June 2018
Innovation on Every Street Corner Dr. Grace McLean
Marketing and Sponsorship Agreements in Sport Marlon Gilbert-Roberts
Whither Zimbabwe
Maureen B.A. Denton
Table of Contents
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Team Message
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Determinants of Small Firm Growth Winsome Minott
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How the Development Bank of Jamaica Helps Businesses to Grow
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Marketing and Sponsorship Agreements in Sport
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Whither Zimbabwe
Development Bank of Jamaica
Marlon Gilbert-Roberts Maureen B.A. Denton
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Can culture be measured in stories?
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Overcoming Challenges for Success
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Towards a Culture of Formalizing Micro Businesses in Jamaica
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Innovation on Every Street Corner Dr. Grace McLean
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Motivation for growth
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Information Security - Key Issues and Developments Part 3
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Financial Versus Cost Accounting
Stefanie THomas
Damien Williams
Denworth Finnikin
Sandra Dixon Bruce Scott
Dalma James
Team Message
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amaica’s high rate of unemployment is inextricably linked to the country’s high crime rate; every well thinking Jamaican ought to want to participate in resolving these problems. One way of reducing unemployment is to formulate a comprehensive job creation plan. Katalyxt team members are committed to not only training entrepreneurs, but challenging SMEs to expand their thought processes to include innovation and embrace technologies. We believe we can improve the fortunes of Jamaicans by providing a road map to business success. It is time for on-the-corner youths to become successful entrepreneurs. We are excited by small chicken farmers who show much potential and one day could rival Jamaica Broilers; we have found in our current cohort trainees, persons who are innovative and are willing to introduce new products & services to the market including “Ackee Butter,” Jalgae’s Spirulina, and Natsima’s asthma spray. Jamaica’s future is brighter because of these young entrepreneurs. We celebrate with “Home Choice” a cohort 2 incubatee, as they continue on the entrepreneurial journey. Home Choice has introduced several new products to local and international markets. We are also proud to have interacted with incubatees who are first time entrepreneurs in their families. We will watch as you step boldly into new arenas, and we look to the future and to your successes. We also encourage incubatees who have tried but have not yet hit the mark, keep trying. Success comes to those who are willing to face challenges and overcome adversity. There is power in overcoming. Katalyxt continues to provide business solutions for entrepreneurs by assessing resource gaps and encouraging SMEs to find winning solutions. W. Minott
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Determinants of Small Firm GROWTH
By: Winsome Minott
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Life Cycle vs. Personality Factors
n the last ten years, determinants of small firm growth focused on the lifecycle effect (that is, younger small firms grow faster than older small firms). Life cycle and economic variables, especially financial variables, have been sited as critical growth variables. Despite the bias in economic studies described as a continuing allegiance to a model that denies the role of the entrepreneur, this paper argues that this omission results in empirical enquiries that failed to address entrepreneurial characteristics, including motivation, and failed to account for associations between the said variables and their impact on business strategies.
of production to be allocated towards equilibrium”.2 The writer also questions whether this alertness and superior perception is brought about or influenced by personality factors. Questions raised in no way discount the ‘life cycle effect’ that demonstrates that younger businesses grow faster than older businesses.
Like Kirzner, the writer argues “that it is the alertness and the superior perception of the entrepreneurs which causes factors
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Barkham,et al, p.8 Barkham,et al, p.8
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entrepreneurial action, the writer introduces personality factors for testing in a scientific manner.
What it is that allows smaller firms to grow faster in the earlier years? Kirzner argued that it is the characteristics of the entrepreneur, including the motivation, that influence the business factors towards growth and the equilibrium. Nevertheless, the writer understands that when a small business grows and becomes successful, the motivation of the lead entrepreneur may change, because motivation, to overcome new challenges may have diminished. This supports the life cycle effect, that is, younger firms can respond more quickly to change to enter the market and to grow. Is Kirzner’s argument still valid? The writer argues that a shift in production function generates a shift in the equilibrium. Nevertheless, it may be the characteristics of the entrepreneur that bring the factors of production to the new optimum position through empathy, social skills and leadership. The choices made by entrepreneurs resulting in firm strategies, to a large extent may be said to reflect the individual characteristics of the lead entrepreneur and are consistent with Goleman’s theory that “emotional intelligence is central to leadership…getting others to do their jobs effectively”.3 Goleman citing McClelland said that top performers had strengths across five emotional intelligence areas: self-awareness, self regulation, motivation, empathy and social skills. McClelland demonstrates that when competencies across the five areas reached a critical mass, this enabled star performance/ success.4 To adapt McClelland’s findings to 3 4 5
Several researchers agree that determinants of economic growth include: a) growth in the labour force, b) investment in human capital including education and training c) investment in physical capital including factories, machines and transportation, d) technological change resulting in new products, new ways of producing existing products, and new forms of business organizations.5 Discussions which address the supply-side explanations for the re-emergence of smallscale enterprise can ultimately be traced to the characteristics of the entrepreneur, and, of importance in this category, the often ignored inborn and made better qualities. The writer having measured and analyzed associations between variables and growth in an effort to confirm associations between a) growth of small business and select internal variables, b) growth of small businesses: select internal variables including personality factors, c) growth of small businesses: select internal variables including personality factors, and external variables, strongly suggests the further exploration of startups with respect to contributions made to economic stability, growth and development, if developed countries are to progress.
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Goleman, p.32 Goleman,p.37 5 Lipsey and Chrystal, p.634; “ The Development Process” Sir William Arthur Lewis, Collected Papers, vol. III, (1941-1988)
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That it is the alertness and the superior perception of the entrepreneurs which causes factors of production to be allocated towards equilibrium.
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HOW THE DEVELOPMENT BANK OF JAMAICA HELPS BUSINESSES TO GROW
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tarting a business can be daunting. The problems of getting financing, appropriate facilities and equipment, good talent and customers scare many entrepreneurs. But, very often, their innovative and marketable ideas need only a slight push to become viable businesses. With small businesses so vital for growth in any economy it’s usually a nobrainer for governments to lend a helping hand.
order to improve our service delivery,” says Mr. Reynolds.
A chief provider of support to small businesses in Jamaica’s case is the Development Bank of Jamaica. “We believe that the help we give to business, especially MSMEs, is aiding wealth creation, increasing employment and skills, and building the kind of capacity that will make Jamaica a large player in business in the Caribbean,” says Managing Director Milverton Reynolds.
Many of Jamaica’s business success stories have either accessed DBJ’s loans and technical assistance or have benefited from the Bank’s privatisation and public-private partnerships programmes. They well-known companies such as Sanmera Paper Products Limited, Southside Distributors, Jamaica Broilers Group, Mavis Bank Coffee Factory, Jamaica Pegasus Hotel and the Sorrel processing machine, an invention by Oral and Allison Turner.
The DBJ is encouraging entrepreneurs to follow their dreams by making it easy for them to access capital and improve their technical skills. This partnership with startups and established businesses is key to the Bank’s strategy and its stated intention to facilitate a business-friendly ecosystem in Jamaica. “We listen carefully to the ideas and suggestions that we get from local entrepreneurs in
The DBJ’s products and services for businesses are geared towards meeting the needs and challenges of micro, small and medium-sized enterprises (MSMEs). By creating easier access to development financing and for MSMEs to have opportunities to borrow, invest and expand, the DBJ has become a major engine of growth in national development.
For more information contact: Tel: (876)929-4000/619-4000 Fax: (876)920-1944 Website: www.dbankjm.com Facebook: https://www.facebook.com/ TheDevelopmentBankOfJamaica Twitter: https://twitter.com/DBJamaica Instagram: https://www.instagram.com/ dbjamaica
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Marketing and Sponsorship Agreements in Sport By: Marlon Gilbert-Roberts
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port is not just entertainment, it is big business. It is important to treat this business opportunity like any other commercial venture. Stakeholders should enter this arena with professionally drafted agreements. Thoughts for consideration.
it is the sporting entity that achieves the most gains from such commercial agreements. This is particularly the case when funding allows the athlete or team to be able to purchase critical equipment, or to undertake essential travel for participants and support staff.
The FĂŠdĂŠration Internationale de Football Association (FIFA) made approximately $1.5 billion USD from sponsorship deals with 20 major companies during the World Cup in Brazil in 2014 While that is a significant amount, it is still much less than is spent on some sports in the United States of America. In commercial contracts, there are usually implied terms of exclusivity, which protect investments and offer value for money. Agreements between parties, or with any other partners, often have performance targets and include minimum standards clauses. Therefore, even for smaller agreements or sponsorship of individual athletes, the terms of the contract are important to all parties.
Innovation and Development
Value for both Parties While these agreements are usually mutually beneficial, generally there is little doubt that
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In most sports, innovation and development are critical if the team or athlete is to perform at the highest level and to attain the accolades that they train for. Therefore, the support of sponsors is important for more than just capital or cash in hand. Often, sponsors may be able to provide resources which can assist the sport in terms of performance. Perhaps the best example of this is in the fast-paced world of Formula 1 (F1).
A successful F1 team not only requires the best engineers and technical experts; it also requires a lot of money. Sponsors of the sport are able to provide teams with the latest technology and components that will allow teams to thrive and often make the difference between winning and losing. In turn, this kind of sponsorship allows sponsors to showcase their products under tough and difficult conditions and provides valuable research and development data.
Morality Clauses A company or a brand will usually have its own ethos and values. These are sometimes derived from its customer base, or from the leadership of the company itself. Therefore, how the company is perceived by its target audience is important. In sponsorship this is another consideration that successful companies take into account. For example, a product whose main target audience is children under 12 years old, is unlikely to sponsor a boxing event (although it’s not impossible). Not only would it make little commercial sense, but it may turn some parents off from supporting the brand and buying it for their children.
Similarly, teams and athletes need to be aware of the values and expectations of companies or brands who sponsor them. As a result, morality clauses are commonplace in marketing and sponsorship agreements. Such a clause usually requires minimum standards of behaviour or prohibition from particular activities, and can range from what a sponsor may consider immoral behaviour (e.g. Tiger Woods), or cheating/sporting violations (e.g. Lance Armstrong). Certainly, any arrest for a criminal offence or conviction would usually violate
most morality clauses. Therefore, athletes owe a duty to themselves and to their sponsors to ensure their behaviour is above board.
When things go wrong Often in commercial contractual arrangements, there are differences of opinion. When this happens, it is important to have a clear understanding of how, where, and when these should be resolved.
Most sponsorships run their course smoothly; however, because there are so many variables, including many which are out of the control of the parties, it is best to address such possibilities in advance. This may include: bankruptcy, change of ownership, serious illness and inability to perform. Sponsorship contracts should explicitly provide for a dispute resolution mechanism for any breaches of the agreement and make the use of the mechanism mandatory. The use of arbitration in such agreements is commonplace. Critically, resort to litigation through the courts should be kept to a minimum. The nature of sport, particularly for individual athletes, is that a career does not last forever, and litigation can take a long time. Further, litigation through national court systems and the Court of Arbitration for Sport can be very costly and those costs can be prohibitive for some teams, athletes and sporting bodies. In short, careful consideration and professional advice are essential in marketing and sponsorship agreements in sport.
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Whither ZIMBABWE
By: Maureen B.A. Denton, Esq
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or the first time in thirty seven years, the people of Zimbabwe started a New Year (2018) with a new President following the resignation of President Robert Mugabe on November 21, 2017 and the swearing in of Emmerson Mnangagwa on November 24, 2017. President Mugabe had ruled the nation of roughly 16 million since the negotiated independence settlement in 1980, following the liberation war against the white racist, Ian Smith. OPERATION RESTORE LEGACY The surprisingly abrupt and relatively peaceful change of the leader started late in the night of November 14, 2017 when armored vehicles were seen traveling towards the capital, Harare.
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The Defense Force’s actions seem to have taken some of the key protagonists by surprise. In retrospect, however, events over the preceding weeks would seem inevitably to lead to a ‘show down’. Reported actions, such as, the demand by President Mugabe that General Constantino Chiwenga, the head of the Defense Forces, swear allegiance to the First Lady, Grace Mugabe on threat of death; and the firing of Emmerson Mnangagwa, Deputy President, former Minister of Defense and the leading contender to replace President Mugabe; created a confrontation with the armed forces leadership that triggered the unexpected removal of President Mugabe.
General Chiwenga publicly stated, one day prior to the ‘coup’, that the Defense Forces would not hesitate to intervene to protect the revolution and to stop those intending to hijack it. The ‘coup’ came swiftly after the failure of the alleged plot to arrest General Chiwenga on his return from a visit to China. It is reported that the First Lady, the President and members of the G40 were trying to ascertain whether a coup was being planned even as the tanks had already started rolling into Harare. Reports are that the First Lady stated that “No-one will stand for a coup. It cannot happen” as she unsuccessfully attempted to shut down WhatsApp and Twitter. Many are happy to see President Mugabe gone but questions remain around the legitimacy of the military’s actions and what the future holds for the people of Zimbabwe.
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The extent, depth and speed of social, political and economic changes and the response of the international community will determine whether Zimbabwe is on a path to economic growth and inclusive and sustainable development. President Mnangagwa has promised to fight corruption, transform the economy, rebuild relations with the West, protect foreign investors and hold free and fair elections by the constitutionally due date of August 2018. This is an ambitious agenda given the decades of social, political and economic structural deformities. THE ECONOMY With its abundance of natural resources, good agricultural lands, adequate infrastructure, world renowned tourist sites and a welleducated population, Zimbabwe has all the ingredients to quickly re-build its economy, if the right policies are pursued. This was evident when the economy grew significantly during the four year period following the formation of the Government of National Unity in 2009 and the adoption of the United States dollar, South African rand and British pound as the country’s official currencies. GDP went from -16.3% in 2008 to 5.3% in 2009, 11.4% in 2010, 11.9% in 2011 and 10.6% in 2012.
The precipitous decline in the growth of the economy to an anemic 0.7% in 2016 started in late 2012 with talk of the impending national elections which were eventually held in 2013.
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Zimbabwe has all the ingredients to quickly re-build its economy, if the right policies are pursued.
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The victory of ZANU-PF in the 2013 polls further deepened the lack of confidence in the economy by both domestic and international investors. With virtually no new investments coming in, the economy slowly grounded to a halt in the ensuing years, with the country facing a serious liquidity crisis. When President Mnangagwa took over, GDP growth was expected to be negative for 2017, unemployment was at 90%, life expectancy had declined to 49.6 years, corruption was rampant, and customers formed long queues from before daybreak with the hope of being able to withdraw a paltry amount from their bank accounts. Zimbabwe ranked 159 out of 190 on the 2018 World Bank Ease of Doing Business Index. Many of the major retardants to economic growth and inclusive development are endemic in the society. The question, as in other countries, is whether President Mnangagwa will have the political will to pursue and implement substantive reforms and policy changes to create macroeconomic stability, attract foreign investments, revive the economy and address inclusive growth. So far, the Government
has been sending the right signals. It has rescinded significant parts of the Indigenisation and Economic Empowerment Act (the “Indigenisation Act”). It was introduced in 2008 and mandated that new and existing businesses had to be majority (51%) controlled by local Zimbabweans. Its aggressive enforcement since 2013 resulted in several companies pulling out and others withholding further investments. This policy reversal will be welcomed by investors. There are also plans to reform or divest stateowned assets which are non-performing and are a drag on the fiscal purse. It is expanding the command agricultural policy geared at reviving the agricultural sector and addressing food security. President Mnangagwa has started discussions regarding the compensation of white farmers whose lands were confiscated. A new policy has also been implemented whereby existing white farmers will now get 99-year land leases, instead of the 5-year leases under the previous arrangements. While stating categorically that it will not reverse the land reform programme, the new Government is allowing white farmers to enter into partnerships or management arrangements with black farmers for the use of their lands, and also to lease lands for farming.
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Zimbabwe ranked 159 out of 190 on the 2018 World Bank Ease of Doing Business Index.
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While understanding the importance of reviving the agricultural sector, there has to be a keen awareness that access to prime land must be handled adroitly, given that the liberation war was fought over land access and ownership. This painful legacy of British rule remains a racially and politically divisive matter. Historically a race-based approach overlooked the structural support in the form of fertile land, subsidies, financing and technical support given to white farmers and withheld from Black farmers. The issue of the reasonable and fair distribution of land must be separated from the twin myths of the naturally brilliant white farmer and the inherently incompetent Black farmer. To follow such reasoning and simply reinstate white farmers in a privileged position will negate the meaning of the revolutionary struggle and will increase social tensions. CORRUPTION A substantive obstacle to growth in Zimbabwe is the high level of corruption. With a score of 22, Zimbabwe ranks 154 out of 176 on the Corruption Perceptions Index. Corruption is endemic and corrosive, and rooting it out will require meaningful economic growth combined with rigorous oversight and where necessary transparent prosecution. President Mnangagwa has indicated that there will be a zero tolerance approach and announced in his 100 Day Report that dedicated corruption courts has been established in all provinces, and all government ministers have been mandated to declare their assets. Nonetheless, there is the concern that the corruption campaign will serve as a pretext to attack and weaken opponents; a pattern seen in other countries with high levels of corruption. So a crucial test of President Mnangagwa will be whether he goes after both prominent friends and foes. NATIONAL POLITICS On the political front, one question is whether President Mnangagwa will be able to live up to his commitment to ensure credible, free and
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fair elections. The decisive role played by the military in removing President Mugabe gives rise to the question as to whether the military will take the chance of a possible loss at the polls for ZANU; or will they, as has been alleged in the past, do whatever is necessary, to ensure a ZANU-PF victory at the polls. Several former leaders of the defense forces have retired and currently serve in the government, with General Chiwenga now a Vice President. The soldiers are not quite back in the barracks so it is not clear as to what role they will play in the elections. Mnangagwa’s credibility internationally will be burnished or tarnished depending on how the electoral process is managed. There are 75 parties registered to participate in the upcoming elections. The main opposition, the MDC, has been plagued by factionalism that have been further exacerbated by the death of its leader, Morgan Tsvangirai early this year. THE INTERNATIONAL COMMUNITY Lastly we throw into the mix the major players in the international community, the United States, Britain, the European Union, and of course China which has been a long standing ally. Since his ascendancy to the presidency, Mnangagwa has been carefully cultivating the relationship with both the East and the West. As in Jamaica, the Chinese have increasingly become the only major investor in many developing economies. General Chiwenga met with the Chinese Defense Minister, General Chang Wanguan, shortly before the ‘coup’. If the speculation that the ‘coup’ was discussed with the Chinese and no objection was raised, how much support will the Chinese provide to the cash-strapped country?
China did not come to the rescue of the Mugabe regime after the 2013 elections and were in fact angered by the implementation of the Indigenisation Act which negatively impacted its large mining investments in Zimbabwe. As noted above, the new Government has scaled back that law and it is to be noted that within one week of taking office the Government signed loan agreements worth US$230 with China that had been in negotiations since 2013. The western international community undoubtedly welcomed the removal of President Mugabe and their turning a blind eye to the ‘coup’ indicates at a minimum their willingness to give the Mnangagwa government an opportunity to demonstrate its seriousness about its commitments. Notwithstanding, they have reiterated that serious reengagement with Zimbabwe and significant funding will depend on the upcoming elections being credible, free and fair and the implementation of political and economic reforms. Thus, the Government has two challenges: Firstly, on the domestic front, ZANU-PF faces a formidable credibility challenge. They are primarily responsible for the state of the Zimbabwean economy which resulted in untold misery, exile and premature death for many. In 2008, the life expectancy was 38 years. Despite this record, they must convince the electorate to vote for them and not the alliance of opposition parties. Secondly, to demonstrate by its conduct leading up to and on the day of the polls that they have implemented reforms and the elections were conducted free and fairly. This may be a conundrum for the Government. Western countries have in general accepted that sanctions did not seriously impact the leadership but instead contributed to the impoverishment of the lives of the majority of poor Zimbabweans. As such, since 2012 there has been a gradual reduction and in some cases removal of certain sanctions. The IMF and other multilateral agencies have also been reengaging over the last few years, however, a major stumbling block has been the large payment arrears on the debt owed by Zimbabwe to these
agencies, some of which was accumulated by the Ian Smith regime. In a bid to unlock new funding, last year Zimbabwe cleared its 15 years of arrears with the IMF and it has indicated that it will pay off its arrears of US$1.2 billion to the World Bank this year. Since the ‘coup’ Britain has said it could possibly provide a bridging loan to help repay arrears. The EU is however insisting on concrete reforms and credible elections prior to opening the financial spigot. To assist in this area, the EU has provided $17 million to improve justice delivery and strengthen the rule of law.
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In a bid to unlock new funding, last year Zimbabwe cleared its 15 years of arrears with the IMF and it has indicated that it will pay off its arrears of US$1.2 billion to the World Bank this year. THE CROSSROADS
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Zimbabwe is at the proverbial crossroads. The path it takes will depend greatly on both the willingness of the government to implement significant social, political and economic changes and the level and type of support it receives from the international community during these crucial months leading up to the elections. President Mnangagwa came to power with a lot of baggage – he is accused of playing a key role in the massacres in Matabeleland; orchestrating the attacks on opposition supporters in the 2008 elections; supporting and buttressing the Mugabe regime throughout the past decades, including its corrupt practices. At the same time he played a key role in the liberation war and he has now been given yet another opportunity to liberate his country from social, political and economic oppression and stagnation. For the sake of the country, let’s hope he seizes it.
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CAN CULTURE BE MEASURED IN STORIES? Interview with Juliane Schulze, Executive Advisor, Media Deals
By: Stefanie Thomas
The creative sector is a lot about storytelling, amazing stories.
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apturing the creative process, and indeed, capturing culture as a construct to be measured, to be translated, to be made to fit the latest models of sustainability, is often dependent on viable balance sheets and complex statistics. This has left many artists and creatives frustrated, operating in survival mode, and at best remaining constantly challenged to develop the right tools, and to engage with other disciplines. The future of culture and the creative industries, may in fact be dependent on intersectionality. The following quote opens the discussion:
“Doing art and culture in a nurturing environment, one that can harvest the fruits produced by risk is beautiful… Harvesting too early or in a controlled and bureaucratic way dries up the soil, leaving very little to grow in the years to come. This is why hubs, spaces, paradigms, you name it, are important, providing the creative land that artists need to innovate, risk and work.” - Korinna Patelis & Vassilis Charalampidis in article ‘Acting Together’ 2017
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It is the evening of the second day of the annual meeting of the European Creative Hubs Network, a network co-funded through the European Commission’s Creative Europe programme. Over 100 participants from creative hubs all across Europe have gathered for dinner and coctails in the beautiful LaValee campus, located within an industrial area of Brussels, Belgium. The creative hub LaValee is home to over 100 creative industries projects and businesses, providing support for entrepreneurship and various aspects of business development in the creative industries. I am here representing Culture Agora, a wiki platform, a virtual space of what is probably the largest collection of activities, projects, event relevant to the creative industries in Europe. I find myself captivated by a developing conversation centered around the inspirational Keynote speech by David Snowden from UK based, Cognitive Edge, a company that approaches problem solving what its website refers to as “naturalising sensemaking and cognitive complexity”. What follows are insights from Juliane Schulze, Executive Advisor of the German based pan-European investor network Media Deals, who graciously accepted to be interviewed on the topic.
ST: Can you share your reflection on what in the method proposed in Snowden’s keynote was so curious? Juliane: Snowden looks at systemic processes, order and chaos, and tries to find structures and methods within chaotic processes to introduce change. We know creative processes are chaotic by definition, so everything he said applied to the chaotic nature of what’s going in the creative industries, i) how creative people work and ii) how they create value without possibly even noticing that they are creating value. For Hubs (Creative Hubs) that are co-financed by public entities which means, public money, the question arises, how do you report back to
financiers who finance your Hub’s activities. All the hubs are trained to use criteria that are coming from governments, ministries, or departments of ministries, that have their rooting in the Capitalist system and in an economically driven expectation that what you do needs to be quantitative. You have to be able to quantify it, to use numbers, express numbers in spread sheets, add them for a result. Snowden introduced the question, of whether that model actually fits the creative industries and reflects how added value is created in the creative industries. With numbers and spreadsheets and economic driven expectiations, are we able to show what the creative industries actually do and what success stories look like? He mentioned one tool which in my view and personal experience has much to do with the creative industries, that of stories and storytelling. The creative sector is about storytelling no matter if you are a fashion designer, a film maker, an architect, whoever you are, you are a story teller, the games developer, it’s all about stories, amazing stories. Success is about telling a good story.
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Why do we need to report success stories in a sector driven by stories, in numbers, when numbers don’t express anything that the stories actually translate? No numbers can actually express the additional added value of the creative industries. So then, how do you influence communities, how do you have an influence on your friends, your family, how do you change expectations in your immediate community because you open a recycling shop or you introducing something as part of your hub that might speak the language of alternative communities? How do we do that? We cannot. So it seems that the methods we are applying today for reporting success stories in the creative industries are not right for the job, so there is a mismatch between the tools we use, and the stories we need to tell because they are much more complex than the evidence that you can kind of articulate in the spread sheet.
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The creative economy is what it is because it doesn’t only answer economic questions, it has answers many more.
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ST: You are a mentor, and advisor within this Creative Hubs network, and beyond this you are engaged with various stakeholders within the Creative Industries. Can you explain, how this new persepctive may affect your day-to-day internactions, and tell us a bit more about the work of Media Deals? Juliane: So far I’m happily confused, and I feel that a level of uneasiness that always been with me, like a second person in the room, is because of this mismatch, suddenly has a name. As a consultant, as someone who works with investors, with governments and with the entrepreneurs, I am constantly in the transition, translation and reporting process. It is about success stories, it’s about how you measure things, it’s about what is a success and what not, so a matter of definition, it’s a matter of convincing people to buy into certain things and to say I believe in it, I back it, I support it and all these things are a fundamental part of our daily work. Generally Media Deals does a lot of work with how to translate value proposition, which is often not clear to entrepreneurs in the creative industries, cultural and creative industries, because they are so brilliant at doing what they do and they will never call it value preposition, to investors so both sides can understand the other. This involves a lot of training, translating,
mentoring, coaching leading to investment forums where these two parties meet and when creatives pitch to investors. Media Deals also advises local or national governments on certain incentives to stimulate the growth of certain sectors in the country or regions to really create a sustainable. So you could say we have our hands on the clay as much as our heads up in the clouds so between policy and practice, back and forth. The question mark caused by the mismatch of all these routines and established methods and learned ways of how to do things makes them obsolete, which is great because it seems to have shaken the foundation of a belief system that is purely economically driven. The creative economy is what it is because it doesn’t only answer economic questions, it has answers many more. And we do not articulate those, we cannot show those effects today so there is need for action, there is need for a better set of tools, there is need to much better way to define how we assess what the creative industries does in communities and in societies and how they differ from other sectors. So I think this is the key learning, which means the question mark is growing the longer I take, the longer I speak and the answers need to be found so I think it’s a work in progress but substantial work.
FOR
OVERCOMING
SUCCESS
CHALLENGES
By: Damien Williams
Growth Mindset • Failure is life’s redirection. It is an opportunity for you to grow. • I can learn anything that I put my mind towards. • Challenges help me grow. I must embrace them. • My efforts, not just my abilities, determine my success. • Feedback or criticism is good for my growth. • I am inspired by the success of others. • I like to try new and challenging tasks. It is an opportunity to build my capacity. Growth Mindset • • • • We live in a society of inequity and inequality. Many of us, because of the community or family we were born into, began life at a disadvantage. This sort of systemic inequity often present immense challenges towards success for many. Despite these built in societal challenges, success is not impossible. As cliché as it may sound, you can in fact become anything you want to become and succeed at it. Greater is on the inside of you than all that is on the outside, in the world. Your success is dependent on your mindset. Do you have a Growth Mindset? The Growth mindset leads to success because the growth mindset embraces challenges
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Embracing Challenges Nurturing a positive mindset Follows after purpose Leaving the comfort zone
rather than eschew it. You were born into a poor family and that puts you at a disadvantage. So what? That does not remove your ability. Life and God trusted you more than anyone else to be born into that circumstance and manage it and come through even stronger. Use your circumstance as motivation. It means that you will have to work smarter and harder than most but those will be invaluable life skills for you at some point in your life. Challenges have a way of building our capacity. When we embrace them and handle them well, they give us the competitive advantage over those who did not embrace challenges.
life’s challenges because we are convinced that we are working, living for something far greater than ourselves. One is never too young or too old, for that matter, to begin to ask one’s self the most important existential question - “Why am I here?”
Secondly, the Growth mindset nurtures a positive mindset. Success is hardly about talent and mostly about attitude. Attitude check! What is your attitude towards work or any task or to people? Are you negative, belligerent, rude? Then you are headed to a place called “NOWEHERE” very quickly. People will not remember how smart or talented you are but they most certainly will remember if you have been nice and pleasant to work with and they will want to create opportunities for you. Do not under-estimate the virtue and value of being a nice person.
Fourthly, when faced with challenges and feel like giving up, draw inspiration from the success of others. What you feed grows. If you feed your mind on success stories, you will become motivated to continue to strive towards success. The mind is so powerful and can align our thinking and actions to however we have trained it.
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Success is hardly about talent and mostly about attitude.
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Finally, to overcome challenges and become successful, you have to have the growth mindset of moving from your comfort zone. Comfort is highly overrated. Take on tasks and ventures scared as you may be. DO IT SCARED.
Thirdly, many persons measure success by the THINGS people achieve or accumulate. However, the growth mindset is one where one is thinking about living a life of purpose. Each of us has a specific assignment to complete in the earth. The engagement of that assignment is what brings us fulfilment. The pursuit of purpose causes us to push pass
Life has taught me that success is not a destination. It is a journey and that I must celebrate every small step I take in the direction of success because considering where I am coming from, every small step is a revolutionary act of courage and victory. Take that first step and clap yourself!!!
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microbusinesses Towards A Culture of Formalizing in Jamaica
By: Denworth Finnikin
“Classified tax-paying MSMEs account for 97.6% of all classified and registered enterprises in Jamaica.”
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he Ministry of Industry, Commerce, Agriculture and Fisheries, Micro, Small and Medium-sized Enterprise (MSME) account for 90% of jobs in the Jamaican economy. The Government is actively working to implement legislation, policies and initiatives aimed at unlocking the growth potential of the Micro, Small and Medium-sized Enterprise (MSME) sector. Critical to all of this, is the creation of an enabling business environment for MSMEs, and reduction of the impediments they face. This thrust, though led by the Government, also requires support from the private sector. Is the country doing enough to formalize and build capacity in the Micro sector? From pre to post colonialism, micro, small and medium enterprises (MSMEs) have been important drivers of equity, economic growth and sustained development in Jamaica. In Jamaica, there is a robust informal economy, estimated to be 43% of the GDP (IDB, 2006). Measurements by the Statistical Institute of Jamaica (STATIN) in the Labour Force Survey indicate that 412, 950 Jamaicans are categorized as Own Account Workers, that is, they are essentially self-employed and employ no one else on a regular basis in the business activity (STATIN, 2015).
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Informal operators: street side vendors, shopkeepers, higglers etc. will be required to register with the local municipal corporation and must participate in a training programme at least sixteen hours per week in order to be eligible for relicensing.
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These enterprises create and retain wealth, generate employment, and provide the support for private sector growth and expansion. It is estimated that classified tax-paying MSMEs account for 97.6% of all classified and registered enterprises in Jamaica (TAJ, 2015). When this is combined with over 412,000 own-accountworkers (STATIN, 2015) it becomes evident that MSMEs are a significant portion of the Jamaican economy. Despite their economic significance, MSMEs face challenges that hinder growth and development. It is therefore critical and logical, that the Government of Jamaica (GOJ) place MSME development at the forefront of the country’s economic policy agenda. Most of these persons formed a part of the underground economy. Three points that may lead to less informality and position the Micro entrepreneurs to move from underground.
Create a Construction Worker Authority Board (CWAB) the construction sector is impacted by the relatively high levels of informal activity in the Jamaican economy. The challenges posed by the informal sector, including the difficulties in enhancing standards and productivity and gathering economic data and information could be addressed as an important part of the planning for the long-term development of the sector. The need for this policy of Registration and Licensing is essential to formalizing the construction sector. There are inadequate number of experienced professionals and technical staff in certain areas and the lack of enforcement of construction standard and specifications.
sector (with requirements for periodic renewal, requirement for practice, professional development) should improve work ethics and attitudes of the workforce by the introduction of a range of programmes for continuing education for construction professionals and will no doubt strengthen employability skills for skilled workers and supervisors. The CWAB will encourage a culture of entrepreneurship and business enterprise development in the construction sector. Policy regulations should ensure that no worker is allowed to work with any of the contractor without being registered or work on small projects by himself or herself and only registered workers are allowed to perform designated work. Construction workers registration will require all construction workers to be registered as skilled workers or semi-skilled workers of related trade, this aims at enhancing the construction quality standards and career status of construction workers. Introduce a one-off “grandfathering� arrangement for senior workers who possess not less than 10 years relevant working experience to register as registered skilled workers will capture the older and experience persons in the sector. All other skilled workers to be approved for registration must possess at least a National Qualification of Jamaica (NVQJ) certificate or equivalent.
The system of licensing/registration for major categories of professionals in construction
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All workers must complete a 10-hour introduction to safety, prior to registration to be considered for skilled or semi-skilled worker designation. Registration should be valid for a period of five (5) years renewable. Continuous professional development must be a pre requisite for reregistration in the category of skilled worker. The implementation of the Worker Authority Board will ensure that all tradesmen, skilled and unskilled will pay an annual fee that will be used for life insurance, compulsory saving, and management fees for the functioning of the entity and finally a portion will be for tax to support the innovation that is needed to modernize the sector. This system will immediately improve the self-esteem of the own account persons and they now will be able to access loan and other necessary financing. The Board will categorize all restaurants and bars so that the paying of taxes will be simple and equitable. The system to be considered is, if a restaurant/bar has 1 – 5 employees with sales of under 5 million per year, they would only pay a flat tax; there would be no need to hire an accountant and it will remove the uncertainty of being afraid to be visited and audited by the tax authority. The next category would be 6 to 10 employees with annual operating revenue of up to $10M. This would clearly simplify the process of calculating taxes and will put the entrepreneur’s mind at ease because he will know up front the taxes to be paid annually.
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Continuous professional development must be a pre requisite for re- registration in the category of skilled worker.
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Informal operators: street side vendors, shopkeepers, higglers etc. will be required to register with the local municipal corporation and must participate in a training programme at least sixteen hours per week in order to be eligible for relicensing. The training will focus on areas such as managing money, cash flow, budgeting, costing order, marketing, forecasting etc. MSMEs in Jamaica can experience significant growth and development if effective legislations are introduced and monitored. Formalization of the MSME sector is, therefore, seminal to the Jamaican economy and its prospects for sustainable growth and job creation. It has the potential to be a major driver for the development and growth of the private sector, while supporting innovation, competitiveness, wealth creation and social stability. Formalization of the informal sector will results in creating a business class from the under-class. Denworth Finnikin - Workforce development expert and a lecturer at the University of the Commonwealth Caribbean (UCC).
Innovation on Every Street Corner
By: Dr. Grace Mclean
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he International Labour Organization (ILO) (2001), defines TVET as “those aspects of the educational process, involving general education, the study of technologies and related sciences, the acquisition of practical skills, attitudes, understanding and knowledge relating to occupations in various sectors of economic and social lives.� Education and training for productive employment is vital for economic and social development in Jamaica. Technical and Vocational Education and Training (TVET) is viewed as a tool for productivity enhancement and poverty reduction, because there is a strong correlation between the proportion of TVET students at the post-secondary level and per capita income. Jamaica has taken steps to strengthen policy guidance and regulatory frameworks for Technical and Vocational Education and Training and to improve partnerships with private sector and employers. The advancement of TVET
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in Jamaica has realized the development of a National TVET policy; TVET integration model; Curriculum reform; Rationalization of TVET resources in schools; Infusion of career development; Introduction of an apprenticeship programme; Industry collaboration; Work experience programme and National/ International World skills competitions. Holistically, the aforementioned are viewed as dependable tools in imparting a sense of innovation among students coupled with the fact that they are better prepared to respond to the demands of the modern workforce. The Curriculum reform has embraced the marriage of TVET with general education along with the integration of Science, Technology, Engineering and Mathematics (STEM). Within these contexts, students are exposed to the Design Process which is a problem solving strategy. This provides an opportunity for students to investigate and develop an enquiring mind, identify many possible ways of solving a problem, be creative and innovative, employ systematic approaches so that they can become skilled and competent.
The curriculum is designed to transform and stimulate students’ understanding of entrepreneurship and business, as well as promote the development of entrepreneurial skill sets that will result in more youth being better equipped to join the workforce and contribute to the nation’s economic growth. Grade 9 students were specially selected by the MoEYI, as cultivating an entrepreneurial mind-set from as early as age 13 will help students identify the discipline as a career option. Engraining entrepreneurship in the psyche of students at this age can change their view of the world and expand their access to varied opportunities. Frances 2001, defines innovation as “the identification, application and exploitation of a new product, process or marketing opportunity by the business which increases its capability to generate wealth and strengthens its competitive position”. Having garnered the pre-requisite skills students are in a better position to embark on their business prospects, some of which emanated from the experience gained during their secondary education. They must be cognizant of the fact that innovation is one of the key elements within a business and as such the competition for customers and resources have become more and more intense.
We are encouraged to embrace the concept of small businesses on the street corners of Jamaica because they have the power to change the economy in a positive way. A cross-sectional view of the streets of Jamaica show that a significant number of young adults are unskilled and unemployed, however, they continue to flood the streets and engage in
unproductive activities. The street corners of Jamaica provide a prospect for them to be actively engaged and become innovative. Innovation requires the ability to access new information, transform this information into enterprising outcomes while using the relevant processes, procedures and resources to exploit the possible opportunity or opportunities which may arise for further development. It is also likely that the capability of such a business to innovate will change as it grows and develops. There are a myriad of examples that can be referenced and emulated. Some of which include small cook shops, meals on wheels/cart offering a variety of authentic Jamaican food, phone repairs, furniture making, tyre repairs, shoe and upholstery repair and photography services.
Having reviewed what innovation is and its importance to the sustainability of small businesses, it therefore becomes the prerogative of both the public and private sectors to promote and support innovation. It is suggested that fostering and implementing innovation within the small business sectors requires additional interventions on the street corners of the country because the unengaged young adults are prime potential for meaningful employment. Jamaicans are innately creative and innovative, therefore, we are charged to channel these inner skills set in the quest for innovation on the street corners.
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Motivation FOR
GROWTH By: Sandra Dixon
A
frican-American social reformer, pray and raised families in a space that was abolitionist, orator, writer, and affirming and loving. Those were the glues that statesman, Frederick Douglass, held communities and the country together. It made the argument that was not a “fetishizing” of things past and an it is better to raise healthy unwillingness to apprehend what it is new but it children than to mend broken is ensuring that in moving forward, we build on adults. Having been raised in rural Jamaica, a sure and solid foundation of community. I experienced the socializing agents of home, church and school. Those were the foundation The time being referenced was when of creating a well-rounded individual that Jamaica was changing from colonialism to ultimately resulted in the growth of the self governance and there was hope in the community and its people. My encounter at institutions that helped to shape the emerging home was with a mother who encouraged society. The school, like the home and the and modeled communal living, and we were church, inculcated hope and motivated the encouraged to be our young minds to look brother’s keeper. While, “The words ‘inclusive’ and beyond the immediacy as children, we did not ‘safe’ speak to building social of their surroundings have the language and to see the great big to identify the cohesion – the foundation of world as a place for their characteristics we were real growth.” own development and being taught, they contribution towards were certainly being inculcated in us from an making the world a better place. early age. Those aptitudes in the citizens were noticed, encouraged, assisted and celebrated. Today, it seems easy to scoff at such position as idealism. Globalisation has brought with it, For us, then, the people in the community were not just advancement but a dangerous brand valued and had their ascribed roles; therefore of sameness, individualism and materialism. the younger ones were respectful. Their older We have come to expect that development people displayed attributes, which engendered is about the things acquired, at every level, camaraderie and self-respect for the young rather than the people we become. We pursue people to emulate. This form of reciprocal latest technological advancements, while altruism engendered a community which was social interactions become less. Social media cohesive and productive. Productivity produces has made our engagement more virtual than growth –personal, social and economic - which personal, robbing us of the basic skill of being are essential to expansion and exploration of human. We build highways and acquire more greater horizons. vehicles and miss the opportunities to walk pass a man on the street to say a simple greeting For the most part communities was indeed that might save his life. We are in a constant a place where people lived, worked, play, state of movement, yet making no progress.
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The sustainable development goals seems to have picked up on this life hack and realized that will all of the major advancements, that the quality of life is truly at the core of real growth. Goal number 11, which is able engendering sustainable cities and communities, speaks expressly to making cities inclusive, safe, resilient and sustainable. The words ‘inclusive’ and ‘safe’ speak to building social cohesion – the foundation of real growth. It assumes a community or city with all of its citizenry working together to ensure the flourishing of all. This reimagination of communities working together is, in the United Nation’s ideological position, necessary for “sustainable growth”.
out one for another. Families, however they are constructed, need to be given to support by the churches and the schools to motivate children so that they can grow personally. The words of Fredrick Douglass echoes again, “It is better to raise healthy children than to mend broken adults.” Finally, we must be able to measure how we know that we are arriving at our desired outcomes. What are those indicators that will tell us that we are sufficiently on a path towards growth? We will know we are getting there when: • There are stronger family units evidenced by more respectful and disciplined children and less incidences of domestic violence and abuses; • The school and the church are actively engaged in the lives of members of the community beyond the church hall and the classroom; • Communities are safer, evidenced by reduction in crime and violence; • Communities are more caring spaces and fewer people go to bed hungry because more people are neighbourly and sharing amongst themselves;
The chickens have come home to roost, it would appear. The values that we have abandoned in the name of development and advancement are the said values that are encapsulated within that singular sustainable development goal. Yet, that goal does not operate in a silo. It has far reaching direct implications for goal number 2, which seek to end hunger; goal number 5, which seeks to bring about gender equality; goal number 10, which endeavours to reduce inequalities and goal number 16, which is about fostering peace justice and strong institutions.
• When public officials and those in positions of authority are authentic, kind and truthful because those were the values passed down to them by each agent of socialization. I am not looking back in longing but looking forward in anticipation and hope.
While we may know where we are going, how do we get there? We need to return to the foundation. We need for our agents of socialization to be the safe space where children are affirmed, nurtured and motivated to become their best selves; where the embers of their aptitudes are fanned into burning flames and where we teach them how to look
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INFORMATION SECURITY Key Issues and Development Part 3
By: Bruce Scott
This article is part three of a three part feature.
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n today’s Information Age, information is among the most valued assets among companies across the globe. Information is required for the day to day running of businesses and forms the basis on which boards and Senior Managers make critical decisions. Part three will highlight questions and answers.
QA &
The side effects caused by low spending on information security
Q: The absence of information security policies The PwC survey reports that only 27% of UK companies have an information security policy. In Jamaica I would put this to be less than 10% based on my experience. A security policy is the most basic information security discipline, which signals one of the most elementary commitments towards information security. The evidence in Jamaica suggests that the presence of low information security spending is not always as a result of directors and senior management not wanting to spend money, but because the IT Manager’s budgets do not include any spending in this area. But why?
Many IT managers are not always as aware of the information security issues as they should be. I know IT Managers who have made requests for money to develop policies and they have been rejected but there are some who have not even realised the need to make the request to the Board. Also, in Jamaica, the time has long come upon us where directors and senior managers now need to start asking piercing questions to their IT folks about their plans for information security!
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Q:
Employees not understanding their responsibilities about information security
the one just described must have adequate information security controls to reduce the risk of information security violations.
In the PwC survey only 28% of UK firms provide formal security awareness sessions to employees when they join the firms or during employment. This is a very low statistic for such an important area! The survey also went on to say that many times companies implement expensive high tech systems with no commensurate training for security related issues for the staff who will be interacting with these systems. Many times we see companies with firewalls and the company’s Security Administrator does not understand the security features within the firewall. Invariably, a third party company is hired to install the firewall, however the IT staff are not always trained in how to configure the firewall and how to monitor security violations on the firewall when they occur. Most times the focus of expensive system implementation is meeting the implementation deadline with not much consideration for the information security implications on end users. Important IT processes that ignore basic
Q: information security rules
Making changes to important computer programs that handle sales, deposits etc represent one of the most important IT processes that is performed in a company. However, the evidence suggests that more often than not, for many major companies in Jamaica computer programmers are able to do almost anything with important computer programs with no sense of alarm or formal risk acceptance by the Board or senior management. But this is not only a Jamaican problem, only 53% of UK businesses have this very basic control (which is much better than Jamaica’s). All key IT processes, such as
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Q:
Computer security configurations that are not secure This area refers to the perennial problem where we constantly see very poor configuration of the security parameters in company’s computer systems. In Jamaica we constantly see weak configurations such as: • No requirement for all users to have passwords • The system not being configured to track and record security violations • Ex-employees which are still defined on the company’s computer system
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Hacking moved from 4% in 2000 to 14% in 2002.
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Weak computer security configuration is the leading cause of most computer security incidents and hence one of the most expensive areas of losses for companies who suffer computer security violations according to the PwC survey. The survey revealed that: 43% of UK business say: “Most security incidents could have been prevented by better system configuration.� The security incidents that were most prominent in the UK are:
vulnerabilities – so be prepared. Many of the vulnerabilities that hackers exploit during their hacking can be simply blocked by the IT staff promptly updating the latest system patch from software vendors for known vulnerabilities. Ironically however, many times these patches are not implemented. Some time ago, a large company in Jamaica suffered an expensive virus attack because of a virus that came through the internet.
Virus attacks
Inappropriate use of internet
The survey revealed that virus attacks, which lead to significant IT system downtime, rose from 16% in 2000 to over 41% in 2002 and that virus attacks represent the most common security incident. 33% say virus attacks are their worse incidents. These findings are consistent with our observations in Jamaica.
Distribution of inappropriate material and inappropriate use of email and website moved from 8% (2000) to 11% in 2002. Simple configurations within the firewall can block people from going to certain inappropriate sites and from accessing certain email services (e.g. yahoo and hotmail). However, we still see many firewalls in Jamaica that are not properly configured and the number of security incidents continue to mount.
Web site hacking Hacking moved from 4% in 2000 to 14% in 2002. This is especially important to those persons who conduct e-business activities whether business-to-business or business to customer and therefore must ensure that their internet technology is secure. Hackers scan sites every day looking for known security
This paper was written by Bruce L Scott FCA, FCCA, CISA, MBA. Bruce Scott is a partner at PricewaterhouseCoopers. He can be contacted at 876-932-8335 or bruce.scott@ jm.pwc.com
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FINANCIAL COST ACCOUNTING
A
By: Dalma James
ccounting is the recording and analysis of financial transactions. How these are recorded and analyzed are influenced by the needs of the users of such information. Let us look at some of the users of accounting information and the reasons they may need such information: -
USERS
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SOME USES
1. Management
Determine efficiency, profitability, control allocation of resources, planning.
2. Government
Taxation, National Production, Growth effect of certain policies, employment.
3. Employees
Productivity, Fairness of distribution, Stability of the entity.
4. Investors
Return on investment, risk profile of Company, managements ’skill and reliability.
5. Financial Institutions
Cash Generating capacity and the risk associated with debt servicing.
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COST ACCOUNTING In cost accounting the information is recorded and analyzed to provide management with the cost of products and services and to assist management exercising control of the business and in the allocation of resources. With cost accounting, one usually prepares reports at a much higher level of detail than in general purpose accounting. It may include reports on: - Individual product - Individual product line - Geographical areas - Customers - Subsidiaries - Product Cost: • Raw Material • Work in progress • Finished goods There is no regulatory framework for cost accounting. It is structured to meet the needs of management. The information in cost accounting reports are mainly financial but may contain operational information derived from outside of the accounting system. Systems such as production, procurement, and distribution may be drawn into cost reports. In most accounting literature you will find cost and management accounting used in the same sentence. This is due to the close link between cost accounting described above and management accounting which deals with the provision of information to assist the management of the company in decision making and feedback. In summary financial accounting is focused on reporting financial information to the outside party while cost accounting is inward focused on management’s needs for control and making good decisions.
We can examine some of the common issues we face in cost accounting: (a) Classification of costs (fixed/variable) (i) Costs may be classified as fixed or variable. Variable costs are those costs which change with the level of sales or production such as materials, labour. Fixed cost on the other hand does not change with the level of output (within certain bands that is). The salary of the plant manager and the depreciation of the plant are typical examples of fixed costs. (ii) Another common classification is direct and indirect cost. Direct costs refer to the cost of inputs which become an integral part of the product: materials and labour. Indirect costs are those costs which are necessary for the production of the output, but are not directly attributable to each unit of production. Plant and machinery usually fall in this category.
nancial accounting is “Fifocused on reporting
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(b) Marginal Cost This is the cost of producing the last item. One would not want to be operating at a level where the selling price is not high enough to cover the marginal cost of item. (c) Break Even This is the level of sale at which the business neither makes a loss nor a profit. The importance of this to management is that it indicates a level of production/sales below which the business will be incurring a loss. (d) Method of Cost Allocation For direct labour, raw materials it is easy to determine the cost of such inputs. Costs such as electricity, supervisory labour and rent cannot be directly attributable to a unit of output, so some mechanism is required to associate such costs to the products. The most common mechanisms are: i. Based on units produced in the period ii. Based on time spent on the product iii. A standard rate or cost based on budgeted expenditure and levels of production.
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CONCLUSION When we look at the purpose served by both financial and cost accounting, it is clear that cost accounting should be at the center of any business accounting system. It is easy to draw financial accounting information from a wellstructured cost accounting base; but difficult if not impossible to draw proper cost accounting information from an accounting system designed only to provide financial accounting information. Your cost accounting should be your first consideration when setting up your accounting system. Much thought should go into setting up your accounting system so that it may produce the costing information you need to manage your business. Generally, a properly designed costing system will produce the information needed for the preparation of financial statements, but the converse is not so in most cases. It is wise to consult with a cost accountant before you invest in your accounting system. If you are already up and running a review of your system by an accountant with the necessary skills is highly recommended.
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