensuring sufficient funding and working capital to meet our business needs. "

At Etihad, we are focussed on ensuring we have a pipeline of high calibre, finance professionals to ensure succession planning and to build the leaders of tomorrow. What are the best and worst things about your job?

I am very proud of the role I have been able to play in building a global airline and a new business model in the competitive world of aviation.

There is no question that the CFOâ&#x20AC;&#x2122;s role is changing. Risk management, technological innovation, and sustainability are just some of the areas driving expansion of the CFO portfolio.

January 2014

In addition to receiving numerous awards on behalf of the finance department, I received the prestigious award for 'Excellence in Finance â&#x20AC;&#x201C; Public Sector' at the 2009 MENA Chief Financial Officer Awards and the Finance Strategy Award at the Airline Business Airline Strategy awards in 2012.

In December 2013, I won the Middle East Chief Financial Officer of the Year by the Institute of Chartered Accountants of England and Wales (ICAEW). This award comes in a year in which Etihad Airways delivered $4.8 billion in revenues and tripled net profits, to $42 million, in only the ninth year of operation. The airline now has a portfolio of more than 70 national and international financial institutions, providing more than US$ 7 billion in financing. In the last 12 months, Etihad Airways has taken minority equity stakes in Air Serbia, Jet Airways and Darwin Airline, adding to previous investments in airberlin, Air Seychelles, Aer Lingus and Virgin Australia. How do you spend your free time? What are your sporting interests, if any?

I spend time with family and friends. I am a big cricket and Australian football fan.

Mergers & Acquisitions

DOMESTIC M&A DEALS RISE 170% EY update report shows Saudi Arabia led as the target country of transactions in MENA with 13 deals, followed by the UAE with 12, in Q3 of 2013.

CCORDING TO EY’s Q3 2013 Mergers & Acquisitions update for the Middle East and North Africa region, domestic deal value increased by 170% from $3.0 billion in Q3 2012 to $8.2 billion in Q3 2013. Inbound deal value more than tripled compared to Q3 2012, rising from $1.1 billion in Q3 2012 to $3.9 billion in Q3 2013, an increase of 254%. The total disclosed value of M&As in the MENA region rose 76% from $9.9 billion in Q3 2012 to $17.3 billion in Q3 2013. Outbound disclosed deal value decreased by 9% from $5.7 billion in Q3 2012 to $5.2 billion in Q3 2013.

Phil Gandier, MENA Transaction Advisory Services Leader, EY: “The surge in both inbound and domestic deal values this quarter is a strong indication that the regional economy is picking up.”

Phil Gandier, MENA Transaction Advisory Services Leader, EY, said: “The surge in both inbound and domestic deal values this quarter is a strong indication that the regional economy is picking up.”

Target sector focus of inbound deals into MENA region (Q3 2013)

3,500

Deal value (US$m)

5 2,000

5 4

1,500 3 1,000

$625.0

500

1 $35.0

Asset Management

Diversified Industrial Products

Oil & Gas

n/a

Prof Firms & Services

Other Sectors

Sector classification Deal value (US$m)

Source: EY analysis of publically available data

34 January 2014

$48.4 Pharmaceuticals

Volume (No. of deals)

No. of deals

2,500

Saudi Arabia led as the target country of domestic deals in MENA with 13 deals, followed by the UAE with 12 deals.

Geopolitical factors The target sector focus of announced domestic deals in MENA region in Q3 2013 was telecommunications, representing 73% of the total value of all domestic deals. This was largely due to the acquisition of Maroc Telecom by Emirates Telecommunications Company for $6.0 billion.

The oil and gas sector had the highest number and value of inbound deals with 7 deals worth $3.3 billion comprising 82% of the total value of all MENA inbound deals. The top deal in Q3 2013 was Emirates Telecommunications Company’s acquisition of Maroc Telecom in Morocco which represented 34% of the total deal value in Q3 2013. The second biggest deal was the acquisition of Apache Corporation in Egypt by Sinopec International Petroleum Exploration and Production Corporation in China for $3.1 billion, followed by the acquisition of Printemps in France by Divine Investments S.A in Qatar for $2.1 billion. Out of the top 10 deals in Q3 2013, four were domestic and outbound, and two were inbound.

$3,209.6

3,000

“This quarter saw the highest Q3 deal values since 2008. Investors from both within and outside the region are recognising that the fundamentals for M&A in MENA are improving. This is strengthening buying intentions across the region and could create real momentum in the M&A market,” he added.

In the private equity space, 21 SWF/PE deals were announced in Q3 2013, with September 2013 having the most activity with 10 deals followed by August with 7 deals.

“Some element of M&A caution still exists given the backdrop of the global economy and MENA geopolitical factors. However, there continues to be a growing corporate appetite in M&A activity due to the strong financial fundamentals of the MENA region’s capital agenda as indicated by EY’s recent Capital Confidence Barometer study,” said Phil.

Mergers & Acquisitions

BRIDGING THE GAP

Are Boards and CFOs in the Middle East aligned when it comes to M&A? Deloitte survey investigates.

ITH SEVERAL high value mergers and acquisitions (M&A) expected to take place in the MENA region over the coming months, the question of whether now is the time to consider an M&A growth strategy is becoming more evident. Deloitte, in association with Corporate Board Member magazine, surveyed corporate directors and CFOs from public companies with revenue of $500 million and above, to compare, contrast, and analyse their views on M&A and risk. The Deloitte survey, “Bridging the Gap: M&A, Are CFOs and boards aligned” indicates that industries such as oil and gas, telecoms and financial services are all expected to see more robust M&A activity over the coming 12 months.

This is buoyed by the recent announced deals such as Etisalat’s offer to buy Vivendi’s 53% stake in Marco Telecom for $5.27 billion and China’s Sinopec acquisition of a 33% minority stake in Apache Corporation’s oil and gas business in Egypt for $3.1 billion. With many risks and issues to consider around M&A, there is an ever growing call for more effective handling of these transactions. Taking strategic risks Effective M&A decisions depend upon strong collaboration and communication between the board and Chief Financial Officers - CFO – especially if both parties are focused on creating value by taking strategic risks. Are board members and CFOs strategically aligned when it comes to risk management and value creation in M&A activities? “While directors and CFOs are largely consistent in their overall view of M&A strategy and valuation, this “Bridging the Gap” survey indicates that their views could be more aligned in other areas. This is particularly the case with respect to primary M&A objectives, and especially with regard to cost synergies and scale efficiencies,” explains James Babb, CFO Programme leader at Deloitte Middle East.

Overall, the Deloitte survey results indicate that: • A majority of directors and CFOs agree that their companies’ M&A strategy is to seek smaller, more strategic deals. Directors and CFOs were fairly well-aligned regarding M&A strategy for the next 12-18 months, with the largest percentage of respondents in each group expecting to seek smaller, strategic deals. • CFOs (64%) were far more inclined than directors (45%) to cite differentiating and diversifying products or services as the primary purposes of M&A. Directors were more inclined than CFOs to cite the pursuit of cost synergies or scale efficiencies as a primary M&A objective. • Both directors (56%) and CFOs (53%) expect to deploy cash as the primary means of funding M&A transactions. However, CFOs are more inclined than directors to view debt as the primary source of funding. • Directors and CFOs agree that the greatest cause for concern in achieving M&A success is integration failure. As to the greatest cause for concern during integration, both most often cited achieving cultural fit. • Directors were more inclined to rate the finance team’s risk-related M&A abilities as “extremely effective” than CFOs. CFOs were less inclined to rate the board as “extremely effective” in this area.

In one of the recent major M&A deal, UAE’s telecommunications firm Etisalat’s offered to buy Vivendi’s 53% stake in Marco Telecom for $5.27 billion.

53% proportion of surveyed CFOs willing to deploy cash as the primary means of funding M&A transactions. 35

Tax Insights

PUTTING

TAX TRANSPARENCY

ON THE AGENDA Recent reported evasion activities have kept taxation in the news spotlight. And while these may just be flashpoints, they demonstrate that the scrutiny on tax morality is not going away, argues Greg Wiebe, KPMG’s Global Head of Tax.

Greg Wiebe, KPMG’s Global Head of Tax.

January 2014

Tax Insights

HETHER YOU are a policy maker, business leader, politician, journalist, tax authority or just a regular citizen, the issue of tax is probably high on your agenda. Over the past few years, there has been a fundamental shift in the way that people view tax.

Today, tax and the issue of paying your fair share is one of the most prominent areas being scrutinised by governments, the general public and, to a great extent, the media. Just like corporate responsibility and environmental issues, significant brand damage can occur if there is a perception that a company’s tax affairs are overly aggressive or ‘unfair’.

Increased global attention The reputational issue can also be relevant for sovereign wealth funds (SWF) and Government Owned Entities (GOE) in the Middle East, given the increased global attention they are drawing from their significant level of high profile investments outside of their own countries. Often these investments are through entities which attract the burden of tax, even though, back in their home country, such entities are often exempt from tax.

As the public looks to businesses to ‘do the right thing’, expectations for more transparency are increasing. Coverage of the inadequacies of Greek revenue collection, public demonstrations in the UK, renewed scrutiny from US government committees and the former French Budget Minister’s reported evasion activities have kept taxation in the news spotlight. And while these may just be flashpoints, they clearly demonstrate that the scrutiny on tax transparency and morality is not going away.

Today, tax and the issue of paying your fair share is one of the most prominent areas being scrutinised by governments, the general public and, to a great extent, the media.

Tax on the global agenda While the debate has tended to focus on corporations and high net worth individuals, the reality is that governments, tax authorities and policy makers must also shoulder some of the responsibility. In part, this is because current tax systems have not kept up to date with changes in business models and practices. At the same time, it must also be recognised that many countries use their tax systems to compete for investment dollars and jobs, and to benefit the foreign activity of their own multinationals. Thankfully, there are a significant number of international meetings involving the EU, OECD, G8 and G20 where tax is on the agenda. Some are likely to focus on evasion, others on international tax rules. Regardless, business leaders can expect to see a myriad of scoping documents, discussion papers and communiqués at the country, secretariat and forum levels. The fact of the matter is that, with respect to tax, businesses need an environment that offers regulatory stability and certainty. To this end, KPMG member firms around the world applaud and support the current work of the OECD.

Much good work has already been done on the global stage over the past few decades to address any number of tax issues. But, now more than ever, it is essential that collaboration between countries and the relevant authorities takes place. This will be difficult to achieve, and the potential for unintended consequences is high. But through proper dialogue, communication and openness, KPMG’s member firms believe that resolutions can be found.

In some of the Middle East countries in particular, active engagement with the tax authorities is critical so that appropriate clarifications around the tax issues and strategies can be communicated so as to avoid any surprises during the audit proceedings. A critical business issue Without a doubt, this ever-shifting debate and tax environment creates significant complexity. Indeed, with their very reputations and relationships on the line, business leaders will need to focus on ensuring that their organisations 37

Tax Insights

are not only acting responsibly in the eyes of their stakeholders, but also reinforcing their ability to comply with possible further reporting obligations.

In my role as KPMG’s Global Head of Tax, I have joined many of my tax colleagues from around the world to talk with business leaders, tax authorities and other influencers about the issues surrounding this debate. Based on this dialogue and information gathering, we believe that there are four key actions that public company business leaders – boards and the full C-Suite –regardless of industry or geography must take seriously and address now:

Just like corporate responsibility and environmental issues, significant brand damage can occur if there is a perception that a company’s tax affairs are overly aggressive or ‘unfair’.

i) Ensure you are fully informed: Keep abreast of developments that will occur at the local country and international level. Consider how these developments could affect the tax positions and planning undertaken by your company.

ii) Plan for public discussion and develop a tax narrative: Be prepared to comment on your business and tax activity at any given moment (a particularly important capability in the era of social media). Ensure board members, management/C-Suite members and the core tax team are aware of the potential questions and challenges that could come from any number of stakeholders such as regulators, investors, media and the general public.

iii) Think reputational risk: Ensure that decisions around tax are made taking into account potential reputational risks and not simply whether your organisation has complied with the tax law in various jurisdictions.

iv) Assess your company’s relationship with tax authorities: Ensure that there is appropriate, open and respectful relationships with local tax authorities in all jurisdictions in which you operate. Ensure that you put in place processes to support discussions with the tax authorities, including paper support and documentation exchange and appropriate communications channels. The bottom line is that the costs of early preparation tend to be significantly smaller than a path of long-term conflict and litigation. All signs suggest that we will continue to see increased pressure for more transparency between taxpayers and the tax authorities, and more disclosure by public companies as to the 38

January 2014

amount of their tax payments and where those taxes are being paid. Ultimately, business leaders, tax authorities and policy makers will need to remember that this is a changing world and one can resist the change or embrace it. The problem with the former is that one tends to get left behind. Do not become complacent: this issue is not going away. For more information, visit www.kpmg.com/tax

"While the tax debate has tended to focus on corporations and high net worth individuals, the reality is that governments, tax authorities and policy makers must also shoulder some of the responsibility.”

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CITI ROUNDTABLE

Chief Financial Officers and Senior Finance Managers engage each other during the stimulating roundtable event where they tackled the topic of Credit Risk and Debt Collection within their respective jurisdictions.

PUTTING A LEASH ON

CREDIT

For your company to maintain reputable image, excellent service standards and stay in business for the long term, you need to keep a close eye on your trade debtors. Joyce Njeri reports on the highlights from the recent Citi-roundtable forum for CFOs and Finance Managers in the Food Processing and Manufacturing sector. 40 January 2014

HE REGIONAL economy is slowly starting to bubble again and along with the ever increasing numbers of super cars that are out and about, our memories seem to fade. We remember the good times again and see them just around the corner. The big contracts, the constant stream of revenue and of course the bonuses. What seems to be fading from our minds is the famine that followed the feast. Many came to dine and many disappeared without paying the bill leaving the host with leftovers of little value. Sector overview As with any other industry sector, the Food Processing and Manufac t ur ing sec tor is lubricated by offering credit to their customers and being granted credit by their suppliers. The key being to balance the two to ensure adequate

CITI ROUNDTABLE

Without a clear credit policy, the financial statements of companies will lack true and fair outlook" - Vincent Valladares, Citi Commercial Bank’s Managing Director and Middle East Head.

cash is available to fuel the business engine. Has the region learnt from the mistakes of the past? In part, yes. Not entirely. It is against this background that Accountant Middle East magazine in conjunction with Citi Commercial Bank once again hosted another round of invigorating discussion forum that targeted CFOs and Senior Finance Managers in the Food Processing and Manufacturing industry. The moderator Andy Yiacoumi, who is a renowned Credit Management expert with deep roots in the F&B industry used an innovative approach to help money managers - drawn from the Processing, Packaging, Distribution and Hospitality Services sectors - identify the gaps in their approach with respect to Credit Risk and Debt Collection within their respective jurisdictions.

characterised by high business costs primarily in materials, food products, labour and rental costs.

For businesses to maintain reputable image, excellent service standards and stay in business for the long term, finance managers need to keep a close eye on payments to suppliers, and the payments from customers who owe the business money. Therefore the objective of the roundtable was to discuss the dynamics of credit risks and also help participants develop easy-touse templates to form part of their regular debt collection procedure. Andy, whose regular menu of matters include helping clients deal with delinquent accounts receivables, vendor disputes, customer disputes, contract disputes, governmental compliance and regulatory complaints, opened the discussion by addressing the pros and cons of trading on credit.

“In their attempt to make a profit, businesses adopt several strategies, one of which is allowing credit to customers. Trade credit therefore arises when customers are allowed to buy goods or services and payment deferred till later date,” Andy explained. Granting of credit involves an element of risk and therefore it should be carefully managed” - Ian Sherlock, Partner, Middle East Credit Management Institute.

Roundtable objective Dubai has a v ibrant F& B sec tor which includes suppliers, distributors, food caterers, restaurants, bars, fast food restaurants, cafes, snack bars, cocktail lounges and numerous coffee shops. According to the Department of Economic Development (DEDD), the sector is the most dynamic and high-growth segment that forms an integral part of Dubai’s economy. This creates a lot of competition in the sector, which is driving higher levels of innovation, service and quality standards. On top of that, the sector is

CITI ROUNDTABLE

The world of cash management has now moved on from debt collection to credit management” - Ayman Fouad, Deputy Finance Manager, Emirates Modern Poultry Company.

“Of course granting of credit leads to temporary deprivation of the company’s funds, however, it is not a bad thing,” said Andy, adding “If properly managed, credit sales actually enhance both profitability and liquidity positions of firms.”

Granting of credit continues There is an appetite amongst the industry players to ensure that they are well placed to gain from the expected revenue gains as well as preparing

to avoid the substantial losses that parts of the sector sustained in the past. According to Vincent Valladares, Managing Director, Middle East Head, Citi Commercial Bank, granting of credit continues unabated, but with caution.

“Whether in the banking sector, manufacturing or hospitality sector, the issue of credit has every cause to be given reasonable attention, considering high cases of liquidation of some businesses in recent times, due to the effect of bad debts brought about by customer defaults,” Vincent said. He also emphasised on the importance of businesses having a solid credit policy, saying “Without a clear credit policy, the financial statements of such companies will lack true and fair outlook, because of the fact that the amount of trade debtors cannot be fully realised.” “Whether your debtors are of high risk class or are deemed as credit worthy customers, the impact of the credit policy laid down by management will largely determine how you manage your credit sales,” said Vincent. Chief Financial Officers and Senior Finance Managers from the Food Processing and Manufacturing industry pose for a group photo during the roundtable session, at the Oberoi Hotel in Dubai.

January 2014

CITI ROUNDTABLE

Granted, some companies do not grant credit and a few that do merely allow only a small portion of their total sales as credit sales. The reasons sometimes given by the firms include… past experiences, insufficient information about the customers, or the companies are just being cautious as they are not certain whether the credit will be paid on terms agreed upon.

It has not been an easy task for my company to grant credit to customers because of the costs associated with credit sales and also due to some past bitter experiences” - Kris Arkay, Finance Manager, Zurich Foodstuff Trading.

“It has not been an easy task for my company to grant credit to customers because of the costs associated with credit sales and also due to some past bitter experiences,” revealed Kris Arkay, the Finance Manager of Zurich Foodstuff Trading. Associated risk elements Kris caused laughter when he narrated about a customer who defaulted on his debts and his company had to take extreme measures by entering into a barter-exchange of some goods with the customer, even though the two firms were in different kinds of trade. Andy intervened; “There are many different types of customer, small, large, local or international. All of them have different risk elements associated with them. Do we even know what the risk elements are and how are we managing them?”

“Just because a customer has no ability to pay today does not necessarily mean that they will be in the same position in a few months or a few years’ time. We should therefore ensure that we are constantly monitoring our customers and the associated risk without jeopardizing valuable revenue streams.”

Chirag Oberoi, Finance Manager, Al Wazan Foodstuffs Factory, lamented on the difficulties of obtaining customers’ background information before granting credit, saying most clients either offer misleading statistics or refuse to disclose any material at all.

“Looking at the information available about our customers both current and historical defines the future risk elements. However, some deliberately fail to disclose their financial position even though they are often fully aware of the cost of working capital and will delay payment benefitting their cash position at the expense of others who are not quite so vigilant,” Chirag said.

granting of credit leads to creation of trade debts in business which can be classified into good or bad debts.

“Bad debt arise when the business is unable to collect its accounts receivable and in this regard, companies should consider engaging the services of factoring agents as it will reduce the incidence of bad debts losses and other associated costs of credit,” he said.

Austerity measures Not all economies are expected to see the same uplift as the UAE in the short term. With parts of the customer base being based in countries with cash strapped governments and austerity measures, how safe are the sales granted on credit going to be? Do we need to look at some form of security either through factoring or credit insurance? The proportion of credit sales is mostly influenced by variables like the nature of business and the presence of business competition” - Syed Turab Mehdi, Finance Manager, Arabian Farms Company.

Ian Sherlock a Partner with Middle East Credit Management Institute (CMIME), explained that

CITI ROUNDTABLE

It is a challenge trying to balance customer relations while ensuring that payments are made according to terms” - Mahmoud Mamdouh, Senior Accountant, Emirates Dates Factory.

“Yes these options have a cost, but they are quantifiable costs that can be factored into the business model,” Ian added.

He further explained there’s no particular universal credit policy that should be adopted by every organisation, as granting of credit largely depends on the current economic conditions, the degree of risk involved, the nature of the business and its cash flow circumstances. “Granting of credit ties up or blocks the firm’s funds that could be used in the daily running of the business. It involves an element of risk that should be carefully managed, therefore, you should view your debtors as an investment,” he said.

Another participant, Anil Jain, the Finance Head at Baqer Mohebi Enterprises LLC extolled the

Some customers deliberately fail to disclose their financial position and will delay payment in order to benefit their cash position at the expense of others” - Chirag Oberoi, Finance Manager, Al Wazan Foodstuffs Factory.Dubai Precast LLC.

benefits of trading on credit, but cautioned that it should be carefully managed.

“When you grant credit to your customer, it means the incurring shortfall has to be financed out of the company’s working capital. Alternatively, the firm can seek funds from banks or other sources. Just like other receivables, substantial amounts are tied up in debt and it needs proper management,” Anil said. Business variables Shoukat Zaman Khan, Financial Controller, Coffee Planet LLC, asked the all-important question about the true cost of granting credit to customers.

“What I have observed lately is that some businesses do not offer credit at all. They require customers to make payment at the time of delivery or sale; while some ask for the payment to be made in advance,” he lamented. Syed Turab Mehdi, Finance Manager, Arabian Farms Company, reminded him that prevailing economic conditions and other business variables may be the cause of such measures.

“Financial managers hardly have any control over these variables and therefore they need to work together with managers in other divisions like the marketing and purchasing arms of the firm,” Turab Mehdi explained, saying “The proportion of credit sales is mostly influenced by variables like the nature of business, presence of business competition and the gap between demand for and supply of the product or service in question.”

Andy interjected: “The fundamental question that must be asked is, what are we in business for, revenue or sustained profitability? Many will say both, but to achieve the later the costs have to be managed also. Granting credit to customers costs. The true cost of delayed and at worse nonpayment is rarely examined in detail by most organisations. Does a boom period grant us an opportunity to manage this cost? Do we need to look at the role of our sales teams in helping sustain profitability?” he posed. Vincent advised that credit sales must be well monitored be c au se “ i f t her e a r e no measures put in place to regulate

January 2014

CITI ROUNDTABLE

When you grant credit to your customer, it means the incurring shortfall has to be financed out of the company’s working capital” - Anil Jain, Finance Head, Baqer Mohebi Enterprises LLC.

we are required to look for quality personnel to fulfill our growing list of duties. This may be in tax, treasury, accounts payable and also credit control,” Ian added. The issue of debt collection whipped up a heated debate, with a number of money managers agreeing that it is a challenge to their businesses, trying to balance customer relations while ensuring that payments are made according to terms.

“We know that we want to increase the amount of collections from our sales, but do we really have a plan? Do we just recruit more people to send emails and make phone calls?” asked Mahmoud Mamdouh, Senior Accountant, Emirates Dates Factory. purchases made to customers on credit, there could be problems especially those related to liquidity and cash flow,” he said.

“Adequate flow of cash and profitability position are the two basic factors that sustain a business in the present and determines its position in the long term. Therefore, management of the working capital presumes the effective use of trade debtors to ensure increased profitability and liquidity in the business,” Vincent added.

Defaulting customers Having properly trained staff to deal with delayed payments, delinquent and defaulting customers is of paramount importance. It often seems that the credit and collections teams are the ‘bad guys’ when it comes to collecting the outstanding invoices. Either they are not collecting enough or they are being too hard on the customers. Or it may be that the bad debts are too high and they are not approving enough new customers. So, how is their role defined? Are they debt collectors or do they have an active involvement in the full customer life cycle?

“In some case yes, however this can be a reactive approach,” Andy answered, adding “We should have a balanced approach to reducing overdue debt by collection activities as opposed to through preventative measures taken earlier on in the customer relationship. We are used to having to set and monitor budgets but we are often not so effective at setting and managing our budgeted debtor levels and the hidden costs associated.” What I have observed lately is that some businesses do not offer credit at all. They require customers to make payment at the time of delivery or sale” - Shoukat Zaman Khan, Financial Controller, Coffee Planet LLC.

“Key to good customer service is communication,” Ian Sherlock said, adding “This is especially so when there are problems with the customer relationship, whether it be service related or payment related.”

“As finance managers our role in business continues to grow from one of reporting financials to a more prominent role of strategic guidance and business planning. As we help the business to build on the present and plan for the future 45

CITI ROUNDTABLE

Round-Table Participants Ayman Fouad, Deputy Finance Manager, Emirates Modern Poultry

The key question we need to ask ourselves are, is our current debt collection strategy delivering for the needs of the business in an efficient and cost effective manner?” Prathapachandra Shetty, Executive Director, Emirates Star Fisheries.

Company Kris Arkay, Finance Manager, Zurich Foodstuff Trading Syed Turab Mehdi, Finance Manager, Arabian Farms Company Mahmoud Mamdouh, Senior Accountant, Emirates Dates Factory Chirag Oberoi, Finance Manager, Al Wazan Foodstuffs Factory Rahim Nilavar, General Manager, Selkar Trading FZE Shoukat Zaman Khan, Financial Controller, Coffee Planet LLC Anil Kumar Bahulayan, Chief Accountant, Bateel International LLC Anil Jain, Finance Head, Baqer Mohebi Enterprises LLC Prathapachandra Shetty, Executive Director, Emirates Star Fisheries Vincent Valladares, Managing Director, Middle East Head, Citi Commercial Bank Gaurav Mehta, Vice President, Citi Commercial Bank

“Therefore, the importance of the actions taken by a business to grant, monitor, and collect the cash for outstanding accounts receivable cannot be over emphasised, because it is a factor that has a strong influence on the cash inflow from its sales activities which is very critical to its survival,” Andy added. Still on debt collection, Ayman Fouad, Deputy Finance Manager, Emirates Modern Poultry Company said that the world of cash management has now moved on from debt collection to credit management.

“The key questions we need to ask ourselves are, is our current collection strategy delivering for the needs of the business in an efficient and cost effective manner? What other cash management strategies are available? We are required to be able to answer all of these questions and many more.”

Roundtable moderator Andy Yiacoumi from the Middle East Credit Management Institute, used an innovative approach to help the money managers identify gaps in their approach with respect to Credit Risk and Debt Collection.

January 2014

“Finance is a diverse function with many skills that draw on our technical and managerial expertise. Our desire to see the business succeed also drives our desire to understand and develop our expertise in the many facets of finance,” Ayman added.

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Due Diligence

THE ART of

DUE DILIGENCE

Application of â&#x20AC;&#x2DC;Discreet Scienceâ&#x20AC;&#x2122; has become a commonplace service in major transactions and disputes. Charles Robson addresses crucial concerns in the process of intelligence and investigative consultancy in frontier markets. 48

January 2014

Due Diligence

O Charles Robson Managing Director, K2 Intelligence EMEA

VER THE past ten years, the commercial intelligence industry has changed significantly. From once being regarded as the eccentric, somewhat spooky uncle of the consultancy world, intelligence and investigative consultancies are now often part of the mainstream line-up of advisors deployed in major transactions and disputes. One of the typical services the industry provides is due diligence, complementing legal and financial due diligences handled by lawyers and accountants. The fact that it has become a commonplace service has meant increasing standardisation, but also a huge range in the quality and substance of what is delivered. Once shrouded in mystique, clients are becoming increasingly aware of how the process works, and mindful of how this range depends on i) the type of information sources used, and ii) the quality and experience of the investigators.

Regulatory compliance The key differentiator is whether a due diligence is based on public record information only, or whether it is combined with human sources. On the basic end of the scale, compliance departments are often satisfied with only a public record exercise, to ensure that the minimum standards of regulatory compliance are met. Clients who are more cautious, and willing to spend more time and resources, want discreet human source enquiries too – particularly when venturing far from home. Clearly, this increases the likelihood of a more thorough product and some firms, K2 Intelligence included, rarely conduct only public record investigations, particularly in challenging areas like Sub-Saharan Africa and the Former Soviet Union, as public records can be scarce and unreliable.

Making investments or engaging with new business partners in one’s home market may be risky but the level of risk increases exponentially when doing business in emerging markets.

But even public record investigations can vary dramatically in quality depending on the experience and mindset of the investigator, their ability to identify anomalies, and the crucial combination of discipline and imagination. Making investments or engaging with new business partners in one’s home market may be risky but the level of risk increases exponentially when doing business in emerging markets and in opaque jurisdictions.

Working with sources Recognising that due diligence is not simply about what is in the data room, the audited accounts or sleek business plans, increasingly sovereign wealth funds, hedge funds, private equity houses and public and private businesses are turning to business intelligence firms like K2 Intelligence to gain additional insights into target companies and prospective business partners.

K2 Intelligence specialises in performing investigations and gathering intelligence in frontier markets – precisely the markets where commonly used compliance databases are all too often found wanting. In these jurisdictions, online public records are scarce and usually incomplete, and a successful investigation involves a circular process of working with sources in country, and analysing available documentation, to obtain as subtle and informative picture as possible. Jules Kroll invented the business intelligence and investigations sector in 1972, and then cofounded K2 Intelligence four years ago to take the profession back to its investigative roots. He likes to call what we do ‘The Discreet Science’. We thought it would be useful to look inside the lab at the checklist of some of the key questions we address when applying the Discreet Science to frontier markets:

Who is in control? Simply requesting a share register of the prospective business partner is unlikely to be sufficient. The shareholders may be nominees or a proxy for those that wield the real power. In our engagements, we have uncovered some unpleasant surprises for our clients. We have seen the military, shadowy relatives, organised crime syndicates, and even the brother of the president behind a commercial partnership. 49

Due Diligence

When gathering intelligence with human sources, as opposed to open source public record and internet, consult with independent referees such as former employees, business partners, litigants and competitors. Do they have the required permits? It is important to look carefully at licences and permits and establish how they were obtained. This should be done by developing a full paper trail locally to increase your chances of discovering whether the one you have seen is not simply a scan of a forgery. Expensive and time-consuming disputes can be avoided if licences are confirmed at source. We have seen many examples of fake licenses and company documents that result in wasted resources and exposure, as well as exposure to allegations of fraud and corruption.

Double checking the references When gathering intelligence with human sources (as opposed to open source public record and internet, media and database checking), we typically consult with independent referees such as former employees, local industry specialists, business partners, litigants and competitors) – and certainly not only those provided by the counterparty. In one recent case, a Western consumer goods company had advertised for local agents through an online selection and vetting process. The client had reviewed documentation and called referees provided by the prospective agents before awarding agency agreements. Some months later, we were asked to investigate some missing stock and, during this investigation, we discovered that the client was linked to the local mafia through the agent it had recently appointed through the online vetting procedure. As well as being defrauded, the client was now potentially complicit in funding illegal activities. Bribery and facilitation payments Gauging the modus operandi of a prospective partner in a frontier market can be a significant challenge. Bribing might keep them in situ for a while, but that can quickly become your problem. 50

January 2014

Under national anti-bribery and corruption legislation, such as the US Foreign and Corrupt Practices Act (‘FCPA’) and the UK Bribery Act, your organisation and even some Directors and employees can be held accountable for the business practices of agents or business partners when performed in connection with your business. Try and establish through enquiry with local industry experts, ex-employees and competitors whether your prospective business partner or acquisition target has a reputation for paying bribes or facilitation payments. One client who wished to acquire a company in an emerging market ended up discounting the revenue of a target by around 50% as it projected that this revenue would be lost once if the practice of paying bribes to win contracts ceased. After which, perhaps not surprisingly, the acquisition no longer seemed so attractive.

Spend time on the ground Proactive local engagement has a significant positive impact and personal relationships are essential. Ensure that your advisers do the same; don’t let them remote control projects from your home country, London or New York. Local interaction equals better results.

What’s the history of the business? Check typical contract sizes. It is unlikely any entrepreneurially spirited company is going to admit it doesn’t have the scale or contacts you require. Similarly if the entity was only incorporated a few months ago, you are likely to have grounds for concern. We’ve had numerous examples of clients spending months extricating themselves from a joint venture that, had they looked deeper into typical volumes handled, they should never have signed.

Do we have sufficient competitor intelligence? Familiarise yourself with the competition. Who is the market leader and why? In most of the competitor intelligence projects K2 Intelligence undertakes, the client wants to understand how a competitor is outperforming it and if it is doing so illegally. The answer is usually ‘No’ – the competitor is more efficient, its sales force may be stronger or it has a product or service that is perceived to be superior. In certain emerging markets there can be a tendency to improve competitiveness through improper relationships with public officials. It is critical to understand when this is the case.

Due Diligence

Once shrouded in mystique, clients are becoming increasingly aware of how the process of due diligence works.

What happens when a dispute arises? If you have a dispute â&#x20AC;&#x201C; assess the chances of success, or at least the prospects of an elegant exit.

Litigation in familiar circumstances is an expensive and a calculated bet. In unfamiliar territories with a weaker rule of law it is always worth assessing the realistic likelihood of success and of recovery. K2 has clients who, five years after a judgement, are still battling to get paid.

Legal success is only possible with a thorough understanding of local practice. In one recent case one of our clients wished to protect a critical operating asset from a legal challenge made by an emerging market competitor. The legal and investigative strategy was to demonstrate that the rival company was in fact the private vehicle of a corrupt government minister. We helped untangle the complex corporate structures used to disguise the origins of the laundered money that had been invested in the target company. Using this information, we encouraged investigative bodies in several western jurisdictions to open their own criminal investigations. As a result, our client now owns the asset - unencumbered. Assessing the management team Check the management team. What other deals have they been involved in over time? Have any of

their prior businesses gone awry? Is there a past pattern of fraud or corruption involving them or the companies they've worked for? This critical step can be challenging due either to the presence of inaccurate information, or to the absence of any public records. Working for a hedge fund to provide an independent account of the share price growth, track record and integrity of its management team, we conducted an investigation into an emerging market technology company.

Our approach focused on investigating the source of growth, speaking to more than 20 industry experts, ex-employees, and suggested business partners. We visited sites of announced plant expansion, confirmation of track record and industry reputation of the CEO. We established that the projects were embellished and fictitious.

Monitoring political stability Be continuously thoughtful about regime stability. Cancelled contracts and expropriation are less common today than in the past, but they still happen. What are the likely changes in government policy and legislation â&#x20AC;&#x201C; either of which might radically affect the attractiveness of doing business in your target market? * Mungo Soggot, Managing Director at K2 Intelligence EMEA, contributed to this report

Taking Stock

GT REPORTS 8.1% GROWTH RATE Strong revenue places firm among the top six largest global accounting organisations in 2013.

RANT THORNTON International Ltd has announced record combined global revenues driven by 8.1% growth in US dollars (8.9% in local currency) for the year ended 30 September 2013.

Ed Nusbaum, CEO, Grant Thornton International Ltd: “While we are pleased to report strong growth results, our focus as a global organisation remains unchanged.”

The firm led the six largest global accounting organisations in reported revenue growth rate in 2012, and now again in 2013.

“While we are pleased to report strong growth results, our focus as a global organisation remains unchanged in first providing high quality services to our clients and helping them unlock their potential for growth,” said Ed Nusbaum, CEO, Grant Thornton International Ltd. Workforce • Workforce grew by 7.6% to 38,543 people in 134 countries.

19.9% percentage growth of Grant Thornton Middle East revenue 52 January 2014

Service line growth • Assurance services grew 3.3% • Tax services grew 1.8% • Advisory services grew 20.2% • Outsourcing services grew 18.8%

Regional revenue growth • North America revenues grew 5.9% • Europe revenues grew 12.4% • Asia Pacific revenues fell 2.1% • Latin America revenues grew 16.1% • Africa revenues grew 23.6% • Middle East revenues grew 19.9%

M&A growth • Eight new member firms in Bangladesh,

Dominican Republic, Eastern Caribbean, Ethiopia, Kyrgystan, Libya, Nigeria, Tunisia. • Thirty additional member firm M&A expansions in South Africa, Canada, China, Hong Kong, Indonesia, Italy, Luxembourg, Netherlands, Norway Paraguay, Senegal, Taiwan, US, and the UK. Corporate Social Responsibility Grant Thornton member firms have gone to great lengths to support communities through educational, charity, environmental and healthcare initiatives. These have included:

• Global: Eradicating Polio - Grant Thornton supports Rotary International, in its campaign to eradicate polio. Since 1979, Rotary has reduced by 99% the number of polio cases. Led by the Chicago office, Grant Thornton people have been fundraising in their local offices to provide support to this campaign. • Vietnam: Supporting Operation Smile (OSV) – Operation Smile provides free surgeries for children and young adults with facial deformities such as cleft lips and palate. Grant Thornton Vietnam has been providing financial and logistical support, as well as volunteers to the charity for over 12 years. Their support has helped the charity run more surgeries and more training for medical practitioners who support OSV to fulfill its vision of 'changing lives one smile at a time.' • India: Grant Thornton India supports the Autism Centre of Excellence (ACE), an initiative of The Special Child Trust to transform the autism education landscape in India by building a notfor-profit centre for high quality research based education that trains teachers and educates children. Its goal is to create a world class facility for individuals with special needs of all functionalities focusing on Autism and other developmental delays, providing a holistic education based on sound scientific principles and preparing them for maximum independence in the social environment. Workplace awards • Grant Thornton Canada named for sixth consecutive year as Great Place to Work. • Grant Thornton US named to Crain’s Business Best Places to Work, Vault.com’s “Accounting 50,” and Working Mother’s Best Companies. • Grant Thornton UK named 'Global Firm of the Year' at the British Accountancy Awards.

SUBSCRIBE NOW TO THE REGION'S FIRST MIDDLE EASTERN FOCUSED ACCOUNTANCY MAGAZINE. Complimentary subscription for any accountants currently working or studying in the UAE. Every month we will bring you the latest news, expert opinion, interviews with regional influencers and policy makers, as well as CPD advice, job opportunities and moves. Accountant ME will also feature regular articles and reports on auditing, legislation, management advisory services, ethics, professional development and practice management.

To subscribe visit

accountancyme.com/subscribe Contact us today for more information about this brand new title. SALES Christopher Stevenson Tel 04 440 9138 Email chris@cpidubai.com

EDITORIAL Joyce Njeri Tel 04 440 9140 Email joyce@cpidubai.com

Fiscal Sustainability

DUBAI LAUNCHES

SMART FISCAL MODEL Pioneering initiative expected to promote financial sustainability in the Emirate.

UBAI GOVERNMENT’S Department of Finance has launched a landmark initiative aimed at strengthening and automating the Emirate’s fiscal planning and budgeting processes and transitioning Dubai Government to performance based budgeting. The Smart Fiscal Planning Programme, which is expected to result in savings in hundreds of millions of Dirhams, has been sponsored by His Highness Sheikh Ahmed Bin Saeed Al

54 January 2014

Maktoum, the Chairman of Dubai Government’s Supreme Fiscal Committee and falls within the framework of the Smart Government initiative launched by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Enhance transparency The programme is representative of the strategic direction that will be taken by Dubai Government and is an expression of the vision of the Department of Finance, which seeks

Fiscal Sustainability

to enhance the transparency of financial processes and support stable economic growth by increasing the efficiency and effectiveness of the administration of public funds.

the programme will translate into significant savings and increased transparency of all fiscal processes, enhancing the effectiveness of the administration of public funds.

According to Abdulrahman Al Saleh, the Director General of the Department of Finance, “the Smart Fiscal Planning Programme will save Dubai Government hundreds of millions of Dirhams in expenses, streamline processes and directly impact the achievement of the Department of Finance’s vision of sound management of public finance.”

The programme will address weaknesses in fiscal planning and budgeting processes and systems at Dubai Government entities and will link fiscal planning with strategic planning while transitioning Dubai Government to performance based budgeting. Budget processes will be automated using Oracle Hyperion Public Sector Planning and Budgeting application, the world’s most advanced application for public sector strategic and fiscal planning.

His Highness Sheikh Ahmed Bin Saeed Al Maktoum emphasised the importance of the role played by a unified fiscal planning system in promoting Fiscal Sustainability and supporting the achievement of the emirate’s strategic plan. He urged all Dubai Government entities to work with the Department of Finance in achieving the programme’s objectives.

“Furthermore, through efficient management of public resources, the programme will enable the Department of Finance to move towards the achievement of its strategic objectives in accordance with Dubai’s strategic plan and will strengthen the integrity and effectiveness of fiscal operations,” Al Saleh added.

Substantial savings The Department of Finance expects the Smart Fiscal Planning Programme to result in substantial savings as it will increase the accuracy of projections, enabling the department to link them to the strategic plans of government entities and to the overall strategic plan for the emirate of Dubai. Moreover, efficiencies in all stages of the planning and budgeting process that will result from the successful implementation of

Efficiencies in all stages of the planning and budgeting process that will result from the successful implementation of the programme will translate into significant savings and increased transparency of all fiscal processes.

The Reform Program Steering Committee, which is headed by the Department of Finance and includes The Executive Council, Dubai Municipality, Dubai Smart Government Department, Dubai Police, Dubai Aviation City Corporation, the Roads and Transport Authority, will oversee the implementation of the Smart Fiscal Planning Programme.

Comprehensive plan The new system will be implemented during the 2016 budget cycle, with a gradual transition to performance budgeting which will take place in accordance with a comprehensive plan for the transformation of Government-wide fiscal processes which spans several stages.

The current contractual agreement covers two stages: current state assessment and future state design for fiscal and strategic planning and budgeting processes. The scope of the consultants’ agreement with Dubai Government also includes detailed design of all significant elements of the future state, ranging from the assignment of relevant authorities to the design of relevant procedures and reports.

Arif Ahli, Executive Director – Budget and Planning at the Department of Finance, and the Chairman of the Reform Programme Steering Committee revealed that the launch of the Smart Fiscal Planning Programme signifies the beginning of a total transformation of all fiscal planning, budgeting and strategic planning activities throughout Dubai Government departments which will enable the Department 55

Fiscal Sustainability

The Department of Finance, which began preparations for the Smart Fiscal Planning Programme in 2011, has appointed KPMG and PDP Consulting, as its consultants for the programme.

on the concept of decentralised decision making and administration across government entities, which is consistent with the approach followed by Dubai Government. He added that the reform will provide a governance framework which will enable decentralised planning, allocation and administration of public resources.

Zaitoon has revealed that programme objectives will be accomplished in coordination with more than thirty experts and consultants in public sector finance, process reengineering, change and quality management, and information technology applications. “In keeping with the Smart Government initiative launched by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, smart devices will play an integral role in the Smart Fiscal Planning Program, enabling users to perform selected functions, such as the retrieval of key performance indicators, strategic and fiscal planning activities, and approval of specific transactions in accordance with the approval matrix for Dubai Government,” he added.

Abdulrahman Al Saleh, Director General, Dubai Department of Finance: “Through efficient management of public resources, the Smart Fiscal Planning Programme will enable the Department of Finance to move towards the achievement of its strategic objectives.”

of Finance to optimise resource allocation and administration of public funds.

Ahli went on to say that on-going advancements in budget preparation, execution and administration have become inevitable due to the challenges faced by governments. He emphasised the need for continuous education and development of finance personnel; controlled, continual development of processes and functions; and the importance of involving and supporting all government entities throughout all stages of change. Decentralised decision According to Mohammad Zaitoon, Director of Financial Development and Support at the Department of Finance, and the Executive Director of the reform programme, performance budgeting has proven to be the best fit for Dubai Government as it is premised 56

January 2014

Best practices The Department of Finance, which began preparations for the Smart Fiscal Planning Programme in 2011, has appointed KPMG and PDP Consulting, specialists in public fiscal policy, fiscal planning and implementation of Oracle Hyperion, as its consultants for the programme. They will contribute their fiscal, economic and technical expertise and their experience with global organisations and finance ministries to design best practices for Dubai Government’s fiscal planning and budgeting functions. As part of their scope, the consulting firms will also provide Dubai Government with a comprehensive plan detailing all stages of the transformation and automation associated with the Smart Fiscal Planning Programme. The first two stages of the programme are expected to be completed in 2014 and 2015 respectively. They involve the automation of budget preparation and administration processes using Hyperion. The transition of Dubai Government to performance based budgeting is expected to be complete by the year 2020.

Corporate Treasury

to adopt an integrated, holistic approach to their treasury activities, rather than pursue temporary solutions for individual issues.

Shareholders demands for increased transparency and better control are driving a global trend toward the centralisation of treasury activities.

Today, treasurers need to cope with the growing complexity of financial instruments, volatile financial markets and the introduction of new regulations and accounting practices.

A CONSTANT CHALLENGE

Shareholders are increasingly putting the spotlight on corporate treasury function and how it monitors and manages financial resources and risks.

T Imtiaz Ibrahim Partner, EY - Financial Accounting Advisory Practice

HE DEMANDS on corporate treasury departments are undergoing constant change, driven by regulators and the organisations themselves.

Requirements for increased transparency, better control and enhanced performance means treasury leaders need to, continuously update their technical knowledge, reduce costs, minimise volatility, deliver value and ensure clear lines of communication. Treasurers need dedicated information systems to support those challenges. Shareholders are increasingly putting the spotlight on the treasury function and how it monitors and manages financial resources and risks. Cash management and bank relationships are, more than ever, key to securing a companyâ&#x20AC;&#x2122;s financing.

System integration It is high time for organisations to focus on process optimisation through system integration and deeper organisational changes, including the centralisation of the set-up of payment factories. It is becoming increasingly important for organisations

Today, treasurers also need to cope with the growing complexity of financial instruments, volatile financial markets and the introduction of new regulations and accounting practices. Hot industry topics include the European Market Infrastructure Regulation (EMIR) for over-thecounter derivatives, Basel III, REMIT, MiFIR/MiFID, IFRS 9 and IFRS 13 for derivatives accounting and valuation, tax matters for cash pooling and payment factory implementation, and the Single European Payment Area (SEPA). These regulations are placing increased pressure on treasurersâ&#x20AC;&#x2122; time, presenting difficulties in monitoring and reporting exposures and the impact on financial statements.

Policies and controls In such a challenging environment, organisations need to define the role and responsibilities of their treasury functions. A fully operational treasury function at a minimum should ensure that the following are kept up to date and are continuously evaluated on a regular basis: Treasury organisation and governance Treasury performance assessment Financial risk management (interest, foreign exchange, credit risks and commodity risks) Cash and liquidity management, including cash forecasting Corporate funding and capital management Treasury technology, including treasury management system (TMS) Valuation and accounting for financial instruments

Organisations should have an appropriate organisational structure and infrastructure in place (such as policies, controls, processes and models), and develop methods and processes for quantifying, assessing and monitoring financial risks.

Organisations need to prioritise actions within their treasury departments and define an action plan for implementation. The many facets of corporate treasury require a pragmatic interpretation of relevant regulations, which need to be considered in the broader context of the companyâ&#x20AC;&#x2122;s risks and its level of complexity. 57

Deloitte Survey

POLITICAL FEARS DAMPEN CFOs OPTIMISM

Deloitte survey also shows that one in four companies in the Middle East do not have a business continuity plan in place.

HE NEWLY released edition of Deloitte’s Global CFO Signals report finds that Chief Financial Officers optimism during the third quarter of 2013 has weakened over the past year in the Middle East due to the ongoing political uncertainties; A net 41% of Middle East CFOs feel more optimistic about the prospects for their companies compared with a net 54% recorded 12 months ago. The purpose of the Deloitte Global CFO Signals report is to provide highlights of recent CFO surveys results by Deloitte practices across the world. “The surveys, which were conducted in 17 countries and regions, illustrate that finance executives worldwide seem to be embracing recovery and setting their sights on expansion, despite continued economic hiccups,” reported James Babb, Deloitte Middle East CFO Programme leader.

He added: “The case of the Middle East is one of mixed optimism: while CFOs in the region reported improved expectations for revenues, capital spending, and hiring over the coming 12 months, the number reporting so is 38% less than a year ago, reflecting less confidence in their outlooks.” “The sample of 156 Middle East respondents to the Q3 2013 Deloitte Middle Eastern CFO Survey expressed decreased optimism from the prior year, due in most part to the ongoing political uncertainties in the region,” elaborated Babb. “Although uncertainty has become a constant companion for many quarters now, the general feeling remains one of mixed optimism.”

Higher cash balances Gulf countries reported relatively higher levels of optimism compared with the surrounding North African and Levant countries. Optimism among 58 January 2014

surveyed CFOs in Syria fell by 13%, while finance chiefs in the UAE reported a net 75% increase. Only a net 2% of CFOs reported their companies are carrying higher cash balances compared with a year ago, when a net 23% reported the same last year. While 75% of CFOs were predominantly concerned with market risk last year, that number has declined to 39%, with strategic, operational, and financial risks all becoming a prevalent concern, reflecting the general uncertainty in the environment. Moreover, when asked about their companies’ business-continuity plans, one in four CFOs in the Middle East said they still did not have a plan in place despite the increased instability in the region. Middle East CFOs were also found to favor expansion in their own region over other parts of the world.

Highlights from the Q3 2013 Middle Eastern CFO Survey: Focus on organic growth, cost reduction • Over the next 12 months, CFOs are turning more inward, focusing on organic growth, cost reduction, and increasing cash flows. Improved balance sheets • A net 61% of CFOs surveyed believe their balance sheets are appropriately leveraged, up from 46% a year ago. Facing continued uncertainty •About 65% of CFOs surveyed would not take greater risks on their balance sheet at this time.

41% PropoRtion of surveyed MidEast CFO'S who feel more optimistic about their companies

Audit Insight

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SUSTAINABLE AUDIT VISIBLITY

When a recruiter or company owner uses Google or a social network to research a list of potential hires, how do you stack up? David Burns enlightens on an opportunity that assesses where you stand in relation to competition.

AVE YOU ever wondered how visible you are to others in the business arena? Being visible is impor tant to sales results and positive revenues, while on the other hand, being invisible may not bring you the recognition you need to open doors.

David J. Burns Partner, UHY-Saxena

60 January 2014

People do business with people they like, not people they don’t know or have never heard about. Building a business relationship for the long haul requires hard work and effort, part of which involves a significant amount of visibility.

There are many ways individuals become wealthy. Some inherit wealth and others win it in competitions. The majority of working humanity have to earn their wealth by working for it in an endeavour they are suited to or have an affinity for in terms of skill sets. Many people work in jobs they don’t like but don’t have the luxury of alternatives due to financial and commercial issues. Pillars of visibility The Sustainable Visibility Audit (SVA) breaks down into two sections - being offline and

IFRS Audit Special Insight

online - with each section being further broken down into the five pillars of sustainable visibility. The total of ten pillars are offline, personal, company, media, CSR and alternative whilst the online include, Facebook, LinkedIn, Twitter, Google, and a blog. A diagnostic tool has been developed to attribute a mark or score to the various elements of the SVA and from this we can determine the recipient’s level of visibility. In addition to the determination of the visibility score we will also provide some insights and assistance on how best to make improvements. Some examples of these pillars are explained below.

A regional leader once said “A country without a past is a country without a future”. This could also be true when examining one’s visibility. Different socio economic groups have differing levels of engagement with the people around them and in their sphere of influence.

Widening contact base A good example of this is the recruitment process for companies like Abbey Life the International insurance company. During the 80’s (and I would stress here it was the 80’s and not the present day) they would visit university campuses to recruit graduates to sell insurance. The rationale behind this methodology was that many university students would come from an A1 socio economic group and would have many of the attributes required by the company. These would include a large and interactive family unit, memberships to numerous groups, clubs, teams and forums which widened their contact base. They would be in touch with a

Executive Search firms are able to source from a much larger talent pool, simply because more people in senior management roles are increasing their visibility.

large number of people on a regular basis and if asked to write down their contact could without difficulty produce a list of 200+ known friends, family and associates.

At the other end of the social scale would be students from a lower socio group, perhaps A3 or B1 who would not have as many family members, friends of memberships to groups. These students would not have a large number of people they could call associates or friends and would generally record much smaller numbers when asked to write down people they know.

When looking into visibility the previously categorised A1students would be more visible today than the other group due to their diligence in maintaining contact with their groups of friends, family and associates. Your past also includes where you lived, where you were educated, where you went on holiday, who you remember meeting or made friends with and who you still communicate with from those formative years. Interaction with media There is also the issue of the company we keep. Company in this context is our place of employment. Working for a multinational conglomerate would be far more visible than a small firm depending on the position and grade in which you are working.

Another aspect of visibility is the interaction you may have with the media. We would categorise media as any written, printed, spoken, filmed reported on, advertised or blogged any mention of your name in any context and for any reason. The phrase ‘There’s no such thing as bad publicity’ is often associated with Phineas T. Barnum, the 19th century American showman and circus owner and in some cases is true today. When issues of CSR are highlighted in the media the respondent’s often take remedial measure which in general enhance their own reputation overall. Failing to recognise the power of the press is a big mistake, but using the power of the press can bring untold rewards. CSR has 61

Audit Insight

been around for many years and is a wellsupported industry in its own right.

Potential candidates quite often and without recognising their efforts become involved in CSR projects that provide visibility opportunities. Whilst many individuals and organisations would argue against the process of visibility in connection with CSR projects the reverse can also be true that by being visible at an event that alone highlights the issues and brings more visibility to the problem than if the event was kept quiet.

Visibility opportunities The last pillar of the offline section can be summed up as alternative visibility opportunities. These are those one off incidents in each of the previous four pillars that bring instant visibility at any level. All of these events have a value and can be marked and scored depending on importance or relevance.

In today’s electronic environment incidents that happen are immediately reported and can go viral within hours. Unless properly managed opportunities to increase your visibility will be missed and results decreased. The most important element of any type of audit is its assurance. With a SVA the offline element is subjective and based on relevance and importance. The online element however, is based on defined analytics and information taken from third party elements linked to the social media in question.

The internet has evolved in the past decade to be personal. By this we mean ‘things’ are no longer categorised in lists and directories (as was the case in the late 1990’s), now things are shown to us based on our preferences. Every time we click a website our computer, or Google, or another system, remembers that click. If we keep clicking that website the system will start to understand that the website is important to us. The system will then show us other things that relate to that website. This system of relevance is endemic in today’s internet. Facilitating communication We use the internet every day, at work and at play, and the companies that dominate the internet are those that facilitate communication. LinkedIn (220 million users) 62

January 2014

Being visible in an electronic environment exposes one to immense opportunities and may help to bring the recognition one needs to open doors.

Audit Insight

was founded in 2003 by the same man who founded PayPal, which was another company that caused a disruption in the way we use the internet. Facebook, founded a year later by Mark Zuckerberg, was the first social network to reach one billion users worldwide. It listed to an oversubscribed price. Google, LinkedIn, and Twitter, are also listed companies. Social Media is a serious business, and the reason it is important enough to be included in a Sustainable Visibility report is simply because it affects everyone using the internet. Activity online can be measured. Every click of a mouse is recorded, every website visited, every advert watched. Every device that connects to the internet leaves a trail of data behind it, much like the breadcrumbs dropped in the Brothers Grimm tale Hansel and Gretel. In the same way we interact offline, by attending events, publishing articles in newspapers and magazines, we act online by joining networks and managing blogs. In the same way as those two unfortunate children dropped bread to retrace a path, people drop small packets of data as they navigate the internet. It is these data packages that people find when they search the internet for content or information. No great mystery Understanding that search and social dominates the internet (Alexa Ranking: 1. Google, 2. Facebook, 3. YouTube, 4. Yahoo, 5. Baidu - a Chinese network), it is reasonable to deduce that our presence on them is important. In the same way a person may meet another person at more than one offline event, a user may encounter another user on more than one network.

There is no great mystery to networking online, the same principles apply to online as they do to offline. So the question begs, when a man wears a suit and tie to offline networking events, why does he not wear one online across all networks? The internet does not delete, accounts do not get closed. Everything that is uploaded stays uploaded, it just gets hidden from view when Delete is clicked. Being visible online is important because the

working world is connected more now than it ever has been. The world is not going to suddenly disconnect, and as the young get old, and the old get older, do the old need to become obsolete?

If a person is able to build a strong reputation in any given industry they will find success. Reputations are built on talent and personality. A manager could have the best academic background possible, and could have decades of experience. But if that man does not have the personality to lead a team, the team will not be led (and vice versa).

Sourcing talent Given the nature of online networking it is possible to build a professional reputation outside of the company a person works for. It is now possible to connect and network with the people that have the authority to hire or place a candidate in their next position. Using social networks people are able to direct their own careers in a way they could not previously. Likewise, Executive Search firms are able to source from a much larger talent pool, simply because more people in senior management roles are increasing their visibility. Business mogul Richard Branson once said: “Whether you’re launching a startup, or expanding an established business, if you’re an entrepreneur and you don’t have a social media presence, your company is at a competitive disadvantage.”

This is equally true to those looking to further a career, or build or enhance a reputation. Branson refers in his quote to the awareness social media offers a company. If you are in 63

Audit Insight

the C-Suite, or looking to join it, people must know you exist, globally, people must know you exist. The internet is not restricted by time or national border, and is an inexpensive and efficient way to connect.

Building networks There is a good chance you have a LinkedIn account. You probably have a few hundred connections, and you keep your LinkedIn connecting to people you know. After all, you don’t need to be connected to everyone. The LinkedIn network is not global. If a user searches for General Manager, and no one in his network (expanded by virtue of the connections of connections) has those words in their profile, the search result will show nothing. Is your network large enough to allow users in other geographies to find your profile? LinkedIn allows a user to have 30,000 first degree connections. Knowing that LinkedIn is eleven years old, and that recruitment professionals are usually very well connected already, can the people that you need to meet connect with

Whether you’re launching a startup, or expanding an established business, if you’re an entrepreneur and you don’t have a social media presence, your company is at a competitive disadvantage. you using LinkedIn? Has your activity online been enough to attract the attention of head hunters already? Or have you arrived late to the game. Sustainable Visibility audits give us an opportunity to assess where we stand in relation to the competition. There is no question that networking, both on and offline, works. The question is, how well do we network when compared to others? When a recruiter or company owner uses Google or a social network to research a list of potential hires, how do we stack up?

Social Media is a serious business, and the reason it is important enough to be included in a Sustainable Visibility report is simply because it affects everyone using the internet.

January 2014

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Corporate governance

SETTING PRIORITIES

RIGHT

Omani business leaders vote to elevate accountability and transparency to top of corporate agenda.

MANâ&#x20AC;&#x2122;S PREMIER business leaders gathered recently at The Bait Al Zubair Museum for an event hosted by the Pearl Initiative, the GCC-based, private sectorled, not-for-profit organisation developed in collaboration with the United Nations Office for Partnerships, to promote best business practices in the Gulf region.

66 January 2014

The discussion centred on the importance of improving accountability and transparency in the private sector among businesses in the Sultanate and across the region. High profile speakers at the event included Sheikh Rashad Al Zubair Chairman of The Zubair Corporation, HE Abdullah Bin Salim Al-Salmi, Executive President, Capital Market Authority

Corporate governance

of a robust framework through strong alliances between business, government and educational institutions.

Imelda Dunlop, Executive Director of Pearl Initiative said: “Corporate accountability and transparency are essential to building a healthy and competitive business environment that fosters economic growth. Oman leads the region with regards to governance practices. The country has the longest standing governance codes in the region and places high emphasis and efforts on developing a sustainable and ethical economy.

From L to R: Mohammed Mubarek Al Hasani, Head of Corporate Communications, The Zubair Corporation, Imelda Dunlop, Executive Director, The Pearl Initiative, Dr Faysal Alaquil, Director, Business Development & CSR, CPC, Sir Paul Judge, Joe Murphy, Director of Public Policy, Society of Corporate Compliance and Ethics (SCCE), Pankaj Khimji, Partner Director, Khimji Ramdas LLC, Sheikh Rashad M. Al Zubair, Chairman, The Zubair Corporation, Hamid Sultan Al-Busaidi, Senior Director, Oman Centre for Corporate Governance / CMA and Dr Amer bin Awadh Al-Rawas, CEO Omantel.

Oman (CMA), Abraaj Group Board Member Sir Paul Judge and Joe Murphy, Director of Public Policy Society of Corporate Compliance and Ethics (SCCE). The Pearl Initiative is working together in a strategic partnership with the United Nations Global Compact, in order to leverage international and regional expertise, combining global best practices with locally relevant imperatives.

Best practices The Omani event was put together to provide the opportunity for dialogue at the highest level on accountability and transparency best practices, between government, civil society and the private sector.

During the forum, speakers highlighted the need for collaboration among Omani businesses to encourage positive behaviour across the GCC. The discussion centered on the path to regional best practices and the benefits

“Today’s gathering was a first in that it enabled open discussion between representatives of some of Oman’s leading companies and professional bodies. At the Pearl Initiative we strongly believe in the benefits of best business practice for all areas of society. The time has come for organisations in Oman and across the Gulf region to unite to demonstrate the link between best practice value creation, and encourage the wider business community to do the same,” she added. Driving business standards Rashad Al Zubair of The Zubair Corporation commented: “At The Zubair Corporation, we strive to spread the practice of good governance, in addition to driving business standards in our native Oman. We want to see all Omani companies apply the highest standards of transparency and accountability to promote ethical conduct and timely disclosure procedures. As a partner of the Pearl Initiative, we will actively engage in dialogue about how to contribute to good governance.”

After the success of the inaugural student case study competition that saw 500 students throughout the Kingdom of Saudi Arabia from universities submit entries, the Pearl Initiative is now launching the case-study oriented competition in Oman. The competition is aimed at undergraduate and graduate business students and tasks them with producing a local case study on corporate accountability and transparency. Eligible students will have from February to April 2014 to complete and submit their detailed written case studies, with the winning entries announced in May 2014. 67

Taking Stock

KPMG IN $23.42BN

REVENUE GROWTH Significant investment in new services such as Data & Analytics and a focus on high-growth markets help to deliver strong returns in 2013 fiscal year.

PMG INTERNATIONAL has announced record-high aggregated revenues of $23.42 billion for the fiscal year ended 30 September 2013, representing a 3.7% increase in local currency terms over the previous year. Michael J. Andrew, Chairman, KPMG International, commented: “Over the past year we have seen the first widespread signs of economic confidence returning to clients and this has led to improving demand for services around the world, accelerating growth in the second half of the year.” “Continuing to make significant investments in a difficult economic period while delivering operating efficiencies has ensured we are wellplaced to meet this upturn in demand, and will drive stronger growth in the future. We are delighted to report record revenues in target high-growth markets. KPMG has a longstanding commitment to supporting clients in the world’s fastest growing economies and this focus drove 16.3% annual growth in revenues in India, 14.3% in Mexico, 13.1% in Africa and 10% in China,” he added. 68 January 2014

The Americas delivered strong growth over the year, with revenues rising by 6.7% driven by a 16.4% growth in Advisory revenues, 7.4% increase in Tax and a 0.3% increase in Audit revenues. EMA revenues grew by 2.6% with strongest growth in Germany, Ireland and Switzerland as many of the region’s leading economies returned to growth.

Michael J. Andrew, Chairman, KPMG International: “Over the past year we have seen the first widespread signs of economic confidence returning to clients and this has led to improving demand for services around the world.”

The Asia Pacific region reported revenue growth of 1.1%, reflecting the difficult economic situation affecting some of the largest economies in the region and the slow IPO market, a traditional strength of KPMG.

Audit, Tax and Advisory While the global audit market remains challenging, and competition for audit engagements intense, KPMG’s global Audit function performed strongly with member firm revenue increasing by 1.2% to $10.21 billion.

“The number of significant audit appointments during the last year includes: Downer EDI, ICBC, Lend Lease, Panasonic, PetroChina, Syngenta, and Unilever. We maintain a vigorous commitment to continuous improvement in audit quality. We have

1.2% Rise in revenue of KPMG’s global Audit function.

Taking Stock

invested over $225 million in audit over the past five years and plan to invest at least as much again in the next five years.” said Michael Andrew.

Tax revenues rose by 4.2% to $4.97 billion driven by an increased demand for tax compliance and tax advisory services in the Americas and EMA. KPMG also led the way in responding to the global debate on tax morality, with the publication of Global Tax Principles, setting out the standards which KPMG tax professionals follow in their work for tax clients. Total Advisory revenues for the year were up by 6.5% to $8.24 billion, buoyed by strengthening demand for KPMG’s Management Consulting services, which delivered 14.2% growth on the prior year. Client demand for KPMG’s Risk Consulting services also continued to grow strongly, up by 6.8% from FY12.

Data and Analytics services saw a sharp increase in demand. As just one example, KPMG professionals helped one of China’s largest insurance firms transform their business, enriching data to better understand and meet their customers’ changing needs. Investing for future growth KPMG continues to make significant investments targeted at long term, sustainable growth and is almost half way through a five year global investment programme totaling around $1 billion focused on our core global audit platform, highgrowth markets and developing new services such as Data and Analytics. KPMG maintained its long-standing focus on recruiting top talent in FY13, recruiting over 45,000 graduates and experienced hires. KPMG’s global workforce grew almost 3,000 to more than 155,000 partners and staff, the highest number of individuals ever employed across the network. With its strong focus on training and career development, KPMG remains a leading choice for graduate talent, and was once again voted in the Top 10 Global Employers in the Universum poll of around 200,000 degree students.

Positive contribution Commenting on the International Annual Review, Jamal Fakhro, Chairman for KPMG Middle East and South Asia added “this has been an exciting year for KPMG, our firms and our people in the region. We are proud that we have been able to demonstrate sound growth in our business with many major markets recording growth of around 9%. More

KPMG continues to make significant investments targeted at long term, sustainable growth and is almost half way through a five year global investment programme totaling around $1 billion.

importantly, we have been able to make a positive contribution towards the markets we operate in. All through the year, we strived to further enhance our service provision to clients, adding greater value in all that we do. Among these are initiatives in infrastructure, oil and gas and family business sectors. Sustainability remained a key priority and our firms engaged in a number of citizenship projects in areas of empowerment, disaster relief and environmental conservation." Jamal added that KPMG's regional cluster has a strongly positive outlook for FY14 in the context of good economic growth across the Middle East and in South Asia. Other FY13 highlights: • KPMG's member firms now serve more than 80% of the Global Fortune 500 list of companies.

• KPMG advised on China’s largest foreign merger and acquisition deal of 2013, the US$15 billion acquisition of a Canadian oil company by CNOOC, China’s largest producer of offshore oil and natural gas.

• KPMG has again led the sector by simultaneously publishing its International Annual Review, Transparency Report and Communication on Progress towards the UN Global Compact goals along with the network's financial results.

• KPMG continued to invest in global Centers of Excellence including the Financial Services, Government & Infrastructure, Energy & Natural Resource, and Healthcare sectors, and competencies around Shared Services and Outsourcing, Strategic Procurement, Human Resource Advisory, and Climate Change and Sustainability. These centres bring together KPMG experts from around the world with specialised skills and market experience to develop practical solutions to help clients deal with the pace and complexity of their global business environment. 69

Professional Development

STAYING

COMPETITIVE

In its latest quarterly Economic Insight report, ICAEW says Middle East states must invest in education in order to diversify.

OUNTRIES IN the Middle East must invest in education and raising skill levels if the region is to remain inter nationally competitive, according to a new report by ICAEW. In its latest quarterly Economic Insight report, the accountancy and finance body says that falling oil prices mean skills shortages coupled with population growth could damage GCC economies if not addressed.

4.8%

2014 GDP growth rate in Saudi Arabia fuelled by expansion in the nonhydrocarbon sectors. 70

January 2014

Economic Insight: Middle East warns that whilst GDP growth in the Middle East is above the global average and expected to remain steady in the short term, oil prices will drop as global supplies rise.

Need to diversify The combination of the rapid expansion of US shale production and the loosening of international sanctions on Iran mean oil prices will continue to fall at the same time as demand from emerging markets slackens. However, whilst GCC governments have recognised the need to diversify away from oil, they face a challenge in terms of skill shortages.

Strong population growth means countries will be in a position to benefit from a ‘demographic

windfall’ if they invest in education. Conversely, a lower-skilled population would lead to rising unemployment and a drain on national resources.

Peter Beynon, Regional Director, ICAEW Middle East, said: “To compete in skills-intensive industries like engineering or financial services, economies need access to a highly-skilled workforce.” “Currently, statistics suggest the GCC is lagging behind other developed economies in terms of education. This means firms are forced into buying in expertise from abroad, but in certain circumstances if they do not employ enough nationals they are fined. This could place them at a distinct disadvantage in competitive international markets. Investing in education to raise skill levels would be a long-term sustainable strategy that would help GCC countries to diversify whilst also helping nationals into the workforce,” he added.

Crossroads of global trade The region’s role as an energy exporter means that its output closely tracks the mood of the global economy, so GDP growth in the Middle East is expected to rise this year. The report notes that the GCC is becoming increasingly reliant on exports to developing economies.

Professional Development

iii) Bahrain remains slightly more vulnerable than other GCC countries owing to concerns over political tensions, however recovering oil outputs should lead to growth of around 4.5% in 2013.

iv) Investor confidence in the UAE is recovering since 2009 and foreign direct investment (FDI) is expected to improve, setting the scene for robust long-term growth.

Peter Beynon, Regional Director, ICAEW Middle East, said: “To compete in skills-intensive industries like engineering or financial services, economies need access to a highly-skilled workforce.”

Douglas McWilliams, Chief Economist and Executive Chairman of Cebr said: “Twenty years ago advanced economies accounted for nearly three quarters of all goods sold overseas by the GCC+5. Now fewer than half of all goods exported go to advanced economies, and nearly the same again to emerging markets.”

“The trend to increased trade with emerging markets is likely to continue. The centre of economic gravity is shifting eastwards, and the Middle East is at the crossroads of global trade. As well as a finance centre, this means the region should have the opportunity to develop as a logistics hub, with a bigger role for ports and shipping,” he added.

The report also shows: i) Saudi Arabia raised oil production dramatically to record levels in recent months in response to unexpectedly high prices. The expansion in the non-hydrocarbon sectors should counteract falling oil prices in 2014, pushing GDP growth up to 4.8%.

v) Kuwait has raised oil production in response to rising prices but uneasy relations between government and parliament mean other reforms are lagging. High oil prices will support the economy in the short term but concerns remain over long term fiscal sustainability.

Economic Insight: Middle East is produced by Cebr (The Centre for Economics and Business Research), ICAEW’s partner and forecaster. The report provides ICAEW’s 140,000 members with a current snapshot of the region’s economic performance. The report undertakes a quarterly review of the Middle East focussing on the Gulf Cooperation Council (GCC) member countries (United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait), as well as Egypt, Iran, Iraq, Jordan and Lebanon (abbreviated to GCC+5). The full Economic Insight report can be found here: http://www.icaew.com/~/media/archive/ files/middle-east-hub/me-q4-2013-final-web-2.pdf

ii) Whilst oil and gas continue to dominate the economy of Oman, Muscat’s new airport opening in 2014 is expected to boost the tourism industry.

The region’s role as an energy exporter means that its output closely tracks the mood of the global economy, so GDP growth in the Middle East is expected to rise this year.

Douglas McWilliams, Chief Economist and Executive Chairman of Cebr: “The centre of economic gravity is shifting eastwards, and the Middle East is at the crossroads of global trade.”

Deloitte Survey

IMAGE IS EVERYTHING

Deloitte survey shows reputation tops companies’ list of strategic risks.

49% proportion of surveyed EMEA companies that describe their risk management programmes as inadequate

ELOITTE’S RECENTLY published survey entitled ‘Exploring strategic risks,’ shows the progress of companies in managing the risks affecting their business strategy. The survey analysed the responses of more than 300 senior top management and board members, representing all major commercial sectors and all geographical regions across the world. According to the survey which was conducted by Forbes Insights on behalf of Deloitte, 81% of respondents reported having an explicit focus on managing strategic risk, with reputation cited as the Number 1 risk they are concerned about. Meanwhile, only 13% of respondents indicated that their risk management programme supports their ability to develop and execute business strategy. “Managing risk effectively has always been a touchstone of the most successful companies. But in today’s risk-filled business environment, it can be hard for executives to have confidence that their plans and strategies will play out as expected” said Fadi Sidani, enterprise risk services leader at Deloitte Middle East.

“A big reason is that strategic risks – those that either affect or are created by business strategy decisions – can strike more quickly than ever before, hastened along by business trends and technological innovations such as social media, mobile and big data.” Survey findings The Deloitte survey highlights what leading companies are doing to manage strategic risk – and how are they preparing for the future:

• Strategic risk has become a major focus, with 72 January 2014

81% of surveyed companies now explicitly managing strategic risk – rather than limiting their focus to traditional risk areas such as operational, financial and compliance risk.

• Nearly all respondents (94%) have changed their approach to strategic risk management over the past three years. The numbers were slightly higher in Asia/Pacific (96%) and slightly lower in Europe/Middle East/Africa (EMEA) (91%). • 49% of EMEA companies describe their risk management programs as inadequate and 91% of EMEA companies have changed their approach to strategic risk management. • Reputation risk was listed as the biggest risk concern, due in large measure to the rise of social media, which enables instantaneous global communications that make it harder for companies to control how they are perceived in the marketplace.

• Strategic risk management is a CEO and boardlevel priority. Two thirds (67%) of the surveyed companies say the CEO, board or board risk committee has oversight when it comes to managing strategic risk.

• 53% of respondents believe technology enablers and disrupters such as social, mobile, and big data could threaten their established business models, and 91% have changed their business strategies since those technologies began to emerge. • The top strategic assets that businesses will need to invest in in the coming 3 years are human capital and innovation.

“In response to these issues and trends, companies are making a deliberate effort to improve their strategic risk management capabilities and performance. Companies are now using strategic risk management as a tool to make decisions with more confidence and create greater business value,” added Sidani. To view the whole survey go to: http://bit.ly/GAGbK

TECH TALK

PROTIVITI LAUNCHES NEW APP

New mobile tablet initiative enables on-thego access to strategic insights.

ROTIVITI, A global consulting firm, has launched Protiviti Mobiliti, the company’s new mobile tablet application delivering its experts’ latest perspectives and insightful thinking about governance, risk, compliance and internal audit directly to users’ mobile devices. “Our new Protiviti Mobiliti app is designed to meet the needs of on-the-go professionals seeking insights to improve their businesses by providing them with Protiviti’s latest reports, surveys, podcasts and more through a customised mobile experience,” said Adam Todd, Protiviti vice president of marketing and communications. Seamless integration The new app features Protiviti’s latest thought leadership content, including flash reports, research, FAQs and case studies, in addition to multimedia content such as blogs, webinars and videos. Protiviti Mobiliti allows users to browse content by popularity, industry and topic, with seamless integration for email and social media sharing. Users can also choose to be notified when new content is Adam Todd, Protiviti vice president of published, marketing and communications. and they

can create a personal thought leadership library – a repository of saved items available on- or offline. “We’ve seen significant growth in the number of visitors accessing our information on the web through mobile devices,” said Todd.

‘Protiviti Mobiliti’ brings the latest content, executive events and career opportunities to mobile devices

“To accommodate this shift, we’ve launched Protiviti’s mobile initiative with the key goals of improving the user experience and creating instant, effortless access to our subject-matter experts’ thought leadership materials,” he added. Download for free App users can also find Protiviti events and speaking engagements (some offering CPE credit) in their geographic areas through built-in location services. Job seekers can learn about Protiviti careers and search open positions for both recent graduates and experienced professionals. Job listings can be sorted by type, title or location. Protiviti’s new app is now available for the iPad and Android tablets and can be downloaded for free through the Apple App Store and Google Play. A mobile phone app will be available for iOS and Android platforms in early 2014. For more information about Protiviti Mobiliti, visit www. protiviti.com/mobiliti.

Industry Appointments

APPOINTMENTS If you have made a new appointment, promotion or have any relevant hiring news, please email the details and a photo to accountancy@cpidubai.com

Commercial Bank of Dubai has announced the appointment of three of its UAE National management members to take up leadership positions at the Bank.

Akram Skaik, previously regional manager for New Dubai, has been appointed as Head of Branch Distribution. He joined CBD last year from Mashreq, and has 20 years of experience under his belt. Skaik holds a Masters’ degree of Business Administration in Financial Management from Southeastern University, SW Washington DC, USA and has also completed his executive corporate studies from the London Business School.

Yousif Al Suwaidi, who has been in CBD’s Consumer Banking Team, is now Head of Sales for Personal Banking. He joined Commercial Bank of Dubai last year and has 12 years of experience in the sector, having previously worked at Citibank and ABN Amro. Al Suwaidi has a Bachelor of Science in Business Studies from Lebanese American University.

74 January 2014

The number of UAE Nationals employed in CBD now constitutes over 41 per cent of all employees and the Bank’s strategy is to continually improve on this number.

Mohammed Ali Redha, who has been the Bank’s Executive Manager – Dubai Branch, has been appointed as Head of Business Banking. He has been with Commercial Bank of Dubai since February 2006, and latterly, was Branch manager at one of the Banks main Commercial branches – Dubai Branch. Ali Redha has 16 years of experience in the sector and holds an MBA from American University in Dubai, and completed his Masters in Quality Management from University of Wollongong, Dubai.

Murray Sims, General Manager of Personal Banking Group, CBD, commented: “As part of CBD’s continuous endeavor to promote UAE Nationals to more senior leadership positions in the Bank by leveraging their experience and expertise, it has been decided to appoint three UAE Nationals to play an even bigger role in CBD’s management. We would like to take this opportunity to wish them all the best in their new positions and we are confident that they will achieve even more success for the Bank and themselves in their new roles.”

“Since its inception, CBD has considered the recruitment of UAE nationals as one of its priorities. We have always aimed to attract and develop UAE Nationals, appointing them in responsible leading positions,” Sims added.

Commercial Bank of Dubai’s efforts and achievements in Emiratisation have been recognised and honoured and the Bank is a past winner of UAE National Resources Development Award, the Dubai Human Development Award and the Human Resources Development Award. Gulf Finance House, the Bahrainbased investment firm which has restructured a number of debt facilities since the financial crisis, has confirmed Hisham Al Rayes as its Chief Executive Officer. Rayes had been acting CEO since March 2012, a statement to the Dubai bourse said.

The sharia-compliant investment house was hit hard by the global financial crisis and it was forced to restructure a number of debt facilities – some more than once – since 2009.

Rayes, in a media interview in July, said that a leaner balance sheet and a new strategy in which it engaged more in its investments would help drive the business forward in future.

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