Accountant Middle East - July - Aug 2013

UAE AED 15 | Bahrain BHD 1.5 | Qatar QR 15 | Oman OR 1.5 | Saudi Arabia SR 15 | Kuwait KD 1.2

SETTING STANDARDS IN FINANCIAL AUDITING & ACCOUNTANCY

JULY - AUGUST 2013

BARRY SALZBERG “I’ve been with Deloitte for more than 34 years and I continue to learn every day”

IFRS: WHICH WAY NOW?

Investors should begin to evaluate their control involvement with investees under the new consolidation standard

WHAT’S MAKING RISK MORE RISKY?

Qatar’s win to host FIFA World Cup 2022 means a great amount of organisational risks ahead for internal auditors

DEATH BY NUMBERS

Investors have lost trust in company financial reports, according to new ACCA study

PUBLICATION LICENSED BY IMPZ

EDITOR'S AUDIT

Publisher Dominic De Sousa Group COO Nadeem Hood Managing Director Richard Judd richard.judd@cpimediagroup.com +971 4 440 9126

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EDITORIAL Editor Joyce Njeri joyce.njeri@cpimediagroup.com +971 4 440 9140 Contributor Shane Phillips

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Office 804 Grosvenor Business Tower, TECOM PO Box 13700 Dubai, UAE

Joyce Njeri Editor, Accountant Middle East

Tel: +971 4 440 9100 Fax: +971 4 447 2409 Printed by Printwell Printing Press Š Copyright 2013 CPI All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Talk to us: E-mail: joyce.njeri@cpimediagroup.com Twitter: @AccountancyME Facebook: www.facebook.com/AccountancyME LinkedIn group: Accountant Middle East

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CONTENTS JULY - AUGUST 2013

Main Features

36

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18

WOMEN IN FINANCE:

Mariam Al Rasasi – Finance Director of DP World on how she has worked her way through the ranks to ϐ ǯ international marine terminal operations.

30

INTERNAL AUDIT:

36

COVER STORY:

Of ‘Big Hammours’ and audit power play – ǯ

Ǧ Ǧ ϐ

Audit practice.

Deloitte’s Global CEO Barry Salzberg – How Ǧ Ǧ dollar worldwide company?

July - August 2013

18

Current Affairs 6 NEWS & VIEWS:

KPMG International in new leadership change – Chairman

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30

BUSINESS PICTORIAL:

12

DIFFERENT DIMENSIONS:

Leadership is us! Ȃ

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56

TECHNOLOGY TALK:

72

BUSINESS INSIGHTS:

Data risk soars Ȃ whitepaper tackles collection of forensic records in GCC.

Chemistry matters Ȃ ϐ ǡ ǡ Ǥ

74

INDUSTRY APPOINTMENTS:

Revolving door Ȃ ǡ new industry hires.

Special Reports

Profession Watch

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14

ACCA SURVEY:

Death by numbers Ȃ

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22

WOMEN IN FINANCE:

34

INSURANCE MATTERS:

42

SPOTLIGHT ON QATAR:

Shattering the glass-­ceiling Ȃ Dz ǯ ǡdz ǯ ǡ ϐ Ǥ

Charting the road to mass markets Ȃ

Ǥ A player in transition – Putting ǡ attracting attention on the world stage for all the right reasons.

12

Leadership is about believing in an ideal, in a goal…

From the Experts 26 CORPORATE TREASURY:

Banking on the AMCT Ȃ ǡ ǯ ϐ Ǯ Ǧ ǯǤ

70

IFRS:

What’s the fuss about IFRS 10? Ȃ

new consolidation standard.

Interactions 3 EDITOR'S AUDIT

5

NEWS & VIEWS

NEW IMA BOARD KPMG INTERNATIONAL TAKES CHARGE IN NEW LEADERSHIP CHANGE

KPMG  INTERNATIONAL’S  Chairman  Michael  Andrew  ( pictured),  has  announced  a  number  of  changes  to  K PMG’s  Global  Executive  Team,  including  t he  appointment  of  a  new  Deputy  Global  Chairman  and  t wo  new  regional  Chairs.

Current  Deputy  Global  Chairman,  A lan  Buckle  will  retire  at  t he  end  of  t he  year,  after  32  years  of  service  to  K PMG.  John  Scott,  who  w ill  remain  Managing  Partner  of  K PMG  in  Spain,  has  been  appointed  as  t he  new  Deputy  Global  Chairman  with  effect  f rom  October  1.  John  w ill  also  become  t he  new  K PMG  EMA  (Europe,  Middle  East  and  A frica)  Chairman  succeeding  Rolf  Nonnenmacher,  who  is  retiring.  Larry  Bradley  w ill  succeed  Joachim  Schindler  on  K PMG’s  Global  Executive  Team  as  Global  Head  of  Audit  f rom  September  1.  A nd  in  addition  to  his  current  role  as  Managing  Partner  of  K PMG  in  Singapore,  Tham  Sai  Choy  w ill  become  A SPAC  ȋ •‹ƒ ƒ…‹Ď?Â‹Â…ČŒ Šƒ‹”Â?ƒÂ? ‘Â? –Š‡ …–‘„‡” ͳǥ succeeding  Hideyo  Uchiyama  (Managing  Partner  KPMG  in  Japan).   Geoff  Wilson,  who  recently  retired  as  CEO  of  KPMG  in  Australia  w ill  become  t he  new  A sia  ƒ…‹Ď?‹… Š‹‡ˆ ’‡”ƒ–‹Â?‰ ˆĎ?‹…‡” ƒÂ?† ™‹ŽŽ ”‡Ž‘…ƒ–‡ to  Hong  Kong  f rom  Australia.   Geoff  t akes  over  from  Yap  Chee  Meng,  who  is  retiring.  T ham  Sai  Choy  and  Geoff  Wilson  w ill  both  join  t he  Global  Executive  Team.  John  Applegate  w ill  become  KPMG  International’s  new  Chief  Information  ˆĎ?‹…‡” ‘Â? …–‘„‡” ͳǥ ™Š‡Â? Š‡ –ƒÂ?‡• ‘˜‡” ˆ”‘Â?

Stuart  Campbell,  who  retires  after  34  years  w ith  the  K PMG  network. Â

6

July - August 2013

THE DUBAI Chapter of IMA (Association of Accountants and Financial Professionals in Business) has new members of the board, elected to steer the association’s projects and strategies for the next financial year.

The team, led by the President Karim Abdelhay (pictured), will be charged with keeping the association’s members updated with essential business knowledge, and help improve their skills through organising and sponsoring professional events.

The chapter currently has more than 1900 members. The chapters

offer a range of professional education programmes to earn NASBA-approved CPE credits, as well as leadership, mentoring, community service, and authorship opportunities. Membership in an IMA chapter is exclusive to IMA members. The 2013-2014 new board members include: t ,BSJN "CEFMIBZ $." $'. o President t #JCIV %VUUB +FOB $." $'. $1" o 4FDSFUBSZ t #BRJS )VTTFJO "$$" $." o Treasurer t *ZBE .PVSUBEB $." $*" $'& VP Professional Education t %FFQB "CSBIBN 71 &WFOUT t )BEFFM /BTTBS $." $*" 71 Communication

STATS FACT:

1,900

CURRENT REGISTERED MEMBERS OF IMA DUBAI UAE CHAPTER

DFM hails UAE’s ‘Emerging Markets’ status upgrade DUBAI FINANCIAL Market (DFM) has welcomed the Morgan Stanley Capital International annual market classification review to upgrade the MSCI UAE Index to ‘Emerging Markets’ status.

Essa Kazim (pictured), Managing Director and CEO, Dubai Financial Market, said: “We are delighted to

see the UAE market upgraded to “Emerging Markets� status, which reflects international investors’ confidence in our markets and their satisfaction with what we have accomplished. The reignited interest of local and foreign investors towards DFM since the beginning of the year underlines that what we have implemented caters to investors’ expectations and the attractiveness of UAE market to foreign investments.�

NEWS & VIEWS

LA FEMME ATTRACTION

THE  PROGRESS  of  women  i n  leadership  across  t he  Commonwealth  c ould  be  i mproved  by  i mplementing  a  set  of  s ix  s imple  policy  and  s trategic  measures,  r ecommends  a  new  r eport  commissioned  by  ACCA  ȋ–Š‡ ••‘…‹ƒ–‹‘Â? ‘ˆ Šƒ”–‡”‡† ‡”–‹Ď?‹‡† Accountants)  a nd  t he  Commonwealth  Business  Council  (CBC).

The  recommendations  are  included  in  a  report  c alled  ‘Paving  the  way  to  opportunities:  women  in  leadership  across  the  Commonwealth.’  This  comprehensive  publication  examines  what  opportunities  exist  for  women  across  the  Commonwealth,  how  t hey  are  able  to  navigate  to  positions  of  power,  and  how  t his  can  be  f urther  supported  by  governments  and  businesses  a like.  Helen  Brand  OBE  ( pictured),  chief  executive  of  ACCA,  explains:  “ The  six  proposed  recommendations  are  a  s ystematic  way  to  work  towards  and  achieve  diversity  in  t he  boardroom  and  senior  leadership  positions  across  t he  Commonwealth."  "The  report  a lso  looks  at  how  we  c an  support  t he  pipeline  of  t alent,  a nd  for  t his  support  to  happen  we  need  to  s tart  early  by  enabling  young  g irls  to  see  a nd  learn  about  women  in  positions  of  senior  leadership  a s  a  part  of  t heir  educational  experience.  Role  models  a re  important.�

The  recommendations  are: i)  Create  a  database  of  women  who  are  board-­â€? ready  or  have  board  potential  ii)  Support  sponsoring  initiatives  iii)  Build  a  research  monitor  across  t he  Commonwealth  iv)  R aise  c areer  aspirations  v)  Create  a  media  strategy  vi)  Share  best  practice  across  the  Commonwealth Â

SAUDI WOMAN WINS ACCA GRANT A WOMAN from Saudi Arabia is one of five winners of this year’s Simpson Scholarship which gives a helping hand with expenses to gain the ACCA (the Association of Chartered Certified Accountants) Qualification.

The winners will have their exam fees, annual student or affiliate fees and membership admission fees paid for them by the scholarship fund for up to five years, or until ACCA membership is achieved, whichever happens sooner. BPP Learning Media, ACCA’s Platinum Approved Learning Partner (Content), is also providing them with study materials for every ACCA paper

they are studying.

The 2013 winners are: t .JTT 3BNTIB ,IBO 4BVEJ Arabia t .T 5IJ /HVZFU $IJOI )PBOH Vietnam t .JTT 3BJIBOB .BISPPG 4SJ -BOLB t .S 5JOBTIF .BUBNCP 4PVUI "GSJDB t .T .FNPSZ .VE[J ;JNCBCXF Alan Hatfield, director-learning at ACCA, said: “Year on year the standards and talents of our scholarship winners and applicants get better, which makes it a tough decision in awarding the five scholarships. The judges looked for candidates who understood and would put into practice as an ACCA student and in their careers afterwards, ACCA’s core values such as opportunity, diversity and integrity.

MECA Launches CFOs Mentorship Programme MIDDLE EAST CFO Alliance (MECA) recently announced the launching of its long awaited CFO Mentorship Programme.

The programme aims at providing leadership development opportunities to promising finance professionals across Middle East through mentorship to be provided by senior level accomplished CFOs. So far more than 50 CFOs from prominent companies and businesses have committed to volunteer as the CFO Mentors.

Saleem Sufi (pictured), the Founder and President of MECA

revealed the details of the programme recently, at an exclusive gathering of CFOs at Shangri-La Hotel in Dubai. “The MECA CFO Mentorship initiative is more than a mentoring programme. We are starting a major long term initiative among the senior finance community in the Middle East that will not only JNQSPWF UIF RVBMJUZ PG UIF MFBEFSTIJQ talent we produce but bring the CFO community closer through multiple long-term mentor-mentee relationships,� Saleem said.

CFOs and finance professionals wishing to join the programme as Mentor or Mentee can register at: http://www.mecacfoalliance.com/ cfomentorship/

7

NEWS & VIEWS

HORWATH MAK REPORTS MANIPULATION HONOURS TOP ‘POSING GREAT RISK’ OFFICIALS

ϐ ǡ member of Crowe Horwath International, recently honoured key government and business personalities at a networking event attended by over 500 invitees f rom across different industries in UAE. Ahmed Bin Sulayem, Executive Chairman, Dubai Multi Commodities Centre Authority (DMCC), was named ‘Government Personality of the Year’ for his vision in driving DMCC’s initiatives in a wide range of commodity sectors.

Sudhir Goyel (pictured centre), Co-­‐founder and Managing Director of Gulf Petrochem Group, was recognised as ‘Businessperson of the Year’ for his achievement in the overall growth of the industry with leadership skills related to Financials & Funding, Strategic Planning and International Business Relations and expansion of the company’s business in the Indian subcontinent.

The award for ‘Banker of the Year’ was presented to Rick Pudner, Group CEO – Emirates NBD for his extensive contribution to the UAE banking industry, while James Mathew, Managing Partner, JAFZA Branch -­‐ Horwath Mak, was ϐ ǯ overall growth as well as serving as Chairman of the Institute of Chartered Accountants of India (ICAI) UAE (Dubai) Chapter.

Dr K halid Maniar, Founder and Group Chairman of Horwath MAK, hailed the leadership of HH Sheikh Mohammed Bin Rashid, whose vision has hoisted Dubai on the world map -­‐ from a pearl producing economy to the region’s busiest and ϐ Ǥ such leadership vision has always inspired him to grow Horwath Mak, which is now among top four ϐ Ǥ

8

July - August 2013

ONE IN five employees of American firms operating in Europe, Middle East, India and Africa are aware of financial manipulations in their company in the last 12 months, according to Ernst & Young’s Fraud Survey for 2013.

Alarmingly, at board and senior manager level the proportion is IJHIFS TUJMM o UIF TBNF TVSWFZ reported more than 40% of respondents said that sales or costs had been manipulated at their company.

“Although the survey covered

American companies operating in the region, this should be a concern for the business community in this part of the XPSME w TBJE +JN (VSPXLB Vice President of International Development at IMA (Institute of Management Accountants).

“The possibility of inaccurate financial reporting could have far reaching impacts on the business community, which is why we cannot overemphasise enough the importance of having trained and certified professionals," he added.

STATS FACT:

40%

PROPORTION OF RESPONDENTS WHO REPORTED THAT SALES OR COSTS HAD BEEN MANIPULATED AT THEIR COMPANY

Deloitte Tax Handbook out %&-0*55& 3&$&/5-: IPTUFE the seventh annual Middle East Tax Conference, in a two day event, which brought together over one hundred Deloitte clients and partners to debate topical developments relevant to the region. Hot topics debated included trends in antiavoidance initiatives, and tax treatments related to permanent establishments.

The highlight of the event was the release of Deloitte’s 2013 Annual Middle East Tax Handbook, underlining the most current tax rules and regulations impacting the region.

“In the last 12 months, significant developments, not

just in technical matters and tax administration, but also in the profile of organisations’ tax affairs, particularly in relation to public and media scrutiny, have been witnessed,” said Nauman Ahmed, Deloitte Middle East tax practice leader.

“We all need to be alert to these shifts in focus,” he added.

Over the two day conference, a diverse range of timely topics were covered, such as countryspecific updates, indirect taxation, European holding structures, aviation taxation, FATCA and compliance outsourcing.

NEWS & VIEWS

DUBAI WOMEN COUNCIL IN PARTNERSHIP WITH PWC

DUBAI  BUSINESS  Women  Council  (DBWC)  has  announced  that  it  has  entered  into  a  strategic  Partnership  Agreement  with  audit  and  advisory  Ď?‹”Â? ™ Ǥ Under  the  terms  of  the  agreement,  both  parties  will  collaborate  on  cross-­â€?functional  business  development  and  provide  mutual  access  to  their  services.  They  will  use  their  respective  social  media  channels  and  portals  to  jointly  promote  events,  trainings,  surveys  and  news.  Raja  Easa  Saleh  Al  Gurg  (pictured),  President,  Dubai  Business  Women  Council,  said:  “Through  our  partnership  with  PwC  we  look  forward  to  opening  up  various  growth  opportunities  for  our  members  who  continue  to  make  value  contributions  to  the  socioeconomic  development  of  the  UAE  through  their  roles  as  inspiring  business  leaders.â€?  Founded  in  2002,  DBWC  motivates  women  to  be  productive  members  of  t he  society,  while  encouraging  role  models  to  rise  up  f rom  t he  ranks  and  inspire  other  women  around  t he  world,  especially  in  t he  A rab  region,  to  discover  t heir  true  potential. “By  joining  forces  with  PwC  we  can  also  instill  a  deeper  sense  of  professionalism  and  global  awareness  through  PwC’s  extensive  multinational  experiences  across  multiple  industries.  Our  ’ƒ”–Â?‡”•Š‹’ …ƒÂ? Â?ƒÂ?‡ ƒ •‹‰Â?‹Ď?‹…ƒÂ?– ‹Â?’ƒ…– in  promoting  women  entrepreneurship  and  empowering  women  to  achieve  their  full  potential.  We  look  forward  to  a  long  and  highly  productive  relationship  with  PwC.â€? Â

DELOITTE, IRTI TO RUN ISLAMIC FINANCE COURSES THE DELOITTE Islamic Finance Knowledge Centre (IFKC) in the Middle East has signed an MOU of a collaborative training initiative XJUI UIF *TMBNJD 3FTFBSDI 5SBJOJOH *OTUJUVUF *35* B NFNCFS PG UIF *TMBNJD %FWFMPQNFOU #BOL (SPVQ The initiative responds to calls from industry leaders and regulators to develop industry-based training programmes for the steadfastly growing industry of Islamic Finance and Takaful. “This initiative between Deloitte BOE *35* ESBXT PO UIF JNQPSUBODF of collaboration among industry stakeholders to strengthen knowledge-sharing process and address the industry challenges and market practices. In particular it aims to streamline professional education and capacity building JO *TMBNJD mOBODFw TBJE +PTFQI &M 'BEM 3FHJPOBM -FBEFS (MPCBM '4* BU Deloitte Middle East.

i*35* DPOTJEFST *',$ BT B strategic partner to inspire and deliver cutting edge research, capacity building and information services in the area of Islamic economics and finance� said Professor Mohammad Azmi Omar, %JSFDUPS (FOFSBM PG UIF *35* The 2013 Stability report by the Islamic Finance Service Board (IFSB) states that ‘some of the remaining challenges to be overcome include the development of human capital which increases with the development of innovative Islamic financial products and services’.

Accountants in blood donation drive AS A social commitment, the Emirates Chartered Accountants (SPVQ PSHBOJTFE B CMPPE EPOBUJPO drive during the Chartered Accountants’ Day, which is PCTFSWFE BOOVBMMZ PO +VMZ Employees from different banks and financial institutions, members of Emirates Chartered "DDPVOUBOUT (SPVQ QBSUOFST and employees from different companies joined together to show their commitment towards the worthy cause.

The event was held at the Blood Donation Section of Latifa

Hospital, Dubai. “Emirates Chartered "DDPVOUBOUT (SPVQ XBT IBQQZ UP take up the initiative to once again prove that accountants are more than number crunchers,� said a SFQSFTFOUBUJWF GSPN UIF (SPVQ

9

BUSINESS PICTORIAL

POINT OF VIEW The Chairman of Qatar’s Institute of Internal Auditors, Chris Adonis addresses the audience during the 3rd National Conference organised by the association in Doha, Qatar. The theme of the conference was on ‘The value of an effective Internal Auditing function.’

FOR A WORTHY CAUSE

RECOGNITION

An official from the Emirates Chartered Accountants Group donates blood to mark the World Chartered Accountants day, observed annually on July 1.

Chairman of the Institute of Chartered Accountants of India, James Mathew, presents an award to the Editor of Accountant Middle East publication – Joyce Njeri, at a recent event.

This was in recognition of the support the magazine continues to offer the association and its members.

10 July - August 2013

BUSINESS PICTORIAL

ALL THE PRESIDENT’S MEN HE Abdullah Bin Hamad Al Attiyah, Qatar’s President of the Administrative Control and Transparency Authority (front, 3rd left) poses with young military officers when he officially inaugurated this year’s 3rd National Conference hosted by Qatar’s Institute of Internal Auditors in Doha.

BANKER OF THE YEAR Rick Pudner (right), outgoing Group CEO of Emirates NBD bank is honoured for his contribution to the UAE banking industry, during an event hosted by audit and advisory firm Horwath Mak.

MORE ON IFRS GOVERNMENT PERSONALITY OF THE YEAR Horwath Mak recently recognised Ahmed Bin Sulayem (centre), the Executive Chairman of Dubai Multi Commodities Centre Authority, for his vision in driving DMCC’s initiatives in a wide range of commodity sectors.

A representative from Wiley presents a copy of the latest edition of IFRS paperback titled ‘International Trends in Financial Reporting under IFRS’, to Atiq Juma Nassib (right), the Senior Director, Commercial Services Sector, at Dubai Chamber of Commerce & Industry, during the World Accounting Summit held in Dubai recently.

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DIFFERENT DIMENSIONS

LEADERSHIP IS US! Nusrate Ibrahim argues that governance role is not a preserve of select individuals in the society…

Leadership is about believing in an ideal, in a goal…

I

S LEADERSHIP entrusted only to the ‘leaders’, I mean CEOs, CFOs, CIOs, presidents, sheikhs, prime ministers, preachers, high profile achievers, celebrities, scholars, academics? ϐ Ǩ

NUSRATE IBRAHIM MANAGING DIRECTOR, NTI FZ LLE - TRAINING CONSULTANCY

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Accountancy Qualifications at Phoenix Financial Training Phoenix Financial Training, founded in 2006 by David Thomasson has achieved great success in the UAE and India as a UK oriented accountancy training provider. We offer a wide range of courses including ACCA, ICAEW & CIMA. Professional These courses are delivered in the D.I.F.C. and World Trade Centre by carefully selected and approved tutors who are the envy of our competitors. With flexible payment options and course to suit a multitude of personal schedules, at Phoenix we always put the student first.

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ACCA SURVEY

DEATH BY NUMBERS Investors have lost trust in company financial reports, new ACCA study reveals‌

45%

PROPORTION OF SURVEYED INVESTORS WHO SAY THE ANNUAL REPORT ‘IS OF NO USE'

I

NVESTORS ARE less trustful of corporate reports since the global financial crisis with more than two-­thirds saying they are more sceptical about the information companies provide, according to new research from ACCA (the Association of Chartered Certified Accountants).

‡› Ď?‹Â?†‹Â?‰• ‹Â?…Ž—†‡†ǣ

Nearly  two-­â€?thirds  of  the  300  investors  surveyed  in  ‘Understanding  Investors:  directions  for  corporate  reporting’  have  told  ACCA  that  managers  have  too  much  discretion  over  the  Ď?‹Â?ƒÂ?…‹ƒŽ Â?—Â?„‡”• –Š‡› ”‡’‘”– ƒÂ?† ƒ •‹œ‡ƒ„Ž‡ majority  of  investors  say  t hey  place  more  value  on  information  generated  from  outside  a  company  than  on  traditional  corporate  reports,  such  as  the  news  and  social  media.  Worryingly,  45%  ‹†‡Â?–‹Ď?‹‡† –Š‡ ƒÂ?Â?—ƒŽ ”‡’‘”– ĥ „‡‹Â?‰ ‘ˆ Â?‘ —•‡Ǥ

͸;Ψ „‡Ž‹‡˜‡ Â?ƒÂ?ƒ‰‡Â?‡Â?– Šƒ• –‘‘ Â?—…Š †‹•…”‡–‹‘Â? ‹Â? –Š‡ Â?—Â?„‡”• ‹– ”‡’‘”–•

+LJSPUPUN [Y\Z[ There  w as  a  c lear  d ichotomy  f or  p olicy-­â€?makers  …”‡ƒ–‡† „› “—ƒ”–‡”Ž› ”‡’‘”–‹Â?‰Ǥ – ™ƒ• •‡‡Â? ĥ —•‡ˆ—Ž „› ͚͡Ψ ‘ˆ ”‡•’‘Â?†‡Â?–• ‹Â? –‡”Â?• ‘ˆ –Š‡‹” own  investment  decisions,  yet  65%  agreed  that  it  created  short-­â€?termism  in  the  market  as  a  whole  and  distracted  management.  Almost  ŠƒŽˆ ™ƒÂ?–‡† –‘ •‡‡ Â?ƒÂ?†ƒ–‘”› “—ƒ”–‡”Ž› reporting  s crapped.

14 July - August 2013

͸͝Ψ ‘ˆ ‹Â?˜‡•–‘”• Šƒ† „‡…‘Â?‡ Â?‘”‡ •…‡’–‹…ƒŽ ƒ„‘—– …‘Â?’ƒÂ?Â›ÇŚÂ’Â”Â‘Â˜Â‹Â†Â‡Â† ‹Â?ˆ‘”Â?ƒ–‹‘Â? •‹Â?…‡ –Š‡ ‰Ž‘„ƒŽ Ď?‹Â?ƒÂ?…‹ƒŽ …”‹•‹•  63%  place  greater  value  on  information  generated  outside  t he  company

͸;Ψ „‡Ž‹‡˜‡ –Š‡ ƒÂ?‘—Â?– ‘ˆ ‹Â?ˆ‘”Â?ƒ–‹‘Â? ’—– ‘—– „› …‘Â?’ƒÂ?‹‡• Šƒ• ‡Â?…‘—”ƒ‰‡† ǎŠ›’‡”nj‹Â?˜‡•–Â?‡Â?–ǯ ͜͸Ψ „‡Ž‹‡˜‡ Â?ƒÂ?†ƒ–‘”› “—ƒ”–‡”Ž› ”‡’‘”–‹Â?‰ •Š‘—Ž† „‡ ƒ„ƒÂ?†‘Â?‡†  93%  expressed  support  for  the  concept  of  integrated  r eporting The  survey  also  revealed  strong  support  for  the  role,  of  external  assurance,  which  was  seen  ƒ• –Š‡ Â?ƒ‹Â? …‘—Â?–‡”„ƒŽƒÂ?…‡ –‘ †‡…Ž‹Â?‹Â?‰ –”—•– ‹Â? …‘Â?’ƒÂ?› Ď?‹‰—”‡•Ǥ Â?Ž› ‹Â? ƒ”‡ƒ• Ž‹Â?‡ ’”‘Ď?‹– warnings  a nd  emerging  r isks  a nd  opportunities ʠܠ ‹Â?˜‡•–‘”• „‡Ž‹‡˜‡ •’‡‡† ‘ˆ ‹Â?ˆ‘”Â?ƒ–‹‘Â? outweighed  assurance.  And  41%  wanted  to  see  ƒ—†‹–‹Â?‰ „‡‹Â?‰ ‡š–‡Â?†‡† –‘ “—ƒ”–‡”Ž› ”‡’‘”–•Ǥ

ACCA SURVEY

)PNNLY YVSL MVY H\KP[ Ewan Willars, ACCA director of policy, said: Dz ϐ information since the economic downturn.

The decline in trust in corporate information ϐ

ϐ Ǥdz “But the research shows that while it’s easy to lump ‘investors’ u nder one r oof, t he r eality i s t hat different investors want different information ϐ Ǥ Ǧ investors, such a s hedge f unds, w ant or need t he same i nformation a s longer t erm i nvestors, such ǫ ϐ teams that support them may need to provide ϐ needs of v arious i nvestment g roups, r ather t han Ǥdz Dz Ǥ Ȃ Ǧ interest, they also recognise that this focus on

overall market’s long-­‐term interests. There ǡ investors a re aware of t he outcome of t hat k ind ϐ Ǥdz :[HUKHYK ZL[[LYZ This poses a real challenge to regulators and policy makers in terms of their approach.

“The decline in trust in corporate information since the global financial crisis suggests there is a bigger role for audit to play in rebuilding confidence in company statements.”

Though in Europe there are moves to remove

ǡ given the mixed feelings on the individual company a nd market effects it i s seen a s having.

Accounting standard setters and regulators

of investors who see no use to annual reports and t he d istrust of management d iscretion over ϐ Ǥ Dz Ȃ they a re t o play a central r ole a nd have t heir voice clearly heard i n t he policy-­‐making process, t hey

ϐ regime t hat g ives i nvestors t he a ssurances t hey ǡdz Ǥ The ACCA survey respondents represented a range of institutions, 150 of which each had more t han $500m i n a ssets u nder management, including pension funds, insurance companies, ϐ ǡ ϐ ǡ advisors or a nalysts a nd corporate t reasurers.

Many investors have become more sceptical about company-provided mOBODJBM JOGPSNBUJPO since the global crisis, according to a new report authored by ACCA.

15

GRANT THORNTON SURVEY

REVERSAL OF FORTUNE? Grant Thornton’s global survey finds US business sentiment on an upswing, while China slumps to lowest level…

4%

DROP IN BUSINESS OPTIMISM IN CHINA IN Q2 OF 2013

N

EW RESEARCH from Grant Thornton’s International Business Report (IBR), a quarterly global business survey of more than 3,200 businesses in 44 economies, reveals a dramatic reversal of fortunes for business leaders in the world’s two largest economies.

While US businesses are feeling more confident about growth in their operations and the economy, optimism amongst peers in China h as s lumped t o t he lowest level r ecorded in I BR h istory.

The IBR reveals that US business optimism climbed to net 55% in the second quarter of 2013, up from 31% in Q1, and the highest level recorded since 2005. This improving

ϐ expectations; net 59% expect to see revenues climb over the next 12 months, up from 46% in ͳǡ ͶͺΨ ϐ ǡ ͶʹΨ three months previously. :[YLUN[OLUPUN VM THYRL[Z By comparison, business optimism in China fell to just net 4% in Q2, down from 25% in Q1 and the lowest level since 2006 (when businesses ϐ ȌǤ ϐ revenues (down from net 72% in Q1 to 60% in ʹȌǡ ȋʹͻΨ ͳͷΨȌ ϐ ȋ͸ͻΨ ͶʹΨȌ ͳʹ Ǥ Ed Nusbaum, global CEO at Grant Thornton, commented: “The divergence in the data is relative in that China is coming off a big high and the US off a deep low. Ultimately global growth prospects would be best served by a strengthening of both markets but broader macroeconomic trends are feeding into business sentiment.”

In t he US, t he Federal Reserve recently suggested it could wind up its programme of quantitative easing by this time next year if the economy keeps improving. Meanwhile r ising house prices, increased construction starts and continuing strong stock market performance are helping to ϐ Ǥ “By contrast, China's economy is slowing. E xports grew by just 1% in May due to weakness in key markets such as the EU. And the new leadership appear eager to rein in credit growth with fears that a housing bubble is building. The downside of course is t hat t his reduces t he spending power

16 July - August 2013

GRANT THORNTON SURVEY

of businesses and consumers and the People’s Bank of China has since had to inject liquidity into its banking system last month to stave off a credit squeeze,” Ed added. <(, YL]LU\L L_WLJ[H[PVUZ YPZL Optimism has remained relatively consistent with Q1 2013 and has ranged f rom 88% to 86%.

Revenue expectations have increased a long w ith export expectations, which highlight a positive trend for t he region.

The IBR also highlighted that the UAE government is extremely supportive of business diversification and that predominately UAE based businesses would want to diversify into the technology and Hospitality a nd l eisure i ndustries.

The IBR also highlighted that the percentage of businesses investing in research and development has increased from 18% in Q1 to 32%. This could see the emergence of new products and ϐ the market, as research and development will promote innovation and therefore support in increasing revenue if researched, developed and implemented effectively.

Hisham Farouk, Managing Partner of Grant Thornton UAE commented, “Current trends in the United Arab Emirates makes this a great region for investment and opportunity. With t he IBR highlighting increases in import, export and research and development, it further supports the ambitious plans w ithin t he UAE.” “The UAE has increased international presence; which t ruly supports it being seen as t he central MENA business hub for t he world,” Hisham added. :[PT\S\Z YLMVYT The IBR highlights a positive increase in optimism for the USA in stark contrast to a slight decrease in one of the BRIC economies.

However, change in business environment coupled with new regulation can alter deter businesses in relation to optimism. We believe that w ith actionable advice, coupled w ith reason and instinct, dynamic businesses can remain optimism even through challenging times with advisors like Grant T hornton.

͹ ϐ in Q2 balanced out a slide in that of the BRIC economies. In the UK, business optimism

Hisham Farouk, Managing Partner Grant Thornton UAE: “Current trends in the UAE makes this a great region for investment and opportunity.”

While US businesses are feeling more confident about growth in their operations and the economy, optimism amongst peers in China has slumped to the lowest level. climbed f rom net -­‐1% in Q1 to 34% in Q2, whilst ϐ time in IBR history, rising to net 8% fuelled by the stimulus and reform measures of the new leadership, dubbed 'Abenomics'. ϐ however, sliding to net -­‐8% in Q2, down from -­‐2% three months previously. Mirroring China, business sentiment dropped in the other three BRIC economies, meaning G7 business optimism ȋ͵ʹΨȌ ȋʹ͵ΨȌ ʹ Ȃ ϐ Ǥ

17

WOMEN IN FINANCE

MARIAM AL RASASI “This is a time of change. More Emirati women are taking up positions on corporate boards, thanks to our Rulers who have facilitated the path for us,” Finance Director of DP World tells Joyce Njeri …

18 July - August 2013

WELCOME MOVE: The debate about having women on companies’ boards is hugely welcome.

However we should be careful and approach it in the perspective of merit and not be seen as a ‘token.’

WOMEN IN FINANCE

I

N HER office, overlooking the Sheikh Zayed Road at the Jebel Ali Free Zone in downtown Dubai, Mariam Al Rasasi offers me coffee as we settle down for this interview.

When I suggest that many Emirati women would dread to lead such a demanding, high profile finance role and would do anything to stay away, she retorts back quick in a flash: “This is a time of change. More women are taking up positions on major finance roles and on c orporate b oards, t hanks t o our R ulers w ho have f acilitated t he p ath f or u s.”

A US CPA-­‐qualified accountant, Mariam is the Finance Director of DP World, a conglomerate of international marine terminal operations, logistics and related services. The Group is a subsidiary of Dubai World, a global holding company that focuses on the strategic growth areas of transport, logistics, drydocks, maritime, i nvestment a nd f inancial s ervices.

Mariam is today one of the most powerful Emirati w omen i n f inance i n t he c ountry. S he graduated from the UAE University in the early 90’s and joined the telecommunication company -­‐ Etisalat -­‐ as trainee in the finance department. She worked her way through the ranks to head the department, after which she moved to DP World as the Finance Director i n 2 007.

Suitably self-­‐deprecating, yet straightforward, she offers a n e xclusive i nterview t o Accountant Middle East in a candid manner, and it is not hard to discern why, as head of finance of DP World, her outspoken mode naturally gives a certain weight to her decisions. Here are the excerpts f rom t he i nterview.

Women continue to aspire for leadership positions in all spheres of governance in both the government and private sector, however it has not been easy as many barriers still remain. women and leaving the board rooms of UAE organisations without the diversity of skills, talents a nd e xperiences.

The d ebate a bout h aving w omen o n c ompanies’ boards is hugely welcome. Past studies have shown overwhelming evidence that having women o n b oards, i n l eadership t eams i s g ood for business as it enriches decision making, enhances innovation and this will eventually make t he UAE m ore c ompetitive i n t he f uture.

However we s hould b e c areful a nd a pproach i t in the perspective of merit and not be seen as a ‘ token.’

Change is occurring, but it is slow and the UAE boasts many talented, qualified and experienced women seeking and waiting to serve on b oards. T here a re s ome organisations which have already started implementing His Highness’ directive, albeit on a smaller scale.

This may have some drawbacks as boards that have never had a female director may

GENDER BALANCE: Past studies have shown overwhelming evidence that having women on boards is good for business as it enriches decision making and enhances innovation.

Recently, His Highness Sheikh Mohammed bin Rashid Al Maktoum announced that his government has made a decision to make the representation of women in companies’ boards c ompulsory. A s t he F inance D irector of DP World what is your reaction to His Highness S heikh M aktoum’s decree?

I wasn’t surprised when I heard about His Highness’ decision. I think the decree was very timely. Statistics show that women graduates outnumber men by a ratio of two to one, and therefore we don’t want to risk wasting the talents of another generation of

19

WOMEN IN FINANCE

invariably appoint a lone female which may lead to feeling of isolation and a sense of being seen a s ‘a t oken’.

What can organisations do to prepare high-­ achieving women in their companies for senior r oles a nd b oard p ositions?

If a c ompany r eally w ants t o a ttract a nd r etain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board r eady”.

Achieving balanced boards requires a pipeline of women progressing through the ranks and therefore organisations need to develop a culture which recognises diverse talent and values different models of leadership.

Companies should make serious interventions by introducing a range of innovative and flexible work options f or women.

As I mentioned earlier, greater gender balance in boards can help companies improve their organisational performance and operating results, however, there are companies that still have policies that discourage women from rising to leadership positions. Therefore companies looking to achieve a greater gender balance need to make serious interventions by introducing a range of innovative and flexible work options for women and make themselves more female-­‐friendly in terms of work environment, workplace c ulture a nd b enefits.

How has women’s leadership roles evolved in the past couple of decades and what challenges r emain?

Historically, in the UAE, as is in many other countries, leadership has carried the notion

If a company really wants to attract and retain top female talent, it must make more effort in the area of professional development. For this to happen women need to be equipped with the skills and experience to make them “board ready”

20 July - August 2013

ATTRACTING TALENT: Companies should make serious interventions by introducing a range of JOOPWBUJWF BOE nFYJCMF work options for women.

of masculinity and the belief that men make better leaders than women is still common today. Women c ontinue t o a spire f or l eadership positions in all spheres of governance in both the government and private sector, however it has not been easy as many barriers still remain. These may be related to stereotypes, culture and cultural expectations, the choice and balance between work and family.

Traditional beliefs and cultural attitudes regarding the role and status of women in society are still prevalent. Therefore, gender quotas, affirmative action, mentorship programmes and financial assistance should be d eployed t o b oost w omen’s p articipation i n all s pheres o f w orkplaces.

What in your view, is important and should be done f urther i n order t o get women b etter represented on b oards?

It needs t o s tart w ith women t hemselves. Many common e xplanations f or w hy women don’t hold advanced positions within companies include reasons such as a lack of commitment, lack of ambition or leaving work to care for family.

We need to rise above this and demonstrate that we can juggle all these responsibilities. Of

WOMEN IN FINANCE

Women’s progression in the top ranks of companies is increasing although some barriers still remain, including the more insidious organisational culture, which maintains workplace inequalities through institutional practices. economy, I b elieve it i s v ital t hat we f ind a w ay of better allowing individuals to raise families and f ully p articipate i n t he workplace.

Is there any advice you can give to women who want to advance as leaders? Any key points t o focus on?

The earlier you start with clear career development plan the better for your future growth, you must define your strength and always work to improve on your weak areas.

Never stop exploring … and always maintain important professional networks.

course we all want to be able to have balance in our lives. We want to rise to the top, but we don’t w ant t o g ive up e very other c omponent of our l ives t o do it.

Serving on the boards of organisations can sometime b e hectic, owing t o c haracteristics such as excessive travel, working beyond contract hours among others. Do you think these facts act as an impediment to many women with the motivation and ambition to reach top-­level management positions? What in your opinion is the biggest hindrance or barriers to women’s progression to the highest echelons of the corporate world?

Women’s progression in the top ranks of companies i s i ncreasing a lthough s ome b arriers still remain, including the more insidious organisational culture, which maintains workplace inequalities through institutional practices. I f we a re t o move t he d ial i n t he r ight direction and increase the number of women in senior roles within our organisations, then these need to be revised. At the same time, women see balancing work and family as the biggest barrier. As a society and an advanced

In your opinion, w hat c an f acilitate t he p ath to t he t op of t he c orporation for women?

While it’s not a new thing in the UAE to have women serving on boards, more needs to be done in order to have Sheikh Mohammed’s decree f ollowed t o t he letter. F irst a nd f oremost, this w ill r equire a s ignificant shift i n c orporate culture and in the attitudes and behaviours of many t owards t he modern women.

People tend to over-­‐play the challenge of a quota system and under estimate the benefits of change that doing something different can bring. Gender representation offers benefits like improved board governance, brings together d irectors w ith d ifferent p erspectives, a deeper talent pool and a more engaged leadership t eam.

What do you enjoy most about serving on the B oard of DP World?

I enjoy b eing p art of very d ynamic t eam w here the learning never stops, we are continuously working t owards i mplementing new i nitiatives, devising fresh strategies and afterwards celebrating t hat f eeling of s atisfaction w hen we see our d reams c ome t rue.

21

WOMEN IN FINANCE

SHATTERING THE GLASS-CEILING “Don’t try too hard to be one of the boys,” Deloitte’s audit partner Cynthia Corby, advices women in finance and accounting careers…

CYNTHIA CORBY AUDIT PARTNER, DELOITTE ME

I 50%

REPRESENTATION OF WOMEN IN THE WORKFORCE IN DEVELOPED WORLD 22 July - August 2013

HAVE deliberately chosen the statement ‘Don’t try too hard to be one of the boys’, as it represents a key message in a recent Deloitte Survey of 15 Global Female Chief Financial Officers (CFO) conducted in January 2012 titled ‘The journey to CFO – perspectives from women leaders.’

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ǡ under-­‐represented in senior executive positions Ǥ

WOMEN IN FINANCE

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Ǥ Lord Mervyn Davies stated in his report titled, Ǯ ǯǡ ʹͲͳͳǢ ǡ ǡ ͹Ͳ ǯ ͳͲͲ Ǥ ǡ ͺ͹ǤͷΨ ͳʹǤͷΨ Ǥ

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Though attitudes vary from country to country and industry to industry, women continue to be under-­represented in senior executive positions and in the boardroom.

23

WOMEN IN FINANCE

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Rise in the non-traditional families: Women have started to actively contribute to household income.

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ϐ ʹͲͳʹǤ ͳͷ ǡ ϐ ǡ senior executives, Deloitte synthesised critical

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The UAE has seen a large percentage of women going to college for higher education averaging a rate of 65%, followed by 61% in Canada, and 58% in both the USA and United Kingdom.

24 July - August 2013

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CORPORATE TREASURY

BANKING ON THE AMCT

When Lourie Kruger moved into corporate treasury with Kingdom Hotel Investments, enrolling for the ACT’s core qualification was a ‘no-brainer’, he tells Sally Percy...

26 July - August 2013

TREASURE OF TREASURY Lourie Kruger - Vice President, Treasury and Mergers & Acquisitions at Kingdom Hotel Investments (KHI): “Treasury is an exciting space, especially in the emerging markets.”

CORPORATE TREASURY

L

OURIE KRUGER was already a successful banker with Standard Bank in South Afr ica when he switched to a career in treasur y

days).  So  he  researched  options  that  would  enable  him  to  brush  up  on  those  skills  and  he  settled  on  the  AMCT  diploma  following  discussions  with  Gordon  Drake,  KHIâ&#x20AC;&#x2122;s  CFO  and  a  former  treasurer.

in 2009.

After  joining  the  bank  as  a  graduate,  he  worked  his  way  through  the  ranks  until  he  and  a  colleague  founded  Standard  Bankâ&#x20AC;&#x2122;s  real  estate  investment  banking  division,  which  provided  debt  advisory  services  to  the  entire  Sub-­â&#x20AC;?Saharan  African  region.  But  Kruger  had  been  weighing  up  a  move  into  corporate  treasury  for  a  couple  of  years  before  he  was  approached  about  taking  on  a  group  treasurer  role  by  his  client,  Dubai-­â&#x20AC;?based  luxury  hotel  investment  group  Kingdom  Hotel  Investments  (KHI).  ;OL YPNO[ VWWVY[\UP[` Intrigued  by  the  possibility  of  seeing  â&#x20AC;&#x2DC;life  from  the  other  sideâ&#x20AC;&#x2122;  and  keen  to  apply  the  skills  and  experience  he  had  acquired  in  Africa  to  the  Middle  East,  Asia  and  Europe,  he  jumped  at  the  chance. â&#x20AC;&#x153;It  was  a  combination  of  the  right  time  and  the  right  Â&#x2018;Â&#x2019;Â&#x2019;Â&#x2018;Â&#x201D;Â&#x2013;Â&#x2014;Â?Â&#x2039;Â&#x2013;Â&#x203A;ÇĄÇł Â&#x201D;Â&#x2021;Ď?Â&#x17D;Â&#x2021;Â&#x2026;Â&#x2013;Â&#x2022; Â&#x201D;Â&#x2014;Â&#x2030;Â&#x2021;Â&#x201D;Ǥ â&#x20AC;&#x153;I  was  curious  about  the  way  corporates  were  looking  at  their  businesses,  managing  risk  and  allocating  capital.  Lots  of  bankers  have  a  morbid  fascination  with  whatâ&#x20AC;&#x2122;s  happening  on  the  other  side  of  the  table.â&#x20AC;?

Once  he  was  installed  in  KHIâ&#x20AC;&#x2122;s  treasury,  Kruger  was  amazed  by  the  scope  of  the  role  he  had  taken  on  compared  with  his  experience  in  banking.  â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s  the  sheer  breadth  of  what  a  treasurer  deals  with  on  a  day-­â&#x20AC;?to-­â&#x20AC;?day  basis,â&#x20AC;?  he  says.  â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve  never  heard  of  any  one  individual  who  looks  after  such  a  range  of  responsibilities  in  a  bank.â&#x20AC;?  He  continues:  â&#x20AC;&#x153;The  eye-­â&#x20AC;?opener  was  not  any  particular  issue,  it  was  the  fact  that  you  have  to  deal  with  all  of  them,  all  of  the  time.  You  think  that  if  you  come  from  a  banking  background,  you  would  be  able  to  sit  on  the  other  side  of  the  table,  but  there  Â&#x2122;Â&#x192;Â&#x2022; Â&#x2020;Â&#x2021;Ď?Â&#x2039;Â?Â&#x2039;Â&#x2013;Â&#x2021;Â&#x17D;Â&#x203A; Â&#x192; Â&#x2022;Â?Â&#x2039;Â&#x17D;Â&#x17D;Â&#x2022; Â&#x2030;Â&#x192;Â&#x2019;Ǥdz )Y\ZOPUN \W VU ZRPSSZ For  Kruger,  the  skills  gap  was  centred  on  tax,  Â&#x192;Â&#x2026;Â&#x2026;Â&#x2018;Â&#x2014;Â?Â&#x2013;Â&#x2039;Â?Â&#x2030; Â&#x192;Â?Â&#x2020; Â&#x17D;Â&#x2021;Â&#x192;Â&#x2020;Â&#x2039;Â?Â&#x2030; Â&#x2013;Â&#x160;Â&#x2021; Ď?Â&#x2039;Â?Â&#x192;Â?Â&#x2026;Â&#x2039;Â&#x192;Â&#x17D; Â&#x160;Â&#x2021;Â&#x2020;Â&#x2030;Â&#x2039;Â?Â&#x2030; Â&#x2018;Â&#x2C6; Â&#x192; group  (rather  than  hedging  on  a  transactional  basis,  an  activity  he  was  familiar  with  from  his  banking Â

Â&#x2018; Â&#x2C6;Â&#x192;Â&#x201D;ÇĄ Â&#x201D;Â&#x2014;Â&#x2030;Â&#x2021;Â&#x201D; Â&#x160;Â&#x192;Â&#x2022; Â&#x2C6;Â&#x2018;Â&#x2014;Â?Â&#x2020; Â&#x2013;Â&#x160;Â&#x2021; Â&#x2021;Â&#x201D;Â&#x2013;Â&#x2039;Ď?Â&#x2039;Â&#x2026;Â&#x192;Â&#x2013;Â&#x2021; Â&#x2039;Â?

International  Treasury  Management  (CertITM)  the  most  useful  module  of  the  AMCT,  which  is  the  ACTâ&#x20AC;&#x2122;s  Â&#x2026;Â&#x2018;Â&#x201D;Â&#x2021; Â&#x201C;Â&#x2014;Â&#x192;Â&#x17D;Â&#x2039;Ď?Â&#x2039;Â&#x2026;Â&#x192;Â&#x2013;Â&#x2039;Â&#x2018;Â?Ǥ â&#x20AC;&#x153;It  has  a  broad-­â&#x20AC;?based  approach  to  treasury,â&#x20AC;?  he  explains.  Dz Â&#x2013; Â&#x160;Â&#x192;Â&#x2022; Â&#x2030;Â&#x2018;Â&#x2013; Â&#x2030;Â&#x201D;Â&#x2021;Â&#x192;Â&#x2013; Â&#x2026;Â&#x2018;Â&#x201D;Â&#x2019;Â&#x2018;Â&#x201D;Â&#x192;Â&#x2013;Â&#x2021; Ď?Â&#x2039;Â?Â&#x192;Â?Â&#x2026;Â&#x2021; Â?Â&#x192;Â&#x2013;Â&#x2021;Â&#x201D;Â&#x2039;Â&#x192;Â&#x17D; Â&#x192;Â?Â&#x2020; Â&#x2DC;Â&#x2021;Â&#x201D;Â&#x203A; good  information  on  cross-­â&#x20AC;?border  cash  payments.â&#x20AC;?  Juggling  a  demanding  job  (Kruger  is  now  vice  president,  treasury  and  M&A  at  KHI)  with  studying  the  AMCT  is  challenging,  but  rewarding  at  the  same  time.  â&#x20AC;&#x153;As  with  all  things  that  require  a  change  in  how  you  structure  your  day  from  a  timing  point  of  view,  it  requires  a  little  discipline,â&#x20AC;?  says  Kruger.  â&#x20AC;&#x153;But  you  can  start  applying  your  knowledge  and  have  more  informed  conversations  almost  immediately.â&#x20AC;?  ,MĂ&#x201E;JPLU[ JHZO THUHNLTLU[ Kruger  has  put  his  AMCT  learning  into  practice  in  a  number  of  different  ways.  It  has  helped  him  to  set  up  teams  within  treasury  and  to  put  the  right  infrastructure  and  controls  in  place  to  allow  for  ǎÂ&#x2021;Â&#x2C6;Ď?Â&#x2039;Â&#x2026;Â&#x2039;Â&#x2021;Â?Â&#x2013; Â&#x203A;Â&#x2021;Â&#x2013; Â&#x2026;Â&#x2018;Â?Â&#x2013;Â&#x201D;Â&#x2018;Â&#x17D;Â&#x17D;Â&#x2021;Â&#x2020;ÇŻ Â&#x2026;Â&#x192;Â&#x2022;Â&#x160; Â?Â&#x192;Â?Â&#x192;Â&#x2030;Â&#x2021;Â?Â&#x2021;Â?Â&#x2013;Ǥ It  has  also  given  him  valuable  knowledge  on  structuring  businesses  so  that  they  are  tax-­â&#x20AC;? Â&#x2021;Â&#x2C6;Ď?Â&#x2039;Â&#x2026;Â&#x2039;Â&#x2021;Â?Â&#x2013; Â&#x2122;Â&#x160;Â&#x2039;Â&#x17D;Â&#x2021; Â&#x192;Â&#x201E;Â&#x17D;Â&#x2021; Â&#x2013;Â&#x2018; Â&#x2021;Â&#x2C6;Â&#x2C6;Â&#x2021;Â&#x2026;Â&#x2013;Â&#x2039;Â&#x2DC;Â&#x2021;Â&#x17D;Â&#x203A; Â&#x201D;Â&#x2021;Â&#x2019;Â&#x192;Â&#x2013;Â&#x201D;Â&#x2039;Â&#x192;Â&#x2013;Â&#x2021; Â&#x2C6;Â&#x2014;Â?Â&#x2020;Â&#x2022; back  to  the  centre.  This  is  critical  for  KHI  since  it  actively  manages  its  cash  across  a  number  of  different  jurisdictions  to  optimise  its  balance  sheet  throughout  the  world.  There  is  a  big  opportunity  cost  to  treasurers  Â&#x2122;Â&#x160;Â&#x2018; Â&#x2026;Â&#x160;Â&#x2018;Â&#x2018;Â&#x2022;Â&#x2021; Â?Â&#x2018;Â&#x2013; Â&#x2013;Â&#x2018; Â&#x2020;Â&#x2018; Â&#x2013;Â&#x160;Â&#x2021; Â&#x201C;Â&#x2014;Â&#x192;Â&#x17D;Â&#x2039;Ď?Â&#x2039;Â&#x2026;Â&#x192;Â&#x2013;Â&#x2039;Â&#x2018;Â?ÇĄ observes  K ruger. Â

â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve had the benefit of having some great bosses. My mentor on my graduate programme said: â&#x20AC;&#x2DC;This is your career and you need to take ownership. If you want something to happen, you need to make it happen yourself.â&#x20AC;&#x2122;â&#x20AC;?

27

CORPORATE TREASURY

“Ambitious treasurers should think about moving into a chief investment officer role, rather than a CFO role, because it aligns slightly better with their skills and doesn’t burden them with the administrative tasks that CFOs have to manage.”

“Think of the amount of time it will take you to get to the same level of knowledge by doing it on the job and the potential risk that something might go wrong during that period. I think it’s a no-­‐brainer.”

He values the fact that the ACT is a chartered body and appreciates how well regarded its diplomas are.

“There is a high level of recognition of these ϐ ǡ build their own brand.”

Besides equipping him with valuable skills, Kruger t hinks t he A MCT shows t hat he is serious about a c areer in t reasury, despite coming f rom a banking background.

“It takes quite a bit of work to get those letters after your name,” he points out. Dz

ϐ challenges that I deal with on a day-­‐to-­‐day basis much more rewarding than where I was. Treasury is an exciting space, especially in the emerging markets.”

6WWVY[\UP[PLZ MVY [YLHZ\YLYZ Although treasury as a business function is still a relatively new concept in the emerging markets, companies are “waking up to the fact that they need treasury skills”, according to Kruger.

This, in turn, will open up lots of opportunities for treasurers. He himself is proud of being part of a ‘world-­‐class’ treasury team that works across different jurisdictions and has done a number of highly structured transactions in various exotic locations, such as Morocco and the Philippines.

He is also very excited about working in Dubai.

“Dubai has done a fantastic job in terms of ϐ the Middle East and a gateway for investment funds

28 July - August 2013

CORPORATE TREASURY

and business into Africa and Asia,” he says.

VALUE-ADD Kruger values the fact that the ACT is a chartered body and appreciates how well regarded its diplomas are. “There is a high level of recognition of UIFTF RVBMJmDBUJPOT JO UIF market, which helps them to build their own brand.”

Dz ϐ professionals and treasury professionals, in particular, is very good and it is getting better.”

In addition, he notes that Dubai is a great base for travelling, which is his passion outside of work. ( JVUZ[Y\J[P]L JVU]LYZH[PVU Although Kruger loves the diversity of being a corporate treasurer and has no plans to return to the banking world, his background is nevertheless an advantage in his new career. Dz ϐ looks at, judges and prices risk, whether that’s risk in a company or in an investment,” he explains.

“As that cuts across almost everything that a ǡ ϐ constructive conversation between treasury and t he bank.”

For the same reason, Kruger believes that ϐ ϐ the issues t heir clients f ace.

“Bankers are always being driven to become more client-­‐centric, and treasury is the touchpoint between corporates and banks,” he observes.

“It can only help bankers to understand how treasurers view the world. I almost think it should be mandatory.”

ACT Middle East Annual Conference 2013 26-­27 November 2013 |The Ritz-­Carlton, DIFC, Dubai

The ACT is delighted to announce the dates of the next Middle East annual Ǥ ǡ ϐ builds upon the series of events we run across the GCC, providing the ǯ ϐ and promote treasury best practice.

Look out for the preview programme in May. For a glimpse of what to expect from this year’s annual conference take a look at the 2012 conference overview here: w ww.actmiddleeast.org/annualconference.

Special rates are available for all Accountant Middle East readers. To submit your interest in sponsoring, exhibiting, attending or speaking at this year’s ACT Middle East Annual, simply visit the website: w ww.actmiddleast.org/ annualconference2013 or email actme@treasurers.org.

29

INTERNAL AUDIT

OF ‘BIG HAMMOURS’ AND AUDIT POWER PLAY

Joyce Njeri tries to decipher audit jargon as President of UAE’s IIA Abdulqader Obaid Ali - uses fish analogy to address serious concerns affecting Internal Audit practice...

Y

OU MAY know hammour as that delicious grouper fish that belongs to the sea bass family.

Whether it’s boiled, smoked or fried, hammour has become probably the most popular saltwater food fish in the Middle East, but at a recent Internal Audit event, the delicacy got a new meaning a ltogether.

In his characteristic style of address where he habitually captures the audience with his unique, interactive, simplistic yet most logical manner to drive the idea home, Abdulqader Obaid Ali laid bare the malaise that ails the modern I nternal Audit f unction, p articularly i n the r egion. *VYWVYH[L NV]LYUHUJL During t he a nnual c onference i n D oha organised by t he Qatari C hapter of t he I nstitute of I nternal Audit (IIA), Abdulqader, who is the current

30 July - August 2013

INTERNAL AUDIT

President of the UAE’s IIA, tackled the issue of how Internal Audit can support management with r egards t o building a nd m aintaining g ood corporate governance practices.

For the entire morning duration, speaker after speaker bombarded the delegates inside the auditorium with mind-­‐numbing technical lectures that sometime tended to get unexciting. But when Abdulqader arose to speak, he veered off the norm as he swiftly attached a wireless microphone on his snow-­‐white kandura and proceeded down the staircase, where he roamed the f loor of the auditorium to ‘interact’ with the seated audience, rather than formally addressing them f rom r aised platform. He d id not h ide h is loathing of ‘ Powerpoint’ s tyle of presenting.

With a perceptible smile and a blade of satire that he meticulously combined to send his message across, Abdulqader lit up the faces of the audience with his ‘hammour’ analogy, which he used to describe the different relationships that e xist i n m any organisations, emphasizing t hat I nternal Audit f unction needs a c omplete overhaul.

7SH` TPUVY YVSL The President has the sly faculty of making himself clearly understood. His thoughts are strong and powerfully joined together.

His style of speech is mostly rhetorical, but precisely logical.

So, with hands thrust behind his back, he opened up the discussion in a splendid rhetorical s tyle.

“Are auditors a p art of t he organisation or apart of t he organisation?” he bluntly a sked.

“It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region.

Corporate governance is seen largely as the province of the ‘big hammours’,” he sent the crowd rolling with laughter, while referring to senior m anagement.

“Good governance i s a journey t hat begins w ith a broad, organisational perspective. W hile boards ǡ ϐ senior leadership are often driving the course, this narrow view can restrict improvements to the corporate governance process.”

“Internal auditors should not be v iewed a s ‘small hammours’, as business leaders expect them to play a more strategic – rather than merely tactical – r ole i n t he governance process.”

0TWHJ[ VU I\ZPULZZ Abdulqader cited recent regulations, including an emphasis on anti-­‐fraud and whistle-­‐blower provisions and the potential impact on the business market, which have compelled auditors to take a more active role in c orporate g overnance.

“We have a long way to go, but making steady progress requires committed senior leadership, integrated planning, coordinated execution a nd c onstant monitoring by b oth t he ‘big a nd s mall h ammours’.”

Every point he t ouched upon w as r eceived w ith a thunderous applause of approval. It w as r eplete with good humour, sound r easoning a nd s poken with t hat perfect command of t he l anguage t hat is, matter of factly, not so eminently common among most orators i n t his r egion.

“Investment decisions usually come from top management. Internal audit support is critical

It is unfortunate that the internal audit function continues to play only a minor role in many organisations in the Middle East region.

31

INTERNAL AUDIT

President of UAEâ&#x20AC;&#x2122;s Institute of Internal Audit - Abdulqader Obaid Ali addresses delegates in Doha, during the annual conference organised by the Qatari Chapter of the IIA.

for  successful  implementation,  especially  for  a  project  that  requires  a  large  budget  and  affects  operational  processes.  A ll  t hese  levels  t hat  m ake  up  t he  organisation  need  t o  work  for  t he  overall  success  of  the  business,  otherwise  the  result  would  be  a  situation  thatâ&#x20AC;&#x2122;s  akin  to  â&#x20AC;&#x2DC;a  surgeon  who  did  a  successful  surgery,  but  the  patient  died,â&#x20AC;&#x2122;â&#x20AC;?  he  s aid  t o  t he  a musement  of  t he  audience. Â

use  of  technology  to  improve  the  quality  and  efficiency  of  its  a ssurance  a nd  c onsulting  work. Â

â&#x20AC;&#x153;The  r ewards  of  i mproved  c orporate  governance  encompass  more  than  a  greater  sense  of  organisational  accomplishment,â&#x20AC;?  he  added. Â

*\S[\YL VM ^HZ[H Addressing  the  contentious  ethical  issues  presented  by  â&#x20AC;&#x2DC;wastaâ&#x20AC;&#x2122;,  Abdulkader  rebuked  the  â&#x20AC;&#x2DC;wicked  habitâ&#x20AC;&#x2122;  based  on  cronyism,  favouritism,  and  nepotism  in  the  hiring  process,  urging  business  leaders  to  recruit  the  right,  competent  and  ethical  people. Â

0TWYV]L YPZR THUHNLTLU[ With  hand  gestures,  eyes  flashing  and  occasional  foot-­â&#x20AC;?thumping,  the  President  used  every  b ody  movement  t o  e xpress  h is  ideas.  He  observed  that  increased  regulatory  scrutiny  as  well  as  directives  from  executives  to  strengthen  controls  and  improve  risk  management,  has  made  the  internal  auditâ&#x20AC;&#x2122;s  responsibilities  grow  exponentially  in  the  recent  years.  Speaking  about  usage  of  Information  Technology,  Abdulqader  bemoaned  the  failure  of  internal  audit  departments  to  make  good Â

The rewards of improved corporate governance encompass more than a greater sense of organisational accomplishment.

32 July - August 2013

â&#x20AC;&#x153;While  we  now  have  audit  software  tools  available,  auditors  are  still  using  archaic  and  traditional  ways  of  doing  work,â&#x20AC;?  he  quipped,  adding,  â&#x20AC;&#x153;They  need  to  catch  up  with  the  rest  of  the  world  by  integrating  technology  in  t heir  audit  process.â&#x20AC;? Â

â&#x20AC;&#x153;We  need  t o  k ill  t he  c ulture  of  w asta!â&#x20AC;?  he  shot.  â&#x20AC;&#x2DC;Wastaâ&#x20AC;&#x2122;  is  an  Arabic  term  widely  used  in  the  region  to  describe  the  unprofessional  practice  of  giving  preferential  treatment  to  relatives  and  f riends  i n  employment.  â&#x20AC;&#x153;Nepotism,  cronyism  and  favouritism  have  the  greatest  negative  effect  on  the  overall  performance  of  t he  organisation.  A s  leaders,  we  have  the  obligation  to  recruit  professionals  on  merit,â&#x20AC;?  he  s aid.  As  he  c ontinued  w ith  h is  address,  t he  auditorium  grew  warmer  and  at  this  time  people  started  raising  hands  to  ask  questions  and  the  venue  almost  became  an  open  house.  Abdulqader  spoke  nearly  30  m inutes,  t he  a llocated  t ime,  but  it  was  obvious  from  the  crowdâ&#x20AC;&#x2122;s  reaction  that  many  w anted  h im  t o  c ontinue. Â

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INSURANCE MATTERS

CHARTING THE ROAD TO MASS MARKETS New Deloitte report examines emerging regulatory and practice challenges faced by the Takaful industry...

K

EY FIGUREHEADS from the Islamic finance industry from across the world were brought together recently for the second year, at an executive roundtable in Bahrain hosted by Deloitte Middle East’s Islamic Finance Knowledge Center. The event was supported by the Bahrain Economic Development Board.

The roundtable was held following the release of t he new Takaful r eport by D eloitte t itled: ‘ The global Takaful insurance market: charting the road to mass markets’. The report studies the emerging regulatory and practice challenges that will impact the Takaful industry, as well as assesses the business structures and strategies, market developments and growth trends g lobally.

$20Bn

WORTH OF GLOBAL TAKAFUL BUSINESS BY THE YEAR 2017 34 July - August 2013

During t he event, Deloitte experts were joined by national regulators, and executive Islamic bankers to discuss the report and focus on the regulatory ϐ Middle East Takaful market as well as identifying potential business strategies in the region.

-\[\YL VM ;HRHM\S Latest industry data estimates that the global Takaful business w ill r each $20 billion by 2017.

Latest industry data estimates that the global Takaful business will reach $20 billion by 2017, with the GCC market contributing more than 62% of the gross Takaful premiums globally.

The G CC m arket c ontributes more t han 62% of the gross Takaful premiums globally and, led

by Saudi Arabia, maintained the largest share of c ontributions, g rowing a f urther 17% t o $5.7 billion during 2010.

Ten key challenges were identified that would significantly impact the future of the Takaful industry. These are grouped into five industry disciplines w hich a re: i) Governance and regulatory compliance: the report f inds t hat more c onsistency of r egulatory frameworks is needed, and optimising capital adequacy through consolidation will achieve growth a nd s ound c orporate s tructures. ii) Risk management and internal controls: Making r isk-­‐based b usiness a p riority, u nified with Takaful operators’ strategic planning, and improving risk and Sharia’ disclosures and g overnance.

INSURANCE MATTERS

It highlights that it is not sufficient for these challenges to be addressed or implemented without the commitment and support of boards and executives of Takaful firms who should enhance their risk management governance a nd c ontrols p rocesses.

The report proposes that the impetus of an enterprise-­‐wide risk strategy should not be overlooked, and support and oversight from boards i s a k ey d river f or t he i mplementation of an effective risk-­‐based business in the Takaful s ector. >PKLY UPJOL THYRL[Z During t he roundt able, Dr Hat im El Tahir, Direc tor of t he Islamic Finance K nowledge Center of Deloit te Middle East , noted t hat: ‘Heightened focus on governance, f iduciar y responsibilit y, risk management a nd a ccount abilit y a re d irec t consequences of t he global f inancial crisis and w ill likely present Tak af ul w it h challeng ing prac t ice and reg ulator y issues during t he nex t f ive years’.

In the Deloitte Middle East event, and under a specialised session on generating growth in the Takaful sector in the Middle East North Africa and South East Asia regions, presentations and discussions focused on the need f or new business models t o accommodate for w ider n iche m arkets, a s well a s r egulatory, risk a nd sharia’ c ompliance i ssues. iii) Operational and Business Excellence: There is a need for new business models to accommodate wider niche markets and improved technology capabilities to achieve cost efficiency a nd productivity. iv) Product governance and strategy: Improving product governance and product development processes, and placing emphasis on t arget m arkets, s ales a nd d istribution. v) Capacity building: talent and leadership development: Switching emphasis to internal development to build specialised knowledge and refocusing on competency-­‐based training and leadership programmes.

Deloitte’s report shows that the key to maximising i ndustry potential l ies i n addressing challenges and issues that will better position the i ndustry t o r each m ass m arkets a nd achieve organic g rowth a nd development.

A second session put forth a ‘Forward Plan’ where the main issues discussed were impediments to growth, as well as an analysis on the target market, and sales and distribution channels needed to achieve growth a nd profitability.

More than 40 participants from GCC countries and Malaysia attended Deloitte Middle East’s Islamic Finance Knowledge Center event in Bahrain, during which 10 guest I slamic F inance s peakers s hared t heir expertise and thoughts on the future of the Takaful m arket.

“The deliberations and discussions emphasised the imperative need for a continuous ‘knowledge-­‐sharing’ and intellectual dialogues between industry stakeholders, t o s trengthen b est p ractices i n the Takaful l andscape” a dded D r E l-­‐Tahir.

35

MOVERS & SHAKERS

BARRY SALZBERG How did a working-class kid from a poor borough of New York City rise to become the Global CEO of Deloitte?

SHANE PHILLIPS MANAGING DIRECTOR, SHANE PHILLIPS CONSULTANTS

Barry Salzberg, Deloitte’s Global Chief &YFDVUJWF 0GmDFS

36 July - August 2013

MOVERS & SHAKERS

W

ITH HIS easy-­going manner and affable Brooklyn accent, Deloitte’s Global Chief Executive Officer Barry Salzberg immediately effuses friendliness, confidence and competency.

When not running one of the ‘Big Four’ professional service firms in the world, Salzberg sits as Chairman of the Board of the non-­‐profit volunteer organisation -­‐ United Way Worldwide -­‐ and he also holds the same position a t C ollege Summit, a non-­‐profit entity geared towards helping underprivileged students b ecome c ollege-­‐bound.

So how did a working-­‐class kid from a poor borough of New York City rise to become t he leader of a multi-­‐billion dollar worldwide company?

In an exclusive interview with Accountant Middle East, Salzberg gives us an insight into his background, his rapid ascension of the corporate ladder, and offers sound advice for anyone w ho w ishes t o do t he s ame. )S\L JVSSHY ILNPUUPUNZ Born into a large, working-­‐class family in Brooklyn, Barry Salzberg grew up in the dense, d iverse environment t hat New York C ity

furnishes. His parents both worked as clerks, and he a nd h is older s ister were t he f irst i n h is family t o g o t o u niversity.

Like many young people, Salzberg did not know exactly what his long-­‐term career path would be; he even considered becoming a math teacher since that was his best subject in school. It was already halfway through his undergraduate studies when he decided to declare h is m ajor i n accounting.

After graduating, Salzberg was hired in 1977 at Haskins & Sells (later incorporated into Deloitte) in Manhattan where he immediately felt like he’d “entered another world.” In this new a nd busy a tmosphere he e xperienced w hat he calls “a real culture shock.” He describes that office as a “fancy formal place. So formal you’d get a mild reprimand if you were caught in t he h allway w ithout your jacket on.”

At first, it was almost too much for him, and he knew most people in the firm saw him as a young man likely to leave soon. This was a belief he also held, but for only a brief time.

While his childhood in rough Brooklyn may not have given him the polish and schmoozing skills needed in upscale Manhattan, it did instill within him an invaluable trait that he

37

MOVERS & SHAKERS

continues  to  use:  the  ability  to  adapt.  He  cites  his  upbringing  as  one  of  the  primary  reasons  he  i s  s o  f lexible  i n  c hanging  s ituations  a nd  new  environments.

WORD OF ADVICE: â&#x20AC;&#x153;I guide my leadership style by the mantra of UIF AmWF 1T 1SPQFS 1MBOOJOH 1SFWFOUT 1PPS 1FSGPSNBODF w

,TIYHJPUN JOHUNL â&#x20AC;&#x153;I  adapted  so  well  t hat  even  when  I  had  an  at t rac t ive  of fer  to  leave  t he  US  member  f irm  when  I  was  on  t he  cusp  of  becoming  par t ner,  I  t urned  it  dow n.  I  k new  t hat  Deloit te,  w it h  it s  size,  scope,  and  cult ure,  of fered  me  unique  oppor t unit ies  to  work  w it h  a  diverse  mi x  of  g reat  people  and  cont inuously  learn  and  prog ress  my  career.  A nd  it  was  t he  right  choice.â&#x20AC;?

This  skill  has  served  Salzberg  over  the  years  and  in  a  surprisingly  short  amount  of  time  â&#x20AC;&#x201C;  eight  years  â&#x20AC;&#x201C;  Salzberg  rose  from  being  a  Certified  Public  Accountant  fresh  out  of  university  to  becoming  a  partner  at  Deloitte.  From  there  he  quickly  ascended  the  corporate  ladder  t o  s enior  leadership  r oles.  When  asked  how  he  managed  to  advance  so  quickly  through  the  ranks,  Salzberg  first  credits  his  major  supporter,  his  wife,  Evelyn:  â&#x20AC;&#x153;From  t he  v ery  b eginning,  [she]  i nspired  m e  t o  dream  big,  rather  than  simply  take  a  job  that  was  comfortable.  She  said,  â&#x20AC;&#x2DC;You're  smart  and  you  can  do  more  with  your  career.â&#x20AC;&#x2122;  And  she  was  r ight.â&#x20AC;?

He  outlines  some  strategies  that  he  says  can  work  for  anyone  wanting  to  move  up  in  a  company,  r egardless  of  h is  or  her  i ndustry: â&#x20AC;&#x153;First,  m ake  s ure  youâ&#x20AC;&#x2122;re  a lways  t hinking  a bout  whatâ&#x20AC;&#x2122;s  r ight  a nd  never  lose  s ight  of  your  morals  and  ethics  in  your  work.  They  should  be  the  foundation  of  e very  decision  you  m ake.  S econd,  donâ&#x20AC;&#x2122;t  b e  a fraid  t o  voice  your  opinion.  E veryone  can  lead,  regardless  of  position.  You  shouldnâ&#x20AC;&#x2122;t  wait  for  an  invitation.  People  take  notice  of  those  w ho  a re  w illing  t o  s tep  up,  a nd  t his  i s  one  of  t he  t hings  I  look  f or  i n  a  s trong  leader.  T hird  and  finally,  hard  work  and  determination  can  take  you  a  long  w ay.â&#x20AC;?

Pertaining  to  his  second  point,  Salzberg  stresses  the  importance  of  making  a  name  for  yourself,  for  creating  a  brand:  â&#x20AC;&#x153;You  canâ&#x20AC;&#x2122;t  advance  if  people  donâ&#x20AC;&#x2122;t  know  who  you  are  and  how  you  add  value.  Itâ&#x20AC;&#x2122;s  critical  to  establish  yourself  as  a  specialist  in  a  certain  area,  to  become  k nown  f or  s omething.â&#x20AC;?

38 July - August 2013

Like many young people, Salzberg did not know exactly what his long-­term career path would be; he even considered becoming a math teacher since that was his best subject in school.

MOVERS & SHAKERS

;OL WV^LY VM TLU[VYZ No m an i s a n i sland, nor s hould he e ven t ry t o b e one. Salzberg recognises his early mentors for giving him the advice and guidance he needed to get his start. Halfway through his thirty-­‐ four year (and counting) career at Deloitte, Salzberg was heading the Tax department and bringing in the highest ratings each year.

Instead of letting him rest on his laurels, Salzberg’s mentor, Bill Parrett, a former DTTL Global C EO, c aught h im one d ay a nd t old h im he needed t o c hallenge h imself f or g reater t hings.

Salzberg recalls; “He saw real leadership potential in me, but to reach that new level he said I needed to broaden my experience. Bill gave me much more than just the push I needed, he demonstrated something priceless—faith in me.”

This career-­‐changing incident never left Salzberg’s mind and he continues to underscore the value of mentors and of mentoring in both his company and in his philanthropic w ork t oday. He s ays a m entor “ is many t hings: a t rusted a lly, a s ympathetic e ar, an advisor, and sometimes an advocate” and the m entoring p rocess i s “ the i nvisible g lue o f our culture, and it explains why I’ve always put a lot of energy into mentoring—even now as G lobal C EO. B oth a s a m entor a nd a m entee, these r elationships h ave b een a mong t he m ost rewarding o f m y c areer.” :WLJPMPJ HK]PJL MVY H NVVK JVTWHU` When m aking decisions w ithin h is business or anything i n h is l ife, B arry S alzberg looks a t t he big picture first, the global view. Ref lecting this large-­‐scope perspective, he emphasises the importance of not becoming “siloed” in one department or another, but rather in cultivating “the ability to think across businesses a nd t o b e business-­‐savvy broadly.”

He says that to be successful in a service industry, a person must acknowledge that good people skills are mandatory. In his own words; “It’s very important when you are in a people business, as we are, that your values are very much a ligned w ith a p eople business.”

When asked at a recent university panel what excellent client service consists of, Salzberg quickly named four qualities: responsiveness, industry knowledge, understanding and perspective of the client’s business activity, and having the right team. He noted the

"Standing out from the crowd and making yourself invaluable to the company presents a challenge to new employees, but it is not something that should be disregarded." primary focus should be responsiveness, as it ranks at the very top of client surveys as the most important differentiating factor in service providers.

Salzberg said, “Being responsive, (not just answering the phone when client calls) means being proactive, thinking about [the client’s] business, a nticipating t heir needs, a nd g etting out i n f ront of i t b efore t hey a sk.”

Of industry knowledge, Salzberg says an employee needs t o u nderstand t he i ndustry t he client is in and share with them benchmarks and b est practices.

On his third point, having an understanding and p erspective of t he c lient’s business activity, he explains this as taking into consideration the client’s operational needs and internal organisational needs. F inally, S alzberg s tresses the importance of having the right team, meaning that the best client service providers are t he ones w ho h ave e xperts i n s pecific a reas and who, upon spotting a new need, will find someone t o d irectly address t hat demand. ,TIYHJPUN KP]LYZP[` For the up-­‐and-­‐coming executive in any industry, t he E xecutive offers t his a dvice; “I’ve joked that when I started at Haskins & Sells as a CPA, I was so green that I was ‘more likely to be making copies than making partner.’ But by my second year, I found my stride and started to rise through the ranks.

My passion for my work and my dedication to my c lients p aid off.”

Salzberg’s advice for ambitious executives centres around his main tenets of embracing diversity, adapting to change and new environments, and championing new ways of thinking. He states that one must “encourage innovation and creative thinking. Consider what you can do to foster a culture where

39

MOVERS & SHAKERS

STANDING OUT: i1FPQMF UBLF OPUJDF PG those who are willing to step up, and this is one of UIF UIJOHT * MPPL GPS JO B TUSPOH MFBEFS w

â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s important to brand yourself. Make sure people know who you are. Be honest. Donâ&#x20AC;&#x2122;t be who you think people want you to be. Be yourself. Be unique.â&#x20AC;? itâ&#x20AC;&#x2122;s  acceptable  to  try  something  new  and  fail,  because  thinking  big  and  thinking  outside  the  box  w ill  e ventually  p ay  off.â&#x20AC;?

Leading  a  t eam  e fficiently  a nd  e ffectively  i s  k ey  to  a  successful  company  and  career.  Salzberg  once  again  highlights  the  strength  of  mentors  as  well  a s  g ood  leadership  s kills:  â&#x20AC;&#x153;Make  sure  youâ&#x20AC;&#x2122;re  investing  in  and  developing  your  p eople.  Never  s olve  a  problem  f or  s omeone  on  your  team  or  project.  Instead  help  them  assess,  a nalyse,  a nd  c ome  t o  a  s olution  on  t heir  own.  Provide  insights  and  observations,  and  prompt  them  by  asking  questions  rather  than  giving  t hem  t he  a nswer.  T his  i s  my  approach  t o  mentoring,  a nd  t o  projects  presented  t o  me  f or  final  approval  t hat  don't  meet  my  s tandards.â&#x20AC;?

Standing  out  from  the  crowd  and  making  yourself  invaluable  to  the  company  presents  a  challenge  to  new  employees,  but  it  is  not Â

40 July - August 2013

something  t hat  should  b e  d isregarded.  S alzberg  directly  declares  that  â&#x20AC;&#x153;itâ&#x20AC;&#x2122;s  important  to  brand  yourself.  Make  sure  people  know  who  you  are.  Be  honest.  D onâ&#x20AC;&#x2122;t  b e  w ho  you  t hink  p eople  w ant  you  t o  b e.  B e  yourself.  B e  u nique.â&#x20AC;?  ;OL JY\JPHS MP]L Âş7ZÂť His  next  piece  of  a dvice  r ings  t rue  e specially  i n  light  of  the  recent  global  economic  crisis,  and  that  i s  one  of  preparedness.  He  s ays,  â&#x20AC;&#x153;Always  b e  prepared.  It  s ounds  s imple,  but  it  really  pays  off.  I  attended  a  training  programme  early  in  my  career  at  Deloitte,  and  the  partner  teaching  the  class  told  us  about  the  five  Pâ&#x20AC;&#x2122;s:  Proper  planning  prevents  poor  performance.  I  guide  my  leadership  style  by  the  f ive  P â&#x20AC;&#x2122;s.  You  h ave  t o  b e  prepared.â&#x20AC;?  Finally,  as  his  last  edict  for  success,  Salzberg  ties  many  of  his  ideas  together  in  describing  the  significance  of  becoming  a  knowledgeable  and  f lexible  leader  i n  your  f ield:  â&#x20AC;&#x153;Push  yourself  out  of  your  comfort  zone.  Leaders  can  take  multiple  paths.  The  more  experienced  you  are,  and  the  more  diverse  experiences  y ouâ&#x20AC;&#x2122;ve  h ad,  t he  b etter  o ff  y ou  w ill  be  in  terms  of  leadership  roles.  Itâ&#x20AC;&#x2122;s  okay  to  be  uncomfortable.  Donâ&#x20AC;&#x2122;t  resist  change.  Donâ&#x20AC;&#x2122;t  resist  a  different  role  or  a  different  way  of  looking  a t  t hings.â&#x20AC;? Â

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SPOTLIGHT ON QATAR

DRIVING FORCE: Board members of the Institute of Internal AuditQatar Chapter pose for a photo during the IIA’s recent annual conference held in Doha. The topic of the event was on ‘The value of an effective Internal Audit function’.

A PLAYER IN TRANSITION Putting its immense wealth into good use, Qatar is attracting attention on the world stage for all the right reasons. Joyce Njeri recently toured the country on the invitation of the IIA-Qatar Chapter, where she got first-hand insight of how the internal audit function is furthering its cause alongside the economic growth of the tiny modern Gulf nation. Here are the excerpts of the interview carried out with some board members of the association…

42 July - August 2013

Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy. As the Institute of Internal Auditors work towards increasing its influence over public policy, how is the body responding to this growth by building a risk framework in the country?

T h e I I A c a n n o t d i r e c t l y ϐ ǡ

ǡ

Ǥ

A.

Qatar relies heavily on expatriate labour.

Human capital is intense, and many companies are feeling the pressure to up their talent management game. A particularly thorny, long-­ term threat to many companies has become ϐ ǡ key skills are in high demand and short supply.

increased t alent and labour risks?

SPOTLIGHT ON QATAR

ǡ Ǥ ϐ Ǥ ǡ

ǡ Ǥ ǡ

ǡ

Ǥ

Ǥ ǡ ǡ

Ǥ

ǯ

Ǥ

Qatar has become the most competitive economy in the Middle East. The World Economic Forum’s Global Competitiveness Report for 2011-­2012 placed the nation 14th, overtaking other countries in the region including the UAE, Bahrain and Kuwait.

Ǥ Failure to manage risk in organisations Ǥ ǡ

important? ǡ Ǥ

Ǧ

GEARING UP: Following Qatar’s successful bid to host the 2022 FIFA World Cup, the Gulf nation is on the verge of an economic revolution. This means a great amount of organisational risks ahead for internal auditors.

43

SPOTLIGHT ON QATAR

As auditors, we sometimes focus too much on the downside of risk and lose sight of opportunities.We are too concerned about maintaining ‘independence’ and are therefore incapacitated to advise management on the opportunities on the horizon.

Ǥ ϐ ϐ ǡ ǡ Ǥ opinion, should the internal audit function evolve to better serve the needs of companies Ǧ ϐ ǫ Qatar is enjoying a period of unparalleled prosperity, with exceptional progress being evident in almost all sectors of the economy.

44 July - August 2013

Ǥ Ǥ

ȋ ȌǤ

Ǥ ȋ Ȍ Ǥ

Ǥ ̵ ǡ Ǥ ǡ

Ǥ ǡ

ϐ ϐ Ǥ ǡ

ǯ Ǥ

ǡ ϐ Ǥ

SPOTLIGHT ON QATAR

According to a recent report authored by ǡ

ʹͲͳͷ more be determined by its ‘impact’ on the Ǥ skill the internal auditor should focus more on in the future? On the same note, do you think it’s necessary for internal auditors to ϐ ǫ ǡ Ǥ ǡ Ǥ

Ǥ

ϐ ǡ Ǥ ǡ

Ǥ ϐ Ǧ ǡ ǡ Ǧ Ǥ The impact of business failures and

Ǥ

Ǧ ǯ governance environment?

Ǧ

Ǥ ǡ

̵ ǡ

Ǥ

Ǥ ǡ

auditors should be looking at?

ϐ ǡ Ǥ

ǡ

ǡ Ǥ

ȋ ǡ Ȍ

Ǥ

Ǧ Ǥ ǡ Ǧ Ǥ

Qatar has become the most competitive economy in the Middle East. The World ǯ

Report f or 2011-­2012 p laced t he n ation 14th, overtaking other countries in the region ǡ Ǥ ǡ see the biggest opportunity for internal audit t o a dd v alue t o o rganisations?

ǡ

internal audit and other assurance providers, such as quality and external auditors?

Chris Adonis, Chairman IIA Qatar: “The IIA-Qatar is equipping members to assist their management and boards of directors, or the owners of family enterprises to ensure risk management is considered as part of the business plan and corporate governance.

45

SPOTLIGHT ON QATAR

ǡ ϐ ʹͲͲͺǦʹͲͳͲǤ ϐ impacts t he recession has had on t he practice of internal auditing? ǡ ǡ Ǥ

Ǥ ǡ ǡ Ǥ

Ǥ

ǡ unrealised opportunities for internal audit?

Hassan Al Mulla, President - IIA Qatar: “The IIA-Qatar provides seminars and training programmes on a regular basis to ensure the governance concepts are well understood by its members.”

Ǥ

Ǥ Ǧ Ǥ ϐ Ǥ came the recession and tough regulatory Ǥ organisations' changing needs, particularly ϐ ǫ

ǡ ǯ Ǥ

Ǥ

Ǥ ǡ ǡ Ǥ ϐ ǡ

Ǥ

46 July - August 2013

ǡ

Ǥ

Ǥ Ǯ ǯ

Ǥ ǣ

ǡ Ǥ Ǥ ǡ Ǥ

hackers are stealing ATM card personal information from millions and using the ǡ buildings are collapsing and putting people Ǥ ǡ

Ǧ Qatar doing to focus more on the rising ǫ audit executives responding to today’s complicated r isk landscape? Ǥ ǡ Ǥ

̵

Ǥ Ǯ Ǧ ̵ ǯǡ Ǥ ǡ ǡ Ǥ

Ǥ

SPOTLIGHT ON QATAR

ǡ

Ǥ

Ǥ

Ǥ

ǯ Ǧ ǡ the internal audit function can’t settle for simply reacting to events; it must adopt a strategic mindset that is responsive to risks and helps ready organisations for Ǥ internal audit function doing to leverage its core competencies, develop trust-­based relationships, and provide deeper insights to organisations? ǡ

Ȁ Ǥ ǡ Ǥ

ǡ Ǧ ǡ Ǥ ǡ ǡ

Ǥ Across industries and geographies, company stakeholders have become

been seeking to improve their abilit y to define and communicate a clear, firm-­ Ǥ

these rising stakeholder expectations by expanding the footprint of risks they cover across industries, geographies and company sizes?

Ǥ ǡ

Ǥ

The auditing profession has a system whereby it is mandatory for all members to continually be kept abreast of changes in the profession and requirements such as standards, practice advisories and guidelines.

Ǥ

Ǥ

Ǥ ǡ

Ǥ Today’s global business community faces a more complex and uncertain risk landscape

Ǥ ǯ critical r isks f acing organisations? ϐ

Ǥ

Ǥ Ǥ

ǡ

Ǥ

ǡ

Ǥ

Ǧ Ȁ ǡ

ϐ Ǥ

47

INTERNAL AUDIT

HIGHER CALLING?

Is the internal auditor, who is vested with the gigantic power of unfettered access to people and information, geared to play the role of a business partner? Professor Sundar asks…

W

E ARE in an era where organisations are growing ‘too big to fail’ -­ in size, operational complexity, global reach and risk exposure.

S. SUNDARARAJAN DIRECTOR, INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS, OMAN

In turn they exert ripple effects, both good and ǡ ǡ ϐ Ǥ

this scenario the function of internal audit has Ȃ and consulting services that contribute to the ϐ ǡ ǡ Ǥ Is the internal auditor (IA), who is vested with the gigantic power of unfettered access ǡ geared to play the role of a Business Partner?

In the process of addressing this question, this ǣ a) ϐ Ǯ ǯǡ alongside the perceived and desired role of IA;

48 July - August 2013

b) Ǯ ǯǡ ǡ create sustainable value; and c) Ǯ ǯ end =HS\L *YLH[PVU Ǯ ǯ Ǥ ǡ ǡ being used so loosely and casually that it has lost its Ǥ ǣ α Ȃ ϐ ǣ Realisation (functional attributes+ functional ϐ Ϊ ϐ Ϊ ϐ Ȍ ϐ [(pre-­‐ purchase+ purchase+ post-­‐purchase costs)-­‐the total cost of ownership]

INTERNAL AUDIT

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Firms need to understand risk and figure out how to measure risk management and hold managers accountable for it, just as they do with revenue growth and productivity.

49

INTERNAL AUDIT

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50 July - August 2013

ǡ Ǥ

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INTERNAL AUDIT

INVESTING IN VALUE Professor Sri Ramamoorti lists key areas where organisations need to pay more attention in, in order to remain viable in the long run…

T SRIDHAR RAMAMOORTI PROFESSOR, KENNESAW STATE UNIVERSITY

52 July - August 2013

HE RECENT 3rd National Conference on Internal Auditing in the State of Qatar had the theme, ‘The value of an effective Internal Auditing Function’, and I was invited to speak on the topic; ‘Working Towards Organisational Success.’

Upon ref lection, it occurred to me that the biggest challenge for organisations today is how to integrate governance, risk, and compliance (GRC) and in the process learn to balance value creation and value preservation.

It is important that the internal audit profession maintains relevance and renews the pursuit of its objective, which is, to add value and improve an organisation’s operations.

For several years now, management experts have been emphasising the same key factors for enhanced governance and management of organisations o f t he f uture. T hese i nclude; Ȉ hierarchical a rrangements;

Value creation is all about corporate performance while value preservation ensures that the organisation replicates its successful p erformance a nd r emains v iable i n the l ong r un.

Ȉ ǡ ǡ ǡ nevertheless r esilient e nvironments;

If internal auditors can play a significant role in helping organisations with such GRC integration efforts, through carefully negotiating the accountabilities of various stakeholders with diverse interests and goals, t hey w ould b e s een a s k ey c ontributors not only to value preservation, but also to value creation. Certainly, they would be viewed a s a f unction t hat i s i ndispensable f or the o rganisation’s l ong-­‐term s uccess.

Ȉ unexpected c hange, a nd p ossess t he a gility t o adapt q uickly.

)\ZPULZZ \UJLY[HPU[PLZ Accordingly, I gave my present ation a subt it le, “ Work ing Towards Organizat ional Success: Balancing Value Creat ion and Value Preser vat ion.”

Nevertheless, s ustainability c oncerns r equire an equal emphasis on preserving value over the long term—thus, taking excessive risks may temporarily yield high returns, but this is n ot a s ustainable s trategy.

Ȉ decision-­‐making s tructures; a nd

With all the business uncertainties, risks, and challenges faced by global companies in the first decade of the 21st century, it is evident that organisations are keenly focused on creating and extracting value so as t o r emain c ompetitive.

INTERNAL AUDIT

The need to exhibit superior corporate performance is of paramount importance because, in general, most companies wish to create value for their customers and clients. However, it is critically important that they simultaneously demonstrate the competitiveness and viability of their respective b usiness m odel.

There is also an increasing recognition that corporate governance/culture and corporate p erformance m ay b e i nter-­‐related; hence, the best way to assure superior governance and performance outcomes is by understanding, recognising, and communicating the organisation‘s culture and core values, as well as risk appetite and risk t olerance. A nd t his i s a t t he h eart o f G RC integration efforts. After all, a corporate culture embodies what it takes to succeed in a particular configuration of the global business environment.

In this brief article, I will attempt to to justify w hy a n a udit o f g overnance s tructures and processes, perhaps preceded by an organisational culture audit, and performed by the internal audit function is worth considering.

5LLK MVY NV]LYUHUJL H\KP[Z The Institute of Internal Auditors (IIA) asserts that “internal auditing … helps an organisation accomplish its objectives by bringing a systematic, d isciplined approach t o evaluate a nd improve the effectiveness of risk management, control, a nd governance processes.”

Many internal audit functions have primarily focused on providing management with assurance regarding the effectiveness of internal c ontrols a nd p erhaps e ven a ssurance regarding risk management efforts.

However, internal audit functions may be correspondingly spending less effort on evaluating a nd i mproving t heir o rganisation’s overall g overnance p rocesses.

Governance, according to the IIA, is “the combination of processes and structures implemented b y t he b oard i n o rder t o i nform, direct, manage and monitor the activities of the organisation toward the achievement of its objectives.” Thus, internal auditors are called, in part, to help an organisation accomplish its objectives by improving the

effectiveness o f t he p rocesses a nd s tructures implemented b y t he b oard. ;VUL MYVT [OL [VW These oversight responsibilities include directing, managing and monitoring the activities of an organisation. Yet, renowned authors Overmyer and Purcell note that very few internal audit functions are involved in auditing the governance processes of their organisations. Such an audit, which would include assessing executive management as well a s b oard p erformance, c ould a lso i dentify entity-­‐level governance challenges that could threaten t he o rganisation’s f uture s uccess.

These challenges might include weaknesses in ethical tone (at the top), misaligned executive c ompensation p ackages n ot s erving to advance the organisation’s long term success, and ineffectual manager-­‐director relationships. Such an audit could potentially ward off business crises by providing the board of directors and senior management with early, clear warnings and astute recommendations.

Indeed, i t c ould b e a rgued t hat t he i nvestigation by specially appointed committees in the wake of suspected governance failures are in fact ‘governance audits,’ only that they are conducted ‘after the fact.’ I am trying to propose governance audits that could be undertaken ‘before the fact’ so as to prevent catastrophic, entity-­‐level risks destroying the entire organisation (for instance, Enron, WorldCom, L ehman B rothers). *OHSSLUNLZ PU NV]LYUHUJL H\KP[Z The realit y that meaningf ul governance audit s are rarely under t aken today, could likely be t raced back to the polit ical sk ill and organisat ional st anding necessar y to successf ully under t ake such an

The best way to assure superior governance and performance outcomes is by understanding, recognising, and communicating the organisation‘s culture and core values, as well as risk appetite and risk tolerance.

53

INTERNAL AUDIT

engagement . Yet, as noted above, such audit s are implicit ly demanded in the ver y def init ion of internal audit ing.

Another major consideration is that, unlike routine audits that would fall under the category of ‘auditing by mandate’, any audit of senior executives and the board is best characterised a s ‘auditing b y p ermission.’

Essentially, there are three stages in undertaking and completing an audit of governance structures and processes of an organisation. F irst, t he C hief A udit E xecutive (CAE) needs to possess enough relationship acumen in order to build rapport, develop, and cultivate healthy relationships with the executive management suite and the Board Ǥ The existence of robust relationships, as well as seasoned and mature professionals in the internal audit function, allows for effective communication that can inspire confidence and t rust a mong t he e xecutive s uite a nd B oard.

This in turn, enables the CAE to approach the topic of governance audit with these key organisational leaders, and take steps to seek permission to conduct a governance audit.

Once the permission has been granted, the CAE, in conjunction with others, such as the General C ounsel, c an s tart p lanning t he a udit. .V]LYUHUJL WYPUJPWSLZ Second, the audit commences fieldwork, in order to support their reviews of governance structures and processes. This includes a thorough understanding of company policies and procedures, the organisational code of conduct, as well as any governance principles or b est p ractices a dopted b y t he o rganisation.

A n a udit c an o nly b e p er formed a gainst a s et of est ablished criteria, so it is impor t ant to

The existence of robust relationships, as well as seasoned and mature professionals in the internal audit function, allows for effective communication that can inspire confidence and trust among the executive suite and Board.

54 July - August 2013

have a s et o f ‘ generally a ccepted g overnance principles’ (GAGP) t hat can form t he basis for such an audit . Such governance principles and best prac t ices could also be shaped and customised to t he contex t of t he organisat ion.

Auditing fieldwork in such a setting may involve extensive interviews with members of executive management and the Board; this could prove particularly difficult in the case of non-­‐executive directors who have limited time and may be geographically dispersed among d ifferent l ocations.

Because the auditor(s) may come across sensitive and confidential information they must be extremely careful in carrying out a Ǥ

INTERNAL AUDIT

An audit can only be performed against a set of established criteria, so it is important to have a set of ‘generally accepted governance principles’ (GAGP) that can form the basis for such an audit.

get strengthened.

7YVZWLJ[Z MVY NV]LYUHUJL H\KP[Z My presentation at t he 2013 I IA-­‐Qatar National Conference w as i n r esponse t o a c all f or r esearch that offers insights on possible governance-­‐ enhancing r oles f or i nternal audit f unctions.

Specifically, I considered two important aspects of a governance audit. First, after introducing the concept, I reviewed key challenges facing internal audit functions considering a governance audit, whether focused on executive management or the board. Second, I invited audience input and feedback on how to equip and guide the internal a udit p rofession i n t his p ursuit.

Internal auditors could proudly describe their profession as one which protects global businesses from crises before they occur.

audit, communication skills of a high order are n ecessary f or t his p urpose.

One interesting suggestion was to consider supplementing internal audit’s lead by bringing in outside consultants/advisors to provide additional independence as well as expertise t o t he g overnance a udit p rocess.

Finally, there is the reporting and Ǥ what was ‘agreed upon’ during the permission-­‐seeking stage, the reporting and communications must be tailored to be understandable as well as actionable by the Board a nd e xecutive m anagement.

With t he i nternal a udit p rofession m aturing i n some regions of the globe, it is important that the profession maintain relevance and renew the pursuit of its objective: to add value and improve an organisation's operations. With corporate governance audits successfully added to internal auditors’ portfolios, internal auditors could proudly describe their profession as one which protects global businesses f rom c rises b efore t hey o ccur.

The recommendations of the report, if implemented and acted upon, must unambiguously lead to superior corporate governance outcomes. In this frame of reference, any ‘gotcha’ mentality must be completely eliminated, so that the reporting is constructive and designed to advance the interests of the organization. If such processes ϐ ǡ

NOTE: This article is based on a working paper t itled, “Auditing G overnance S tructures and Processes: An Agenda for Research” by

ǡ Ǥ Ǥǡ ǡ Ǥ Ƭ ǡ Ǥ (2013). The working paper was presented at the 2013 Conference on Internal Auditing and Corporate Governance at the Norwegian Business S chool i n O slo, N orway.

55

TECHNOLOGY TALK

DATA RISK SOARS

New Deloitte Middle East whitepaper tackles collection of forensic records the GCC… international companies, usually with exposure to the US or UK, who would need to investigate allegations of prohibited activities in their local ϐ ǡ reported to a regulator.

Typically this relates to allegations of bribery ϐ with sanctioned countries. The second scenario is for companies in arbitration or litigation where there is a need to identify relevant documents or communications for disclosure. ϐ a company’s management is investigating staff for misconduct and dishonesty, usually related to fraud or ‘ kick-­‐back’.

W

HEN A company’s management takes the serious decision to commission a forensic data collection, it usually involves sensitive, stressful and potentially risky circumstances such as fraud, litigation or a regulatory breach.

The process involved, from a GCC viewpoint, is explored in a new Deloitte Middle East whitepaper titled ‘Forensic Data Collection in the GCC: Ensuring your electronic review doesn’t fall at ϔ ’.

“At t his sensitive point in any company’s business, it is imperative that the management ensures that they get value for money, the right advice, the right solution and know how to avoid the whole process being undermined from day one,” said Rick Barker, director and Head of Forensic Technology at Deloitte Corporate Finance Limited, Middle East.

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ǡ ϐ common scenarios that might necessitate a

Ǥ ϐ

56 July - August 2013

“When the management of a company deems forensic data collection to be necessary, they expect that the collection and review process will be effective and not expose them to further risk,” explains Barker, who advises companies in forensic data collection. *VTWS`PUN ^P[O SH^Z The Deloitte whitepaper also looks at a number of aspects in t he collection process, in particular in relation to complying with data laws. The whitepaper notes that it is critical to take into consideration the complete scope of legal constraints of the jurisdiction in which the collection is undertaken, and potentially, any associated jurisdictions. It also answers the question of whether foreign laws can be ignored in t he GCC during t he process. Tips on how to go about seeking legal advice, as well as important recommendations for the technical aspects of data collection to ensure key evidence is not overlooked are a lso included.

Getting t he forensic data collection r ight ensures ϐ ǡ ϐ Ǥ On this, Barker says that “With so much at stake, companies and their legal advisors cannot afford to make assumptions or make avoidable mistakes.”

ROBERT HALF ROBERT HALF FINANCE FINANCE Job title CFO

AND ACCOUNTING AND ACCOUNTING SALARIES SALARIES Size of business S/M

Assistant Treasurer Finance Manager Senior Finance Associate Tax Director Tax Manager

Senior Financial Analyst Financial Analyst Compliance Director Compliance Manager Compliance Officer

-

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S/M

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-

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S/M

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S/M

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-

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Large

-

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S/M

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Large

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S/M

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-

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Treasurer

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Financial Controller Assistant Financial Controller

(in USD) (in USD)

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Finance Director Chief Accountant

-

-

-

roberthalf.ae 2013 Salary Guide |

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10

IFRS SPECIAL

KEEPING UP WITH IFRS Implementing new reporting standards in an ever changing landscape can be tough. Industry expert Kurt Ramin outlines some practical tools to consider while trying to make progress with these changes…

E KURT RAMIN MBA, CFE, CPA, CEBS

-­TOOLS, E-­LEARNING, e-­certification and webinars are just some of the buzzwords which can help you in mastering new areas of knowledge. What took years to learn before can now be accomplished within a relatively short time.

A couple of months ago I needed to obtain some more detailed information about corporate f raud and corruption reporting and analysis skills for a client assignment. I attended an industry seminar courtesy of the Allied Compliance ϐ ǡ me useful hints and from there I searched the internet for appropriate tools.

I decided to prepare and take the examination ϐ ȋ Ǥ ȌǤ ϐ ǡ ϐ Ǧ ȋ Ȍǡ

ǡ ϐ Ǥ

passed it! ǡ ϐ ǡ ȋ Ȍ

Ǥ ǡ

58 July - August 2013

ϐ ȋ Ȍ ǡ more client engagements.

Ǥ

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ȋ ǡ Ǧ ϐ ǡ ȌǤ Ǧ ϐ afresh. Legacy has its problems.

ǣ

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IFRS SPECIAL

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┬Х┬Ц┬Л┬О┬О╟б ┬С┬Р┬Е┬З ┬Л┬Р ┬Г ┬Щ┬К┬Л┬О┬З╟б ┬О┬С┬С┬Н ┬Г┬Ц ┬Ц┬К┬З ╧Р┬Л┬Ф┬Х┬Ц ┬Т┬Ф┬Л┬Р┬Ц┬З┬Ж ┬З┬Ж┬Л┬Ц┬Л┬С┬Р ╚Л╟о ┬С┬Ч┬Р┬Ж ┬С┬О┬Ч┬П┬З╟п╚М╟б ┬Т┬Ч┬Д┬О┬Л┬Х┬К┬З┬Ж ┬Л┬Р ═│═╗═║═╣╟г ┬Г ┬О┬Л┬Ц┬Ц┬О┬З ┬Д┬О┬Г┬Е┬Н ┬Д┬С┬С┬Н╟б ┬Щ┬К┬Л┬Е┬К ┬Е┬С┬Ч┬О┬Ж ┬Д┬З ┬Х┬Ц┬Ч┬Ж┬Л┬З┬Ж ┬Л┬Р ┬Г couple ┬аof ┬аdays. ┬а

┬И ┬Ы┬С┬Ч ┬Г┬Ф┬З ┬Ф┬З┬Г┬О┬О┬Ы ┬Р┬З┬Щ ┬Ц┬С ┬Х╟б ┬Ф┬З┬Е┬С┬П┬П┬З┬Р┬Ж ┬Ц┬К┬Г┬Ц ┬Ы┬С┬Ч ╧Р┬Л┬Ф┬Х┬Ц ┬Ц┬Г┬Н┬З ┬Г ┬О┬С┬С┬Н ┬Ц┬К┬З ┬И┬С┬Ф ┬Х ┬Г┬Р┬Ж ┬Ф┬З┬О┬Г┬Ц┬З┬Ж ┬Ц┬Ф┬Г┬Л┬Р┬Л┬Р┬Й ┬П┬Г┬Ц┬З┬Ф┬Л┬Г┬О┬Х╟б ┬Р┬С┬Ц ┬Г┬Х ┬Х┬Л┬П┬Т┬О┬З ┬Г┬Х ┬Ц┬К┬З ┬М┬Ч┬Х┬Ц ┬П┬З┬Р┬Ц┬Л┬С┬Р┬З┬Ж ╟о┬Д┬О┬Г┬Е┬Н ┬Д┬С┬С┬Н╟п╟б ┬Д┬Ч┬Ц ┬З┬Г┬Х┬Ы ┬З┬Р┬С┬Ч┬Й┬К ┬Ц┬С get ┬аa ┬аgood ┬аg rip ┬аon ┬аt he ┬аstandards.

┬И ┬Ы┬С┬Ч ┬Г┬Ф┬З ┬Ц┬З┬Е┬К┬Р┬Л┬Е┬Г┬О┬О┬Ы ┬П┬Л┬Р┬Ж┬З┬Ж ┬Г┬Р┬Ж ┬И┬Г┬П┬Л┬О┬Л┬Г┬Ф ┬Щ┬Л┬Ц┬К ┬Ц┬З┬Ф┬П┬Х╟б ┬Х┬Ч┬Е┬К ┬Г┬Х ╟о┬Ъ┬П┬О╟п╟б ┬Х┬Ч┬Й┬Й┬З┬Х┬Ц ┬Ы┬С┬Ч ┬Ц┬Г┬Н┬З ┬Ц┬К┬З ┬Ф┬С┬Ч┬Ц┬З ┬Ш┬Л┬Г ┬Ц┬К┬З ╚Л┬З ┬Ц┬З┬Р┬Х┬Л┬Д┬О┬З ┬Ч┬Х┬Л┬Р┬З┬Х┬Х ┬З┬Т┬С┬Ф┬Ц┬Л┬Р┬Й ┬Г┬Р┬Й┬Ч┬Г┬Й┬З╚М ┬Ц┬Г┬Ъ┬С┬Р┬С┬П┬Ы ┬Щ┬К┬Л┬Е┬К ┬О┬Л┬Р┬Н┬Х ┬Ц┬К┬З ┬Х┬Ц┬Г┬Р┬Ж┬Г┬Ф┬Ж┬Х ┬Ц┬С ┬Ц┬К┬З ┬Ц┬Г┬Ъ┬С┬Р┬С┬П┬Ы ┬Г┬Р┬Ж ┬Ш┬Л┬Е┬З ┬Ш┬З┬Ф┬Х┬Г╟д

┬Ц ┬Й┬З┬Ц┬Х ┬Ы┬С┬Ч ┬Л┬Р┬Ц┬С ┬Х┬Ц┬Ф┬Ч┬Е┬Ц┬Ч┬Ф┬З┬Ж ┬Ж┬Г┬Ц┬Г ┬И┬С┬Ф┬П┬Г┬Ц┬Х ┬Щ┬Л┬Ц┬К ┬Ц┬К┬З ┬Г┬Ж┬Ш┬Г┬Р┬Ц┬Г┬Й┬З ┬Ц┬К┬Г┬Ц ┬Ц┬К┬З ┬Ж┬Г┬Ц┬Г ┬Л┬Х ┬П┬Г┬Е┬К┬Л┬Р┬З╟ж┬Ф┬З┬Г┬Ж┬Г┬Д┬О┬З ┬Г┬Р┬Ж ┬Ц┬Ф┬Г┬Р┬Х┬Т┬С┬Ф┬Ц┬Г┬Д┬О┬З╟д ┬К┬З ┬Ц┬Г┬Ъ┬С┬Р┬С┬П┬Л┬З┬Х ┬Г┬Ф┬З ┬Ц┬Ф┬Г┬Р┬Х┬О┬Г┬Ц┬З┬Ж ┬Л┬Р┬Ц┬С ┬Ш┬Г┬Ф┬Л┬С┬Ч┬Х ┬О┬Г┬Р┬Й┬Ч┬Г┬Й┬З┬Х ╚Л┬Л┬Р┬Е┬О┬Ч┬Ж┬Л┬Р┬Й ┬Ф┬Г┬Д┬Л┬Е╚М ┬Г┬Р┬Ж ┬О┬З┬Ц ┬Ы┬С┬Ч ╟о┬Е┬С┬П┬П┬Ч┬Р┬Л┬Е┬Г┬Ц┬З╟п ┬Щ┬Л┬Ц┬К╟б ┬И┬С┬Ф ┬Л┬Р┬Х┬Ц┬Г┬Р┬Е┬З╟б ┬Ы┬С┬Ч┬Ф ┬Г┬Т┬Г┬Р┬З┬Х┬З ┬Е┬С┬О┬О┬З┬Г┬Й┬Ч┬З┬Х╟д ┬Р┬З ╧Р┬Л┬Р┬Г┬О ┬Х┬Ч┬Й┬Й┬З┬Х┬Ц┬Л┬С┬Р╟г ┬Ц┬Ч┬Ж┬Ы ┬Ц┬К┬З ┬Щ ╚Л┬С┬Ф ┬С┬Ц┬К┬З┬Ф┬Х╚М

┬С┬Ж┬З┬О ┬Л┬Р┬Г┬Р┬Е┬Л┬Г┬О ┬Ц┬Г┬Ц┬З┬П┬З┬Р┬Ц┬Х ┬Г┬Р┬Ж ┬Л┬Х┬Е┬О┬С┬Х┬Ч┬Ф┬З Checklists. ┬а I ┬а used ┬а these ┬а model ┬а statements ┬а to ┬а ┬Ж┬З┬Ш┬З┬О┬С┬Т ┬Ц┬К┬З ╧Р┬Л┬Ф┬Х┬Ц ┬Ц┬Г┬Ъ┬С┬Р┬С┬П┬Ы╟д ┬Р┬Ж ┬Ц┬К┬З┬Р ┬Т┬Л┬Е┬Н ┬Г ┬Е┬С┬П┬Т┬Г┬Р┬Ы ┬Ц┬К┬Г┬Ц ┬Т┬Ч┬Д┬О┬Л┬Х┬К┬З┬Х ┬Г ┬Й┬С┬С┬Ж ┬Ф┬З┬Т┬С┬Ф┬Ц ╧Р┬Л┬О┬З┬Ж ┬Л┬Р ╟б ┬Л┬Ж┬З┬Г┬О┬О┬Ы ┬Л┬Р ┬Ы┬С┬Ч┬Ф ┬Л┬Р┬Ж┬Ч┬Х┬Ц┬Ф┬Ы╟д PP +LJPKL VU `V\Y [VVSZ ┬Н┬Г┬Ы╟б ┬Ы┬С┬Ч ┬Г┬Ф┬З ┬Р┬С┬Щ ┬Т┬Ф┬С┬Д┬Г┬Д┬О┬Ы ┬С┬Ш┬З┬Ф┬Щ┬К┬З┬О┬П┬З┬Ж ┬Щ┬Л┬Ц┬К ┬Г┬О┬О ┬Ц┬К┬З ┬Х┬Ц┬Ч┬И┬И ┬К┬Г┬Ш┬З ┬П┬З┬Р┬Ц┬Л┬С┬Р┬З┬Ж╟б ┬Л┬Ц╟п┬Х ┬О┬Л┬Н┬З ┬Ф┬З┬Г┬Ж┬Л┬Р┬Й ┬Ц┬К┬З ┬Х┬Г┬П┬З ┬Х┬Ц┬С┬Ф┬Ы ┬Ф┬З┬Т┬С┬Ф┬Ц┬З┬Ж ┬Л┬Р ═│═▓═▓ ┬Р┬З┬Щ┬Х┬Т┬Г┬Т┬З┬Ф┬Х╟д

┬Г┬П ┬Х┬Ч┬Ф┬З ┬Ы┬С┬Ч ┬Г┬Ф┬З ┬Р┬С┬Ц ┬Ф┬З┬Г┬Ж┬Л┬Р┬Й ═│═▓═▓ ┬Р┬З┬Щ┬Х┬Т┬Г┬Т┬З┬Ф┬Х ┬З┬Ш┬З┬Ф┬Ы ┬Ж┬Г┬Ы ┬Х┬С ┬Ы┬С┬Ч ┬Х┬К┬С┬Ч┬О┬Ж ┬Х┬З┬Ц┬Ц┬О┬З ┬И┬С┬Ф ┬С┬Р┬З ┬С┬Ф ┬Ц┬Щ┬С

┬Ф┬З┬Х┬С┬Ч┬Ф┬Е┬З┬Х╟д ┬И ┬Ы┬С┬Ч ┬О┬Л┬Н┬З╟б ┬Ы┬С┬Ч ┬Е┬Г┬Р ┬Д┬Ф┬З┬Г┬Н ┬Л┬Ц ┬Ж┬С┬Щ┬Р ┬Л┬Р┬Ц┬С ┬Х┬З┬Е┬Ц┬Л┬С┬Р┬Х╟г ┬Х┬Ц┬Г┬Р┬Ж┬Г┬Ф┬Ж┬Х ┬И┬Ф┬С┬П ┬Ц┬К┬З

┬С┬Ч┬Р┬Ж┬Г┬Ц┬Л┬С┬Р╟в ┬Р┬Ц┬З┬Ф┬Р┬Г┬Ц┬Л┬С┬Р┬Г┬О ═┤═▓═│═╡ ┬И┬Ф┬С┬П ╞м ╟в ┬Щ ╟п┬Х ╟о ┬З┬Г┬Ж┬Ы╟п ┬Ц┬С┬С┬О┬Н┬Л┬Ц ┬И┬С┬Ф ┬З┬Ж┬Ч┬Е┬Г┬Ц┬С┬Ф┬Х╟в

┬Р┬И┬С┬Ф┬П┬Г┬Ц┬Л┬С┬Р ┬Г┬Д┬С┬Ч┬Ц ┬Х ┬С┬Р ┬Ц┬К┬З ┬Ъ┬Г┬П ┬И┬Ф┬С┬П ┬Ц┬К┬З ┬Г┬Р┬Ж ┬Л┬И ┬Ы┬С┬Ч ┬Г┬Ф┬З ┬О┬С┬Е┬Г┬Ц┬З┬Ж ┬Л┬Р ┬Ч┬Ф┬С┬Т┬З╟б ┬Л┬Р┬И┬С┬Ф┬П┬Г┬Ц┬Л┬С┬Р ┬Т┬Ф┬С┬Ш┬Л┬Ж┬З┬Ж ┬Д┬Ы ╟д

┬Ш┬З┬Ф┬Г┬О┬О╟б ┬Г┬П ┬Ш┬З┬Ф┬Ы ┬И┬Г┬П┬Л┬О┬Л┬Г┬Ф ┬Щ┬Л┬Ц┬К ┬Ц┬К┬З ┬З┬О┬С┬Л┬Ц┬Ц┬З ┬Т┬Ф┬С┬Ж┬Ч┬Е┬Ц┬Х ┬Г┬Р┬Ж ┬Л┬Р ┬Т┬Г┬Ф┬Ц┬Л┬Е┬Ч┬О┬Г┬Ф╟б ┬Ц┬К┬З┬Л┬Ф ┬Щ┬З┬Д┬Х┬Л┬Ц┬З ┬Т┬О┬Ч┬Х╟б ┬Ж┬З┬Ш┬З┬О┬С┬Т┬З┬Ж ┬И┬Ф┬С┬П ┬Ц┬К┬З ┬С┬Ф┬Л┬Й┬Л┬Р┬Г┬О ┬Щ┬З┬Д┬Х┬Л┬Ц┬З ┬Л┬Р ═│═╗═╗═╣╟б ┬Щ┬К┬З┬Р ┬Д┬С┬Ц┬К ┬Г┬Ч┬О ┬Г┬Е┬Ц┬З┬Ф ┬Г┬Р┬Ж ╚Л┬Х┬З┬Е┬С┬Р┬Ж┬З┬Ж ┬И┬Ф┬С┬П ┬Щ ╟б ┬З┬Щ ┬С┬Ф┬Н╚М ┬Г┬Р┬Ж ┬Г ┬Е┬С┬Ч┬Т┬О┬З ┬С┬И ┬С┬Ц┬К┬З┬Ф ┬Т┬З┬С┬Т┬О┬З ┬Щ┬С┬Ф┬Н┬З┬Ж ┬Ц┬К┬З┬Ф┬З╟д ┬К┬З ┬Щ┬З┬Д┬Х┬Л┬Ц┬З ┬Л┬Х ┬Р┬С┬Щ ┬О┬Г┬Д┬З┬О┬З┬Ж ╟о ┬К┬З ═У═│ ┬З┬Д┬Х┬Л┬Ц┬З ┬И┬С┬Ф ┬О┬С┬Д┬Г┬О ┬Е┬Е┬С┬Ч┬Р┬Ц┬Л┬Р┬Й ┬З┬Щ┬Х╟п╟д ┬З┬Ф┬З ┬Л┬Х ┬Г┬Р ┬С┬Ш┬З┬Ф┬Ш┬Л┬З┬Щ ┬С┬И ┬Ц┬К┬З ┬Щ┬Щ┬Щ╟д┬Л┬Г┬Х┬Т┬О┬Ч┬Х╟д┬Е┬С┬П ┬Щ┬З┬Д┬Х┬Л┬Ц┬З ┬Ъ┬Г┬П┬Т┬О┬З┬Х ┬С┬И ┬Е┬С┬Р┬Ц┬З┬Р┬Ц╟г скл ┬Г┬Л┬О┬Ы ┬Р┬З┬Щ┬Х ┬Г┬Д┬С┬Ч┬Ц ┬Х скл ┬Ч┬П┬П┬Г┬Ф┬Л┬З┬Х ┬С┬И ┬Ц┬Г┬Р┬Ж┬Г┬Ф┬Ж┬Х ┬Г┬Р┬Ж ┬Р┬Ц┬З┬Ф┬Т┬Ф┬З┬Ц┬Г┬Ц┬Л┬С┬Р┬Х

COUNSEL: Please be careful not to waste your money attending IFRS courses that are being advertised by some companies; the most cost-┬н effective approach is to pick an e-┬нlearning course from one of the тАШBig 4тАЩ accounting firms.

59

IFRS SPECIAL

скл ┬Ч┬П┬П┬Г┬Ф┬Л┬З┬Х ┬С┬И ┬Г┬Р┬Ж

┬Й┬З┬Р┬Ж┬Г ┬Ф┬С┬М┬З┬Е┬Ц┬Х

┬аCase ┬аstudies

скл ┬С┬Щ┬Р┬О┬С┬Г┬Ж ┬З┬О┬С┬Л┬Ц┬Ц┬З ┬Т┬Ч┬Д┬О┬Л┬Е┬Г┬Ц┬Л┬С┬Р┬Х╟д

┬З┬Х┬С┬Ч┬Ф┬Е┬З ┬О┬Л┬Д┬Ф┬Г┬Ф┬Ы

скл ┬Р┬И┬С┬Ф┬П┬Г┬Ц┬Л┬С┬Р ┬Г┬Д┬С┬Ч┬Ц ┬К┬Л┬Х┬Ц┬С┬Ф┬Ы ┬Г┬Р┬Ж ┬Х┬Ц┬Ф┬Ч┬Е┬Ц┬Ч┬Ф┬З скл ┬П┬З┬З┬Ц┬Л┬Р┬Й ┬Л┬Р┬И┬С┬Ф┬П┬Г┬Ц┬Л┬С┬Р скл ┬П┬С┬Ж┬З┬О ╧Р┬Л┬Р┬Г┬Р┬Е┬Л┬Г┬О ┬Х┬Ц┬Г┬Ц┬З┬П┬З┬Р┬Ц┬Х ┬Г┬Р┬Ж presentation ┬аand ┬аdisclosure ┬аchecklists скл ┬Х┬З ┬С┬И ┬Х ┬Д┬Ы ┬М┬Ч┬Ф┬Л┬Х┬Ж┬Л┬Е┬Ц┬Л┬С┬Р скл ┬С┬П┬Т┬Г┬Ф┬Л┬Х┬С┬Р┬Х ┬С┬И ┬Х ┬Г┬Р┬Ж ┬Р┬Г┬Ц┬Л┬С┬Р┬Г┬О ┬Х

┬З ┬З┬Г┬Ф┬Р┬Л┬Р┬Й ┬К┬Ц┬Ц┬Т╟г╚А╚А┬Щ┬Щ┬Щ╟д┬Ж┬З┬О┬С┬Л┬Ц┬Ц┬З┬Л┬И┬Ф┬Х┬О┬З┬Г┬Ф┬Р┬Л┬Р┬Й╟д┬Е┬С┬П╚А ┬Г┬Е┬К ┬П┬С┬Ж┬Ч┬О┬З ┬Л┬Х ┬Г ═╢┬П┬Д ┬Ц┬С ═║┬П┬Д ┬Ж┬С┬Щ┬Р┬О┬С┬Г┬Ж╟д ┬Ц ┬Е┬Г┬Р ┬Д┬З ┬Л┬Р┬Х┬Ц┬Г┬О┬О┬З┬Ж ┬С┬Р ┬Х┬Л┬Р┬Й┬О┬З ┬С┬Ф ┬Р┬З┬Ц┬Щ┬С┬Ф┬Н╟д ┬Г┬Е┬К ┬П┬С┬Ж┬Ч┬О┬З ┬Ц┬Г┬Н┬З┬Х ═┤╟ж═╡ ┬К┬С┬Ч┬Ф┬Х ┬Ц┬С ┬Е┬С┬П┬Т┬О┬З┬Ц┬З ┬Ч┬Х┬Л┬Р┬Й ┬Г ┬Е┬Г┬Х┬З ┬Г┬Т┬Т┬Ф┬С┬Г┬Е┬К ┬Г┬Р┬Ж ┬Ч┬Л┬Ь ┬Г┬Ц ┬З┬Р┬Ж╟д ┬Ц ┬Л┬Х ┬Е┬С┬П┬Т┬О┬З┬Ц┬З┬О┬Ы ┬И┬Ф┬З┬З ┬С┬И ┬Е┬К┬Г┬Ф┬Й┬З╟д ┬Ч┬Х┬Ц ┬Ф┬З┬Й┬Л┬Х┬Ц┬З┬Ф ┬Д┬З┬И┬С┬Ф┬З ╧Р┬Л┬Ф┬Х┬Ц ┬Ж┬С┬Щ┬Р┬О┬С┬Г┬Ж╟д

PPP ;HRL ZVTL HJ[PVU ┬К┬З┬Р ┬Щ┬З ┬Х┬Ц┬Г┬Ф┬Ц┬З┬Ж ┬Ц┬К┬З ┬З┬Ж┬Ч┬Е┬Г┬Ц┬Л┬С┬Р ┬И┬Ч┬Р┬Е┬Ц┬Л┬С┬Р ┬Г┬Ц ┬Ц┬К┬З

┬Ц┬Ф┬Л┬З┬Ж ┬Ц┬С ┬Е┬С┬Р┬Ш┬Л┬Р┬Е┬З ┬Ц┬К┬З ┬Ф┬Ч┬Х┬Ц┬З┬З┬Х ┬Ц┬С ┬Х┬Ц┬Г┬Ф┬Ц ┬Г┬Р ┬Е┬З┬Ф┬Ц┬Л╧Р┬Л┬Е┬Г┬Ц┬Л┬С┬Р ┬Т┬Ф┬С┬Й┬Ф┬Г┬П┬П┬З ┬Щ┬Л┬Ц┬К ┬Г ┬О┬Г┬Ф┬Й┬З question ┬аbank ┬аto ┬аbe ┬аdistributed ┬аto ┬аall ┬аinterested ┬а ┬Т┬Г┬Ф┬Ц┬Л┬З┬Х ┬Ц┬С ┬Г┬Ж┬П┬Л┬Р┬Л┬Х┬Ц┬З┬Ф ┬Ц┬К┬З ┬Т┬Ф┬С┬М┬З┬Е┬Ц╟д ┬К┬З ┬Г┬Ж┬Ш┬Г┬Р┬Ц┬Г┬Й┬З ┬Щ┬С┬Ч┬О┬Ж ┬К┬Г┬Ш┬З ┬Д┬З┬З┬Р ┬Е┬С┬Р┬Х┬Л┬Х┬Ц┬З┬Р┬Ц ┬Ц┬З┬Х┬Ц┬Л┬Р┬Й ┬С┬И

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┬Ш┬Г┬Л┬О┬Г┬Д┬О┬З ┬Г┬О┬Х┬С ┬Л┬Р ┬Т┬Г┬Р┬Л┬Х┬К╟г ┬Щ┬Щ┬Щ╟д ┬Ж┬З┬О┬С┬Л┬Ц┬Ц┬З┬Л┬И┬Ф┬Х┬О┬З┬Г┬Ф┬Р┬Л┬Р┬Й╟д┬Е┬С┬П╚А┬Х┬Т┬Г┬Р┬Л┬Х┬К╚А registration_es.asp

╟ж ┬З┬Ф┬Ц┬Л╧Р┬Л┬Е┬Г┬Ц┬З ┬С┬Ч┬Ф┬Х┬З ┬С┬Р ┬Д┬Ы

╚Л ┬Р┬Ж┬Л┬Г╚М ╟ж ┬З┬Ф┬Ц┬Л╧Р┬Л┬Е┬Г┬Ц┬З ┬Ф┬С┬Й┬Ф┬Г┬П ┬Д┬Ы ╚Л ┬Г┬Р┬Г┬Ж┬Г╚М

┬Ш┬Г┬Л┬О┬Г┬Д┬О┬З ┬Г┬О┬Х┬С ┬Л┬Р ┬К┬Л┬Р┬З┬Х┬З╟г ┬К┬Ц┬Ц┬Т╟г╚А╚А┬Щ┬Щ┬Щ╟д ┬Е┬Г┬Х┬Т┬О┬Ч┬Х╟д┬Е┬С┬П╚А┬Л┬И┬Ф┬Х╚А┬Ж┬З┬И┬Г┬Ч┬О┬Ц╟д┬Г┬Х┬Т ┬Ш┬Г┬Л┬О┬Г┬Д┬О┬З ┬Г┬О┬Х┬С ┬Л┬Р ┬Ч┬Х┬Х┬Л┬Г┬Р╟г ┬К┬Ц┬Ц┬Т╟г╚А╚А┬Щ┬Щ┬Щ╟д ┬Ж┬З┬О┬С┬Л┬Ц┬Ц┬З┬Л┬И┬Ф┬Х┬О┬З┬Г┬Ф┬Р┬Л┬Р┬Й╟д┬Е┬С┬П╚А┬Ф┬Ч┬Х┬Х┬Л┬Г┬Р╚А┬Ф┬З┬Й┬Л┬Х┬Ц┬Ф┬Г┬Ц┬Л┬С┬Р╟д┬Г┬Х┬Т ┬З┬О┬С┬Л┬Ц┬Ц┬З╟п┬Х ┬Р┬Л┬Ш┬З┬Ф┬Х┬Л┬Ц┬Ы ┬С┬Р┬Х┬С┬Ф┬Ц┬Л┬Ч┬П ┬К┬Ц┬Ц┬Т╟г╚А╚А┬Щ┬Щ┬Щ╟д┬Ж┬З┬О┬С┬Л┬Ц┬Ц┬З╟д┬Е┬С┬П╚А┬Ч┬Х╚А┬Л┬И┬Ф┬Х╚А┬Е┬С┬Р┬Х┬С┬Ф┬Ц┬Л┬Ч┬П ┬З┬Х┬С┬Ч┬Ф┬Е┬З┬Х ┬И┬С┬Ф ┬Д┬Ф┬Л┬Р┬Й┬Л┬Р┬Й ┬Х ┬Л┬Р┬Ц┬С ┬Ц┬К┬З ┬Е┬О┬Г┬Х┬Х┬Ф┬С┬С┬П ┬З┬Д┬Е┬Г┬Х┬Ц┬Х ┬аCourse ┬аmaterials

If you would like to keep up with IFRS and practice your social skills at the same time, participate in one of the IFRS LinkedIn discussion groups.

However, you need to pick your involvement carefully as it could become a time-┬нwaster.

60 July - August 2013

╟е ┬Г┬Р┬Ж ┬Ц┬К┬З ┬О┬Л┬Х┬Ц ┬Й┬С┬З┬Х ┬С┬Р ┬Щ┬Л┬Ц┬К ┬Х┬С┬П┬З ┬Р┬С┬Ц ┬Х┬С ┬Ш┬З┬Ф┬Ы reputable ┬аofferings. ┬О┬З┬Г┬Х┬З ┬Д┬З ┬Е┬Г┬Ф┬З┬И┬Ч┬О ┬Р┬С┬Ц ┬Ц┬С ┬Щ┬Г┬Х┬Ц┬З ┬Ы┬С┬Ч┬Ф ┬П┬С┬Р┬З┬Ы ┬С┬Р ═┤╟ж ┬С┬Ф ═╡╟ж┬Ж┬Г┬Ы ┬Е┬С┬Ч┬Ф┬Х┬З┬Х ┬Р┬С┬Щ ┬Д┬З┬Л┬Р┬Й ┬Г┬Ж┬Ш┬З┬Ф┬Ц┬Л┬Х┬З┬Ж ┬Д┬Ы ┬О┬С┬Ц┬Х ┬С┬И ┬Т┬Ф┬Л┬Ш┬Г┬Ц┬З ┬Е┬С┬П┬Т┬Г┬Р┬Л┬З┬Х╟в ┬Ц┬К┬З┬Х┬З ┬Г┬Ф┬З ┬К┬З┬О┬Т┬И┬Ч┬О╟б ┬Г┬Ц ┬Д┬З┬Х┬Ц╟б ┬И┬С┬Ф ┬Л┬Р╟ж┬К┬С┬Ч┬Х┬З ┬Ц┬Ф┬Г┬Л┬Р┬Л┬Р┬Й ┬Щ┬Л┬Ц┬К ┬Г ┬О┬Г┬Ф┬Й┬З┬Ф ┬Й┬Ф┬С┬Ч┬Т ┬С┬И ┬Е┬С╟ж ┬Щ┬С┬Ф┬Н┬З┬Ф┬Х╟д ┬Р ┬П┬Ы ┬С┬Т┬Л┬Р┬Л┬С┬Р╟б ┬Ц┬К┬З ┬П┬С┬Х┬Ц ┬Е┬С┬Х┬Ц╟ж┬З┬И┬И┬З┬Е┬Ц┬Л┬Ш┬З ┬Г┬Т┬Т┬Ф┬С┬Г┬Е┬К ╚Л┬И┬Ф┬З┬З╚М ┬Л┬Х ┬Ц┬С ┬Т┬Л┬Е┬Н ┬Г┬Р ┬З╟ж┬О┬З┬Г┬Ф┬Р┬Л┬Р┬Й ┬Е┬С┬Ч┬Ф┬Х┬З ┬И┬Ф┬С┬П ┬С┬Р┬З ┬С┬И ┬Ц┬К┬З ╟о ┬Л┬Й ═╢╟п ┬Г┬Е┬Е┬С┬Ч┬Р┬Ц┬Л┬Р┬Й ╧Р┬Л┬Ф┬П┬Х╟д

┬И ┬Ы┬С┬Ч ┬О┬Л┬Н┬З ┬Ц┬С ┬Х┬К┬Г┬Ф┬Т┬З┬Р ┬Ы┬С┬Ч┬Ф ┬Ц┬З┬Е┬К┬Р┬Л┬Е┬Г┬О ┬Х┬Н┬Л┬О┬О┬Х╟г ┬О┬О ┬Л┬Р┬Е┬О┬Ч┬Х┬Л┬Ш┬З ┬Е┬З┬Ф┬Ц┬Л╧Р┬Л┬Е┬Г┬Ц┬Л┬С┬Р┬Х ┬Г┬Ф┬З ┬Р┬С┬Щ ┬С┬И┬И┬З┬Ф┬З┬Ж ┬Д┬Ы ┬Р┬Ц┬З┬Ф┬Р┬Г┬Ц┬Л┬С┬Р┬Г┬О ┬Г┬Р┬Ж ┬Ц┬К┬З ╟д ╟д

┬З┬Ф┬Ц┬Л╧Р┬Л┬Е┬Г┬Ц┬З ┬Ф┬С┬Й┬Ф┬Г┬П ┬Ц┬К┬Г┬Ц ┬Ц┬К┬З ┬Л┬Х ┬Е┬С╟ж ┬Ж┬З┬Ш┬З┬О┬С┬Т┬Л┬Р┬Й ┬Щ┬Л┬Ц┬К ╟д P] ┬║2LLW PU -VYT┬╗ HUK Z[H` PU]VS]LK ┬С┬Щ╟б ┬Г┬И┬Ц┬З┬Ф ┬Г┬О┬О ┬Ц┬К┬Л┬Х ┬Щ┬С┬Ф┬Н╟б ┬Ы┬С┬Ч ┬Щ┬Г┬Р┬Ц ┬Ц┬С ┬П┬Г┬Н┬З ┬Х┬Ч┬Ф┬З ┬Ц┬С ┬Х┬Ц┬Г┬Ы ╧Р┬Л┬Ц ┬Г┬Р┬Ж ┬Н┬З┬З┬Т ┬Ч┬Т ┬Ц┬С ┬Ж┬Г┬Ц┬З ┬Щ┬Л┬Ц┬К ┬Ц┬К┬З

┬Ж┬З┬Ш┬З┬О┬С┬Т┬П┬З┬Р┬Ц┬Х╟д ┬С┬Ц ┬Г┬Р ┬З┬Г┬Х┬Ы ┬Ц┬Г┬Х┬Н ┬Г┬Р┬Ж ┬П┬С┬Х┬Ц ┬О┬Л┬Н┬З┬О┬Ы ┬Ы┬С┬Ч ┬К┬Г┬Ш┬З ┬Ц┬С ┬И┬С┬Е┬Ч┬Х ┬С┬Р ┬Г ┬Т┬Г┬Ф┬Ц┬Л┬Е┬Ч┬О┬Г┬Ф ┬Г┬Ф┬З┬Г ┬С┬И ┬Л┬Р┬Ц┬З┬Ф┬З┬Х┬Ц ┬Ц┬С ┬Г┬Е┬Е┬С┬П┬Т┬О┬Л┬Х┬К ┬Л┬Ц╟д ┬Й┬Г┬Л┬Р╟б ┬Ц┬К┬З ┬О┬Г┬Ф┬Й┬З ┬Г┬Е┬Е┬С┬Ч┬Р┬Ц┬Л┬Р┬Й ╧Р┬Л┬Ф┬П┬Х ┬Р┬С┬Щ ┬Т┬Ф┬С┬Ш┬Л┬Ж┬З ┬У┬Ч┬Г┬Ф┬Ц┬З┬Ф┬О┬Ы ┬Щ┬З┬Д┬Е┬Г┬Х┬Ц┬Х╟б ┬И┬С┬Ф ┬Л┬Р┬Х┬Ц┬Г┬Р┬Е┬З╟б ╞м ╟г The ┬а Ernst ┬а & ┬а Young ┬а Q2 ┬а 2013, ┬а June ┬а 6, ┬а 2013╟б ╧Р┬Л┬Р┬Г┬Р┬Е┬Л┬Г┬О ┬Ф┬З┬Т┬С┬Ф┬Ц┬Л┬Р┬Й ┬Ч┬Т┬Ж┬Г┬Ц┬З╟д ┬К┬З┬Х┬З

IFRS SPECIAL

TAKE THE TEST: TYPE INTO GOOGLE.COM: ‘IFRS 13’. HERE IS WHAT YOU GET:

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61

IFRS SPECIAL

THE FAB ‘5’ In the first part of this series, we highlighted reasons why there was a need to relook at IAS 27, what changed and who should consider these changes closely. In this second instalment, Rakesh Pardasani makes the transition of IAS 31 to IFRS 11…

T RAKESH PARDASANI PARTNER - RSM DAHMAN

HE CASE for IFRS 11 is not as complicated as IFRS 10.

First of all, under IAS 31 – the structure of the arrangement, that is, whether the arrangement is a jointly controlled asset/ operation or a jointly controlled entity was the sole criteria for selecting a particular accounting treatment. The decision depended solely on t he legal s tructure of t he deal.

There could be two exactly similar arrangements but just because of the fact that in one case, an entity was incorporated and in another c ase, no entity w as i ncorporated would result i n a d ifferent accounting t reatment.

9PNO[Z HUK VISPNH[PVUZ Secondly, you had t wo possible account ing t reat ment s for account ing for invest ment s in joint ly cont rolled ent it ies. You could eit her use propor t ionate consolidat ion, or as an alternat ive, account for t he invest ment using t he equit y met hod.

T his choice was at t he discret ion of t he Company ’s management .

As you a re aware, t he I ASB i s t rying t o r estrict alternative t reatments f or s imilar t ransactions wherever p ossible t o enhance c omparability.

The IASB thus decided that the rights and obligations of the parties in a joint venture relationship should be the deciding factor for accounting treatment, rather than the legal structure or form of the vehicle used. Yes, in some cases the legal structure becomes decisive but broadly, t he r ights a nd obligations

62 July - August 2013

have to be first considered. Let’s have a look first at w hat doesn’t c hange.

1VPU[ VWLYH[PVUZ ]Z 1VPU[ ]LU[\YLZ Under IAS 31, the accounting treatment for an investment in a joint arrangement in the books of the parties depended mainly on the legal structure or form of the arrangement. If the parties to a joint arrangement came together

IFRS SPECIAL

the legal form. Accordingly, IFRS 11 aimed to remove t his a nomaly.

Under IFRS 11, the decision on whether the arrangement is a ‘Joint Operation’ or a ‘Joint Venture’ depends not only on t he legal f orm l ike in I AS 31, but on t he r ights a nd l iabilities of t he parties u nder t he a rrangement. T he question t o ask now i s: “Do the parties to the arrangement have an individual right to the assets and an obligation to the liabilities, relating to the arrangement? Or do the parties only have an obligation to the capital investment and a share in the profits / returns / net assets of the a rrangement?” :LWHYH[L SLNHS LU[P[` On a simple reading it seems that the legal form itself will decide the above question. For instance, if there is a separate legal entity, the parties will only have a share in the net assets but i f t here i s no legal entity, t he p arties will have an individual right to assets and obligations, and accordingly, it may seem that the provisions of I FRS 11 a re not very d ifferent from I AS 31.

However, in many situations, it may happen that even though there is a separate legal entity, the parties do have a right to the underlying assets and liabilities of the legal entity. Take t he e xample o f a s pecial p urpose investment vehicle. Many times two parties come together to invest in a real estate project. They form a separate, preferably offshore, C ompany t o h old t he a sset a nd t hey become s hareholders i n t hat C ompany.

and established an entity which had a separate identity from the parties themselves, it would fall under the category of a ‘Joint Venture’. In other cases, where no separate legal entity was established, it would f all u nder ‘ Jointly controlled asset’ or ‘ Jointly controlled operation’.

As explained above, this could result in inconsistencies in application just based on

In s uch a c ase, e ven t hough t here i s a s eparate legal entity, the rights and obligations of both parties are clearly laid out in the formation documents wherein both parties have a share in the underlying property that they are investing in and are individually responsible f or t heir s hare o f p ayments t o b e made for the project. Accordingly, this will fall under ‘Joint Operations’ under IFRS 11 but under IAS 31, it would’ve fallen under ‘Jointly c ontrolled e ntities’.

Once you are able to determine whether the arrangement is a Joint operation or a Joint venture, the recognition of interest in the joint arrangement i s pretty s imple:

63

IFRS SPECIAL

>OH[ KVLZU»[ JOHUNL& AREA

What is a Joint Venture / Joint arrangement

IAS 31

IFRS 11

IAS 31 laid down two essential characteristics required for applying this standard: A contractual arrangement; and Existence of joint control.

The two essential characteristics remain the same under IFRS 11 as well.

There has to be a contractual arrangement; and The arrangement should give parties joint control.

However, the definition of joint control has undergone a change as explained below.

>OH[ JOHUNLZ& AREA

IAS 31

IFRS 11

Definition of joint control

IAS 31 talked about joint control over the strategic financial and operating decisions.

In line with the change in definition of control in IFRS 10, IFRS 11 also defines joint control as control over activities that significantly affect the investee’s returns on the investment.

Terminology used for joint arrangements

IAS 31 had described 3 types of arrangements: Jointly controlled operations; jointly controlled assets and jointly controlled entities.

IFRS 11 essentially combines jointly controlled operations and jointly controlled assets under the same category because the IASB believes that these are very similar arrangements and the accounting treatment for both these arrangements is also similar.

This however seems like just a change in terminology with no practical effect.

Accounting for joint ventures (earlier known as jointly controlled entities under IAS 31)

IAS 31 prescribed ‘proportionate consolidation’ of the assets, liabilities, revenue and expenses of jointly controlled entities.

Alternatively, the venturer also had an option of using the equity method.

IFRS 11 discontinues the proportionate consolidation method.

IFRS 11 only allows joint venturer to recognise its interest in a joint venture using the equity method in accordance with IAS 28.

i) Joint operations: A Joint operator will recognise its share of a ssets, l iabilities, r evenue and e xpenses i n its own f inancial s tatements; ii) Joint ventures: A Joint venturer will recognise only the net assets using the equity method i n accordance w ith I AS 28. +PZJSVZ\YLZ In the first and second part of this ‘Fab 5’

64 July - August 2013

series, we have tackled the two major changes in standards – IFRS 10 and IFRS 11. The third new s tandard I FRS 12 i s primarily a d isclosure standard and dictates the mandatory and recommended disclosures that are needed to be made in the financial statements of companies who have an interest in other entities. This covers interests that may be in a s ubsidiary, a joint a rrangement, a n a ssociate or a ny o ther entity.

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.

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SALES Christopher Stevenson Tel 04 440 9138 Email chris@cpidubai.com

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

IFRS SPECIAL

STAYING ON TOP Regional Director of ICAEW Middle East, Peter Beynon, on how accounting bodies are delivering clarity and unity towards the adoption of IFRS in the region…

A PETER BEYNON REGIONAL DIRECTOR, ICAEW MIDDLE EAST

S BUSINESS has globalised, the accountancy profession has been forced to follow suit.

It is no longer possible to t hink in purely national terms; not only is t rade increasingly international, but many companies are themselves now multinational with their operations spanning entire regions if not t he world.

This is certainly the case in the Middle East, which not only thrives on global trade but is also home t o r egional a nd i nternational f inance and f inancial s ervices hubs.

The development and widespread adoption of International Financial Reporting Standards (IFRS) has reflected the internationalisation of accountancy. T here a re c urrently more t han 100 c ountries t hat r eport u nder I FRS, i ncluding over t wo t hirds of G20 n ations. *HWP[HS PZ TV]PUN LHZ[^HYKZ In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre (DIFC). Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans t o c onvert by 2015.

66 July - August 2013

The development of I FRS a lso h as t o r eflect geo-­‐ political realities. For most of the last decade, the focus of the International Accounting Standards Board (IASB), which sets IFRS, was on converging with the US accounting standards, the US Generally Accepted Accounting Principles (US GAAP). There was a clear attraction t o h aving a s ingle, g lobal, h igh-­‐ quality accounting language, but now that the US has postponed IFRS adoption yet again this is u nlikely t o h appen i n t he i mmediate f uture.

Moreover, capital is moving eastwards. It is estimated t hat t he E astern hemisphere’s share of global GDP will exceed the West’s by 2015, for t he f irst t ime i n 500 years.

According to the IMF, Asia’s GDP will exceed the combined output of the United Stated

IFRS SPECIAL

some hedging arrangements that make perfect sense f rom t he perspective of r isk m anagement are not eligible and are therefore not always accurately r eflected i n t he accounting.

Under the new system, which introduces a more principles-­‐based approach to this area, this will change, ultimately allowing companies to avoid artificial volatility in earnings. This is just one example; there are other areas of IFRS that could do with improvement, such as the way that company performance is ref lected in the income statement. Overall, it is vital that in order to encourage wider adoption, IFRS are of the highest p ossible q uality, a nd t his w ill r equire constant w ork a nd e volution.

2UV^SLKNL KLSP]LY` So how is this change communicated? What can a ccounting b odies d o t o e nsure t hat t heir knowledge, insight and technical expertise is available to members and stakeholders, and to inf luence the development of the profession o verall?

KNOWLEDGE-SHARING: As one of the oldest professional accountancy bodies in the world, ICAEW has worked to help the accountancy profession develop for almost a century and a half.

and Europe by 2030. It is likely that the focus of the IASB could increasingly shift away from its relationship with the US, and take greater account of the needs of its newer ‘constituency’ members as well as the development o f b usiness. ,]VS]PUN Z[HUKHYKZ IFRS are not static; they also have to evolve to reflect t he r ealities of modern business. T his i s especially t rue a fter t he e conomic shocks of t he last five years, which have focussed attention on t he w ay f inancial r eporting i s c arried out.

An example of t his i s t he c urrent work on IFRS 9, ϐ replace t he I AS 39. Under t he c urrent s tandard, there are exacting rules-­‐based criteria to meet to qualify for hedge accounting. T his means t hat

ICAEW is a professional member organisation, and has a number of approaches to sharing thought leadership, industry and economic research and technical updates. The first is through a suite of internationally-­‐respected IFRS qualifications.

In order to make sure these are available worldwide, they are delivered not just through classroom learning, but also online and w ith d istance l earning o ptions a vailable.

New for 2013 will be a qualification in IFRS for Islamic Finance, which focuses on accounting for Islamic finance transactions from a n I FRS p erspective.

A key part of being a Chartered Accountant is a commitment to continuous professional

Qualifications are a way to attract the best and brightest of tomorrow into the profession; this is why ICAEW offers scholarships to high-­flying Emiratis who want to enter the profession under the ICAEW Emiratisation Scholarship Scheme.

67

IFRS SPECIAL

In 2013, the Chartered Accountants Worldwide initiative was launched to raise awareness of the work that chartered accountants do globally to underpin confidence in business and markets. development. In order to help this process ICAEW ensures that the latest technical information, news and developments are widely available through online journals, factsheets and regular updates and by organising r egular w ebinars.

6U [VW VM JOHUNL Staying up to date means making sure these are also be delivered on mobile and tablet devices. A wealth of technical information as well as the latest in research and thought leadership is available through the Institute Faculties, which play a large part in co-­‐ordinating events and publications to disseminate their work. For more in-­‐depth technical enquiries, there is a library and information service and a separate enquiry service, and regular member alerts contain the latest headline developments with links to m ore i nformation.

makers across the world, sharing experience and e xpertise.

In t he M iddle E ast, ICAEW holds r egular t hought leadership sessions with the Dubai Financial Services Authority, as well as working with Hawkamah on C orporate G overnance i ssues.

Training and knowledge-­‐sharing is another area where accountancy bodies can support the wider profession, as demonstrated by the work of the GCC Accounting and Auditing Organisation. In 2013, ICAEW was asked by GCCAAO to help them set up a framework for a GCC-­‐wide audit quality monitoring unit, and then to help establish the unit itself.

Aiming to ensure that audit quality is as high as possible across all six GCC nations

In this way we can ensure that our members are on top of change, and also have access to Ǥ ϐ are a way to attract the best and brightest of tomorrow i nto t he profession; t his i s w hy ICAEW Ǧϐ want to enter the profession under the ICAEW Emiratisation S cholarship S cheme.

This has recently been recognised by the Bahraini government, who offer financial support through Tamkeen to bright students who w ant t o u ndertake I CAEW q ualifications.

Further afield, ICAEW has launched a centre for accountancy training excellence in Malaysia this year together with leading universities a nd t he M alaysian g overnment. .SVIHS KL]LSVWTLU[ ICAEW is also committed to supporting the wider development of the accountancy profession worldwide. One way in which the profession can help support economic growth is by working with regulators and policy-­‐

68 July - August 2013

SETTING STANDARDS: In the Middle East, IFRS is a requirement for companies within the Dubai International Financial Centre.

Bahrain, Kuwait, Oman and Qatar use IFRS and Saudi Arabia plans to convert by 2015.

IFRS SPECIAL

and Yemen, this is the largest such project that ICAEW has undertaken and a concrete demonstration of how professional bodies and policy-­‐makers can work together to support business and drive economic growth internationally. With specific reference to IFRS, ICAEW has provided training to the Asian Development Bank in the Philippines, the Securities and Exchange Commission of Nigeria and the Institute of Chartered Accountants o f S ri L anka. /PNO WYVMLZZPVUHS SL]LS Capacity building is a further strategy whereby established bodies can help to strengthen nascent organisations in developing economies. By helping create and build national professional qualifications

and training, in line with international benchmarks, a high level of professional and technical standards can be encouraged. This in turn makes both national and international trade e asier a nd m eans p eople c an d o b usiness with c onfidence.

The World Bank recognises the importance of this work, a nd h as s ponsored ICAEW projects i n countries as diverse as Botswana, Bangladesh and C roatia. Having m ade c ontact w ith n ational bodies, the next stage is to encourage sharing knowledge, strategies, and experience, which is the philosophy behind the Accountancy Profession Strategic Forums. So far this year there have been two already, one for national bodies of Central Europe, and one for the countries of t he Former S oviet Union.

Finally, in 2013, the Chartered Accountants Worldwide initiative was launched to raise awareness of the work that chartered accountants do g lobally t o u nderpin c onfidence in business a nd m arkets.

Accountancy is in many ways the keystone of the global economy; nearly all trade rests on trust in the financial reports. Chartered Accountants Worldwide aims to support the role t hat accountancy plays i n d riving g rowth. )\ZPULZZ ^P[O JVUÄKLUJL If accountancy underpins trust in business, then it i s v ital t hat t he t echnical a spects a re up to date, fit for purpose, and constantly able to reflect global economic reality. IFRS is a great example of how this works in practice; it is critical that finance professionals across the world are cognizant of the latest developments and up t o s peed w ith c urrent t hinking.

More widely, a global marketplace demands a level of unity and transparency between national, r egional, a nd i nternational accounting bodies, so it is important for bodies to work together t o s upport a nd s trengthen e ach other.

As one of the oldest professional accountancy bodies i n t he world, ICAEW h as worked t o help the accountancy profession develop for almost a century and a half. Although we cannot say what t he g lobal e conomy of t omorrow w ill look like, it is certain that robust, rigorous and – above all – trusted accountancy will be a key element of growth and prosperity for many years t o c ome.

69

IFRS SPECIAL

WHAT’S THE FUSS ABOUT IFRS 10?

Investors should begin to evaluate their control involvement with investees under the new consolidation standard…

A

YUSUF HASSAN

NEW consolidation standard has been long in the making.

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KPMG’S REGIONAL HEAD OF IFRS

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Ǥ

Ǥ +PMMLYLU[ JVU[YVS PUKPJH[VYZ

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Ǥ ǡ

Contracts of control with foreign owners in the Middle East are often complicated due to the foreign ownership laws and these arrangements are impacted by IFRS 10.

70 July - August 2013

ǡ ϐ Ǥ ϐ ǡ ǡ ǡ ϐ ǡ ǡ Ǥ

Ǥ

ǡ ǡ ǡ

ʹ͹ǡ Ǥ *VUJLW[ VM KL MHJ[V JVU[YVS

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IFRS SPECIAL

Ǥ Ȁ ǡ Ǥ ͳͲǡ ǯ Ǥ

Ǥ Ȃ Ǯ ǯǤ

CONNECTION: In its new consolidation standard, IFRS 10, the IASB has stated that its objective is to develop a single consolidation model applicable to all investees. That model states that an investor consolidates an investee when it has power, exposure to variability in returns, and a linkage between the two.

Ǯ Ǧ ǯ Ǥ

ǡ ǡ ǡ Ǥ ǡ Ǯ ϐ ǯǡ Ǯ ǯǡ

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ͳͲΨǨ

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As many fund managers would be consolidating their funds as a consequence of IFRS 10, an amendment to IFRS 10 was passed by the IASB to allow investment funds to avail of a consolidation exemption on their funds.

-VYLPNU V^ULYZOPW SH^Z

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71

BUSINESS INSIGHTS

CHEMISTRY MATTERS Misreading personality leads to workplace inefficiency, poor team dynamics and personal brand damage, according to Deloitte survey…

C

HIEF FINANCIAL Officers (CFOs) juggle with many diverse stakeholder personalities as part of their job requirement, and often times, knowing how to interact with these individuals can mean the difference between success and failure.

As such, a framework identifying distinct patterns of behavior – dubbed ‘Business Chemistry’ – was created by Deloitte with the aim of not only improving individual ǡ ϐ Ǥ ‘Business Chemistry’ is the product of the collaboration between Deloitte and scientists ϐ Ǧ Ǥ

leverages modern computational techniques to Ǧ Ǥ

50%

OF CFOS CONSIDER THEMSELVES BUSINESS DRIVERS, ACCORDING TO DELOITTE SURVEY 72 July - August 2013

7LYZVUHSP[` WH[[LYUZ

Deloitte, t he 'Power of Business Chemistry', t hese different Business C hemistry t ypes a re outlined

Ǥ Business Chemistry uses a series of 70 behavioural questions to reveal four dominant personality patterns, which a re: i) Drivers: analytical thinkers who are intellectually creative and prefer experimentation over t heorisation ii) ǣ Ǧ ǡ

adaptability allows them to thrive in multiple environments iii) ǣ nuance, particularly skilled at understanding the broader context of a n i ssue iv) Guardians: people who prefer concrete reality, particularly skilled at providing structure a nd m inimising r isk

reveals t hat more t han half consider t hemselves ǡ ͵ͲΨ Ǥ As such, Business Chemistry a s a tool c an not only be used to help recognise personality patterns in colleagues – which would help gain insight into how to connect on a personal level and build Ǧ ǯ Ǥ

BUSINESS INSIGHTS

It is crucial for the CFO to understand the cultural differences between the people he is working with as it establishes trust with them, it helps to communicate with them effectively, and also establishes the common bonds upon which to build a healthy chemistry within a culturally diverse team.

*\S[\YHS KPMMLYLUJLZ Â&#x2018;Â?Â&#x2022;Â&#x2021;Â&#x201C;Â&#x2014;Â&#x2021;Â?Â&#x2013;Â&#x17D;Â&#x203A;ÇĄ Â&#x2022; Â&#x2122;Â&#x160;Â&#x2018; Â&#x2014;Â?Â&#x2020;Â&#x2021;Â&#x201D;Â&#x2022;Â&#x2013;Â&#x192;Â?Â&#x2020;Â&#x2022; Â&#x2013;Â&#x160;Â&#x2021;Â&#x2039;Â&#x201D; Â&#x2018;Â&#x2122;Â?

Business  Chemistry  are  better  suited  to  engage  Â&#x192;Â?Â&#x2020; Â&#x2039;Â?Ď?Â&#x17D;Â&#x2014;Â&#x2021;Â?Â&#x2026;Â&#x2021; Â&#x2022;Â&#x2013;Â&#x192;Â?Â&#x2021;Â&#x160;Â&#x2018;Â&#x17D;Â&#x2020;Â&#x2021;Â&#x201D;Â&#x2022;ÇĄ Â?Â&#x192;Â?Â&#x192;Â&#x2030;Â&#x2021; Â&#x2013;Â&#x2021;Â&#x192;Â? Â&#x2022;Â&#x2013;Â&#x201D;Â&#x2021;Â?Â&#x2030;Â&#x2013;Â&#x160;Â&#x2022; Â&#x192;Â?Â&#x2020; Â&#x2122;Â&#x2021;Â&#x192;Â?Â?Â&#x2021;Â&#x2022;Â&#x2022;Â&#x2021;Â&#x2022; Â&#x192;Â?Â&#x2020; Ď?Â&#x17D;Â&#x2021;Â&#x161; Â&#x2013;Â&#x2018; Â?Â&#x2014;Â&#x17D;Â&#x2013;Â&#x2039;Â&#x2019;Â&#x17D;Â&#x2021; Â&#x201D;Â&#x2018;Â&#x17D;Â&#x2021;Â&#x2022;ÇĄ Â&#x192;Â&#x2022; Â?Â&#x2021;Â&#x2021;Â&#x2020;Â&#x2021;Â&#x2020;Ǥ â&#x20AC;&#x153;This  report  is  particularly  relevant  to  the  Middle  East  region  because  of  the  additional  Â&#x2026;Â&#x160;Â&#x192;Â&#x17D;Â&#x17D;Â&#x2021;Â?Â&#x2030;Â&#x2021; Â&#x2013;Â&#x160;Â&#x192;Â&#x2013; Â&#x2022; Â&#x2C6;Â&#x192;Â&#x2026;Â&#x2021; Â&#x160;Â&#x2021;Â&#x201D;Â&#x2021; Č&#x201A; Â?Â&#x192;Â?Â&#x2021;Â&#x17D;Â&#x203A;ÇĄ Â&#x2122;Â&#x2018;Â&#x201D;Â?Â&#x2039;Â?Â&#x2030; with  people  from  a  wide  variety  of  cultural  backgroundsâ&#x20AC;?  explains  James  Babb,  Partner  a nd  Â&#x201D;Â&#x2018;Â&#x2030;Â&#x201D;Â&#x192;Â?Â?Â&#x2021; Â&#x2021;Â&#x192;Â&#x2020;Â&#x2021;Â&#x201D;ÇĄ Â&#x2021;Â&#x17D;Â&#x2018;Â&#x2039;Â&#x2013;Â&#x2013;Â&#x2021; Â&#x2039;Â&#x2020;Â&#x2020;Â&#x17D;Â&#x2021; Â&#x192;Â&#x2022;Â&#x2013;Ǥ â&#x20AC;&#x153;Understanding  t he  c ultural  d ifferences  between  people  on  top  of  their  individual  personality  traits  makes  it  even  more  challenging  for  a  Â&#x2013;Â&#x2018; Â&#x201D;Â&#x2021;Â&#x17D;Â&#x192;Â&#x2013;Â&#x2021; Â&#x2013;Â&#x2018; Â&#x2013;Â&#x160;Â&#x2021; Â&#x2019;Â&#x2021;Â&#x2018;Â&#x2019;Â&#x17D;Â&#x2021; Â&#x160;Â&#x2021; Â&#x2039;Â&#x2022; Â&#x2122;Â&#x2018;Â&#x201D;Â?Â&#x2039;Â?Â&#x2030; Â&#x2122;Â&#x2039;Â&#x2013;Â&#x160;ÇĄ establish  trust  with  them,  communicate  with  Â&#x2013;Â&#x160;Â&#x2021;Â? Â&#x2021;Â&#x2C6;Â&#x2C6;Â&#x2021;Â&#x2026;Â&#x2013;Â&#x2039;Â&#x2DC;Â&#x2021;Â&#x17D;Â&#x203A;ÇĄ Â&#x192;Â?Â&#x2020; Ď?Â&#x2039;Â?Â&#x2020; Â&#x2013;Â&#x160;Â&#x2021; Â&#x2026;Â&#x2018;Â?Â?Â&#x2018;Â? Â&#x201E;Â&#x2018;Â?Â&#x2020;Â&#x2022;

CFOs who understand their own business chemistry are better suited to engage and influence stakeholders, manage team strengths and flex to multiple roles, as needed. upon  which  t o  build  a  healthy  chemistry  w ithin  Â&#x192; Â&#x2026;Â&#x2014;Â&#x17D;Â&#x2013;Â&#x2014;Â&#x201D;Â&#x192;Â&#x17D;Â&#x17D;Â&#x203A; Â&#x2020;Â&#x2039;Â&#x2DC;Â&#x2021;Â&#x201D;Â&#x2022;Â&#x2021; Â&#x2013;Â&#x2021;Â&#x192;Â?ÇĄÇł Â&#x160;Â&#x2021; Â&#x192;Â&#x2020;Â&#x2020;Â&#x2022;Ǥ Business  Chemistry  is  not  only  about  creating  a  personal  advantage,  but  also  about  creating  a  competitive  advantage  by  creating  better  alignment  w ithin  t eams,  better  engagement  a nd  relationships  with  stakeholders  and  a  better  understanding  of  how  to  change  perceptions  Â&#x192;Â?Â&#x2020; Â&#x201E;Â&#x2014;Â&#x2039;Â&#x17D;Â&#x2020; Â&#x2026;Â&#x201D;Â&#x2021;Â&#x2020;Â&#x2039;Â&#x201E;Â&#x2039;Â&#x17D;Â&#x2039;Â&#x2013;Â&#x203A; Â&#x2122;Â&#x2039;Â&#x2013;Â&#x160;Â&#x2039;Â? Â&#x2013;Â&#x160;Â&#x2021; Â&#x201D;Â&#x2018;Â&#x17D;Â&#x2021;Ǥ

73

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

Deloitte  Corporate  Finance  Limited  has  announced  the  appointment  of  James Dervin  as  a  Managing  Director  in  the  Middle  East  North  Africa  Reorganisation  Services  team.  James  has  been  with  Deloitte  since  2005,  initially  based  in  London  working  in  the  Restructuring  Services  team.  He  transferred  to  the  Middle  East  in  early  2012  and  over  the  last  year  has  played  an  integral  part  in  the  rapid  growth  of  the  Reorganisation  Services.  The  Deloitte  Reorganisation  Services  team  is  a  restructuring  advisory  business  acting  Â&#x2C6;Â&#x2018;Â&#x201D; Â&#x2026;Â&#x2018;Â&#x201D;Â&#x2019;Â&#x2018;Â&#x201D;Â&#x192;Â&#x2013;Â&#x2021;Â&#x2022;ÇĄ Â&#x2C6;Â&#x192;Â?Â&#x2039;Â&#x17D;Â&#x203A; Â&#x2018;Â&#x2C6;Ď?Â&#x2039;Â&#x2026;Â&#x2021;Â&#x2022;ÇĄ Â&#x2030;Â&#x2018;Â&#x2DC;Â&#x2021;Â&#x201D;Â?Â?Â&#x2021;Â?Â&#x2013; entities  and  lenders  of  varying  sizes,  across  all  sectors  in  the  GCC.  Â

Malcolm Furber  has  been  elected  President  of  the  Chartered  Institute  of  Management  Accountants  (CIMA).  Furber  has  been  a  member  of  CIMAâ&#x20AC;&#x2122;s  council  for  15  years  and  was  involved  Â&#x2039;Â? ÇŻÂ&#x2022; Â&#x17D;Â&#x192;Â&#x2022;Â&#x2013; Â&#x2C6;Â&#x2018;Â&#x2014;Â&#x201D; Â&#x201C;Â&#x2014;Â&#x192;Â&#x17D;Â&#x2039;Ď?Â&#x2039;Â&#x2026;Â&#x192;Â&#x2013;Â&#x2039;Â&#x2018;Â? Â&#x201D;Â&#x2021;Â&#x2DC;Â&#x2039;Â&#x2021;Â&#x2122;Â&#x2022; and  the  review  of  its  ethical  code.  He  was  previously  chairman  of  CIMAâ&#x20AC;&#x2122;s  Lifelong  Learning  Policy  Committee  and  is  also  a  regular  speaker  for  CIMA  globally  on  integrated  business  planning  and  performance  management.  In  addition  to  Furberâ&#x20AC;&#x2122;s  appointment,  Keith  Luck  FCMA,  CGMA,  has  been  elected  Deputy  President,  and  Myriam  Madden  FCMA,  CGMA,  has  been  appointed  Vice  President.  Luck  has  extensive  experience  in  both  the  public  and  private  sector  and  has  been  a  CIMA  speaker  and  an  ambassador  for  the  organisation  throughout  his  career.  In  2004  he  was  voted  CIMAâ&#x20AC;&#x2122;s  Business  Leader  of  the  Year  for  his  pivotal  role  Â&#x2039;Â? Â&#x2013;Â&#x201D;Â&#x192;Â?Â&#x2022;Â&#x2C6;Â&#x2018;Â&#x201D;Â?Â&#x2039;Â?Â&#x2030; Â&#x2013;Â&#x160;Â&#x2021; Ď?Â&#x2039;Â?Â&#x192;Â?Â&#x2026;Â&#x2021;Â&#x2022; Â&#x2018;Â&#x2C6; Â&#x2013;Â&#x160;Â&#x2021; Metropolitan  Police.

74 July - August 2013

KPMG  Lower  Gulf  has  announced  the  appointment  of  Sophia Yazane  as  a  manager  in  its  Tax  department.  Sophia  has  vast  experience  in  advising  on  cross-­â&#x20AC;?border  mergers,  acquisitions  and  corporate  restructuring  as  well  as  holding,  Â&#x2039;Â?Â&#x2013;Â&#x2021;Â&#x17D;Â&#x17D;Â&#x2021;Â&#x2026;Â&#x2013;Â&#x2014;Â&#x192;Â&#x17D; Â&#x2019;Â&#x201D;Â&#x2018;Â&#x2019;Â&#x2021;Â&#x201D;Â&#x2013;Â&#x203A; Â&#x192;Â?Â&#x2020; Ď?Â&#x2039;Â?Â&#x192;Â?Â&#x2026;Â&#x2039;Â?Â&#x2030; Â&#x2022;Â&#x2013;Â&#x201D;Â&#x2014;Â&#x2026;Â&#x2013;Â&#x2014;Â&#x201D;Â&#x2021;Â&#x2022;Ǥ Â&#x160;Â&#x2021; Â&#x2039;Â&#x2022; Â&#x192;Â? Â&#x2021;Â&#x161;Â&#x2019;Â&#x2021;Â&#x201D;Â&#x2013; Â&#x2018;Â? Â&#x2013;Â&#x192;Â&#x161;ÇŚÂ&#x2021;Â&#x2C6;Ď?Â&#x2039;Â&#x2026;Â&#x2039;Â&#x2021;Â?Â&#x2013; investment  structures  for  regulated  and  non-­â&#x20AC;?regulated  investment  funds  and  real  estate  structures.  She  also  focuses  on  tax  planning  investment  vehicles  to  preserve  family  wealth  and  minimise  their  tax  burden  and  structuring  of  family  estates  for  high  net  worth  individuals.  Sophia  holds  multiple  Masters  Degrees  including,  International  tax  law,  Business  and  corporate  law  and  Legal  and  Strategic  Corporate  Management.  She  will  be  based  Â&#x2018;Â&#x2014;Â&#x2013; Â&#x2018;Â&#x2C6; ÇŻÂ&#x2022; Â&#x2014;Â&#x201E;Â&#x192;Â&#x2039; Â&#x2018;Â&#x2C6;Ď?Â&#x2039;Â&#x2026;Â&#x2021;Â&#x2022;Ǥ

Bob Hirth,  a  senior  managing  director  with  Protiviti,  has  been  named  chairman  of  the  Committee  of  Sponsoring  Organisations  of  the  Treadway  Commission,  the  organisation  that  provides  thought  leadership  and  guidance  on  internal  control,  enterprise  risk  management,  and  fraud  deterrence.  During  his  career,  he  has  served  as  executive  vice  president  for  global  internal  audit  for  Protiviti  and  is  currently  serving  a  two-­â&#x20AC;?year  term  (2012-­â&#x20AC;?2013)  on  the  Standing  Advisory  Group  of  the  Public  Company  Accounting  Oversight  Board  (PCAOB).  He  is  a  member  of  Financial  Executives  International  (FEI)  and  The  Institute  for  Internal  Auditors  (IIA).  In  March  2013,  Hirth  was  inducted  into  The  Institute  of  Internal  Auditorsâ&#x20AC;&#x2122;  Hall  of  Distinguished  Audit  Practitioners.  Â

Crowe  Horwath  has  appointed  Naresh Phanfat  as  its  A ssociate  Partner  -­â&#x20AC;?  Corporate  Finance.  His  domain  expertise  in  t his  role  w ill  include  Corporate  Finance,  Business  Valuations,  Feasibility  Studies,  Business  Plans,  Intangibles  &  Intellectual  Property  R ights,  Valuations,  Purchase  Price  A llocations,  Due  Diligences,  Mergers  &  Acquisitions.  Naresh  is  a  National  R ank  Holder  Chartered  Accountant  f rom  t he  Institute  of  Chartered  Accountants  of  India,  Â&#x160;Â&#x192;Â&#x2022; Â&#x2026;Â&#x2018;Â?Â&#x2019;Â&#x17D;Â&#x2021;Â&#x2013;Â&#x2021;Â&#x2020; Â&#x2013;Â&#x160;Â&#x2021; ÇŽ Â&#x2014;Â&#x192;Â&#x17D;Â&#x2039;Ď?Â&#x2039;Â&#x2021;Â&#x2020; Â&#x192;Â&#x17D;Â&#x2014;Â&#x2021;Â&#x201D;ÇŻ Â&#x2021;Â&#x201D;Â&#x2013;Â&#x2039;Ď?Â&#x2039;Â&#x2026;Â&#x192;Â&#x2013;Â&#x2021; Â&#x201D;Â&#x2018;Â&#x2030;Â&#x201D;Â&#x192;Â?Â?Â&#x2021; Â&#x2018;Â&#x2C6;

ÇĄ Economics  National  Merit  Holder,  and  a  Mathematics  City  Topper.  He  has  more  than  14  years  of  prior  international  work  experience  w ith  Standard  &  Poorâ&#x20AC;&#x2122;s  India,  P wC  London,  K PMG  Corporate  Finance  Bahrain  and  Dubai  World  UAE. Â

Emirates  N BD  h as  announced  t hat  it  h as  appointed  Shayne Nelson  as  t he  Groupâ&#x20AC;&#x2122;s  new  Chief  E xecutive  Officer.  P rior  t o  this  appointment,  Shayne  Nelson  w as  t he  C EO  of  Standard  C hartered  P rivate  B ank  with  additional  r esponsibilities  f or  the  S ME  B anking  s ection.  He  a lso  served  a s  t he  C hairman  of  Standard  Chartered  S aadiq  I slamic  B anking  and  t he  D irector  of  t he  Standard  Chartered  B oard  f or  C hina.  S hayne  was  a  member  of  t he  C onsumer  Bank  Steering  Group,  t he  B ankâ&#x20AC;&#x2122;s  Executive  B usiness  Strategy  Group  and  a  member  of  t he  B ankâ&#x20AC;&#x2122;s  D iversity  and  I nclusion  C ouncil.  S hayne  i s  a  graduate  member  of  t he  Australian  Institute  of  C ompany  D irectors  a nd  an  A ssociate  Fellow  of  t he  Australian  Institute  of  Managers. Â

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