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THE MAGAZINE FOR FINANCE PROFESSIONALS .A ACCOUNTING AND BUSINESS MALAYSIA 05/2014
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DUBAI
MEETING
ACCA’S COUNCIL GATHERS IN THE
GULF FOR THE FIRST TIME
PROBLEM SOLVER
JASON CRIMSON, KIMBERLY-CLARK ASIA PACIFIC SHARED SERVICES DIRECTOR
WAR FOR TALENT TO TIE THE KNOT OR NOT
INTERVIEW: BDO INTERNATIONAL’S CHIEF HUMAN CAPITAL STRATEGIST SUPPORT FOR PRACTICE MERGERS: IS IT WORKING?
OPINION THE CHALLENGES FOR CFOs IN INDONESIA TRENDS THE BUSINESS BENEFITS OF SOCIAL MEDIA
FORECASTING LIFE AFTER SPREADSHEETS IFRS CONVERGENCE AT THE CROSSROADS
M&A WHY INTERNAL AUDIT IS VITAL CPD TECHNICAL EQUITY ACCOUNTING

WELCOME 3
Welcome
ACCOUNTING
INCENTIVES TO GROW AND BUSINESS
The idea that ‘big is better’ seems to be part of the The leading monthly magazine for
Malaysian government’s philosophy, at least when it finance professionals, available
comes to professional services firms. Last February, in six different versions: China,
the government unveiled a tax incentive to promote Ireland, International, Malaysia,
merger and acquisition (M&A) activities among small- Singapore and UK.
and medium-sized services firms.
The Ministry of International Trade and Industry
(MITI), which spearheaded the move, says the government There are different ways to
wants professional services firms to build capacity in order to withstand foreign read AB. Find out more at
competition and export their services. Professional service activities are currently www.accaglobal.com/ab
seen as fragmented, dominated by small firms and not globally competitive.
The initiative is part of larger efforts to liberalise Malaysia’s services sector, which
contributed 54.6% to gross domestic product in 2012. Successful applications will
ON PAPER
enjoy a flat tax rate of 20% on all taxable income earned by the merged companies
for five years. M&A documents will also be exempted from stamp duty. Free to ACCA
The incentives are open to professional services such as specialised medical members. Annual
practices and services like accounting, taxation, architectural and engineering. non-member
Courier services, private technical and vocational secondary education services, and subscription £85
skills training services are also included in the list (see our feature on page 16).
Small firms comprise the bulk of accounting firms in Malaysia, estimated at
almost 98%. Their feedback on the incentives has been less than encouraging.
ON IPAD
This is not surprising as owners of small accounting firms have tended to shy away
from mergers. Such reluctance may stem from a fear of losing their independence Download searchable
as well as control, given that in most mergers, one party usually plays a more iPad editions from
prominent role. While this is understandable, perhaps the time has come for small the iTunes App Store
practices to seriously consider the merits of moving into a larger pond.
Meanwhile, on page 12, Kimberly-Clark’s Jason Crimson explains how the shared
services industry has helped to give him an international business perspective.
ON
Lee Min Keong, Malaysia editor, [email protected] DESKTOP
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ACCOUNTING AND BUSINESS
4 CONTENTS
AB MALAYSIA EDITION
MAY 2014
VOLUME 17 ISSUE 5
Asia editor Colette Steckel
[email protected] [phone]
Editor-in-chief Chris Quick
[email protected] [phone]
NEWS
International editor Lesley Bolton 6 News in pictures
[email protected] [phone] A different view of
recent headlines
Malaysia editor Lee Min Keong
[email protected]
8 News round-up
Digital editor Jamie Ambler A digest of all the latest
news and developments
Sub-editors Loveday Cuming, Dean Gurden,
Peter Kernan, Vivienne Riddoch
FOCUS
Digital sub-editors Rhian Stephens, Eleni Perry 12 Interview: Jason
Crimson We meet
Design manager Jackie Dollar
[email protected] [phone] Kimberly-Clark’s director
of Asia Pacific Shared
Designer Robert Mills Services
Production manager Anthony Kay
[email protected] 16 Joining forces
Are mergers the answer
Advertising Richard McEvoy for SMEs?
[email protected] [phone]
COMMENT
Head of publishing Adam Williams
[email protected] [phone] View from Singapore
Investors need educating
Printing Times Printers Pictures Corbis
ACCA 20 Errol Oh The
President Martin Turner FCCA Companies Bill is
Deputy president Anthony Harbinson FCCA starting to take shape
Vice president Alexandra Chin FCCA
Chief executive Helen Brand OBE
21 Cesar Bacani Dealing
ACCA Connect with fraud is top of the
Tel [phone] agenda in Indonesia
Fax [phone]
[email protected]
[email protected] 22 Martin Turner ACCA
[email protected] continues to innovate by
exploring MOOCs, says
ACCA Malaysia ACCA Malaysia Kuching branch the ACCA president
ACCA Malaysia Sdn Bhd (473007P) Unit #8.01 8th Floor Gateway
27th Floor, Sunway Tower Kuching
86 Jalan Ampang No 9 Jalan Bukit Mata CORPORATE
50450 Kuala Lumpur 93100 Kuching Sarawak
1 800 88 5051 1 800 88 5051 23 The view from
[email protected] [email protected] Eshwar Sunderaj of
Diageo, plus snapshot on
Accounting and Business is published by ACCA 10 times per year. All views
expressed within the title are those of the contributors. agriculture
The Council of ACCA and the publishers do not guarantee the accuracy of
statements by contributors or advertisers, or accept responsibility for any 24 Shell and shared
statement that they may express in this publication. The publication of an services The company
advertisement does not imply endorsement by ACCA of a product or service. has adopted the model
Copyright ACCA 2014 Accounting and Business. No part of this publication
may be reproduced, stored or distributed without the express written PRACTICE
permission of ACCA.
27 The view from Ayesha
Accounting and Business is published by Certified Accountant (Publications) Bedwei of PwC, plus
Ltd, a subsidiary of the Association of Chartered Certified Accountants. snapshot on indirect tax
29 Lincoln’s Inn Fields
London, WC2A 3EE, UK Audit period July 28 On message Social
[phone] 2012 to June 2013 media can be an asset – if
www.accaglobal.com 154,625
deployed strategically
ACCOUNTING AND BUSINESS
CONTENTS 5
CPD
Reading this magazine to keep up
to date contributes to your non-
verifiable CPD. Learning something
new and applying it in some way
contributes to your verifiable CPD,
as do the online questions related to
certain articles on the technical pages,
provided that they are relevant to
your development needs.
INSIGHT
31 IFRS A growing
divergence between the
global standard-setters
35 Graphics Women in
business
36 Mutually beneficial
The EU and US are
negotiating a free trade
agreement TECHNICAL
49 Equity accounting
38 Forward thinking We look at the issues
Companies are ready
to embrace integrated 52 M&A management
reporting, an ACCA Internal audit has a vital
roundtable found role in the process
40 Meet the MOOCs PEOPLE
Accreditation is the way 55 Career strategist
forward for massive open We meet Emree Siaroff
online courses of BDO International
42 Careers Dr Rob Yeung ACCA
looks at how to manage
60 Council A series of
change, plus CV tips
regional events took
place to coincide with
44 One-page strategy
last month’s landmark
SMEs should stick to
meeting in Dubai
simple business plans
62 Election Nominations
46 Organisational and
are invited for the 2014
people strategy A look at
election to Council
economic value
63 MOOC launch ACCA
48 So long, spreadsheet?
and FutureLearn will
There are better tools for
offer massive open online
reporting, forecasting and
course developed by the
planning
University of Exeter
64 News Approved
Employers honoured;
event promotes Certify Me
Now! programme
65 Opinion SMEs must
get ready for MPERS
66 News Profession must
meet changing needs,
says ACCA; public audit
crucial, finds ACCA report
ACCOUNTING AND BUSINESS
6 NEWS | PICTURES
▼ ON THE BALL
China’s Tongchuang Toys is
producing one million mascots
for the 2014 FIFA World Cup
mascot – representing 80% of
the company’s sales volume
▲ HAPPY ANNIVERSARY
To commemorate its 40th anniversary, Singapore’s state-owned Temasek
Holdings has put S$40m into a new endowment fund for emergency situations
▲ BUILDING A FUTURE
Japanese architect Shigeru Ban, who uses
cardboard tubes to create low-cost buildings ▲ WARRIOR SPIRIT
in the world’s disaster zones, has won US First Lady Michelle Obama and her daughter
2014’s Pritzker Architecture Prize Malia view the Terracotta Warriors in Shaanxi
province during their visit to China
ACCOUNTING AND BUSINESS
PICTURES | NEWS 7
▼ RISE OF THE ROBOT
Cyberdyne, the maker of robotic exoskeleton
suits that help in rehabilitation, has listed on
the Tokyo Stock Exchange’s Mothers market
▲ GREEN MACHINE
Lewis Hamilton won the Malaysian Grand Prix at Kuala Lumpur’s Sepang
circuit. New Formula 1 rules mean that cars must now be fitted with turbo
hybrid engines that are more fuel efficient as well as quieter
▲ CONCENTRATED EFFORT
Staff at UK satellite communications
company Inmarsat contribute to the search
for Malaysia Airlines flight MH370
ACCOUNTING AND BUSINESS
8 NEWS | ROUND-UP
News round-up
This month we include stories on Alibaba’s US IPO, Singapore’s crackdown on virtual
currencies, the rise of the ‘smart city’ and Grant Thornton’s challenge to the Big Four
ALIBABA CHOOSES NY listing in China, ‘should a daily threat, rather than Singapore (IVAS) and EY.
After months of wrangling circumstances permit’. merely reacting once it is Dr Stanley Lai, SC, chairman
with Hong Kong Exchanges discovered. ‘Corporations of the Intellectual Property
and Clearing over its listing BE PREPARED need an enterprise-wide, Office of Singapore,
laws, Chinese e-commerce Financial crime is keeping integrated risk management described the study as
giant Alibaba is going senior executives awake at strategy that accounts timely as the intellectual
offshore to New York. In night – which Deloitte says for the entire lifecycle – property (IP) community
March, the company began is ‘completely warranted, compliance, prevention, of Singapore enters a
proceedings for what may given that trillions of dollars detection, investigation, new phase of transacting
be the biggest US initial and their organisation’s remediation, monitoring and securitising IP assets
public offering (IPO) in reputation are at stake’. and testing. A silo, minimal as part of business
two years, estimated at To address the ‘complex approach will no longer cut engagement. ‘It is hoped
around HK$100bn. Alibaba threats’, the firm hosted it,’ he said. that the IP community and
proposed that its partners a three-city roadshow in stakeholders will make it
nominate a majority of Singapore, Jakarta and GROWTH FOR ALL a priority to embrace the
the board of directors, a Hong Kong. Tim Phillipps, Big Four and local best practices of business
system not allowed under Deloitte analytics and accountancy firms in valuation, so as to achieve
Hong Kong rules. The forensic global leader, said China have grown equally the best possible financial
Hangzhou-based company that the best approach is over the past decade at outcomes,’ he said.
has not ruled out a future to treat financial crime as an average annual rate of
22%, according to tracking VIRTUAL CAUTION
by Paul Gillis, professor Singapore is the first
of practice at Peking country in Asia – and the
University’s Guanghua second in the world, after
School of Management. the US – to regulate virtual
While it is ‘good news’ that currency intermediaries.
investment in accounting In a move designed to
is more than double the combat potential risks
average 10% GDP growth, from money laundering or
difference in performance terrorism-related financing,
between the two sectors ‘is the Monetary Authority
telling’, he says. Big Four of Singapore (MAS) now
firms outgrew local ones requires that virtual currency
until the financial crisis exchanges must verify
of 2008, after which their their customers’ identities
growth rate shrank by 12%. and report any suspicious
Local firms also slowed in transactions. The MAS
2009, but still grew at 24%, also renewed its concerns
LITTLE GROWTH FOR MACAU
he says. ‘The Big Four will about the risks associated
struggle to find growth equal with such transactions.
Macau’s accountancy profession has grown only to GDP growth, while local ‘Consumers and businesses
marginally over the past year, despite boom times firms will grow faster,’ Gillis should take note of the
for the sector. Data from the Committee for the writes in his blog. broader risks that dealing
Registry of Auditors and Accountants shows that in virtual currencies entails,
113 auditors, 172 accountants and 13 auditing firms VALUABLE FINDINGS and should exercise the
were registered in Macau at end-2013, compared The growing importance of necessary caution,’ said
with 110 auditors and 169 accountants, and the business valuation, and the Ong Chong Tee, MAS deputy
same number of auditing firms, the year before. need for structured training managing director.
Macau Business reports that while the volume of to equip professionals with
business they deal with is much higher, ‘people in the necessary skills, is SINO-NZ BOOST
the accounting profession say there are not enough highlighted in an inaugural The New Zealand dollar has
accountants or auditors to meet demand’. study by the Institute of become the latest currency
Valuers and Appraisers of to trade directly against the
ACCOUNTING AND BUSINESS
ROUND-UP | NEWS 9
planned for China’s financial
S ALL EYES ON ASIA markets – the opening
Asia continues to be a beacon of According to the report, 50% of up of the banking sector,
D
growth among local and Western companies see expanding into new deregulation of interest
N multinationals, with 83% of markets as extremely important rates, introduction of a
those operating in the region in the next three years, with China deposit insurance scheme
expecting to meet or exceed their the primary growth market; half and implementation of
E
financial and strategic objectives nominated mainland China as part new fiscal initiatives – are
R in the next three years, according of their strategic expansion plans. credit positive for the sector,
to Connecting Countries, a Additionally, companies are focused on if executed well, during
T new pan-Asia Telstra Global expansion into Singapore (38%), Hong the next five to 10 years,’
research report. Kong (33%) and India (32%). said Minyan Liu, associate
managing director at
Moody’s. However, the reform
agenda will bring its own
challenges in the immediate
S
R LOADING 5% term – in particular, deposit-
83 A rate deregulation will add
E to the banks’ funding costs
Y and would consequently
%
pressure net interest margins
3
– Liu added.
83% of companies in Asia expect to ICT is a standout – or over-represented CITIES SMARTEN UP
meet or exceed their financial and – sector of the top 5% of companies in Within a decade, ‘smart-
strategic objectives over the next Asia, based on past high performance city’ technology investment
three years and future promise of success in Asia Pacific will total
US$63bn, estimates
Navigant Research. The
$ region is home to most
of the world’s largest and
fastest-growing urban areas
and they need intelligent

systems, reasons Eric
Woods, research director.
‘Working with an evolving
mix of international
Financial services and insurance 50% of international companies and regional smart-
companies in Asia are more bullish than pursuing expansion in Asia city technology firms,
other industries about exceeding their nominated China as part of their governments in the region
objectives in the next three years strategic plans are piloting a variety of
technologies to solve urban
problems, reduce urban
Chinese yuan, joining the US, free-trade agreement was ‘under specified conditions’. energy and resource use,
Japan, Australia, Russia and signed in 2010. Professor KC Chan, and prepare for future
Malaysia as China promotes Secretary for Financial growth,’ he said. India’s
use of its currency in global IRD TAX HUNT Services and the Treasury, immense Delhi-Mumbai
trade and finance. New Americans working in Hong said that ‘highly prudent Industrial Corridor, China’s
Zealanders are expecting Kong may have details about safeguard measures’ were in 104 nationally selected
exponential trade growth their finances released to place to protect taxpayers’ smart-city demonstration
will result – as happened the region’s Inland Revenue privacy and confidentiality projects and South Korea’s
in Australia following its Department following an of information exchanged. pioneering Songdo smart-
agreement with China exchange of information city development are cited
last year – even reaching agreement between both COMMITTED TO REFORM as examples.
NZ$30bn by 2020, a target countries. The agreement, Recent statements by China’s
set by Prime Minister John the first of its kind signed political leaders show that BRIDGING IASB GAPS
Key and Chinese President by Hong Kong, is in line with Beijing is committed to The International Accounting
Xi Jinping during a recent the US’s global crackdown banking and financial reform, Standards Board (IASB) will
meeting. Trade between on tax evasion. Requests says Moody’s Investors consult with banks across
the two countries has for information may be Service. ‘On balance, we Asia and the Middle East on
»
more than doubled since a granted to Washington consider that the key reforms how to bridge differences
ACCOUNTING AND BUSINESS
10 NEWS | ROUND-UP
between accounting
practices in Islamic and TRENDS
conventional finance. Wayne
Upton, IASB international
director, told Reuters
that the board’s Islamic
finance consultation group, #1 FRENCH
established last year, was
requesting industry feedback
on four areas. ‘As is often
tsheett icnags,e o inne s staignndiafircda-nt #6 CANTONESE # 7 ILNADNIGAUNAGES
outcome would be to resolve
utondcaeyr tiani nthtiee sa pthpalitc mataioyn e oxifs t #8 RUSSIAN #3 GERMAN
IFRS. Another would be to
bridge the gaps that may #4 MANDARIN
exist in terminology and our
understanding of contract #10 PORTUGUESE
forms.’ Submissions will be
received until 1 August. #2 SPANISH
MThNe CA uTsAtrXa lTiaAnR TGaExaTtEioDn #5 ITALIAN
Office (ATO) has begun #9 ARABIC
a four-year investigation
into the affairs of big
multinational companies
suspected of shifting THE BUSINESS OF LANGUAGE
profits among their global For the first time Cantonese joined the top 10 of foreign languages spoken in the
subsidiaries as a way of City of London, the UK’s principal business district, shooting into sixth place.
minimising tax. Eighty- German, Indian languages, Russian, Arabic and Portuguese slipped, while French
six companies are being held the top spot, according to recruitment firm Astbury Marsden.
investigated initially, but
ATO deputy commissioner
Mark Konza flagged THE DANGER WITHIN by 2018, predicts Xero, TIGER AT LARGE
that other cases ‘will be Incidences of economic a New Zealand-based The Asian financial system
identified over time’. He crime detected in China, small business accounting will dominate international
said that if profit-shifting is Hong Kong and Macau are software developer. When markets by 2030 in what
proven, penalties will apply. lower than regional and accountants were asked the ANZ Bank terms a
global averages, according if they planned to provide ‘financial revolution’. In
LOOK OUT, BIG FOUR to PwC data – and in those online services to their its insight report, Caged
Faced with ‘formidable cases where it does occur, clients this year, 55% Tiger, the bank projects
competition’ from the Big the culprit is likely to be a said they did, compared that Asian bond markets
Four accountancy firms, company employee. Among with 43% last year and (excluding Japan) will
Grant Thornton has been the executives surveyed by 32% in 2012. ‘There’s grow to six times their
awarded 2014’s best the firm, 27% in mainland a trend everywhere in current size over the next
managed international firm China and 16% in Hong software around moving 15 years, to match the
by the Managing Partners’ Kong and Macau reported to the cloud because it size of US debt markets.
Forum, a professional that they have encountered creates better products,’ Equity market capitalisation
body that celebrates the economic crime, compared said Peter Karpas, CEO across the region will rise
value of leadership and with 32% in Asia Pacific and of Xero North America. dramatically, from US$9
management excellence. 37% globally. In mainland However, constant contact trillion to almost US$55
Citing the firm’s ‘ambitious China, though, concerns between accountants trillion by 2030, driven by
five-year strategy across persist around bribery and and their small business China, which will account
127 countries’, the judges corruption, procurement clients remains a key for around half of Asia’s
found that Grant Thornton fraud and kickbacks. imperative; more than financial assets by 2050,
‘has now positioned itself half of respondents said the report anticipates. ■
as a strong and credible CLOUDS ARE COMING that clients should be
challenger brand in a very Every accountant will offer preparing for their taxes Compiled by Peta
consolidated market’. online accounting services all year long. Tomlinson, journalist
ACCOUNTING AND BUSINESS