Insight

Issue 11

HAMT

AUDIT | TAX | ADVISORY

06

Implementing MIS dashboards for better decision-making

08

The importance of crisis communication

10

Embedding analytics into internal audit

insight

CONTENTS

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06 Implementing MIS dashboards for better decision-making

08 The importance of crisis communication

Companies can find themselves in a crisis at any moment. A clear corporate communications strategy is critical when crisis strikes, according to HLB HAMT’s Director of Sales and Marketing Inder Pal Singh.

Insight | HLB HAMT

12 Two’s company

HLB HAMT’s Director of IT Vimal Rama explores the technological challenges that must be managed during a corporate merger.

A business intelligence reporting tool is fundamental for any organisation hoping to make the right decisions and increase efficiency, according to HLB HAMT’s IT Auditor Melita Grace.

10 Embedding analytics into internal audit

With data growing at an unprecedented rate, HLB HAMT’s Business Analyst Ashif Mohamed Abbas explores the need to use analytics tools in internal audit to ensure better results for clients, employees and wider stakeholders.

14 On the money

Basil Salah, Managing Director of Cinque Technologies, explains how the firm is a crucial technology partner to the GCC’s exchange houses.

Partner’s message

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Jay Krishnan, Partner, HLB HAMT

AI is changing accounting profession precision. With AI, the job of three accountants can be done by one.

Consulting has also seen benefits from adopting AI technology. At HLB HAMT, we conduct extensive research to give customers the data they need, when they need it.

We are also planning to implement software that will be able to easily summarise and collect data to automatically respond to clients’ calls.

Thanks to this, enquiries can be dealt with pre-recorded, customisable and fully accurate answers, reducing time consumption.

However, AI can also become a threat if not implemented correctly. In the absence of cybersecurity audits, cybercrime can be encouraged, and data can become easily manipulated. A cybersecurity audit is necessary before implementing AI to avoid these risks.

We encourage all of our clients to implement AI, while also focusing on having the right resources to successfully support this process.

Jay Krishnan, Partner, HLB HAMT

HLB HAMT | Insight

Audit firms in the UAE have recently seen a technological shift which has changed traditional audit styles thanks to AI technology.

The impact of this shift is unimaginable, and it is quickly evolving the industry and profession.

In terms of scope, the traditional concepts of bookkeeping, auditing and consulting are facing heavy changes. Consultants can now spend more time on the quality of audits rather than on lengthy clerical procedures.

The opportunities arising from AI are evident in the examples of its implementation.

A leading US audit firm is using AI to substitute their traditional physical inventory count with robots. Within ten minutes, a huge warehouse inventory can be verified with complete accuracy, removing the need for time consuming and sometimes imprecise human processes.

Some firms are using AI for invoice processing.

Manual posting has become obsolete: clients’ invoices can just be scanned into the system within minutes, and again, with absolute

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News

New members

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31 58 49 53

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Germany Ganteführer, based in Dusseldorf

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Portugal Santos Vaz Trigo de Morais & Associados, SROC LDA (SVTM), based in Porto

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Panama HLB Cheng y Asociados, based in Panama City

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Brazil HLB Deals Advisory Assessoria Empresarial Ltda (HLB Deals Advisory), based in Sao Paulo

As one of the leading global accountancy networks, HLB International has continued its growth with the addition of these new member firms. They have allowed us to strengthen our position in developed economies, as well as expand our presence into emerging markets.

Latest News

Insight | HLB HAMT

Strategic focus on the future drives HLB’s record growth

London-HLB, the global network of independent advisory and accounting firms, has reported that the network’s delivery of its strategy has returned global revenues of $2.73 billion, a record 15% growth increase from the previous year.

In its newly published Global Annual Review, 2018 saw HLB take many transformational steps into the future. The network’s growth is the result of many factors, including:

the launch of the network’s new brand, which better reflects our collaborative and entrepreneurial approach to business; A 10% increase in overall headcount; Particularly strong growth in Europe, which saw a 29% increase in fee incomes and the network breaking into the top 10 nationally HLB becoming a top 10 network in advisory services, with growth of85% in fee income.

Marco Donzelli, HLB chief executive officer, said, “Our success is the result of HLB adapting to these turbulent times while anticipating where growth opportunities arise. Our agile nature, coupled with a deliberate focus on the strategic development of the network’s capabilities and diversifying service offerings, has seen HLB become one of the fastest growing networks, culminating in a 15% growth in 2018.”

News

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HLB assist Qingdao Haier Co., Ltd to successfully list on the CEINEX D-Share Market HLB member firms HLB Hodgson Impey Cheng Limited (Hong Kong) and Shandong Hexin Certified Public Accountants LLP (Shandong, China) assisted Qingdao Haier Co., Ltd (Qingdao Haier) to successfully list on the China Europe International Exchange AG’s D-Share Market (CEINEX D-Share

Market) in Frankfurt, Germany on 24th October 2018.

Headquartered in Qingdao, China, and already listed on the Shanghai Stock Exchange (A-Shares), Qingdao Haier is a leading global household appliance manufacturer that ranks as the top selling major household appliances company in the world.

Qingdao Haier is now the first company listed on the CEINEX D-Share Market of the Frankfurt Stock Exchange.

HLB Hodgson Impey Cheng Limited and Shandong Hexin Certified Public Accountants LLP acted as auditors and reporting accountants to Qingdao Haier in connection with its D-Share listing.

HLB HAMT becomes Amazon tax agent Global e-commerce leader Amazon announced that it had completed the acquisition of Souq.com, the Dubai-based online retail and marketplace platform. The acquisition, which was signed in March 2017, signaled the entry of the

global e-commerce giant into a fastgrowing Middle East market.

HLB HAMT is proud to announce that it is now one of the approved Tax Agents for Amazon in the UAE. It is now helping amazon suppliers with VAT registration and other requirements.

In order to cater to the Chinese market, HLB HAMT has teamed with ThinkBridge Consulting, HLB’s member firm in china to mitigate the language barrier. Amazon had made a formal announcement at its conference in China held in March 2019.

HLB Indian Subcontinent Conference 2019 HLB hosted its Indian Subcontinent Conference 2019 in Trivandrum from 21st-23rd February. The conference shared the latest updates on HLB

by Marco Donzelli, Chief Executive

Officer of HLB and discussed stakeholders expectations from the profession through a panel discussion with C. Balagopal, Sunil Gupta and Nilesh Vikamsey. The

conference also gave an opportunity to gain insights on technology and trends for the profession through workshops and discussions conducted by Jim Bourke.

HLB HAMT | Insight

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Business intelligence reporting

IMPLEMENTING MIS DASHBOARDS FOR BETTER DECISIONMAKING

Insight | HLB HAMT

A business intelligence reporting tool is fundamental for any organisation hoping to make the right decisions and increase efficiency, according to HLB HAMT’s IT Auditor Melita Grace.

With all industries evolving at a faster pace than ever before, making the right decisions based on consistent and clear data is key for any company.

Way too often, managers have to deal with several different monthly or yearly reports from each department, making data visualisation and decision-making strenuous tasks, frequently resulting in poor financial and operational results.

In order to facilitate the flow of information and avoid disastrous choices, companies should put in place a consistent and efficient reporting system, such as a dashboard.

A dashboard is a business intelligence tool used to display data visualisations in a way that is immediately understood, by summarising information from different parts of the organisation to ensure the appropriate decision will be reached.

Dashboards fall into three categories: Operational, Analytical and Strategic. Whilst the first two will look respectively at real-time data to understand performance, and past trends that can influence future decision-making, a strategic dashboard tracks performance

in relation to a company’s key performance indicators, to better align actions with strategy.

A management information system (MIS) dashboard can help identify the source of a problem in order to determine the future needs of the company. Moreover, it can predict future trends by using various market tools to analyse the current ones, while also helping assess monthly or yearly performance to increase efficiency.

Essentially, this system ensures data collated from different parts of your organisation are processed and then

Business intelligence reporting

presented in a manner that will help make the right decisions.

For example, different banks will have different reporting formats and tools, raising the question of whether integration can happen within the two and whether reported data is accurate.

The needs for a strong and customisable visualisation tool in terms of charts, graphs and data is fundamental.

By using at MIS dashboard, banks can collect and understand consistent reports and financial statements of competitors using external sources, while also comparing assets, such as credit cards, applications or sales being audited across years. This helps identify their position in the market, loopholes, threats and action plans to fix any issue highlighted by the data.

Excel sheets have become a thing of the past, as a dashboard can show a greater and more in-depth amount of internal and external data in one report, avoiding discrepancies between departments. Thanks to this, spending per department can be compared and negative trends identified and corrected, resulting in more effective decision-making.

A business can have various MIS reports to benefit each division of the business, saving them time and gaining total visibility of all systems.

For example, financial MIS can provide financial managers with fixed and standard report formats containing major financial objectives, while also projecting financial needs.

Similarly, accounting managers can benefit from aggregated information

on accounts payable, accounts receivable and payroll.

Besides banking, other industries can greatly profit from an MIS dashboard. In IT, an MIS dashboard can report on infrastructure or operational issues, as well as calculating how many of these escalated to vendors, or ensuring the IT team is meeting SLAs. Each report can be customised depending on the company’s needs, tailoring frequency or data accordingly.

In retail, a MIS can be used for point-of-sale collection, logistics, inventory control and internal communication, all of which affect retail operations and marketing. The latest can also benefit from MIS dashboards by making sure its strategy is in line with KPIs such as sales effectiveness and sales revenue.

The report can include

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charts, different dashboards, and comparisons between current and past years data and targets.

A similar approach can be applied

by HR by analysing recruitment data, as well as employee retention and month-on-month or year-on-year productivity.

In conclusion, MIS reporting should be a backbone of any organisation to ensure we achieve our goals and objectives by improving the performances and helping us look forward towards the growth and success of an organisation.

Melita Grace, IT Auditor, HLB HAMT

HLB HAMT | Insight

“A management information system dashboard can help identify the source of a problem in order to determine the future needs of the company.�

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Crisis communication

Insight | HLB HAMT

THE IMPORTANCE OF CRISIS COMMUNICATION

Companies can find themselves in a crisis at any moment. A clear corporate communications strategy is critical when crisis strikes, according to HLB HAMT’s Director of Sales and Marketing Inder Pal Singh.

Crisis communication

Over the years, various high profile

the crisis team needs to make clear what actions will be taken and what has been achieved in the last 24 hours to avoid falling short in the long run.

Different branches and employees all over the country must be made fully aware of the situation and what is being done to handle it. Word of mouth can spread incredibly fast and can quickly have a negative impact on the company.

Just like Nissan, another example of a successful corporate communications strategy can be found in the debt crisis that hit Air India from 2007 until 2010, culminating with the pilots’ strikes of 2009. The company, which had a monopoly of skies in India, announced a huge drop in profit in 2007 which meant delays in salary payments and subsequent strikes by its employees. The crisis was averted by the Aircraft Operations Minister.

As a spokesperson, he constantly communicated with the press and the public, winning their trust and proving the employee’s demands were too high to meet.

Similarly, during the Mumbai communal riots of 1992, the police commissioner in charge decided to address the media every single day to explain how he was handling the situation. While talking to political parties and influential people in the city, he won the hearts of the public by being frank, forthright and honest. His open approach eventually solved the crisis and drew sympathy from stakeholders.

Constant communication is essential to handle a corporate crisis, and nothing will take a company as far as honesty and frankness in handling any difficult situation.

Inder Pal Singh, Director of Sales and Marketing, HLB HAMT

“A lack of internal and external communication in time of crisis can be catastrophic.”

HLB HAMT | Insight

crises have hit numerous companies, from small businesses to corporate giants. Whether it’s a case of corruption scandals, inadequate performance, natural or manmade disaster, a crisis can hit any business at any time. The difference between whether a company comes out of a crisis relatively unscathed or severely damaged is often down to two key concepts: communication and honesty.

A sound corporate communications strategy is of fundamental importance, and is equally applicable in the case of external communications, talking to suppliers, stakeholders, investors or the press; or internally, involving all employees, from manufacturing, to sales.

A lack of internal and external communication in time of crisis can be catastrophic. To avoid unpleasant surprises, a crisis team should be put in place, and a spokesman for the team should be appointed. This team needs to be ready for a crisis to come at any time, and should have a plan in place for when this happens.

Being unprepared is not an option, and neither is being dishonest about how you’re handling the crisis.

The wrong statement can damage the image of a company and make a difficult time even worse.

Communication within and outside the company must be timely and transparent. In some cases, an honest statement can win people’s sympathy and help improve the situation.

People will accept and appreciate truthfulness, and 50% of the problems that arise during a time of crisis can be solved with an honest approach.

For example, last November Nissan’s CEO Carlos Ghosn was arrested for under-reporting his income for several years to Japanese financial authorities. The company handled communications fantastically. Ghosn was fired from Nissan immediately and the company made several statements following the scandal, handling it successfully through timely and frank communication with the public and within the company.

False promises can be very dangerous. When communicating with the media, as well as internal sources,

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Analytics in internal audit

EMBEDDING ANALYTICS INTO INTERNAL AUDIT

Insight | HLB HAMT

With data growing at an unprecedented rate, HLB HAMT’s Business Analyst Ashif Abbas explores the need to use analytics tools in Internal Audit to ensure better results for clients, employees and wider stakeholders.

We are living in a VUCA world that is gaining REPLEX. But what does this mean?

The rapid growth and development in technology has given us some of the best products ever seen, from smartphones to driverless cars. This improved connectivity has made our world more volatile, uncertain, complex and ambiguous (VUCA), with the result being an explosion of data. However, the growth in data is rising faster than technology can keep up with, thereby Rapidly Enhancing Complexity (REPLEX) in developing better tools to handle data.

While the growth of data and development of analytics tools and techniques is one part of the equation, to keep up with this constant

transformation, the other part is the need to embed analytics in operations to drive better outcomes, like increasing top line growth, improving customer and employee engagement, cost reduction, streamlining procurement and mitigating risks.

At HLB HAMT Chartered Accountants, we are working on a roadmap to embed analytics into our internal audit function in the coming years to ensure we remain relevant to our clients, employees, and wider stakeholders. Such a transition will help us deliver internal audit engagements that are: • Faster • Cheaper • Impactful • Innovative

Like any initiative, embedding analytics into the internal audit function starts with setting the vision, defining objectives, designing KPI’s and then asking relevant questions along the way: • What are our current analytics capabilities?

• What are our desired analytics capabilities or the future state?

• How and where to implement those capabilities and solutions?

• How to reposition our resources to drive these efforts?

• How can we use analytics to be more strategic not just for our clients but also with competitors?

Once the vision and the strategic direction are set, the next step

Analytics in internal audit

is to design the data analytics competency model.

I believe a deeper understanding of the competencies needed to succeed in this journey will help organisations of all sizes to bridge the gap between people, processes, technology and data. According to a survey conducted

by PwC in 2018, 52% of organisations in the Middle East see the lack of in-house data analytics skills as a challenge compared to 53% globally.

In fact, embedding analytics in internal audit is a 7-step approach analytics in auditing is a game changer. What I described so far is just the first step.

A leading stationery manufacturer, required rationalising their portfolio of 720 SKU’s (stock keeping units/ products) to turn around the widening losses over the years and to remain competitive. The task was to rationalise their portfolio based on two criteria: • What products to discontinue manufacturing and why?

• What products to continue manufacturing and why?

Traditionally, they relied on profit and loss accounts by department or sometimes by category, not by SKU, to find answers to such questions. Such an approach was not effective given the lack of visibility and granularity at SKU level. As part of the team, I drew up upon multiple internal and external sources of data to shed light on the status of portfolio. A closer look at the analysis revealed that around 300 SKUs were responsible for less than 7% of the total revenue and

almost 20% of total expenses. Using analytics, the client was able to make confident decisions on each SKU and to revise their portfolio to 386 SKUs, improving profitability and their market positioning.

In another case, one organization in the hospitality industry had problems had problems with the high procurement cost of raw materials, despite strategic partnerships with vendors. Traditionally the approach is to validate the reliability of the procurement cycle by checking purchase orders, invoice and GRN (goods received note) to ensure the effectiveness of internal controls.

However, on this instance by taking an insights-driven approach enabled by analytics to helped to understand all purchase orders over a period of three years. The analysis revealed contrary to expectations, the business was making purchases outside strategic vendors.

Furthermore,

for some raw materials they were overpaying by as much as 30%. The analysis was drilled further down into the data to shed more light on the nature and extent of the purchases.

To do this, the organization had to answer specific questions like: what made the procurement manager to approve purchases away from strategic vendors? Why there was a significant variance in procurement and whether procurement expenses were reported on time? If quality and on time delivery are key, then why initiatives were not made to establish new strategic partnerships?

Overall, analytics helped to go beyond a checklist approach and make recommendations on rationalising their procurement processes for improved savings.

Ashif Abbas, Business Analyst, HLB HAMT

HLB HAMT | Insight

“Improved connectivity has made our world more volatile, uncertain, complex and ambiguous.”

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Corporate merger

TWO’S COMPANY

Insight | HLB HAMT

HLB HAMT’s Director of IT Vimal Rama explores the technological challenges that must be managed during a corporate merger.

Corporate merger

The current economic situation in the UAE has means that some companies are vulnerable, and an increasing number of enterprises have sought mergers as a result.

Mergers bring new opportunities and can increase revenue, and as such have become an attractive option for a lot of companies.

When you try to combine systems, there are a lot of advantages and challenges that come. The advantages include combined reports, bringing operations together, and that board members get easy MIS reports.

A lot of trading companies and banks in particular have taken the merger route to increase their stability, but a lot of challenges result for IT systems once this happens. It brings both technical and digital challenges and can cause difficulties in combining technology operations into one.

Companies “A” and “B” will almost always have different operations and that’s difficult to handle.

History of records won’t match for a data integrity report. Dimensions of reporting will be different for the two companies. There’s also an innovation challenge. When they merge, there needs to be a business reason for the merger. They need to innovate new things with their current systems.

Blockchain can help to avoid challenges. It can easily integrate systems and data sources can be validated and used to trust reports, it will give easier data analysis and trust of data for merging companies.

Blockchain can be difficult to

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shipments. Issues can occur without proper planning.

That being said, organisations should always see challenges as advantages. They should look to bring new technology and IT systems, and invest in security to avoid challenges. It’s an undoubted challenge for companies to implement new technology, but it has to be done.

IT systems have to be farsighted when merging. Organisations need to evaluate the cost benefits and technology benefits, and then decide which technology to progress with.

They shouldn’t just think about the present, but also the future.

Cloud is going to be a challenge with mergers. One company may be reliant on cloud, but the other could be reliant on on-premise. The future will be in cloud, so we need to keep an eye on the future. That being said, they also need quick wins to mitigate any problems occurring.

Organisations need to adopt best

“Organisations need to adopt best practices to take strategic decisions.”

Vimal Rama, Director of IT, HLB HAMT

practices like COBIT 5 or COBIT 2019 to take strategic decisions. They need to do a proper analysis of what needs to be achieved, and use a GAP analysis, then they can plan projects to avoid future risks and proceed without any loss of business.

Proper project management is key.

You need to build a project management office with the right stakeholders to plan properly for the merger. If you’re focused too much on project management, you can’t always focus on your own business, and sometimes that aspect can be outsourced.

When it comes to solving conflicts between two parties, meanwhile, the board has to decide on some issues.

There aren’t always clear answers.

Boards have to take tough decisions.

It’s important to be flexible enough to decide things based on logic.

HLB HAMT | Insight

implement, but it has the promise to bring huge benefits.

Banks, in particular, will have to assess how to handle customers during a merger. Merging causes technology gaps and that’s not easy to manage. There will be issues around training and distribution, and how to handle

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Risk analysis services

ON THE MONEY

Basil Salah, managing director of Cinque Technologies, explains how the firm is a crucial technology partner to the GCC’s Remittance Industry.

Insight | HLB HAMT

Basil Salah, Managing Director, Cinque Technologies

Sandeep Anand, senior business development executive, HLB HAMT

Cinque Technologies has built up a formidable reputation in the GCC remittance industry. The firm is the GCC “market leader” for providing enterprise software for foreign exchange and remittance operation, we and has deployed software for the majority of exchange houses in the UAE. The largest exchange in Kuwait, Al Muzaini, and the fastest growing remittance operations in Saudi Arabia, Bank Al Jazira. Today, the firm has grown its operations into 19 countries.

A 22-year-old company, last year the company rebranded its name from Mighty Systems to Cinque Technologies to mark its transformation from also a software to a Fintech company, according to managing director Basil Salah. We also launched a new department to develop its next generation of products with a focus on expanding client services through digital channels.

SYMEX Cinque’s flagship product, is an end to end enterprise software for foreign exchange and remittances.

“It takes care of most of the front and back office operations for our clients,” Salah says. “It helps to manage the compliance of clients: and one way is by screening names for anti-money

“We were very impressed by HLB because they were very process oriented.”

Risk analysis services

L1, Tech support and software development and made quality control mandatory. We brought in a lot of new people with new ideas, and that has made us a much more process oriented company that can better serve our clients.”

Salah also decided to do a risk analysis because there was a lack of processes between the company and its clients. We hired HLB HAMT, “one of the few” companies in region who offered risk analysis services for software companies. “We were very impressed

by HLB because they were very process oriented,” Salah says. “Melita sat down with a lot of our staff and took the time and effort to understand our system.

Vimal also did a good job of setting our expectations and proposing realistic solutions. They proposed solutions involving decreasing our risks internally

as well as managing our relationships with our clients.”

Cinque is now exploring the possibility of doing a software development lifecycle audit with HLB HAMT to help the company improve the process of developing new software.

“We looked at internal risks and risks with our clients,” Salah says. “We are very pleased with HLB. We hope that we can expand our relationship so that we can provide clients with a better and more complete service. Our clients deal with money, and we have a software that manages their business.

We have a critical responsibility to make sure we have made the effort to reduce the operational risks of our clients running their business.”

HLB HAMT | Insight

laundering. It processes remittances or transfers.”

Salah says Cinque’s experience in the market is what differentiates it from its competitors. “We have seen every type of challenge and always found a solution for it. We have a software development team in Dubai.

Allowing of our clients to appreciate face to face visits to plan their IT projects. Our team has done more integrations and customisations than anybody else in this field, including over 200 file formats and integrations with banks, Money Transfer Operators and utilities, which in essence makes it easier for our clients to operate their businesses. With these integrations, our clients reduce the burden of double entries which saves them valuable time and resources.”

Although the organisation had built a formidable reputation within the remittance industry, Salah was determined to change the structure of the organisation to improve efficiency and reduce risk. “Our software developers were dealing with clients, performing development and managing the requirement cycle all together. That needed to change. We split the development team between

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HAMT

AUDIT | TAX | ADVISORY

TOGETHER WE MAKE IT HAPPEN HLB HAMT is a leading audit, advisory and consulting organization in the Middle East, and globe. We are backed by a team of highly qualified professionals, who confidently help you channelize and streamline your business to focus on core risk areas. We commit that you receive the best professional guidance to improve performance and thereby respond to your day-today growing business needs and combat competition.

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