The CFO Middle East | January 2015 by CFO Middle East

BRING IT HOME!

WORLD VIEW

DARWINIAN CFO

A NEW ACCOUNTANCY CERTIFICATION IN THE UAE

THE GLOBALLY ASTUTE CFO

PE DEMANDS A LARGER REMIT

Vol. 1 ISSUE 2

PLASTIC FANTASTIC

BILL CHAPPELL’S PROMISES AREN’T MADE OF SILICON

CFOs: THE WORLD IS NOT ENOUGH MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Assistant Editor Steven Pradia steven.pradia@cpimediagroup.com +971 4 440 9114 ADVERTISING Publishing Director Rajashree Rammohan raj.ram@cpimediagroup.com +971 4 440 9131 Commercial Director - Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120 DESIGN Head of Design Glenn Roxas Senior Graphic Designer Froilan Cosgafa IV Production Manager James Tharian Data Manager Rajeesh Melath Printed by Al Ghurair Printing & Publishing LLC

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The world is apparently growing smaller every day. This is made clear with every opening information flow, branch office opened and intercontinental deal struck. Globalisation is very loudly rearing its influence. As avenues widen flush with communication, business concerns become more closely aligned. As such, reports are emerging which indicate that global markets are easing from the financial crisis and once again trading at levels seen prior to the crash. Central to the renewed expansion is the CFO. The levels of data sophistication private equity investors are attaining speak directly to the shift. The capital PE yields has grown to new heights. As a result, this intercontinental industry is relying a great deal more on CFOs. The strategic purview of company financials which only today’s evolved CFO can offer has become imperative. An analysis of this progressively essential conduit of finance is present within this month’s coverage. The relationship between the United Arab Emirates and India is a classic example of successful global relations. This issue’s country report focused on the subcontinent outlines how political developments will drive the country forward whilst educate new investors interested in the space. While Indian tourists flock to the UAE’s capital Emirate Abu Dhabi in record numbers, the country as a whole remains by far India’s most important trade partner. Nearly $800 billion of trade revenue was reported between the countries last year. The figure is set to increase, so what better a time than now for finance professionals to gain a better understanding of this all important global partner? Expats of all stripes have flocked to the UAE. Alongside the country’s enviable geographic positioning, globalisation has long shaped where the Emirates head next. In a bid to prepare local Emiratis for larger gains abroad whilst better facilitate its accountancy bona fides inside the country, the United Arab Emirates Certified Accountant (UAECA) Certification was launched in Dubai in early November. With global accountancy body ACCA as a partner, this lofty new certification will bolster Emiratisation aims. The UAE is preparing an even more financially global local populace with a goal of increasing the number of qualified Emirati accountants in the country in the coming years. The UAECA will almost certainly ensure realisation. The CFO’s remit is growing and with it the physical landscape the role oversees. Tech CFOs now merge financials with tomorrow’s next bright idea regionally. Meanwhile auditing experts act as the pride of a nation. This issue of CFO has a global outlook which matches just how far reaching today’s financial professional is consistently proving to be.

Steven Pradia Assistant Editor

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BUILDING BE T TER BUSINESSES - GLOBALLY

CONTENTS 8

Infographic CFOs around the world

DUBAI SILICON OASIS The UAE’s premiere tech freezone as overseen by its top finance executive.

“People talk about strategy... but getting the numbers right must always be the number one thing.”

UAECA A new accountancy certification reaches the Emirates.

CFO Roundtable Citi Commercial Bank hosts a discussion in Dubai.

India A closer look at the investment prowess of the subcontinent.

Procurement A.T. Kearney delivers a report aimed at CFOs.

Saed Al Sharid

“Trying to do business while not understanding accounting is like getting into the ocean and not knowing how to swim; you will drown.”

CONTENTS markets 30 Emerging 34 CIMA A how to for investment The Institute in the world’s most promising localities.

revamps its reknowned syllabus.

ERP IT business solutions are evolving in line with the role of Chief Financial Officer.

Private Equity Buyout firms demand more stringent financial data.

Competency Crisis The Institute of Management Accountants addresses a looming gap.

Lindsay Degouve de Nuncques

A new face heads up the ACCA’s UAE chapter.

“Our qualification is about complete finance professionals.” 34

WIEF

The World Islamic Economic Forum sets up in Dubai for its 10th anniversary.

Tech Talk

NMDC Shaping the world’s coastlines as seen by the CFO.

David Allen

Opinion

The business coach and best selling author offers more of his recipe in a Q&A.

Geetu Ahuja of CIMA on the essentials of globalisation.

The best iPad apps for the global finance professional.

PROJECTIONS

CFO Infographic

expect M&A activity to rise over the next year

CFOs express rising optimism

In North America, 39% of CFOs are older than 50 years

47% 42% 20%

of CFOs believe it's a good time to take greater risks

rate this economy as good or very good

of CFOs are optimistic about financial prospects

expect a major merger or acquisition

95%

71%

38% 13% Europe

21%

49%

NORTH AMERICA

49% Europe

North America

CFO GLOBALISATION INFOGRAPHIC

North America

29%

Optimism Risks and opportunities

South America

Growth and expansion

Lowest

% of CFOs with total annual compensation including bonus and benefits of over US$255,000

% of CFOs younger than 35 years old when they attained their position

43% South America

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PROJECTIONS

CFO Infographic

believe international expansion will play a major role in in business development see new product or service launches as a key growth opportunity

35%

39% 68%

40%

are positive about the future state of the Indian economy

of CFOs are confident about credit availability in the future

44%

of CFOs are now more optimistic than in the last quarter

72% MIDDLE EAST

AFRICA

56%

of CFOs believe financial risk management policies are not significantly aligned to cover market risks

of CFOs feel that the finance function will play a larger role in their companyâ&#x20AC;&#x2122;s development and execution of business strategy

of CFOs spend significant amounts of time as strategists for company growth

SOUTHEAST ASIA

INDIA

On average, CFOs worldwide attain their position between the ages of 30 and 39

73%

of CFOs are now more involved in risk management

26% of CFOs are satisfied with the performance of their finance function

51%

consider pricing pressures as the top growth inhibitors

48%

31%

are hopeful about organisational growth opportunities

55%

of CFOs willing to take greater risks

14% Asia

of CFOs are more optimistic than last quarter

30% Pacific

76%

36%

of CFOs will pursue organic expansion

PACIFIC 18%

31% 30% Asia Highest

AUSTRALIA Pacific

WOMEN AS CFOS (% OF FEMALE CFOS, IN % OF RESPONDENTS) (% of respondents surveyed)

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SOURCES: Michael Page International, Global CFO Barometer 2012 by Michael Page International, Deloitte CFO Signals â&#x20AC;&#x201C; Q1 2014, Deloitte CFO Signals Q4 2013, Robert Half CFO Insights

MARKET OUTLOOK

UAECA Launch

CERTIFICATION: TAKING REGIONAL OWNERSHIP AAA launches an accountancy Certification for the UAE in collaboration with ACCA.

The United Arab Emirates Chartered Accountants (UAECA) Qualification launched at Dubai’s Armani Hotel 3 November by the UAE Accountants and Auditors Association (AAA) in association with the global accountancy body ACCA (Association of Chartered Certified Accountants). The announcement coincided with UAE National Flag Day and advanced ever expanding Emiratisation aims across the country. With the support of the ACCA, the skills gained will not only lead local UAE accountants to excel across the Emirates but also to encourage further growth internationally. A number of notable local leaders spoke at the event and

expressed their delight and favorable expectations for the UAECA. His Excellency Sultan Bin Saeed Al Mansouri, the UAE Minister of Economy, Saif Abed Al Muhairi, Chairman of the Board, AAA, Abdullah Amiri, Financial Manager, AAA and Ahmad Darwish, Secretary General, AAA and Chair of ACCA’s members advisory committee in the UAE, each offered speeches to the crowd of assembled finance professionals. “We are confident that UAECA will be the ambition of young Emiratis who would like to be the future leaders in the finance field,” said Al Muhairi. The UAECA qualification is the national qualification of the UAE and is based on

“We are confident that UAECA will be the ambition of young Emiratis who would like to be the future leaders in the finance field.”

the globally recognised ACCA qualification. This criterion will provide a dual-branded, internationally recognised, IFAC compliant route to membership of both AAA and ACCA. Said Stuart Dunlop, regional director, MENASA – ACCA: “This unique partnership between ACCA and AAA will give students access to a national qualification making their skills and knowledge globally and locally relevant. Once qualified as an ACCA member, they will also be eligible to apply for membership to AAA, meaning they can use the titles ACCA and UAECA after their names. And because this partnership supports

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MARKET OUTLOOK

UAECA Launch

The new qualification has a good deal of promise for bolstering Emirati involvement in local accountancy as well as international ventures which lie beyond the country’s borders.

the government’s initiative to develop the accountancy and finance profession, they will benefit from enhanced career opportunities as more employers and stakeholders choose to work with us in the future.” Emiratis in the accountancy field joined the procession eager to take part furthermore in what the AAA has planned, unequivocally encouraged by the Association’s hand in the UAECA’S launch. The new qualification has stoked promise for bolstering Emirati involvement in local accountancy as well as international ventures which lie beyond the country’s borders. “As an ACCA member I’m really proud the ACCA route

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Ahmad Darwish, Secretary General, AAA

Saif Bin Abed Al Muhairi, Chairman, AAA

to membership has formed the basis of the new national qualification of the UAE. It gives aspiring Emiratis recognition on a local and global stage and is a unique opportunity that will develop our careers and the profession in the UAE,” said Ayesha Al Zaabi, Senior Accountant of Group Finance Aerospace & Engineering Services, Mubadala. The future of accountancy appears brighter than ever in the UAE with the unveiling of an internationally supported qualification specific to the country. The potential increase of Emirati participation spells great promise for the finance industry as it grows from within.

MARKET OUTLOOK

CFO Roundtable

In changing times CITI COMMERCIAL BANK CORRALS A powerful meeting of minds

One of the trends in world business currently attracting considerable comment and debate is the changing role of the CFO. No longer simply the custodian of the business’ finance or the head of accounts, the CFO is increasingly seen as a master strategist and the key architect of corporate decision-making. As such, a roundtable event held by Citi - in collaboration with Grant Thornton - was both a timely and revealing landmark on shifting attitudes and aspiration.

The management guru Tom Peters recently commented that: “In these perverse and perhaps illusory times, is it any wonder that the CFO is seen as the one reliable point of reference - the one person from the C-suite cut out for more responsibility and bigger things in the business?” Citi Commercial Bank and Grant Thornton echoed the importance of this shifting role by gathering a collection of leading CFOs and finance executives at Dubai’s Grosvenor House hosting a keynote round table called ‘The Changing Role of the CFO’. In a world where CFOs are increasingly wearing a number of new hats within their respective enterprises, the event asked pertinent questions such as -

• Whether the CFO is increasingly the business’ key strategist? • Whether or not the role is more and more impacted by changing legislation and regulation? • Is the CFO now effectively the CEO-in-waiting? • What is the role of management education in this new mix? So while much has been written lately about how essential it is that the CFO’s function evolve and change, the day’s discussion took an overtly practical view and gathered the opinions of the individuals at its core. Hosted by Paul Godfrey, Group Editorial Director

“The CFOs duties have changed as strategy and other focuses are becoming increasingly important.”

at CPI Media Group, the discussion offered a candid conversation of lively opinions, bringing together key individuals from prestigious and influential businesses based in the UAE. The spirited discussion delved into how varied and increasingly imperative the Chief Financial Officer’s role has become. Vincent Valladares, Managing Director, Middle East Head, Citi Commercial Bank, led the vibrant discussion with the support of Anand Nagaraj, Vice President, Head Product Development, Citi Commercial Bank whilst Grant Thornton Partners Jay Raney and Amgad Nassif offered their views as well.

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MARKET OUTLOOK

CFO Roundtable

Vincent Valladares offers his position.

Members of the roundtable trade ideas.

ROUNDTABLE ATTENDEES Vincent Valladares, Managing Director, Middle East Head, Citi Commercial Bank Anand Nagaraj, Vice President, Head Product Development, Citi Commercial Bank Jay Raney, Partner, Grant Thornton

CFO or CCO? “The duties have changed in some very clear ways. A phrase that I am constantly coming across and strongly agree with is that we should be thinking of the CFO as the Chief Commercial Officer as opposed to someone who deals solely with finance. Responsibilities central to finance continue to exist of course, but strategy and other focuses are becoming just as if not more important,” commented Rishi R. Vig, ZAFCO CFO. In addition to how much larger a remit commercial decisions are demanding, the importance of regulatory protocols was a muchdiscussed topic. The post-

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Amgad Nassif, Partner, Grant Thornton Paul Godfrey, Moderator, Group Editorial Director, CPI Media Group Steven Pradia, Assistant Editor, The CFO Middle East Ganapathi Bhat, Senior Manager of Finance, GEMS Education Mark Downie, Financial Controller, Proclad Nimesh Lokhandwala, ICAI Jehangir Pocha, Himalaya Kamal Shah, Finance Manager, Logicom Rishi Vig, CFO, Zafco Low Wai Leng, Financial Controller, Dubai Precast Rajeev Jain, CFO, Afri Ventures K.G. Vincent, Finance Director, FDC International Ramesh Pemmasani, Head of Accounts, Intersun Nagesh Nadig, AIC.

recession environment has created an atmosphere rife with new regulations which CFOs are expected to master as these international enterprises venture into new markets and encounter sensitive and risk management-oriented frameworks. Citi’s Vincent Valladares observed: “Regulatory issues are becoming bigger for banks, as well as compliance. And when we look at doing business with companies we want to look at those with good management teams because otherwise it can become difficult. The CFO plays a very important role within this process.”

CEO waiting in the wings? When the group was quizzed on their individual desires to become CEO, every hand around the table went skywards, with an affirmative “yes all of us!” - highlighting how commercially-minded today’s CFOs have become. Not to mention just how axiomatic the relationship between CEO and CFO consistently proves to be. Another factor is that amid all this diverse change - in roles, working contexts and background economics - the CFO is seen very much as the person creating order, control and standardization. No small task! Perhaps the only certainty is that the communication of ideas is leading the charge forward for one of the business world’s most important roles: and The Changing Role of the CFO provided a definitive benchmark for this onward march.

Country focus

India

SUBCONTINENTAL SURGE With an eye towards the nation’s key partnership with the Middle East, the following India country report shares economic prospects accounting for last year’s instability – defining what investors can gain moving forward. By Arvind Chari

Last year was undoubtedly a turbulent time for emerging markets due to political instability, inflation and the fledgling recovery in the West all causing significant headwinds. Unsurprisingly, this has led some commentators to be sceptical about the prospects for these markets, including India. But the Indian economy is showing signs that it will weather the challenges of the next few years. This may not be an easy task given the

manner the Indian rupee plunged in response to the US Federal Reserve’s decision to taper asset purchasing. Nevertheless, India does have the political will to make the necessary reforms to deliver on its potential. While the Fed’s decision has caused some fallout in emerging markets, commentators expect that this will tail off over time. Meanwhile, India’s economy is driven by domestic demand, which means that

India does have the political will to make the necessary reforms to deliver on its potential.

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COUNTRY FOCUS

India

India’s debt market needs to attract stable investors over ‘bond tourists’; short term foreign flows evident in India’s bond markets.

it is better placed than most to deal with the world postquantitative easing. Without the so-called ‘taper tantrum’, investors in India might have focused more on the positives in 2013. But given the overall improvements in the economy and the political outlook, we feel the India narrative will be harder to ignore in Q4. One of the most significant changes has been the appointment of Dr. Raghuram Rajan as governor of the Reserve Bank of India (RBI)

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STAT FACTS

$791b Total trade between India and the UAE in ‘13

6.4% Expected growth of India’s economy in ‘15

last year. He is clearly part of a dying breed of central banker: that is, one who actually knows how the world works. He will make mistakes, but the most important thing is that he will be trying to move India in the right direction, as shown by his decision to continue with a hike in interest rates at the end of January. Bond and currency markets have reacted very well to this move, which shows the bank is now ahead of the curve in fighting inflation. In October, Rajan remarked that

India’s debt market needed to attract stable investors over ‘bond tourists’, a reference to the short-term foreign flows that have been evident in India’s bond markets. His stance is an indication that policies could be shifted to attract more long-term, stable money into India’s government bond markets, away from a focus on the foreign-bank ‘proprietary’ investments that dominate flows currently. India’s current account deficit (CAD) was set to halve

Country focus

India

Significant Japanese investment into India’s infrastructure is a further boost to the country and this relationship will be one to watch over the coming years.

in the year ending March 2014. It was due to fall to 2.5% from 4.8% of GDP in 2013. The fall in gold imports, alongside currency depreciation, was a major contributing factor to this reduction. India’s exports became more competitively priced over Q1 2014, which has led to higher exports in textiles, chemicals and leather goods, while the drop in the value of the rupee has also led to a fall in non-oil/gold imports. We expect the CAD to increase to around 3% of GDP for this financial year as gold import restrictions are removed, a shift that should still be easily fundable. Additionally, the RBI’s FX reserves have increased by $34bn through the bank and non-resident Indian deposit swaps, which was a much higher figure than anticipated. This gives the RBI the additional firepower to intervene in the markets if it is necessary to counteract currency volatility. In fact, the

STAT FACTS

162K Indian tourists in Abu Dhabi YTD

rupee has been remarkably stable since October and has steadily outperformed its other ‘fragile’ emergingmarket peers. There has also been an improvement in how other countries perceive India. Net foreign direct investment is stable, despite some negative sentiment driven by the outflows from the bond markets and banks. Vodafone, described by Rajan as ‘the poster child for companies with difficulties in India’, is investing more in spectrum and also buying out minority operators. In addition, significant Japanese investment into India’s infrastructure is a further boost to the country and this relationship will be one to watch over the coming years. Overall, the world has a much better impression of India than it did a few years ago, when the country was facing significant obstacles. In 2010, increasing inflation, expanding fiscal deficits and an escalating CAD – all coupled with slowing growth rates – put India in a very difficult position. But in 2012, the government realised that the current situation could not continue and, since then, there has been a much greater focus on reform. A mixture of poor growth and bad policies dramatically hampered India’s progress earlier this century, frustrating many investors. But the country is now beginning to drive a wedge between itself and the other, more troubled emergingmarket economies. We feel

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COUNTRY FOCUS

India

TOP TIPS FOR DOING BUSINESS IN INDIA

Hire a local manager or partner who has a very good understanding of local rules and regulations. Be patient and have realistic expectations – things take time to work out in India.

Have a longer-term investment horizon because the Indian rupee will remain volatile for a while.

Don’t view volatility as a risk; view the integrity of the government and management as a risk.

Travel to India and feel the ‘micro’ India story rather than just read about the ‘macro’ India story.

Country file Population size: 1.2 billion Area: 3,287,263km2

that these differences will mean that India significantly outperforms those economies over the coming years. And while we might still be facing some turbulent times, for India, at least, the dark clouds are beginning to break. As with any emergingmarket economy, the next few years will present challenges alongside opportunities, and investors will have to

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be comfortable with this state of affairs. But India is committed to making the reforms it needs to improve its future. The country has much better potential for growth than any developed country and it is also in a far better position than many of its emerging-market peers. Now is the time to take advantage of all that India has to offer to investors.

Type of government: Federal republic Official language: Hindi Capital city: New Delhi Largest city: New Delhi GDP (2012): $1.825 trillion Central government debt as a proportion of GDP: 67% Currency: Indian rupee Conversion rate against the euro: 0.013

TECHNOLOGY

Cover Story

Innovationâ&#x20AC;&#x2122;s Bottom Line Bill Chappell occupies a rare space as the CFO of Dubai Silicon Oasis, a free zone dedicated to the development of technology across the emirate. In the following interview he shares with CFO Magazine how far along technology has come in the UAE and why the figures are the most important aspect of his role as Chief Financial Officer.

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TECHNOLOGY

Cover Story

Dubai Silicon Oasis (DSO) occupies a vast 7.2 million square metre stretch of land in the northern reaches of the UAE’s most globally recognised emirate. Established in 2005 as a government-owned free zone devoted to the development of technology, DSO has in the time since welcomed over 1,087 companies into a space of which more than 59% of has been developed. Responsible for liaising with DSO’s companies both large and small whilst overseeing the free zone’s balance sheet, CFO Bill Chappell mans a unique station as a finance executive with a keen eye for technological growth. “I’ve been with Dubai Silicon Oasis for nine years and my role is rather split. I am the finance director but I’m also responsible for our initiatives on technology incubation and investment which is all very interesting,” Chappell said. Despite Chappell’s years of experience in the technology industry granting him an imperatively strategic purview as CFO, he makes clear what is most important as Chief Financial Officer. “Getting the numbers right must always be the number one thing. People talk about strategy and a number of other things, but you must focus on the numbers,”

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Chappell offered. “My background is in technology companies for over ten years previous to coming here, so I have a knowledge of technology which I brought to Dubai above all. My overlap personally involves understanding technology whilst being a CFO.” When Dubai Silicon Oasis first came into existence, the area was undeveloped with no roads, customers or residents. Today the oasis acts as both a home for industry and residence whilst the Dubai Silicon Oasis Authority operates a number of services unique to companies which operate within the free zone. A business incubation centre, venture capital funding structure and various forms of entrepreneurial support are among DSO’s many aspects available to tenants. Said Chappell: “There are three categories of companies at DSO. There are smaller companies which deal more largely with our entrepreneur and incubator ecosystem. The other extreme involves global firms such as Fujitsu or SAP, and we look at their needs and make sure they’re satisfied as customers. They want our help to get setup. And then there is the middle group and I meet them if they need my help as CFO.” DSO counts SAP, Porsche, Fujitsu and Qordoba among its vast bank of companies,

“People talk about strategy... but getting the numbers right must always be the number one thing.”

each of which are granted access to the Chappell’s wellhoned expertise. “Bill has been involved in several meetings to gain updates about the company and offer input on what he thinks we should be focusing on whilst asking questions about our financial processes. He also sits with the board on occasion,” said Loulou Khazen Baz, founder of Nabbesh, an online marketplace which connects professionals with work opportunities. “Dubai Silicon Oasis has been an important Investor at various stages of Nabbesh’s journey and a vital stamp of approval. Our company has found priceless value in DSO’s support and the approachable nature of an involved CFO like Bill.” Chappell faces a number of challenges related to investment due to the region not ranking tech developments as high as traditional platforms such as real estate. Additional concerns related to innovation have found themselves increasingly entering the CFO’s remit as related to encouraging ideas specific to the region. Chappell is confident however that certain companies based in DSO are addressing these issues “In this region, one of my biggest challenges is getting people to understand

TECHNOLOGY

Cover Story

“Within five years we’ll be further down the path and recognised for our contributions to the smart city and the Islamic economy.”

Dubai Silicon Oasis headquarters

the complexities of tech. Technology is a good investment class, but the region is focused very much on real estate whilst the investment class of technology doesn’t rank as high,” said Chappell. “In order to widen the general understanding, we want to be developing solutions which address problems specific to the region. We have one or two gems, for example Qordoba, a translation company which translates content in multiple languages. The programme utilises artificial intelligence and as a result is getting smarter and smarter each time it is asked to translate so that it understands the meaning of what it’s translating.” Another key variable for DSO is centred on supporting

STAT FACTS

1,080 Companies in DSO

7.2 million DSO’s land mass in square metres

Dubai’s goals based around becoming the world’s capital for Islamic finance. Chappell describes his role as CFO as one with “two thousand hands”, a multi-layered position which he seems to relish being held responsible for. While DSO has grown tremendously in its near decade of existence, the free zone’s exuberant CFO sees lots more to come. Said Chappell: “I see us going from strength to strength. We’ve been in existence for nearly ten years. When I joined it was empty desert. Now we have over 1,000 companies and an estimated 43,000 living on site. Within five years we’ll also be further down the path and we’ll be recognised for our contributions to the smart city and the Islamic economy.”

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ACCOUNTING FOR EXCELLENCE THE MIDDLE EAST ACCOUNTANCY AND FINANCE EXCELLENCE AWARDS WEDNESDAY 10 DECEMBER 2014 AT THE JUMEIRAH BEACH HOTEL, DUBAI Once again, the very best talent in the world of accountancy and finance will be celebrated by ICAEW at a stellar awards ceremony. ICAEW is a professional membership organisation supporting over 142,000 chartered accountants around the world. And, on Wednesday 10 December 2014, at the Jumeirah Beach Hotel in Dubai, weâ&#x20AC;&#x2122;ll be recognising excellence in ten categories featuring: Business Leader of the Year, CFO of the Year, Corporate Finance Deal of the Year and the Internal Audit Excellence Award. With an impressive line-up of speakers, special guests and entertainment, it all adds up to a truly memorable evening. To submit a nomination or for more information, visit icaew.com/middleeastawards Nominations close on 1 October 2014

A WORLD LEADER OF THE ACCOUNTANCY AND FINANCE PROFESSION

ANALYTICS

PROCUREMENT

The new language of procurement Leading global management firm A.T. Kearney recently released a report on the evolving conversation which surrounds procurement. A key aspect of the report spells out how much CFOs stand to gain by making more pronounced investments based on utilising procurement in terms of value. The relative distance between CFOs and their respective company’s procurement methods is cited as cause for concern.

Return on Supply Management Assets (ROSMA) is a pioneering framework launched by A.T. Kearney after four years of testing, one aimed at addressing the aforementioned procurement gaps. The performance measurement standard was initiated with an eye on creating a benchmark for the procurement industry and providing a compass to direct investments. “ROSMA started in 2010. And it started out with conversations with the CFO. There are a group of folks in the company talking about how great their achievements are however

the capital that procurement claims isn’t often obvious and can create a disconnect within the company,” said A.T. Kearney Vice President Federico Mariscotti. This year’s annual report surveyed a number of businesses and arrived at a series of significant findings which outline procurement patterns. • Top-tier companies generate approximately $1.6 million in financial return per procurement employee yearly. A reported 35 per cent of return derives from applying advanced methods. • Mid-level performers typically

The first step for companies in the Middle East is to take a good look at what they expect procurement to bring.

generate four to five times of their investment in procurement valuation yet have not exemplified growth since 2011. • Performers at the lowest level surveyed do not achieve monetary benefits which cover costs. • The majority of organisations surveyed do not possess the tracking structures needed to analyse procurement performance. • Regardless of company size or industry, procurement

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ANALYTICS

PROCUREMENT

The CFO community has not yet awakened to the value of procurement.

performance varies though companies with sophisticated reporting techniques experience less variable performance. The report’s express aim to create a benchmark for procurement follows a wave of process monitoring which found notice in the manufacturing industry in the 1980s, supply chain, research and engineering in the 1990s and sales and marketing performance being closely tracked in the 2000s.

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“Procurement costs can represent anything from 20 to 90% of a company’s total cost, going from the public sector to consumer goods. Yet, the productivity of the team that presides over the supply market interactions has a way of explaining their value add using savings that do not add up to the P&L impact measured by finance. Savings definitions, different baselines and cost avoidance, all contribute to a murky aggregate view of the impact on the business,” added Mariscotti.

In the Middle East, the challenge is fundamental – getting the spend data in the first place. Companies admit they often do not have a clear categorisation of intelligence, lack an agreed definition of savings measurement, and generally position procurement as a pre-eminently transactional activity, lacking the mandate to contribute value. Procurement processes as a result remain centred around purchasing, are paper based and lack transparency. The first step for companies in the Middle East is to take a good look at what they expect procurement to bring

ANALYTICS

PROCUREMENT

TOP-QUARTILE PERFORMERS DELIVER NEARLY TWICE AS MUCH VALUE AS MIDDLE-TIER PLAYERS

764

TOP QUARTILE 527 704 522 644 MIDDLE-TIER 50% 396

60 42

BOTTOM QUARTILE

1.9x middle tier

39 32

30 28

1.7x bottom quartile

19 15

4 3

Influenced spend

Sourced spend

Units of yield

Postcompliance benefits

Additional benefits

Financial results delivered

Note: All three segments start with a common hypothetical spend of 1,000 to normalize the case example. Source: A.T. Kearney analysis

THE CFO COMMUNITY HAS NOT YET BEEN “AWAKENED” TO THE VALUE OF PROCUREMENT

The inconsequential (13.8%)

The brand leaders (2.5%)

The pack (77.4%) Leaning up (6.3%) Procurement is not on the radar for those who gave the wrong answers to three essential questions

Source: A.T. Kearney analysis

Leadership with accountability for performance is clear, but either the measures are not clear or performance is believed to be weak, variable, or unknown – or a mix

Leaners and leaders answered all three essential questions correctly, and also answered most or all other questions correctly

to the table and how it should support the business. To make a steep change, companies need to understand the multiple benefits which will occur for investments made once they’ve allowed for stronger procurement practices. The benchmarking aspects of ROSMA’s report speak directly to CFOs based on an existing, widespread inability to track and improve this often unquantifiable nature of procurement practices. According to the report, the CFO community has not yet awakened to the value of procurement and Chief Financial Officers are thus divided into three segments: The brand leaders (2.5%), those leaning up (6.3%), the pack (77.4%) and the inconsequential (13.8%). Said Mariscotti: “This is a way to give procurement a measurable quality that CFOs can quantify. You have to know what you’re doing with relation to procurement in order to do it well. ROSMA gives you a number which helps you understand how good your procurement is working as compared to peers. It lets you know whether or not you could be doing something different,” offers Mariscotti. CFOs have exemplified an increasing ability to share in a company’s strategic efforts whilst expand their respective remits. Procurement is emerging as the latest segment of this conversation. Understanding its value beyond the transactional is the first step for CFOs to fully engage with harnessing the potential of procurement and grow to become a part of the elusively paltry portion of brand leaders indicated in ROSMA’s report.

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PERSONALITIES

Interview

The Emirati Dream Saeed Al Sharid is today an elder statesman in the world of UAE accountancy. With decades of know-how based on chairing a number of key Emirati organisations, Al Sharid is today atop his own family firm. In the following exclusive interview, he shares the importance of education, the evolution of a nation and just how being an accountant has driven his many triumphs. By Shane Phillips

Al Sharid is the Vice Chairman of Emirates Transport and has enjoyed a successful career in which the lion’s share of his tenure has afforded him a seat at the helm of the business. “I remember when I first received the GM of Tata in the late 80s, he said to me ‘You are the youngest GM I have ever met!’ I was 29 years old at the time.” Looking at Al Sharid’s rapid ascent to the top of his organisation can be mind boggling to the average observer, however to those few who strive to push themselves to their limits it is perhaps more common a reality. As with any top performer we can often see their desire for results and impact

early on in life; and with Saeed the first stride of his race to the top began with an accounting degree in university. It was 1976 and the excitement of the UAE’s biggest milestone moment, its inception just five years earlier, still clung to the air from Fujairah to Abu Dhabi and every emirate in between. A nation was being built. Saeed had just finished high school and went to the United States where he was to study engineering. “I was not yet 18 years old, it was 1976 and I was sent to America to study; it was the beginning of a dream and a young life,” says Al Sharid. Unfortunately Al Sharid’s academic tour of duty came to

Saeed’s desire for results took its first stride with an accounting degree in university.

an abrupt halt when his father suddenly passed and he was forced to return home. “We are seven brothers, and I am the middle one; so during tough times we always come together and during this period the strength of my family pulled me through. I have three younger brothers and I felt I had to be there for them; I felt responsible for them. My mother played an omnipotent role in pulling us through this dark moment in our history. The death of my father forced us to become more independent,” says Al Sharid. Now back in the UAE with his plans of studying abroad dashed, Saeed looked at the local schooling system within which Al

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PERSONALITIES

Interview

Saeed Al Sharid

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Ain University had just opened. “Al Ain University was the pride of the Emirate at the time, the students were like celebrities. The first batch of graduates were all promised 50,000 AED from HRH Sheikh Zayed. I was one year late so technically I should not have graduated with the first batch; but I was determined. I worked an extra course load, did summer school and soon caught up to the first class. 50,000 AED in 1981 was like 500,0000 AED today, so I was very motivated,” says Al Sharid. Saeed not only caught up with the other students but he wound up graduating atop Al Ain University’s first class of graduates with a 3.8 GPA. “We

PERSONALITIES

Interview

“The UAE was a brand new country and a lot of work was being done to develop the nation.”

never had any idea of a career path, and there was no such thing as career counsellors or ‘career services’ at the school. So when you graduated most people just joined the Ministries. The UAE was a brand new country and a lot of work was being done to develop the nation. The Federal Government paid the highest and so one just joined them. There was no grand vision or dream that I was off and chasing. In those times you simply tried to do the next best thing. So I ended up working in the Ministry of Health as an accountant. Back then a university degree was a veritable qualification and it had a lot of market equity; today it won’t even get you in the door.” As the Middle East market evolves not only are university degrees becoming more common but so are post graduate degrees such as MBAs and even PhDs. As such, the competitive positioning of professional qualifications are gradually eroding over time. “To stay competitive executives today will require deep and specialised knowledge of their respective industries; an intellectual arbitrage that provides superior results. To beat the market, to manage the risks, to develop a sustained competitive edge. For this executives need to stay in a role for the full strategic cycle, which is at least four years in duration,” says Sharid. In the case of Al Sharid, he was there for 33 years. “Do you just want a job, or are you looking to make a contribution to your company. Too many young people today are just looking for a title or a position. The difference between those who make it into senior roles and stay there is the desire to create impact, to add value

STAT FACTS

2012

Year Moody’s upgraded the UAE economy from developing to emerging

37 The UAE’s global rank for GDP

to the organisation,” he says. Saeed first joined Emirates Transport after seeing a small newspaper advertisement for an accountant’s position. He applied but initially they did not want to hire a local, because locals were too expensive. After a few months however they called him back for an interview and offered him a job. Initially Saeed struggled to get a promotion or even a raise. He worked tirelessly to develop himself and kept detailed notes of his work. After nearly two years went by with no promotion he requested to meet with the Chairman of the corporation to discuss his career. The Chairman was a Minister, making him even more senior than his title implied. Al Sharid was courageous and determined. “You should not stay silent, you have to take initiative, your future is in your hands,” says Al Sharid. “I met with the Chairman and told him about my work and what I wanted to do. He did not talk, he just listened and that was it. It was a 15-minute meeting,” says Al Sharid. Three days after Al Sharid’s pivotal appointment, he was promoted to Deputy General Manager. Directly from a Trainee to DGM, skipping all the roles in between at the age of 27 years old. They doubled his salary and catapulted him into a senior leadership role. “I felt it was quite strange to move up that fast and personally was not sure I could handle the job. I had a lot of resistance from the board. I had people in their 50s reporting to me and they were not happy about it. So I just took a step back and did not try to get involved in their work too fast. I went slow and watched my step. This was a very important

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PERSONALITIES

Interview

“Trying to do business while not understanding accounting is like getting into the ocean and not knowing how to swim; you will drown.”

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moment for me to gain valuable leadership experience early on. To make my learning curve even steeper the General Manager quit after two years and I became the GM at the age of 29 years old,” explains Al Sharid. He ascended to the top job in less than five years and stayed in the position for almost twenty years. He was totally committed and could even be found in the bus yard at four in the morning to greet the drivers as they started their shifts. “The key to being successful in business is to keep your finger on the details. Some people let the details slip and if this happens you will suffer. I get into the yard, I meet the drivers, I meet all the staff. If you saw us you will not know who was the GM or who was the driver. You have to realise people will never work for you, they will only work with you. To me Emirates Transport is like my family,” says Al Sharid. When asked what his keys to success are, he says: “I think if I was not an accountant, I would not be a good leader, I would not be a good manager. In my opinion trying to do business while not understanding accounting is like getting into the ocean and not knowing how to swim; you will drown. The Chief Executive Officer who does not know how to create the financial statements is always at the mercy of his Chief Financial Officer. He cannot take any big decision on his own and he will not even be able to challenge the CFO. Accounting is the bedrock of any business and a critical skill set for any leader. No one can argue with this fact,” says Al Sharid. With over 20 years of experience in tow and the related chairmanships to boot, Al Sharid

STAT FACTS

UAE’s rank among GCC nations for chosen hub of all major accountancy bodies

has since early last year partnered with his family to form Al Sharid Auditing. Though the Emirati youth is not as keen to pursue positions related to accountancy as Al Sharid was, he feels that there is hope to close the gap. “It is difficult to find an Emirati expert. I studied the audit market specifically and there were others like me then. But now you break Emirati auditing involvement into three categories. The first involves the big firms. This is followed by individual, smaller enterprises. But, thirdly a lot of locals opt to work with the government also. Most are not managing their own firms, they just have a partnership and they are building that,” Al Sharid explains. “Al Sharid Auditing however is a firm that includes my brother and our two sons which make up a body of qualified professional auditors. We established this firm last year and work closely with the government. We decided to make one firm together instead of having many smaller entities.” Moving forward Al Sharid plans to grow his family’s firm by applying the very belief system which has catapulted him to his position of power. Marketing concerns which are designed to furthermore announce how tailored Al Sharid’s offerings are at present a key variable to forging ahead. Said Al Sharid: “Moving forward we’re focusing more on the marketing of our firm. It’s a matter of not exactly expanding but going over the right deals. The market is tough and the small jobs are easy, but we don’t need them. We don’t want to be in many rooms, we want to be in the important ones.”

ANALYTICS

Market Intelligence

Entering emerging markets strategies, risks and opportunities

TOP TEN MARKETS Ease of Doing Business

RANK

PANAMA Projected annual GDP growth, 2014 & 2015,

6.7%

The following report explores emerging markets from West to East, which are at the helm of economic development, trade and innovation, and highlights what their rising popularity means for the growth of your business.

Ease of Doing Business

RANK

Latest insights from PwC’s 15th Annual Global CEO Survey revealed that 59 per cent of CEOs see emerging markets as more important than developed markets to their future. What is making emerging markets such a pressing priority for C-suite executives? Why are emerging markets increasingly grabbing headlines? Emerging markets are large, fast-growing and ambitious markets best known for being the growth engines of today’s global economy. Research (1) suggests that emerging market countries are expected to amount for more than 60 per cent of global GDP growth – a clear indication of the wealth of opportunity they present.

Understanding emerging markets Based on estimates by the International Monetary Fund, emerging economies are expected to grow two to three times faster in comparison to developed nations. Explaining this fast-growth and the rise of these emerging markets, an article on Forbes.com details that “during the US housing crash and resulting credit crisis of 2008, world markets were saved from a total disaster thanks to the big emerging markets – mainly Brazil, India and China. The global credit crisis was one of the longest, deepest, and most painful in history. It toppled Wall Street icons like Lehman

PERU Projected annual GDP growth, 2014 & 2015,

5.5%

Brothers, required government bailouts of bulge bracket banks, and shocked the global economy with a deep economic recession and even a deeper crisis of confidence. Its most important legacy, though, may be one that has yet to fully unfold: the crisis revealed a new world order in terms of economic and market dynamics. Emerging market economies finally arrived as

(1) Source here: Accenture Research, “Gearing up for Growth – Five imperatives for success in emerging markets, 2011, Henry Egan and Armen Ovanessoff

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ANALYTICS

Market Intelligence Ease of Doing Business

RANK

Ease of Doing Business

RANK

Ease of Doing Business

RANK

POLAND Projected annual GDP growth, 2014 & 2015,

LATVIA

CHINA

3.2%

Projected annual GDP growth, 2014 & 2015,

7.4%

4.1%

Ease of Doing Business

RANK

SOUTH KOREA Projected annual GDP growth, 2014 & 2015,

3.5% Ease of Doing Business

RANK

Ease of Doing Business

CZECH REP.

RANK

Projected annual GDP growth, 2014 & 2015,

2.1% Ease of Doing Business

RANK

THAILAND Ease of Doing Business

RANK

CHILE

MALAYSIA

Projected annual GDP growth, 2014 & 2015,

4.3%

5.0%

Projected annual GDP growth, 2014 & 2015,

4.5%

Source: http://www.bloomberg.com/news/2014-01-29/qatar-china-top-ranking-of-frontier-and-emerging-markets.html

powerful, essential, and permanent contributors to global economic growth and sustainability.â&#x20AC;? Bloomberg.com recently ranked the top emerging markets based on their performance on 19 economic, financial, political and social indicators. In order of ranking, the top ten markets were:

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1. 2. 3. 4. 5.

CHINA

SOUTH KOREA

MALAYSIA

CHILE

THAILAND

6. 7. 8. 9. 10.

PANAMA

PERU

LATVIA

POLAND

CZECH REP.

ANALYTICS

Market Intelligence Making an entry If your business is looking to enter any of these emerging markets, it’s worth considering the following checklist: 1. Assess your readiness: The biggest mistake you can make is to enter a market without proper evaluation of your business. Don’t do it just because everyone else is. Like every other major business decision, be sure to speak to your Board of Directors, partners, investors, stakeholders and most importantly your CFO and certified accountants. Make a business plan enlisting your objectives, goals, investment strategy, potential risks, etc. 2. Research, research, research: Do your homework. Treat emerging markets as any other international expansion venture and do thorough research on the new market – Who are the competitors?What is the price point for your product? What are the customer demographics? What kind of infrastructure do you need for the manufacturing production or distribution of your product? 3. Understand the legal framework: Emerging markets might not have rules and regulations as clearly spelled out as your home country. Invest some time and money in understanding how business procedures work. A very obvious area of focus for UAE-based companies is tax. Since the UAE is a tax-free economy, companies aren’t exposed to tax accounting and other legislation surrounding

this. Another area to consider is corruption – emerging markets are notorious for high corruption, red-tape and bureaucracy. Speak to your company lawyer to assess these areas and take proper measures to avoid them before-hand. 4. Invest in local talent: Working with people already accustomed to the new market avoids the hassle of relocation and reduces costs. But, more significantly, gives you skilled talent to work in these unique environments. This also works in favour of your company as it gives you a clear understanding of the kind of compensation packages you will have to offer to your employees. For instance, employees based in China might want high remuneration and low healthcare benefits, while in India it may be quite the reverse. Recruiting local talent will also have a trickledown effect – your employees will easily be able to cater to the local customer needs, without the need for intense training. 5. Supply chain: 44 per cent of business leaders surveyed consider accessing the right supply chain capabilities extremely or challenging in emerging markets, according to Deloitte’s Globalisation Survey. Make sure that you know who your suppliers will be, what the production costs are, whether their production procedures fit your time constraints, and if the final product matches your level of quality. 6. Cater to local market demands: This is one of the most important aspects of all

Do your homework. Treat emerging markets as any other international expansion venture.

– failing to adapt to the needs and expectations of the local customers is surely a recipe for failure. Time and again, companies haven’t been able to create a customised offer and have had to exit these markets with huge losses. A success story, however, is that of the Haier Group. Haier famously introduced washing machines to specifically suit the water pressure levels in the households of India – an emerging market strategy that worked very well in their favour and helped them become leaders in that sector. Another great example is that of Coca-Cola, as explained in an online Reuters article by Matt Reilly: “In Brazil, CocaCola has used social media to better understand consumer preferences and has developed a successful local network to supply traditional Coca-Cola products as well as fruit juices tailored to local tastes.” 7. Local currency: This is a complex, yet critical, area to consider when entering a new market. Ask yourself questions such as – What is the local currency rate? How does it compare to the currency in your home country? Is the country import-led or exportled and what impact can this have on the global value of the currency? Remember that fluctuations in currency rates can hugely effect your overall investment, and thereby the return on investment. 8. Build partnerships: When entering an unknown territory, it is quite useful to have the backing and support of peers who can help you in case of unforeseen challenges. This is

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ANALYTICS

Market Intelligence markets owing to immense corruption pressures. There is also a high percentage of inherent risks in these markets which amount to many companies not succeeding in their first attempts. It is important to take your time when adapting to these markets and fully understand the business dynamics. Following recent case studies and going over the lessons learnt by multinational companies who have made an entry into these markets, consider the below:

Consider the risks!

48% of companies believed they had invested more resources in emerging markets than was required

24% entered a market without fully assessing the ability of the supply chain to support the expansion

20% entered with the wrong pricing model and an inappropriate operating model

Source: Emerging markets expansion and the supply chain, Economist Intelligence Unit survey conducted on behalf of EY, September 2010.

the very reason why Mergers and Acquisitions are a popular way to enter into emerging markets. Many companies piggyback on their clients who are entering these markets. For instance, if you are an IT consultancy working on a major project for a manufacturing and trading company with operations across India and China, you can use their resources and expertise to explore opportunities in these countries. Remember to consider these steps every time you enter a

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new market as every locality has its own set of unique needs. One strategy doesn’t fit all.

Surviving fierce market conditions While the massive opportunity that lies within emerging markets paints a pretty picture, businesses need to be wary of bottlenecks such as corruption, volatility, gaps in laws and regulations, and strong competition. There have been several high-profile cases of multinational companies withdrawing from emerging

There is also a high percentage of inherent risks, take your time when adapting to these markets and fully understand the business dynamics.

• Is your company’s headoffice – and senior management – located in your home country without any C-level representation in the new emerging market? • Are you focusing all of your resources on doing business in the emerging market at the cost of losing profits in your home market? • Have you researched local competitors in these markets, who may already have a strong standing and proven models of success? • Are you using the same “entry approach” and business model across different emerging markets? If your answer to one or more of these questions is yes, it may be time to re-evaluate your presence in these markets and map out a different strategy. Finally, remember that no matter what the outcome of your admission to these markets might be, your business is sure to emerge out of this stronger, tougher and – of course – ready for a new challenge!

INTERVIEW

CIMA

Curating Curriculum The Chartered Institute of Management Accountantsâ&#x20AC;&#x2122; (CIMA) Managing Director Andrew Harding visited Dubai to host the Instituteâ&#x20AC;&#x2122;s seminar on global management accounting principles. In the wake of CIMA revising their well heralded syllabus, Harding discussed with CFO Magazine what the newest edition held, how CIMA is applying a digital focus to its courses and just how CFOs can gain from it all.

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INTERVIEW

CIMA

Can you expound on just what can be found within the new CIMA syllabus? We just revised the syllabus, we do that every four to five years. What we have done this year is a very significant revision. It is based from a complex study that we have carried out to over 3000 people from 200 companies globally. It is the very first revision since the joint venture with CIMA and AICPA. So this has allowed us to attain a syllabus rich with all the data from all the continents in the world. For the first time we’ve had real involvement from companies in the USA in this project. Why is the collaboration between AICPA and CIMA significant? Most important is the Chartered Global Management Accountant (CGMA) designation that AICPA and CIMA both issue for qualified management accountants. We’ll have a common curriculum and common examination which will begin on January 1, which gives us a global designation for management accountants wherever they are around the world. There are plenty of accounting bodies who claim to be global but actually this is the only

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genuinely global designation. This is because it has the only one with a North American participation in it. So we can say that the CGMA will be just as well-recognised in the USA as it is in Dubai. With the global landscape in mind, how do you create an even objective that applies to localities which may prove widely differential? The landscapes are different but businesses have common needs wherever they may be. What we’ve particularly seen since the global financial crisis is that companies are actively looking to build management accountant capability to build that capacity within their organisations. They don’t want to have a poor quality of information that lacks insight being used in their businesses. So they see management accountants can bring solutions to that. As a result of all the work we’ve done with companies who participated in the syllabus, we’ve also put together a series of what we call Global Accounting Principles. This is a series of principles which describes what good management accounting looks like and what top quality management accounting in a company should be producing. This then

“Companies are actively looking to build management accountant capability to build that capacity within their organisations.”

can give CFOs something they can take and something they can measure their own management accounting services against. They can benchmark using this and they can utilise this to see their progress. Part of that is having professional management accountant in place. I don’t think the landscape matters, I believe that there is a common business need wherever you may be around the globe. All of the emerging markets need these skills. The first aspect that accounting schools teach is about auditing skills because they’re interested in protecting investments. Then they teach you how to keep your business sustainable and to have a sustainable business you need to have a management accountant in place. So it’s not just here in the UAE where we see these demands, we see the same demands in China, Indonesia and other powerhouse economies. We see their skills shortages and we see the need for solutions in those areas. Talk to me about how this new syllabus works to promote the evolution of a CFO. This syllabus that we’ve

INTERVIEW

CIMA

“The CFO has a real challenge on his hands now as traditional P&L reports no longer reflect the value of the business... and [the role] must focus on strategic thinking and considering long-term objectives.”

worked on acknowledges the skill set needed by professionals throughout their career. There’s a base level of competence that is needed but beyond that there is more. There is business acumen, the ability to communicate and influence, and finally the ability to lead. So you start off enhancing your raw technical accounting skills. Then you need to place that into the context of the business that you are in. Then as you move forward and as you rise to become the CFO you’ll need the others. You have to learn how to present your work in a way that can influence and make an impact in the business. The final piece is the ability to lead projects and other functions and to a great extent lead the board of directors. That’s how the context works, it’s not just about technical knowledge. How do you find that CFOs in the GCC region are responding to this programme? The CFO has a real challenge on his hands now. In 1975, 80 per cent of corporate value is showing on the balance sheet. By 2010 that dropped to less than 20 per cent. Your traditional P&L reports no longer reflect the value of the business or how the business drives value.

STAT FACTS

218K CIMA members worldwide

All things that should be of interest to investors is missing. With things like the integrated report initiative we’re starting to see the other dimensions that add value to business. For CFOs that’s all about strategic thinking and considering the long-term objectives. Being articulate in implementing those strategies, keeping in mind the risks and opportunities that the business faces. We are also nowadays witnessing a whole new world of transparency around that. Are there electronic aspects to CIMA’s advancing approach? The interactive case study simulates a real working situation and it tests how they can apply their knowledge in real life situations. They’ll be presented with a scenario a few weeks before they take the exam so they can prepare for it. They then go to an exam centre where they are asked questions about how they will deal with a certain situation in the real world. They’ll get an email from the CFO giving them a certain task for a particular period of time. We want to make it as close to reality as possible, so students taking the exam will be assessing situations based on real life scenarios.

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ANALYTICS

ERP

Excelling with ERP Faster, more nuanced IT solutions are available to the modern day CFO. Whilst Chief Financial Officers are called upon to analyse data across a number of spectrums, the digital tools on hand are likewise being expanded to aid in focusing more squarely on the bottom line.

The global landscape is today firmly entrenched within a digital model. As a result, CFOs whom are called upon to take a larger role in a number of variables must also increase their abilities with respect to utilising the many upsides which tech innovations offer a business. When surveyed about their most pressing concerns CFOs generally return a varying collection of responses. Revenue growth, regulatory changes and meeting quarterly goals are among the chief concerns. Virtually every obstacle can be hurdled by way of maintaining the order of financial reporting and data which has long been

synonymous with the Chief Financial Officerâ&#x20AC;&#x2122;s remit. A widening berth of ERP solutions is making this data all the easier to come by. Despite how sophisticated the market is today, it was not long ago that ERP departments once spent days processing business reports. Said Rohan Tejura, Assistant Vice President, Focus Softnet: â&#x20AC;&#x153;Traditional ERP systems were solely data repositories. Moreover, these repositories werenâ&#x20AC;&#x2122;t real time, and were incredibly dependent upon locational connectivity. With the emergence of smarter development platforms, more versatile devices, and

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ANALYTICS

ERP

A major impetus of the ERP-centered growth is based on how effective comprehensive real-time data proves to be for the CFO.

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more intuitive designs of system development, the overall experience of the ERP now extends from data warehousing, to reporting, analysis, trend mapping, business intelligence, and governance oriented capabilities. Yet these solutions amazingly execute all of these deliverables via portable handheld devices and through cloud environments.” New generation ERP systems must now be on the go whilst including up to the minute analytics to provide deeper insight into the business. ERP Analytics tools use historical data captured from various business functions to provide valuable information for efficiency and business performance, each incredibly priceless to a leading CFO. Finesse is an ERP provider which is continually addressing the transformation of output which the ERP industry is offering the equally transitioning role of CFO. “We provide end-toend business management solutions to SMEs and Enterprises. Our approach to ERP is much more than providing simply an operational management system,” said Finesse COO Sunil Paul. “We believe that today’s businesses need much more than integrating sales with inventory, accounting and manufacturing, but also to have seamless integration with all their sales channels including the point of sales, ecommerce and inbound sales solutions.”

ANALYTICS

ERP

Tech companies are providing the region’s CFOs with information technology that converts traditional internal and external data into rich visual insights.

In order to compete in today’s fiercely competitive environment, organisations need to think both innovatively and out of the box. They require more insights about their business and their customers and need to ensure that they are able to meet the expectations of their internal as well as external stakeholders. Enormous amounts of data, both structured and unstructured, is continuously being generated within the internal and external systems of the organisation which if analysed can be of immense value both to the business and subsequently the stakeholders associated with the organisation. With the the era of CFOs labouring over spreadsheets now in the past given how many business frontiers have become so dependent on mobile options such as the cloud, more and more tech companies are providing the region’s CFOs with information technology that converts traditional internal and external data into rich visual insights. This information is then used for faster decision making, and provides the ability for a CFO to assess, manage and control risks. Regional CFOs have grown enabled to drive corporate strategy accordingly, demonstrating how the knowledge economy is now in full force amongst the Gulf’s corporates. Given that advanced IT has now become a regular CFO tool, the region’s CFOs are subsequently making faster decisions and driving internal growth models with greater speed and agility than ever

before, thereby creating new global benchmarks for overall economic growth. Microsoft Arabia CFO, Sadrul Khan, offered insight into just how far the knowledge economy has influenced regional financial leadership, by explaining how one of the most prioritised technologies by CFOs in the region is social platform monitoring. “One of the five technology choices that CFOs tend to prioritise in boosting productivity, efficiencies and faster decision making in the fast paced business environment which include a social platform that monitors trends, customer sentiments and helps process mashable data for customer centricity and business growth,” said Khan. A major impetus of the ERP-centered growth is based on how effective comprehensive real-time data proves to be for the CFO. Whether employed as on-premise ERP, softwareas-a-service or cloud-based solutions, a nearly identical ethos is being utilised. Allowing the CFO to quickly access the performance of all facets of a business is paying dividends in the boardroom, a reality which is showing itself increasingly in the Middle East. The technologicallycharged relationship between ERP solutions and the region’s CFOs is expanding and as a result has catalysed what many see as GCC economic performance outstripping that of many economies outside of the region as a result.

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ANALYTICS

Private Equity

The Private Equity CFO The rise of PE-backed acquisitions is forcing CFOs to develop an entirely new set of skills. By Aaron Heidari

The CFO’s utility in the world of private equity is without question on the rise. The once-held belief of the CFO existing solely as the “accounting guy” has been abandoned. Over the last 20 years, the role of CFO has become more demanding requiring not just finance and accounting acumen, but also a financial literacy in corporate planning, risk management, M&A, asset/ liability management, and regulation. This evolution has been driven by a number of

“By effectively using real-time data CFOs can create a dynamic process that proactively drives performance, accountability, and value creation.”

key factors. Yet, the private equity industry, which is now reshaping the corporate landscape through active ownership, is by far the most significant factor driving change within the role of the CFO. PE-backed buyers today represent a larger percentage of overall buyers in the corporate acquisition marketplace than ever before. Data provider Prequin estimates that as of June 2014 the capital raised by PE funds that

has not yet been deployed, amounts to $1.14 trillion globally. The result of this “dry powder” is that a vast quantity of corporate acquisitions in the coming years will be undertaken by the private equity industry. As such, CFOs will be more accountable to demanding “smart money” shareholders than at any point in recent history. Budgeting, accounting, and financial reporting will no longer exist as sole priorities, but as a core competency among a

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ANALYTICS

Private Equity STAT FACTS

$15m

Average MENA PE investment size in ‘13

50% Percentage of investment in IT and energy sectors

MENA region Cumulative Funds Under Management Since 2008

Cumulative funds ($ m)

25,000

20,000

19, 636

20, 363

21, 586

22, 643

23, 506

24, 250

15,000

10,000

5,000 2008

2009

2010

2011

2012

2013

Source: Zawya Private Equity Monitor

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robust set of complimentary and required skills. Most of all, the bar for CFOs is rising as PE investors will only accept above-average performance from their management teams. CFOs were once more reactive in function; setting budgets based on other executives’ plans and managing the flow of reporting to shareholders on a quarterly and yearly basis. Today, CFOs are required to become proactive managers of their respective businesses alongside their C-suite compatriots, using a granular, data-driven approach to aggregate, analyse, implement, and report on every aspect of a company’s operations. An important tool to drive this value creation process are KPIs. Yet KPI structures, including both aggregation and output, are generally not up to the standards required of private equity investors prior to an investment being made. “The benefits of using KPIs and monthly reporting packages are significant. By effectively using real-time data that is actionable and by partnering with functional area leaders within the organisation, company CFOs can create a dynamic process that proactively drives performance, accountability, and value creation,” said Amanda Robinson, Vice President of Accordion International in Dubai, a consulting firm which is comprised of former private equity and investment banking professionals who

ANALYTICS

Private Equity Investment Volume By Sector Since 2006 Manufacturing

10% Education

3% Telecoms

4% Other

28% Information Technology

17% Oil & Gas

9% Healthcare

6% Consumer goods

5% Food & Beverages

6% Leisure

2% Media

4% Transport

Investment Volume By Sector in 2013 Manufacturing

3% Education

1% Telecoms

3% Other

3% Information Technology

30% Transport

5% Media

6% Oil & Gas

17% Healthcare

9% Consumer goods

9% Food & Beverages

8% Leisure Source: Zawya Private Equity Monitor

A CFO should manage the transition, stay ahead of expectations and impress upon the company’s shareholders a new way of doing business.

work with companies to deliver cost-effective project execution services. Active shareholders, whose money it is being spent, will typically require a datadriven justification before approving any budgets, capital expenditures, or new acquisitions. Furthermore, in many private equity backed companies, the use of debt and the matching of shorterterm bank financing with longer-term investments will only be considered after a robust analysis is conducted to understand the company’s ability to service that debt in the future. This evaluation is not simply to identify revenues, expenses and profits. It’s about drilling down into every transaction and rooting out data, processing and reporting. At least that is the expectation. The most valuable CFOs are those who have the ability not just to scrutinise and understand the financials but all also possess a wider grasp of the underlying data which truly comprise the business. As an investor who has just acquired a stake in a new business, I want a CFO who can manage the transition and stay ahead of my expectations. Most of all, a CFO should impress upon the company’s shareholders a new way of doing business. The first 100 days of an acquisition are said to be the most important. During this period, the CFO’s worth will be established when the new financial plan is due and the platform for the next five years of growth is presented.

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THE FUTURE OF ACCOUNTING EDUCATION Addressing the Competency Crisis By Peter C. Brewer; James E. Sorensen, CPA, CGMA; and David E. Stout

Have you ever stopped to think about how the accounting profession has changed since you graduated from college? Recent graduates can answer this question by reflecting on the last two or three years, whereas for other, more seasoned professionals, answering this question requires a bit more thought and memory searching. Indeed, we can all think of ways that the field of accounting is remarkably different today from the one we likely envisioned during our college days— regardless of which decade we each donned our cap and gown. This gradual transformation of the accounting profession leads to two important questions related to competencies: • Which competencies are important for success in accounting today? • Were these competencies consciously developed as part of your accounting degree programme?

We suspect that more than a few of you would answer “no” to the second question. Put another way, our profession may be facing—more so than at any time in the past—a “competency crisis,” that is, a gap between the competencies needed for professional success and those taught in our college classrooms today. We propose a three-pronged strategy or “game plan” for overcoming this competency crisis and, in turn, better preparing accounting graduates for the challenging world they will face. First, all of us accountants need to understand the changes that have already taken place in our profession and, perhaps more importantly, anticipate the changes that are on the horizon. Second, we need to educate ourselves and future generations of accountants so that as a collective group we can deliver the expanding set of competencies demanded in today’s dynamic organisational

contexts. Third, as professional organisations and as individuals, we need to think beyond ourselves by asking: How can I (or we) help the accounting profession address the competency crisis?

A Shift Toward Integrated Thinking Many articles and white papers have been written that describe in detail the changes that have occurred in our profession over the last few decades, but, for our purposes, we’d like to distill these changes down to one crucial idea: How does the accounting function add value to an organisation? Accountants have evolved from supportoriented personnel who hand off information to others who actually make decisions into business partners who “have a seat at the table” with managers

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across the organisation. Together, they formulate and plan strategies, then participate in collaborative decision-making processes that execute those strategies in a manner that adds stakeholder value. Said another way, accountants have evolved to become enterprise performance managers. This shift in our orientation from a support function to an enterprise performance management (EPM) role has enormous implications for defining the determinants of success within our profession, the most important of which involves becoming collaborators and “integrated thinkers.” Take, for example, a common but important business decision process: capital investment analysis. Certainly, technical knowledge regarding how to estimate relevant after-tax

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cash flows and how to apply discounted cash flow (DCF) decision models, such as net present value (NPV), is of foundational—some might say critical — importance. But integrated thinkers draw on an understanding of organisational strategy coupled with a broader set of competencies (beyond what might be considered technical or foundational knowledge) when making these types of decisions. For example, they consider how behavioural issues may influence the capital investment decision-making process. Perhaps the financial estimates contained in the NPV analysis are too optimistic because the manager who prepared the numbers has a vested interest in seeing the project approved. Decision makers also need to consider issues such as leasing vs. buying a capital asset and the corresponding impacts on the financial statements and ratios that are tracked by investors and lenders. What nonfinancial factors are associated with the proposed investment? Add in the tax consequences of capital investment decisions, coupled with the need to maintain internal control over any new business processes tied to these decisions, and the need to think in an integrated fashion across a variety of accounting competencies becomes apparent. Furthermore, becoming a true business partner with managers across the organisation requires more than simply integrating various accounting competencies. It also means thinking like a business manager or a chief executive officer (CEO). Returning to the capital budgeting example, an integrated thinker will ask questions such as:

• 􀀀 What regulatory risks may accompany the proposal? • 􀀀 What social and environmental factors will we face if, for example, the proposal requires investing in overseas operations? • 􀀀 What types of employee resistance may arise if we implement the proposal, and how will we overcome the root causes of any such resistance? • 􀀀 Can, and how, should we value future options associated with the proposal, such as expanding or contracting the investment over time, as new information becomes available? • 􀀀 Should we use debt or equity to fund the proposal? In short, accountants have evolved to become integrated thinkers who enable EPM by partnering with managers across the organisation to add value. Yet as EPM has gradually become the centrepiece of our profession’s value proposition, accounting education hasn’t done enough to embrace it. To overcome this gap, we’d like to further suggest that the concepts of competency integration and EPM need to come “front and centre” as we move forward in educating the next generation of successful accounting practitioners.

Accounting Education: No Longer on the Sidelines Recently, a task force consisting of members of IMA® (Institute of Management Accountants) and members of the Management Accounting Section (MAS) of the American Accounting Association (AAA) addressed the competency issue: How should accounting education change, fundamentally, to help close the competencies gap? The efforts of the task force led to

Proposed Competencies-based Framework for Accounting Education

FOUNDATIONAL COMPETENCIES Communication

ACCOUNTING COMPETENCIES External Reporting & Analysis

Planning, Analysis, & Control

Taxation: Compliance & Planning

Information Systems

Assurance & Internal Control

Professional Values, Ethics, & Attitudes

Quantitative Analytical Thinking & Problem Solving

BROAD MANAGEMENT COMPETENCIES Interpersonal leadership

Technological

a recently published article that contains a proposed framework for accounting education, reproduced here as Figure 1. The framework is general in the sense that it’s meant to apply to all accounting students, not subgroups based on career specialisation such as tax, assurance services, corporate finance, and the like. It’s based on the idea that accounting educators can better prepare students to deliver our profession’s EPM value proposition through integrated competency-oriented curricula. (For more, see “Focusing Accounting Curricula on Students’ Long-Run Careers: Recommendations for an Integrated Competency-Based Framework for Accounting Education” in the May 2014 edition of Issues in Accounting Education.) A glance at Figure 1 reveals three levels of competencies: foundational competencies (communication, ability to leverage technology, and analytical thinking and problem solving, among others), broad management competencies (including leadership, ethics and social responsibility, and process management and

Ethics & Social Responsibility

Process Management & Improvement

Governance, Risk, & Compliance

improvement), and accounting competencies (external reporting and analysis; planning, analysis, and control; taxation: compliance and planning; information systems; assurance and internal control; and professional values, ethics, and attitudes). Of critical importance to the framework is the assumption that the set of competencies contained in Figure 1 would be developed and integrated over time through a blend of formal education (including continuing education), training, and job experience. What levels of integration—on the road to developing integrated thinkers in accounting—are possible? First, accounting educators can integrate within a single accounting competency. So, referring back to our capital budgeting discussion, teaching computational models such as NPV analysis, coupled with a review of various behavioural issues associated with capital investment decisions, would be an example of integrating within the Planning, Analysis, and Control competency listed in Figure 1. Second, professors can integrate across accounting competencies. For example,

Additional Core Business Competencies

expanding capital budgeting discussions to include financial statement impacts, tax consequences, and internal control issues integrates topical coverage across the External Reporting and Analysis, Taxation: Compliance and Planning, and Assurance and Internal Control competencies shown in Figure 1. Third, accounting curricula can incorporate a broader set of management competencies. For example, evaluating capital investment proposals from the perspectives of change management (Leadership), social and environmental issues (Ethics and Social Responsibility), regulatory concerns (Governance, Risk, and Compliance), and capital structure (Additional Core Business Competencies) brings a CEO’s perspective to the decisionmaking process. Fourth, accounting curricula should include foundational competencies, such as proficiency with spreadsheets and written and oral communication. In the context of capital budgeting, this may include asking students to use Microsoft Excel to perform a sensitivity analysis and then to present their findings to the entire class.

Working to Fix the Problem At this point, although you may agree with us that there’s a competency crisis within the accounting profession, you may be wondering: What does this have to do with me? What can my organisation do to help address this so-called competency crisis? The answer: a lot! Practice partners and academic partners can help the accounting profession overcome the competency crisis. That said, let’s take a closer look at the role of practice partners first.

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A practice partner should be or become a CMA® (Certified Management Accountant), maintain professional certification by completing required Continuing Professional Education (CPE) hours, and regularly read the IMA publications Strategic Finance and Management Accounting Quarterly. In addition, there are a number of excellent resources that deal with topics covered in this article and that IMA makes available to its members.

Strategic Finance PowerPacks (www.imanet.org SFPowerPacks): These are resources focused on contemporary topics, similar to those discussed earlier. Current offerings include Risk Management, Strategic Planning, IT Skills & Software, and Internal Controls. Each PowerPack includes a combination of resources, such as research studies, articles, and links to webinars. Statements on Management Accounting (SMAs) (www.imanet.org/resources and_publications/research_ studies_resources/statements on_management_accounting. aspx): SMAs represent monographs classified into one of the following six categories: Leadership Strategies and Ethics; Technology Enablement; Strategic Cost Management; Business Performance Management; Finance Governance, Risk, and Compliance; and the Practice of Management Accounting. Multiple items are available within each category. For example, the Practice of Management Accounting category includes (among other items)

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the Definition of Management Accounting and Implementing Shared Service Centres.

Research Studies (www.imanet.org/resources_ and_publications/Research_ Studies_and_Resources/All_ reports.aspx): The “Thought Leadership” section of IMA’s website includes research covering a broad range of issues classified into seven categories. For example, under the “Global Business Environment” category, the following two research reports are available: “Key Differences Between IFRS and U.S. GAAP: Impact on Financial Reporting” and “Costing Methodologies and Cost Management Practices in the People’s Republic of China.” IMA Leadership Academy (www imanet.org/programs_ events leadership_academy.aspx): As described on the IMA website, this programme is designed to assess a member’s leadership status, enhance that individual’s skills (principally through monthly webinars), and recognise leadership achievements. These benefits are free to members.

How You Can Make a Bigger Impact In addition to attending local, regional, and national IMA meetings, consider inviting a small group of students to each chapter meeting. This could be a wonderful (and relatively low-cost) option for mentoring aspiring accountants and finance professionals, providing networking opportunities, and introducing students to cuttingedge issues regarding the practice of management accounting. Joining a university accounting

Although you may agree with us that there’s a competency crisis within the accounting profession, you may be wondering: What does this have to do with me?

advisory group may be another way to influence the development of EPM in that institution’s curriculum design. Other methods to enhance EPM in your organisation include (1) forming user groups within your company, your local IMA chapter, or your industry to review and share EPM experiences; (2) encouraging advancement in the firm to be linked to EPM proficiency; (3) focusing your company’s recruiting efforts on candidates who display a background in and/or understanding of EPM; and (4) organising cross training within your company to enhance a mutual understanding of each other’s respective roles. Finally, visit the Competency CrisisTM website (http:// competencycrisis.org) set up by IMA to unite the accounting and finance constituencies professionals, students, employers, academics, and professors—and explore competency issues through the lens of each stakeholder group. The site is designed to “encourage a discourse, spur action, and create a community dedicated to resolving the serious crisis of competency present in the profession.” Special sections of the website are devoted to educators, students, and employers professionals.

Our Partners in Education Much like a practice partner, an academic partner should be or become a CMA, maintain professional accreditation by completing CPE hours, and regularly read IMA’s publications. Academic members of IMA can pursue and actively promote the CMA programme at their respective institutions.

IMA’s website contains helpful resources, including an exam content overview, content specification outlines for each of the two parts of the CMA exam, and learning outcome statements. The current exam covers some of the professional competencies represented in Figure 1. A summary of changes to exam content, which will be effective in January 2015, is provided on the IMA website in News & Media Relations, which is located under “About IMA.” (See the press release dated March 24, 2014.) Other helpful resources include “ICMA Announces CMA Exam Content Changes” in the April 2014 issue of Strategic Finance, as well as “Management Accounting Career Readiness: Shaping YOUR Curriculum”. These forthcoming changes are based on the most recent IMA study of the knowledge and skills needed by management accountants from the view of CFOs, controllers, and other accounting/finance professionals from around the world. Also consider taking a group of your students to the IMA Student Leadership Conference held each November. The Conference provides excellent networking opportunities for you, your students, and practicing professionals. Students can learn firsthand from Conference presenters the challenges and opportunities facing finance and accounting professionals today. Moreover, if your institution doesn’t currently have an IMA Student Chapter, consider forming one! One of the authors of this article, David Stout, reinstituted the student chapter at his school (Youngstown State University) after travelling with a group of his students to the IMA

Student Leadership Conference in Cleveland, Ohio. Through an IMA Student Chapter on campus, students are able to work closely with a sponsoring local IMA chapter and bring to campus speakers who are experts in a wide range of topics, including those discussed earlier in this article. Each year, student chapters compete for an Award of Excellence (AOE) and recognition as an Outstanding Student Chapter. In addition, IMA student members are able to engage in networking activities, leadership training, mentoring, and community service programmes— all through their local chapter. You also might consider volunteering to serve as a Campus Advocate. In this role, you’ll represent IMA in all major matters of interest to your students (scholarship opportunities, starting a student chapter, mentoring, and the like) and to your institution (for example, leveraging IMA resources to advance the relevancy of the accounting curriculum, use of educational case studies published in the IMA Educational Case Journal, and access to IMA’s ethics curriculum). And if you haven’t yet done this, ask IMA to endorse your accounting programme (information is available at www imanet.org/educator_resources index.aspx). This programme is designed to identify business curricula that meet the quality educational standards required to prepare students to earn the CMA designation. Endorsement is based on an analysis of the curriculum and topics covered on the two-part CMA exam. Currently, 12 programmes have been endorsed.

We need to educate ourselves and future generations of accountants so that as a collective group we can deliver the expanding set of competencies demanded in today’s dynamic organisational contexts.

Finally, if your school has an IMA Student Chapter, consider participating in the annual IMA Student Case Competition, where students are asked to propose a solution to a real world problem. (Cases are solicited each year by Raef Lawson, IMA VP of Research and Policy and IMA Professor in-Residence.) Finalists make their presentations at IMA’s Annual Conference & Exposition before a set of judges consisting of accounting faculty members and practitioners. Each year a new case is published in the August issue of Strategic Finance for students to use for that year’s competition.

Working Together In this article we have summarised the changes that have affected the accounting profession and provided a competencies-based framework for guiding accounting educators in responding productively to those changes. As a management accountant, you know that implementing change in any organisation, let alone within an entire profession, never comes easily. To be successful in overcoming our profession’s competency crisis, IMA’s practice and academic partners will need to assume leadership roles in defining enterprise performance management as the cornerstone of the accounting profession’s value proposition.

This article was orginally published in the August 2014 issue of Strategic Finance. It appears here with the permission of The Association of Accountants and Financial Professionals in Business.

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INTERVIEW

ACCA

Global by Association The Association for Chartered Certified Accountants (ACCA) provides its services across a number of international borders. The recent announcement of Lindsay Degouve de Nuncques as the new head of the Association’s UAE chapter further exemplifies the ACCA’s reach based on her previous work in the UK. Nuncques shares here what she brings to the Middle East and just how globalisation has driven her ascent.

How are the ACCA’s many years of activity being applied to the Middle East? ACCA has now had a presence in the UAE for well over a decade. During that time we have established strong relationships across the Middle East epitomised by the recent signing of our Strategic Partnership with AAA. As a national body, in choosing to partner with ACCA, they recognised the local and global perspective we bring. We are continuing to work with students, members and employers across the Middle East to build their networks, knowledge and business success through events, research and insights and access to a growing number of online resources. Which initial priorities are among your key aims upon joining the organisation’s efforts in the UAE? In the first few months I hope to build on the success of the team in the UAE. My priority will be to meet as many of our key stakeholders

across the region, from our key employers and learning provider partners to our active and growing student and member base. I want to understand their challenges and priorities and how ACCA can work with them to help support the economic success of the region. What can a CFO gain from working with ACCA? The ACCA qualification is about complete finance professionals. For CFOs it brings the technical knowledge vital to business success, complemented with the strategic management skills and ethical competence crucial to an organisation’s success. As an organization, ACCA in the UAE brings CFOs access to that local and global network of peers and expertise along with our leading research and insights that help them to keep up to date on the issues that matter most. Are there any initiatives in place to leverage the recently announced partnership with AAA?

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INTERVIEW

ACCA

â&#x20AC;&#x153;The ACCA qualification is about complete finance professionals. For CFOs it brings the technical knowledge vital to business success, complemented with the strategic management skills.â&#x20AC;?

The strategic partnership with AAA is the first of its kind in the region. Students who complete the UAECA qualification will be entitled to both the AAA and ACCA designations and ACCA members in the UAE will also be eligible to apply for AAA membership. This is a very exciting development in the market and together AAA and ACCA will be working to deliver maximum value to all our stakeholders from this partnership. As we launch the UAECA qualification, this activity will start in earnest. Which key industries will you be spotlighting in the Middle East in the months ahead? Our experience of working across all sectors and levels of organisations globally gives ACCA a unique insight into all types of industries. We will continue to be working with employers across the spectrum in the months ahead to help them gain the insight and make the connections that drive businesses to succeed at whatever they do.

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MARKET OUTLOOK

Islamic Finance

The World Islamic Economic Forum lands in Dubai In its 10th instalment, the Forum is hosted in Dubai as a direct result of the UAE’s increasing importance in the world of global Islamic finance.

In Dubai’s continued quest for leading the world across a range of spectrums, the Emirate accelerated its desire to become the world’s leading hub for Islamic finance by hosting the 10th installment of the World Islamic Economic Forum (WIEF). Delegates from dozens of countries attended to take part in a three-day event held at Madinat Jumeirah which rests alongside Dubai’s gleaming coastline. Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the

Vice President and Prime Minister of the UAE and Ruler of Dubai, key speakers included The Honorary Dr. Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, H.E. Kairat Kelimbetov, Governor of the National Bank of Kazakhstan, The Honorary Dato’ Sri Mohd Najib Tun Abdul Razal, Prime Minister of Malaysia and H.E. Xavier Bettel, Prime Minister of the Grand Duchy of Luxembourg. Launched in 2006 in Malaysia, WIEF has grown in tandem with the increased

Delegates from dozens of countries attended WIEF to take part in the threeday event.

sophistication and reach of Islamic finance. After a successful event in London in 2013 amidst increased interest in Islamic finance across Europe, WIEF relocated to Dubai where the local business structure is keen to host halal finance. Said Hamad Buamim, President and CEO, Dubai Chamber of Commerce and Industry, co-organisers of the event: “[The forum] is the start of a new chapter of cooperation between Dubai and the world, as part of

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MARKET OUTLOOK

Islamic Finance “Korea is very interested in the strength of the Islamic economy and wants to export its products based on their halal qualities.”

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Dubai: Capital of Islamic Economy vision…establishing a unified regulatory authority to provide the framework for standards across halal industries will significantly accelerate growth. Likewise, we need to see increased cooperation and partnership between the public and private sectors. This is already happening with great success here in Dubai.” The order of global cooperation needed to facilitate growth across the Islamic finance world was more than apparent at WIEF based on how many differing nations were represented at the event. The exhibitor’s hall was populated with a number of key Malaysian stands, representative of the Southeast Asian’s ranking as the global leader in Islamic finance. Also present were companies from Saudi Arabia, also a key locality in the world’s halal industries. An interesting yet prescient presence was of attendees from South Korea, a nation which is eager to participate in Islamic finance and will be hosting the WIEF Pyeongchang Roundtable in December 2014. “Gangwon is a province located in Korea, which is very interested in new business opportunities. We’ve realised the strength of the Islamic economy and have come here with many different companies. The first type is based in real estate investment. We also have companies which want to export their products to the Islamic economy based on their halal qualities. And Gangwon will also be hosting the Winter

MARKET OUTLOOK

Islamic Finance Olympics in 2018 and are presently seeking investments for this as well,” said Seong-hun Kim, a member of Gangwon Province Government’s Export Support Team. Dubai proved to be an excellent place for the event considering how well the UAE is able to so regularly corral international cooperation. A key sign of this was witnessed recently when Luxembourg, now considered the third most important base for Islamic finance globally, opened a finance office in Dubai International Finance Centre. The European nation also opened a €200 sukuk earlier this year which was quickly oversubscribed. The prime minister of Luxembourg offered the WIEF audience a riveting speech which detailed just how international the Forum has become whilst encouraging more of the world to support the growing influence of Islamic finance. Said Bettel: “We need to innovate more economic partnerships for growth. We sometimes need to reengineer relationships, but also have to make sure these relationships remain sustainable. Growth in one country also brings growth to others as long as this is guided by free market initiatives. Free trade and free flow of capital combined with innovation leads to prosperity. We have all gathered here in Dubai to explore the future of Islamic finance and Luxembourg is also a pioneer of Islamic finance in Europe. The Islamic financial sector has a major role to play in continued global growth.”

STAT FACTS

$2.47 trillion Projected value of halal products industry in ‘18

12.5% Muslim percentage of global tourism expenditure

Q&A with

Khaled M. Al Aboodi, CEO OF ICD

The Islamic Corporation for the Development of the Private Sector (ICD) is based in the Kingdom of Saudi Arabia where it manages an international fund worth $2 billion, half of which is available for subscription. With shareholders in more than 50 countries and a sovereign sukuk fund recently launched in West Africa, the ICD’s CEO Khaled M. Al Aboodi attended WIEF this year excited to participate in the global event. How does the ICD approach its attendance at the World Islamic Economic Forum? I think the Forum is one of the best places for discussing the financial issues of the OEC member countries. It has been around for ten years and has grown to become a very important platform for discussion. We’re here to attend and listen but also to network. It’s a great networking platform and a place to share views whilst letting everyone know what we have to offer. How has Islamic finance changed over the years? Of course it’s growing in a large scale. Some of it actually needs more support, particularly with respect to regulatory frameworks. We’re trying to partner with many international organisations, like the IMF, to try to provide support to countries to adapt regulation for Islamic finance. Sukuk issuance is one of the biggest issues that needs to be addressed because there is a huge amount of liquidity in this arena. Due to issues related to regulation, sukuk issuance can be costly. But with the regulation we are confident it will be on a level playing field with other forms of finance. Compliance is a major area where more work can be done. The Forum started with a roundtable on sukuk which shows how helpful WIEF has been over the years. What type of work does ICD do internationally? ICD helped the government of Senegal to issue the first sovereign sukuk. This was successfully issued last summer. Progressing in this manner is something we’d like to see continue across West Africa in order to utilise its resources with aiding development in the region in mind.

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INTERVIEW

Gautam Pradhan

Success beyond boundaries The UAE is progressively becoming a hub for world-class infrastructure. The country has duly impressed the rest of the globe with noteworthy land developments showcased across the emirates. Among the remarkable landscapes found in Abu Dhabi are the Corniche Beach, Yas Island and Sir Baniyas Island. Behind these successful projects is NMDC the dredging division of Abu Dhabi National Oil Company (ADNOC). In an interview with CFO Magazine, Gautam Pradhan, Chief Financial Officer, NMDC shares an exclusive look into the company’s international blueprint for growth and his dynamic role as a strategic leader of one of the best in dredging and marine construction in the Middle East.

How has a company with such a unique set of deliverables grown so consistently over the years? Our organisation strongly believes that the core to our strength is the people, process and equipment. A strategic decision led by our Board of Directors and the senior management has been implemented that required us to consistently invest in these three aspects to help expand our business beyond the territorial boundaries of the UAE and at the same time enhance what we can offer which is relevant to these segments. We attribute our success to the efforts which every employee contributes. We also strongly believe in the “We can make it happen” principle. The management raises the index of performance while setting SMART objectives within the organisation and encouraging the employees to achieve them. How has your position as the CFO changed over NMDC’s 35 years of operation? As the market evolves and business dynamics change, my role as the CFO has become complex and more challenging. A few years back, I was mainly focused on bookkeeping, accounting and other financial responsibilities such as arranging bank facilities. But moving forward I became more involved

in other management roles such as strategic decision making, mentoring and leading efficiency and productivity across a range of other departments and functions, as well as a being a catalyst in ensuring that the board’s vision for the organisation is achieved. A significant percentage of NMDC’s shares are owned publicly. Does the CFO play a role in balancing the interests of the shareholders? As a CFO, balancing the shareholders’ interests is definitely part of my responsibility. In order to achieve this goal there needs to be a careful evaluation of each decision while keeping the short-term and long-term goals of the company in mind. At NMDC we actively implement a system where we utilise a balance scorecard as a method of ensuring that all our primary objectives are met yet at the same time continuously enhance our relationships with our shareholders. NMDC has completed various projects across the Emirates. Are there plans to move abroad? As NMDC moves towards becoming an international player, our strategic expansion plans are focused in areas within the GCC region and India. In line with this strategy, we opened

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INTERVIEW

Gautam Pradhan

“A few years back I was mainly focused on financial responsibilities... moving forward I became more involved in strategic decision making, mentoring and leading productivity.”

branches in Qatar, Bahrain, Oman and India. This has paid rich dividends recently as projects of strategic importance are bagged in Qatar and Bahrain. Furthermore, NMDC (UAE) has recently played a key role as a leader of an international consortium with Royal Boskalis Westminister (Netherlands) and Jan De Nul Group (Belgium) for the awarding of the Suez Canal Dredging project in Egypt. Moving forward we have devised a strategic approach that will enable us to play a key role in the development of India’s marine infrastructure. What are the global strategies that are part of the CFO’s responsibilities? As CFO, understanding the macro economic scenario, risk analysis and mitigating those risks are all a part of my responsibilities. I also have to have a proper comprehension

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INTERVIEW

Gautam Pradhan

“Accountancy is the lifeline of any company; it does not only record the finances, it also reflects the health of the organisation.”

of the challenges faced by the company in terms of dealing with foreign contracts, direct and indirect taxes, and hedging and managing the integration process. These are essential to enhance shareholders wealth and mitigate undue risk. How significant is accountancy for NMDC in its operations? Why exactly? Accountancy is the lifeline of any company; it does not only record the finances, it also reflects the health of the organisation. The MIS reports, analysis, trends and statistical information go a long way toward effectively providing

A burgeoning slice of Abu Dhabi coastline.

the diagnostic approach essential for the company. How have NMDC’s environmental activities helped the company’s bottom line? NMDC’s work is well-synchronised with our environmental activities and specifically with nature. Our activities are closely linked to sand and water and we view such activities with strategic importance. Projects such as increasing water supply to mangroves and beach nourishment help us support the environmental activities while adding to our bottom line.

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INTERVIEW

David Allen

Productivity principles with

David Allen Today’s evolving CFO is often caught between the world of business set-up, generating revenue, managing employees and building strong company infrastructure. When can things actually get done? What can one do to boost productivity and master workflow? World-renowned business coach David Allen has the answers.

What went into completing your bestseller – Getting Things Done (GTD)? After twenty years of researching, developing, and implementing a methodology for achieving stress-free productivity, based upon thousands of hours spent desk-side with some of the best, brightest, and busiest people in the world, I decided to write the manual for it. That’s what Getting Things Done is. What are the five phases of mastering workflow? In order to get any situation under control so you can focus, you will utilise these five steps. Whether you’re managing your kitchen or your company, you will need to collect and capture what has your attention, clarify what, if anything, to do about it, organise it according to what it means to you, review and reflect upon it in relation to

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INTERVIEW

David Allen

the whole, and then engage your resources with intuitive trust. As a CFO, how can you transfer efficient workflow management skills to your employees? It’s very difficult to legislate processes for individuals – you can really only hold them accountable for their results. But if you are managing your own commitments and intersections with them, with integrity and rigour, it will automatically force your team to “step up to the plate” in their own behaviours in order to meet your standards. If you request their complete list of their company projects, and they can’t produce it, that’s a sign they’re not in control. If they make a commitment to you that they haven’t kept, that’s data about their performance. GTD is simply about good operational business practices. With so many planning and organising activities in your methodology, is there a risk of losing spontaneity as a strategist? The reason for these best practices is to optimise freedom, creativity and spontaneity. Without them,

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those are greatly subverted. How does one maintain a fair balance between the time spent planning and actually getting things done? You simply need to spend just the amount of time you need to, to trust that what you are getting done is the right thing to be getting done, in the moment. It takes as long as it takes to get to that point. Why would you do anything less? How can one apply your core productivity and workflow principles to today’s technologically driven environment? The principles and their techniques are systemindependent. Whether you have meaningful input from the Internet, your smartphone, or a conversation in the hall, you must engage with it equally. Technology has simply increased the flow of input and ease of distraction in your world. There is a lot of talk about how connected we’ve become and how connectivity is driving tremendous business growth. Does connectivity actually come with its fair share of downsides?

“But if you are managing your own commitments and intersections with them, with integrity and rigour, it will automatically force them to “step up to the plate” in their own behaviours in order to meet your standards.”

Connectivity is obviously a two-edged sword. We can have intimate, productive, and creative interaction instantly with someone on the other side of the world and we can just as easily be distracted and seduced into those engagements, when they may not be the best use of our attention and resources. Don’t shoot the medium. It’s all simply bringing attention to your clarity of direction and priorities, or lack thereof. Could you share a few quick tips with our readers to instantly boost productivity? Write everything down that has your attention. Decide the very next actions required to get closure on all of them. Any next actions that require less than two minutes, do instantly. Park reminders of everything else somewhere that you’ll see when you can do something about them. We are currently facing a massive information overload. What are some basic principles you could suggest to mentally organise such large amounts of data? Constantly ask yourself: Where am I going? What’s important and rewarding to me? Is this information

INTERVIEW

David Allen

“If you want to implement strategy most effectively, it demands utilising your resources optimally.”

supporting that? Park whatever you find potentially meaningful somewhere that is easy to access when needed. Being an entrepreneur is a non-stop job. How do you ensure that you have an adequate work-life balance? Pay attention to what has your attention—with regard to anything. Your health, relationships, career, finances, etc. Notice when something might be “off” and make good decisions about what you need to do to get it back “on” again. Does your work teach people to be efficient or effective? In essence they are the same thing. Effective choices are generated by efficiency on a higher level. If you want to implement strategy most effectively, it demands utilising your resources optimally, which is efficiency. Does motivation actually improve quality of work, or purely quantity? Depends on the focus of the motivation. You can be motivated to work harder, and you can be motivated to work smarter. What is your favourite productivity mantra that

you implement in your day-to-day life? Using my own in-basket and note-taking devices to capture potentially meaningful and valuable ideas, and soon afterwards clearing all of them out by deciding what to do about them, if anything. Your books, seminars and other work inspires many individuals and businesses. Who is your personal inspiration or role model? I have many, about many different aspects of my life. The only person, though, that I ultimately trust as my best guide is my higher self, which I try to access as frequently and clearly as I can. Finally, what advice would you give to current business owners and aspiring entrepreneurs looking to gain complete control of their life and business? Capture what has your attention; clarify what you need to do about it to get it off your mind; organise the inventory of all your commitments, at all levels; review and reflect on all of that regularly; relax, and trust your inner wisdom to engage with the most appropriate thing, in the moment.

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TECH TALK

APPS

Maximise business ‘on-the-go’ with these handy apps iPAD SPECIAL

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2.5G (GSM/ GPRS/ EDGE): 850 / 900 / 1800 / 1900 MHz 3G (HSPA + 42Mbps): 850 / 900 / 1900 / 2100 MHz 4G (LTE Cat 4 150/50Mbps) or 4G(LTE Cat 6 300/50Mbps) *May differ by country and carrier.

2.7 GHz Quad-Core Processor

Display

5.6 inch (141.9mm) Quad HD+ Super AMOLED (2560 x 1440 + 160)

Android 4.4 (KitKat)

Camera

Rear Facing: 16 Mega pixel Auto Focus camera with Smart OIS Front Facing: 3.7 Mega pixel camera with f1.9 Rear Facing Camera: HDR (Rich tone), Selective Focus, Rear-cam Selfie, Beauty face, Virtual Tour Shot, Shot&More, Dual Camera Front Facing Camera: Selfie, Wide Selfie

Video

Codec: H.264, MPEG-4, H.263, VC-1, WMV7, WMV8, Sorenson Spark, MP43, VP8, Recording & Playback: up to UHD

Audio

Codec: MP3, AAC/AAC+/eAAC+, WMA, AMR-NB/WB, Vorbis, FLAC(*) (*) Ultra High Quality Audio (~192KHz, 24 bit) support

Additional Features

Multi Window Ultra Power Saving Mode Voice Recorder (Normal Mode, Interview Mode, Meeting Mode, Voice Memo) Download Booster S Health 3.5 Dynamic Lock Screen Briefing Edge screen UX : Revolving Interaction, Immersive apps(Camera, Video, S Note), Ticker board, Express me, Quick Tools, Night Clock, etc

Google Mobile Services

Chrome, Drive, Photos, Gmail, Google, Google+, Google Settings, Hangouts, Maps, Play Books, Play Games, Play Newsstand, Play Movie & TV, Play Music, Play Store, Voice Search, YouTube

Connectivity

WiFi 802.11 a/b/g/n/ac (HT80) MIMO PCIe GPS / GLONASS / Beidou NFC, Bluetooth® v 4.1 (BLE, ANT+) IR LED (Remote Control), USB2.0, MHL 3.0

Sensor

Gesture, Accelerometer, Geo-magnetic, Gyroscope, RGB, IR-LED Proximity, Barometer, Hall Sensor, Finger Scanner, UV, Heart Rate Monitoring, SpO2 (Dependent on market)

Memory

32/ 64 GB Internal memory + microSD slot (up to 128GB) 3GB RAM

Dimension

151.3 x 82.4 x 8.3mm, 174g

Battery

Standard battery, Li-ion 3,000 mAh, Fast Charging (Adaptive Fast Charging & QC2.0)

* The availability of service may differ by country. * All functionality, features, specifications, and other product information provided in this document including, but not limited to, the benefits, design, pricing, components, performance, availability, and capabilities of the product are subject to change without notice or obligation.

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TECH TALK

APPS

Air Display Using this app, you can connect your iPad to your computer and use it as an additional screen. While working on an important presentation or sales proposal, you can extend or mirror your computer screen on your iPad. This app is compatible with both Mac and Windows computers. Note that to use this feature, you have to install Air Display on your iPad and a separate free app on your computer. The computer and iPad also need to be on the same Wi-Fi network in order to work in-sync. For Mac users, the app allows you to connect to up to four screens – all at the same time! Apart from the ability to convert your iPad into a wireless display, what’s also attractive about this app is that it allows you to control your computer wirelessly using your iPad.

PRICE

AED 36.99

Square Register This fantastic application can serve as a mobile point of sale for your business. It allows you to accept credit card payments – including Visa, MasterCard, Discover and American Express. A transaction fee of 2.75% is charged for every time you swipe a card. The sale amount is transferred to your account within two working days. Once you download the app, you can sign up and register for a unique card reader solution called the ‘Square Reader’ (this is free). Square Reader encrypts all card details and ensures that the transaction is secure. Once you receive your Square Reader, you can connect it to your device and are all set! The application also offers added features such as transaction history, connecting to a receipt printer, creating employee logins and more.

PRICE

Free

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TECH TALK

APPS

DocuSign Have you ever been in a situation where your employees need you to urgently sign a contract but aren’t able to physically reach you in time? DocuSign solves this problem with its easy-to-use eSignature feature. In three easy steps, you can sign important documents and securely send them to your intended recipient. First, you have to import the document to your device – this could be from Dropbox, Google Drive or another select applications. You then place your signature or any other important legal information you need to include such as initials. Once you have finished working on the document, send it back via e-mail. What’s particularly great about DocuSign is the great emphasis it puts on security – so that users don’t have to worry about getting into any legal trouble. Use DocuSign and never miss a deadline again!

PRICE

Free for basic version.

mPay An initiative by the Dubai eGovernment Department, mPay is a simple application that allows you to make important payments. Once you’ve signed up and entered your payment details, you are good to go! You can pay your Dubai Electricity and Water Authority (DEWA) bills, Etisalat utility bills, Dubai Police fines, Recharge SALIK and much more. A handy feature is its ‘auto-recharge’ option which you can use to set automatic payments.

PRICE

Free

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PERSONALITIES

Opinion: CIMA

NEW HORIZONS By Geetu Ahuja, Head of GCC at CIMA

The days of the traditional accountant working within a small community, in a small town, in a small market have long gone. CFOs are now being referred to as Chief Frontier Officers as they travel from market to market overseeing their offices overseas. This new expanded role has distinct advantages for both the company and the CFO, who gain new skills and new insights from foreign branches; a single hand at the helm of many markets provides business perspectives on a global scale and benchmarks across the board. On a personal level, working abroad also has huge importance. Robert Walters, the specialist professional recruitment consultancy, recently conducted a survey

As geographical boundaries are pushed ever-wider, a CFO’s responsibilities are pushed with them. 68

of almost 2,200 employees across a variety of professions exploring a number of topics which ranged from working practices and attitudes to careers. The results highlighted some notable trends, particularly for finance professionals. In career progression, for example, the survey showed that 50% of all accountants see working abroad as either ‘essential’ or ‘extremely useful’ to furthering their prospects, more than banking professionals, lawyers and IT workers – a strong indication of how accounting professionals are thinking about their future either within their existing company or with opportunities elsewhere. Accountants with globally recognised qualifications obviously have a greater chance of gaining some experience abroad, and the ‘Gen Y’ professionals in particular seem ready to pack their bags. In a CIMA study conducted in the UK last year, over a third of those seeking employment in the

next two years will prioritise opportunities abroad over those in their home countries, many of them enticed by the career incentives offered by the Middle East. How quickly can they land what seems to be their dream job? What are the realities? It may be that the move is simply from one branch to another and the only significant difference is a view from the window, but for those expanding rather than changing their roles, we have seen a very real need for a depth and breadth of knowledge never needed before. As geographical boundaries are pushed ever-wider, a CFO’s responsibilities are pushed with them. For many finance executives, the understanding of their own patch of land is no longer enough; they now have to be aware of foreign markets, up to speed with foreign trends and au fait with foreign laws. There is a need for a new commercial awareness in geography as well as philosophy.

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Q&A

John Varghese

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