eGlobal Noviembre

Estimado socio, Nuestro producto eGlobal INCP presenta noticias internacionales relevantes para la profesión a nivel global. Todos los artículos son difundidos en su idioma de origen; para filtrar por interés hemos traducido los títulos pero al leerlos en su totalidad los encontrará ya sea en inglés o en español. Para garantizar la recepción de estos correos en su bandeja de entrada, favor agregar este correo electrónico (comunicaciones@incp. org.co) en su lista de correos deseados.

Contable Nuevas reglas globales de contabilidad para arrendamientos podrían empezar a partir del 2019 Parece que las nuevas reglas de contabilidad para arrendamientos entrarán en efecto a principios del 2019 y de acuerdo con los lineamientos decididos por los creadores de las normas cuando se revisaron asuntos importantes en marzo de este año. Los arrendamientos operativos, que actualmente se encuentran fuera del estado de situación financiera del arrendatario, tendrán que capitalizarse bajo las nuevas reglas [...]

Resumen de la adopción de las NIIF en la ASEAN — Parte Uno En la primera entrega de esta serie de tres partes sobre la información financiera en la Asociación de Naciones del Sudeste Asiático, ASEAN Briefing describe el estado de implementación de las NIIF en dos de las economías más capitalizadas de la región: Singapur y Malasia. Las Normas Internacionales de Información Financiera, [...]

Los múltiples beneficios de las NIIF La contabilidad creativa ha llevado a la quiebra con los años a grandes corporaciones alrededor del mundo. En el 2005, tras un escándalo el año anterior por seguros y fondos de inversión colectivos, AIG fue investigada por fraude contable. Como resultado del escándalo, la compañía perdió capitalización en el mercado por aproximadamente 45 mil millones de USD. Las investigaciones también […]

Marco de las NIIF: Diferenciación entre las pérdidas por deterioro y las provisiones Desde la adopción de las Normas Internacionales de Información Financiera (NIIF), los preparadores de estados financieros acá en Brasil, y me atrevo a especular que en otros países que han adoptado las NIIF, han estado usando mal la palabra provisión. Muchos han seguido usándola de la misma manera que antes de las NIIF: es decir [...]

La nueva norma de reconocimiento de ingresos requiere mucha preparación tecnológica

Los estados financieros no son únicamente un «asunto de cumplimiento», afirma el IASB

El Consejo de Normas de Contabilidad Financiera de los Estados Unidos y el Consejo de Normas Internacionales de Contabilidad han pospuesto la fecha de entrada en vigencia de su norma conjunta de reconocimiento de ingresos por un año, pero las compañías necesitarán más tiempo para ajustar sus sistemas [...]

El Consejo Internacional de Normas de Información Financiera (IASB, por sus siglas en inglés), ha publicado un proyecto de directriz que busca ayudar a las corporaciones a evitar errores en sus estados financieros. La directriz, expuesta en forma de borrador de declaración de prácticas, ha sido desarrollada en respuesta a las preocupaciones que la gerencia está remitiendo sin necesidad a [...]

El IASB busca ayudar a la gerencia a entender la importancia relativa El IASB, como organismo emisor de normas, ha publicado un proyecto de directriz para ayudar a la gerencia a determinar si la información es de importancia relativa.

Como parte de la iniciativa más amplia del IASB por mejorar las divulgaciones, el proyecto de directriz se ha desarrollado en respuesta a preocupaciones porque, a menudo, los gerentes no saben cómo aplicar [...]

Riesgo Control Interno Mantener el riesgo a raya en medio de la incertidumbre

Impedir el riesgo mediante un marco adecuado de control interno

En un entorno volátil, cada vez es más necesario que la profesión contable lleve la delantera en cuanto a tecnología. A medida que el entorno económico global se hace más incierto y complejo, los negocios necesitan construir sistemas de gestión del riesgo robustos para evitar el estrés financiero y [...]

Ahora que se acerca la auditoría de fin de año, es el momento para que las compañías observen cuidadosamente uno de los relativamente nuevos problemas en las auditorías corporativas —los controles de TIC y ciberseguridad—, con el fin de asegurar que la conversación apunte apropiadamente al riesgo. Sin duda, los auditores externos estarán revisando los controles de TIC [...]

Las tarifas de auditoría aumentan más rápidamente en compañías más riesgosas Cuánto paga una compañía a su auditor depende de lo bien que se cuide de fraudes y errores en la información. Las firmas con controles poco efectivos sobre sus informes financieros tienden a pagar más que aquellas que hacen un mejor trabajo, de acuerdo con un informe de la Fundación para la Investigación [...]

Utilizar el Marco del COSO para mitigar el riesgo cibernético El riesgo cibernético no se puede evitar, pero se puede gestionar mejor mediante un diseño y una implementación cuidadosos de los controles apropiados. Si se usa el marco de control interno del Comité de Organizaciones Patrocinadoras de la Comisión Treadway (COSO, por sus siglas en inglés) como guía, las organizaciones pueden construir [...]

Gestión Financiera

Sostenibilidad El punto de vista ejecutivo sobre la sostenibilidad

Nueva guía ofrece consejos para construir programa de sostenibilidad

A los conductores se les recuerda su punto ciego para alertarlos sobre las limitaciones de su vista. Todos los ejecutivos están de acuerdo con los beneficios de la sostenibilidad y concuerdan en que una buena ciudadanía corporativa mejora el resultado financiero. Muchos de ellos coinciden en que la sostenibilidad debería ser una prioridad.

Así, parece ser un concepto [...]

Si necesita ayuda para conseguir apoyo a los intentos de sostenibilidad en su compañía, querrá echar un vistazo a la Guía Rápida «Sustainability 101» de la Iniciativa Global para la Gestión Ambiental (GEMI, por sus siglas en inglés). La guía ofrece un panorama amplio sobre la manera en que las compañías están creando valor para su negocio hoy en día, a partir de [...]

La relación entre la inclusión y la estabilidad financiera

7 preguntas que darán forma al futuro de la sostenibilidad

¿Cual es el rol de Recursos Humanos en una estrategia de sostenibilidad?

La motivación por la inclusión financiera ha adquirido un papel protagónico en las economías en vías de desarrollo, particularmente en los últimos 20 años. Las naciones del G20, así como instituciones para el desarrollo internacional como el Banco Mundial, están evaluando el proceso a través de sus muchos programas y ramas y han apoyado la inclusión financiera como [...]

La globalización, el cambio climático y las macrotendencias tecnológicas están cambiando el cálculo sobre asuntos de sostenibilidad. Es un desafío para todos: ¿en dónde debo enfocar mis esfuerzos? ¿Qué vale la pena intentar ahora, y para qué necesito prepararme? Para responder estas preguntas, debe buscar lo que está cambiando en [...]

En la medida en que más organizaciones implementan iniciativas de responsabilidad social empresarial (RSE), muchos profesionales en RRHH prodrían preguntarse cómo es posible adoptar y operativizar una estrategia de sostenibilidad en su cultura organizacional. De acuerdo con Jacquie Fegent McGeachie, directora de asuntos públicos […]

Financiación para PYMES: Por qué la preparación es la clave - Comentario de Investec

3 maneras en que las PYMES pueden reducir la complejidad en sus departamentos financieros

Durante los últimos seis o siete años ha habido un refrán relativamente común sobre la dificultad de los negocios pequeños para conseguir financiación. A mí nunca me ha convencido ese punto de vista. El caso es que, debido a las limitaciones de capital y los recortes de nómina, los días en que una compañía simplemente podía llamar a un banco y acordar automáticamente un [...]

Debido al poco acceso a los recursos financieros y a las aún menores cantidades de tiempo, las pequeñas y medianas empresas (PYMES) pueden tener dificultades para producir a tiempo cálculos financieros precisos y valiosos. De acuerdo con Chris Meyers, colaborador de Forbes, este hecho puede atribuirse al «Desafío del 90%», es decir que [...]

10 maneras para que su negocio tenga la oportunidad de ser longevo Todos escuchan hablar de negocios que se extinguen rápidamente, ¿pero qué pasa con los que han resistido la prueba del tiempo? Muchos negocios fracasan en sus primeros años de operación, pero algunos prosperan y sobreviven por generaciones. ¿Qué podemos aprender de las compañías que siguen siendo relevantes después de años [...]

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New global lease accounting rules likely to commence from 2019 It now seems likely that the coming new lease accounting rules will take effect as from the beginning of 2019, and on the lines decided by the standard setters when the major issues were last reviewed in March this year. Operating leases, currently off-balance-sheet to the lessee, will have to be capitalized under the new rules.

However, following an earlier deadlock between the two standard setting bodies there will be divergence as between international financial reporting standards (IFRS) and US GAAP in the profit and loss account treatment of these leases.

In IFRS they will be expensed on a front loaded basis and split between interest and amortization amounts as with current finance leases. In US GAAP, operating leases

will continue to be expensed on a straight line basis, and presented as a single rental expense.

The International Accounting Standards Board (IASB) will shortly be deciding the start date of the new rules within IFRS. Its staff report recommends that the new standard should in general become binding for accounting periods starting on or after January 1 2019.

However, for SME lessees subject to IFRS, and in some jurisdictions for all those who are not public listed companies, the effective start date could be later, probably not until January 1, 2022. It may take until then to incorporate the new leasing rules into the separate IFRS SMEs accounting standard which (depending on varying national legislation) SMEs or other unlisted

companies may be permitted to use in place of the main IFRS standards. Indeed until the next general review of IFRS SMEs it is not certain that the new leasing rules will ultimately be incorporated into it, though this does seem probable.

The US Financial Accounting Standards Board (FASB) will be deciding next month on the start date for the new lease accounting rules in US GAAP. It may concur with the likely IFRS start date of 2019, with perhaps an extra year to be allowed for unlisted companies.

In their final forms the IFRS and US GAAP versions of the new lease accounting standard are likely to be published before the end of this year. This month the two Boards separately are reviewing some final “sweep-up� issues requiring further

decisions that emerged during the drafting process over recent months. Most of these are of relatively minor importance. The IASB will be considering four of these issues shortly, of which seemingly the most important for equipment leasing concerns a possible requirement for periodic updating of the discount rate in accounting for leases subject to interest rate variations.

As agreed by the Boards earlier, the accounting rules for lessors will be very little changed compared with the existing position. Lessors will nevertheless be concerned with the far reaching implications for their customers of the changes in lessee accounting.

Sorce: Asset Finance International - By Andy Thompson legal and regulatory editor

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An overview of IFRS adoption in ASEAN – Part One In part one of this three part series on financial reporting within the Association of South East Asian Nations, ASEAN Briefing outlines the state of IFRS implementation in two of the regions most capitalized economies – Singapore and Malaysia.

International Financial Reporting Standards, known commonly by their acronym IFRS, are a product of the International Accounting Standard Board (IASB) and help to harmonize basic guidelines on financial reporting throughout the world. By adopting this common language, countries place themselves at a competitive advantage for investment by cutting down on due diligence and reducing compliance costs.

Although regional bodies such as the ASEAN Federation of Accountants (AFA) have made ground in standardizing accounting practices within the region, a fully harmonized system of accounting has yet to emerge.

Singapore Under the auspices of the Singapore Accounting Standards Council (ASC), Singapore Financial Reporting Standards (SFRS) guide reporting within the city state. These standards are closely modeled after IFRS, and in general only lag IFRS standards by

sia is carried out by the Malaysian Accounting Standards Board (MASB) and codified in Malaysian Financial Reporting Standards (MFRS) via the MFRS Framework. As of 2012, MFRS have been word-for-word in agreement with existing standards set by the IASB. As part of the MFRS Framework, the MASB will continue to update MFRS to mirror relevant changes in International Financial Reporting Standards. Recent MFRS alterations made by the Malaysian Accounting Standards Board pursuant to the MFRS Framework include:

three months. However, there are a few key exceptions outlined below.

Although understanding SFRS will be critical for many investors, it is important to note that accommodations made by regulators allow for IFRS to be substituted for SFRS in two cases: 1. The company in question is also listed on another stock exchange outside of Singapore that requires IFRS financial statements.

2. An exemption is granted by Authorities.

In the event that a foreign listing mandating IFRS reporting cannot be established and an exemption is not procured, the following differences between SFRS and IFRS – laid out by the International Financial Standards Association – should be noted: • The following effective IFRS is yet to be adopted as SFRS: IFRIC 2 (Members’ Shares in Co-operative Entities and Similar Instruments).

IFRS & Malaysian Financial Reporting Standards (MFRS) Regulation of financial reporting in Malay-

• Adoption of MFRS 15 Revenue from Contracts with Customers, effective for annual periods beginning on or after 1 January 2017.

• Amendments to MFRS-116 and MFRS 141 – dealing with Agriculture and Bearer Plants in particular – which will be effective for annual periods beginning on or after 1 January 2016.

While IFRS have been transposed into Malaysian Standards and required since January 2012, authorities have made accommodations for certain “transitioning entities” – Agriculture (MFRS 141) and Construction of Real Estate (IC 15) – which have been, or are soon thought to be, affected by MFRS updates. To allow

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An overview of IFRS adoption in ASEAN – Part One transitioning entities time to effectively prepare and comply with newly established financial reporting standards, the MASB has set January 1st, 2017 as the deadline for transitioning entity migration to MFRS. With regard to all entities preparing financial statements in compliance with the MFRS, the MASB has also set in place a requirement that these statements include an “explicit and unreserved statement of compliance with IFRS.”

dards Board issued accounting guidelines for Small and Medium Sized Enterprises through the establishment of Malaysian Private Entities Reporting Standards (MPERS). While these standards are largely taken word-for-word from IFRS for SMEs, certain areas of divergence are observed:

FRS for SME’s & Malaysian Private Entities Reporting Standards (MPERS)

• Section 1 (Small and Medium-sized Entities): modified to prescribe the applicability of the MPERS in the Malaysian context. In this regard, all references to “SMEs” and “public accountability” in Sections 1-35 have been replaced by the term “private entities”.

In 2014 the Malaysian Accounting Stan-

• Section 9 (Consolidated and Separa-

te Financial Statements): requires the ultimate Malaysian parent to prepare consolidated financial statements regardless of whether its ultimate parent that is not incorporated in Malaysia prepared consolidated financial statements.

• Section 29 (Income Taxes): revised to incorporate the principles in IAS 12 Income Taxes and the content therein is based on the income tax chapter in IASB ED/2013/9 IFRS for SMEs issued in October 2013 • Section 34 (Specialized Activities): amended to provide guidance on the accounting for property deve-

lopment activities in Malaysia. Consequently, Example 12 on Agreements for the Construction of Real Estate contained in the Appendix to Section 23 Revenue has been removed.

IFRS compliance in ASEAN With a diverse range of financial reporting standards, all at varying stages of cohesion with IFRS, it is recommended that those interested in establishing operations in ASEAN or expanding throughout the region fully comprehend relevant compliance requirements.

Source: Asean Briefing – By Dezan Shira & Associates

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The many benefits of IFRS “overstatements” in its accounts, which according to it, spanned many years. Consequently, more than 300 shareholders sued the board of Cadbury Nigeria and its auditor for breach of duty.

Creative accounting has over the years led to the fall of major corporations the world over. In 2005, after a scandal on insurance and mutual funds the year before, AIG was investigated for accounting fraud. As a result of the scandal, the company lost over $45 billion worth of market capitalisation.

Investigations also revealed over $1billion worth of errors in accounting transactions.

The investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. A similar development occurred in Nigeria in October 2006, when the board of Cadbury Nigeria Plc notified the world, including its shareholders and regulatory bodies of the discovery of

It was alleged that the shareholders suffered huge losses due to deliberate overstatement of Cadbury Nigeria’s financial position over a number of years to the tune of N15 billion ($122 million). Also, at some point, Federal Government of Nigeria sacked two accounting firms responsible for certifying fuel subsidy claims by marketers. Sacked were Akintola Williams and Co and Adekanola and Co. The crisis in the Nigerian banking space that led to the removal of several chief executives and the near collapse of the capital market is still very fresh in our minds.

Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates.

A time for change To check this ugly trend, governments around the world have since embraced the International Financial Reporting Standards (IFRS) and every Nigerian company has been mandated to comply as well. Actually, Nigeria started considering adopting IFRS in 2007. In fact, the Central Bank of Nigeria (CBN) disclosed that banks should adopt IFRS from 2008 while the Securities and Exchange Commission (SEC) advertised it 2009.

IFRS are accounting standards issued by the International Accounting Standards Board (IASB), an independent organisation registered in the United States of America (UAS) but based in London, United Kingdom. They pronounce financial reporting standards that ideally would apply equally to financial reporting by public interest entities worldwide.

Between 1973 and 2000, international standards were issued by the IASB’s predecessor organisation, the International Accounting Standards Committee (IASC), a body established in 1973 by the professional accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico, Netherlands, United Kingdom and Ireland, and the U.S. During that period, the IASC’s pronouncements

were described as “International Accounting Standards” (IAS). Since April 2001, this rule-making function has been taken over by a newly constituted IASB. The IASB describes its pronouncements under the label “International Financial Reporting Standards” (IFRS), though it continues to recognise (accept as legitimate and adopted by them) the IAS issued by the defunct IASC. The IASB is better-funded, better-staffed and more independent than its predecessor, the IASC. Meanwhile, experts believe Nigeria needed to join the rest of the world because there are growing evidence that the world economies are even more interconnected and symbiotic than anyone really understood.

“Judging from the global financial crisis, it is obvious to all now that nations have strained the present system of differential national accounting standards to its limit. Nations that are truly desirous of moving forward are now aiming to free their countries from the limits of the present system,” said Jim Obazee, Executive Secretary/Chief Executive Officer Financial Reporting Council.

Speaking at a forum put together by Capital Market Correspondent Association of

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The many benefits of IFRS Nigeria (CAMCAN), Obazee stressed that the implementation of IFRS, as observed by world accounting standards setters, would reduce information asymmetry and subsequently smooth the communication between managers, shareholders, lenders and other interested parties, resulting in lower agency costs.

“Lower information asymmetry would also lead to lower costs of equity and debt financing. The benefits of implementing IFRS include higher comparability, lower transaction costs and greater international investment. IFRS also assist investors in making informed financial decisions and predictions of entity’s future financial performance and give a signal of higher quality accounting and transparency. Therefore, IFRS would tend to reduce earnings manipulation, enhance stock market efficiency and positively impact on entity’s’ stock returns and stock related financial performance measures,” he said.

Implication for the capital market Obazee added that the implications of IFRS implementation on the Nigerian Capital market will present themselves in several forms.

He said: “Assurances shall be evidence in

more significant public interest entities will list in the capital market because of enhanced disclosures.”

Entities, he added, are expected to learn certain lessons that can lead to a successful IFRS conversion process.

“The following issues, if not properly addressed during the conversion process and design of IFRS implementation strategies by adopters who are players in the Nigerian capital market, may lead them to produce numbers instead of economic information. These are:

areas such as costs of capital and market integrity, implied cost of equity capital, the price impact of trades and the frequency of zero-return days. In the European Union, entities that adopted IFRS in 2005, found some evidence that the cost of capital was lower for all firms reporting under IFRS. “Their liquidity proxies provided stranger results that were robust across different benchmarks, the findings for the price impact of trades and for the frequency of zero-return days suggested improvements in market liquidity after IFRS reporting became mandatory. They also observed

that the results for their bid-ask spread improved marginally. I am convinced that the Nigerian experience will show better results because of learning curve advantage.”

He added: Major implications can be classified as follows: increased interest of foreign direct investors, alternative enforcement environment as a result of legislative changes, late supporters may throw up wrong positions and give numbers instead of economic information, restatement may lead to punishment from investors leading to lower share prices and

Management buy-in, Tone at the top/ Board sponsorship, knowing that it is not just a corporate level exercise and not under estimating the amount of work involved, establishment of a strong project management office and not underestimating the scale and complexity of conversion and time frame needed,” he said.

He stated that those expected to adopt IFRS must note that they are expected to come up with a methodical approach to reviewing accounting differences by assessing the financial implications of converting to IFRS. Source: This Day Live

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New revenue recognition standard requires lots of tech preparation need to use under the new revenue recognition model and then making sure the data is coming from systems that you can rely on, particularly SOX 404-compliant systems.”

The Financial Accounting Standards Board and the International Accounting Standards Board have delayed the effective date of their converged revenue recognition standard for a year, but companies are going to need the extra time to get their systems adjusted.

PricewaterhouseCoopers recently issued a report on the technology and process implications of the new standard.

“Our first piece of advice is to start early,” said PwC risk assurance emerging solu-

tions leader Shawn Panson. “The point of the paper is that we really believe this is not just an accounting exercise. It goes beyond accounting into the processes and some other core business functions, such as legal. We think the implementation of the standard has a lot more depth than some people are acknowledging.”

Among the problem areas are data. “There are many new and different uses of data sources,” Panson noted. “That’s one part of the assessment—understanding your data, understanding what data you’re going to

On top of the data perspective is looking at revenue recognition from a systems perspective. “There will need to be either upgrades to revenue or order-to-cash systems or implementation of some niche revenue software providers,” said Panson.”They have software that helps you do what today is called ‘multi-element accounting,’ and in the future will be determining your deliverables and figuring out standalone selling prices. We’re definitely seeing in-house systems for where you’re getting your data from and then the potential need to upgrade accounting and revenue-related systems to comply with the new standard.”

PwC is helping its business clients with vendor analysis and vendor selection, but none of the systems appear to be completely ready to handle the new and still-evolving standard.

“I think many of the major ERP providers as well as some of the niche revenue software providers are still in development stage,” said Panson. “We see some early

modules coming out, but I think that’s one of the continuing challenges—really understanding the full depth and capabilities of these systems that are coming out. It is a challenge because I’d say they’re not at full availability today. That’s another challenge in assessing what the right system may be for each company.”

Besides pushing back the effective date for the new standard, FASB and the IASB set up a joint Transition Advisory Group that has been asking for additional guidance and amendments to help companies implement the new standard. In response, the two standard-setting boards are still tinkering with the standard, which was supposedly finalized over a year ago.

Vendors are planning to release their software in time for companies’ fiscal year 2016. “We do see a lot of expected releases in fiscal ’16,” said Panson. “There should be enough time, but we’re advising companies not to start their vendor selection at that point. The vendors are talking about what the capabilities will be, and I think it’s important for companies to do that assessment now, understanding that implementation won’t happen until maybe ’16.”

One aspect of the standard is it requires companies to have some historical data on

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New revenue recognition standard requires lots of tech preparation hand to compare their revenue, using either a full retrospective method or a modified retrospective method of adoption.

“It’s important for companies to do the analysis now and make the decision on which method they want to go with,” said Panson. “From a systems consideration they will be essentially running two systems at the same time for a period of time because they’ll need to report under old GAAP as well as have the data and be able to report upon adoption under new GAAP. There will be overlapping periods where they’re going to essentially need to be

running dual systems to track under both forms of GAAP. When people think about waiting until the year of implementation that would be a major challenge because both methods of adoption require you to have historical data. It’s just a matter of how much and how far back it goes. There’s a lot of work to be done.”

PwC is also recommending that companies use project management to handle the transition.

“We continue to preach that as vital for companies’ success, having a really ex-

perienced project management office in getting this done,” said Panson. “If it were just purely the accountants, I don’t think that would be as necessary, but the intersection with the order-to-cash folks and legal—with so many different departments and every business unit—it really requires detailed project management.”

To help with the transition, PwC has developed a set of tools called GAAP Accelerator 2.0 that companies can use for project management. “It’s got an integrated survey tool,” said Panson. “It’s not an accounting

system, but it’s a suite of tools that help companies with the implementation and the assessment phases.”

The main message from PwC is that companies shouldn’t wait to get started on the transition. “It’s bigger than a lot of people believe, and I think those who have gotten started have found that out in a meaningful way,” said Panson. “We’re advising companies to get going and really get into the details of the assessment because it’s a far-reaching standard.”

Source: Accounting Today – By Michael Cohn

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Inside the IFRS framework: Differentiating impairment losses from provisions Ever since the adoption of International Financial Reporting Standards (IFRS), preparers of financial statements here in Brazil, and dare I speculate in other countries that have adopted IFRS, have been misused the word provision. Many continue to use the word in the same way they did before IFRS: that is, used in the context of doubtful debts, obsolete and slow-moving inventories and losses on investments for example. Whenever I venture to discuss this issue, I am usually accused of being too zealous or a perfectionist, in my strenuous efforts to apply IFRS. In this article, I will aim to stress the conceptual difference between impairment losses and provisions—and hopefully convince you that there is a significant difference that is worth acknowledging. And, thus there is method in my apparent madness.

The concept of impairment losses before and after IFRS The onset of IFRS challenged us, as accountants, to embrace the concept of impairment as something that applies to all assets—all perhaps with the exception of cash. Impairment is now a concept intimately and definitively attached to almost every asset measured at cost or depreciated/amortized cost.

Before IFRS, this concept was limited almost exclusively to trade accounts receivable and

obsolete or slow-moving inventories. The terms allowance for doubtful accounts and provision for obsolete inventories have been in our vocabularies for decades—at least those of us trained in the days before IFRS was born.

the same customer, likely facing financial difficulties, might very well be doubtful in connection with amounts owed at a date in the future was completely ignored. Similarly, inventory was the object of same rationale.

Still talking about the past—before IFRS— preparers of financial statements usually understood and applied those concepts by looking in the rearview mirror only. Take accounts receivable, for example: if a debtor had several amounts outstanding, the concept of doubtful was only applied to those amounts overdue. The fact that

Impairment Assets versus Provisions a) Impairment The concept of impairment of assets, clearly introduced in IFRS and, specifically in IAS 36, refers to the amount by which the carrying amount of an asset (or a cash-ge-

nerating unit or group of assets) exceeds its recoverable amount. This concept reflects business reality. An asset or group of assets will only be retained when capable of generating enough cash to pay for itself and, preferably, produce some profit. If the asset were unable to pay for itself, then its carrying amount would have to be reduced to reflect the loss of capability to produce cash and profit. As a consequence, the business owner has to reflect this “business value” in the financial statements of its entity. The result is the recognition of a loss. Period. There is no provision and, as such, no liability to be stated in the balance sheet. Rather the asset(s) should be shown at a lower amount—the lower of the two, cost or market value. End of story. b) Provisions IAS 37 defines provisions as “liabilities of uncertain timing or amount.” It goes on to clarify that, in certain jurisdictions, the term provision is used in the context of items such as depreciation, impairment of assets, and doubtful debts. It also clarifies that these items represent “adjustments to the carrying value of assets.” That is, these items are not provisions in the IFRS lexicon and so should not be labelled as such when applying IFRS. Once we accept that

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Inside the IFRS framework: Differentiating impairment losses from provisions a provision is in fact a liability, it’s worth seeing how IAS 37 defines liabilities and its components: IAS 37, paragraph 11 to be precise, defines three kinds of liabilities: • Accounts payable, which are those liabilities derived from the purchase of goods or services, which have been received by the entity and invoiced by the supplier. In connection with these accounts, there is a transparent condition of amount and maturity.

• Accruals, which are liabilities arisen from the purchase of goods or services that have been received or supplied but have not been paid, invoiced, or formally agreed with the supplier, what includes amounts due to employees (for example, amounts relating to accrued vacation pay and its related salary taxes).

• Provisions have been defined above. The main difference between provisions and accruals is the degree of uncertainty regarding the calculation of the liability and/or the actual maturity.

In Brazil, and I suspect other South American countries that have adopted IFRS, the distinction between accruals and provisions is small, and most of this kind of liability would be classified as provisions.

Concluding remarks Losses, in relation to assets that have to be recognized at a value below their carrying amount, must be accounted for as losses, not as provisions. The fact that, for control purposes, the credit may be recorded in a separate account does not change the nature of the entry. The debit has to be applied to income, and the asset shown at its net recoverable amount. This does not make it a provision as no liability is present—no creditor would be eligible to receive any amount of resources embodying economic benefit that flows from the entity. In writing this article, I have sought to clarify the difference between impairment losses and provisions. This distinction, and the appropriate treatment of these items, is crucial to the accuracy of financial reporting under IFRS. Source: IFAC Global Knowledge Gateway –

By Ricardo Julio Rodil

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Financial statements not a matter of ‘mere compliance’, says IASB The International Accounting Standards Board (IASB) has published draft guidance in an attempt to help corporations avoid mistakes within financial statements.

The guidance, delivered in the form of a draft practice statement, has been developed in response to concerns that management are unnecessarily referring to disclosure requirements as a result of uncertainty regarding the concept of materiality.

According to the IASB, an unnecessary reliance upon disclosure requirements in

the standards “can result in excessive disclosure of immaterial information that can obscure useful information and also make financial statements cluttered and less understandable”.

Hans Hoogervorst, IASB chairman, noted that financial statements should not be used as “a mere compliance exercise”.

“Management needs to take a step back and consider whether they are providing the right level of information in the financial statement and whether it is useful,” said Mr Hoogervorst.

“The practice statement should help guide management’s judgement, encouraging them to remove repetitive and uninformative wording and improve the overall quality of financial statements,” he added.

As part of the development of the practice statement, the IASB added that it has consulted with both the International Auditing and Assurance Standards Board (IAASB) and the International Organization of Securities Commissions (IOSCO).

Source: Public Accountant

Contable

IASB moves to help management understand materiality Standard setter the IASB has published draft guidance to help company management determine whether information is material.

As part of the IASB’s wider initiative to improve disclosures, the draft guidance has been developed in response to concerns that management are often uncertain about how to apply the concept of materiality and therefore use the disclosure requirements in IFRS as a checklist.

This can result in excessive disclosure of immaterial information that can obscure useful information and also make financial statements cluttered and less understandable. It can also lead to useful information being left out, the IASB said.

The guidance comes as UK reporting wat-

chdog the FRC has raised concerns around how some boards assess materiality and noted that materiality should not be used to justify opaque reporting about relevant items such as amendments to prior year accounts.

Whether information is material or not depends on a range of factors and entity-specific circumstances, and is a matter of judgement. Determining what information is material also requires an understanding of the users of the financial statements and the decisions that they make based on those financial statements.

“Financial statements are meant to be a means of communication, and should not be viewed as a mere compliance exercise. Management needs to take a step back and consider whether they are providing the right level of information in

the financial statement and whether it is useful,” said Hans Hoogervorst, IASB chairman.

The draft guidance on materiality complements an amendment made to IAS 1 Presentation of Financial Statements by the IASB in 2014, which clarified that companies do not need to apply the specific disclosure requirements in IFRS if the related information is not material. It also specified that a company should consider whether to provide additional disclosures when compliance with the specific requirements would be insufficient in disclosing material information.

The deadline for submitting comments on the draft guidance is 26 February 2016.

Application of Materiality to Financial Statements Source: AccountancyAge – By Richard Crump

Riesgo Control Interno

Keeping risk at bay amid uncertainty In a volatile environment, there is an increasing need for the accounting profession to be ahead of the curve when it comes to technology.

Anthony Harbinson, chairman of the Anti-Money Laundering Task Force, UK Consultative Committee of Accountancy Bodies, says: “This involves the CFO working hand in hand with the chief information or IT officer as the threats facing organisations come from many sources.”

AS the global economic environment becomes more uncertain and complex, businesses need to build robust risk management systems to avoid suffering financial and reputational damage.

He notes that in the area of money laundering, organised crime has been quick to take advantage of the opportunities offered by the growth in e-commerce and online banking. However, organisations are also at risk from employees who can cause damage either by accident, or by deliberate and malicious intent.

The rise of digital technology in particular has created a new set of challenges for businesses - from cyber attacks to money laundering. According to the 2013 study “Global Cost of a Data Breach” conducted by the Ponemon Institute, the average cost of a data breach to an organisation in 2013 ranged from US$1.1 million in India to US$5.4 million in the US. Armed with tools such as data analytics, accountants are well placed to be at the forefront of developing robust risk management systems to mitigate such risks. Big data analysis can help management spot behaviour or patterns that may be harmful to an organisation.

However, a recent report published by the Chartered Institute of Management Accountants (CIMA) and its joint-venture partner, the American Institute of CPAs

“These are perhaps the most difficult of threats as they come from those who are trusted with access to an organisation’s most valuable data,” he says.

(AICPA), found that 86 per cent of businesses are struggling to get valuable insight from such data.

This is where accountants can add value by translating analytical insights so that they can be applied in areas such as planning, budgeting, forecasting and performance management, says Andrew Harding, managing director at CIMA.

“As one finance leader at Yahoo! told us, ‘It’s not our job to go down to the lowest level of data, but to know how to aggregate outcomes so they can be converted into an insightful report’,” he says.

To be truly effective in mitigating risk, however, accountants and finance professionals need to work hand in hand with other members of senior management.

Local bank UOB has been leveraging technology to boost its ability to manage its risk. Over the past five years, the bank has been integrating its regional network through a common technology platform to support its regional growth. With this platform in place, the bank is able to offer its customers a seamless banking experience and access to a wider range of products and services.

Riesgo Control Interno

Keeping risk at bay amid uncertainty “Beyond serving our customers, this also allows us to assess and manage our risk in a holistic manner,” says Lee Wai Fai, chief financial officer at UOB Group.

The bank is also investing in big data tools to strengthen its analytical capabilities in order to identify developing risks within the environment and its portfolio in order to pre-empt and mitigate such risks, explains Mr Lee, who is also chairman of the CFO committee at the Institute of Singapore Chartered Accountants.

Managing risk has become particularly tricky for the banking sector, which has undergone tremendous changes since the 2008 global financial crisis. Some of these changes include increased regulatory and

compliance requirements in recent years that are having an impact on the business models of banks.

In this fast evolving environment, the CFO plays a critical role in anticipating and understanding global trends and changes and the impact these will have on the company.

“Since the finance function typically holds the key to major investment decisions, it is incumbent upon the CFO to challenge new business proposals to ensure that adequate controls and safeguards have been considered as part of the process,” says Mr Lee. “As finance professionals, we play a dual role in supporting the business in their growth while keeping a close eye on the various risks which may impact our businesses.”

Indeed, Mr Harbinson notes that an accountant’s professional scepticism is the first line of defence in tackling risks such as money laundering and terrorist financing.

“In most cases if it looks or feels wrong then there’s a very strong chance it is. In my experience, talking to colleagues when you have an inkling that something isn’t right is as important as running the data and scrutinising the numbers. Seeking someone else’s view, someone you trust, is important,” he says.

However, a general lack of understanding of risk hampers an organisation’s ability to build up a system to manage it. Therefore, accountants need to educate and advise their colleagues in the

area of risk management “Accountants would always have one eye on potential risks and will not be afraid to report them upwards to the CEO and the board,” says Mr Harbinson.

He adds: “Effective risk management is both a challenge and an opportunity - there are massive gains to be had from acting as a risk advisor, alongside other colleagues, to protect and enhance the reputation of the profession and the companies or clients for which they work. In this way we are trusted advisors, looking for the opportunities that can and do come out of good integrated risk management.”

Source: The Business Times – By Francis Kan

Riesgo Control Interno

Frustrating risk with the right internal control framework With the year-end audit approaching, now is the time for companies to look closely at one relatively new pain point in corporate audits—IT and cyber-security controls—to assure that the conversation is appropriately targeted toward risk.

External auditors no doubt will be scrutinizing IT controls that are important to financial statements, as the Public Company Accounting Oversight Board continues to give auditors poor marks in that area. Johnny Lee, a managing director at Grant Thornton who focuses on forensic accounting, says the interactions between external audit and IT staff will go much faster and easier if everyone can stay focused on risk.

“The conversation is difficult if you start straying too far from a risk-based discussion,” he says. “What are the core risks you’re trying to have us speak to in the control environment?”

Cyber-security has become major focus in corporate IT circles in recent years, but that does not mean auditors and IT folks are focused on the same priorities or even working from the same standards or frameworks. That’s where the chief compliance officer needs to step

into the discussion, says Worth MacMurray, senior vice president at compliance services provider GAN Integrity.

Auditors almost always follow the COSO Internal Control-Integrated Framework in their audit of financial statements and internal controls important to financial reporting, because that’s the framework almost all companies follow to satisfy their Sarbanes-Oxley reporting requirements.

IT staff, however, might be following any number of frameworks that have different objectives, because the IT needs of any gi-

ven company encompass much more than just financial reporting.

“The chief compliance officer can play a significant role in aligning those various parties because of their skill set,” MacMurray says. “They are used to dealing with a complex, multijurisdictional environment.

It’s quite analogous to dealing with anti-corruption.”

Herrygers-sandy-0814HerrygersIt’s a common point of confusion, especially with audit committees, says Sandy Herrygers,

a partner and IT specialist at Deloitte. “If you’re looking at a cyber-security program broadly, that’s going to cover all facets of the business: operational, processes, systems, and financial reporting,” she says.

“If you’re looking at information systems controls that are tested as part of an integrated audit, you’re looking at a narrow slice of controls related to systems that are relevant to financial reporting.”

David Roath, a partner in risk assurance for PwC who focuses on cyber-security and other IT risks, says the COSO framework looks at controls from a higher level compared with many of the IT frameworks used today. “Other IT frameworks are more security- and privacy-oriented,” he says.

He’s thinking of the NIST framework, for example, produced by the National Institute of Standards and Technology and intended foremost for critical infrastructure industries such as public utilities. Others are published by the International Organization for Standardization, or ISACA and its Control Objectives for Information and Related Technology framework (better known as CoBIT).

“The interesting thing is that these are just frameworks,” Roath says. “It’s guidance. It

Riesgo Control Interno

Frustrating risk with the right internal control framework doesn’t mean it’s how it has to be. When we do assessments, we’re looking broadly at security, privacy, maturity. We will incorporate different pieces of any of those frameworks. No one framework is right for any company. It has to be supplemented with broader knowledge, skills, expertise, to really elevate the risk in that environment.”

Adventures in Mapping Brian Palazini, a systems architect at sensor-maker Analog Devices, has been involved in mapping exercises to reconcile the requirements of different frameworks for different purposes. He’s seeing some demands from different constituencies to make more use of the NIST framework, which experts say is becoming more common for U.S.-based companies as cyber-security attacks have become more routine. “It’s pretty painful to try to do those matrices, mapping it back to a specific source document,” he says. “It’s a lot of manual work.”

Mapping across frameworks is an “unfortunate reality” for anyone working with an external auditor who answers to the PCAOB, says David Brand, managing director in the IT audit practice at consulting firm Protiviti.

“The PCAOB is swinging a big stick in the IT space,” he says. “It consumes so much time and effort to comply with COSO and external audit expectations; it pushes some of the other things out to the edge. Some IT departments don’t have time to do other things because they are so focused on getting all of this stuff right for one individual regulatory requirement.”

Bob Hirth, chairman of COSO, says he doesn’t see any conflict between COSO and other IT frameworks. “NIST and other frameworks are more granular and appropriately more detailed than COSO,” he says. “If you follow those, you can tick off many things in the COSO

framework.” And much of what the IT frameworks cover is not relevant to financial reporting, he says. “For example, if you have a retailer with credit card information, that may not fall with SOX, because SOX is focused on a limited subset of internal controls.”

Cyrus Amir-Mokri, a partner at law firm Skadden, Arps, Slate, Meagher & Flom, says the situation is not unlike others where companies face multiple regulators pushing different regulatory requirements.

“We are probably making more of the differences between standards than actually exists,” he says. Companies choose different IT frameworks based on their particular needs, and some companies are further along in addressing IT security than others, he says.

With so many frameworks and standards in play, that’s one of the reasons chief compliance officers need to help make sense of it, says Pamela Passman, presi-

dent and CEO for consulting firm CREATe. org, formerly corporate vice president in charge of global regulatory affairs for Microsoft. “This is where the new normal is headed,” she says. “The first movers are trying to have a comprehensive approach in this cyber-security area, but these are the early days. The chief compliance officer and general counsel can really play a role here.”

Lee agrees companies need to be careful not to get lost in the details. “I don’t think the adoption of one framework over another changes the dialogue one bit,” he says. “If you can get away from which framework is important and talk about which control objectives are important, you’re going to have a far more productive dialogue. If we have to marry your checklist of 237 points to my checklist of 182 points, that’s going to be a long day.”

Source: Compliance Week – By Tammy Whitehouse

Riesgo Control Interno

Audit fees jump faster at riskier companies How much a company pays its auditor depends on how well it safeguards against fraud and reporting errors.

Firms with ineffective controls over financial reports tend to pay more than those who do a better job, according to a new report by the Financial Executives Research Foundation.

Companies registered with the SEC paid a median audit fee of $402,812 last year.

But for about 21% of companies that reported ineffective controls over financial reporting, the median increase in audit fees was three percentage points higher than the median increase for all companies.

The group reviewed audit fees at 7,000 companies. Last year’s median fee is up 3.4% from 2013.

Companies are required to test the effectiveness of their internal controls for financial reporting and have auditors review their results under the Sarbanes-Oxley Act of 2002.

The testing is aimed at preventing fraud or

material errors in financial reports.

Almost 60% of the companies polled said the cost of internal control audits rose over the past three years, but about 45% said they saw improvements to their controls and were satisfied with the additional expense.

In a survey of 200 financial executives, the majority of public companies said there was an increase in the volume of audit work in 2014, compared with 2013.

Executives at public companies said audit fees and work are rising because of increased merger and acquisition activity and extra scrutiny on internal controls by the government’s auditor watchdogs, the Public Company Accounting Oversight Board.

About 45% of those polled said they had to change their controls as a result of PCAOB inspections or findings at other companies, however none said that the inspections resulted in a financial restatement.

Source: The Wall Street Journal – By Emily Chasan

Riesgo Control Interno

Using the COSO framework to mitigate cyber risks “The 2013 version caught up to real-world applications of the Framework, especially related to fraud risk assessment, general technology controls and identifying changes in the business that affect risk and internal controls,” noted Mr. Hirth.

Identifying and structuring control activities to address cyber risks

Cyber risks cannot be avoided, but such risks can be managed better through careful design and implementation of appropriate controls. Using the internal control framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as a guide, organizations can build preventive and detective controls aimed at mitigating cyberthreats to an acceptable level.

There is an increased emphasis on controls in the 2013 Framework, according to Robert Hirth, COSO chairman, who spoke about the update to the original Framework during a recent Deloitte webcast.

The 2013 COSO Framework comprises five internal control components and 17 related principles. The Framework recommends that organizations perform a risk assessment to define its objectives, evaluate cyber risks that can hinder objectives and develop a priority list of critical information systems to protect against identified risks before they begin designing and implementing control activities.

After an assessment has been made, organizations can use three principles of the 2013 Framework to guide the design and implementation of control activities. The Framework suggests that organizations select and develop controls over technology that, similar to the risk assessment component, help mitigate risks that could hamper an organization from meeting its objectives, and support achievement of the objectives. Specific objectives vary, but executives should consider focusing

on objectives that affect the business in a material way. For example, most organizations have objectives regarding their protection- and industry-specific data and hardware associated with the information cyber attackers typically target. In addition, the Framework suggests that organizations deploy controls through formal policies and procedures.

Control structures should be deployed in a layered approach that helps prevent infiltrators from accessing subsequent information systems after the initial layers of defense are compromised. “One of the most important questions an organization should consider when designing control activities is whether its cyber environment is protected by different layers of security,” said Mary Galligan, a Deloitte Advisory director at Deloitte & Touche LLP in Cyber Risk Services, and former FBI special agent in charge of Cyber and Special Operations for the New York office. “Multiple layers of effective defense means there is no one single point of failure, which is a critical element of cybersecurity and access management around data,” added Ms. Galligan.

Layered controls, when well-designed, help prevent attacks by keeping intruders outside of an organization’s internal IT en-

vironment. Additional preventive controls, deployed within the internal IT environment, act as obstacles to slow intruders.

“When exploits occur, the controls allow for more timely detection of breaches and enable management to take corrective actions and assess potential damages as early as possible,” noted Donna Epps, a Deloitte Advisory partner at Deloitte Financial Advisory Services LLP, who moderated the webcast. “After corrective actions are taken, it is important for management to assess the root cause and improve controls to prevent or detect similar exploits that may occur in the future,” said Ms. Epps.

“While the 2013 COSO Framework provides principles and points of focus that direct organizations toward well-designed control activities, it was not intended to dictate specific controls that should be implemented at organizations,” noted Sandra Herrygers, a Deloitte Advisory partner at Deloitte & Touche LLP, and leader of the Information Technology specialist group.

Indeed, specific control activities are influenced by an organization’s industry and risk assessment. “Professional judgment is applied to internal control design and implementation to address the specific cyber security risks of the organization,” added Ms. Herrygers.

Riesgo Control Interno

Using the COSO framework to mitigate cyber risks Monitoring activities targeted at cyber risk complexities Monitoring activities include how an organization selects, develops and performs evaluations to ascertain the design and operating effectiveness of internal controls that address cyber risks. They can also include decisions about how deficiencies are communicated and prioritized for corrective action when they are identified, and how the organization monitors its cyber risk profile.

Under the 2013 Framework, the monitoring component comprises activities performed by management to evaluate effectiveness of internal controls and communicate, manage and remediate identified deficiencies. “However, the complexities of cyber risk can be daunting, and the board and management may need technical IT concepts translated into how cyber

risks affect an organization’s objectives and business priorities to accomplish their oversight and risk management responsibilities,” observed Ms. Herrygers. Further, boards and management should be made aware of what value information systems provide with respect to meeting the organization’s objectives. This information can help leadership define risk tolerance levels and direct adequate investment to protection systems critical to meeting an organization’s objectives.

“Cybersecurity monitoring is challenging because it’s a relatively new area and several important elements must align. Monitoring must target the right parts of an organization, the right sections of a network and look for the right anomalies,” says Ms. Galligan. “That is a complex process based a great deal on having capable talent in place,” she added, pointing out that currently there is a shortage of quali-

fied cyber risk professionals.

IT environments of many organizations extend to other entities. In such cases, it is important to monitor cyber controls that operate at third parties or other outsourced service providers. If service auditor reports are not provided or do not sufficiently address cyber controls, a user organization should consider taking steps to understand the controls and potential deficiencies. In addition, threat intelligence and behavior analysis are growing areas of cyber risk monitoring. “The focus should be on what the organization identifies as normal within IT systems, so abnormalities can be detected,” explained Ms. Galligan.

Equally important, leadership should consider developing an appropriate communication plan for when deficiencies are identified. Proper communication of issues is essential to identifying the root cause of

the cyber security event, modifying appropriate control activities and developing an appropriate remediation plan. “The bottom line is that the new Framework provides an opportunity for organizations to take a fresh and deeper look at internal controls as activities that add value to the business and not simply a cost,” observes Mr. Hirth.

Organizations also may want to take steps to hold control owners accountable to protect information systems. “If leadership makes cyber risk management a priority and assesses cyber risk and controls on an ongoing basis through monitoring activities,” noted Ms. Galligan, “the organization should be positioned to deploy changes necessary to stay current against evolving cyber risks that can hamper the achievement of strategic objectives.”

Source: The Wall Street Journal – Deloitte –

By Sandy Herrygers

Gestión Financiera

Financing for SMEs: Why preparation is key - Investec Comment aimed at small businesses.

It’s been a fairly regular refrain over the past six or seven years that small businesses can’t access finance. I’ve never been persuaded by that view. It is the case that, due to capital constraints and reductions in headcount, the days when a company could simply call a bank and automatically arrange a loan are long gone. But that’s partly an issue for the borrower to address: there’s competition for capital in the bank sector, but there’s also competition for getting the attention of the banker in the first place.

There are two key elements to doing this successfully. The first is ensuring that you have a clear understanding of the diverse financing options available, and the variety

of drivers that influence lending decisions for each of the providers. The second is ensuring that you present your proposal in such a way that the lender does not need to do all the leg work. A good proposition poorly presented will struggle. So what options are available?

The bond markets may sound like an odd place to start, given that small businesses are generally locked out, but there is an indirect relationship between them and the availability of bank finance. Larger companies have been able to access more of their funding by issuing bonds over the past five to six years, and this has freed up capital on constrained bank balance sheets to be

This means banks are more likely to be able to offer loan products to small companies than many assume. This includes the vanilla senior debt-style corporate credit that most banks provide, but also asset-backed financing, which has grown substantially in recent years. This type of debt is secured against a business’s assets – from machinery, equipment and vehicles, to inventory and receivables. Some banks are also willing to offer subordinated debt, and the growth of challenger banks has seen lenders appear that have different drivers to more established institutions.

Beyond the bank market, venture capital trusts are providing senior debt and more junior financing products to smaller companies. In the credit fund market, meanwhile, a number of funds have sprung up in recent years that are explicitly targeting smaller businesses. This has been given added impetus by the government’s agenda. The British Business Bank has put money into credit funds, in many cases matching money lent pound for pound. The retail bond market is a further option available to some borrowers.

Finally, the peer-to-peer part of the market is clearly growing. It operates in a different

way to other lenders, and therefore has its own idiosyncrasies and challenges in terms of how a firm can successfully access finance. It is likely to become increasingly influential.

Given all this, getting the presentation of your business right is more crucial than ever. And this is where an adviser can add value. First, they are more likely to know how the different types of provider think, ensuring that the borrower is much more prepared for the challenges and questions they are likely to encounter.

Second, the process of comparing and contrasting is now a lot more difficult.

An experienced adviser will have a better understanding of the choices available to the borrower, which can have advantages in terms of negotiating power. Making the choice between financing options will include an assessment of key lending terms such as interest rates, entry and exit fees, and pre-payment penalties, but also other, equally important factors, such as covenant structure, certainty of delivery and future support as the business grows. In short, how confident the borrower can be that appropriate funding will actually be forthcoming.

Source: City A.M. - By Jason Green

Gestión Financiera

10 ways to give your business the best chance at longevity Everyone hears about businesses that burn out early, but what about the ones that have stood the test of time?

A BHAG (pronounced be-hag) is not so much a plan but an almost fanciful future dream or a long-term bit of guesswork. In 1950, Boeing set a BHAG to become the dominant player in commercial aircraft and bring the world into the jet age. Arguably, the Boeing boffins nailed it.

Many businesses fail in their first years of operation, while others thrive and survive over generations. What can we learn from companies that remain relevant after years of trading?

“A BHAG will stimulate growth and make us better and stronger, even if it is cumulative failure along the way,” Collins said.

Here are 10 pointers geared to help ordinary people build extraordinary organisations.

In his book, he identified four types of BHAGs: target-oriented, role model, internal transformation, and competitive. Honda’s mission statement in the early 1980s was “Yamaha wo tsubusu!” roughly translated as “We will crush Yamaha!”. Yikes!

1. Consistently innovate 3M, perhaps best known as Post-It note producers, was a failed mining company in the early 1900s. The owners persisted and today this innovative company manufactures close to 60,000 products, recently earning its 100,000th patent.

For small business players, innovating incrementally can be a profitable path to increased turnover, productivity and efficiency. Staying on top of industry trends, improving existing processes and making use of technological advances are all clear examples of where a small business can innovate without having to take out a seven-figure loan to beef up research and development.

2. Embrace change While the concept of “embracing change” is particularly significant in the technology sector, it carries weight in many industries.

It may be a tough sell to staff (at all levels), but consistently measuring, reflecting, learning and adjusting allows a small business to grow.

Virgin and its suite of businesses have been powered by change since Richard Branson opened his first record store in 1971. When CD technology emerged 10 years later, Vir-

gin was selling vinyl in more than 100 UK stores. Sensing a seismic shift, Branson got the jump on other record retailers, and was one of the first to ditch and switch. Bob Dylan sung it best: “You better start swimmin’ or you’ll sink like a stone, for the times they are a-changin’.”

3. Set a fearless goal Jim Collins in the influential book Built to Last: Successful Habits of Visionary Companies, coined the phrase Big, Hairy Audacious Goal (BHAG).

4. Build your company around a set of core ideologies Designed to last for generations, a number of “set in stone” core ideologies will give a company a stronger sense of its own identity and an unbroken thread of continuity.

Singapore Airlines claims to be the world’s most awarded airline – and judging by theaccolades, nobody’s arguing. Its six core values focus on customer service, pursuing excellence, safety, staff welfare, integrity and teamwork. These values could be

Gestión Financiera

10 ways to give your business the best chance at longevity effectively appropriated by any company, no matter the size or industry.

5. Develop a strong and cohesive culture A workplace might gravitate towards a sit-down retro video game machine in the break room, but a winning culture is built around more than a high score on Galaga. Importantly, culture should not be confused with perks. A winning work culture is one where people are supported, rewarded and treated with respect while achieving great results.

In 2014, the Australian arm of Mars Inc broke into the top 20 of BRW’s Best Places to Work, the only manufacturer on the list.

A privately held, family-owned company, Mars’ culture motivates its more than 2000 Australian staff to work hard and stay loyal.

Successful work programs include health and wellbeing initiatives, reverse mentoring (graduates educate managers on developments in social media) and attractive pay and bonuses.

6. Serve the customer In a 2014 survey commissioned by Australian small business cheerleaders Shop Small (an American Express initiative), 85 per cent of small businesses revealed that

customer service is their main point of difference when competing with bigger rivals.

Even such a simple gesture as a human voice on the end of the line or including a handwritten thank-you note with an order is appreciated in today’s digital world.

Thanks to social media and online forums, the customer has found its collective voice.

One complaint can spread quickly, placing a company’s reputation at risk.

Since going online in 1995, Amazon has led from the front on customer service, offering revolutionary work practices that are now almost e-commerce standard: automatic “no questions asked” refunds, free postage deals and price guarantees on pre-ordered items.

7. Think long-term Remember Blockbuster Video? In 2000, the company turned down a chance to purchase ambitious new player Netflix for US$50 million. Netflix now has a market cap of over US$45 billion. In the US, Blockbuster filed for bankruptcy protection in 2010.

Being fixated on short-term decisions and solutions is a common trap for small businesses. Taking time to look ahead and reflect is just as important as capitalising on the cut and thrust of everyday trading.

8. Build a team The people in your team are a reflection of your company’s culture and, ultimately, generate value. Take time when hiring, focus on building a powerful and empowered team, and don’t employ to simply fill holes.

The best companies attract the best talent, creating even better companies.

In 1998, when Ian Campbell was appointed CEO of struggling ASX-listed GUD Holdings, he reviewed staffing, turning losses into profits.

“I needed professional managers who knew what was possible,” Campbell said.

“Plant and equipment is easy, you just go and buy it – but selecting the right people is a value judgement.”

9. Compete online Even without the benefit of a fully budgeted marketing team driving content, small business can really shine online. There are conditions: a business needs to be in the same online space as its customers, give that audience value, cater to their needs, and communicate in an authentic voice at their level, not at industry level.

One company that executes its social media program effectively is Telstra. Recognising

that social media has fragmented audiences, it uses Twitter mainly for customer service and Facebook for promotion. LinkedIn is focused on networking and careers, and its YouTube posts are service and product driven. The beauty of online communication is that you can refine and tailor your approach as required.

10. Develop customer loyalty programs Historically, customer loyalty programs have been the exclusive domain of larger operators. Adopting a creative program for small businesses has two main benefits, however: customers choose to be a part of your program over competitors, and it can act as a form of marketing for your business, generating word-of-mouth.

Linking your rewards program with other complementary small businesses also gives your customers added value. One of the most popular frequent flyer programs, Asia Miles, offers thousands of product rewards besides the obligatory free flights. Its extensive onlineredemption store is stocked like eBay, with rewards including electronics, clothing, home wares, beauty products and concert tickets.

Source: INTHEBLACK - By Michael Blayney

Gestión Financiera

3 Ways SMBs can reduce complexity in their finance departments answer does not always lie in an outpouring of finances to hire a new employee in order to solve a problem.

Small to midsize business can follow three best practices in order to limit complexity in their finance department and, as a result, to improve efficiency.

Centralize the finance function

With little access to financial resources and even smaller amounts of time, small to midsized businesses (SMBs) can have a challenging time producing timely, accurate and valuable financial calculations.

According to Chris Meyers, a contributor at Forbes, this fact can be blamed on the “90% Challenge,” signifying that the vast majority of SMBs financially “operate in a state of utter chaos, even if they use an accounting system of some kind.”

Traditional processes of organizing and managing finances that larger enterprises find convenient and efficient prove

to be too complex, too difficult, and too time consuming for smaller businesses.

According to research compiled by Meyers, approximately 90% of SMBs are unable to produce dependable financial statements when prompted.

The root of the challenge is complexity.

While complexity plagues both small and large companies, enterprises have the luxury of hiring people who can dig through piles of information to find the needle in the haystack. For SMBs, however, eliminating as much complexity as possible is vital since resources are limited and the

The day has come when the finance world must move beyond a collection of Excel spreadsheets. Even SMBs must make the transition from simple data templates to more encompassing, sophisticated software environments. Companies need standardized processes to prevent their companies from being fraudulent in any way, as small businesses risk more than their larger counterparts when fraud is not monitored for extensively. With less revenue, SMBs have fewer financial and legal resources to allocate when being audited proving that software that reduces complexity and limits cost is extremely valuable to these entities.

In the event of changing national standards, a centralized finance function can enable SMBs to discover simplified frameworks that could benefit their financial statements. Standards such revenue

recognition and leasing are currently undergoing improvements; those attempting to comply with these changes will certainly face increased accounting complexity during implementation. According to David Duckwitz, CPA at Rubin Brown LLP, without an integrated solution, smaller companies might not be aware of options that are available to them because they may not allocate resources to follow emerging developments.

An integrated finance function will allow small business to comply with these changing regulations in a streamlined and efficient way, limiting risk of not following disclosure requirements.

In addition, central finance processes can be managed by a global business services organization integrating the treasury function for cash related optimization potential as well as leveraging global business networks connecting your organization to your business partners. This results in integrated payables, receivables and payment processes.

Automate time-consuming processes According to a recent survey by Concur, seven out of ten SMBs do not have

Gestión Financiera

3 Ways SMBs can reduce complexity in their finance departments automated expense management functions and use outdated expense methods.

However, automating expenses can decrease the cost of expense claim transactions by 75 percent and reduce the time to process expenses by 35 percent.

Research firm, Ardent Partners recently wrote a report that described the importance of automated financial processes for SMBs. For today’s SMBs, cloud-based, automated solutions provide tremendous value because they allow companies to “move key resources away from the more tedious and tactical tasks to the higher value activities that have a much greater business impact.” A good example is a touch-less procure to pay process that enables your organization to positively manipulate DSO and DPO key measures

SMBs face a number of challenges in growth – so why wouldn’t they do everything in their power to improve efficiency in order to streamline development? The lack of automation not only stagnates company growth, it also hinders supplier relationships. Since many small businesses partner with larger enterprises who already have automated processes, manual functions such as paper invoices could hurt the partnership and further deteriorate the small business’s growth.

In terms of competition, automation or lack thereof could be the “make it or break it” (respectively) quality of an SMB. In order to remain competitive, small business must automate, otherwise, according to Jeff Haden at Inc., “someone else will automate you out of business.”

Embrace the next generation The hiring process is a daunting one. Do you choose the applicant with years of experience or the one with a natural knack for tech and finance? For SMBs, one could argue that the millennial pool of applicants is an invaluable resource that must be tapped sooner rather than later.

According to a recent IDC report, Millennials and SMBs share a great deal of views when it comes to technology: both show interest in leveraging technology, have comfort with advanced mobile capabilities and resources available on the cloud, and possess a genuine interest in doing things better and more efficiently to improve business outcomes and also enhance the quality of life they enjoy. Millennials provide value to small businesses, addressing many of the challenges

that these organizations face with effective technology solutions that will have distinct competitive advantage that will only increase in the future.

Whether a company has 100 employees and 50 million in revenue or 5,000 employees and two billion in revenue, the complexity of today’s finance-related world does not allow for exemptions to be made for those companies with fewer resources.

All companies must do their due diligence to remain competitive by centralizing and automating functions and attracting the “cream of the crop” from the tech-savvy millennial applicant pool. The smaller the company, the greater the opportunity for finance to make an impact in the long run.

Source: CPA Practice Advisor - Henner chliebs

Gestión Financiera

The links between financial inclusion and financial stability in various ways, not all of them positive.

However, dialogue and research on how FI impacts areas such as the integrity and stability of financial markets, as well as consumer protection issues continues to flourish and this indaba is clearly one such forum that will promote our collective understanding of what the issues involved are.

Defining financial inclusion, financial stability, financial integrity and consumer protection THE drive for financial inclusiveness (FI) has taken centre stage in developing economies, particularly in the last 20 years.

The G20 nations, as well international development institutions such as the World Bank, are assisting the process through their various arms and programmes and have endorsed FI as a global development agenda.

Many national governments have also adopted FI as a domestic policy objective.

There is general consensus that in pushing for broader and deeper financial inclusivity, economies will generally not only improve the well-being of the previously unbanked or financially excluded sections of society, but that of society as a whole.

However, there is also recognition that pushing for broader financial inclusion in most cases also comes with risks and trade-offs as any financial inclusion agenda will impact other areas

The four terms: financial inclusion (FI), financial stability (FS), financial integrity, and financial consumer protection have varying definitions, depending on the context.

• Financial stability is generally understood to refer to a lack of financial instability.

• Financial integrity is used by many to refer to the broad to the absence of financial crimes such as: - money-laundering and the financing of terrorism, financing the proliferation of weapons of mass destruction, fraud, theft, corruption, forgery and others.

However, the term can be used in a more focused sub-set of financial crimes.

• Financial consumer protection is essentially concerned with the market conduct of financial service providers in their interaction with customers on an ongoing basis.

According to the 2011 White Paper prepared on behalf of the Global Partnership for Financial Inclusion (GPFI) titled Global Standard Setting Bodies and Financial Inclusion for the Poor: Toward Proportionate Standards and Guidance, the terms are defined generally as follows:

Understanding the linkages between the various I-SIP elements

• Financial Inclusion is “a state in which all working age adults have effective access to credit, savings, payments and insurance from formal service providers”.

The interactions and linkages between these various elements of a financial system are complex and will not always pull in the same direction.

In this context “effective access” incorporates elements of convenient and responsible service delivery, at a cost affordable to the customer and is also sustainable for the provider, with the result that financially excluded customers use formal financial services rather than existing informal channels.

A holistic “multi-stakeholder” approach is often required to reach an optimal framework that balances the broader socio-economic agenda of achieving high levels of financial inclusion whilst at the same time maintaining adequate financial stability, high levels of consumer protection and preserving the

long term integrity and sustainability of the financial system.

The challenge for financial regulators, therefore, is to consider how to optimise the linkages among these four distinct policy objectives — financial Inclusion (I), financial Stability (S), financial Integrity (I) and financial consumer Protection (P), collectively I-SIP. It has been found that in many cases, it appears that the I-SIP objectives may be mutually reinforcing and interdependent, building a strong case for synergistic pursuit of the various objectives.

Long-term financial stability, for example, cannot be achieved without high levels of financial inclusion, that is coupled with effective financial consumer protection as well as adequate laws and practices that prevent financial crimes.

What is the link between financial literacy and financial inclusion and consumer protection?

Financial Education and Financial Literacy Programmes are key pillars and tools for building strong consumer awareness (protection) by giving out knowledge of the safe use of financial products to improve consumers’ economic well-being.

Financial literacy/education can lead to greater financial capability and, therefore, better support Financial Inclusion.

Gestión Financiera

The links between financial inclusion and financial stability Such programmes, however, still need adequate levels of both industry level self-regulation as well as supervisory and prudential regulation, supported by a well-meaning legislative framework.

Greater FI improves financial stability For example, it is accepted that greater FI contributes to financial stability because FI policies guide the formation of fair, safe and stable financial markets in a jurisdiction.

Less than fully effective inclusion can, and has been shown to lead to financial sector instability.

An inclusive financial sector: • Will have a more diversified, stable retail deposit base, which can increase systemic stability.

Similarly, greater inclusion will increase the diversification of lenders’ loan portfolios away from large borrowers, thereby reducing systemic and concentration risks.

• Is more likely to have greater political legitimacy andtherebydecrease the risk of political and social instability, which in turn could lead to financial instability.

• And has greater potential to enhance economic stability, which itself is an essential component of financial stability.

• Will more likely promote a stronger monetary and economic policy transmission mechanism leading to greater economic efficiency.

Similar pairwise outcome linkages can be posited between financial inclusion and financial integrity and also between FI and consumer protection.

• Greater financial integrity is also likely to promote increased trust in financial institutions and the system as a whole, therefore, encouraging more usage and greater levels of financial inclusion.

This in turn boosts savings levels as well the smoother functioning of credit markets. The reverse relationships also applies.

• Greater financial stability builds consumer trust and confidence in the financial sector as a whole, making it more likely that individuals will want to use formal systems.

• Greater financial stability also positively impacts economic factors (such as inflation and interest rates) that can lead to reductions in prices, potentially making financial services more affordable to poorer people thus increasing participation in formal markets (greater FI) by stimulating demand.

However, concrete evidence of these multiple linkages has generally not been systematically

collected, often leaving policymakers to make competing choices between the different policy objectives (for example between higher inclusion, on the one hand, and greater financial stability on the other).

across agencies to assess the risks and benefits of various I-SIP objectives as well as broader policy objectives of economic development, increased welfare, increased market efficiency.

Thus trade-offs among the I-SIP objectives are not inevitable, but synergies are also clearly achievable.

Regulators must, however, seek greater private sector input as well as input from consumers themselves, and also institute ongoing monitoring, evaluation and adjustment of policies.

What can policymakers do to balance the seemingly competing I-SIP objectives?

There is increasing consensus that, a framework that pursues the I-SIP goals at the level of outcomes, can result in greater synergies where the goal of broader financial inclusion should reinforce the other three objectives of Stability, Integrity and Protection, and is in turn be reinforced by them.

There is, therefore, need to consider the four I-SIP objectives collectively rather than independently, as is commonly the case, so that linkages among them can be optimised.

However, optimisation of linkages is not an easy process and is not likely to occur by itself without the explicit intervention by policymakers.

Optimisation of linkages requires a clear articulation of policy objectives, and the gathering and sharing of data and its analysis

How can policymakers measure the impact of financial inclusion policies?

Policymakers can utilise various monitoring and evaluation tools to measure the efficacy of financial inclusion policies but generally they should cover the following bases: • Regular periodic financial literacy surveys and tracking studies • Promoting academic institutions that continuously assess the financial landscape.

• Measuring mobile penetration rates (impacting mobile money) • Measuring bank density and bank account penetration.

• Tracking insurance penetration.

Source: NewsDay - By Clive Mphambela

Sostenibilidad

The executive view of sustainability Drivers are reminded of their blind angle to alert them on the limitations of their sight.

Every executive agrees on the benefits of sustainability agreeing that good corporate citizenship improves the financial bottom line. Most of them agree that sustainability should be prioritised. In that regard, it seems to be an easy concept to present to the boardroom for adoption when it is the opposite.

The effects of business activities to the community and environment asserts the notion that action speaks louder than words when businessmen’s hearts have not been in the right places. Sustainability require significant investment and very few organisations are allocating a budget towards it. Where a budget exists, it is mostly insignificant and some organisations are actually chopping off the sustainability budget.

Organisations that have significantly invested in sustainability are those that are tightly monitored by environmental agents. Where the industry is not tightly monitored, it was observed the management did not have faith in the business case of sustainability. This led to weak implementation of sustainability budgets since internal support was very weak because the management did not fully understand the benefits of sustainability to the business and society at large.

The other challenge has been the lack of

criteria for contract award. Ignoring sustainability is slowly becoming an impediment to competition.

In actual fact, investing in sustainability in a systematic way is a key to new business avenues given the global village. It is also a means to protect the organisation from avoidable costs of non-compliance, a major risk to the business that affects the reputation and increasing inefficiencies that erode stakeholder value.

knowledge to systematically approach sustainability to realise maximum business value. In most cases, where the punishment is low and surprisingly the organisation pursues it, it might just be the hobby of the managing director to take it up. In such cases, the application will be discretionary and is mostly used as an image polishing measure when times are good and something that can quickly be abandoned in hard times.

The major driver of sustainability has been the media. No organisation can afford the effects of bad press. Many articles have been published on sustainability with the latest

one on the effects of brick molding companies catching my eye. To the ordinary person, the immediate desire is just to purchase bricks at a competitive price. The environmentalist is concerned about the state of the environment after the activity.

Making money is the primary objective of most businesses by ensuring that customers are happy with quality and low cost. In such instances, such companies do not see any meaningful way sustainability can achieve quality and cost reduction to the customers.

Now that the world is a global village, slowly sustainability is one of the critical evaluation

One challenge is non-availability of measure sustainability. There are various measures that can apply, such as assessing how financial success has provided long term employment. Companies achieving this measure may also suffer bad press as with the case of Volkswagen recently, Shell Oil Corporation and BP because of some missteps concerning the environmental or social performance that automatically overshadow the good achievements in one area.

In that light, it is now important to consider how sustainability matters can be addressed holistically given the effects on the society at large. The procurement function has a big role to play to achieve it in a proactive manner.

Source: NewsDay - By Nyasha Chizu

Sostenibilidad

7 questions that will shape the future of sustainability What do you think?

1. Sustainable Development Goals: the new framing device?

The SDGs were announced only late in the year but the difference is noticeable.

Unlike the Millennium Development Goals, the SDGs are universal and every country is required to say how they will meet the goals.

There’s no guarantee, but we expect the SDGs will be the new framing device. At first, leaders will be expected to say how their sustainability plans align with the SDGs. Then people will realize that business-as-usual will not be enough.

Your key question now: how is your business transforming markets so the SDGs are met?

Globalization, climate change and macro trends in technology are changing the calculus on sustainability issues.

It’s a challenge for everyone: where should I focus my effort? What’s worth trying now, and what do I need to prepare for?

To answer these questions, you need to be scanning what’s changing in the world.

Here at Forum for the Future, we’re just concluding our annual scanning cycle. Our Futures Centre, based in Singapore, scans what people are talking about, what they

are innovating and what is being financed on sustainability solutions.

We feed in our experiences with leading companies around the world. And we take a view — part analysis, part instinct — on what will be more important on sustainable business the next two years.

Here’s our current list, which covers climate change, European turmoil, gender empowerment, manufacturing, citizens and better scaling of innovations. Each trend also includes a question for your business.

2. Extreme climate change more likely Climate science keeps getting more certain that impacts will be more severe than earlier projections suggested.

At the time of writing, the COP21 United Nations climate talks are just over a month away. The rumors are of a global deal that is a step forward, but still well short of keeping warming below 2 degrees Celsius since pre-industrial levels. The best we can hope for is a deal, which is a stepping-stone to the deal that we really need.

“How would you have to transform your business strategy for extreme climate change?”

There is some good news, however. A renewables revolution is underway, with an 80 percent drop in price of solar PV in the last five years. Elon Musk is making energy storage sexy. Community energy projects are making disturbed renewables a reality in pockets.

Even so, it’s likely people will start concluding it’s too little, too late. We can expect talk of geoengineering and carbon capture and storage to rise, along with positioning gas as a bridging technology (something we fear will slow diffusion on the renewable technologies we need).

Your key questions now: How would you have to transform your business strategy for extreme climate change? How are you riding the energy transformation?

3. Europe’s turmoil intensifies The crisis in Europe on refugees symbolizes many things, from the failure of global governance to the slow response times of European institutions.

Already, many Europeans were feeling left behind and that normal politics wasn’t working for them. This polarized mood has been further exacerbated by the migration crisis.

Sostenibilidad

7 questions that will shape the future of sustainability On one side is “solidarity,” those offering rooms to refugees and cheering them into train stations. On the other is an effort to “protect your own,” with people fearing refugees take state handouts and jobs.

Populist politicians on both left and right and from across the continent have been capitalizing on these moods. (We can also see some of this in the U.S. with Sanders and Trump.)

The drivers of the crisis — people feeling left behind by globalization and technological change, refugees escaping various conflicts, institutions slow to react — are not going away. We can expect the turmoil to intensify.

This matters in terms of how you frame your approach to sustainability. Acting for future generations or people far away won’t work if enough people are trying to protect their own.

men to Lean In, but also for change in the nature of male-dominated corporate hierarchies.

The London School of Economics’ Gender, Inequality and Power Commission recently concluded, “The burden of the argument should now shift from the under-representation of women to the unjustifiable over-representation of men.”

In emerging nations, gender empowerment is crucial on health, birth rates, education attainment, skills and more. We can expect the push for greater gender empowerment to grow.

Your key question now: how can your business be proactive on gender empowerment to drive positive change?

5. Manufacturing reconfigured

4. Gender empowerment as force for positive change

In this area we see several factors combining. Labor cost differentials between countries are leveling off. There’s a growth in automation, Big Data and other digital technologies. Additive printing makes localized, bespoke production cheaper. Yesterday’s contract suppliers are today’s design-to-delivery service providers.

The push for equality and diversity is not new. What we believe we’re seeing, though, is the start of a new phase. In industrialized countries the call is for wo-

How these factors will combine is complex and uncertain. But the next two years will see much experimentation in distributed manufacturing, with changes in what is

Your key questions now: how will the polarized mood — ‘protect your own’ vs ‘solidarity’ — affect the sustainability narrative you use?

made where by whom.

“The next two years will see much experimentation in distributed manufacturing, with changes in what is made where by whom.”

That will affect sustainable supply chain policies and management. It will challenge consumer labels and auditing.

Your key questions now: how will your business reconfigure your value network to take advantage? How will you make the best of it, from a sustainability point of view?

6. Citizen Innovators do it themselves We all know that incumbents rarely drive change. We’re used to the idea that creative-destruction comes from an entrepreneur, a new entrant, an idea that had been hidden in an R&D lab. Well, in our work we’re beginning to see a new source: Citizen Innovators.

People are looking at the problems around them and trying to address them directly, not through politics or existing businesses.

Thanks to digital platforms such as crowdfunding sites, individuals have the ability to execute new solutions that previously only big institutions could try.

According to the Harvard Business Review in the U.K., 6 percent of adults had created or modified consumer products within the past

three years. Currently at the margins, we see more people moving from being passive consumers to active citizen innovators.

Your key question now: how can your business better engage the Citizen Innovator?

7. Better ways to scale niche innovation Famously, innovation is an idea that works.

There are plenty of good ideas, but few of them reach scale.

The last few years have seen developments in how people understand when, why and how an idea scales. Techniques such as strategic niche management and creating prizes are more familiar than ever.

We expect greater sophistication in the sustainability space, with more companies testing how to scale their sustainability bets by through a bespoke combination of growing user-demand, growing the ability to supply, creating replicable business models, using standards to transfer best practice, creating platforms to share common costs and more.

Your key question now: how could market-shaping instruments be applied to your business’ big sustainability bets?

Source: GreenBiz – By David Bent

Sostenibilidad

New guide offers tips for building a sustainability program nization about how to build greater business value from a company’s approach to sustainability. It charts five important action steps for EHS professionals and executives to consider as they determine how sustainability can bring value to their businesses. It also includes supporting case studies from GEMI members and an index of recommended external resources.

If you need help building support for sustainability efforts at your facility, you might want to check out the new “Sustainability 101″ Quick Guide from Global Environmental Management Initiative (GEMI). The guide offers a comprehensive overview of how companies today are creating business value from sustainability plus guidance to help sustainability professionals develop, manage, and grow their programs.

“A successful corporate sustainability strategy requires senior management support, and GEMI’s new ‘Sustainability 101’ resource will help environmental, health, and safety professionals facilitate that discussion and earn critical leadership buy-in,” said Roland Mostovy, Sustainability Program manager, Ashland Inc., and GEMI’s membership chair. “Whether a company is talking about sustainability for the first time or wants to better align an

existing program with the larger business strategy, this primer will show how to navigate the complexities, gather feedback, research the right opportunities, and set goals and measurements.”

The “Sustainability 101” guide provides a baseline understanding of the subject; offers a simple approach to tackling an often complex, sometimes vague topic; and supports discussion within an orga-

“Sustainability isn’t an easy topic, and that’s why GEMI exists – to collaborate on sustainability solutions, tools, and resources as well as leveraging our own experiences to help others solve these challenges,” said Bill Gill, assistant vice president, Environmental Affairs, Smithfield Foods, and chair, GEMI. “Our organization has been working on this latest resource for three months, and we’re proud to offer it for free on our website.”

The “Sustainability 101” guide is part of GEMI’s larger Quick Guide series that features practices to address real-time issues and sustainability concepts, supported with mini case studies from member companies.

Quick Guide - Sustainability 101 Source: Facility Executive

Sostenibilidad

What is HR’s role in a sustainability strategy?

As more and more organisations implement corporate social responsibility (CSR) initiatives, many HR professionals may be left questioning just how possible it is to embed and operationalise a sustainability strategy into their organisational culture.

offering incentives and recognition for sustainability achievements; and having policies that promote worker cooperation and involvement with the company’s environmental objectives.”

According to Jacquie Fegent McGeachie, director of public affairs, communications and sustainability at Kimberly Clark Australia and New Zealand, it is very possible – here, she provides her tips.

Fegent McGeachie shared four tips on integrating sustainable practices into the workplace culture:

Where to start?

“A good starting point is for sustainability and HR practitioners to form a closer relationship, as a stronger relationship can reap plenty of mutual benefit,” Fegent McGeachie suggested.

“HR professionals can assist in providing formalised structures to help operationalise sustainability within an organisation – such as providing staff with training and development; incorporating sustainability into the onboarding process for new employees;

What next?

1. Secure showcase support from the top of the organisation.

2. Identify and recruit organisational sustainability champions at a range of levels.

3. Champions need to be effective business partners and clear communicators.

4. Apply a tried and tested model for driving organisational change in order to integrate and operationalise sustainability.

Source: HRM Online (Canada)

“El INCP se une a la consciencia ecológica para la conservación del equilibro ambiental. Sabías que de un árbol de 2,5 metros de alto se pueden producir 10.000 hojas? Pero según estudios mundiales el 70% resulta en la basura. Con el eGlobal no solo damos alcance a las necesidades de nuestros socios si no también ayudamos a preservar el planeta.”