The CFO Bangladesh | March 2017

MARCH 2017

STRATEGIC

DEVELOPMENT PARTNER Suraiya Zannath Khan FCA Lead Financial Management Specialist- The World bank

Obstacles to Practicing Professional Ethics in Real Life Chief Editor Md. Kausar Alam MBA(IBA), FCS, FCCA, FCMA

Editorial Pannel Khaled Mahmud Raihan, ACCA Mohammad Zahid Hossain FCA, ACMA, CGMA, CPA Mohammad Nazrul Islam FCMA, FCA Mohammad Shakawat Hossain Bhuyan ACA, ACMA, CGMA, CPA, QIA(UK) Md. Anwar Hossain ACA Farhana Sultana ACA

Publishing Director Mohammad Akram Hossain Siblee FCMA, FCCA, CPA

Published by: CFO Connect Bangladesh ‘The CFO Bangladesh’ is a quarterly publiation of

Gaining knowledge on ethical behavior is relatively easier than practicing ethics in real life situation, even though one have every intent to be ethical. Experience shows that entrepreneur and professionals often make bad or non-optimal ethical judgments even when they know the right thing to do. If we think deeply, why a well-educated entrepreneur and professionals can’t avoid ethical dilemma. Reasons those make it difficult for entrepreneur and professionals to transfer their ethical skills from the classroom to the boardroom are suffering from ethical dilemma -keeping ethics as the priority over other relationship and situations, secondly there are tendency to buy peace – do not show the courage to demonstrate true and bold alternative views and thirdly, in real life most of the decisions are made quickly and relying on intuition rather than careful analysis and reasoning.

Identifying the ethical dilemma in the first place through exercising ethical sensitivity and identifying it as one of the key components of ethical decision making. One must be continuously and consistently be alert about the ethical aspects of any decision making, regardless of its financial impacts, shows the ability to evaluate decisions with ethical components. In real-world situations, ethics context may get lost when combined with other necessary or common decision context, as in the contexts of finance, politics, friendship etc.The second obstacle is that,in the real world differing viewpoints are often subdued by the desire to agree or appease others. Arguing on alternative views is a common tendency of group thinking, this is a phenomenon why groups often make horrible decisions.Thirdly, in real life most of the decisions are made quickly and relying on intuition rather than careful, reflective reasoning.

Generally people are prone to a number of emotional biases when facing stress and uncertainty.

The tendency of avoiding a loss or to make a quick gain are real life biasness. People may choose an ethically risky behavior when they react more strongly to the benefits of success rather than to the threat of a lawsuit or other consequences.There is no yes or no answer to overcome ethical decision making problem. May be one of way to overcome an ethical situation is to focus on excellence, not just adequacy, on actualizing high ethical ideas in addition to following the bare minimum rules. Such a positive focus may prevent or mitigate the use of risky strategies to avert loss. Another way could be people should develop their intuitive reasoning powers, thereby reducing the potential to fall into emotional traps, even under stressful conditions. In real life situation one have to start with self-reflection in an ethical decision making situation - what s/he’d do if s/he were in the same situation. Further, by developing and cultivating a positive mindset of distinguished professional identity – I am an entrepreneur, I am an accountant, I am an engineer so on, one may be more likely to bring ethical frames in the decisions s/he need to make. For a professional accountant being ethical is the first and fore most to retain professional qualification – because integrity, objectivity, professional competence and due care, confidentiality and professional behabiour are their code of ethics.

CFO Connect Bangladesh.

Copyright 2016 CFO Connect Bangladesh all rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

Correspondence Address: CFO Connect Bangladesh 18/6 Bashiruddin Road, Lake circus, Kalabagan, Dhaka.

Contact: +8801726630038 Price: For Institution: Tk. 500 For Individual: Tk. 300 To subscribe the magazine please visit the magazine page of the website.

Md. Kausar Alam MBA(IBA), FCS, FCCA, FCMA Chief Editor

TALK TO US: Email: info@cfoconnectbd.com Facebook: www.facebook.com/cfoconnectbd/

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Getting to Next Level

Academic qualification is not enough, and definitely not the peak of your career. A practical pragmatic understanding of leadership is essential to get to next level.

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SAFA Regional CFO Conference 2017

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ICAB ogranized the conference on the theme of Navigating Trhough Digital Transformation Towards Better Accountability.

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My Story - CFOs are Meant to be CEOs

C M Alam FCA shares his story of how he had graduated to CFO and then to CEO.

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30 Ways to Maximize Employee Productiviey

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8 Steps CFOs Can Take to Prep for the oard

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Strategic Development Partner Suraiya Zannath Khan FCA, the Lead

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Financial Management Specialist of the World Bank elucidates her opinion on why the relationship between The World Bank and Bangladesh is very important.

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All Changes for Accounting for Lease

The IASB released the much waited IFRS-16, Leased, in January 2016. Here is the nuts major changes of the new standard.

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7 Sources of Workplace Stress

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To live a life with full potential we must learn to handle stress.

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Commitment for Reliable Financial Reporting

Sabbir Ahmed FCA, Partner of HodaVasi Chowdhury & Co explicates his thoughts on improvement of reliability of financial reporting, corporate governance and auditing practice in upcoming days.

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The Strategist CFO

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Four orientations for engaging in the strategy process.

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PwC, the Most Powerful Brand of Big Four

PwC still has one of the top ten most powerful global brands, but its strength is in decline.

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5th Bangladesh Investment Summit

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Unique investment prospect for industrialists, entrepreneurs and share maraket patrons.

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5 Biggest M&A Deals of 2016

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Conflict of Interest Situations Addressing the dilemma.

Top Lines

Ban on blank cheques

BB circular bars banks from receiving such bare cheques to avert fraud Country's commercial banks are barred from receiving blank cheques as security from their clients against loan or investment to check fraud and forgery.The central bank issued a notification to this effect to the managing directors and chief executive officers of all of the scheduled banks, asking them not to entertain Non-Magnetic Ink Character Recognition (MICR) cheque as security.The Bangladesh Bank (BB) took the measure in the wake of a rising trend in fraud and forgery through use of the MICR cheque, according to the notification.

Besides, the banks have been asked not to impose any 'early settlement fee' for adjustment of current loan or demanded one,

the notification added.The banks will have to issue a one-month notice to their clients if they (banks) want to increase interest rates on term loans.

Repayment scheduled with all liabilities will be included in the notice. It will also be added to the conditions in loan-sanction letter. It will be settled without receiving early settlement fee if the clients want to adjust their loans or investment in the shariah-based Islamic banking system within a month for increasing interest rates.The banks are allowed to impose maximum 2.0 per cent extra fee along with other charges for settlement of late installment payment against term loans.

Bangladesh to log fastest growth after Vietnam, India in 34 years: PwC Projection of 23rd largest economy by 2050 intact

31st largest economy, followed by Vietnam, with the Gross Domestic Product (GDP) worth $ 628 billion on the PPP basis.

Bangladesh's economy is likely to grow at the fastest rate after Vietnam and India in the next 34 years, according to the latest report of a global professional service network group.

The country will maintain an average growth rate of 4.8 per cent annually in the next 34 years to 2050, when it will become the 23rd largest economy of the world in terms of purchasing power parity (PPP).

PricewaterhouseCoopers (PwC) in its latest update on the report titled 'The World in 2050' made the projection.

The report mentions that Bangladesh's economy will continue to grow at the third highest average pace during 2016-2050.Vietnam will grow by 5.0 per cent annually followed

by India with 4.9 per cent on an average and Bangladesh with 4.8 per cent. Pakistan (4.4pc), the Philippines (4.2 pc), Nigeria (4.2pc) and Egypt (4.1pc) are projected to follow Bangladesh.

According to the report, fast population growth may boost GDP in Nigeria and Pakistan, provided jobs are created for young people in these countries.Nigeria, which currently ranks 22nd, could move up to 14th though this is dependent on diversifying its economy and addressing weaknesses in institutions and infrastructure.Vietnam could move from 32nd to 20th and Pakistan could move from 24th to 16th.

The multinational professional service network group first published this report in March 2006.

The report then made projections on potential growth in Gross Domestic Product (GDP) in 17 leading economies over the period to 2050.Later these projections were updated in March 2008, January 2011, January 2013 and February 2015 expanding the country coverage. Bangladesh was included in the list in 2015 and projected to be 23rd largest economy in 2050

Such advancement of these economies is, however, subject to some broad sets of conditions.To realise this growth potential, emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more effective political and legal institutions.

By 2050, emerging economies such as Indonesia, Brazil and Mexico are likely to be larger than the UK and France, while Pakistan and Egypt could overtake Italy and Canada (on a PPP basis). In 2016, Bangladesh was ranked

The PwC also projects that China will remain the largest economy while India will replace the United States as the second largest economy in 2050 when the world economy could more than double in size.

Key Stats 6

14 years later in 2030, the country will be the 28th largest economy as its GDP will rise to $1324 billion. And in 2050, it will emerge the 23rd largest economy, outstripping countries like Malaysia, Thailand, Australia and Argentina.

BDT 24,596 Cr.

Govt. earned from 6 mobile operators since 2000

5.44 %

12 Monthly average inflation at Jan’17.

Point to point inflation is 5.15% at Jan’17

Interest rate on deposits continues to decline The interest rate on banks' deposit fell drastically, much to the central bank's concern.Now, the rate of interest on savings deposit ranges from zero to 4 percent; most of the banks are giving 2 to 3 percent interest, according to central bank statistics.

If the advance income tax, excise duty and banks' service charge are taken into account, the depositors' profitability falls further. And if inflation adjustment is made, depositors do not get any profit; rather, it becomes negative.

For depositors without taxpayer identification numbers, a 15 percent tax on the interest income is deducted; otherwise, the income tax rate is 10 percent.If the deposit amount is over Tk 25,000, Tk 345 is deducted as excise duty and VAT, with the amount increasing progressively.

The service charge varies from bank to bank. For instance, if a depositor has over Tk 20,000 with Agrani Bank, Tk 150 will be deducted as service charge. If the deposit amount is between Tk 1 lakh and Tk 10 lakh the service charge will be Tk 500.If anybody has Tk 1 lakh as savings deposit with Agrani, the depositor will get Tk 900 a year after deducting taxes and all charges.

If inflation is taken into account there would be no profit. If the amount is withdrawn without notice there would be no interest earning.

The interest rate on fixed deposit and deposit pension schemes in many banks has also come down to below 6 percent, which has prompted many to rush to buy government savings instruments.

Given the development, the Bangladesh Bank issued a notice to banks asking them to keep the interest rate on deposit at a reasonable level.The severe cut in interest rate on deposit is encouraging wasteful consumption as people are put off by the idea of saving.

Default loans are on the rise and on the other the businessmen's pressure to reduce the rates of interest on loans has resulted in the lowering of returns on deposits. At the same time, banks are sitting on excess liquidity due to the low investment demand -- a development that also had a part to play in the downward trend of interest rates on deposits.

BDT 278,000 Cr.

Public debt swells until December 2016

BDT 420,000 Cr.

Next year (2017-18) estimated budget size

Feature

Finance Leadership

GETTING TO NEXT LEVEL MA IBRAHIM

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Editor’s note: GETTING TO NEXT LEVEL is a regular column for our readers by MA Ibrahim. He is a world-class expert in areas of Strategy, Family Business Governance and Talent Management. These regular columns will enrich our readers about various leadership and business related insights appropriate for top tier executives.

Strategy is a field where I have spent a major portion of my career. And in the process worked with few greats of our time. I cannot forget the tremendous insights I gained while working with Dr. David Norton – the management guru who pioneered the famous Balanced Scorecard thinking.

Let me share one very powerful advice from him. If a CEO wantsto effectively execute strategy and thus achieve sustainable competitive advantage consistently then he should focus on creating the Organization. Unless the right Org. culture and environmentare created supported by a robust performance management process through which every managers targets are aligned it is almost impossible to execute strategy and create sustainable competitive

advantage. Dr. Norton calls such a strategy enabling organization the Strategy Focused Organization (SFO).

Well saying that is one thing but doing is another - a very challenging task indeed - though ultimately very rewarding and worth every step of it.

Creating an SFO is a significant culture change. Requires few processes to be built up concurrently. According to Dr. Nortonthe critical processes required to build and establish an SFO are as follows: 1.

Translate the strategy into operational terms. You need to translate strategy into actionable initiatives and into tasks. Tools like the strategy maps, cascaded scorecards, and strategy grids are used to integrate strategy with the operational tasks that employees perform daily. This ensures that tasks are done in ways that best support the strategies. This process helps to create a common point of reference for entire Org. and employees.

2.

Align the organization to the strategy. This involves looking dispassionately at your current

Feature

Finance Leadership

organizational structures, lines of reporting, and policies and procedures to ensure that they are consistent with the strategies. It should include review of re-alignment of strategic business units or re-defining the roles of different support functions/units to make sure that each part of the org. is aligned to best support the strategies.

Alignments are required among executive team, business units, budget & capital investment and various support functions – including Finance, HR and IT, which if delinked to strategy cannot deliver long term value to business.

3.

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Make strategy everyone’s job.

This is done through ensuring you have an effective Performance management system in the Organization, so that the entire Org., SBUs, departments - and individual managers - each can have aligned annual performance targets – these should include both strategic and operational targets. The link to strategy should be explicit at least at top and mid-levels. This helps departments and individuals understand, feel connected and find

new ways to support the strategy of the organization. It also helps that employee performance is being measured and compensated in ways that support that strategy. The purpose is to communicate strategic objectives to employees not to command them about what to do.

4.

5.

Make strategy a continual process. The strategic focus will be lost if strategy becomes a one-time activity. Feedbacks are needed to periodically focus attention on and re-evaluate the strategy and the measures. To support strategy evaluation, tools for reporting and analysis should be deployed to enable analysis of the factors influencing the measures. The annual budgeting process also is often linked to strategy. Stimulating challenging discussions keep the strategy momentum going.

Mobilizing change through executive leadership. Perhaps this is the single most important condition for strategy execution.

Consistent executive leadership, active sponsorship, and support are critical. Often- when the proverbial

rubber meets the road- the steam is lost, the top management engagement is crucial to keep up the momentum going.

Creating a successful SFO is neither an IT system nor a KPI/metrics project. It is a Change Management project. Initially the focus is on mobilization and creating momentum, to get the project launched.

Once the organization is mobilized the focus shifts to govern with emphasis on team based approaches to deal with unstructured nature of transition to new performance level. Finally and gradually the cultural values and new structures are developed into a system for managing. The various phases can evolve over two to three years.

The competitive landscape is constantly changing so strategies must continuously evolve keeping in pace too to reflect shifts happening in opportunities and risks. Strategy is a continual process.

The art of leadership is to skilfully balance the tension between stability and change.

[The author can be reached at ibrahim@statureasia.com]

Event

CFO Conference

SAFA Regional CFO Conference 2017 The Institute of Chartered Accountants of Bangladesh (ICAB) organized South Asian Federation of Accountants (SAFA) Regional CFO Conference 2017 on the theme of Navigating Through Digital Transformation Towards Better Accountability’ on 28 January 2017 at the Pan Pacific Sonargaon, Dhaka.

Md. Abdul Hamid, Hon’ble President, People’s Republic of Bangladesh inaugurated the Conference as the Chief Guest on 28 January 2017 at the Pan Pacific Sonargaon, Dhaka while A H M Mustafa Kamal, MP, Hon’ble Planning Minster, GoB was present as Special Guest. Fayezul Choudhury, Chief Executive Officer, International Federation of Accountants (IFAC) presented the Keynote paper on ‘Navigating Through Digital Transformation Towards Better Accountability’. Hans Hoogervorst, Chairman, International Accounting Standards Board (IASB) and Hedayetullah Al Mamoon, ndc, Senior Secretary, Ministry of Commerce, GoB were present as Guests of Honor. SAFA President ASM Nayeem FCA, ICAB President Adeeb Hossain Khan FCA and SAFA Conference Organising Committee Chairman Muhammed Farhad Hussain FCA also present on the occasion. The full day conference have been designed with beginning of inaugural session and thereafter three (03) technical sessions followed by valedictory session in the evening.

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In session one technical paper on Evolving Business Environment: Challenging Role of the CFOs was presented by Akhter Matin Chaudhury FCA, Chairman & Managing Director, Nuvista Pharma Ltd, technical paper on Conflict of Interest Situations: Addressing the Dilemma presented by Masud Khan, Finance Director of Lafarge Surma Cement and technical paper on Emerging Regulatory Regime and panel discussion on Financial Reporting : Country Perspective held in session three. In the evening teahnical paper on Accelerated Pace of Economic Development in a Digital Age: Opportunities and the Way Forward was presented by Ahmed Raihan Shamsi, FCA, Chief Executive Officer, Accenture Communications Infrastructure Solutions Ltd. ICAB President Adeeb Hossain Khan said that innovation and transformation are two of the key principles that guide society and businesse. Citing example of US General Motors and Hilton Hotels, he said these companies may have their controversies and the valuations may be disputed, but the fact remains that digitalization is rapidly and irreversibly changing society and business.

The leadership of this country has correctly given digitalization its due importance in our path of progress, he added.

SAFA President ASM Nayeem FCA said that CFO even needs to deal with dilemma while there is a conflict of interest situation. But whatever the challenges and difficulties in the digital transformation, the South Asian countries have been experiencing every year an accelerated pace of economic development which creates new opportunities in sustainable manner.

Professional accountants, especially CFOs, are expected to play a vital role in the age of digital transformation.

Conference Organising Committee chairman Muhammed Farhad Hussain said that Digital transformation is the profound and accelerating transformation of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact across the society in a strategic and prioritized way. He added that accountability means the obligation of any individual or organization to account for its activities, accept responsibilities for those and to disclose the results in a transparent manner.

Professional accountants, especially CFOs play a leadership role in their respective organizations in this age of digitalization and transformation, he said . Also businesses are continually faced with demands for increasing transparency and accountability. This can lead to

Event

CFO Conference

<<<<

“Md. Abdul Hamid, Hon’ble President, People’s Republic of Bangladesh inaugurated the Conference as the Chief Guest.”

and M&A transactions and execution report all are depended directly to them, and nearly 40% of CFOs are responsible for information technology, he stated.

conflict of interest situations which finance professionals may face and need to resolve, he stated.

The keynote speakers said the intersection of technology and accountability is vital for the future of not just CFOs, but the businesses or organizations, shareholders and investors and ultimately, the global economy.

Highlighting three key themes, the keynote speaker Fayezul Choudhury said that the role of the CFO continues to change and evolve, technology helps CFO be more transparent and accountable. Clarifying the Accountability, he said it is vital to building trust, and that trust has been more important in the global economy. He demonstrated the conference paper before audiences across the south Asian region.

Referring the McKinsey Global Survey on the role of CFOs, he said CFOs are finding new demands such as digitizing critical business activities and managing cybercrime, in addition to traditional finance duties. More than half of CFOs reported that their companies’ risk, regulatory compliance,

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<< Session one: technical paper on Evolving Business Environment: Challenging Role of the CFOs.

To succeed, business thinking, management and reporting everything are depended on broader information sets and quicker, more sophisticated ways of analyzing the material information for effective decision-making, he pointed out.

SAFA, an Apex Body of SAARC formed in 1984, is a << forum of professional Session two: accountancy bodies in the technical paper on SAARC Region for promoting Conflict of Interest the accounting profession Situations: Addressing regionally and internationally. the Dilemma Currently it comprising of Accountancy Bodies in India, Pakistan, Nepal, Bangladesh and Sri Lanka. Bhutan, Maldives & Afghanistan are the observers of SAFA. Its << mission is to bring the Session three: accounting bodies together at technical paper on a common platform and Emerging facilitate professional Regulatory Regime cooperation in the areas of and Financial education, training, technical Reporting- Country and ethical standards in Perspective accountancy profession.

Interview

C M Alam FCA

CFOs ARE MEANT TO BE CEOs - MY STORY -

Chaklader Mansurul Alam FCA

My Life I am a Chartered Accountant and secured my membership of the Institute of Chartered Accountants in England & Wales (ICAEW) in February 1975. I also did my Post Graduation Diploma in Social Planning for Developing Countries from London School of Economics (LSE) of the University of London.

I completed my professional career as the Managing Director of Industrial Promotion & Development Company of Bangladesh (IPDC) Limited.

Presently I am the Chairman of Kapita Auto Bricks Ltd, a concern where eco-friendly bricks are manufactured.

I mentioned all these because it has relevance to my story.

My Story I landed in London during the month of March 1969 to do Chartered Accountancy and I started my Articleship at a City Auditing Firm in London having thirteen partners. The very first day, after getting introduced to my Principal, I was taken to a client’s office where I was greeted by an elderly gentleman who was the Audit Manager conducting the audit. The client is in a some sort of financial services business. In a room (Auditor’s room) with some other colleagues of the Audit Firm, I was given some ‘extended sheets’ to do the casting and crosscasting (I was home sick and very home sick and I thought to myself ‘is it studying Chartered Accountancy!’). I felt very demoralized. It was morning time of the day.

When lunch time came, we were taken to the Board lunch room. During lunch hour I was introduced to the Managing Director and Finance Director. To my surprise, both of them are Chartered Accountants! So I thought ‘a chap doing casting and cross-casting could also become the Managing Director’. My demoralized mood suddenly lightened up; and as the day passed on I started to feel ‘I must see what is behind the figures; I must see how the figures are generated out of business activities; I must be able to literally visualize the activities / operations of the business we audit’.

During my four years of Articleship I

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travelled to many parts of England and Wales with audit assignments ranging audits of Public Schools, Solicitor Firms, Pharmaceutical Companies, Dredging Companies, Retail Store Chains and many others.

What I came across was amazing; many of these companies were headed by Chartered Accountants. And I started my own ‘investigative journey’ to find out why this is so. And the Journey span over 35 years from the year 1969 to 2005; during these years I worked as Articled Clark, Audit Manager, Financial Controller, Group Accounts Manager, Head of Operations, Deputy Managing Director, Managing Director and as Chairman. What I learnt, what wisdom I gathered, and how I applied this to become ’from CFO to CEO’ is told in the following lines ; of course this is very much my personal understanding on reflections of my working years.

the data from the business. This helps us to make judgments and take appropriate decisions fast.

Personal Attributes 1

Adaptability i.

During the process of carrying out audits of so many different kind of businesses, organizations people and all are so different from each other; we learn to be very adaptable to do our duties as Auditors.

2

Interpersonal relationship i.

Going through all these business enterprises and coming across so many diverse kinds of people, we develop the skill of interpersonal relationship.

We develop the skill of putting people at ease, listening to people intensely, interacting with people in a more constructive and positive way, impress people with our sincerity of purpose integrity, fairness and ‘culture of respect’. ii. At the top of any business interpersonal relationship skills is a must.

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Observation Skills Years of audit work helps us to sharpen our observation skills, makes us alert and resilient; and helps us to avoid surprises.

I believe I acquired the following qualities which helped me to become the CEO of IPDC. As a matter of fact any CFO having these can secure the leadership role in any organization.

Professional Attributes 1 Process understanding i.

During the process of carrying out audits, you need to ‘walk through the system’ to understand how effective is the operational process and how the internal control system is effectively working. Strength and weakness of the internal control normally dictates us areas and volume of ‘random sampling of transactions to be audited’. ii. This ‘walk through the system’ gradually helps you to understand the business processes and its operational framework. iii. This enables us to understand the businesses of any kind much faster.

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Analytical competence Understanding and interpretation of the Balance sheet and the Income statement makes us analytical and provides us with insights of the operations and really understanding

4. Personal Skills i.

Many of the skills mentioned above goes into the making of the personality and it is the personality which ultimately guides us to pursue leadership role. ii.

Once we know life is meant to be purposeful and meaningful, it instills in us an attitude, aptitude, core values and believes; and ultimately it gives birth to a passion. And passion drives us to materialize our dreams.

So the story ends – I have graduated to CFO, then to CEO and now at a late stage of my life I graduated to an entrepreneur doing business of manufacturing eco-friendly bricks – from a Banker to a Brick maker.

Interview

C M Alam FCA

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Feature

Employee Productivity

30 WAYS TO MAXIMIZE EMPLOYEE PRODUCTIVITY No one needs to be told how important productivity is for prosperity – and perhaps survival – in business today.

Most companies are constantly looking for ways to improve job performance. Robert Half, a leading global recruitment firm suggests 30 ways to maximize employee productivity.

1. Humanize the Work Environment People work harder and more effectively in an employee-friendly work environment, one in which management recognizes and respect the need to treat each employee as an individual. Here are some basic elements of a healthy workplace: a. b. c. d. e.

Comfortable working conditions Salaries and benefits that are comparable to or better that what other companies offer Open communication between management and employees Advancement opportunities A clear commitment to basic courtesy

2. Hire Smart Take the time and effort to recruit and hire the best possible person for each job opening in your company.

When you are considering candidates, focus on past accomplishments rather than credentials only. Pay more attention to what the candidates achieved in their last positions, and focus less on the positions’ functions. One more thing: When you are considering new employees, don’t overlook such basic virtues as loyalty and reliability.

3. Use Strategic Staffing There is a fine line between having too much work and not enough. Most people tend to use their time more efficiently when they are busy than when they have idle time on their hands. So, before you staff an open position or add to your full-time staff, make sure that current employees can not assume additional responsibilities. Or consider hiring a temporary employee so that you can determine whether you need someone full time.

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Feature

Employee Productivity

4. Spell Out Objectives One of the most common and frequently overlooked reasons behind subpar performance is poor direction. When you issue an assignment, spell out as many details as you can. Keep in mind that many employees are embarrassed to ask questions for fear of appearing incompetent.

5. Be Consistent Within reason and without being rigid, be consistent in your general management approach. True, you need to customize your supervisory style for each individual, but make sure the rules and regulations that apply to one person apply to everyone else in a comparable position.

6. Set the Proper Example The old adage ‘Do what I say, not what I do’ does not work well in business.

Managers should exemplify the standards employees are expected to adhere to, especially in such areas as punctuality, appearance, courtesy to fellow employees and willingness to work overtime when need arises.

7. Encourage Employee Input and Risk Taking Never assume that your employees voluntarily express their concerns.

Instead, actively seeking comments, observations and suggestions. To do

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this, you will have to do more than install a suggestion box. Be sure you maintain an open-door policy that makes it easy for staff to talk to you. Remember to reward risk taking as well as results.

Give your employees enough latitude to achieve their full potential.

8. Publicize Company Goals Your employees should know what goals (both short- and long-term) your company is striving for. Spotlight these ambitions in company publications, on the employee bulletin board or on posters. Encourage individual departments to set objectives and involve employees in the process.

9. Develop Career Paths Just as it important for your company to have objectives, your individual employees need to have personal career goals as well. Advancement opportunities can be a powerful way to motivate your staff.

10. Promote from Within With rare exceptions, the policy of most successful companies is to promote from within. This is not to say that you shouldn’t bring in an outsider, depending on the job and individuals involved, but the issue here is one of policy.

Promoting from within builds morale and also simplifies your hiring procedures.

11. Show a Personal Interest in the People Who Work for You Make sure you know enough about the lives of your staff members to relate to them on a personal level. When you really get to know your employees, you will be able to identify what motivates each individual on you team and develop a more effective system of incentives and rewards for your department.

12. Vary Rewards People perform better when their efforts are recognized – but rewards do not necessarily have to be financial. Extra days off, praise in company publications and the opportunities to broaden the job responsibilities are just three examples of nonfinancial rewards.

13. Use a ‘Carrot’, Not a ‘Stick’ to Motivate Fear of repercussions never results in a good performance over the long term. If you run your department by constantly assigning blame and criticizing workers, your employees won’t stick around for long. And you are not fostering open communication and teamwork, which are key to maximize productivity.

14. Be Liberal with Praise Compliment employees whenever it is warranted, and don’t worry about making them complacent by overpraising. Most people respond to praise by working

Feature

Employee Productivity

harder. On the other hand, people who work hard but feel unappreciated are likely to cut back on their efforts, figuring that management doesn’t care.

Group effort is an important dynamic in each business, but make sure the individuals within the group have clearly defined responsibilities.

15. Delegate Effectively It is one thing to sue an assignment and another to allow the person true responsibility for its successful execution. When you delegate, there is always some risk that the employee will not do assignment the way you want or, worse, may delegate all the decisions back to you. But unless you are willing to take this risk, you will never maximize employee productivity.

21. Beware of the Signals of an Unproductive Work Environment Many companies become aware of trouble only after problems with productivity reach major proportions. To prevent this, be alert to the early symptoms:

16. Put ‘Stretch’ into Assignments Encourage staff members to beyond their comfort zones in taking on new responsibilities and projects. The new challenge also will demonstrate your faith in them and motivate them to perform at a higher level.

17. Don’t Whitewash Unpleasant Assignments Accept the fact that not all projects your employees are expected to perform will be pleasant for them. When you have to give difficult assignments, prepare your employees in advance and don’t minimize the scope of the task.

Consider, too, the possibility of bringing in temporary professionals to ease the burden of time consuming projects.

18. Hold Meetings Only When Necessary It’s been said that a company’s success is inversely proportional to the number of meetings it holds. Hold a meeting only when there are issues of substance to discuss. Equally important, keep meetings brief and to the point. An agenda helps to keep people from wandering off the topic of discussion.

Also, set a time limit for each meeting.

19. Remember That Time Is Money Effective time management is essential for maintaining peak levels of productivity. Make sure that your employees are not only working hard but also working smart – getting the maximum results from the time and energy they spent on specific tasks.

20. Individualize Responsibility The more people share responsibilities on a particular assignment, the longer they will take to complete the project.

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a. Sharp rise in absenteeism b. Significant increase in employee complaints c. Noticable decline in the appearance of the office d. Breakdowns in discipline e. Sudden and substantial decline in the communication between employees and management 22. Don’t Take Training Programs for Granted Make sure the people who conduct your training understand the differences between demonstrating a skill and teaching that skill someone learning it for the first time. Also, be certain to customize your activities to the ability levels of the people being trained.

23. Hold Off-Site Events Try to hold regular training or planning events off-site, even if only once a year.

Different soundings can help spawn new ideas and provide a break from routine.

Allow for some social time in agenda; it can help your department develop a spirit of teamwork.

24. Take Note to Poor Performers Be alert to signs that a staff member lacks motivation or is unhappy in his or her job, such as sharp rise in absenteeism or missed deadlines. Speak directly to the individual and try to determine the underlying reason. If there is no change in behavior after an established period, it might be everyone’s best interest to let him go before the department’s overall performance suffers.

25. Tell the Truth Productivity rarely flourishes in an atmosphere plugged by rumors and distrusts. Keep your employees informed of any issues that could conceivably affect them. Establish management and employee discussion groups in which staff have the opportunity to express

their own concerns and views on company issues.

26. Criticize Constructively When employees are doing a substandard job, let them know, but do it with care and fact. First of all, never criticize and employee in front of his or her coworkers. And second, to take the sting out of the criticism, focus the discussion on performance, not the person.

27. Say ‘No’ Tactfully Whenever you decline an employee’s request – whether it’s for a raise, a day off or a change in working conditions – make sure that the way you refuse it doesn’t alienate the individual more than the refusal itself. Always give an explanation for your decision and be careful to phrase it so as not embarrass the employee.

28. Implement a Formal Performance Review Process A formal review process is important for you and your employees. Most compaies hold formal evaluations on an annual basis, but consider touching base with individuals in your department quarterly or every six months.

These assessment ensures that both you and your employees are aware of performance expectations and can help you determine objectively if those goals are being met. Be sure to keep a record of each review. Documentation will be important when making decisions about pay increases or promotions, for example.

29. Learn Form Employees Who Quit An exit interview with a staff member who leaves can give you insight into company problems that you may not be able to get elsewhere. The exit interview should be conducted by the highest-level manager who had contact with that particular employee. But remember, the departing employee may not be entirely objective, so take this into account in your assessment of his or her comments.

30. Admit Your Mistakes When you make a mistake, don’t try to conceal it from your employees. You’ll only encourage them to hide their errors.

Remember, nobody expects perfection – even from the boss.

Feature

Leadership

8 Steps CFOs Can Take to Prep for the Board According to Ernst & Young (EY) there are eight important steps that CFOs and future finance leaders can take to prepare for executive and non-executive board positions.

1. Develop a coherent CV Boards and nomination committees are increasingly adopting a more strategic approach to achieve the right mix of experience on both the management team and board. This means that recruiters are now often looking for particular experience, such as M&A, capital markets or rapid-growth markets.

If one has deep experience of a particular domain, such as M&A, then this will give him a good chance of being matched up with certain positions on certain boards.

2. Take on roles outside finance, and even business Board roles on charitable trusts, government taskforces or cultural institutions can help CFOs to develop important skills to take them toward their next career goal, as well as providing rich and fulfilling experiences in their own right. These roles provide valuable exposure to another sector, access to new networks and experience of group dynamics. A move outside the comfort zone into a non-finance role, whether in business or not, also demonstrates a willingness to gain a broader perspective.

Spending time on the board of a charitable organization gives you a good experience of how boards interact, and teaches you how to keep your knowledge about an organization current when you are only meeting several times a year. It also gives you experience of stepping back and the shift in mindset that is required for board positions rather than trying to run everything.

3. Build networks In recent years, boards have taken a more transparent and independent approach to recruiting directors. But

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nevertheless, to be considered for directorship roles, it still helps to have the right contacts among senior business leaders. CFOs should nurture these networks through trade associations, conferences, industry meetings and part-time roles. Word of mouth is still a significant factor that will determine whether or not you are on a list for a board appointment.

4 Develop a personal profile In the past, CFOs have been accused of not doing enough to build relationships with the outside world. This is changing, but a CFO seeking a directorship or onward executive step should still work on building a public profile for themselves that extends beyond their core role.You need to demonstrate not only that you are a leader in your field, but also someone who can think broadly beyond the CFO role.

5. Gain international experience Companies increasingly expect board directors and senior executives to have spent time in different countries. CFOs increasingly need to be people who have traveled and been exposed to multiple ways of looking at similar problems.

There is a lot of training taking place in cross-cultural awareness and empathy, so CFOs who have those skills already will be at an advantage. Experience of rapid-growth markets is particularly desirable 6. Build relationships across the business CFOs who enjoy a wider range of potential career opportunities and are most in demand for executive positions are those who can demonstrate breadth, by having moved beyond the traditional

finance role to assume wider business and commercial responsibilities. Every time one should see an opportunity for him to get involved with the business. He would take the initiative, rather than just sit on the periphery and look at it only from a limited financial perspective. He has to be a good business partner for the CEO and COO of the company, broaden the horizons and look beyond the numbers.

7. Donâ&#x20AC;&#x2122;t get stuck at head office Finance professionals who have yet to reach the group CFO position should ensure that they get a range of experience, both at head office and in SBU (Strategic Business Unit) roles.

Spending time in a country role will give finance professionals greater exposure to the commercial aspects of the business, and the ability to handle a broader range of issues that will provide valuable experience.

8. Start planning early It is never too early to start planning the next step. CFOs who spend their entire careers in the finance function will be at a disadvantage to those who have taken a more structured approach to career planning. Not every CFO will be able or willing to take on a part-time position, but it is very useful for those with ambitions beyond pure finance, and can afford the time, to do so.

However, some caution and forethought is essential. A board role requires deep experience, because you have to have the confidence to speak up and the ability to provide valuable input to the discussion. If you take a board position too early, you will place yourself at a disadvantage and it may harm your career over the long term because you are not ready.

Cover Story

Suraiya Zannath Khan FCA

STRATEGIC DEVELOPMENT PARTNER Suraiya Zannath Khan FCA is Lead Financial Management Specialist in the Governance Global Practice of The World bank. She elucidates her opinion on why the relationship between Bangladesh and World Bank is very important for economic growth, employment and poverty reduction.

How does World Bank see the opportunity of Bangladesh in global economic arena?

Bangladesh has achieved phenomenal progress since its independence in 1971. With a vibrant economy that has grown at nearly 6% per year in the last decade, Bangladesh has seen the number of poor drop by one-third during the same period. As per Global Competitive Report, Bangladesh ranked 110 out of 148 countries due to its competitive strengths of large market, stable macro-economy, efficient and improving markets for goods, finance and labour, coupled with improving health and education indicators. Despite challenging circumstances, Bangladesh has proven to be remarkably resilient and achieved significant human development over the last four decades.

It has made notable progress on most health outcomes, especially on maternity and child health. The country has also achieved impressive results in enhancing access to and equity in education.

Rapid growth has propelled Bangladesh from low income to low middle income country (MIC) status, as per capita GNI (Gross National Income) of US$1,080 crossed the MIC threshold of $1,046.

Robust macro-economic framework, strong growth of exports and remittances and relatively under-developed and insulated financial markets have played a pivotal role in boosting the economic growth. Bangladesh is now the world’s second largest garment exporter, making it unique among low-income countries because of the high share of manufactured goods in exports.

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Bangladesh has enjoyed the lowest inflation and price volatility in South Asia over the last two decades and inflation is likely to remain relatively low. It is also amongst a selected group of countries worldwide that experienced a sharp decline in inequality.

How important is a good tie up of World Bank with Bangladesh government for economic growth, employment and poverty reduction?

Bangladesh is one of the important member countries of the World Bank Group since its independence andhas been the largest recipient of IDA concessional loans and credits. The World Bank is not just a lending institution helping the borrowing countries for commercially viable projects or some form of development program. The uniqueness of World Bank is its leadership in helping client countries realizing the economic potential for growthand become resilient in fighting poverty, natural calamities and other emerging challenges. Unlike other development organizations, the World Bank is not merely considered for project financing only. Bank’s Knowledge products is also another strong instrument for advising, engaging and supporting theclient countries for policy and operational reforms. Bank is uniquely positioned for bringing, connecting and harnessing global knowledge.

When you are in business, it is common phenomena that business relationship will encounter challenges and takes various forms- sometimes warm and

sometime cool. While in a political economy relationship really matters.

However our core focus is the people, be it Bangladesh or any other countryand how economic prosperity can be achieved through a wide range of policy advice and development program.

Despite the cancellation of Padma Bridge financing in June, 2012, our lending has gone up. The number of active projects was 30 in 2013 and it has shoot up to 41in 2017 and financing amount reached to USD 9.8 billion from USD 4.9 billion. In addition, bi-lateral donors are increasingly asking World Bank to channel their funds to the government, which is currently stood to USD 573 million. So it is evident that relationship issue hasn’t worked as barrier towards our common objective for inclusive growth and shared prosperity.

What are the priority areas of World Bank as a development partner of Bangladesh?

According to Systematic Country Diagnosis (SCD) for Bangladesh, the strategy paper that sets the priorities for Bank’s lending program for 5 years identified five key areas i) energy sector, ii) inland connectivity and logistics, iii) regional and global integration, iv) urbanization and v) improved delta management. The SCD is developed in alignment with country priorities set out in the 7th five year Plan. In addition to these priority sectors, education, health, financial sector and private sector development continue to remain Bank’s core focus of development assistance in

Cover Story

Suraiya Zannath Khan FCA

â&#x20AC;&#x153;The uniqueness of World Bank is its leadership in helping client countries realizing the economic potential for growth and become resilient in fighting poverty, natural calamities and other emerging challenges.â&#x20AC;?

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Cover Story

Suraiya Zannath Khan FCA

Bangladesh. Another priority is to support the government to improve governance and service delivery which cut across all sectors. Bank recently introduced a new instrument ( Program for Result, PfoR) to help the government implement priority program expeditiously.

The comprehensiveness of Bank’s development strategy in turn supports achieving its twin goals.

World Bank is mainly involved in public sector development, how the bank is working for private sector development and job creation?

The foundation for private sector development is the infrastructure and enabling business environment. If government can offer necessary infrastructure to entrepreneur and investors, be it localand foreign investment, good regulatory framework, sound financial sector and competitive business environment, then private sector led growth is bound to happen.

Brining the supplychain is another approach for ensuring that all dots for promoting private sector are connected.

For instance, income generating activities in rural areas alone will not help unless there is access to market, bank and roads etc. We often tend to ignore such holistic approach for boosting private sector which is the main engine for creating job market. International Finance Corporation (IFC) of the World BankGroup mainly drives private sector related policies and program. BKash is a very successful program with equity financing from IFC. In addition,World Bank’s global practice ‘FinanceTrade Competitiveness’ mainly responsible for private sector development. Bank’s on-going and pipeline projects (Private sector development support projects, Investment Promotion and Financing Facility, Export Competitiveness for Jobs, Bangladesh trade and transport studies, Leveraging ICT growth, Employment and Governance project) speak the growing lending program for private sector and employment generation. There are still infrastructural bottlenecks, lack of

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business friendly environment and red tapes which continue to threaten a vibrant private sector growth. In many countries, World Bank’s main program is to promote private sector led economic growth. India in South Asia and other countries beyond South Asia have large WB funded which mainly concentrates on investment promotion and job markets.

Compared to other developing nations what are the challenges of our financial management system and what are your recommendations to improve the situation?

Public sector financial management starts right from the planning followed by budgeting and budget execution, monitoring, reporting and oversight both

by Audit office and legislative body of Parliament. These are all the components of public sector financial management.

Bangladesh have made substantial progress in terms of budget formulation but persistent challenges remain with regard to budget execution.

In addition, institutions are not strong enough to absorb the emerging challenges that keep coming with the change of business need, environment or modality. The PFM system needs constant update, modification, adjustment and improvement. This leadership is practically non-existent in Bangladesh.

Accountability of the budget holder for use of public funds is also very weak.

Major financial decisions or budget decisions are driven by individual’s discretion which lack transparency. In the absence of strong institution, system cannot function properly and as a result discretionary authority eventually overtakes. Bangladesh is known for a variety of laws, rules and regulations but enforcementremains weak. . In such environment, even world class system cannot function.

So recommendations are basically what we have been saying- build strong institution, focus on human resource development programs so that public sector is well equipped to face not only today’s but also the emerging challeng-

es. The donor community has invested a lot in PFM programs including automation but sustaining this interventions is a challenge.

Are there any initiatives/projects from World Bank to improve the capacity of professional accountancy organization in Bangladesh?

We do provide analytical service to the borrowing country to promote and accelerate the growth of the accountancy profession for two reasons-one is to develop business ready finance professionals to serve the corporate sector and the other is to ensure high quality audit assurance. World Bank engages private sector auditor and hires professionals from accountancy profession. Our advisory and analytical service in this field includes ROSC (Report on Observance of Standards and Codes) report. ROSC report is one of the entry points which summarizes country regulatory framework for accountancy profession, its growth prospect, role of regulatory bodies, financial reporting and auditing standards and effectiveness of enforcement mechanism. The first ROSC report in 2004 laid down the basis for the World Bank to help the accountancy profession and provide the first technical assistance to two accountancy bodies i.e. ICAB (The Institute of Chartered Accountants of Bangladesh) and ICMAB (The Institute of Cost and Management Accountants of Bangladesh) and selected regulatory bodies including BSEC and RJSC. Under this TA, ICAB entered into an agreement with another developed accountancy institute i.e. ICAEW (Institute of Chartered Accountants of England and Wales) as twining partner.

This arrangement brought about significant changes in the professional education system and audit quality assurance process. There are many visible changesin the recent past and the accountancy profession has undergone massive reform over last 5-10 years.

ROSC recommendations played a pivotal role in this regard. Since then,

Cover Story

Suraiya Zannath Khan FCA

“International Finance Corporation (IFC) of the World Bank Group mainly drives private sector related policies and program. BKash is a very successful program with equity financing from IFC.”

we continued our support through a number of TAs. Our policy note on public-private partnership for improved auditing is helping the private sector and public sector auditors to work together which in Bangladesh have been working in two different streams.

The main objectives of the above mentioned program is to bridge the knowledge gap of both sector auditors and create the scope to engage private sector auditor by public sector and vice versa. The second project is the strengthening public sector financial reporting. Under this TA, ICAB is helping the government by preparing a financial reporting framework which state-owned enterprises are expected to adopt.It is evident that Bank is actively engaged and committed to support the growth of accountancy profession through a wide range of interventions.

What is the scope of finance professionals of Bangladesh to play the leading role in World Bank?

To work with World Bank, IMF or similar institutions the finance professionals are mainly drawn from private sector. The curriculum of finance profession is basically designed to serve the corporate bodies, as a result, finance professional has little or no exposure to public sector subject or issues. To gather relevant knowledge for serving the WB, a major shift that every professional need to make is how to grasp quickly the dynamics in public sector. Often it becomes huge challengeing for many individuals. In many countries, Bank has to hire professionals having strong public sector experience as financial management specialist.

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Nonetheless World Bank invest hugely in training and learning for staff development and together with professional qualification, it seems there is good prospect for finance professional to work with the Bank. Keeping the challenges in mind, we are now asking the professional accountancy organizations to include public sector subjects in their curriculum.

Sometimes policies (e.g. de-nationalization of entities) promoted by World Bank create negative impact on economy and subsequently there is pressure from various group of not taking fund from World Bank. How do you see it?

We are very careful whenever we provide any advisory service or policy advice, the overarching focus of which is to make everything “made in Bangladesh” brand. Our responsibility is to connect the client with global knowledge, good practice and customize that suits Bangladesh context.The problem here is everything is individual driven. With the change or transfer of a govt official who originated particular ideaand sought Bank’s advisory services, everything takes a new shape. New official bring new ideas and takes time revisit his/her predecessor’s position. Then there is always a third group to preventany good initiatives. The blame for delay has been invariably pointed to the Bank. Media love to publish glossy story and in case of the Bank, all-time favorite blame is “Bank’s conditions”. It is the government’s programthat we provide advice on, mobilize resources and work hand in hand for successful implementation.

It is up to the sovereign government to decide what to take and reject. Looking at the current rising lending program, I’m not do see any reflection anywhere of the above mentioned statement.

You are the first female Chartered Accountant of Bangladesh. During the last 27 years, number of female CAs increased significantly. Do you think women community of today isfinding accounting profession suitable for them and the gap between male and female CA will be reduced in near future?

Yes it is true, the number of female chartered accountants are increasing and the percentage has really gone up but it is still disproportionate. I can’t exactly say why femalestudents do want to pursue chartered accountancy as profession. The age old perception that CA is a male dominant profession and tough to qualify are no longer valid. The other challenge facing the profession is that bright students do not consider CA as first choice for career building.

Current approach of ICAB to reach out promising students is also old fashioned and rudimentary. We are working with the institute to brand the profession, the sole objective is to attract good students, generate business like professionals, and how to sharpen and deepen the knowledge of the members.

My advice especially to female students - learn about the profession and the career prospects it offers before thinking of other line of profession. I’m optimistic that female students would enroll in large number in the near future and would like to be proud member of this elegant and well paid profession.

Feature

Accounting for Lease

ALL CHANGES FOR ACCOUNTING FOR LEASE The IASB released the much-awaited IFRS 16, Leases, in January 2016. Here is the nuts major changes of the new standard.

In January 2016, the International Accounting Standards Board (IASB) released IFRS 16, Leases, which supersedes IAS 17, Leases. IFRS 16 eliminates the classification of leases as either operating leases or finance leases, and introduces a single lessee accounting model. The new standard requires the lessee to recognise lease assets and any related financial obligation to make future lease payments. This applies to all leases with a term of more than 12 months, unless the value is low.

Leases are measured by recognising the present value of the lease payments including any directly related costs. They are either shown as lease assets (right-of-use assets) or included within property, plant and equipment. Further, in the income statement, depreciation on lease assets should be shown separately from interest on lease liabilities. In the financial statements of lessors, leases are still classified as operating or finance leases, and are accounted for separately. The main change for lessors is the additional disclosure of information on the risks relating to its residual interest in leased assets.

A lease is defined as part of a contract that conveys to the customer the right to use an asset for a period in exchange for consideration. A distinction is drawn between a lease and a service. Under a leasing agreement, the customer obtains control of a resource that is the right to use an asset whereas, in a service contract, the supplier retains control. Consequently, the standard focuses on whether a customer controls the use of an asset.

The use of the asset is controlled when the customer has the right to substantially all of the economic benefits and can direct the use of the asset. Just as with IAS 17, judgment may be required to determine whether a contract contains a lease. The identification of an asset can arise by being explicitly or implicitly specified in the contract when the asset is made available for use.

Where an entity previously has a number of leases not recognised on the balance sheet, there may be a significant change in the nature of expenses related to those leases, as the operating lease expense will be replaced by the depreciation expense for the leased asset and the interest expense on the lease liability. Over the life of the lease, there will be a reduction in the lease expense because the interest expense naturally reduces.

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Feature

Accounting for Lease

"Under IAS 17, off balance sheet leases and services are treated in similar ways but this will change under IFRS 16"

It is possible for a customer to obtain economic benefits from use of an asset in many ways, including the sub-letting of the asset. Economic benefits include the assets output, cashflows and any other benefit from a commercial transaction as a result of using the asset. Control of the asset can be determined by examining such things as whether the customer has the right to make the decisions about the purpose for which the asset is used or can use the asset without the supplier having the right to change the way that the asset is operated.

Treatment changes Under IAS 17, off balance sheet leases and services are treated in similar ways but this will change under IFRS 16. Thus the decision as to whether a contract is a lease or a service contract is critical because it determines the recognition of related assets and liabilities. The principle is relatively simple in as much as a lease exists when the customer controls the use of the asset and a service exists when the supplier controls the assetâ&#x20AC;&#x2122;s use.

On first applying IFRS 16, entities need not reassess existing contracts to determine whether the contract contains a lease. The entity is allowed to apply IFRS 16 to contracts that were previously identified as leases under IAS 17 and not to apply IFRS 16 to contracts that were not previously accounted for under IAS 17. Thus the only initial costs that an entity should suffer are when it chooses to reassess contracts.

When new contracts are entered into, entities will have to determine whether they contain a lease or whether they are service contracts. Often, contracts

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contain both a right to use the asset and a service agreement. Where this is the case, entities can separate the contract Âť into its component elements, often with the use of judgment. However, IFRS 16 allows an entity to either capitalise only the amounts paid for the lease or not separate lease and service elements but account for them together as a lease.

The latter policy choice is only likely where the contract contains a small service element.

Simplifications Certain measurement simplifications have been introduced by IFRS 16. For example, variable lease payments are excluded from the measurement of lease assets and liabilities, with any such costs recognised in profit or loss in the period in which they are incurred. In addition, inflation-linked payments are measured based upon current contractual payments, and entities are not required to forecast future inflation. If a lease contains clauses that may require optional payments, which are not reasonably certain, then those payments are excluded from the measurement of lease assets and liabilities.

On first application of IFRS 16, there is no requirement to restate comparative information and an entity can choose how to measure lease assets relating to off balance sheet leases either as if IFRS 16 had always been applied or at an amount based on the lease liability.

Entities will have to choose between the costs of prior application of the standard as opposed to an option that may mean a higher value for the leased assets.

Additionally, a lessee may apply a single discount rate to a portfolio of leases with similar characteristics when applying IFRS 16 retrospectively.

The impact of IFRS 16 will vary. For entities with significant off balance sheet leases, IFRS 16 will result in a reduction in reported equity, the degree of which is dependent upon the significance of leasing to the entity, the time remaining on the leases and the discount rate applied. These entities may also find that they have a higher operating profit because operating lease payments are reported as part of operating costs whereas the implicit interest in lease liabilities is now shown as part of finance costs.

There will be no change in total cashflows but, following from the above, there will be a reduction in operating cash outflows and an increase in financing cash outflows. The higher asset and liability base will affect ratios such as asset turnover and gearing, whereas the higher operating profit will affect ratios such as EBITDA, which excludes the interest element of the lease liability. However, many users of financial information already make adjustments for the different accounting treatment of operating and finance leases and view the current treatment as artificial.

Entities with material off balance sheet leases may incur costs in measuring lease assets and liabilities at the present value of future lease payments due to the need to determine a discount rate for each recognised lease. However, when first applying IFRS 16, entities are permitted to use the incremental borrowing rate for each portfolio of similar leases.

Souce: AB, ACCA

Feature

Workplace Stress

7 SOURCES OF WORKPLACE STRESS

Stress is a mental and physical condition that impacts an individual with negative feelings, fear, anxieties, tensions, and a sense of lostness, emptiness and futility. It is a condition that affects health, productivity, potentials and constricts natural life growth. To live a life with full potential we must learn to handle stress.

Before we get into stress management it is necessary to understand stress very well. As an executive we have to focus on things with pressing priority today and also things that will become a pressing priority tomorrow. It is a vicious circle.

Stress is the source of dysfunctionality and unhappiness and eventually it diminish productivity at workplace and our personal life.

In a stressed out situation our body takes and defensive stance and releases a complex mix of hormones and chemicals such as adrenaline, cortisol and norepinephrine to prepare the body to fight against that condition. This sometimes forces the body to react in an abnormal condition thus resulting in diseases. In life there are many conditions for stress but in workplace it is somewhat different. I have come across knowing few you might find it helpful to understand stress better.

1)

By Munshi Abdul Alim MBA, FCMA Motivational Speaker

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Natural stress: Bad things happen to everyone, this is reality and when we cannot accept this that becomes a common source of stress. This is a common source and

Feature

Workplace Stress

workplace is not different.

Sometimes things go wrong, market, the economy and many other calamities can strike, an accident so on and so forth. It is said that we donâ&#x20AC;&#x2122;t have control over 10% things and it we are prepared for that it strikes like a red iron.

How we overcome this? We can handle it by managing the other 90% very efficiently.

2)

3)

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Time stress: Time can create stress in our life. Living too much in the past failures, fearing the uncertainty of the future can create huge stress in our mind. It just appears as a mental chatter like a bee in the box. We fear things mostly before happening the actual event and we feel much different after it just gone.Learning from the past and considering the future requirement we can work only in the present, thatâ&#x20AC;&#x2122;s how we manage time stress.

Competency stress: When we lack the required competency to deliver a job, it creates unbearable stress. It has two effects if you are in a leadership position you multiply the stress by transferring it to your team. Mismatch of competency with the roles and assigned job creates stress and frustration in the workplace. It sometimes leads to disengagement. We must work on our competency, we have no choice.

4)

5)

6)

Clarity stress: This is about role clarity, whether the roles were understood by the job holder or not.

The line manager may have totally different understanding about the role compare to the subordinate. In this situation the job holder may think he is doing much better but the line manager may show dissatisfaction which ultimately will create an unhealthy stressed condition in the workplace. Open culture of questioning for clarification must be practiced in the workplace. Right to ask and speak is to be ensured.

Expectation stress: This stress results from not being able to deliver results as expected. First lack of clarity then expectations if not clearly understood by both the part it may create stress for both the executive and the manager. It also may happen with the top management and the board if the expectations are not clearly defined. It creates a condition of stress even the best employees may suffer. There may be some implied expectations which may not be understood by new employees.

A standard of expectations may be practiced with a dialogue session.

One on one coaching will also help to cope up with this situation.

Priority stress: This is the stress condition when the executives fail to prioritize things in hand. In a

challenging business environment the crisis mongers may change the direction of the organization to an unhealthy emergency situation. It happens when an organization priority is not attached to its mission. When the strategy is not understood by its moving force, when long term planning is viewed as futile this may happen. Spending more time in important but not urgent quadrant is a solution but it must be practiced by the organization to reap the full benefit.

7)

Discipline stress: Another common source of stress that originates from indiscipline. Lack of exercise, over eating, too much addiction in social media, lack of balance with family, friends and job creates discipline stress. This may otherwise be called as lifestyle stress; which means the solution will come from a healthy life style.

This seven source of stress are not exclusive, however if we understand those well it will help us to take action. I have excluded stress from multitasking intentionally. Read books on stress management and other life skills, attend some motivational lectures, spend time with people with healthy life style. Look around and be aware of theses stresses and draft your action plan. Enjoy a stress managed life if not a stress free life.

Interview

Sabbir Ahmed FCA

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Interview

Sabbir Ahmed FCA

COMMITMENT FOR RELIABLE FINANCIAL REPORTING Sabbir Ahmed FCA, Partner of leading professional firm HodaVasi Chowdhury & Co, Chartered Accountants having more than 20 years of professional experiences. He explicates his thoughts on improvement of reliability of `financial reporting, corporate governance and changes expecting in auditing practice in upcoming days.

Which experiences helped you to shape your career?

I am very honoured to get few mentors during the course of my professional life and they guided me to navigate through many critical stages of my career. No doubt their relentless effort and hand holding at times greatly helped me to reach where I am.

From my side I would say attitudes like not shying away from taking responsibility, learning from mistakes and accepting constructive feedback helped me to excel my performance. To take a leadership role in corporate world you need to demonstrate right attributes and be a team player, and hence “share success with team” and “be a listener first” allowed me to gain trust of my team and helped my progression from a manager to a leader. Finally, to become successful there is no short cut, you need to be passionate about what you are doing and give 100% commitment to it. Last thing I would like to sum up is to be successful push your limits, think out of box and never lose sight of big picture.

As you worked long time in KPMG Australia, how do evaluate the quality of financial reporting and disclosures practiced by Bangladeshi Conglomerates as compared developed country like Australia?

Being an emerging economy Bangladesh is also in a journey like any other country in similar growth trajectory. Many local business conglomerates are still run by first generation entrepreneurs who started the business themselves, only few are into second generation and just a handful are well into third generation.

Therefore, it is not surprising that most business conglomerates here are run as owner managed business not professionally managed business.

It is quite natural that when the business expands entrepreneurs focus their

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attention to areas like growth, higher revenue, increased production, sourcing (i.e. front office matters) and hence many back office issues like ascertaining true profitability, effective internal control, process efficiencies are received lower priority. Critical business decisions are at times taken without proper analysis of financial information and hence true value of financial reporting and disclosures are often overlooked.

Furthermore, many such Bangladeshi Conglomerates are yet to fall under public interest entity and hence there are limited users of their financial statements. All these factors are big impediment to enhance quality of financial reporting and disclosures amongst Bangladeshi Conglomerates.

However, on a positive side we are now seeing many such businesses coming forward for transparent financial reporting and enhanced disclosure due to involvement of multiple local/foreign lenders, cross border strategic partnerships, family expansion etc. As a result many business groups are also actively looking for qualified professionals.

Accordingly, I am quite hopeful that overall quality of financial reporting and disclosure would improve in coming days, although it will take quite some time to reach the level comparable to a developed economy like Australia.

How audit firm can play role in changing the perception of stakeholders with respect to the reliability of financial reporting? What role an audit firm can play in enhancing corporate governance in Bangladesh?

No doubt external auditors can play very important role to enhance reliability of financial reporting as well as improve corporate governance. However, it is also true that only external auditors alone cannot improve the overall reliability of financial reporting unless all other key stakeholders are also fully committed to it and actively fulfilling their respective roles and responsibilities.

As you know, financial statements are prepared by management with an oversight by those charged with governance and hence there should be full commitment from entities to be fair and transparent in their financial reporting. Equally an Auditor need to be committed that audit shall be performed without compromising any ethical matters and proper observance of all auditing standard requirements. Once both these parties fulfill their respective obligations I believe reliability of financial reporting would greatly improve. On the matter of Corporate Governance, I believe regulators can also play very crucial role to strictly enforce various code of corporate governance issued by them.

It is pertinent to note that changing perception is not an easy task especially when financial literacy rate is quite low which creates so called “expectation gap”. I am not defending any auditor for their misdeeds but all I am saying is an auditor performs audit as per defined set of standards and procedures. Therefore, it will be unfair to direct all criticisms towards them as we often see it happening. If we analyze root cause for all stock market crash both in Bangladesh and elsewhere in the world there is no empirical evidence that suggests involvement of auditors as the main cause for such crash. Even after the recent Global Financial Crisis (GFC) significant scrutiny were made about the role of audit firms in GFC but no significant findings have been identified.

However, if any such event happens auditors are put into immediate firing line which at times detrimental to attract best and brightest talents into the audit profession.

Nevertheless, we as audit professionals cannot be complacent and need to strictly follow our ethical and auditing standards to enhance trust of the general public and also be more visible with various stakeholders.

Interview

Sabbir Ahmed FCA

Big four international firms as well as representations of tire-two global firms are present in Bangladesh market, how lucrative is the Bangladesh market for these global firms and how industry is benefited from this presence?

I am sure you have seen a recent media article which mentioned that according to a survey of PricewaterhouseCoopers (PwC), Bangladesh has the potential to become the World's 23rd largest economy by 2050, overtaking countries such as Netherlands, Australia, Spain, Thailand and Malaysia,. PwC also predicted that Bangladesh would be the 28th largest economy by 2030, up from 31st in 2016. All other Big four firms as well global think tanks are quite bullish about long term prospect of Bangladesh.

Therefore, it is quite natural that they are eyeing Bangladesh Market for quite some time now. In fact almost all Global Firms have formal presence or tie ups with local firms in Bangladesh. As the economy would grow the pie for traditional services would grow and need for additional services would also be created. Therefore, no doubt Bangladesh will be a market that all Global Firms would be looking at. However, we also need to be mindful that unlike the physical flow of goods, service delivery is quite dynamic and at times even without the physical presence service professional can serve their clients remotely.

Coming back to your point, cross border collaboration by Big Four and Tier Two Global Firms in Bangladesh would be helpful for the economy in general and finance profession in particular.

However, such collaboration should happen with right attitude and in sustainable manner with long term commitment to share intellectual property, knowledge and technology at local level that would be beneficial to Bangladesh and its people.

How statutory audit could help in the financial and operational process improvement of an organization?

In the past some stakeholders in our country has considered statutory audit as a necessary nuisance which idea need to be strongly challenged by all parties, including the auditor themselves.

While process improvement recommendation is not the primary objective of an audit but an auditor does look at the design and implementation of system/control as relevant to the financial reporting and also at times check operating effectiveness of those controls. While conducting these

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assessments an auditor certainly has the ability to add value either through confirming existing process as effective and/or making recommendation for improvement in the process and related controls. Such assurance and/or recommendation for improvement shall be appreciated by the Client.

standards which gives more prominence to matters like going concern, disclosures in financial statements and other information accompanying thereon.

Once adopted in Bangladesh this will be a big move from the traditional boiler plate audit report to more informative and entity specific audit report.

What changes you are expecting in auditing practice as well as auditors reporting in upcoming days in Bangladesh?

Most of the Audit Firms in Bangladesh are predominantly concentrated into Audit and Tax practices, whereas, majority of revenue of global firms are coming from advisory services.

Do you think there are enough opportunities in the field of advisory services in Bangladesh?

In terms of audit practice I see big changes coming in the form of increased need for Information Technology (IT) literacy amongst auditors. With growing business automation and increasing dependency on IT, financial reporting became more IT driven. Furthermore, use of complex software, internet, mobile devices, online transactions have created additional risk factors and its own challenges. Therefore, auditors also need to quickly adapt themselves for these rapid changes and prepare accordingly.

For auditors reporting as you know in January 2015, International Auditing and Assurance Standards Board (“IAASB”) has issued its new and revised Auditor Reporting Standards, which require auditors to provide more transparent and informative reports on entities they audit.

A new Audit Standard ISA 701 has been issued which includes a judgment-based decision-making framework and requires an auditor to report on Key Audit Matter (“KAM”) on its audit report. KAM is defined in the standard as those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period. KAM are selected from matters communicated with those charged with governance. In addition to KAM, some other changes have also brought through amending other auditing

Without even a blink of an eye the answer is a Big Yes. As I mentioned earlier, Bangladesh has the potential to become one of the top twenty five economies in the world by GDP size as per purchase power parity (PPP) basis.

This is big window of opportunity for audit firms to broaden their horizon and expand advisory practices.

As businesses are growing they need various advisory supports in areas like business restructure, process design and re-engineering, system automation, robust management information system, efficient supply chain management, IT and Cyber security to name a few.

Businesses are also actively looking at outsourcing many non key functions which could be a potential area to look at.

Finally, increased inward and outward cross border transaction and deals would also throw greater opportunities for advisory professionals.

All in all these are great opportunities for audit firms to step into the field of advisory services and hence they should start investing in people, process and technology to be ready for the future.

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Strategist CFO

The Strategist CFO

Four orientations for engaging in the strategy process CEOs and boards increasingly want CFOs to not only deliver a finance organization that gets the numbers right, but also partner with them in shaping the company’s strategy. But when asked what they want from a strategic CFO, their answers vary widely.

For example, CEOs typically want their CFOs to look around corners for new opportunities and potential black swans as well as help transform the company’s products and markets, capitalize and plan for future growth, create and effectively communicate the corporate growth story, and improve decision making around key investments. At the same time, boards have their own expectations concerning risk management, protecting the company’s reputation, and compliance and regulatory matters, among others.

Given this varied mix of responses, where should CFOs focus, and how should they orient themselves to supporting strategy?

Based on practice observations, discussions with numerous CFOs, Deloitte has framed the four orientations of a strategist CFO model to help guide better alignment between CFOs’ actions and CEO and board expectations.

Beyond the well-established four faces

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of the CFO as operator, steward, catalyst, and strategist, the orientations bring greater clarity to the strategist role and the capacity of an organization to reorient and execute a new strategy.

above strategy process by addressing uestions such as:

The strategy process: core questions

2. What products and markets deliver the greatest promise for revenue or margin growth?

Making the necessary choice starts with a version of the cascade of strategic choices first laid out by A.G. Lafley and Roger L. Martin in their book Playing to Win: How Strategy Really Works.

Key corporate strategy questions include: 1. What are the aspirations and goals of the company?

2. Where will you play? (What products and/or services will your company choose to offer, and in what markets will you offer these products and services?)

3. How will you play to win? (How will your company differentiate itself to gain advantage over competitors?)

4. What distinctive capabilities are required to sustain competitive advantage?

5. What management systems and processes are required to succeed?

CFOs can then bring a financial discipline to support and extend the

1. Are the financial goals of the company viable?

3. How should the company organize and structure financing of key investments to generate competitive advantage?

4. What structures (for example, business models; legal and tax entities; onshore, offshore, or outsourcing talent models) and processes (automation, build vs. buy, networking, and so on) enable competitive advantage and deliver superior market valuation and returns?

5. What financial and management reporting enables management to effectively execute and deliver the strategy?

The strategy process frames answers to the above questions and executes on them to deliver returns to shareholders.

The challenge for CFOs is to choose effective ways to engage in the process in the context of their company’s

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Strategist CFO

business, leadership, and directors. The four key orientations below outline how CFOs can choose to engage the strategy process.

Four orientations There are four distinct ways CFOs can orient themselves—responder, challenger, architect, or transformer: Responder. As a responder, the CFO and the finance organization support the company’s strategy development by helping key business leaders quantitatively analyze the financial implications of different strategy choices. This type of CFO orientation is especially evident in highly decentralized businesses where the CEO chooses to drive accountability for strategy and performance to business-unit leaders. Occasionally, this orientation is also prevalent when the CEO chooses to limit the role of the CFO or finance in the strategy process to quantitative and analytic support. To be an effective responder, the CFO and finance organization should consider having a central financial planning and analysis (FP&A) capability that delivers the relevant analyses and data to the businesses, whose leaders have primary responsibility for generating strategy alternatives.

Challenger. As a challenger, the CFO and finance organization act as stewards

of future value in the strategy process by critically examining the risks to, and expected returns on, different strategy alternatives. Being a challenger is sometimes equated with being a “Dr. No,” as the CFO and finance organization seek to minimize risk or ensure adequate returns to future capital allocations and investments. Being an effective challenger may require the CFO and finance organization to have FP&A capabilities similar to those required of a responder, as well as access to requisite information from the business units on key strategy assumptions and models. Importantly, the CFO requires the permission of the CEO to challenge business-unit leaders and their strategies. When given that permission, the CFO as challenger is especially critical to the review of major strategy investment decisions.

Architect. In the architect orientation, the CFO, finance department, and business leaders jointly work through shaping strategy choices and apply finance strategies to complement and maximize the value of particular strategies. Architects go beyond the challenger orientation to enable the financing of innovative initiatives through varied finance strategies and finance arrangements with suppliers, customers, or delivery channels. Architects thus work to find “a path to yes” on key

Fig-1: Common requirements for strategist CFOs

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Responder

Challenger

Architect

Transformer

Permission

Generally, low permission from CEO for CFO to engage in strategy

Strong permission from CEO for CFO to challenge

Acceptance by business-unit leaders in strategy process

Strong permission from CEO and/or the board to shape strategy

Typical context

Highly decentralized businesses or where other executives are primarily responsible for strategy

Decentralized or nonperforming businesses seeking capital from the corporate for future investments

Finance is already viewed as a contributing partner to the businesses

Finance is a business partner or where finance is not a key constraint to the growth of the overall business

Required finance capability

Strong centralized FP&A capabilities

Strong FP&A and access to relevant data to evaluate value and risk in business strategies and plans

Strong CFO capacity to influence the business to fundamentally change its strategy

Required organizational capability

Strong strategy capabilities in the business

Strong strategy capabilities in the business

Strong finance capabilities to partner with the businesses on strategic planning, complemented by strong FP&A expertise Strong partner to finance in the businesses

Capacity to absorb any necessary changes to strategy and change processes, systems, and structure accordingly

business investments. To effectively deliver the architect orientation, the CFO, finance organization, and businesses might need to establish mutual trust and work together at the outset of setting the strategy. In addition, the CFO often needs a strong finance team inside the businesses to proactively partner with business leaders throughout the strategy process.

Transformer. As a transformer, the CFO becomes a lead partner to the CEO in shaping and executing future strategy.

The CFO is key to execution of “real operational and financial options” for shifting the product market mix, delivering value, and creating distinctive capabilities. For example, consider a multi-division company with common accounting and financial systems where the original synergies driving the existing product market mix no longer exist. By upgrading the systems, but doing so in a way that allows the efficient spinout of a division in the future, the CFO operationally creates the capacity for shifting a core strategy choice—the product market mix.Or by changing the mix of debt to equity, the CFO may free up cash to invest in future growth, creating financial options for the future. Through carefully structured financing and lease models, the company could change how customers are able to buy or use its products, thus shifting the business model to more-profitable formats.

The choice of strategist orientation depends extensively on the context of the company and the level of permission from the CEO. Following table summarizes common requirements for CEO permission and finance and organization capabilities, as well as typical contexts for the different types of orientations.

No single approach There is no one single approach to being an effective strategist CFO. The four CFO orientations described herein should help CFOs, CEOs, boards, and business-unit leaders better establish mutual expectations on how the CFO will engage in the strategy process and address key strategy questions within the company. Moreover, these orientations are not static, and the appropriate orientation will vary with the changing context and performance of the organization.

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Brand

PwC, the Most Powerful Brand of Big Four PwC still has one of the top ten most powerful global brands, but its strength is in decline staff and other stakeholders and the impact of those factors on business performance.

While PwC will be happy to remain in the top 10, its brand power has been waning. In 2015 it was named the world’s second most powerful brand behind only Lego and in 2016 it slipped to fourth.

Danish toy giant Lego reclaimed number one spot this year while the rest of the top ten included (in order): Google, Nike, Ferrari, Visa, Walt Disney, NBC, PwC, Johnson & Johnson and McKinsey.

Brand Finance also calculates the world’s 500 most valuable brands. This year Google has replaced Apple at the top of the table with a brand value of $109.5bn (£86.9bn). Google’s brand value rose during 2016 by 24% (from $88.2bn) whilst Apple’s declined from $145.9bn to $107.1bn.

PwC was again the top performing of the Big Four in 66th place with a value of $18.5bn. Deloitte was next in 77th with a value of $16.7bn, then EY in 98th ($13.35).

Meanwhile KPMG was outside the top 100, coming in at 124th with a value of $10.9bn.

The firm PwC came 8th in the 2017 ranking of the world’s most powerful brands by consultancy firm Brand Finance. It is one of only 10 companies to receive the top score of AAA+ on the "Brand Strength Index" (BSI).

Deloitte just fell out of the top 20 while EY was ranked 30th and KPMG was placed in 60th place.

BSI is calculated by a number of factors, including “emotional connection”, financial performance and sustainability.

Brand Finance analyses marketing investment, brand equity – defined as the goodwill accumulated with customers,

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Financial services companies comprised 20% of the Global 500. China, according to the report, was also a big winner regarding brand growth as its middle class becomes more prominent and spends more.

Last year, PwC replaced Deloitte as the world's largest firm by fee income. The mega-firm saw global fee income rise by 4% to $35.356bn (£24.413bn), some $156m ahead of Deloitte which brought in fee income of $35.2bn, up 3%.

The World’s 10 Most Valuable Brands

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Bangladesh Investment Summit

5th BANGLADESH INVESTMENT SUMMIT

Unique investment prospect for industrialists, entrepreneurs & share market patrons By Md. Azizur Rahman FCS Council Member, ICSB; Director General, IPAB; Company Secretary, British American Tobacco BD. Investment is the lifeblood for the emerging economies! It’s a two-way traffic, a give & take situation! So, why shouldn’t we think big and look wide for our 5th Bangladesh Investment Summit for the greater interest of Bangladesh as well as investors? This Summit will provide ‘food for thought’ for the investors, entrepreneurs’ professionals and government. The Summit can be a show-case for emphasizing ongrowth opportunities for every sector of the economy directly or indirectly and by cross-sectional synergies. The key takeaways may be as follows: ●

A great interacting forum for investors;

●

Unique investment opportunities for entrepreneurs; and

●

Overview and assessment on share market forportfolio investment.

WHAT ARE THEI NVESTMENT OPPORTUNITIES IN BANGLADESH? Bangladesh is one of the fastest growing economies in the world. Currently, it is

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enjoying lower middle income status on one hand, and Least Developed Country (LDC) grade on the other. This unique combinationisan opportunity for investors and will facilitate them more than in another 10 years. A recent report of PwC, a big four professional service firm projects that Bangladesh is going to be the 23rd largest global economy in the world by 2050 which is another good news for the investors. The investors who are intelligent and far-sighted, forward looking may be able to take this unique opportunity of investment advantage in Bangladesh.

Its business friendly policies, suitable geographical location and skilled labour force at cheap wages are the basic facilities to beacon the entrepreneurs and share market investors. Moreover, it is observed that Asia is rapidly becoming the world’s new consumer market. Therefore, as an LDC, the comparative advantage for Bangladesh is that investors may export most of the products to Asia as well as to the develop countries. On the other hand, considering current dynamics of stock market under low index, foreseeable

economic growth of the country and considerable value growth scope of fundamental stocks also creates unique investments opportunity in share market of Bangladesh.

WHAT COULD BE THE OUTLINE FOR OUR INVESTMENT SUMMIT? The last Investment Summit was held in Hog Kong on 26 April 2016. In order to further focus on the current good opportunity of investment in Bangladesh, we need more initiatives of Public Private Partnership (PPP). The Professional Institutes, Chambers and Associations in collaboration with relevant Government authorities and regulators can lead to organize in advance level the ‘Bangladesh Investment Summit’ which may be held in December, 2017 or first quarter 2018. The Summit may be a full, 4 days event where 2 days may be for entrepreneurs and 2 days for share market investors. The show of the event would not only bring together top entrepreneurs and executives but also will attract share market investors from all over the world. As part of PPP, the summit

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Bangladesh Investment Summit

would be also a flagship investment promotion event of the Government which may lead a unique journey of economic growth of the country. The event will provide unmatched platform for investors to network with all those who matter.

WHY NEED PPP TO ORGANISE THE SUMMIT? ●

Quality of a nation depends on quality of companies;

●

Quality of a company depends on the quality of governance; and

●

Quality of governance breeds from quality of corporate professionals.

The corporate professionals who lead corporate world ensuring good governance and safeguarding interests of the stakeholders may facilitate increasing FDI in Bangladesh. Therefore, it is essential to have a Public Private Partnership (PPP) to organise the 5th Bangladesh Investment Summit in order to achieve the objectives.

The PPP will help all stakeholderto be stronger together. Under the PPP, all Professional Institutes like ICSB, ICAB, ICMAB; Chambers and Associations like FBCCI, FICCI, MCCI, DCCI; in collaboration with relevant Ministries, Government authorities and regulators like BIDA, BSEC, DSE, CSE; and any other individual stakeholders and professional bodies may join in this collaboration (PPP) to continue the journey of growth which will facilitate to achieve the sustainable development goals (SDG) of the Bangladesh.

CAN WE FOCUS ON BIGGER AREAS? The summit will cover high priority industrial sectors as well as potential business sectors and share market - a pride place for investors. The Summit can be a show-case for emphasizing on growth opportunities for every sector of the economy directly or indirectly and by cross-sectional synergies. The sectors create multifaceted job and skill development opportunities in the respective fields.

The high priority industrial sectors include Agribusiness, Garments and Textiles, ICT and Business Services, Pharmaceutical Sector, Leather and Leather Goods, Jute and Jute goods sector. On the other hand, priority potential industrial sectors include Plastic Industry, Light Engineering, Manpower Export Sector, Ship Building Ind. Sector, Environment friendly ship breaking and Assembling Industry, Tourism Industry, Frozen Foods, Home Textile Industry, Renewable Energy (Solar Power and Wind Mill), Active Pharmaceutical ingredient Industry and Radio pharmaceutical Industry, Automobile

33

Md. Azizur Rahman FCS Sector, Power Savings Instrument Industry, Bicycle Industry, Tea Industry, Agro Machinery Manufacturing Industry, Seed Industry, Toys Industry and Cosmetics and Toiletries etc.

Being able to see things from a different angle may often times make a huge difference to investors returns! Industry fund managers will be sharing insights on where they should focus their attention.

Share market investors may get to see investment strategies that they need to implement.

WHAT OUTCOME WOULD BE IF WE THINK BIG? The 5th Bangladesh Investment Summit may provide international investors and business leaders exclusive access to the Bangladesh business insights to take investment decision in suitable sector(s).

This summit will also focus on investing in the stock market aimed at intermediate and advanced-level by investors and traders. The investors will not only learn directly from top stock experts how to grow their wealth through value investing but also the respective chief executives and the company secretary of the top public listed companies will apprise their current business status and future strategy. The entrepreneurs will get adequate information on high priority industrial sectors as well as priority potential industrial sectors and stock market investors will be highlighted about the fundamentals of listed companies as well as overall current share market scenario venting unique opportunity for enabling investment in Bangladesh. The 5th Bangladesh Investment Summitmay be featuring some of the best investing minds in Asia and around the world, where industry experts,

professionals, government authorities and investors alike meet to share ideas, discuss investment strategies and support one another to navigate the investing scenes internationally.

We believe the 5th Bangladesh Investment Summit would be one of the most exciting startup hubs what it deserves to be shown to the world. We may keep the Summit as a casual and informal event, so that we can create unique networking opportunities, unlike the bigger conferences, and real investment opportunities. The Summit may also deliver thought-provoking keynotes, interactive panels and workshops on some of the hottest topics on startups, fundraising and growth.

Considering the additional focus on share market, the summit may also serve as an exclusive platform for large institutional investors, fund managers, asset managers, bankers, Government representatives and advisers representing America, Asia, Europe and Australia for networking and establishing partnerships for future projects. Moreover, the summit may showcase the strengths and industrial dexterity of Bangladesh including its linkage industries facilities, and provide a global platform for interaction with Bangladeshi industry leaders, policy makers, investors and other stakeholders.

For the interest of the investors, we may facilitate one-on-one meeting program with the CEO/Company Secretary from exciting group of public listed companies from across all sectors of the Bangladesh economy. We expect over 60 companies to participate in one-on-one meeting program, including some evolving private companies. The Summit may provide various insights on utilising unconventional

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Bangladesh Investment Summit

asset allocation strategies to maintain returns and may highlight the latest strategies for optimising investment efficiency to effectively navigate the macro-economic climate. Considering all these, we believe the Summit would benefit the participants, investors, executives, think-tanks and observers as follows: Related Topics ●

Get concepts and motivation for the business investment, finances, and career.

Real Experts ●

Learn insights from leading group of professionals and panel speakers.

Rewarding Experience ●

Join thousands of potential global investors, professionals and Govt. bodies.

Return on Investment ●

Useful information on potential sectors and infrastructure finance.

WHY SHOULD WE CREATE FDI ATMOSPHERE? Foreign Direct Investment (FDI) is a potent weapon of economic development, especially in the current global context. It enables a capital-shycountry like Bangladesh to build up physical capital, create employment opportunities, develop productive capacity, enhance skills of local labor through transfer of technology and managerial knowledge, and help integrate the domestic economy with the global economy.

Foreign Investors expect such a country for their investments which has some good facilities for production and sustainable business operation. Such factors of production like land, labor, capital, and entrepreneurship are always important.

But as well as good supply of electricity and gas, good transportation, expert human resources, investment friendly atmosphere and proactive and helpful administrative and judicial side have become crying need now days to attract the concentrations of foreign investors.

POTENTIAL AREAS FOR FDI The potential investment areas in Bangladesh are power generation, distribution and exploration of gas and other mineral resources, highway development including bridge, express-way and tunnels, port infrastructure facilities, industrial parks/private export processing, software and electronics, diversified jute goods and jute based pulp and study,

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chemicals and petrochemicals, LP gas, environment friendly insecticides, leather and leather goods, tourism, food processing, fruit canning and allied products, sports goods, light, engineering and agro-based industry etc.

CONCERNS WHICH REQUIRE IMMEDIATE ATTENTION As a developing country, Bangladesh needs Foreign Direct Investment (FDI) for its ongoing development process.

Although the current Government undertook a massive liberalization of its investment programs to attract more and more FDI however, there are a number of concerns which need to be addressed to facilitate a positive mind-set of the potential foreign investors. ● Unfriendly Taxation policy and unfair tax burden The current taxation policy of Bangladesh is not favorable at all to attract FDI. Many incidents of unfair tax claims were imposed on Foreign Investment/Multinational Companies (MNCs) in recent times misusing gap of local regulations which violates the provisions of equal treatment as per the international treaties. Moreover, in many cases, the National Board of Revenue (NBR) tries to impose additional tax burden irrationally on MNCs to meet revenue short target. Not only that MNCs are not getting proper justice against any unfair treatments as well asirrational additional taxes claims through administrative process. Therefore, MNCs are bound to file a number of cases in judicial process where final remedies are long pending year on year due to vested quarter interests. The unfriendly taxation policy, non-cooperation of administrative process to resolve unfair tax burden and long pending judicial process to get fair judgment are giving wrong message to business community locally as we as internationally which is a big concern currently for FDI in Bangladesh. ● Highest Corporate tax rate discouraging FDI The maximum Corporate tax rate for MNCs is significantly higher in Bangladesh Country Bangladesh (maximum rate for MNCs)

Corporate Tax Rate 45%

India

35%

Pakistan

32%

Malaysia

20-24%

Thailand

20%

Singapore

17%

compared to other neighbor countries of Asia. A comparative chart shows significant difference in corporate tax rate. ● No Level Playing Field Local competitors are getting extra advantage from law enforcement agencies and other government authorities whereas the same authorities are not supportive enough for the MNCs at the same level. As a result, MNCs regular business operation became difficult and challenging due to lack of cooperation for the lawful business activities.

Foreign investors often do not get the same facilities as local investors. It is always difficult for foreign investors to adopt the culture and associated business mechanism of a foreign country. The lack of facilities makes it harder to attract FDI. ● Excessive bureaucratic interference Bureaucratic complexity to get registered or permission and lack of administrative coordination among different government bodies have restricted FDI potentials in Bangladesh. ● Alleged irregularities in processing papers Alleged irregularities in processing papers, lack of commitment on the part of local investors, and frequent changes in policies on import duties for raw materials, machinery and equipment make it difficult for foreign investors to determine the feasibility or future prospect of the success of their investment. ● Lack of proper Infrastructure Bangladesh needs to develop its infrastructure facilities and service in various sectors and in this context should also encourage private participants with policy initiatives.

WHAT WOULD BE OUR ASPIRATION? It is high time to think jointly in a broader perspective so that we can utilize this Summit as our best to unveil all opportunities and hindrances to overcome the present barrier and set the goal in a higher trajectory. Moreover, investors will get a unique investment opportunity merging their goals with entrepreneurs’ andshare market investors under the current dynamics of Bangladesh economy which will continue more than 10 years at least. For the greater interest the Summit can be an ‘Interacting Place’ of best investing minds from Asia and around the world, where the professionals, government, regulators, industry experts and investors alike may meet to share ideas, discuss investment strategies and support one another to navigate the investing scenes internationally.

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M&A

5 BIGGEST M&A DEALS OF 2016 While none of the largest M&A deals announced in 2016 would be big enough to crack the all-time Top 10, there were plenty that involved major brands and potentially industry-shaking consequences. Overall, the value of the average merger or acquisition announced in 2016 was around $104.2 million, according to data from analytics firm Dealogic. That was smaller than in 2015, when the average deal was worth $115.4 million, but greater than the average for deals made between 2000 and 2014, which was around $77.1 million. Below is the 5 biggest deals in 2016.

5. Qualcomm and NXP Semiconductors: $47 billion

while also assuming some $30 billion in long-term debt on Energy Transfer Partners' balance sheets.

In one sense, this deal is like an in-house merger, since both companies are controlled by the gas and oil pipeline empire Energy Transfer Equity .

According to the two companies, the combined entity is expected to yield over $200 million in annual savings by 2019, while also attaining what the companies called, in a November statement, “increased diversification through the combination of Energy Transfer Partner’s primarily gas focused and Sunoco’s primarily liquids focused businesses.”

3. British American Tobacco and Reynolds American: $58 billion

In late October, San Diego-based Qualcomm announced plans to buy Dutch manufacturer NXP Semiconductors for about $47 billion including debt—making it the biggest semiconductor deal on record, according to Dealogic.

For Qualcomm, the purchase offers it a bigger foothold in areas where it had been weak, including chips for self-driving cars, mobile payment devices, and sensors for drones and other smart devices.

4. Sunoco Logistics and Energy Transfer Partners: $52 billion

In late November, Sunoco Logistics Partners and Energy Transfer Partners agreed to merge in a bid to lower borrowing and operating costs. Sunoco agreed to purchase Energy Transfer Partners in a $21 billion all-stock deal,

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2. Bayer and Monsanto: $66 billion

German pharmaceuticals and chemicals giant Bayer corporate offices on Sept. 14, 2016 in Berlin, Germany.

The second-largest deal of the year was announced by German pharmaceutical and chemicals giant Bayer, which said it would buy U.S. seed and agricultural chemical company Monsanto. The combined company would control over a quarter of global supply of seeds and pesticides, assuming the merger is completed. Monsanto shareholders accepted the deal in December, though it still requires regulatory approval.

Both companies have struggled to expand their market share while coping with low grain prices and decreased spending on crop sprays. While the merger highlights the lasting difficulty in finding growth in the agrichemical industry, Bayer’s chief executive is betting on an eventual uptick in demand for his products.

Reynolds American brands Pall Mall, bottom left, and Camel, bottom right, are displayed for sale at a convenience store in

Renewing the consolidation mania in the tobacco industry, British American Tobacco in October offered $47 billion in cash and stock for full control of Reynolds American. BAT already owns 42% of Reynolds; the announced deal would involve purchasing the remaining 58%. As of the third quarter, Reynolds also had some $12.6 billion in long-term debt.

The combination of the two companies would come at a time when tobacco companies have been struggling to gain market share, and fighting to create attractive cigarette alternatives.

In November, however, Reynolds threw a wrench into the deal machinery, reportedly demanding a higher price.

The two companies were still in talks at press time.

1. AT&T and Time Warner: $85.4 billion

AT&T store in Times Square New York and Time Warner headquarters

This combination of two telecom giants has become one of the most talked about deals of the year—not only for its size, but also because of its media exposure in the U.S. election season.

Through their ownership of various communications systems, including cable-TV infrastructure, broadband Internet services, satellite TV systems and cellular-data networks, the two companies have an unusually large influence over the ways information and entertainment reach consumers.

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CONFLICT OF INTEREST

CONFLICT OF INTEREST SITUATIONS Addressing the Dilemma Masud Khan FCA, FCMA Chief Financial Officer Lafarge Surma Cement Ltd.

What is a Conflict of Interest?

More generally, conflicts of interest can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit.

A widely used definition is: "A conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest. Primary interest refers to the principal goals of the profession or activity, such as the protection of clients, the interest of the company or its shareholders, the health of patients, the integrity of research, and the duties of public office. Secondary interest includes personal benefit and is not limited to only financial gain but also such motives as the desire for professional advancement, or the wish to do favours for family and friends. These secondary interests are not wrong ab initio, but become objectionable when they are believed to

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have greater weight than the primary interests.

Examples of Conflicts of Interest Conflicts of Interest in the Workplace • Hiring an unqualified relative to provide services your company needs.

• Starting a company that provides services similar to your full time employer.

• Making arrangements to work for a vendor or client at a future date while continuing to do business with them.

• Offering paid services on your time off to a company customer or supplier.

• Failing to investigate a subordinate or coworker’s wrongdoing because they are a friend.

• Sharing confidential information about your employer with a competitor.

• Accepting a favor or a gift from a client above the amount specified by the company.

• Owning part of a business that sells

goods or services to your employer.

• Reporting to a supervisor who is also a close friend or family member.

• Accepting consulting fees and providing advice to another company for personal gain.

Conflicts of Interest by Board of Directors Some examples of situations that might cause a conflict of interest for a corporate board member: •

• •

If the board member has an outside business interest in a company that competes with the company where he or she is a board member If the board member is privy to board decisions that can affect the price of the company's stock If the board member has knowledge about an upcoming company merger or acquisition or sale.

Conflicts of Interest in the Judiciary Judges are supposed to recuse themselves from cases when personal conflicts of interest may arise. For

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Conflict Of Interest

A conflict of interest is a set of circumstances that creates a risk that professional judgment or actions regarding a primary interest will be unduly influenced by a secondary interest. Primary interest refers to the principal goals of the profession or activity, such as the protection of clients, the interest of the company or its shareholders. Secondary interest includes personal benefit and is not limited to only financial gain but also such motives as the desire for professional advancement, or the wish to do favours for family and friends.

Masud Khan FCA, FCMA example, if a judge has participated in a case previously in some other judicial role he/she is not allowed to try that case. Alternatively, if the judge has a financial relationship with one of the parties in a case, she must disclose that relationship immediately and recuse herself from the case.

Conflict of Interest in the Accounting Profession Sections 220 and 310 of IFAC Code of Ethics deals with self interest or conflict of interest for Professional Accountants in Public Practice and Professional Accountants in Business. Self interest creates athreat to integrity, objectivity and other fundamental principles. It is created when you undertake a professional activity related to a particular matter for two or more parties whose interests with respect to that matter are in conflict.

Conflict of interest in the health care industry Conflict of interest in the health care industry occurs when the primary goal of protecting and increasing the health of patients comes into conflict with any other secondary goal, especially personal gain to healthcare professionals, and increasing revenue to a healthcare organization from selling health care products and services.For example, a medical doctor, receives a research grant from a pharmaceutical company. He then feels obliged to prescribe drugs from that organization, even though there are better alternatives available.The influence of the pharmaceutical industry on medical research has been a major cause for concern.

Also the practice of pharmaceutical companies to use medical representatives or sponsoring doctors to visit abroad creates clear conflict of interest.

Conflict of interest in the financial sector The subprime mortgage in late 2000 in US created shock waves across US leading to a global meltdown. It is well accepted that bankers acted greedily because they had incentives and opportunities to do so. They did this in part by innovating to make consumer

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financial products like retail banking services and home mortgages as complicated as possible to make it easy for them to charge higher fees.

Consumers who shop carefully for financial services typically find better options than the primary offerings of the major banks. However, few consumers think to do that.

Conflict of interest in the corporate sector The Enron corporate scandal along with other scandals that rocked US in early 2000 is well known to all. This was mainly driven by the short term behavior of the top management of these entities who clearly had a conflict of interest with the needs of the corporation and that of their shareholders. The greed was triggered by the hefty bonuses on performance and the practice of giving stock options.

Unfortunately, although these giant corporations have perished, the greed of top corporate management to get the maximum bonus and stock options continues unabated leading to the tendency to manipulate or withhold critical financial information that would have otherwise have had a material adverse impact on the investors.

Stockbrokers A conflict of interest is a manifestation of moral hazard, particularly when a financial institution provides multiple services and the potentially competing interests of those services may lead to a concealment of information or dissemination of misleading information. There are many types of conflicts of interest such as a "pump and dump" by stockbrokers. This is when a stockbroker who owns a security artificially inflates the price by upgrading it or spreading rumors, and then sells the security and adds short position. They will then downgrade the security or spread negative rumors to push the price back down. This is an example of stock fraud.

It is a conflict of interest because the stockbrokers are concealing and manipulating information to make it misleading for the buyers.

The Enron scandal is a major example of pump and dump. Executives participated in an elaborate scheme, falsely reporting profits, thus inflating its stock prices, and covered up the real numbers with questionable accounting.

Media The business model of commercial media organizations (i.e., any that accept advertising) is selling behavior change in their audience to advertisers.However, few in their audience are aware of the conflict of interest between the profit motive and the altruistic desire to serve the public and "give the audience what it wants".

Commercial media organizations are not eager to bite the hand that feeds them.

Advertisers have been known to fund media organizations with editorial policies they find offensive if that media outlet provides access to a sufficiently attractive audience segment they cannot efficiently reach otherwise.

Media are often accused of â&#x20AC;&#x153;yellow journalismâ&#x20AC;? in which the media house writes stories against a particular corporate house either to blackmail them or discredit them to favour competition.

Strategies to Prevent Conflicts of Interest Develop Business Standards Every company should have a code of conduct or employee handbook that addresses conflicts of interest along with other ethical situations an employee might come across. For example, it can address how employees should respond to issues concerning bribery, data protection, confidential information and social media. The code of conduct should also cover policy for giving or receiving gifts.

Business Ethics Training Business ethics training covers the exact same messaging as Companyâ&#x20AC;&#x2122;s code of conduct in a different way that helps employees retain the information. With training, employees can be shown scenarios that will guide them to making the right choice when a conflict of

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Conflict Of Interest

interest arises.Organisation needs to periodically conduct up-to-date education on ethical issues and on the legal restrictions and other regulations around potential insider trading.

Formal Reporting Procedures Even if an employee is aware of a conflict of interest, they still need to be encouraged to disclose it to the company. Creating formal reporting policies allows employees to have an open channel of communication where they are able to ask questions. Whistle blowing policy is yet another example of channels of communication where the official channels of communication fails.

Removal If a conflict of interest is significant, ongoing, and irreconcilable, and if it impedes the ability of the individual to carry out duties of the position, a conflict of interest policy gives the organization the right to remove the person from the position.

Sometimes, people who may be perceived to have a conflict of interest resign from a position or sell a shareholding in a venture, to eliminate the conflict of interest going forward. The raging debate that is currently going on in US is the conflict of interest of President Trump and his vast shareholding in corporate entities that he owns.

Disclosure Organizations normally have policies that require disclosure of individuals on any issue that may lead to a conflict of interest. Disclosure of all relevant interests, and of any plans to exercise entitlements or trade in relevant shares, to those charged with the governance of the employing organization, in accordance with any internal policies.

Commonly, politicians and high-ranking government officials are required to disclose financial assets annually.

Recusal Those with a conflict of interest are expected to recuse themselves from (i.e., abstain from) decisions where such a conflict exists. For example, if the governing board of a government

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agency is considering hiring a consulting firm for some task, and one firm being considered has, as a partner, a close relative of one of the board's members, then that board member should not vote on which firm is to be selected nor take part in the discussions.

Judges are supposed to recuse themselves from cases when personal conflicts of interest may arise. For example, if a judge has participated in a case previously in some other judicial role he/she is not allowed to try that case. Recusal is also expected when one of the lawyers in a case might be a close personal friend, or when the outcome of the case might affect the judge directly, such as whether a car maker is obliged to recall a model that a judge drives.

Conflict of Interest Policy for the Board A conflict of interest policy should be prepared by your corporation's attorney and signed by all board members at the first (organizational) board meeting, or when they join the board.No board member should be allowed to serve without signing this policy. The signed conflict of interest policies for each board member are part of the corporate records and must be kept in the corporate records book or file.

Statutes or canons of ethics in the judicial profession.

The imperative for recusal varies depending upon the circumstance and profession, either as common sense ethics, codified ethics, or by statute. This is required by law under Continental civil law systems and by the Rome Statute, organic law of the International Criminal Court. Attorneys are generally bound by the Code of Professional Responsibility

by Bar Associations in most countries.

Found conflict can lead to denial or disgorgement of legal fees, or in some cases (such as the failure to make mandatory disclosure), criminal proceedings.

Concluding remarks Conflict of situations are a part of everyday life whether in profession or in our personal lives. There is no shoe that fits all sizes. Hence, a number of measures must be taken in unison to address such situations in the corporate world.

Strong corporate governance is needed that includes appointment of independent directors, balance of board and management powers.There needs to be strong tone from the top of the organization stating zero tolerance to violation of conflict of interest. There is a need to effectively communicating to all employees the importance of adhering to conflict of interest situations. A strong and effective recruitment procedures needs to be in place.Restructuring or segregating certain responsibilities and duties is extremely important. This includes separating the roles of sourcing and negotiation in procurement.

Appropriate oversight needs to be in place, for example, acting under the supervision of an executive or non-executive director.Appointment of acommittee independent of management to determine policies and procedures for the level or form of remuneration of senior management.Consulting with third parties, such as a professional body, legal counsel or another professional accountant.

Consultation, where appropriate, with those charged with the governance of the employing organization or relevant professional bodies. Effective Internal and external audit procedures.