CIMA Sri Lanka 2010 technical update

ISSN 1800-3826 December 2010

Technical Update CIMA Sri Lanka Division

Contents 1. CIMA Technical Symposium 2010 on ‘Transformation: the compulsory choice’

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Convergence to IFRS: the way forward Some reflections on management accounting change Incorporation of risk factor in capital budgeting The turbulent business environment: place for transformational leaders

6. Technical news and events 2010

2. Theme In a world which is rapidly changing, does an individual business have a choice other than to evolve with the changing times? The response is ‘Yes’ it does, but, at its own demise.

Therefore, the ‘choice to transform’ becomes a compulsion for both survival and growth, unless one wishes to allow its business to decay. So, the theme of this year’s CIMA Technical Symposium is a paradox that demand the businesses to do a soul search from within about their future and existence in the long-haul.

3. Deliberations

CIMA Technical Symposium 2010 on ‘Transformation: the compulsory choice’ 1. Background In the 15th century French author François de la Rochefoucauld stated ‘The only thing constant in life is change.’ How ironic that six centuries later this statement remains true to its word.

‘Change’ has not just become the constant in life, but its frequency and intensity has arisen in leaps and bounds during the past few decades. Therefore, the business world we held as ‘normal’ and ‘usual’ about a decade ago may no longer exist.

Technology and globalisation are the key drivers of current change, and in fact, these two drivers are rapidly changing the playing field of the global market. The ease of trade barriers made globalisation of production and markets a theoretical possibility, and technology has now made it a tangible reality.

(Hill & Jain, 2009) ‘Change’ by and large, exerts from the outside environment such as through the changes in the infamous SLEPT factors or micro factors such as competition and new alliances. Changes in the external environment strongly impact the internal business. These changes impact the business life-cycle, business model, management practices, products, customers, interaction with other stakeholders etc. So, what can a business facing a plethora of perplexing changes and consequent challenges do?

CIMA Sri Lanka Division - Technical Update December 2010

The deliberations focused on several key ways in which a business can transform itself to be externally effective and internally efficient in facing tomorrow’s challenges. The eminent faculty representing the local and global businesses, and world academia shared specific thought-leads, knowledge and experiences on how to conceptualise the path to transformation and operationalise the concepts. These deliberations were complemented by two lively and thought-provoking panel discussions amongst the industry leaders, speakers and the audience. Key learning derived from each deliberation are illustrated in the following page.

Left to right: Dr Fernando, A Cabraal, S Sadanandan, Prof Bhimani and Prof Neo

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Keynote: Informational, technological and global forces of change - the impact on management accounting by Professor Al Bhimani, Head of Department of Accounting, London School of Economics Increase in standards: risk grows with globalisation because interconnectedness increases systemic risk. This leads to increased number of standards being issued pertaining to corporate governance, ethics and accounting.

The rise of social networking enable the sellers to influence buyers ‘informally’, which results in faster innovation, greater transparency and increased analytics.

Consumers as producers: the consumers have now become price makers, product makers and then ‘prosumers’.

Example, Flickster, You tube, Myspace.

Impact on information processing and management accounting: wider sources of information and global shift in location of information users; collaborative working style; multidimensional information platforms; and prosumers will alter the price-cost-product interface.

Paper 1: Bringing ethics and sustainability to mainstream strategy - the DNA of business success by Dr Rohan Fernando, Head of Plantations and Business Development, Aitken Spence PLC The importance of ethics and sustainability and the repercussions if it is ignored: it will affect food security; some countries will get affected more such as Maldives and Africa; employment will suffer; and there will be vulnerability to more pests and diseases.

What are the preconditions in bringing ethics and sustainability to mainstream strategy: a new generation of business leaders; change of mindset starting from investors; and development of right values for the youth.

Paper 2: Innovative decision-making - driving triple-loop thinking

by Prof Boon Siong Neo, Lee Kuan Yew School of Public Policy, National University of Singapore Organisations need to rejuvenate and renew their strategies and business models to develop and tap new ideas and fresh perceptions, undertake continual upgrading to achieve flexible adaptation.

Innovative decision-making involves developing and driving triple-loop thinking capabilities through the following.  Thinking ahead: ability to perceive early signals of developments that might affect the mission and goals of an organisation.  Thinking again: review and reinvent currently functioning policies and processes when the environment changes in order to achieve better results.  Thinking across: ability to cross traditional boundaries to learn from the experience of others, recognising that others’ ideas, systems and experiences may hold lessons which may be adapted to achieve new and better outcomes.

Panel discussion on conceptualising transformation Moderator: Shanthikumar Sadanandan, Group Director, Hayleys Advantis Ltd. Panellists: Amal Cabraal, Chairman/CEO, Unilever Sri Lanka Ltd. and the preceding speakers It is necessary to have the correct level of governance considering the nature of the industry and the need for standardised information.

Public sector firms could focus on efficiency and effectiveness.

Routine tasks can be managed through standardisation, but, policy and strategy should be managed through innovation.

CIMA Sri Lanka Division - Technical Update December 2010

As businesses are increasingly becoming consumer driven, complying with required level of ethics and sustainability is essential.

Case study: Supply chain agility - the Dell way by M R Sundaresan, General Manager – Operations, Dell India (Pvt) Ltd. ‘When you're dealing direct, there's no place to hide from change. Nor should you want to, as change promotes growth.’

Michael Dell Key values of the Dell direct model  Supply chain excellence: first-to-market technology, lower cost, just-in-time inventory and order management.  Convenient choice: ready out of the box (preloaded software), full customer solution choice, and velocity of orders as fast as 4 hours.  Direct: on-time delivery, and predictable and real time feedback.

Winning paper of the CIMA technical paper competition 2010: The turbulent business environment - place for transformational leaders by Tharindu Ediriwickrama Transformational leadership: ‘a person who impacts his followers who are intended to trust, respect and admire people in return.’ (Bass, 1990) First turnaround achievement (FTA): this is the first major achievement which made a leader’s life success full. It is the achievement which lifts a leader into transformational status or a major contributor that led him/her to be classified as a transformational leader.

Subsequent key achievement (SKA): major achievements by a leader after the occurrence of FTA. Paper 3: Finance transformation - finance merging with the business by Dr Arul Sivagananathan, Senior Vice President – Finance and Accounting Operations (Sri Lanka and India), WNS Global Services (Pvt) Ltd. Purpose of finance transformation: significantly reduce reporting cycle time and improve accuracy; develop deep capability in business partnering; re-engineer processes to create clearer accountability, reduce duplication and drive efficiency and effectiveness; simplify complex data feeds and optimise ERP; and restructure the organisation to facilitate service quality.

Role of an accountant as a business partner: have a strategic approach and value creation as the motto; partner with business teams; assist the wider teams to formulate and implement business plans and manage risks; managing the company’s supply chain processes and cash conversion cycle to achieve optimal efficiency; ensure accurate and timely accounting and external reporting; ensure adherence to controls and compliances; and ensure the company has sufficient funds to drive the business.

Paper 4: Creating a knowledge workforce to ensure competitiveness and agility in the industry by Rajendra Theagarajah, CEO/Managing Director, Hatton Bank PLC Enhancing the industry knowledge of employees is a critical success factor amidst rapidly changing external forces.

Flexibility of work, constantly ‘listening’ to employees and building caring human relations is crucial to maintain employee loyalty and commitment.

Opportunity for employees to address issues with the top management will build trust and motivate employees.

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Commitment and the correct attitude of the management in taking extra effort towards reaching out to employees and customers in rural areas will result in business growth, regionally.

Panel discussion on operationalising the transformational concepts Moderator: Muditha Ferdinando, Director - Lean Systems, MAS Active Trading (Pvt) Ltd. Panellists: Dr Travis Perera, Senior Consultant, Postgraduate Institute of Management, University of Sri Jayewardenepura, and the preceding speakers Manufacturing internally vs. outsourcing  Internal and external competencies and capacity should be considered when deciding to outsource.  Greater customer value could be created by first analysing the customer needs, and then determining whether to manufacture internally or externally.

Shift from ‘controlling’ to ‘trusting’: management accountants need to develop a mindset of trust, open communication and delegation to ensure loyalty and commitment of the employees.

Impact of outsourcing on information security  Companies need to have documented systems and processes in place, including relevant quality standards to ensure data security.  It is recommended that these processes are frequently and effectively communicated to the customers.  It is wise to engage the customers in formulating security policies.

4. Conclusion Since the world is continuously changing and evolving, yesterday’s strategy for survival and growth is no longer a guarantee for tomorrow’s success. Therefore, ‘transformation’ in strategising and executing is a dire need of the hour to ensure that businesses create consistent and progressive value to its numerous stakeholders such as the shareholders, customers, suppliers, partners, employees and the society at large.

However, it is important to note that transformation commences not with the organisation but with each individual – as, any organisation is nothing but a collection of people. It is each individual’s attitude and commitment to ‘transform’ that will ultimately convert to business transformation.

Convergence to IFRS: the way forward

by Manil Jayesinghe Manil is a fellow member of CIMA and ICASL. He is a Partner of Ernst & Young, which position he has held since 1993, working in audit and advisory. He is a member of the CIMA Sri Lanka Board and chairs the technical committee of CIMA Sri Lanka.

He also chairs the accounting standard study group of CIMA Sri Lanka. He is a member of the statutory auditing standards and statutory accounting standards committees and the financial reporting faculty management committee of ICASL. He is also the alternate chairman of the ICASL urgent issues task force. He has served as a group leader at several national conferences of the ICASL presenting papers on both accounting and auditing. Manil has widely presented on risk management, statutory reporting and on numerous related topics to the financial services industry.

1. Introduction In an increasingly international market, the move to a globally agreed set of accounting standards seems a natural progression. Many countries either have or are currently implementing IFRS (accounting standards issued by the International Accounting Standards Board - IASB) as their own standard. Thus, in order to move with the worldwide trend in harmonising accounting standards with IFRS, the Institute of Chartered Accountants of Sri Lanka (ICASL) has taken steps to converge Sri Lanka Accounting Standards (SLAS) with IFRS in 2012 by issuing SLFRS and LKAS (equivalent to IFRS) for financial periods starting on or after 1 January 2012.

Currently Sri Lanka has in issue 30 accounting standards which are based on the 2004 version of the IFRS and two standards which are locally developed. The convergence will witness all of these standards being revised to the 2009 version and the adoption of 11 new standards including 27 interpretations.

The convergence will impact the policies, procedures, systems and the operations of organisations. Therefore, it is imperative that organisations should be prepared for the changes.

To embrace the opportunities presented by the adoption of IFRS (Revised Sri Lanka Accounting Standards), organisations need to embed IFRS in more than just the financial processes.

Experience to date confirms that compliance with IFRS has impacted many aspects of a company and its environment.

Left to right: Dr Sivagananathan, Dr Perera, M Ferdinando, M Sundaresan and R Theagarajah

CIMA Sri Lanka Division - Technical Update December 2010

It requires enterprise-wide awareness and training involving financial and non-financial personnel. In particular, organisations will need to focus on the following areas (refer Figure 1).

Harmonise internal and external financial reporting systems in order to avoid confusion.

Identify and report on important issues more quickly, more frequently, and in more detail.

Review key performance measures used for managing the entity and introduce appropriate changes.

Adapt information systems to accelerate processes relating to closure of accounts, while ensuring the completeness of information produced.

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Improve communication and enhance teamwork across different group functions.

Redefine overall communication strategy to make information, both financial and non-financial, a competitive advantage.

Educate all stakeholders, in particular shareholders and analysts, to ensure they are not confused by new and more complex financial information.

Figure 1: SLFRS compliance framework

2. Experience around the globe Adopting IFRS in Europe and Asia has shown that it is a time consuming task, and can be quite costly if not addressed in a timely manner. As in any project, timeliness of the project, right resources and appropriate training are some of the key success factors of a successful IFRS conversion project. An illustration of ‘what’ and ‘where’ such impact will affect is given in Table 1.

Table 1: Impact of adopting IFRSs Area Impact impacted Control environment Tax planning

Financial instruments

Oversight and project management Investor relations

Employee benefits Management information Processes and systems

Business and franchise

Policies and procedures, finance function efficiency, and finance and operations transformation Impact of accounting, impact on tax strategies, data collection, structured products and Inland Revenue Fair value, debt vs. equity, review of hedging strategies, hedging documentation, day one profit recognition, observability of market prices, embedded derivatives and reserving policies Complex project management, audit committee involvement, non-executive understanding and oversight, and resources and budgets Early education, underlying business performance, volatility of earnings and equity, hedging strategies and re-benchmarking relative to global peer group Share based payments, pension arrangements and funding, and alignment of remuneration and bonuses Key performance indicators, management reporting, underlying infrastructure, reconciliation to reported results and IFRS alignment Fragmented processes/systems resulting from IFRS tactical solutions, data capture, hedging, loan provisions, segmental reporting and presentation of financial statements Covenant renegotiation, valuation of earned outs, demand for valuations, impact of consolidation of SPEs, clients’ appetite for existing structured

CIMA Sri Lanka Division - Technical Update December 2010

financial products, viability of transactions due to treatment on own balance sheet and ability to assess client suitability and credit Front office, research and credit, non-executives, and access to knowledge and tools

Training and knowledge

3. Benefits of convergence Significant benefits can be derived from converging to IFRS. These include enhanced comparability, reporting transparency, lower cost of raising capital etc. The IFRS conversion process pervades all areas of an organisation and is not restricted to a technical exercise. The consequences are far wider than mere financial reporting issues, and extend to business and operational issues, regulatory issues, tax complications, employee benefit schemes, modification of IT systems etc.

Illustrated below are some of these key examples.

Sales contract pricing may include embedded derivatives that need to be accounted separately which will require the support of marketing and sales teams.

Information systems must be able to collect data to meet the new accounting recognition and measurement requirements in relation to revenue recognition on long-term contracts or components of fixed assets previously regarded as single assets.

Treasury operations and systems may be affected by the highly prescriptive IFRS hedge accounting rules. Far greater use of valuation models, together with increased data and employment of assumptions will be required in order to apply IFRS. Pensions, share-based payments, asset impairment, and financial instruments will all require the use of models and assumptions about future performance and cash flows.

Capital instruments previously classified as equity may have to be classified as debt under IFRS (or bifurcated with an element being treated as debt and the balance as equity), thereby, affecting gearing.

4. Key challenges to all companies in Sri Lanka In Sri Lanka, the convergence with IFRS will necessitate entities to apply IFRS 1 – First time adoption of Internal Financial Reporting Standards. The key principle of IFRS 1 is full retrospective application of all IFRS standards in effect as of the closing balance sheet date.

Doing so will mean that the financial statements of the company for 2012 will reflect the financial position and performance of the company as if the company has always reported its financial statements using the new SLASs. Hence, organisations will be required to do the following (refer Figure 2).

Prepare financial statements in compliance with new SLASs for the reporting period (2012).

Prepare comparatives for the immediately preceding period (2011).

Restate opening balances of the immediately preceding period (2010).

Figure 2: IFRS adoption timeframe Opening balance sheet date of transaction

Comparatives

Comparatives

Reporting date

1st financial statement based on new SLASs

December year end

31-Dec-2010

31-Dec-2011

31-Dec-2012

March year end

31-Mar-2010

31-Mar-2011

31-Mar-2012

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5. Some of the Key issues foreseen in adopting IFRSs Converging with IFRS will entail that the existing accounting standards will be revised, 12 new standards will be issued and about 26 IFRICs will be in force beginning 1 January 2012. A few common issues that may affect the companies in Sri Lanka are indicated in Table 2.

Table 2: Common issues affecting Sri Lankan companies Item and issue Revenue: recognition based on fair value

Share based payments: to be recorded at fair value Financial instruments: recognition, classification, measurement and disclosure

Leases: sale and lease back arrangements, and arrangements that contain a lease

Impact When goods and services are sold as a bundled package, these bundled items should be unbundled, and revenue should be recognised at fair value.

Free gifts, reward points should be accounted at fair value, resulting in possible deferment of revenue.

Timing of revenue recognition for service contracts to reflect provision of services, as opposed to agreed payment plans with customers.

Intercompany pricing methods may need to be revisited, as the purpose for which such pricing was done may not be met due to new measurement requirements adopted in preparing financial statements.

Recognition of share based payments in the income statement at fair value.

Investments (equity investments, treasury bills, bonds, commercial papers etc.), trade receivables, trade payables and borrowings to be measured and disclosed as per IAS 32, 39 and IFRS 7.

Bad and doubtful debt provisioning to be replaced with impairment testing.

Off balance sheet items such as, interest rate swaps, currency swaps, forwards, guarantees to be fair valued and brought in to the balance sheet.

Off market loans to both related parties and non-related parties to be fair valued.

Disclosure of risk management policies of the company.

When assets sold are leased back under operating leases, the gain on sale should reflect any off market interest rates.

Outsourcing arrangement that is a lease or contains a lease in substance should be identified and recorded either as an operating lease or a finance lease.

business unit finance teams.

Identifying any ‘gaps’ in the availability of data for disclosure purposes and effecting any system changes to accurately capture data on a routine basis.

Preparing the first full year consolidated accounts, including the restatement, and additional detailed notes in relation to the comparative period.

Broader business Market communication: financial communication will have to address changes in presentation of financial information, as well as the fundamental change towards fair value accounting and its impact on traditional ratios and key performance indicators.

Legal: in-house legal staff will need to support accounting staff in interpreting contractual terms and conditions in accordance with IFRS; and companies may need to revise their processes and systems for entering, drafting, approving and monitoring contracts.

Treasury: detailed hedge documentation and ongoing effectiveness testing is required to achieve hedge accounting under IFRS. Human resources: the volatility caused by IFRS may mean that the calculation base for certain types of compensation (profit sharing, bonuses, share option awards) needs to be adjusted.

Taxation: the tax department will have to work closely with accounting staff to examine the IFRS impact of any new financing structures implemented within the group.

Marketing and sales: IFRS will impact a number of areas including determining the net realisable value of inventories, reviewing sales contracts for revenue recognition issues, conditions of sale, and embedded derivatives.

Production/R&D: information from production/R&D personnel will drive accounting on a broad range of topics including defining normal capacity and measurement of inventories; determining components of property, plant, and equipment; and distinguishing between research and development phases etc.

7. Are you ready for IFRS? Some of the questions a company may consider in preparing to adopt the IFRSs are given below.

What will converting to IFRS mean to our business?

What resources will be required and how much will it cost?

What are our competitors doing?

How will IFRS impact tax reporting and tax filing?

Can our current IT system handle the conversion?

What training is required?

How can we take advantage of the opportunities presented in converting to IFRS? How do we manage the expectations of the capital market and stakeholders?

8. When will the process be over?

6. Embedding IFRS into financial reporting processes Adopting IFRS is not a mere technical exercise. Both the financial reporting process and the entire organisation need to be re-engineered in order to ensure sustainability of the financial reporting process. The process changes that may be required in financial reporting process and the wider business due to the convergence are given on Table 3.

Table 3: Process changes required due to convergence

IFRSs have evolved over the years and it continues to evolve due to the complexities of the operations that involve companies. Hence, being complaint with IFRS becomes a moving target.

As the new accounting framework matures, there will continue to be changes in accounting practices in the next decade.

Companies will need to keep up-to-date on IFRS related developments to ensure that their IFRS conversion will continue to weather these changes.

Financial reporting process Aligning budgetary and management reporting processes with external financial reporting.

Rolling out the updated accounting policy manuals, group reporting database, and focused training to subsidiary and CIMA Sri Lanka Division - Technical Update December 2010

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Some reflections on management accounting change

by Dr Danture Wickramasinghe Dr Wickramasinghe is the former Dean of the Faculty of Management and Finance at the University of Colombo.

Presently, he is attached to Manchester Business School, the University of Manchester, UK. Being the first Sri Lankan to earn a PhD in management accounting, he has produced over 30 international research publications. He had been the programme director of M.Sc. accounting and finance at Manchester for many years.

Presently, he is the module coordinator for management accounting on the MBA worldwide programme and conducts workshops in six countries. He has been appointed to the Professor of management accounting at the University Hull, UK, from 2011, the first Sri Lankan to hold this position in a British university.

1. A misconception It has been a general view that management accounting is a static science providing information for decision-making and controls. One would thus think that management accounting techniques are universally adoptable; it is valid across an infinite time span; and it has nothing do with dynamics occurring in the environment.

However, management accounting is not a static science. On the one hand, it cannot stand on its own without support from auxiliary disciplines and services. This is because management accounting has come to be hybridised with many other disciplines including management information systems, HRM, risk management, marketing and operation management.

Consequently, management accountants are now regarded as hybrid accountants working collaboratively with sister professionals within interdisciplinary teams while these teams are facilitated by uses of IT such as ERP. On the other hand, management accounting has now entered unchartered territories. For example, with the upsurge of worldwide privatisation programmes and new public management initiatives, management accounting plays a vital role in the reformed organisations. Ideas such as value for money, programme budgeting, greater public accountability are now coming to be vital practices. Management accounting there has become a means of modernising government. In this context, non-accounting professionals such as hospital doctors and school teachers are becoming hybrid accountants.

Even within its conventional territory, management accounting has now moved from its decision-making and control roles to risk management, governance and accountability perspectives.

Moreover, with the growing importance of strategic and sustainable issues, management accounting is breaking its boundaries to focus on strategic management accounting and environmental management accounting.

CIMA Sri Lanka Division - Technical Update December 2010

It is thus wrong to hold the static view of management accounting. What we need to realise is that management accounting is all those spatially and historically varying practices ranging from costing to performance measurement, and from abandoning budgeting to adoption of alternative reporting, and control and governance mechanisms. While we term this movement as management accounting change, this article shows you how management accounting has now come to be such a multifaceted social and economic practice rather than a static science.

2. Bad practices in good old days The expanding mode of management accounting began from the 1980s when the world’s competition was in full swing.

Writing in the 1980s, Harvard professors, Johnson and Kaplan (1987) argued for a ‘relevance lost’ in management accounting.

By this, what they had in mind was the issue of inappropriateness of current management accounting which offered few capabilities of providing useful and timely information for better decisions and control in the areas of product costing and managerial performance. They pointed to the contemporary environment of rapid technological change, vigorous global and domestic competition, and enormously expanding information processing capabilities. Conventional management accounting which developed from a stable and monopolistic environment had been ‘subservient to financial reporting’ rather than facilitating internal processes.

Johnson and Kaplan contended that the period between 1825 and 1925 represented the heyday of management accounting during which cost management practices were well developed.

However, after 1925, virtually nothing was developed, yet the same practices were used by firms even in the 1980s.

If management accounting systems in organisations were to respond to environmental changes and to be shaped into meaningful managerial devices, then there was a simple question as to how the century-old knowledge of management accounting could be suitable for the contemporary world of management. To put it another way, as Johnson and Kaplan illustrated from the case of General Motors, the inadequacy of current systems arouse from a lag in replacing pre-war cost accounting systems, designed for financial reporting and tax purposes, with modern information and accounting systems.

3. Regaining its momentum There is now a change agenda in management accounting. It guides us to understand how environmental factors shape internal processes within organisations.

The environmental factors include technology, competition, globalisation effects, economic uncertainty, social and cultural influences, political initiatives, and also effects of management accounting research and consultancy. The internal processes include all interrelated functions of R&D, accounting, finance, HRM, marketing, production etc. Change occurs as a result of the interaction between the environmental factors and internal processes.

When focusing on change, we can learn how this interaction happens, what factors are more influential, why change is so fast or slow, how organisational members react to such change, and how change impacts on social and economic wellbeing of a society.

Changes might occur deliberately or accidentally. The deliberate and the accidental have links to the time (history) and the space (geography) in which they occur. Understanding changes along with historical and geographical concerns would

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constitute a realistic knowledge of management accounting.

With regard to linking technical changes with history and geography, the technical-managerial view of management accounting has little to offer.

Instead, a broader social and organisational perspective would give a complete pedagogical approach to understanding management accounting change. This would enable us to explore the questions of why some techniques and practices came to be prominent, and how these techniques could be reflected in the interaction between the contextual factors and internal processes. Change places much onus on technological innovations which are linked to customer-orientation and globalisation effects. These factors are considered to be the most dominant environmental forces affecting businesses today. Highly dynamic and volatile markets are the resultant immediate business context: firms soon find new customer needs to satisfy and new forms of competition to beat. Markets are getting fragmented and ‘mass production’ and ‘mass marketing’ are no longer valid business strategies.

Moreover, Fordism as an organisational form became more or less outdated, and management gurus soon launched into the discovery of organisational forms of greater flexibility and adaptability such as the ‘learning organisation’ and even ‘effective organisation’.

Visionary leadership, organisational culture, teamwork, and networking became the structural apparatuses of the expected organisational form. Continuous improvement, total quality management, business process re-engineering and lean production became the buzz words in various management discourses. Change management evolved into a popular course in business schools and in-house company training programmes. As a result of all these dynamics, the notion of ‘change’ is now projected not only as a means for various other ends, but also an end in itself. The concern for ‘change’ in other disciplines of managements had certain knock-on effects on management accounting. Management accountants had to face the challenge of changing their techniques and procedures to meet this overall agenda of change.

Traditional management accounting techniques of budgeting and control were no longer sufficient to meet the demands of emerging strategic dimensions of organisations. More specifically, management accounting was faced with the problem of moving beyond the traditional administrative mode of control to integrate itself with the emerging strategic and marketing aspects of the businesses. Balanced scorecards (BSC), activity based management (ABM) and beyond budgeting are the kinds of such reactions. This drive for integrating strategic and other non-accounting business dimensions with management accounting was quite commonplace that affects the changes in the professional management accounting syllabi.

4. Way forward What are the implications of these reflections for practitioners then? Firstly, one thing is certain. That is, organisational strategies for growth and sustainability are predicated on the understanding of management accounting from its broader perspectives. The establishment of a culture of collaboration is thus crucial here.

Rather than living in separate ‘kingdoms’, it is important to promote coordination of related activities across the entire value chain. In this regard, replacing the hierarchical forms of management controls with a flexible form would be useful.

CIMA Sri Lanka Division - Technical Update December 2010

The spirit of beyond budgeting lay in such a flexed culture where conventional responsibility accounting is coming to be replaced or abandoned.

If this form of organisation culture is pertinent to the social and cultural contexts in which your firm is located, then other associated management accounting techniques such as BSC and ABC/ABM would be useful initiatives. If this was the case, other elements of responsibility accounting such as variance analyses and related management control mechanisms could be replaced with ensuing performance measurement systems (PMS) such as BSC and cost management programmes such as ABC/ABM and target costing. If there is less possibility for changing the organisational culture into a flexible form, there is no point in investing in those new programmes.

In the UK, BAE Systems developed a new performance measurement system through its culture change programme.

They did not develop PMS from the scratch. Instead, they allowed the culture change programme to emerge a pertinent PMS programme. It was not BSC, though there were some similarities. Some other firms, being embraced by the new programmes’ fashion effect, ended up with failures in implementation.

Secondly, new flexible culture must be capitalised in a pertinent strategic context. What is this pertinent strategy now? In the recent past, strategic management accounting means a provision of both financial and non-financial information for making decisions for sustaining the firm’s future. Today, there is a third partner between strategy and management accounting, that is, information technology.

For example, Intel Corporation’s integrated strategy, technology and cost reduction programmes led to new performance groups of products. These new products became more competitive in the market rather than merely lowering their prices to be competitive. However, again, we need to be cautious here in making investment decisions on technology. The key question is: what strategic move does a technological expansion accommodate?

Finally, there are ethical issues. World is now at the risk of environmental degradation. Increased competition pushes this further. One could argue that management accounting is part of this tendency. The argument is not wrong. Hence, management accountants must learn from ecologists and address degradation issues in conjunction with the deployment of both technologies and management accounting initiatives. It is not ethical enough even though the decisions can enhance economic prosperity of the firm in particular and the economies and societies in general. There are no hard and fast rules yet, but collaborative spirit should do some justice in this regard.

Ambitious research programmes have now been embarked on addressing these issues. Rather than awaiting their results, we must start acting upon this very issue now.

In summary, we must realise that management accounting is not a static science. Ensuing environment dynamics demand a flexible organisation culture, which can absorb new management accounting practices. Such an endeavour must accompany a pertinent strategy and a strategic deployment of IT. We can trust the value of such an endeavour if ethical issues are sufficiently addressed.

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Incorporation of risk factor in capital budgeting

by Ravi Edirisinghe Ravi is a fellow member of CIMA and an MBA of Postgraduate Institute of Management, University of Sri Jayewardenepura, Sri Lanka. Ravi possesses over 18 years of work experience, in local and multinational organisations covering CEO’s responsibilities, strategy formulation, international business development, strategic financial management, manufacturing operations, lean enterprise systems and human resource development. He is presently employed as vice president of Freight Links International Limited. Ravi has over 15 years of experience, in lecturing finance related studies. He also serves as a visiting lecturer for MBA studies at Postgraduate Institute of Management, University of Sri Jayewardenepura.

1. Introduction The Sri Lankan economy was crippled by the brutal civil war, which lasted for almost three decades. During this period, the strategies of the public sector were heading in a different direction to those of the private sector. The official declaration of a post-war economy was unfortunately, overshadowed by the global economic recession. In this period most of the capital budgeting decisions were determined by risk-averse decisionmaking tools. In times of an economic recession it is natural for investors to rely heavily on payback period as a tool to assess the financial feasibility of investments. The underlying logic is simple. Investors do not want their investments spread over a long period of time. They would possibly settle for a lower return in exchange of a faster recovery of their initial capital investment.

The Sri Lankan economy is now indicating promising signals to be an economic center for the region. Leading entrepreneurs and organisations are keen to capitalise on investment opportunities emerging from post-war era. The attitude of investors would now shift from risk-averse to risk-seeking in return of higher benefits. However, investors should be knowledgeable of advanced capital budgeting techniques to assess the feasibility of their investments in relation to the risks they accept.

Most investors use basic appraisal tools namely, net present value (NPV), internal rate of return (IRR) and famous payback period calculation. Whilst endorsing the effectiveness of these tools for basic appraisals, it must be stated that these tools lack the important features of incorporating risk into the assessment process.

Let’s consider two investment opportunities available to a local investor. Assume that, project A is an opportunity available to expand the business in North and East along the existing lines of trade the company is currently involved. Project B would be a diversification to a different line of export oriented business. The cash flows of the projects in Sri Lankan rupee millions are listed in the next column.

CIMA Sri Lanka Division - Technical Update December 2010

Time

Project A

Now End of Year 1 End of Year 2 End of Year 3 End of Year 4 End of Year 5

Project B

(400)

(430)

70 175 230 140 80

70 90 210 230 270

Let’s assume the company managed to negotiate a credit line from a bank to fund either of these projects at a cost of capital of 8%.

The basic appraisal tools, listed below suggest project B to be selected over project A due to superior financial feasibility especially considering NPV and IRR. The payback slightly favors project A. Indicator

A

B

NPV IRR

Rs.155million 21%

Rs.231million 23%

Pay back (discounted)

3 years

3 years 9 months

If the investment in project B is for an export oriented diversification, obviously, it inherits industry specific and country specific risks of the export market. Country specific risks are determined by economic factors, political factors and currency fluctuations. These risks are driven by the fiscal and monetary policies of the governments, which investors have little control over. For example, the withdrawal of GSP+ benefits by the EU to Sri Lanka immediately created a negative price variation for Sri Lankan exports. As a result, the demand from the EU markets for Sri Lankan exports has declined significantly. The edible fish exports from Sri Lanka to Europe have been severely affected due to this reason. These factors are difficult to predict accurately but an investor needs to be mindful of probable changes.

Exchange risk reflects the danger of an unexpected change in the exchange rate in which project cash flow is denominated which will reduce the value of the benefits. For example, in project B, revenues are collected in foreign currency.

Appreciation of Sri Lankan rupee against this currency could demine the benefits of the project. However, medium to shortterm currency risk can be hedged hence this risk can be kept under control to an extent.

2. Risk based capital budgeting techniques In the current dynamic business environment, investors have become increasingly concerned about their investment portfolios. It is paramount that investors be mindful to assess and account for the risk in the investment, which basic capital budgeting tools are unable to manage. Investors can use many tools to thread-in aspects of risk to a capital project. Sensitivity analysis and scenario planning are two very popular tools for this purpose. In this paper, two additional techniques are discussed, which are not very popular among investors in this part of the world. These tools are certainty equivalent method and risk adjusted discount rates method.

2.1 Risk adjusted discount rate (RADR) RADR is the rate of return that must be earned to compensate shareholders adequately in comparison to the risk they accept.

The RADR uses a single input valuation method to compensate risk. It adds a ‘risk premium’ to the risk free cost of capital. A risk index can be used to determine the value of the risk premium. The risk index, sometimes subjective, should be

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prepared after careful consideration of different types of risks a project is exposed to. Example of a risk index is given below.

Risk free

Project A

Project B

Risk index 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

RADR 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

Pay back (discounted)

A Rs.126million 21% 3 years 2 months

Cash flow (400)

CE (α) 1.00

Cash flow * CE (400.00)

D/f @ 6% 1.000

Present value (400.00)

1

70

0.95

66.50

0.943

62.74

2 3

175 230

0.92 0.90

161.00 207.00

0.890 0.840

143.29 173.80

4

140

0.86

120.40

0.792

95.37

5

80

0.82

65.60

0.747

49.02

NPV

124.21

Year 0

Project B Year

Obviously the risk index of project B is higher than that of project A. RADR for project B is now adjusted to 14% whereas the cost of capital of project A is only adjusted by 2% points.

The new indicators using RADR now look different and the investors would now prefer project A. Indicator NPV IRR

Project A

B Rs.119million 23% 4 years 2 months

2.2 Certainty equivalent (CE) Certainty equivalent is a procedure for dealing with risk in capital budgeting to reduce the forecasts of future cash flows to some certain and conservative level. In examining a capital budgeting decision using certainty equivalents, the cash flow is adjusted to reflect the risk of actual realisation of cash flows of the project. Once these risk adjustments are made, the cash flows are discounted at the risk free rate to reflect time value of money. This methodology appropriately separates the time and risk factors, allowing for linear adjustments for risk. The cash flows following a certainty adjustment will always be lower than the expected value of an uncertain cash flow.

The certainty equivalent is the value of a certain prospect that yields the same level of utility as the expected utility of an uncertain prospect. The certainty equivalent coefficient (α) assumes a value between 0 and 1, and varies inversely with risk. A lower α will be used if greater risk is perceived and a higher α will be used if lower risk is anticipated. The coefficients are subjectively or objectively established by the decisionmaker. These coefficients reflect the decision-makers confidence in obtaining a particular cash flow in a future time period.

Another way of explaining certainty equivalent is the use of probability. Suppose an investor has equal chances of yielding a cash flow of Rs.10,000 or a loss of Rs.5,000. The expected value, using simple probability is 0.5* Rs.10,000 + 0.5 * Rs. (5,000) = Rs.2,500. However, suppose that the investor decides to accept a certain return of Rs.1,000, and then the investor is indifferent between expected values of Rs.2,500 subject to risk and Rs.1,000 with no risk. Then the certainty equivalent coefficient is calculated as Rs.1,000/Rs.2,500 = 0.4. Let's apply CEs to projects A and B. Obviously, a higher α will be applied to project A’s cash flow to reflect low risk, and a lower α to project B’s cash flow will signify the risk of investment in an unknown territory. The cash flows are then discounted by the risk free cost of capital. This is appropriate since the cash flows are already adjusted for risk.

CIMA Sri Lanka Division - Technical Update December 2010

Cash flow

CE (α)

Cash flow * CE

D/f @ 6%

Present value

0

(430)

1.00

(430.00)

1.000

(430.00)

1

70

0.90

63.00

0.943

59.43

2

90

0.84

75.60

0.890

67.28

3

210

0.78

163.80

0.840

137.53

4

230

0.74

170.20

0.792

134.81

5

270

0.70

189.00

0.747 NPV

141.23 110.29

The indicators calculated after using certainty equivalents support project A. Indicator NPV IRR (based on CE cash flow) Pay back (discounted)

A Rs.124million

B Rs.110million

17% 3 years 2 months

13% 4 years 3 months

It is evident from above examples that some capital budgeting decisions may have to be reversed when risk adjustments are factored in to the project cash flows.

3. RADR vs. CE Most investors choose to apply the simpler RADR and sidestep the importance of the CE methodology. Ease of application does not justify model choice. The goal of the investor is to maximise personal wealth. There are criticisms on RADR method. The RADR method simultaneously adjusts for time and risk hence; there is interplay between the two that is not consistent with economic principles. For project B if the RADR assumed 14%, of which 6% is the risk free rate and 8% is the adjustment for risk. The risk adjustment has a different effect depending on the number of periods of investment. In large multi-year capital investment projects, the risk adjustment using the RADR is arguably not an accurate representation of the risk adjustment. The implicit assumption in RADR is that risk increases as time increases which may not be practical. The application of a risk adjustment with RADR’s is highly arbitrary.

Certainty equivalent method is considered superior to the RADR method due to the multiple levels of inputs which separately adjust for risk and time value. It is recognised that certainty equivalents are accepted, at least in theory, as a superior risk adjustment model to risk adjusted discount rates.

Their limited usage in both personal and corporate financial management is blamed on the relative difficulty of application and determination of certainty equivalents for risky cash flows.

Smart investors can capitalise on bright investment opportunities emerging in the region provided they assess the projects with the correct tools thereby making the best capital budgeting decisions to maximise the wealth.

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The turbulent business environment: place for transformational leaders

by Tharindu Ediriwickrama the winner of the CIMA Technical Paper Competition 2010 Tharindu Ediriwickrama studied at Debarawewa Central College, Tissamaharama and is a graduate of the University of Sri Jayewardenepura with a B.Sc Finance (special) degree. He completed CIMA examinations in 2008 and progressed to obtain a postgraduate diploma in investment analysis from the ICFAI University, India. He was adjudged the winner of the CIMA Technical Paper Competition 2010 conducted by the CIMA Sri Lanka division. He is a member of the council of Portfolio Management and Research, India. Presently he is working for DFCC Bank, Matara branch and reading for a MBA from the ICFAI University, India. His vision is to be a key researcher for business consultancy.

1. Introduction Transformational leadership is the process of going beyond the predefined needs of followers by inspiring them through a greater vision as opposed to the transactional leadership which deals with economic exchange of contracted services of subordinates. The concept of transformational leadership was initially coined by James MacGregor Burns in 1978 as ‘the mutual process between leader and follower raising one another to higher levels of morality and motivation.’ Later Bernard M. Bass developed the concept which is widely accepted today as ‘Bass’ transformational theory’ and he defined it based on the impact caused on followers through the inspiration ignited by leader.

Turbulent business conditions can be defined as unpredictable and rapid changes to the external or internal environment of a business organisation which affects performance positively or negatively.

Burns defined transformational leadership as a process where leaders and followers engage in a mutual process of 'raising one another to higher levels of morality and motivation.’ (1978) Many religious leaders used spiritual values to motivate followers which are very effective even today. Further, Burns identified transformational leadership as a continuous process that happens over time between leader and followers.

Transformational leaders reflect characteristics of being proactive, long-term oriented, thinking beyond the framework, inspire followers through shared vision and promote learning. In contrast transactional leaders are always reactive, relied on formal rewards, short-term oriented and managed within boundaries.

3. Key concepts and illustrations Two key concepts outlining the base argument in this paper are first turnaround achievement and subsequent key achievement.

First turnaround achievement (FTA): FTA is defined as the first major achievement which turned around a leader’s life into a successful stage. It is the achievement which lifted a leader into transformational status or major contributor that led him/her to become classified as a transformational leader.

Subsequent key achievement (SKA): SKA is defined as the major achievements in leader’s life after the FTA. In the analysis of biographies of business leaders, it can be understood that there are number of subsequent achievements in a leader’s life. FTAs and SKAs of three selected business leaders are illustrated in Table 1.

Table 1: FTA and SKAs of transformational leaders Name and early life Giannini, Amadeo: Commission merchant and produce dealer for farms in the Santa Clara Valley.

FTA

SKA(s)

Created a loan monopoly in 1906 at the time of San Francisco earthquake.

Graham, Katherine: began working with family news paper Washington Post.

Assumed reins of Washington Post in 1963 after her husband’s suicide.

‘56 for 56’ campaign: offered car loans for 1956 model year cars for $56 monthly rental and 20% down payment.

Created Bank of America where most banks were limited to a city or region in 1928. Offered banking services to middle class and created a system of branch banking.

Unveiling Watergate conspiracy in 1972.

2. Literature review Bernard M. Bass and James MacGregor Burns presented two key theories on transformational leadership. Bass defined a transformational leader as a person who impacts his followers who are intended to trust, respect and admire people in return (1990). According to Bass, transformational leaders always transform their followers through emphasising the significance of the task, highlighting the team objective rather than personal interest and finally addressing the higher order needs of followers. Bass identified four aspects of transformational leadership which are described below.

Idealised influence: qualities of the leader that his/her subordinates will emulate.

Inspirational motivation: ability of the leader to provide a meaningful context to his subordinates to carry out their responsibilities.

Intellectual simulation: ability of the leader to frequently follow up with his/her subordinates keeping-up the task performance. Leaders usually do this by frequent questioning or solving the day-to-day problems of followers.

Individual consideration: ability of the transformational leader to pay special attention to each of his/her followers on an individual basis.

CIMA Sri Lanka Division - Technical Update December 2010

Lacocca, Lee: commenced the career at Ford Motors as an engineer.

Brought ‘Mini-Max’ project to Chrysler which resulted in outputs such as K-cars and mini-vans which turned around Chrysler. Obtained approval for loan guarantee requested from government.

Source: www.wikipedia.org

Environmental forces influencing FTA: FTA can be directly or indirectly influenced by various environmental forces, which can be classified into two main categories named internal (personal) and external. It can be observed that these environmental forces are interlinked. For example, Lee ByungChull, founder of Samsung group, South Korea was mainly influenced by political reforms in 1960’s, but he couldn’t have developed Samsung into a large MNC if other environmental forces such as technology, economic and social factors were not managed properly. Another important aspect is that FTA can be influenced by one environmental force, but SKA can be

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facilitated by another. These forces can be further classified as illustrated in Figure 1.

Figure 1: Broad environmental forces influencing FTA Environmental forces influencing FTA

Internal (personal) • Personal interest • Turbulent personal life • Personal background

External • Political • Economical • Social • Technological/innovation • Ecological • Legal • Competition

The next step would be to judge whether particular environmental force was turbulent or non-turbulent at the time of achieving the FTA by leader, and whether it had a positive or negative magnitude. Each of the environmental forces identified can be either turbulent or non-turbulent. Environmental forces were classified based on the nature of unpredictability and rapidness at the time of FTA. Table 2 presents how these forces affected the respective business leader in reaching the FTA. Table 2: Environmental forces influencing FTA Name and main reasons/factors contributing to FTA

Environmental force influencing FTA

Turbulent/ non-turbulent condition

Giannini: Amadeo’s vaults were located in remote areas. He funded many rebuilding projects after the earthquake. It was not possible for other big banks to open their vaults for weeks.

Graham: suicide of her husband and familiarity to the business from childhood.

Lacocca: economy cars were making headway in the market. People were concerned about cheaper and easy financing cars.

Ecological

Turbulent

4.3 Key findings Sample of 33 international business leaders and 14 Sri Lankan leaders were analysed.

International business leaders: it revealed that 22 out of 33 international leaders studied were influenced by external forces while the rest were influenced by internal forces.

Personal interest was the key internal force influencing nine leaders out of 11 leaders who were motivated through internal forces. Technology/innovation motivated seven leaders while political motives and competition influenced six leaders out of 22 leaders impacted by external forces. Eighteen leaders out of the sample encountered turbulent environments to achieve their FTA while 15 leaders did not encounter a turbulent environment, even though they have passed a turbulent environment before or after their FTA. Sri Lankan leaders: from the sample of 14 leaders, two leaders were motivated through internal (personal) drives while remaining 12 leaders were influenced through external forces. Of the leaders who were externally driven, six leaders were influenced through political reasons, while five were inspired by innovation. Two leaders have gone through smooth conditions in achieving their FTA while 12 faced turbulent conditions in achieving their FTA.

5. Conclusion Turbulence in personal life

Turbulent

Economic

NonTurbulent

Source: www.wikipedia.org

Further, impact of environmental forces can be varied during the leader’s life. Mostly, FTA is the greatest achievement in the leader’s life while there is a possibility that SKA outperforms FTA impact in latter part of the leader’s life. Further, there can be degrades too which are major failures after FTA in leader’s life. One example for degrades is the US president Richard Nixon’s resignation due to allegations on Watergate incident in 1970s. So, FTA and SKAs can be mapped in a leader’s lifeline as illustrated in Figure 2.

Figure 2: Leader’s life line, and FTA and SKAs Impact of SKA Early life

4.2 Data collection method Content analysis was used as the method of data collection.

Biographies published in Wikipedia (web based encyclopedia), articles in LMD Magazines (business magazine published in Sri Lanka) and other web and print sources were studied to perform a content analysis. Further, a sample of international leaders were selected from the article ‘Short primer to transformational leadership’ published by Murray Johannsen.

Sri Lankan leaders were selected from the list ‘Sri Lankan of the year’ published by LMD from 1995 to 2009.

Impact of FTA Subsequent degrades

4. Research methodology 4.1 Research objective Research objective was to identify whether turbulent environmental conditions impact leaders in achieving their FTA.

CIMA Sri Lanka Division - Technical Update December 2010

It can be concluded that external environmental forces had great influence on transformational leaders both in international and Sri Lankan context. Technology/innovation, politics and competition were the major external forces of influence, and personal interest was the key internal force of influence. Most of the international and Sri Lankan leaders analysed in this study have gone through turbulent environmental conditions which prove the strong relationship between the two variables namely, the turbulent environment and transformational leadership.

Eighteen out of 33 international business leaders have experienced turbulent environments while 12 out of 14 Sri Lankan leaders were influenced with turbulent situations in achieving their FTA.

6. Limitations The main limitation in the study was the limited sample size of the leaders. In the international context, 33 business leaders were analysed while only 4 business leaders were studied out of a sample of 14 Sri Lankan leaders. There is no exact measure of transformational status. Therefore, standard for selecting leaders is not consistent. Widely accepted lists of transformational leaders were used as a solution to this limitation. Another limitation is that the study mainly focuses on the environmental conditions influencing the achievement of FTA. But, SKAs can be influenced with different environmental conditions which can be turbulent in the latter part of respective leader’s life. Environmental forces are interlinked. Therefore, often it is difficult to identify the exact environmental condition influencing the FTA. So, judgment played a critical role in selection of an environmental force influencing the FTA.

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Technical news and events 2010 The technical services team of CIMA Sri Lanka strives to support the continuous professional development of members by enhancing their technical competencies; extend CIMA’s thinking through research; and drive thought-leadership in the finance and business community to facilitate greater value creation. Some of the key initiatives taken during 2010 are illustrated below.

Discussion forums Driving thought-leadership to the business community CIMA Technical Symposium 2010 on ‘Transformation: the compulsory choice’ CIMA CEO Forum with RAM Rating on ‘Private equity: an unused option’

LBO-LBR CFO Forum with CIMA on ‘The emergence of finance as a key to business transformation in light of the global downturn’

CIMA HR Leaders’ Forum on ‘Ethics in human resource management’

Facilitating in-depth discussions to support industry growth

Incorporating ethics into strategy: developing sustainable business models Quarterly business confidence survey 2010

Sharpening the saw through global and local technical and business publications The CIMA’s premier global business magazine Excellence in Leadership carries timely industry updates from eminent business leaders. Dr Arul Sivagananathan is the first Sri Lankan to be appointed to the editorial advisory board of this magazine.

The CIMA Edge a regional e-magazine focuses on regional contemporary issues and technical updates. Past copies can be downloaded from www.cimaglobal.com/Thoughtleadership/Newsletters/Regional/The-CIMA-Edge-South-Asiaand-Middle-East Accounting standards study: this project chaired by Manil Jayesinghe, Partner, E&Y conducts in-depth study of Sri Lanka Accounting Standards and disseminates the knowledge to members. It aims to enrich the technical knowledge of members and support the finance community in their journey of convergence to IFRS. Technical Update carrying articles of technical value is disseminated annually.

Numerous global publications on governance, ethics, risk management and other related topics were disseminated. Most of these publications can be downloaded free of charge from the thought leadership section of the CIMA global website.

CIMAsphere unites the finance community through online discussions and debates. Join this community today by connecting to http://community.cimaglobal.com

Technical Paper Competition 2010 successfully concluded in June 2010.

The winners were as follows.

A focus group discussion was conducted amongst the key stakeholders operating in the F&A BPO sector of Sri Lanka to gather insights about the competency gap in the industry.

A focus group study on the future of corporate reporting was held amongst prominent industry leaders.

Winner: Tharindu Ediriwickrama First runner-up: Mallika Godakanda Second runner-up: Dinupa Peiris Highly commended: Chandrien De Mel

Brief discussions and workshops Evening discussions on 2010 and 2011 budget highlights were held in July and November respectively.

The papers were assessed and the winners adjudged by an eminent panel of judges moderated by Professor Uditha Liyanage and comprised of Malinga Arsakularatne, Manil Jayesinghe, Mangala Fonseka, and Dr Sunil Nawaratne.

A half a day workshop on ‘Research techniques and analytical writing skills’ was held in March.

A full day workshop on ‘Management accounting change agenda’ was conducted in Bangladesh.

Publications Extending the known through empirical studies: the following global publications carry local case-studies and insights to increase their applicability to the Sri Lankan context Breaking glass: strategies for tomorrow’s leaders Reflections from the Asia Pacific leaders: strategies for career progression

CIMA Sri Lanka Division - Technical Update December 2010

Disclaimer Opinions expressed are the contributors’ own and do not necessarily represent the views of the institution or the organisations by which they are employed.

Note of thanks My sincere appreciation goes to the contributors of the Technical Update 2010 for sharing their invaluable insights, thought-leads and knowledge with the CIMA member fraternity.

Sharing knowledge If you wish to intellectually engage with other CIMA members through a publication or a discussion forum please email details of your area of expertise to technicalservices.srilanka@cimaglobal.com Nilushika Gunasekera, Regional Technical Manager, CIMA.

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