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THE MAGAZINE FOR FINANCE PROFESSIONALS .A ACCOUNTING AND BUSINESS CHINA 11/2014
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SPACE RACE SKY’S THE LIMIT
THE ECONOMIC BENEFITS OF GOING TO THE MOON ACCA REPORT ON CHINA’S 100 GLOBAL GIANTS
CROWDFUNDING SHINING STAR
MAKING ITS MARK ON BUSINESS IN ASIA INTERVIEW: SUSANNE SWANIKER-TETTEY, CFO, OKAVANGO DIAMOND COMPANY
CAREERS WHAT YOU CAN GAIN FROM NETWORKING WCOA TECHNOLOGY AND THE FINANCE FUNCTION
POSTGRADUATE MBAs IN MULTIPLE LOCATIONS WCAER CORPORATE GOVERNANCE
INTERVIEW KPMG’s GLOBAL CHAIRMAN CPD FINANCIAL INSTRUMENTS

WELCOME 3
Welcome
ACCOUNTING
GOING GLOBAL AND BUSINESS
Alibaba, the Chinese internet trading firm, is the business The leading monthly magazine for
everyone is talking about following its successful flotation finance professionals, available
on the New York Stock Exchange in September. EY in six different versions: China,
recently included it in its infographic listing of the 10 Ireland, International, Malaysia,
largest public debuts in history (see page 8). Alibaba Singapore and UK.
– which started out in founder Jack Ma’s apartment in
Hangzhou in 1999 – earned the top spot with a staggering
$25bn in IPO proceeds, eclipsing Facebook, which listed There are different ways to
in 2012 and raised $16bn. A corporate success story that begins humbly and read AB. Find out more at
blossoms into a global behemoth always makes for a good read. www.accaglobal.com/ab
Can we expect to see a surge of similar successes emanating from China?
In this issue on page 16, we find out about ACCA’s new report, China’s next 100
global giants, which recognises fast-growing businesses that have the right mix of
ON PAPER
characteristics to emerge as the next Alibaba. Written by Professor Andrew Atherton,
deputy vice chancellor of Lancaster University in the UK, it singles out companies Free to ACCA
that have built a strong domestic presence in China from which to launch into the members. Annual
global marketplace. Indeed, one-third of the top 100 already have gone global and non-member
are starting to make their mark on the worldwide stage. Among the ones to watch subscription £85
are the top five: Hengtong Optic-Electric, Huapont-Nutrichem, Zhejiang Dahua
Technology, iSoftStone Holdings and Hangzhou Hikvision Digital Technology.
As Faye Chua, ACCA’s head of future research, puts it, the report not only
ON IPAD
identifies the next big global players, but looks at ‘how they got to where they are
now with the potential to compete against established giants in China and other Download searchable
markets’. Alibaba may have been the largest IPO ever in global terms but, while few iPad editions from
companies could hope to earn that accolade, there’s a throng of thriving businesses the iTunes App Store
waiting in the wings to make it to the big time. The question is: who’s next?
Meanwhile, on page 12, Susanne Swaniker-Tettey, CFO of Okavango Diamond
Company, explains how she helped set up the distribution company from scratch.
ON
Colette Steckel, Asia editor, [email protected] DESKTOP
The latest edition
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ACCOUNTING AND BUSINESS
4 CoNTENTs
aB cHINa edItIoN
NovemBer/decemBer 2014
VoLUmE 17 IssUE 10
Asia editor Colette Steckel
[email protected] [phone]
International editor Lesley Bolton
[email protected] [phone]
Digital editor Jamie Ambler
Sub-editors Loveday Cuming, Peter Kernan,
Vivienne Riddoch
Digital sub-editors Rhian Stephens, Eleni Perry
Design manager Jackie Dollar
[email protected] [phone]
Designer Robert Mills News
Production manager Anthony Kay 6 News in pictures
[email protected] A different view of
recent headlines
Advertising Richard McEvoy
[email protected] [phone]
8 News round-up
Head of publishing Chris Quick A digest of all the latest
[email protected] [phone] news and developments
Printing Times Printers Pictures Corbis focus
12 Interview: Susanne
Editorial board Rosanna Choi, Jimmy Chung, Tracy Ho,
Belinda Kwee, Andy Lam, Arthur Lee, Roy Leung, Swaniker-Tettey We meet
Anthony Tyen, Fergus Wong, Davy Yun the CFO of Okavango
Diamond Company
ACCA
President Anthony Harbinson FCCA 16 On the horizon A new
Deputy president Alexandra Chin FCCA
ACCA report identifies
Vice president Brian McEnery
Chief executive Helen Brand OBE China’s next generation
of global giants
ACCA Connect
Tel [phone] commeNt
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A+8C6C 2A8 C86h2e0n g20d8u5 nporot dimucptl yo re snedrovircsee.ment by ACCA of a executive
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Copyright ACCA 2014 Accounting 22 Anthony Harbinson
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plus snapshot on
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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.
practice
27 The view from
technical
Tatiana Pavlova of Moore
Stephens, plus snapshot 49 IFRS 9 Putting
on managing risk the requirements into
practice is a challenge
28 World vision John
Veihmeyer, global 52 Technical update
chairman of KPMG, The latest on audit,
on shaping corporate taxation guidelines,
culture agreements and
financial reporting
insight
32 Group support people
Crowdfunding is 56 The postgrad
beginning to gain ground pages Studying
for a postgraduate
35 Graphics Loss trends qualification in multiple
and emerging risks locations
36 WCOA Technology acca
rules Digital 59 News Awards support
developments are continues; record
shaping the finance attendance at career day
function
60 AGM Minutes from
40 WCAER Principle the meeting on 18
matters The OECD is September
revising its Principles of
Corporate Governance 62 News Young Members
League meets; ACCA
42 WCAER Delivering Hong Kong holds annual
value Stakeholders are AGM; support for Tao
increasingly demanding Zhu Gong award; ACCA
greater accountability report on next global
giants launched
44 Careers Dr Rob Yeung
looks at the value of 64 Working together
networking, plus tips for ACCA and IMA members
the perfect business trip can benefit from a
strategic partnership
46 Management and
strategy What are your 65 Update New ACCA
divestment options? report on China’s next
global giants launched;
48 Forecast foundations new president welcomed;
How to create a diversity in business
forecasting model hampered by data gap
ACCounting And Business
6 news | pictures
▼ final accounts
Gone Girl actor Ben Affleck is set to star in The
Accountant, a film about a financial professional
▲ Pollution REtRiBution
Shanghai has hiked polluter fines to combat high smog levels
and enhance the city’s attractiveness for foreign talent
Accounting And Business
Pictures | news 7
◄ smoke choke
ASEAN countries are
looking to control tobacco
consumption with higher
taxes and by setting up
health promotion agencies
▲ vroom to grow
International motorbike makers are eyeing up the potential of South-East Asia, the world’s biggest
motorbike market after India and China, as machines with bigger engines grow in popularity
▲ tremors spread
The protests in Hong Kong have taken a toll on
the city’s retail and tourism sectors
Accounting And Business
8 NEWS | ROUND-UP
News round-up
Hong Kong prepares to embrace CRS, corporate governance in Asia Pacifi c falls
behind, OECD backs international tax reform, and integrated reporting gains ground
CRS READINESS PLEDGE IMF ENDORSES GST global industry awards. corporate structures for tax
The Hong Kong government The International Monetary Druckman said: ‘I am proud avoidance purposes.
has pledged to support Fund has given the thumbs of the achievement of the
the Common Reporting up to Malaysia’s impending International IR Framework TAKING AIM AT BANKS
Standard for Automatic Goods and Services Tax and its contribution to Former Goldman Sachs
Exchange of Financial (GST) as part of ongoing financial stability and co-chairman Alastair Walton
Account Information in Tax fiscal reform to broaden the sustainable development, has warned that Australia
Matters (CRS), issued by tax base. Speaking at an and am thrilled that the faces a ‘day of reckoning’
the OECD in July, joining international seminar, IMF IIRC’s work has been when the next financial
more than 40 countries, fiscal affairs department recognised in this way.’ crisis strikes due to the
including China, which have adviser Kiyoshi Nakayama might of its Big Four banks:
signalled their commitment. said that this shift of IMPACT ON EUROPE’ Commonwealth, Westpac,
PwC recommends that revenue source was a crucial The OECD’s Base Erosion NAB and ANZ. In a lecture
financial institutions should policy direction to maintain and Profit Shifting Action reported by Melbourne’s Age
assess whether their existing Malaysia’s long-term fiscal Plan is already leading to newspaper, Walton urged
compliance and information sustainability. He said the changes in European tax policymakers to consider
systems are flexible enough ‘growth-friendly tax’ was law, according to a study breaking up the oligopoly in
to accommodate the less distortive for economic by KPMG International. The order to boost competition
additional reporting and growth compared with UK is leading the way as and improve stability. ‘Given
due diligence obligations. income tax. the first of 44 countries to the inevitability of future
For taxpayers in general, formally commit to using the shocks to the global financial
the boosted international AWARD FOR DRUCKMAN OECD’s template, says the system, unless something is
transparency under the International Integrated report, The View in Europe. done to significantly change
CRS will serve as another Reporting Council CEO Paul KPMG predicts European the current structure of the
deterrent to the use of Druckman has been voted countries will also address Australian financial system,
offshore accounts, by both ‘Personality of the Year’ for issues of double non- there will come a day of
individuals and entities, to 2014 at the International taxation, transfer pricing reckoning as has happened in
avoid domestic tax liabilities. Accounting Bulletin’s annual and the use of hybrid the United Kingdom,’ he said.
7 GENERAL 8 ENTE NAZIONALE PER
MOTORS L’ENERGIA ELETTRICA
(2010) (ENEL) (1999)
5 VISA 19.7 18.1 17.4
(2008)
US$BN US$BN US$BN
24.7
16.0
US$BN
US$BN*
9 FACEBOOK
(2012) 1 ALIBABA GROUP HOLDING (2014)
* Flotation value subsequently increased
to US$25bn on 16 September 2014
Source EY: ‘Ten largest IPOs ever by proceeds globally’
ACCOUNTING AND BUSINESS
ROUND-UP | NEWS 9
SUKUK DEBUT CLSA Corporate Governance increasing taxes primarily tax. Secretary-general Angel
Hong Kong has made Watch, undertaken in on the wealthy. Thailand’s Gurría said that the G20
its debut in the Islamic collaboration with the Asian Ministry of Finance has had identified base erosion
financing world, pricing a Corporate Governance said that Chan-ocha wants and profit shifting as a
US$1bn five-year sukuk at Association. Ex-Australia, the new tax system ‘to be a serious risk to tax revenues,
the tightest spread for a ratings on the two top mechanism for fairness and sovereignty and fair tax
US dollar benchmark bond markets, Singapore and income generation for local systems worldwide. ‘Our
offering from a government Hong Kong, lost ground communities’. Estimates recommendations constitute
in Asia, excluding Japan. due to internal conflicts of project the new taxes the building blocks for an
The deal set a benchmark interest, weak leadership could generate as much as internationally agreed and
for Hong Kong and Asia and and opposition to reform, US$3.1bn. The inheritance co-ordinated response to
is expected to draw more the report found. Japan tax will reportedly levy corporate tax planning
sukuk issuance to the city. It has leapt to third position, taxes of 5% to 30% on all strategies that exploit the
also marks the world’s first and Malaysia, Taiwan and domestic assets passed gaps and loopholes of the
USD-denominated sukuk India have also moved down to heirs, such as real current system to artificially
originated by a AAA-rated up, but Indonesia and estate, automobiles, stocks shift profits to locations
government. The sukuk was the Philippines remain at and bonds. Certain assets where they are subject
allocated to more than 120 bottom. Amar Gill, CLSA’s can be moved or already to more favourable tax
global institutional investors, head of Asian research, says exist overseas, however, treatment,’ he said.
with 36% distributed to that political reforms – such raising concerns over
the Middle East, 47% to as Beijing’s war on pollution potential loopholes. RECORD REVENUES
Asia, 6% to Europe and – underscore that it is no Deloitte has posted record
11% to the US. By investor longer ‘business as usual’ TIME FOR OVERHAUL revenues of US$34.2bn
type, 11% was distributed in Asia. The Organisation for globally for the fiscal year
to fund managers, 56% to Economic Cooperation and ending 31 May, marking
banks and private banks, TAX REFORM PLANNED Development has released its fifth consecutive year of
30% to sovereign wealth Plans to reform Thailand’s its recommendations on growth. Accelerated demand
funds, central banks and tax system, including the the biggest changes to for its range of services was
supranationals, and 3% to introduction of inheritance international tax rules in observed in all regions of
insurance companies. and property taxes, have more than a century. The the world. The organisation’s
been approved by the chief goal is to create a single aggregate revenues represent
GOVERNANCE SLIPS of the military-led National set of international tax growth of 6.5% in local
Overall across Asia Pacific, Council for Peace and Order, rules to end the erosion of currency, or 5.7% in US
corporate governance General Prayuth Chan-ocha. tax bases and the artificial dollars. Growth was led
ratings have slipped again The proposed reforms shifting of profits to by consulting (up 10.3%),
»
according to the latest would raise revenue by jurisdictions to avoid paying followed by tax and
2 AGRICULTURAL 3 INDUSTRIAL AND CHINA TOPS IPOS
BANK OF CHINA COMMERCIAL BANK Alibaba’s initial public
(2010) OF CHINA (2006) offering, which floated
10 NIPPON TELEGRAPH on the New York Stock
AND TELEPHONE Exchange in September,
(NTT) (1987) was the largest ever
22.1 21.9 globally, raising a record
US$25bn.
13.6 The e-commerce
US$BN US$BN giant’s flotation means
US$BN that Greater China
holds the top four
spots in the IPO league
18.4 table, according to
20.5 figures released by EY.
US$BN Agricultural Bank of
China now takes second
US$BN
position, followed
by Industrial and
6 NTT MOBILE Commercial Bank of
4 AIA GROUP COMMUNICATIONS China and Hong Kong’s
(2010) NETWORK (1998) AIA Group.
ACCOUNTING AND BUSINESS
10 NEWS | ROUND-UP
OPERATION SNAKE A SUCCESS
A major joint customs operation coordinated by the European Anti-Fraud Office
(OLAF) and China’s Anti-Smuggling Bureau prevented the loss of more than €80m
(US$103.7m) in customs duties between February and March 2014. It was the first time
such an operation involved Chinese customs officials.
Over a one-month period, Operation SNAKE detected 1,500 containers where the
declared customs value was heavily undervalued. This included false descriptions
of goods, false weights and quantities, and counterfeit goods. In addition, customs
authorities identified several so-called missing traders and non-existent importers,
triggering criminal and administrative investigations in several countries.
Algirdas Šemeta, commissioner responsible for customs and anti-fraud, said that
the operation reinforces the benefits of joining forces at global level to fight a common
threat. ‘The undervaluation of imported goods is an endemic problem worldwide,
affecting not only EU customs, but also those of other countries, including China.’
legal (7.7%). Financial RUMOURS QUASHED straight-through processing (53rd), Brazil (56th), India
advisory and enterprise risk BDO Hong Kong has to multiple banks, and (60th) and Russia (64th).
services also experienced refuted speculation that it 26% are still handling
strong growth (6.8% and is in a merger discussion payments manually BAKER TILLY EXPANDS
4.2% respectively), while with BDO China. In a using spreadsheets. Expanding its reach to
audit gained 2.5%. statement, it said that Sabah, Baker Tilly in
Meanwhile, EY announced under the current legal and IR ADVANCES Malaysia has added Chang
combined global revenues of regulatory environment PwC analysis has found & Associates to its network.
US$27.4bn for its financial between mainland China that the annual reports The newly renamed firm,
year ended 30 June 2014 – and Hong Kong, and due of many companies in Baker Tilly CKF, brings the
a 6.8% increase over FY13 to different firm cultures, Singapore already have total number of offices in
in local-currency terms. both agreed that a merger some components required Malaysia to eight, with an
Revenues grew 6% in US will not be realised in the by the Integrated Reporting additional office in Phnom
dollar terms. All EY’s service short term. ‘However, BDO Framework – such as Penh, Cambodia. A new
lines continued to grow in Hong Kong confirms that information about strategy, firm has been added in
FY14: advisory by 14.4%; it has been in discussion business model and risks – Canada, with Collins Barrow
transaction advisory services with BDO China since last but they would need to link Victoria joining Baker Tilly’s
6.5%; assurance 4.5%; and year for closer cooperation these elements better to expanding network of 25
tax 4.3%. with the aim of providing holistically communicate a independent member firms
exceptional service to more relevant value creation across Canada.
CONFIDENCE DIPS clients which operate in story to stakeholders. The
China business sentiment both jurisdictions.’ analysis, the first of its kind OUTWARD BOUND
hit a five-month low in in Singapore, surveyed the Malaysia needs around
September in what one PAYMENTS A PRIORITY 30 companies on the Straits 60,000 accountants to
analyst called a ‘reality Over half (56%) of Times Index (STI). become a developed nation
check’ for the world’s treasurers polled in Asia by 2020, but it is competing
second biggest economy. have said that optimising AP CLIMBS CGI RANKS hard with other countries to
The dip followed an eight- existing payment processes Singapore ranks second fill the global demand for
month high in August, is their top priority. ‘As Asia in the World Economic accountants, the Financial
and was attributed to the has a diverse financial sector Forum’s latest Global Times reported. Noting that
waning impact of stimulus with dynamic emerging Competitiveness Index Malaysia’s TalentCorp had
measures and companies markets, handling payments (GCI), behind Switzerland, taken part in London-based
reassessing their outlook. A is far more complex than which tops the ranking for career fairs to lure local
decline in confidence among in Europe or the Americas,’ the fifth year running. Hong accountants back home,
manufacturers was attributed said Tony Singleton, Kong moved up two places the report also alluded
as the precipitator. ‘[In managing director Asia from ninth to seventh, while to initiatives from other
September], firms seemingly Pacific at Reval, a provider Japan, now ninth, is closing countries, such as China,
underwent a reality check of treasury and risk the gap on the world’s most the UK and Uganda, which
with sentiment falling to management software, competitive economies. The are vying to fill their skills
the lowest since April,’ which conducted the poll. US is ranked fifth and the shortages. ■
said Philip Uglow, chief Only 9% of the treasuries UK 10th. Of the five BRICS,
economist at MNI Indicators, polled have fully automated China leads in 29th place, Compiled by Peta
which produced the data. payment workflows and followed by South Africa Tomlinson, journalist
ACCOUNTING AND BUSINESS