In the Name of ALLAH,

the Most Magnificent, the Most Merciful.

(1) Say, “I seek refuge with the Lord of

the daybreak
(2) From the evil of everything He has
created,
(3) And from the evil of the dark night
when it penetrates,
(4) And from the evil of the women who
blow on the knots,
(5) And from the evil of an envier when
he envies.

— Translation : Mufti Taqi Usmani

Surah: 113 - Surah Al-Falaq, verses 1 to 5 http://www.quranexplorer.com

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Management Accounting, to continually set and
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research bringing value-addition to the economy.

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Journal is also available on ICMA Pakistan’s Website : www.icmap.com.pk

 National Council 2012-14
President and Chief Executive Members Members - Government Nominees
Mr. Zia ul Mustafa, FCMA Mr. Mohammad Ashraf Bawany, FCMA Mr. Tassaduq Hussain
Chairmen: Executive, Education and Disciplinary Committees Chairman: Quality Assurance and Ethics Committee Deputy Secretary (CF-II)
CFO & Business Administrator Chief Executive & Managing Director Finance Division,
Expo Lahore (Pvt) Ltd. Linde Pakistan Ltd. Government of Pakistan
Vice President
Mr. Ghulam Mustafa, FCMA Mr. Sajjad Ahmad, FCMA Mr. Tahir Mahmood, FCMA
Chairmen: Examinations and Technical Support & Practicing Chairmen: Audit and Members’ Social Welfare Committees Acting Chairman
Development Committees General Manager (Cost Accounts) Securities and Exchange Commission
Partner, Tariq Nasir Rashid Shah Pakistan Telecommunication Company Ltd. of Pakistan (SECP)
(TQMS Consulting)
Honorary Secretary Mr. Jawed Mansha, FCMA Mr. Muhammad Abdul Basir
Mr. Abdul Wasey Khan, FCMA Chairman: Corporate Relations & Communications Committee Chairman: Public Sector Coordination Committee
Chairman: Students Affairs Committee Chief Internal Auditor Deputy Auditor General (APR&SD)
Acting Senior Manager - Internal Audit Pakistan International Airlines Corporation C/o Auditor General of Pakistan
Pakistan Telecommunication Company Ltd.
Honorary Treasurer Mr. Muhammad Haroon Rasheed
Mr. Abdul Khalil, FCMA
Mr. Shahzad Ahmad Awan, FCMA Chairman: Continuing Professional Development (CPD) Acting Managing Director, BSC
Chairman: Research and Publications Committee and Seminars/Conferences Committee State Bank of Pakistan
Chief Officer (Billing & Recovery) General Manager Finance
Sui Northern Gas Pipelines Limited (SNGPL) Askari Aviation Pvt. Ltd. / Army Welfare Trust (AWT)

Research & Publications Committee

Chairman/Chief Editor
Mr. Shahzad Ahmad Awan, FCMA

Members
Mr. Nazir Ahmed Shaheen, FCMA
Mr. Anwar ul Haq, FCMA
Mr. Mohammad Iqbal Ghori, FCMA
Mr. Naeem Haider, FCMA
Mr. Muhammad Imran Afzal, FCMA
Mr. Muhammad Yasin, FCMA
Mr. Saqib Masood, ACMA
Mr. Kamran Mahmood Butt, ACMA
Mr. Faisal Mobin, ACMA

Email: rp@icmap.com.pk
URL: www.icmap.com.pk
 Volume : 23.3 l May-June, 2014

MANAGEMENT
ACCOUNTANT
Official Journal of Institute of Cost and Management Accountants of Pakistan

The only Professional Journal in Pakistan with a circulation of over 10,500 copies per issue

WHAT’S INSIDE THIS Interview Section

issue
6 Meritorious Article 43
An Exclusive Interview with
Engr. M. A. Jabbar
Former Chairman, SITE Association
of Industry; Former Vice President,

17 the Federation of Pakistan

Chambers of Commerce and
Industry (FPCCI) and Member New rules mean virtually every
Board of Governors of Sustainable
Development Policy Institute (SDPI)
company will need a code of ethics...
Ensuring Ethical Effectiveness
From the Desk of President and Chief Executive 4
From the Desk of Chief Editor 5
23
Focus Section
— An Assessment of Professional Talent Migration from Pakistan
- A Paper produced by Research and Publications Department, ICMA Pakistan 10
— Best Practices for Building Effective Talent Tarn
27 By Salman Masood Sheikh, FCMA 17
– Building of Talent Reservoir, by Mazhar Mahmood, FCMA 23
— Managing Talent - A Research Report, by Muhammad Asif Qureshi, ACMA 27
— The Organization in the Pursuit of Talent Management
30
30 By Abdul Raqeeb, ACMA, CIS

— Building Talent Reservoirs: Educational Endowments, Fostering

unheeded Talent by Jamshaid Mohsin, ACMA 32
— Nursery of Talent Reservoir by Syed Irshad Ali, ACMA 35
— Possibility of Succession Planning in Public Sector
- A Sneak Peek into Culture, by Ayesha Mirza, ACMA 37
32 — Building Talent Reservoir– Role of ICMA Pakistan
By Syeda Sana Batool, Qualified CMA 39
— Ten Tricks of Talented Organizations, by Muhammad Muzamil Farooq 41

Articles Section
— First Appellate Forum Under Some Fiscal Laws, by Qaisar Mufti, FCMA 48
35
Updates
– Economic Horizon - SBP’s Monetary Policy 55

Disclaimer: Views expressed herein are author’s own thoughts/viewpoint and do not represent
ICMA Pakistan policy unless so stated. Publication of paid advertising
and new product/service information does not constitute an endorsement by the ICMA Pakistan.

Our Next Issue

39
Professional Networking
Research & Publications Committee would welcome articles on the
above-mentioned topic before August 10, 2014 for Journal’s forthcoming issue.
Message

From the Desk of

President & Chief Executive

It gives me great pleasure to present the May-June 2014 Issue of the 'Management Accountant', which is on the
theme of 'Building of Talent Reservoirs' .

The objective of 'Talent Reservoir' is to build a high talent pool of people who are capable of supporting an
organization's current and future business requirements. Talent Reservoir refers to a talent management process
that helps in identifying the competencies required by any organization as well as risk management and organization
deficiencies. It integrates all components of talent management viz. selection; competency and performance
evaluation; coaching and staff development; and succession planning.

Talent management, in present global business environment, has assumed much significance, in view of the fact that
success in international business depends greatly on the quality of top executive talent and how effectively this
critical resource is developed and managed. Today almost all business entities use the management tools to make
the best use of the skills, knowledge and competencies of its staff and to implement corporate and business
strategies, missions and goals of the organization.

It is a fact that a substantial proportion of employers around the globe are finding it difficult to get the skilled talent
for their organization and this is substantiated by different surveys. These surveys identify that by far the most
commonly used approach used by organization to address the talent shortages is to offer training and development
to their existing employees.

The Pakistani companies should also focus on this approach to arrest the increasing trend of brain drain or human
capital flight from the country and bring back the professional talent who have migrated overseas for better
prospects and opportunities. The government should also ensure merit-oriented culture in the society and provide
employment to the deserving candidates that suits their qualification. It should also devise plans and strategies to
utilize the accumulated expertise of Pakistani diaspora overseas for the economic development of the country.

Zia-ul-Mustafa, FCMA

4 | Management Accountant, May-June, 2014

 Message

From the Desk of

Chief Editor

This current issue of the Journal on the theme of 'Building of Talent Reservoirs' highlights the significant role of
talent management in the corporate business. This topic has been selected to give our members an opportunity to
share their insights and experiences on the Human Resource (HR) aspect of the business - which is an integral
component of performance management and evaluation.

The Focus section begins with an interesting write-up by the Research & Publications Department on professional
talent migration from Pakistan. This paper assesses the trend of migration of Pakistani professionals, especially
accountants, to markets in the Gulf & Middle East as well as in Europe and USA. I hope that the readers will find this
research paper quite beneficial and informative.

In other articles included in the focus section, the writers, all of whom are qualified members of the Institute, have
covered various aspects of talent management such as best practices for building talent management; role of Board
of Directors in creating talent management reservoir; talent management in accounting profession; talent
development process; use of education endowment funds for talented people; ICMA Pakistan as a talent reservoir;
and role of ICMA Pakistan in building talent reservoirs.

In the Meritorious Article Section, we have selected an Article titled 'Ensuring Ethical Effectiveness" written by
Randy Myers and judged as one of the 'Articles of Merit' by the PAIB Committee of IFAC. This paper dilates upon the
requirement for disclosures by corporate firms under the Sarbanes-Oxley Act

The ‘Articles Section' includes a very comprehensive article contributed by our senior member, Mr. Qaisar Mufti, on
the "First Appellate Forum" under some Fiscal Laws. The Update section covers a summary of monetary policy
decision announced by the State Bank of Pakistan on 17th May 2014.

Please enjoy reading and do share with us your comments on how to make the Journal more informative.

Shahzad Ahmad Awan, FCMA

Management Accountant, May-June, 2014 | 5

Interview Section

An Exclusive Interview with

Engr. M. A. Jabbar
“The relevance of some issues during the period may have
changed in terms of mode of approaches but nevertheless
WTO in terms of objectives remains the same. There can be
changes in the modalities of ingredients of the supporting
packages but if we talk about less tariff and no tariff and we talk
of NAMA and coefficient of Swiss formula, it does not make any
basic difference except that today LDC and GSP are converging
and are being given to the less and least stronger economy at
par with; however, the political thinking and backup behind, in Engr. M. A. Jabbar is a renowned
some reasons, like combating terrorism or drugs are the rescue industrialist and a well-known
gates to sustain the justifications in policy shift by EU or from
elsewhere.”
figure in the business community
of Pakistan. He is the former
“US is still in active and once it is active we can see many areas
to open and we will be caught with surprise as it always happen Chairman of SITE Association of
so. I remember tariff base system (TBS) was replaced with Industry and former Vice
TRIMs but AIDC a substitute could survive its tenor and now President of the Federation of
we are talking of new AIDC. The taxation again for foreign Pakistan Chambers of Commerce
investment, even in part, calls for 20% taxes but for locals more
than 30% corporate tax. Isn’t it a example of discrimination
& Industry (FPCCI). Presently, he
against the committed national treatment. The projects is a member, Board of Governors
similarly are discriminated in terms of concessions, which of Sustainable Development
shows how much we ourselves standby to help the domestic Policy Institute (SDPI); member
potential to move forward.”
Syndicate of University of Karachi
“I remember SBP asked for bigger margins for import of finished and the Honorary Consul of
products against lower margins for import of raw materials. It
Ukraine at Karachi. He has
was perfect in the direction of national interest but in the name
of IMF and donors that no discrimination should be sustained remained Chairmen of the WTO
on imports. In my personal opinion there was no discrimination, and R&D Affairs Committees of
the import of raw materials at less cash margins with banks FPCCI. Mr. Jabbar, who is also
against higher cash margins on import of finished products is a
Chief Executive of M/s. Qaim
national policy which is called developmental economics in the
interest of exploiting domestic potential. I tried by best but Automotive Manufacturing (Pvt)
when the shots come from top and not consolidated for Ltd., holds a bachelor's degree in
opposition by industry, then, you may see anything to happen. ‘Engineering’ with post-graduate
So now, no cash margins for rent seeking game is again back as specialization in ‘power systems’
a policy.”
from the former Soviet Union. He
“Indians are champions of liberalization but they are really on a
has more than 30 years
real game of national legislation on standardization. They will
allow cement from Pakistan when they have bigger ADB and experience in the engineering
less domestic manufacturing. The situation changes and our industry and has been associated
cement cannot cross the borders. When they have much with the trade and industry for a
appetite for higher Fe iron ore for their domestic iron long time. He has represented the
manufacturing, they impose export duties and even some of
the regions are barred from exporting the iron ore. Classic and private sector at various national
great service to the nation though policy manufacturing. and international fora. He is also
Where we are? we need to review and revisit”. life member of FPCCI and SAARC
– Engr. M. A Jabbar Chamber of Commerce & Industry.
6 | Management Accountant, May-June, 2014

What has been done so far to create mass
awareness on WTO and what are future plans in
this regard?
Before, I comment on this question I would like to recall the
observations made in this regard by Mr. Razzak Dawood,
former Minister for Commerce and Industry who observed
that “In Pakistan, the business community knows very little
about the WTO and its impact on the country's economy.
Moreover the government functionaries also need
understanding of the issues for creating room in the policy
matters to recommend adjustments in the business
governance laws. Thus, they can inform the business
community to face the challenges of WTO and prepare them
to bid for sharing the promises of opportunities created by
emerging trends in world business”. As I see it, the
observations made by Mr. Razzak Dawood are still there to be
considered and handled with regard to creating awareness
among all stakeholders to face theWTO regime. Primarily it is
the responsibility of the government to create awareness
among all stakeholders by informing them, educating them
and advising them on how to face the impact ofWTO regime on
country economy. The productive utility of the responsibility is
through public private partnership in which Government is
spending resources on the advice of private sector seated on
the driving seat of the engine of economic growth.
Unfortunately this has not been done in just and proper
manner. The WTO awareness programme got a kick start with
a monetary grant from the British government who later
decided to discontinue it following the military takeover in
October 1999. However in response to FPCCI's request, the
British government restored the grant with the objective of
providing understanding of the complexities of WTO
agreements and the knowledge required for asking the
government to prepare business governance laws in
conformity with international trading laws outsourced by the
WTO agreements. The first seminar with regard to WTO was
held in the last quarter of 1999 when some specific options
were identified for consideration of the government of
Pakistan and the Central Board of Revenue. Very recently on
the instructions of the Commerce Minister a mass awareness
campaign has been launched to educate all stake holders,
including manufacturers and exporters about the rules of the
multilateral trade regime. The government also intends to hold
talk shows and discussions, seminars and workshops to
educate the people about the WTO agreements. It may be
mentioned here that the WTO agreements mostly deal with
agriculture, health regulations for farm products, textiles and
clothing, product standards, investment measures, anti-
dumping measures, safeguards, customs evaluation methods,
pre-shipment inspection, import licensing, subsidies and
countervailing measures, movement on natural persons, air
transport, financial services, shipping and the tele-
communications etc including but not limited to.
The United Nations Conference on Trade and
Development (UNCTAD) and the International
Trade Centre (ITC) are reported to have
extended assistance to Pakistan to meet WTO
requirements. How does FPCCI view this offer?
The UNCTAD and the ITC have joined hands to provide
technical assistance to the developing countries including
Pakistan to enable them comply with the WTO's trade related
requirements. The UNCTAD-ITC are reported to have drawn up
Interview Section
training programme with the objective to create awareness
with regard to WTO's requirements on Intellectual Property
Rights and Industrial Standards. These two organisations
would be inter-acting mostly with the Export Promotion
Bureau, but as the Trade Related Intellectual Property Rights
(TRIPS) is a matter of serious concern to FPCCI, it is ready to
extend all assistance to the implementation of their training
programme.
How is Pakistan positioned to face WTO's
impact on the country's textile sector?
No doubt the most glaring strength of Pakistan is its textile
industry. Being 46 per cent of the total manufacturing sector,
having 38 per cent share in the manufacturing's employment
generation and 67 per cent share of the total exports, the
textile industry stands strong and has the potential to survive
and grow in the free trade area. In recent years there has been
increased investment in terms of balancing, modernisation,
capacity enhancement and quality up-gradation in this sector
enabling it to compete under free market conditions, provided
there is a level playing field. The overall export analysis shows
that the export earnings of Pakistan depend on cross border
movement of textile and clothing. The major exports in quota
countries include European Union and the USA. Now Pakistan
has to face competition in price and quality for keeping its
share of textile clothing to quota countries which have lifted
the restrictions of quota from January 2005.
In this context the World Bank has reported that Pakistan has
some internal weaknesses and that Pakistan may not be able
to compete in quota free regime unless necessary steps are
taken towards increasing productivity of textile and clothing
sector alongwith reducing cost of production and
rationalization of tariff. The same report also places Pakistan
at 63 per cent below production level against China in areas of
textile and clothing manufacturing. The report also pointed out
that the raise in production level in close proximity of China can
add one billion US dollars earnings in exports. According to the
World Bank's report Pakistan may face timely setbacks in
exports of clothing but will retain its share in textiles. However
the changes indicated by the World Bank can be possible only
after creating appropriate atmosphere which could be
achieved by making immediate moves to increase the
productivity of the textile and clothing sector and by reducing
the cost of infrastructure including the cost of production and
proper adjustment of tariff regulations. Moreover the
government needs to introduce a policy and regulatory
framework for strengthening the private sector's capacity to
deal with rapid changes and growing competition for capturing
the trade opportunities that are being created through
improved market access.
What is the state of Pakistan's readiness and
preparedness to face the advent of WTO
regime?
Our readiness to face the WTO regime can be measured in
terms of our compliance of TRIPS and TRIMS in which field we
are still non-committal and look forward to a policy of seeking
extensions and evasions.
Here it may be pointed out that implementation of Trade
Related Intellectual Property Right (TRIPS) are important for
and in developed countries. Implementation of Trade Related
Intellectual Property Rights (RIPS) in developing countries is
also very important for having congenial and mutually
Management Accountant, May-June, 2014 | 7
Interview Section
acceptable trade relations with the developed countries.
However in Pakistan the TRIPS laws are split amongst different
ministries such as the Ministry of Commerce, Ministry of
Industries, Ministry of Education and the Ministry of Science
and Technology. In 2001 a single umbrella for handling TRIPS
was announced in the Trade Policy. It was known as the
Pakistan Intellectual Property Rights Organization (PIPRO). It
was again announced in the subsequent trade policies
including of 2003-04. The private sector still has not seen the
draft legislation of the PIPRO. It is time that one umbrella is
created by pooling officers from all the concerned ministries,
with academia, researchers and businessmen who, together
can promote trade and business interests, while protecting
consumers and complying with international obligations.
The Trade Related Investment Measures (TRIMS) affect the
automobile industry already protected by tariffs and nontariff
barriers by restricting the import of second hand automobiles.
It is time to liberalise the import of raw materials at the lowest
rate of duty, against higher slabs for import of finished goods.
Steel, plastic paper and chemicals are raw materials which
need to be imported at the minimum possible tariffs without
any discrimination between category of importers.
Pakistan's import oriented industries fear the WTO most. WTO
envisages that the deletion programmes for automobiles,
electronics, electrical products and engineering items will be
phased out within five years from the date of the enforcement
of the agreement, with the provision that transition could be
extended in case of difficulties in eliminating Trade Related
Investment Measures. The TRIMS when fully enforced would
impact on deletion policy and local content requirements in
automobile industry. Mention may be made here of some
concerns. The vendor industry urges for supportive
government policy for automobile industry, as it has generated
tremendous supporting vendors who are generating million of
jobs to the local population. Whatever is being produced by this
industry is for automobiles. Our industry is not of the standard
of even developing countries like India. The government must
therefore continue the supportive policy for auto industry to
help it in becoming a engineering base for diversification.
In areas of compliance on technical regulations, sanitary
measures, non-tariff measures, and matters related to
environment and social compliance we are still short of
constitutional inputs as to what are the requirements in
importing countries for welcoming sale of merchandise. These
agreements may not be mandatory provisions of WTO but all
the member countries are allowed to treat national standards
for sale of imported merchandise. In these areas the loud voice
is now for correcting the situation. It should be noted here that
while new forms of barriers like the anti-dumping duties,
countervailing, social, labour and security issues will play an
important role by the beginning of 2005, the developed
countries would be lobbying for support of their interests in the
WTO.
What is Pakistan's state of readiness to face the
WTO regime in other sectors such as agriculture
and industries such as leather, carpet and other
goods?
The Agriculture of Pakistan has been having pendulum swing
from import and export of the same commodities such as
8 | Management Accountant, May-June, 2014
sugar and wheat. The potential in agriculture continues to exist
as the agriculture produce is not fully routed to agro based
industries which have to be given incentives so that Pakistan
can take the share during the period when the developed
countries start dismantling subsidies on agriculture which
they are now promising. On the products other than textile and
clothing, the continuity and progress of export figures will
depend on meeting the requirements under N.T.B.s as allowed
by the WTO to be applied by individual member countries.
As regards other items, exceptions apart, all our traditional
export products leather, sports goods, surgical instruments,
fish, fruits, vegetables etc. fetch low prices abroad. What is
needed is the up-gradation in the existing industrial base and a
shift in the future investment pattern with or without the
involvement of government to produce diversified range of
sophisticated products of international standards. In the
services sector Pakistan has to consider proper policy to
balance the interests of local and foreigners encouraging both
to invest resources for capital development and employment
generation.
What about the role of National Tariff
Commission?
The National Tariff Commission requires complete
restructuring so that it becomes capable of taking measures
for the imposition of Anti-Dumping, Countervailing and
Safeguard measures to protect the domestic industry.
The National Tariff Commission should be made an
autonomous body headed by a chairman from the judiciary and
should have private sector professionals conversant with cost
structure of produced goods, particularly in view of the need to
evaluate industry performance as well as the need for legal and
other services accompanying anti-dumping procedures. The
FPCCI has also suggested to create a buffer body to carry out
research and development and advise the small industries on
how to file applications for anti dumping measures on
imported goods against which their survival becomes
questionable. The Cost and Management Accountants with
their professional knowledge and experience can be of great
help in setting up such advisory bodies which can take care of
national interest which if harmed would add to unemployment.
Unfortunately the idea has been accepted but not yet
implemented.
Overall, what is FPCCI's role in facilitating
Pakistan's successful handling of WTO's advent
and further preparations for tackling emerging
markets in the new world trade order?
FPCCI has been actively participating in trade policy proposals
by sending recommendations and also pressing for the
implementation of trade policy measures to add to the state of
readiness and preparedness to face the effects of globalization
of trade. FPCCI have been constantly making positive
suggestions and ideas in this regard, These include:
– The government of Pakistan and parliamentarians must
link with the WTO Mission in Geneva for consultations to
reply in the affirmative or negative on the issues in which
consensus is to be given as it would effect the trade and
industry of the country.

– Since the multilateral agreements mandated by the Doha
Development Agenda are progressing at not very high
pace, it gives Pakistan time to accelerate signing re-gional
trade agreements and to activate regional cooperation
agreements including BLTAS & FTAs.
– The Ministry of Commerce must research on how to shift
exports to other destinations by considering the new
configuration of EU.
– Our missions in foreign countries must be activated to
anticipate antidumping measures on the import of
Pakistani goods so that the time gap before the imposition
of Antidumping duties could be utilized to seek deferment
and lobby for its anti measures.
– In order to face the challenges of TBTs and NTB's the
government of Pakistan should secure information on the
standards that are demanded by importing countries in
existing and in likely to be come emerging markets.
– The government of Pakistan be urged to amend policies for
the manufacturing of engineering goods to offset the
effects of a termination of the TRIMS grace period.
– The ministry of Commerce should take stance, in
multilateral negotiations through developing consensus
with similar economies on rules seeking concessions of
grace period on the basis of the actual level of progress. The
rules must be based not on the claim of being a developing
country when it is the least developed country in actual
statistics of the economy.
– Legal defence before a dispute settlement body is an area of
vital concern. We should therefore have a body of
professionals who can defend cases of antidumping for the
country in a dispute settlement body.
– The country has internal weaknesses such as the high cost
of doing business, lack of strong infrastructure, high energy
charges, inadequacy of water supply for industrial areas and
multiple laws for the same purpose such as the labour levy
related laws which add to the cost of doing business,
adversely affecting competitiveness. These matters have
to be rectified.
– The local industry has long demanded that import of
machinery and capital goods be zero based at the time of
import so that the cost of the project and servicing of the
mark ups are manageable, for better feasibility of the
project, as a sustainable and profitable project. The issue
needs to be addressed.
– Prepare a list of vulnerable items where application of Trade
Remedy laws may be expected, based on natural
production cycles of key industries in Pakistan.
– Form, at the level of Export Promotion Bureau and
Federation of Pakistan Chambers of Commerce & Industry,
a Trade Remedies Action Committee, addressing issues of a
practical nature - e.g. list of lawyers by areas of
specialization, legislation and practices of Pakistan's key
trading partners and other imports sources being complaint
of dumping by domestic industry (e.g. domestic Anti-
Dumping legislation and practices of the EU, Japan, USA, 10
major trading partners and China and others).
Interview Section
– A facilitation Centre be established in FPCCI or EPB
employing professionals to advise SMEs manufacturing
sector to establish their case seeking Anti-Dumping duty
imposition through NTC. The facilitation center is proposed
to be funded from EDF or EMDF or from other funds under
arrangement by the Ministry of Commerce so that practical
steps can be taken to help SME sector. Alternatively an
advisory Body needs to be established in order to help
identify industrial sectors and determine when to invoke
and apply relevant laws relating to Safeguards and Anti-
Dumping and Countervailing actions.
– Consolidate information, raise awareness and provide
professional advice of a practical nature to all stakeholders
(private sector, government and civil society) addressing
key issues relating to Pakistan's obligations under
GATT/WTO legal provisions. This should focus on strategic
questions such as cross retaliation that could target
Pakistan's textile sector, e.g. owing to violation of disciplines
in different for altogether.
– Explore a more active stance for Pakistan as a plaintiff
rather than respondent in the application of Anti-Dumping
Duties.
– Broaden participation in formulation and implementation of
WTO initiatives protected by Trade Policy, beginning with
wider stakeholder representation within Pakistan's
delegations to the WTO's Conferences, ministerial, mini and
of other levels in Geneva and elsewhere for interaction of
private sector with counterparts for better gathering of the
informations. This will help in taking positions on the basis
of like economies and on the basis of similar pattern and
level of development.
– Rationalize the use of Trade Remedies, bearing in mind that
Safeguards and Countervailing Duties may be the
instruments of choice for influencing issues relating to
national interest, while Anti-Dumping Duties may be more
appropriate for targeted action within given industries.
– Prepare Pakistan's negotiation positions well in advance of
the WTO's Ministerial and other level Conferences through
an immediate and wide consultation process.
– Define Pakistan's position through the commissioning of
timely studies focused on export performance and
evaluation of economic and employment related impacts in
trade and industrial sectors, particularly as regards
opportunities and risks from:
(a) China's accession to the WTO
(b) Enlargement of the EU
(c) Increasing cooperation within NAFTA
(d) Proliferation of Regional Trade Agreements
(e) FTAs, PTAs, BLTAs and other economic cooperation
agreements
The interview ended with a vote of thanks to Engr. M. A. Jabbar,
Former Vice President, Federation of Pakistan Chambers of Commerce
and Industry (FPCCI) , who spared his valuable time and gave his candid
views exclusively for this journal. – Editor
Management Accountant, May-June, 2014 | 9
Focus Section

An Assessment of Professional
Talent Migration from Pakistan
A Research Paper produced by the 'Research & Publications Department' ICMA Pakistan
Preamble with massive and permanent emigration of highly qualified
and talented professionals from developing countries to
'Talent migration' or 'brain drain' is a global phenomenon advanced nations. This phenomenon had an adverse impact
whereby mostly developing and poor countries lose their on economic growth and development of these countries.
educated, technically and professionally skilled and talented
workforce, who prefer to be employed in the rich and According to the World Bank, 'brain drain population' are
advanced countries for better job and career prospects, those who are 25 years old and above, hold a tertiary-level
better salary and for improving their living and working degree and do not currently reside in their country of birth.
conditions. Brain drain or emigration of skilled workers has The United Nations (UN), defines 'brain drain' as a 'one way
become the dominant pattern of international migration movement of highly skilled people from developing countries
now-a-days, in the context of globalization, expansion of to the developed countries that only benefits the
knowledge economy and ageing population in rich countries. industrialized countries'.
Brain drain is, sometimes, also termed as 'human capital Brain drain or human flight capital has been defined by the
flight' as it resembles international transfer of resources in economists, intellectuals and writers in different ways but
the form of human capital. the meaning of all of them are almost similar. Some of these
In this Research Paper, we have made a detailed assessment definitions are:
of migration or brain drain of professional talent from a) Brain drain is the departure or emigration of individuals
Pakistan, supported by data and statistics from with technical skills or knowledge from organization,
independent sources. This Paper is broadly classified under industries and geographical regions.
the following heads:
a) Definition and origin of term 'Brain Drain' The developed countries, including USA are
b) Benefits and Losses of Talent Migration experiencing low birth rates and an ageing
c) Why talented professionals migrate? population (workforce), which is compelling them
d) Recent trends in international migration to look towards the emerging and developing
e) UAE most popular migration place for markets for their requirement of skilled workforce
Professionals Linkedin Study
and talented professionals.
f) Statistics of Professional Talent Outflow
from Pakistan
b) Brian drain is the departure of highly educated people
g) Increasing migration trend of Pakistani Accountants from one profession, geographic region, or nation to
h) UAE is the top destination for Management another.
Accountants c) Brain drain is the migration of engineers, physicians,
i) Pakistan ranks 2nd in Global Index of Support for scientists, entrepreneurs and other highly skilled
Immigration professionals with university-level education and
training.
j) Students Emigration A Great loss of Talent for Pakistan
d) Brain drain is the movement of highly skilled individuals,
k) How to achieve reverse brain drain? some referred to as knowledge workers, from their home
recommendations countries to countries that offer them greater
opportunities in their area of specialty as well as in
Definition and origin of term 'Brain Drain'
terms of living conditions and life styles.
The term 'brain drain' originated in the 1960s when a good
e) Human flight capital means flow of human capital out
number of British professionals (i.e. scientists, researchers
of a country, particularly skilled individuals and tertiary
and intellectuals) emigrated to the United States for better
graduates.
working environment. This pattern followed during 1970s
10 | Management Accountant, May-June, 2014

Benefits and Losses of Talent Migration
Talent migration or international movement of skilled
workers and professionals brings a number of benefits and
losses for both the home country and the country of
destination.
Benefits of Migration
a) Migration of professionals and talented workforce
contributes positively towards social and economic
growth both in the countries of origin and the countries
of destination.
b) Migration of skilled and unskilled workforce reduces
poverty and unemployment in home country and
expands access to talented and skilled labour force in
the host country.
c) Emigration of skilled people strengthens the
knowledge-based economy. The returning emigrants
bring back experience and knowledge and act as
'knowledge brokers' who facilitates in technology
transfer, skills development and knowledge exchange.
d) Migrants play the role of 'development agents' by linking
the origin country with the host or destination country
for achieving economic growth and
development. The highest
e) Emigrants help their home country by
FY 2012-2013 were received from Saudi Arabia,
sending back remittances and making
investments in viable development which is one of the top most destinations for
projects.
professionals and workers from Pakistan.
Losses of Migration
a) Migration of professionals and skilled workers is a
matter of concern for the developing and emerging
countries. International migration, as a result of
globalization, has contributed to growing inequality
across countries as human capital is becoming scare
where it is already scarce; and becoming more
abundant where it is already abundant.
b) Departure of professionals and workers overseas
results in less tax revenue, loss of potential
entrepreneurs and shortage of key workers in the
developing countries.
c) The reduction in human capital stock as a result of
emigration of professionals slows down the economic
progress in the host country.
Why talented professionals migrate?
According to a research study, talent migration is directly
proportional to the earning differential which means that
more talented professionals will tend to migrate, in case
there is reduction in their rate of return due to domestic tax
and incomes policy. Secondly, talent migration also takes
place when the state of affairs does not let the people to use
their brain to best of their ability. Others reasons may be lack
of opportunities; economic depression, law and order
situation etc.
Focus Section
Research also suggests that there is a global and macro-
perspective of massive movement of talented professionals
to the advanced countries, especially to the USA. A major
segment of business entities today operate in the global
market place and they continuously need highly qualified
professional managers and talented workforce, who are not
only well updated with the industry but also know the global
implications of their decisions. The developed countries,
including USA are experiencing low birth rates and an ageing
population (workforce), which is compelling them to look
towards the emerging and developing markets for their
requirement of skilled workforce and talented professionals.
That is why; USA is now the top most destinations for all the
international migrants, especially from the developing
countries.
The 15th Annual Global CEO Survey, conducted by the
PricewaterhouseCoopers (PWC) in 2012, revealed that
CEOs are finding it difficult to get the right talent they need
to meet business demands and future prospects for the US
economy are unlikely to improve without a long-term
solution to existing talent shortages. This survey which
interviewed 1258 CEOs in 60 countries, with 160 CEOs in
USA, further reports that CEOs are looking for business
growth in developing markets like Brazil, India and China by
remittances of US$ 4.12 billion during
utilizing the home-growth talent base in these markets.
The PWC survey concludes that during the past decade,
global movement of talent has increased by 25 percent and
by 2020 this talent migration shall grow by another fifty
percent.
Recent trends in international migration
According to the United Nations (UN), in 2013, around 232
million people or 3.2 percent of the world's population are
international migrants, as compared with 175 million
emigrants in 2000 and 154 million in 1990. This indicates
the growing trend in international migration. Other
important observations made by the United Nations in its
released data are highlighted below:
o USA remains the most popular destination for
emigrants from the developing countries.
o International migration from the Asian countries has
increased substantially during the past decade. In 2013,
Asians were the largest group with about 19 million
migrants living in Europe; 16 million in North America
and 3 million in Oceania.
o Migrants from the Latin American and Caribbean
countries were the second largest diaspora group with
26 million of them living in the North America.
Management Accountant, May-June, 2014 | 11
Focus Section

The above Table 1 indicates that in 2013,

Table 1: Top 10 Destinations of International Migrants in 2013
out of 232 million international migrants,
No. Destination Number of Int'l % Share in Total 199 million which comes to 51.29 percent
Country Migrants Int'l Migrants (232 million) of total world migrants were living in ten
1 USA 45.8 million 19.74% countries. Further, USA remained the first
2 Russian Federation 11 million 4.74% choice destination for 19.74 percent
3. Germany 9.8 million 4.22% international migrants. During 1990 to
4. Saudi Arabia 9.1 million 3.92%
2013, USA attracted 23 million emigrants,
5. U.A.E 7.8 million 3.36%
equal to one million additional migrants
6. United Kingdom 7.8 million 3.36%
every year.
7. France 7.4 million 3.19%
8. Canada 7.3 million 3.15% UAE most popular migration
9. Australia 6.5 million 2.80%
10. Spain 6.5 million 2.80% place for Professionals –
Total 119 million Linkedin Study
(Source: United Nations – Analysis by ICMA Research Dept.)
Linkedin – the world's largest professional
o Asia and Europe combined host nearly two thirds of all network carried out a global study with
international migrants worldwide. In 2013, Asian region regard to trends in talent migration among the 300 million
was home to 71 million migrants whereas Europe was members on the network. Out of twenty nations covered in
most popular destination with 72 million international the study, UAE has emerged as the most popular
migrants. destination for the talented professionals, of which 75
percent migrants hailed from outside the Middle East. UAE
o From the Asian region, 36 million international migrants
attracted more professional talent at 1.3 percent of its
from the South Asian countries constitute the largest
workforce than by other countries including Saudi Arabia,
group, out of which 13.5 million settled in the oil-
India, Canada, Singapore, Australia, South Africa,
producing countries in Western Asia (Middle East and
Switzerland and Brazil.
Near East countries).
o Within Europe, Germany and France hosts the largest The major source countries from where talented
immigrant communities due to work migration and professionals migrated to UAE included India at the top
geographic routes with North Africa. position followed by UK, Pakistan, USA and Saudi Arabia.
The main professional industry skills that were mostly
o Out of 232 million international migrants in 2013, 136
attracted in UAE included (1) management and leadership;
million are residing in the North or developed countries,
(2) engineering; (3) Sales; and (4) Lifestyle. This growing
whereas 96 million are living in the South or developing
talent inflow into UAE is due to the fact that UAE is
countries.
embracing to host Expo 2020 in Dubai for which it is steadily
o In 2013, around 82.3 million international migrants building up a 'talent pool'. The Expo 2020 will be a 6-month
who were born in the South were residing in the South, long mega event that is expected to provide upto 277,000
which is slightly higher than 81.9 million international new job opportunities in the market and boost the UAE
migrants born in the South and living in the North. economy.
o Majority of international migrants are in the working The Linkedin study further concluded that Saudi Arabia is
age group between 20 to 64 years which accounts for also the second popular destination for the global talented
74 percent of the total migrants during 2013. professional, especially from the sub-continent, USA,
o Women migrants are 48 percent of the total number of Europe and other Arab nations, with talent attraction of 0.9
international migrants in 2013. percent of total workforce. This shows that Gulf States still

Table 2: TOP Employment Destinations of Pakistani Professionals and Workers

No. Countries 2009 2010 2011 2012 2013 Total
1 Saudi Arabia 201,816 189,888 222,247 358,560 270,502 1,246,013
2 U.A.E 140,889 113,312 156,353 182,630 273,234 866,418
3 Oman 34,089 37,878 53,525 69,407 47,794 242,693
4 Bahrain 7,087 5,877 10,641 10,530 9,600 43,735
5 Qatar 4,061 3,039 5,121 7,320 8,119 27,660
6 Italy 5,416 3738 2,875 3,361 2,068 17,458
7 Malaysia 2,435 3287 2,092 1,309 2,031 11,154
8 Kuwait 1,542 153 173 5 229 2,102
9 U.K. 556 430 308 183 158 1,635
10 U.S.A 184 196 182 164 226 952
(Source: Bureau of Emigration and Overseas Employment - Pakistan)

12 | Management Accountant, May-June, 2014

 Focus Section

The above statistics are clear indicative of brain drain trend

Table 3: Top Nationalities of Successful in Pakistan, which is also evidenced from the growing
Applicants to UK Entrepreneur Visa amount of remittances being received from the overseas
Pakistanis. According to the State Bank of Pakistan's data
No. Country %age visa acceptance
the expatriates and overseas Pakistanis sent home a record
1. Pakistan 21% US$ 13.92 billion during FY 2012-13 as compared to US$
2 China 12% 13.19 billion showing a growth of 5.56 percent or US$ 73
3. USA 9% million. The highest remittances of US$ 4.12 billion during FY
4. India 7% 2012-2013 were received from Saudi Arabia, which is the
5. Russia 5% top most destination for professionals and workers from
Pakistan. The other top destinations include UAE, USA, UK
6. Australia 5%
and GCC countries viz. Bahrain, Kuwait, Qatar and Oman;
7. Iran 4%
and EU countries.
8. Canada 4%
According to the Migration and Remittances report 2014 of
9. Egypt 3.5%
the World Bank, Pakistan is ranked at 7th position in terms
10. Nigeria 3%
of the largest recipient of officially recorded remittances in
11. Hong Kong 2.5% the world. After India, Pakistan is the second largest
recipient of remittances in South Asian region.
retain the attractiveness for employment by global
professionals. According to recent statistics released by the UK
government, Pakistan is at top position in applying for
The above study of Linkedin is supported by the statistics of
entrepreneurial visa. Around 1943 applications from the
CMAs qualified from ICMA Pakistan working overseas which
entrepreneur visa were received in the first three quarters of
shows that UAE and Saudi Arabia are the two top
2013, out of which UK accepted 912 foreign entrepreneurs
destinations (Table-5)

Statistics of Professional Talent Around 17 percent of CMAs qualified from ICMA

Outflow from Pakistan Pakistan have migrated to different countries for
According to the latest statistics released by seeking better job prospects. UAE is the top
the Ministry of Overseas Pakistanis and Human destination of CMAs, followed by Saudi Arabia and
Resource Development, around 2,765,789
Pakistani nationals have proceeded abroad for Canada at second and third top destinations.
employment during the last five years i.e. from
January 2008 to September 2013. In one of its from January 2013 to October 2013. About 21 percent of
earlier released reports, the Ministry of Overseas Pakistanis Pakistani entrepreneurs applied for UK visa, followed by
had stated that 5,873,539 Pakistanis have emigrated from China (21%); USA (9%) and India (7%). Table-3 shows
1981 to 2012 out of which 41,498 professionals and rankings of countries with regard to application for UK
technical workers left Pakistan for abroad in 2012 alone. Entrepreneur visa.
According to statistics released by the Pakistan Bureau of
Emigration and Overseas Employment (BEOE), a total Increasing migration trend of Pakistani
number of 7,072,530 Pakistani workers registered during Accountants
the period from 1971 to 2013 for overseas employment
It is concluded from statistics released by the Bureau of
through the Bureau of Emigration out of which 4,062,584
Emigration and Overseas Employment that more
workers registered during the period from 2002 to 2013.
accountants are now moving outside the country for
During 2013, 622,714 emigrants workers were registered
seeking employment and this number is increasing gradually.
which departed abroad for employment. Table-3 shows
In 2009, total 1,248 accountants emigrated which
that Saudi Arabia and UAE have remained the top
increased to 1,802 in 2011; 2,593 in 2012 and 3,473 in
destinations for Pakistani workers and professionals.
The above table indicates that during
Table 4: Professionals registered for Overseas Employment
the last five years from 2009 to 2013,
around 1.25 million professionals and No Categories 2009 2010 2011 2012 2013 Total
workers (that were registered with the
1 Engineers 2,352 2,408 2,951 3,577 4,764 16,052
Bureau of Emigration) migrated to
2 Doctors 589 819 1,453 1,218 1,131 5,210
Saudi Arabia for employment with
270,502 workers migrated alone in 3 Nurses 219 78 131 449 315 1,192
2013. The other major employment 4 Teachers 458 537 615 956 868 3,434
providing countries are UAE, Oman, 5 Accountants 1,248 1,381 1,802 2,593 3,473 10,497
Bahrain and Qatar. (Source: Bureau of Emigration and Overseas Employment - Pakistan)

Management Accountant, May-June, 2014 | 13

Focus Section

Table 5: CMAs working Overseas world centre for accounting and finance training and an
educational hub for the ASEAN region.
No Country of Total Number
Destination of CMAs UAE is the top destination for Management
1 U.A.E. 234 Accountants
2 Saudi Arabia 191
Around 17 percent of CMAs qualified from ICMA Pakistan
3 Canada 109
have migrated to different countries for seeking better job
4 United Kingdom 67 prospects. Table-5 shows the list of major countries and
5 Australia 51 the number of CMAs working in these countries. UAE is the
6. U.S.A 28 top destination of CMAs, followed by Saudi Arabia and
7. Oman 24 Canada at second and third top destinations, respectively.
8. Qatar 16
9. Afghanistan 15 Pakistan ranks 2nd in Global Index of
10. Other countries 82 Support for Immigration
Total 817
The WIN-Gallup International conducted a global survey,
(Source: Membership Department - ICMA Pakistan)
covering 59 countries having more than 74% of world's
2013, respectively. Table-4 shows the number of population, with regard to seeking opinion as to whether
professionals, including accountants registered with the immigration across borders is a good or bad thing. The
Bureau for overseas employment. It is quite clear from the results of this global poll have been released in shape of
table that in the professional category, accountants are in "Global Index of Support for Immigration 2012" which
second position after engineers who are migrating to concludes that 34 percent support immigration whereas 38
overseas countries for employment. percent are against immigration. (Note: the 'Immigration
Index' represents the percentage of the population in a
The above increasing migration trend of accountants is not country which feels positively towards Immigration minus
unique for Pakistan. Even in United Kingdom, professionals, those who feel negatively about immigration).
especially qualified accountants are migrating overseas
which is causing concern for the governments. According to The Pakistani nation has been ranked second in the
recent OECD statistics, around 1.3 Britons with university Global Index with + 41 net score, after Nigeria (top
level education are living abroad that will add to the skill position with + 65 net score) which support immigration.
shortage issue in United Kingdom. A recent research carried Quite surprisingly, the Indian nation with -20 net score is
out by the Association of Professional Staffing Companies among those countries which oppose immigration.
(APSCo), also indicates that the United Kingdom
will be facing a shortfall of 10,200 qualified More accountants are now moving outside the
accountants by 2050 due to skills shortages, an country for seeking employment and this number is
ageing workforce and restrictive migration
policy. The research reports a 7.5% increase in increasing gradually. In 2009, total 1,248
accounting and finance placement in the last accountants emigrated which increased to 1,802 in
quarter of FY 2013 as against last year during
same period. In addition, there was a 15% year-
2011; 2,593 in 2012 and 3,473 in 2013.
on-year increase in UK finance and accounting
vacancies advertised during July and August According to the experts, increase in brain drain from
2013. Pakistan has reached alarming proportion and the country
The Malaysian government is also facing similar situation has lost its capability to absorb thousands of doctors,
with their best talents leaving abroad after getting engineers, accountants, IT experts and other professionals
education in the home country. The number of emigrants and technicians that enter the job market every year.
from Malaysia has tripled in the last two decades and the Resultantly, most of them have either left the country or are
World Bank estimates that two out of every ten Malaysian aspiring to leave the country. The situation is reverse in
with tertiary education migrates to other countries. To bring India.
the talent back and ensure a skill pool, necessary to achieve
Students Emigration – A Great loss of Talent
its economic agenda of becoming a high income nation by
2020, the Malaysian government has established an for Pakistan
agency by the name of 'TalentCorp Malaysia'. Mobility of students is also referred to as skilled migration. It
(http://www.talentcorp.com.my). Recently, an MoU has is a fact that Pakistan is one of the leading sources of foreign
been signed between ICAEW and the Sunway-TES, one of students in USA, Europe, Australia and new emerging higher
Malaysia's leading international universities, to set up a education destinations in Asia. United Kingdom and
Regional Centre for accountancy training. The Centre will Australia are the top two destinations in OECD countries for
aim to attract the best talent from the ASEAN countries Pakistani migrating students, despite the fact that visa
and China to Malaysia. This would help Malaysia to become a rejection rates for Pakistanis are higher than students from

14 | Management Accountant, May-June, 2014

 Focus Section

Global Immigration Index for 2012

(Rank ordered from 'High' to 'Low')

Nations that Support Immigration Nations that Oppose Immigration

(Net Score is Positive) (Net Score is Negative)
No. Country Net Score No. Country Net Score
1. Nigeria 65 1. Denmark -1
2. Pakistan 41 2. Fiji -1
3. Armenia 30 3. Kenya -2
4. China 28 4. Afghanistan -3
5. Ghana 26 5. Colombia -3
6. Finland 23 6. Netherlands -5
7. South Sudan 22 7. Argentina -8
8. Vietnam 19 8. France -9
9. South Korea 17 9. Azerbaijan -9
10. Uzbekistan 16 10. Romania -10
11. Germany 16 11. Australia -12
12. Switzerland 14 12. Moldova -13
13. Iceland 12 13. Bulgaria -15
14. Canada 11 14. Palestin -17
15. Saudi Arabia 10 15. Spain -19
16. Cameroon 07 16. USA -20
17. Austria 07 17. India -20
18. Peru 05 18. Poland -21
19. Japan 05 19. Ireland -23
20. Brazil 02 20. Ecuador -24
21. Italy -31
the other countries. The number of Pakistan students in the 22. Russia -31
USA was 5,222 in 2009-10 (23rd rank), which declined from 23. Hong Kong -31
8,644 students in 2001-2 (13th rank). 24. Ukraine -33
25. Tunisia -37
Pakistan has become the top growth market for Australia's 26. South Africa -38
struggling education industry which is now facing decline in 27. Lebanon -39
overall foreign student population. Australia's earnings fell 28. Iraq -39
drastically from its top twelve foreign markets and major 29. Lithuania -39
loss of 37% was from Indian students. However, 15% 30. Malaysia -40
increase in Australia's earnings was witnessed in growth of 31. Egypt -41
Pakistani students. According to a recent data released by 32. Macedonia -41
Australian government, the number of Pakistani students in 33. Czech Republic -43
Australia is continuing double-digit growth. During last five 34. Georgia -43
years, Australian international education revenue from 35. Belgium -44
Pakistan has more than tripled, which indicates the 36. Turkey -46
migration trend of Pakistani students.
back to Pakistan and prefer to get a good job in the European
The above statistics provides evidence to the fact that companies and other settle there permanently after getting
more Pakistani students are migrating overseas for higher immigration nationality or citizenship of these countries.
education, than the Indian students who prefer to stay in This also signifies loss of professional talent and brain drain.

The above Table-6 reflects the following facts /

According to the experts, increase in brain drain
from Pakistan has reached alarming proportion
and the country has lost its capability to absorb
thousands of doctors, engineers, accountants, IT
experts and other professionals and technicians
that enter the job market every year.
India for higher education. It is also unfortunate that
majority of the talented Pakistani students do not come
trends:
a) Steady increase in students' migration - 14,294
students in 2004 to 24,800 students in 2009.
b) Falling trend in students migration to USA 7,325
students in 2004 to 5,211 students in 2009.
c) Growing students' migration to Australia 1,100
students in 2004 to 2,844 students in 2009.
d) New students' destination in Sweden only 4 students
in 2004 to 2,420 students in 2009.

Management Accountant, May-June, 2014 | 15

Focus Section

Table 6: International Students from Pakistan in OECD Countries the economic development of
the country. Taiwan experienced
No Five main destinations 2004 2005 2006 2007 2008 2009
a loss of more than 80 percent of
1 United Kingdom 4,378 6,547 7,940 9,307 9,303 9,609 its students who completed
2 United States 7,325 6,576 5,963 5,520 5,351 5,211 their graduate degree in USA.
3 Australia 1,100 1,295 1,539 2,090 2,482 2,844 The Chinese government took a
4 Sweden 4 3 20 62 1,303 2,420 number of steps to increase
5 Canada 889 - 1,161 996 1,342 1,439 return migration of its students.
In this connection, it set up a
Total 14,294 15,126 17,484 19,115 22,517 24,800
cabinet-level government
(Source: Connecting with Emigrants: A Global Profile of Diasporas - OECD 2012)
agency namely "National Youth
Commission (NYC) to recruit
How to achieve reverse brain drain? Some Taiwan's scholars abroad and carry out related programs.
recommendations The official policy of Taiwan consists of two sections i.e. (1)
improving and strengthening institutions of higher learning
a) Providing lucrative package of Incentives to
at home and (2) encouraging Taiwan's brain in the USA to
Pakistani emigrants remigrate and/ or contribute their talents and knowledge to
There is no shortage of talent in Pakistan but unfortunately Taiwan's national development.
due to wrong policies of the government and the
macro-economic conditions in the country,
they are migrating to other countries. The
The government should encourage the overseas
government should, therefore take immediate Pakistani professionals, through the Pakistani
measures to arrest the increasing trend of Missions abroad, to form 'Diaspora Knowledge
migration of Pakistani professionals like
accountants, doctors, engineers, economists, Network (DKN)' as being done by emigrants from
technicians, IT experts etc by providing them countries like India, China, Korea, Taiwan, Vietnam,
lucrative package of incentives so as to engage
them in the national growth and economic Turkey and Bangladesh.
development. No doubt, the country earns
valuable foreign exchange in shape of
remittances as a result of brain drain, but on the other hand, References
we are also losing huge amounts in shape of fee to foreign a) Migration statistics of Pakistan by The Bureau of Emigration &
experts and consultants, due to lack of our own experts and Overseas Employment, Ministry of Overseas Pakistanis &
consultants which migrate to other countries for better Human Resource Development (OP & HRD), Government of
prospects. If proper infrastructure is provided to the Pakistan.
Pakistani emigrants, the country could earn manifold than b) Connecting with Emigrants: A Global Profile of Diasporas
the money it is receiving in shape of foreign remittances. OECD Publication 2012
c) Globalization, Brain Drain and Development Working Paper by
b) Establishing 'Diaspora Knowledge Network' Frederic Docquier and Hillel Rapoport Harvard University
of Pakistani emigrants Centre for International Development (February 2011)
d) 7th Annual Global CEO Survey 2014 by
The government should encourage the overseas Pakistani
PricewaterhouseCoopers (PWC), USA (2012)
professionals, through the Pakistani Missions abroad, to
e) The Global Migration of Talent: What does it mean for
form 'Diaspora Knowledge Network (DKN)' as being done by
developing countries? By Davesh Kapur and John McHale
emigrants from countries like India, China, Korea, Taiwan, Centre for Global Development (October 2005)
Vietnam, Turkey and Bangladesh. The Diaspora Knowledge
f) The Accounting Brain drain by Ryab Pengelly, Beverley Lord
Network has played a critical role in technological upgrading, and Yvonne Shanahan – University of Canterbury Auckland,
industrial development and building of productive capacities New Zealand (November 2008)
in these countries through designing of diaspora strategy as g) The Economic Consequences of 'Brain Drain' of the Best and
an integral part of industrial policy along with a broader Brightest – Microeconomic evidence from five countries by
national development strategy. This means that the John Gibson and David Mckenzie – the World Bank (August
Pakistani government should design industrial policies and 2010)
strategies in consideration to the skills and abilities of the h) Global Index for Support for Emigration - Survey by WIN-
Pakistani professional emigrants, who may then provide Gallup International Survey (May 2012)
knowledge and technology for use in Pakistan and revive the i) The Global Talent Index Report: The Outlook to 2015 by
stagnant economic growth. Economic Intelligence Unit (2011)
j) Human Capital Flight in Pakistan: Strategies for Coping Brain
c) Following Taiwan model for return migration Drain Situation-by Sirajul Haque and Javed Ahmed Chandio
of Pakistani students University of Sindh, Jamshoro (May 2013)
Pakistan can follow the 'Taiwan' model for encouraging its k) UN Press Release - 232 million international migrants living
talented students abroad to return and use their talent for abroad worldwide new UN global migration statistic reveal
(September 2013)

16 | Management Accountant, May-June, 2014


Best Practices for Building
Effective Talent Tarn
Talent
Due to effective talent management
system the personals can have premier
impact on organizations for long term
strategy formulation and implementation.
“Talent, in a company's context is an
attribute that is a combination of
performance and potential” (cited in
Pandey, 2008) and is defined by Claus E.
Heinrich, Head Global Human Resources &
Labor Relations. Basically capabilities,
people and their roles assimilate to form
Salman Masood Sheikh, FCMA talent.
Talent Management
Talent management has been defines in
many contexts. Some of them have been
conversed below. Talent management can
Capture Implement
Design and
Solution in Integrative
Build
Software Process
Figure 1-1. Talent Reservoir
be defined as “the process of developing
and integrating new workers, developing
and retaining current workers and
attracting highly skilled employees to work
for the company.”(David Watkins, 1998)
Talent Management refers to “a
continuous integrated process that helps
employers to effectively plan talent needs,
attract the very best talent, motivate the
right behavior, developing targeted
capabilities and knowledge, retaining the
highest performers and enable talent
mobility across the organization”
(Knowledge Infusion,2006). “Talent
Management Accountant, May-June, 2014 | 17
Focus Section
Management is a process used by
management to align talent with business
objectives to reduce process costs,
improving quality of hire, reduce risks and
achieve levels of performance”. (TM
Glossary, 2008). “Talent management is
simply a matter of anticipating the need for
human capital and then setting out a plan
to meet it” (Chappelle & Peter, 2008)
Evolution of Talent
Management
One of the most important HR function is
talent management that plays a role of
backbone of whole system. Personal
function was considered as the function
responsible for people in 1970's. The
emphasize of the function was on the
payroll, welfare and benefits of employees.
That had business function status that
time. In 1980's strategies HR's concept
was introduced instead of personal
function. This concept emphasized on
various factors and functions like
recruitment and selection, training and
development, organizational design, people
management, to compensations,
communications and it became business
function. Inspite of all previous functions,
talent management is more important for
any manager where competency
management, performance management,
system integration, succession planning
leadership and development of
interpersonal processes are focused which
targets as business integration.
Talent Reservoir Model
For better understanding of talent “talent
reservoir model” needs to study that
categorically clears the major components
of the process of talent management.
These one
Focus Section

1 Designing and building a

talent reservoir solution Table 1-1 Representative Core Competencies
2 Capturing the talent Core Competency Attributes
reservoir solution in a Leadership Motivates, empowers, inspires, collaborates with, and
software package encourages others. Develops a culture where employees feel
ownership in what they do and continually improve the
3 Implementing and business. Builds consensus when appropriate. Focuses team
integrative talent reservoir members on common goals.
process Technical / Functional Demonstrates strong technical/functional proficiencies and
Expertise knowledge in areas of expertise. Shows knowledge of company
Designing and Building a business and proficiency in the strategic and financial processes,
Talent Reservoir Solution including P&L planning processes and their implications for the
company.
Senior executive team with a
Critical Judgment Possesses the ability to define issues and focus on achieving
sound CEO input and
workable solutions. Consistently does the right thing by
a c c o u n t a b i l i t y t h e Ta l e n t performing with reliability.
Reservoir can be designed
Creativity / Innovation Generates novel ideas and develops or improves existing and
successfully. Human Resource new systems that challenge the status quo, takes risks, and
Executives can be facilitated by encourages innovation.
the process of proposed Talent Interpersonal Skill Effectively and productively engages with others and establishes
Reservoirs in a way that trust, credibility, and confidence with others.
Executive can be supported by
Customer Orientation Listens to customers, builds customer confidence, increases
his/her staff and IT professionals. customer satisfaction, ensures commitments are met, sets
Consultants frequently help drive appropriate customer expectations, and responds to customer
the process in larger needs.
organizations, but smaller Communications Communicates well, both verbally and in writing. Effectively
organizations often rely conveys and shares information and ideas with others. Listens
principally on internal staffs to carefully and understands various viewpoints. Presents ideas
coordinate efforts. clearly and concisely and understands relevant detail in
presented information.
Talent Reservoir teams collect
Teamwork Knows when and how to attract, develop, reward, and utilize
information on organization
teams to optimize results. Acts to build trust, inspire
s t r u c t u r e , j o b h i e r a r c h y, enthusiasm, encourage others, and help resolve conflicts and
employee d e m o g ra p h i c s , develop consensus in creating high-performance teams.
projected organization and
Action Orientation Targets and achieves results, overcomes obstacles, accepts
business plans (potential new responsibility, establishes standards and responsibilities, creates
jobs), company values, culture a results-oriented environment, and follows through on actions.
descriptions, employee surveys,
current human resources policies Potential Forecast: A prediction of how many levels
and practices, annual reports, cur- rent training and (organization/job) an employee can progress within an
development, industry studies, and other relevant data. organization based on his/her past/current performance
Much of this data is already codified in company appraisals, training and development needs, career
documents, but their meaning and value is enhanced preferences, and actual and projected competency levels.
through interviews with the CEO and members of the
Core/Institutional Competencies: Behavioral/skill
executive staff. Their observations, recommendations, and
expectations that are crucial to the success of each
ownership of the core elements of the Talent Reservoir
employee and to the success of the entire organization.
solution are necessary to develop and implement the
Table 1-1 illustrates a list of 09 representative core
assessment tools and talent management processes that
competencies and their definitions.
will be used by the entire organization.
Data collection and interviews are used to develop the Talent Development Approaches
assessment tools described below. The composite All the struts collectively contribute towards the designing
definitions of the assessment tools were developed from of Talent Reservoir at an competence level on all the phase
research studies and consulting company assignments. like coaching, training, development, books and related
Talent Management Assessment Tools materials.
The linkage of implementation actions to assessment data
Performance Appraisal: A measurement of actual results
provides managers with the best advice, consistent across
achieved within those areas for which the employee is held
the organization, for performance improvement,
accountable and/or the competencies deemed critical to
competency enhancement, and career growth. Table 1-2
job and organization success.
illustrates the type of guidance to many organizations
18 | Management Accountant, May-June, 2014

Approach
1 On-the-job coaching/
mentoring
2. Staff meeting on
current problems
3 Job rotation
4 Emergency fill-in
assignments
5 Special one-
person projects
6 Task force assignment
7 Company educational
courses
8 Courses outside the
company
9 Guided reading
10 Teaching educational
courses
11 Assistance from
counselor or psychologist
12 Extracurricular activity
Table 1-2
Goals
To develop competencies
in some phase of the
current job
To obtain solution to
problem
To develop problem-
solving techniques
To determine the abilities
of each person in this area
To develop a sense of
participation and sharing
of problems
To broaden knowledge of
unit operations
To discover the extent of
breadth and versatility
To develop latent abilities
To provide “office” point
of view
As a selection device
for promotions
Same as #3
To determine adaptability
and performance under
pressure
To develop competencies
in a specific area
To broaden and increase
strengths as an individual
contributor
To become aware of
specific needs
Same as #5
To develop ability to lead
and participate in group
activities
To develop pre- managerial
skills
To develop knowledge and
skill in fundamentals applying
to specific areas and needs
Same as #7
Same as #7
To develop knowledge
of fundamentals
To develop skill in instructional
techniques and communication
To reexamine ideas and values
To discover handicaps
to personal development
To discover and apply principles
of leadership and followership in
a variety of areas other than
industry-related committee work
Focus Section
Coverage Timing
Immediate manager When the particular
and/or staff specialist competency is needed for the
Covers all employees job as recognized by manager
Conducted by staff or When problems arise
line manager at any
level
Covers all employees
Plan prepared by Careful scheduling to permit
managers sufficient time on each
Focus on Super assignment to acquire
keepers and Keepers competencies
Assignment by Created by emergencies
immediate supervisor
Focus on Super keepers
and Keepers
Approved by immediate As needed
supervisor
Focus on Super keepers
and Keepers
Approved by immediate As needed
supervisor
Covers all employees
Recommendation by Continuously (supplemental
superior to other methods)
Covers all employees
Recommendation by Continuously (supplemental
superior to other methods)
Focus on Super keepers
and Keepers
Recommendation by Continuously (supplemental
superior or book club to other methods)
Covers all employees
Assignment by superior Subjects that are important
on request of training to personal development
specialist needs
Focus on Super keepers, During or after work hours
Keepers, and high-
competency people
Upon recommendation When managerial counseling
of superior Covers fails to achieve the desired
all employees results
Upon recommendation Activities that have specific
of superior objectives for self-development
Applied selectively to all Applied selectively to all groups;
groups; emphasis on Super through community, professional
keepers and Keepers groups, field study
Management Accountant, May-June, 2014 | 19
Focus Section

those assist managers in selecting developmental situations. In addition, there may be special guidelines in
approaches. dealing with the four classes of talent. Excellent
organizations provide guidance to their managers in
Human Resources Planning approaching each employee group in terms of rewards,
Coaching guides always play an important role in improving training and development, career paths, and recognition.
individual performance and competence in career The talent management process described above will fuel
development. An SOP (Standard Operating Procedures) organization excellence by:
guide for Managers is also needed to interpret and act on
1. Identifying and creating a set of career paths,
the meaning of the composite results of individual
development, and reward plans for Super keepers. This
assessments for the purpose of human capital planning,
will ensure that high-quality role models will enable the
organization-wide training and development, and career
organization to achieve and maintain superiority.
planning.
2. Identifying key positions and ensuring that associated
Human Resources Planning: Our experience and research
indicate that there are five major situational
classes that must be addressed in human capital
planning:
1. Surpluses – more than one replacement for
an incumbent
2. Voids – no replacement for an incumbent
(voids for key positions are a critical
concern)
3. Blockages – non-promotable incumbents in
the path of one or more high-potential or
promotable employees
4. Problem employees – those not meeting
expectations
5. Super keepers – employees whose
performance greatly exceeds expectations,
who inspire others to greatly exceed
expectations, and who embody voids are immediately addressed and that the quality
institutional competencies of replacements is affirmed. This will ensure that
organization continuity is not disrupted because of the
Capturing the Talent Reservoir Solution in
loss of any individual.
Software
3. Segmenting the talent pool into each investment
A software application is best mode to translate the raw category (Super keeper, Keeper, Solid Citizen, and
data into information as well as for providing speed with Misfit) and managing the investment in each category
accuracy and precision. Talent Reservoir Design if map into appropriately.
software will give the result. This will facilitate data
collection, analysis, iteration, and interpretation. It is found Four Steps to Creating a Talent Management
that Microsoft Access is simple, inexpensive software that System
fits the goal.
It is already been described a highly developed approach to
Implementing the Integrated Talent talent management based on extensive research and
Management Process practitioner experience. In this section one will find tools
that can be used to implement that approach in
Talent Reservoir holds the supervisor accountable for final organization. These tools fall into a four-step process:
assessments and recommendations. The talent
management plan formally begins when the Step 1 – Develop assessment tools and scales.
supervisor/assessor adds replacement and career planning a. Develop competency definitions and measurement
data to the employee assessments previously developed. scales.
Once all data is entered, a series of specialty human b. Establish a performance appraisal definition and
resources reports are developed. The principal reports are measurement scale.
Bench Strength Summary, Replacement Summary, and
c. Establish a “talent potential forecast” definition and
Core Competency Summary. Each summary provides
measurement scale.
insight and guidance to assessors on issues and courses of
action associated with different human resources d. Apply the measurement scales to each job.

20 | Management Accountant, May-June, 2014


Step 2 – Develop training and development
application tools.
a. Create a coaching guide.
b. Assemble a directory of the best training and
development programs organized by competency.
c. Create a directory of top books associated with each
competency.
Step 3 – Evaluate each employee using
assessment tools.
Step 4 – Prepare action reports.
a. Create a “bench strength” summary.
b. Create individual talent competency development
forms.
Achieving Organization Excellence through
Talent Planning and Development
Laying the Groundwork: The Design Process
Before one can embark on designing a succession planning
process, you need to define the underlying objectives. What
exactly is the organization trying to achieve? Is it using
succession planning to develop people internally?
Once the objectives and population have been defined, the
next step is to establish a set of leadership competencies
or qualities that are considered desirable in a high-potential
person. These could include anything from financial acumen
and cost control to aggressiveness, vision, and risk-taking.
Clearly defined criteria are important, as they provide the
framework for identifying and developing potential
successors for key leadership positions. Such criteria also
serve as the core thread linking the leadership development
program to the organization's HR processes. While the goal
is certainly not to create the perception that leadership
development is “just another HR program,” the defined
competencies when integrated into the company's hiring,
Focus Section
development, assessment, and reward processes will
enable the succession-planning process to be more
effective.
Handing over the Reins: The Implementation
Process
At the completion of designing phase, it is time to
implement it. Unfortunately, a considerable number of
organizations miss this. We should evade this usual pitfall
to help organization; six-stage process has been launched
for implementing a succession-management program.
Stage I: Preplanning
The first phase is of preplanning serves as the transition
from the design phase to implementation, in which HR
arranges those who will participate a key position in the
leadership development program. Unluckily, many
organizations fail to notice this serious stage and simply
expect their business leaders to go on accordingly with no
adequate training, education, or communication. The
preplanning phase basically consists of two steps:
1. Give details of the underlying goals of the process to
those business leaders who will be charged with
identifying and developing the company's future
leaders.
2. Impress upon business leaders their answerability for
assessing their people. Foster a culture in which
managers feel at ease identifying high-potential
people, rather than being in danger by them.
Coach participants on the company's succession
management process. Provide each business leader with
a process map that explains the process, along with the
corresponding forms and charts.
Stage II: Assessment
Business leaders have been given the apparatus and
knowledge necessary for a successful leadership-
development program, they are ready to put their training
into action, evaluating talent and identifying business-
critical positions. Mindful of the business competencies
established during the design phase, they should begin
considering their people, asking themselves who has
exhibited the performance and the potential to become
the future leaders of the organization.
For example, potential ratings could be defined as follows:
1. High Potential: An executive who has the adaptability
to play a number of executive leadership roles in the
organization; a leader who you are confident will be
in the next wave of senior/executive leadership;
he/she shows the ability to see things from new
perspectives and to quickly adapt to change; would be
difficult to put back due to the value that he/she brings
to the company.
2. Expandable: An individual seen as capable of
contributing to the organization in a role with greater
Management Accountant, May-June, 2014 | 21
Focus Section
difficulty, impact, scope, and scale than his/her present
role.
3. Well-Placed: Well suited for current role. Unlikely to
move to the next level or take on expanded
responsibility within the next two years.
4. Issue: A person who needs significant coaching or a
person who is incompatible to his/her position or a
person who has become a blocker to another's
success.
5. Too New to Rate: This individual has been in the
organization less than six months.
Stage III: One-on-One Discussions
People make evaluations of individuals based on data they
have or perceived situations. To minimize this subjectivity,
it is important to draw out input from a variety of people to
make sure that all relevant parties are generally in
agreement as to who the organization's high-potentials
are and how they should be developed. These debates could
simply take place between HR and the business leader or
they could be held between direct reports, such as the vice
president of finance and the chief administrative officer.
Stage IV: Group Meetings
Group sessions are held in which business leaders meet
with their boss and colleagues to review and debate, the
decisions that have been made up to this point to confirm
that those who have been selected are, in fact, the right
people to be developed as future leaders of the
organization. The goal of this meeting is to bring business
and people issues together and determine if there are any
issue, concerns or gaps. These meetings might result in the
need to amend the profiles, grids, and charts that have
been completed by the business leaders in the first three
phases of the implementation process. Such changes can
be made quickly, however, thus keeping the process
moving along with the assistance of an HR facilitator.
Stage V: CEO Discussions
It's time to make the case to the CEO and obtain his
or her input for further improvements and final decisions.
Therefore, HR facilitates a series of meetings between
individual business leaders and the CEO during which the
latter reviews the designated high-potentials and their
development opportunities inside the company. The
individual CEO's objectives will determine exactly which
materials are evaluated. The CEO may limit
himself/herself to the business critical substitution
charts or may dig in and examine performance and
potential grids, as well as individual profiles.
Developmental opportunities are discussed and the CEO
offers advice on how best to prepare the organization's
future leaders.
Stage VI: Ongoing Review
At the start of this phase, a pool of successors has been
chosen and is being developed. But succession-planning
22 | Management Accountant, May-June, 2014
process is not over here. On the other hand, the process
remains very runny, others leave the organization for other
opportunities as leaders move into top positions and new
talent joins the ranks. Therefore, it's critical to conduct
regularly scheduled reviews on a periodical, biannual, or
annual basis. Granted, change happens every day and
replacement charts and development plans may need to be
revisited fairly frequently. It is the constantly changing
nature of leadership development, in fact, that helps build a
culture that values succession and keeps it from becoming
a once-a-year HR program. That being said, it's important
for HR to partner with business leaders at least once a year
to ensure that all data is up to date and to provide the
CEO with a status report so he/she can report to the
board of directors on the bench strength of the company.
References:
1. Reich, Robert, the Future of Success, New York: Knopf, 2000,
p. 34.
2. Perspectives on Total RewardsJanuary 2000, co-authored by
Brian Reidy and Jane Bhar.
3. Heneman, Robert L. Merit Pay: Linking Pay Increases to
Performance Ratings. Reading, MA: Addison-Wesley, 1992.
4. Heneman, Robert L. Business-Driven Compensation Policies:
Integrating Compensation Systems with Corporate
Strategies. New York: AMACOM, 2000.
5. Katzenbach, Jon. R. Peak Performance: Aligning the Hearts
and Minds of Your Employees. Boston: Harvard Business
School Press, 2000.
6. Lawler, Edward E., III. From the Ground Up: Six Principles for
Building the New Logic Corporation. San Francisco: Jossey-
Bass, 1996.
7. Lawler, Edward E. Pay and Organizational Effectiveness: A
Psychological View. New York: McGraw-Hill, 1971.
8. Lawler, Edward E. Rewarding Excellence: Pay Strategies for
the New Economy. San Francisco: Jossey-Bass, 2000.
9. Ledford, Gerald E., Jr. “Designing Nimble Reward Systems.”
Compensation & Benefits Review, July-August 1995, 27(4),
46-54.
10. Maslow, Abraham H. Motivation and Personality. New York:
Harper & Row, 1954.
11. Mohrman, Allan M., Jr., Susan Albers Mohrman, Gerald E.
Ledford, Jr., Thomas G. Cummings, and Edward E. Lawler III.
Large-Scale Organizational Change. San Francisco: Jossey-
Bass, 1989.
12. Schuster, Jay R., and Patricia K. Zingheim. The New Pay:
Linking Employee and Organizational Performance. San
Francisco: Jossey-Bass, 1996.
13. Wilson, Thomas B. Innovative Reward Systems for the
Changing Workplace. New York: McGraw-Hill, 1995.
14. Wilson, Thomas B. Rewards That Drive High Performance:
Success Stories from Leading Organizations. New York:
AMACOM, 1999.
15. Zingheim, Patricia K., “Rewarding Scarce Talent.” In Lance A.
Berger and Dorothy R. Berger (eds.), The Compensation
Handbook, Fourth Edition. New York: McGraw-Hill, 1999.
About the Author: Mr. Salman Masood Sheikh, FCMA, FPFA,
ACPA, CA (F), M.Com, MBA, M.Phil, Ph.D (Scholar) is Associate
Dean, Faculty of Business and Management Sciences at Superior
University, Lahore
 Focus Section

Building of
Talent Reservoir
By Mazhar Mahmood, FCMA

T alent is defined as, “An innate ability in a person to have

accurate, relevant and quick oral, visual or articulate
response to complex problems for direct satisfaction of
beneficiaries or public at large”. TMR is principally a strong
positive correlation between Actions and Reaction of
individuals. Here, Action means the nature of objective or
task and reaction means the TMR's accurate, relevant and
quick response in terms of short or long run strategy to
accomplish the objective. No doubt there is a tangible
significance of Talent Management Reservoir in the growth
of firm or corporate sector. Talent Management Reservoir,
as an organization, plays a vital and all pervasive leading role
in corporate sector among all four factors of production i,e
land, Labor, Capital and Organization (TMR) itself for
growth of firm.
There are certain consultancy firms in advanced countries
providing the TMR solution to the giant companies in a
professional way. There is a standard procedures how
companies build the TMR both from internal and external
sources. But I am concerned what is happening in Pakistan
and how to improve it because we are for away from
advanced countries in building TMR.
In today's knowledge economy, up to 70 percent of an
organization's value is based upon the skills and
experiences of its employees. But following four reasons
are the driving force to compel the companies for the best
TMR:
employees having different qualities, IQ levels, attitude,
traits and adoptability etc. Talent and consistent hard
worker are two prominent variables in employees which are
most effective than other qualities of HR. Our focal point in
first phase is to see the impact of team comprises of
Intelligent and hard workers. Qualities of both the
categories are given below in point 1. It's very aptly to
mention few limitations in both the categories;
Intelligent:
o Mostly, intelligent HR is vibrant and volatile.
o They are at fast track which is normally not accepted
by the other colleagues due their own limitations.
o Due to high creativity level, they are not consistent.
They leave the old idea half done and run after the new
one.
o Their Bureaucratic approach of intelligent, if setting at
higher position, may hamper the entire business.
o Number of such talented HR is for less than the
demand which is causative of abnormal turn over and
compel the companies to engage hard worker and
experienced.
Hard Worker / Experienced:
o Hard workers have low IQ level and remain at medium
pace track.

o Globalization of present time needs intelligent fast o They review their task many times before finish which
track business leadership. is time taking exercise.

o Scarcity of talent or databank of talented employees. o Their hardship quality may go waste if they are not
backed by the intelligent idea as driving force.
o To produce the leadership as a succession.
o To ensure the fast track growth.
Qualities Intelligent Hard / Experienced Worker
Management Accountants know that Reaction Very quick Moderate
EOQ, the best level of inventory, is Quality of outcome Superb Acceptable
basically the certain plausible ratio of
Table Talk / Negotiation Excellent Better
all inventory related cost elements.
Similarly to maximize the profitability Accuracy Surely 100% May be 100%
we calculate the best product mix to Volatility / Unpredictable Very high Moderate
achieve the objectives. On the same Job change frequency High Moderate
line we need to have the best mix / Successful field Short run Long run
combination of HR, termed as TMR, to Work Strategy Proactive Mostly Reactive
control the current and futuristic Mistakes Significant, if any May be significant
business requirement for growth of Solo flight Superb / Fast Track / bumpy Slow and smooth
firm. An organization is mostly blend of
Team work Less responsive to team work Responsive to team work

Management Accountant, May-June, 2014 | 23

Focus Section

S.# Element Qualitative Philosophy Quantification Significance of TMR regarding quickness, accuracy and final
1 Economy Doing the things Planned input / If result < 1 presentation. Now, intelligent
cheaper Actual input bureaucratic leader remains at fast
2 Efficiency Doing the things well Actual input / If result > 1 track without realizing the Hard
Actual output Worker state of mind when all team
3 Effectiveness Doing the things right Actual output / If result < 1 members are at play. Data from
Planned output
primary research is presented to
o Such type of HR is abundantly available. support the argument.
o They have been consuming a lot of time to equalize It's an illustrious fact that man is the most unpredictable
their output at par with an intelligent. creature on earth. As already discussed that perimeter
should be confined to two qualities of HR, intelligent and
Significance of Talent Management Reservoir: There are consistent hard workers, to see overall productivity in term
five operational steps in an organization that justify the of team work to reduce probability of unpredictability. Team
presence of TMR through vibrant role in a company to work is the only factor in an organization that can produce
achieve the current and futuristic business requirements. the tangible results than other attributes in employees
Let us discuss them one by one. individually or collectively. Core competency of fast track is
(1) Organizational activity – Management is a group IQ level and others have commitment for HARD WORK.
activity that coordinates or establishes a strong positive Now we are in position to draw the final matrix out of the
correlation between Action and Reaction of individuals. summary to show the player's productivity in team with
There are certain distinct features of both intelligent hard / respect to their core competencies.
experienced worker. There is no concept of solo flight in commercial
(2) Goal formation – the most important step is that organization rather no way out except team work. All
goals / tasks are set while considering the Actions and individuals have different levels of performance depending
Reactions of individuals or the talent capacity which itself is upon their core competencies. Normally an organization is
comprises of competency and attitude. blend of very few intelligent employees, too many hard
Management sets the goals and plan according to worker cum intelligent and few employees having working
predetermined capabilities, as mentioned above, of capacity. Hard worker can also compete intelligent, to
different employees. Sometimes readjusts the some extent, by experience.
combinations of employees to achieve the objectives. For What should be exact Mix / combination to constitute
examples to develop the integrated system, the experts an excellent TMR?
from different departments (Accounts, Finance, IT and There are three possible combinations as detailed below:
operation) are selected having a proven delivery record
irrespective of their IQ levels. (a) All intelligent Employees; its naturally impossible for
an organization to have hundred percent intelligent
(3) Goal accomplishment and evaluation – Management employees. Had there been a case, the organization
also evaluates the effectiveness of goal accomplishment. would be a bumpy and risky, due to fast track strategy
Basically the effectiveness should be viewed as third ladder and volatility of intelligent people, as shown in the
after Economy and efficiency achieved. graph. Creative ideas will be too many to practically
(4) Organizational Survival – in the short run, managers realize. May be, there will be as many acceptable
uses the available resources as efficiently as possible and strategies as many intelligent persons are there. There
practices the art of implementing their decisions. The will be chaotic situation to adapt any one's strategy as
ability to forecast and adopt to change is also important for other will give hard time for implementation.
organizational survival. (b) All hard workers; Once again an organization cannot
(5) Implementation – is the creed of management. Action be devoid of intelligent human resource. This had been
plan should be very precise strategies for effective a case; the organization would be a sluggish and
implementation. passive as shown in the graph. There will be no creation
This is the most critical and final phase to implement the or very slow, if any.
program to achieve the objectives. Style of management (c) Hybrid of intelligent & had worker; this is the
and position of both intelligent & hard worker, in staff or line situation where both the categories will share the
management, plays a vital role to finish
Situation Short Run Long Run
the task with happy end. Some one
very rightly said,” all is well that ends Resource available All four factors of production All four factors of production
well”. Bureaucratic style, demand of Jurisdiction You can change the operational You have an option to change both
fast track activities and absence of cost only to achieve the objectives Fixed and variable cost to achieve
without additional investment. the objectives
team work are few of the reasons that
end the task to failure. There are Role of TMR Quickly and accurately decides the Precisely and slowly analyzing both
combination of wage, rent, interest & fixed and variable cost for all factors
sufficient reasons to believe that there
price to maximize the profitability with of production within and outside
are too many differences between all these limited resources within the the organization for maximization
intelligent and Hard Worker, as already organization. of profit.
mentioned in point 1, in the team Significance of TMR Critical Moderate

24 | Management Accountant, May-June, 2014

 Focus Section

Intelligent
Name Type of business Type of Management Designation Reported to Status Remarks
CMH Educational Bureaucratic Owner X FailureType of management &
Institution Bureaucratic Fast Track
MAS Construction, Bureaucratic MD X FailureType of management &
Trade & Consultancy Bureaucratic Fast Track
AQ Garments & imports Bureaucratic Owner X FailureFast Track
RS Distribution Participative Middle management MD SuccessfulStaff Management
KM Group of Companies Participative Top management MD / BOD SuccessfulBureaucratic
Fast Track
RA Construction & Trade Participative Owner X FailureB Fast Track
RRR NGO Participative Middle management Director SuccessfulStaff Management
ZA Engineering Participative Middle management Chief SuccessfulStaff Management
ZA Services Participative Middle management MD SuccessfulStaff Management
CK Telecommunication Participative Owner X Successful Participative
Fast Track
X Ltd Security Bureaucratic MD BOD Failure Participative Fast Track

Hard / Experienced Worker

Name Type of business Type of Management Designation Reporting to StatusRemarks
SA Garments Participative Owner X Successful Participative
MMK Consultant Participative Owner X Successful Participative
SF Foods Participative Owner X Successful Participative
AU Construction & Bureaucratic Owner X FailureBureaucratic
Engineering Fast Track
J Kabana Foods Participative Owner X FailureBureaucratic Fast Track
KN Distribution Participative MD BOD Success ful Participative
Fast Track
Shahid Electronics Bureaucratic Owner X Failure Bureaucratic Fast Track

Summary of the above primary data;

Category Position Style of management Remarks
Intelligent Line Management Bureaucratic Failure
Staff Management Participative / Team work Successful
Hard Worker Line Management Bureaucratic Failure
Staff Management Participative / Team work Successful

mutual core competencies. The growth of the firm will
be less risky than intelligent stratum and on fast track
than hard worker combination.
Role of BOD to create Talent Management
Reservoir
Board of directors is always enduring better than best
option for wealth maximization of firm. Best option is to
arrange such a TALENT MANAGER RESERVIOE that will
cater the needs of both current future business
requirements. BOD may adopt any of the strategies, on the
bases of situation, to build the TMR.
A good teacher always quotes relevant examples from
norms of society that help to clarify the concepts. This
example will highlight that who share their core
competencies. You see that a person on fast tract is not
always winner but, sometimes, he needs the core
competencies of steady, may be, at very decisive occasion.
Let us read out a story that will surely support the
suggested combination to constitute an excellent TMR on
the bases of core competencies in team work.
Once upon a time a tortoise and a hare had an argument
about who was faster. They decided to settle the argument
with a race. They agreed on a route and started off the race.
The hare shot ahead and ran briskly for some time. Then
seeing that he was far ahead of the tortoise, he thought
he'd sit under a tree for some time and relax before
continuing the race. He sat under the tree and soon fell
asleep. The tortoise plodding on overtook him and soon
finished the race, emerging as the undisputed champ. The
hare woke up and realized that he'd lost the race. The moral
of the story is that slow and steady wins the race.
This is the version of the story that we've all grown up with.
But then recently, someone told me a more interesting
version of this story. It continues.
The hare was disappointed at losing the race and he did
some Defect Prevention (Root Action Analysis). He realized
Category Bureaucratic Participative
Fast Track Fast Track
Intelligent Failure Success
Hard Worker Failure Success

Management Accountant, May-June, 2014 | 25

Focus Section

Y Intelligent The moral of the story? It's good to be

individually brilliant and to have strong core
TMR competencies; but unless you're able to work in
a team and harness each other's core
competencies, you'll always perform below par
Growth because there will always be situations at which
Hard Worker you'll do poorly and someone else does well.
Teamwork is mainly about situational
leadership, letting the person with the relevant
core competency for a situation take leadership.
There are more lessons to be learnt from this story.
O Timings X
Note that neither the hare nor the tortoise gave up
that he'd lost the race only because he had been after failures. The hare decided to work harder and
overconfident, careless and lax. If he had not taken things put in more effort after his failure.
for granted, there's no way the tortoise could have beaten The tortoise changed his strategy because he was already
him. So he challenged the tortoise to another race. The working as hard as he could. In life, when faced with failure,
tortoise agreed. This time, the hare went all out and ran sometimes it is appropriate to work harder and put in more
without stopping from start to finish. He won by several effort.
miles. Sometimes it is appropriate to change strategy and try
The moral of the story？ Fast and consistent will always something different. And sometimes it is appropriate to do
beat the slow and steady. If you have two people in your both.
organization, one slow, methodical and reliable, and the When Roberto Goizueta took over as CEO of Coca-Cola in
other fast and still reliable at what he does, the fast and the 1980s, he was faced with intense competition from
reliable chap will consistently climb the organizational Pepsi that was eating into Coke's growth.
ladder faster than the slow, methodical chap. It's good to be
He asked his executives what was the average fluid intake
slow and steady; but it's better to be fast and reliable.
of an American per day? The answer was 14 ounces. What
But the story doesn't end here. The tortoise did some
thinking this time, and realized that there's no way he can Management Style
beat the hare in a race the way it was currently formatted.
Participative Bureaucratic
He thought for a while, and then challenged the hare to
T Spontaneous Pull Strategy Structured Push Strategy.
another race, but on a slightly different route. Y
BOD will not interfere as the BOD should change the formation
The hare agreed. They started off. In keeping with his self- P leader will pull team to fast track to lead the hard / experienced
E
made commitment to be consistently fast, the hare took and team will drag down the risky
decisions by experience and
leader. Intelligent will push the
leader to fast track and risky
off and ran at top speed until he came to a broad river. The o
argument. decisions are already smooth
due to experienced leadership.
finishing line was a couple of kilometers on the other side of f
HA
the river. RD
Spontaneous Push Strategy Question Mark = ?
M
BOD will not interfere as the An experienced Bureaucrat is
The hare sat there wondering what to do. In the meantime a / intelligent will push leader at fast more dangerous than an
the tortoise trundled along, got into the river, swam to the n track and decisions are already intelligent bureaucrat. BOD
EXP smooth due to experienced has two options either to
a
opposite bank, continued walking and finished the race. g
leadership. change both or change any of
the two to participative style.
WOR
It's better to form the
The moral of the story. First identify your core competency e KE
structured pull strategy
r
and then change the playing field to suit your core
competency. In an organization, if you are a good speaker,
make sure you, If your strength is analysis, make sure you was Coke's share of that? Two ounces. Goizueta said Coke
do some sort of research, make a report and send it needed a larger share of that market.
upstairs. Working to your strengths will not only get you To this end, Coke put up vending machines at every street
noticed but will also create opportunities for growth and corner. Sales took a quantum jump and Pepsi has never
advancement create opportunities to give presentations quite caught up since.
that enable the senior management to notice you. To sum up, the story of the hare and tortoise teaches us
The story still hasn't ended. many things.
The hare and the tortoise, by this time, had become pretty Important lessons are:
good friends and they did some thinking together. Both – that fast and consistent will always beat slow and
realized that the last race could have been run much better. steady;
They started off, and this time the hare carried the tortoise – work to your competencies;
till the riverbank. There, the tortoise took over and swam – pooling resources and working as a team will always
across with the hare on his back. beat individual performers;
On the opposite bank, the hare again carried the tortoise – never give up when faced with failure; and
and they reached the finishing line together. They both felt a – finally, compete against the situation. Not against a
greater sense of satisfaction than they'd felt earlier. rival.

26 | Management Accountant, May-June, 2014


Managing Talent
A Research Report
We all are gifted with some
talent.
A Chinese proverb says, "If you wish to
grow something for a season, grow
mangoes; If you wish to grow something
for a year, grow rice; but if you wish to
grow something for a lifetime, develop
manpower".
We all are born with some talents which
we even don't know sometime. It does
not require us to practice. List of natural
Muhammad Asif Qureshi, ACMA
talents could be endless. Some of us are
good singers while others could be
expert swimmers etc.
What is Talent Management?
In the corporate world, we hear so much
about talent acquisition, talent
management and knowledge
management etc. So what is talent
management all about and what kind of
talents organizations are looking for
these days.
Talent management comprises a
complex set of Human Capital
Management processes designed to
manage companies' greatest assets:
their people. (Oracle)
There has been a paradigm shift in how
human resources have been looked at
over the past few decades. From early
1980s when organizations used to have
personnel departments which were later
flipped to be Strategic HR Units and now
after significant research in human
learning behaviors and natural
tendencies, we see talent acquisition
and management teams working closely
with Executive Management. The whole
concept has shifted from managing
people to managing the talent.
Management Accountant, May-June, 2014 | 27
Focus Section
HP has a series of interlocking programs
through which they recruit and onboard
staff, train them, assess their
performance and develop their skills and
competencies. Beyond graduate
recruitment, HP also try to promote
from within.
Persistent organizations like IBM, GE,
UPS, American Express have survived
the pitfalls of global economies by
reinvent themselves and focusing on
their people not only the business.
In a recent CHRO (Chief Human
Resource Officer) study performed by
Cornell's School of Industrial and Labor
Relations, HR leaders overwhelmingly
agreed that their biggest challenge this
year is "building better talent." According
to the survey, this is not HR's problem.
HR's role is to design and promote the
process, but it is up to line leaders to
operate as "talent managers. This means
taking time to assess leaders, figure out
"what people qualities drive success,"
and gives people feedback on a
continuous basis. These are the skills
which winning leaders build over their
entire career. And as organizations, only
7% of companies believe they have
reached this level of management
maturity.
So, how do we harness the business
objectives with people and skills required
for achieving these objectives?
Accenture uses a holistic system of
talent multiplication based on four key
capabilities:
1. Defining talent needs based on a
clear understanding of mission
critical jobs.
Focus Section

2. Discovering new sources of talent by seeking out Talent Management in Accounting

diverse talent pools. Profession
3. Developing talent's potential by building individual
In today's world, technical skills accounting are
skills, knowledge and competencies in ways that
necessary, but may not be suffi cient enough when
expand organization's collective capabilities.
accounting staff gets engaged in organizational
4. Deploying the right talent in the right place at the decision-making, which demand soft skills such as
right time to align employees' strengths and critical thinking and communication. Talent
aspirations with the organization's goals. management, then, remains a chief priority for heads of
fi nance departments.
Talent Management in Pakistan – where do
In September 2012, ACCA reported the results of a
we stand as a nation.
short survey on talent management in global finance
Pakistan is a country which is rich in human capital. With functions. s. The results suggested a paucity of effective
demographics showing that 21.6% of the population talent practices across the spectrum of finance. The
between 15 24 years and nearly 35% of population is report found that traditional finance career hierarchies
between 25 54 years. Young talented Pakistanis like Ali could be disrupted as the hunt for the next generation of
Nawazish, Arfa Karim (late) and Shafay Thobani have finance leaders changes course in the wake of the
made us feel proud. Needless to mention that there are changing face of global finance operations.
several Pakistanis who have been
acknowledged globally for their
talent and skills.
The big picture
A study was conducted by Aiza
Hussain Rana (Lahore Garrison
University) and Abdus Sattar Abbasi
(COMSATS, Lahore) on "Impact Of
Talent Management and Employee
Turnover intention on organizational
efficiency" conducted on Pakistan
telecommunication sector. The
results suggested that talent
management has meaningful direct
impact on employee turnover
intention and organizational
efficiency.
During 2011, ACCA and KPMG
undertook a global study of best
One in four CEOs said they were unable to pursue a
practices in Talent Management in businesses. The
market opportunity or have had to cancel or delay a
research report 'Maximizing People Power highlights the
strategic initiative because of talent challenges. One in
role that finance teams can play to generate a
three is concerned that skills shortages will impact their
competitive advantage. Mr Kamran Yousafi, Partner
company's ability to innovate effectively (PWC).
KPMG said, "Historically, with a few exceptions, the local
businesses in Pakistan have not kept talent During 2013, ManpowerGroup surveyed over 38,000
management practices on their list of priorities. The employers across 42 countries. 35% of over 38,000
main reason for their doing so was the uncertainty employers surveyed report they are experiencing
around the return on investment and the outcomes of difficulty filling jobs due to lack of available talent which
these practices". is impacting their client facing abilities, as well as the
business outcomes. The respondents associated the
However, leading companies including but not limited to
shortage of talent with reduced competitiveness and
Ufone, GSK, and mobilink have been hiring professionals
productivity, and increased employee turnover.
managers experienced in talent management and have
Surveyed employers mentioned that they are taking
talent management and skills development programs in
steps for growing talent pool to help drive business
place. Recently, PTCL became the first Company in
results. Lack of candidates with technical competencies
Pakistan to introduce one of the best internationally
and professional qualifications and skilled trades were
recognized talent management solution 'Success
the most common explanations for talent shortages in
Factor' in the Company.
EMEA.
28 | Management Accountant, May-June, 2014
 Focus Section

According to the survey,

Accounting and Finance
are among the top 10
jobs employers are
finding difficulty filling.
An article was published
on BBC website on 24th
January, 2014
mentioning Sony's hiring
problem. The company
couldn't find the right
peoplethe 'sales pros'
who could explain the
features of a camera
without using complex requirements for their staff skills and talent.
explanations of terms like aperture or audio format. Google's senior vice president of people operations,
While speaking at World Economic Forum conference in Laszlo Block revealed five hiring attributes he is looking
Devos, David Gartside, a New York-based managing for from candidates.
director who specializes in global HR strategy at
1. It's not all about being smart - The number one
Accenture mentioned that on a global scale, companies
thing we look for is general cognitive ability, the
are seeking to avoid talent scarcity trend emerge in
ability to pull together disparate bits of information.
different ways. He further added that university
students are not getting the science, tech, 2. Leadership. But not as you know it - What we care
mathematics and engineering skills that are in high about is, when faced with a problem and you're a
demand. Asian companies are also struggling to cope member of a team, do you, at the appropriate time,
with a workforce that consistently job-hops rather step in and lead? And just as critically, do you step
than sticking with one firm and gradually creating value back and stop leading, do you let someone else?
for that company by keeping skills and knowledge there. Because what's critical to be an effective leader in
this environment is you have to be willing to
What CEOs are looking for? relinquish power.
It is quite obvious that 3. Humility - If you're a hotshot graduate or big fish in
talented professionals are your previous company and have never failed, this
really difficult to find and isn't always ideal.
retain. Companies are
4. Ownership - You don't blame problems on other
developing strategies for
people.
acquiring and retaining the
talent. Frequent employee 5. You don't need to be an expert - Surprisingly,
turnover results in loss of expertise is the least important attribute Google is
the resources consumed looking for when hiring. Somebody who is green to a
in developing and training role or who hasn't been doing it for years can offer
the employee. up new perspectives and ideas.
Most CEOs believe leading from the center of the Lastly, I would suggest my fellow accounting
organization rather than exercising command and professionals to consider the following questions before
control from the top. While hiring talent CEOs and hiring applying to any perspective employer:
managers often look for following characteristics in any
Do you have required skills to do the Job?
candidate:
Do you fit in the department and organization?
– Trust
– Flexible Do you have the right mind-set for the job and
– Creative and risk taking company?
– Passionate Do you really want this Job or you are just exploring?
– Communication skills "When I stand before God at the end of my life, I would
– Realistic hope that I would not have a single bit of talent left, and
Executive managers tend to be very specific in their could say, 'I used everything you gave me." –― Erma

Management Accountant, May-June, 2014 | 29

Focus Section
The Organization
in the Pursuit of
Talent Management
“The most valuable of all capital is that
invested in human beings”
(Alfred Marshall, Principles of Economics)
O nce the CFO asked the CEO “what if
we train our people and they leave
us?” and the CEO replied “what if we don't
train them and they keep working for us?”.
In order to create continuous value for
stakeholders and to maintain competitive
advantage, organization must pro-actively
manage their “Human Capital”. This
includes the identification, selection,
development, and retention of valued
Abdul Raqeeb, ACMA
employees, who demonstrate superior
accomplishments, inspire others to high
achievement.
Today's competitive environment bring
pressure to improve return on investment.
H o w e v e r, o r g a n i z a t i o n ' s b i g g e s t
investment and its primary assets are its
human capital. Empirical studies have
shown that investment in human resource
does not only increase work productivity
but also improve work quality, enhance
satisfaction and motivation. Although,
during the time person getting training,
there would be cost of evolvement, the
cost of getting training and also
opportunity cost of letting out of work due
to training. But, this has far reaching
effects in the long term and can take an
%age share in
organization Compensation
Super- keeper 3% Accelerate much
faster than pay
market
Keeper 20% Accelerate faster
than pay market
Solid citizens 75% Accelerate moderately
until competitive level
is reached
Misfit 2% No increase
30 | Management Accountant, May-June, 2014
organization towards prosperity.
The organization is not run by systems or
policies or even procedures, but by people,
and if they are developed and invested
properly, they in turn develop the
o r g a n i z a t i o n i t s e l f. S u c c e s s f u l
organizations pro-actively take action to
ensure that they have the human resource
capability to meet their current and future
business requirements. These
organizations have made talent
management a critical force in their drive
for excellence.
Categorically, in every organization there
are four types of employees – Super-
keepers, keepers, solid citizens and misfit.
Super-keepers are employees who are
demonstrates superior performance, who
inspired the others to achieve superior
performance. Topically, no more than 3% to
5% of an organization's workforce are
classified as “super-keeprs”.
After super keepers, there are the keepers.
These employees exceed performance
expectations, help others to improve their
performance, reinforce each other and
promote team work in an organization.
They represent between 20% to 25% of an
organization's workforce. After that there
are Solid citizens who represent about 70%
of the work force. They meet the
Training/
Development Career Paths Visibility
Major Very rapid Very high
Investment recognition
Substantial Rapid High
Investment recognition
Investments only Moderate Recognition
to enhance to none
competencies
for/future business
situations
Only to improve fit None —
now or for next Job.

Emerging Developing Strategic
Super-keepers super keepers super keepers
Emerging Developing Strategic
Keepers keepers keepers
Strategic
Emerging Solid Developing
citizens solid citizens solid citizens
Emerging Developing Strategic
Misfit Misfit Misfit
Business impact
Emerging Developing Strategic
expectations for performance, enhance work for others,
and meet expectation in demonstrating organization
competencies.
Last, there are Misfits. This group contain employees who
do not meet organization expectations for performance,
working with others, or organizations competencies.
Typically, no more than 5% of an organizations employees
are desinated as Misfits.
As observed in table above the organization invest most of
its budget on Super keepers. Surely, if the organization
focuses only on super keepers, the organization can not
prosper. It is like paying attention to only to arrow head and
not the shaft and the tail of arrow which are equally
important to the arrow to fly. But off-cource you do need
the arrow heads to be sharp.
However, if an organization overly focuses on a gifted few
(Top 3-5% of performers), the vast majority of ordinary
people who make an organization an extraordinary could
get neglected for their development leading to their
separations. This will affect long term sustainability of
competitive advantage.
It is generally accepted amongst management researchers
that “human Capital” is unique competitive advantage that
cannot be easily replicated by competitors and is an
internal quality of an organization. Similarly, commitment,
loyalty, learning ability, and positive attitude are internal
qualities of an employee that can not be easily replicated
and are becoming scare in current scenario. Hence,
employees with such qualities should not be neglected as
compared to employees with higher degree of knowledge
for short term gains. After all now a days knowledge is
available at the click of mouse.
Further, the most successful organizations produce
extraordinary results from ordinary people. Even super
keepers give performance with the help of other
talented/committed and loyal employees of the
organization.
Therefore, “talent” is defined as an aptitude of an individual
to deliver unique results in assigned jobs. The whole group
of employees who deliver expected results in assigned jobs
should be treated as “talent” and not alone the gifted few.
Talent Development Process
The organization must invest in manner that each individual
dot not demoralized and they keep continue work with
their best sprit in the interest of an organization. Basically,
Focus Section
the proper pipeline of emerging employees is the
foundation for the success of an organization. As Guru of
Strategic Management, Peter Ducker said, “where there is
no vision people perish”.
At that time, developing great business leaders was much
like developing great concert pianist. Over the time, as
these young virtuosos move from “Twinkle Twinkle Little
Star” to mavens, the cream of the crop - those with real
talent and passion - rises to the top. The process continues
over the years. At the end ultimately, the world-class
performers emerge.
Factors of Attraction and Retention of
Employees
Harvard Business School research has shown that the
most significant contributing factor to an organization's
success is employee's loyalty, which can never be achieved
in an environment that is not conductive to long term stay.
Human beings can only be at their productive best when
they have a compulsion to stay, promotion, opportunity
and advancement.
According to Towers Perrin research, the factors that
attract people to join an organization are different from the
factors that keep them there. The chart below illustrates
the top five reasons employees join and stay with
organization. Respondent indicates that tangible rewards -
like pay and benefits - often attract them to join an
organization, while intangible reward encouraged them to
stay.
Join Stay
1. Competitive base pay and Developing the skills of
health benefits employees
2. Opportunities for Understanding the unique
advancement needs of high performers
3. Work/Life balance Competitive base pay
4. o Competitive retirement o Aligning HR program to
benefits packages. meet the business
objectives.
 o Pay raises link to individual o Self-respect.
performers.
5. Recognition of work. Clarify what the company
expects and what employee
can expect in return.
Conclusion
The “Talent Management” is not just a euphemism for
finding and developing employees but is all about
attracting, recruiting, developing, motivating, and retaining
people those posses' competencies required by the
organization and have potential to grow within an
organization. It is systematic ongoing proactive activity
that calls for dynamic interaction between many functions
and processes. The retention of committed and loyal
employees delivering expected level of performance (Solid
Citizens) is critical and almost as important as that for
keepers and super-keepers. Job comparability to employee
potential, providing expected work environment, and return
(beyond monetary and grade growth) are critical factors for
retention of talent pool. Employee expectations on these
factors depend upon employee's self perception of own
potential and increase with career progression.
Management Accountant, May-June, 2014 | 31
Focus Section
Building Talent Reservoirs:
Educational Endowments, Fostering unheeded Talent
G od has bestowed the blessings of
intelligence to all, with some
exceptions. Yet, the opportunities and
environment they get, makes the
difference. The segment of national
human resource, who is not wealthy
enough, yet has talent and aptitude,
often miss the opportunities of polishing
their talent, and nation as whole miss the
opportunity of building national talent
reservoir and consequently, right person
for right job, and internationally
Jamshaid Mohsin, ACMA competitive foreign exchange earner.
Permanent Education Endowment Fund
is a solution to address this issue.
Although there are
different types of
endowments yet from
education perspective,
system of establishing
Permanent Educational
Endowment Funds, is
common, in leading
universities. Briefly
speaking, these are such
donations whose
principal amount is
maintained intact and
invested. The profits or
returns are spent to meet educational
needs of deserving scholars.
Educational Institutions often create
such funds to ensure that talented yet
under-privileged students may not be
deprived of higher education.
Sometimes, organizations in general also
create such funds for the support of their
employees' children education, like,
State Bank of Pakistan Endowment
Fund.
A management accountant can play key
role in creating and maintaining
32 | Management Accountant, May-June, 2014
Endowment Funds, following steps are
involved;
o Managerial Resolve
o Rules of Business
o Legal Form
o Tax Exemption
o Funds Raising
o Investment Management
o Expense Budgeting
o Operations
o Periodic Review
Managerial Resolve
The Endowment Fund would involve, use
of the name of organization for fund
raising and, interpreting organizational
goals, in deciding upon priority areas of
education, which are to be sponsored.
Moreover, strategic managements
resolve will instill the motivation of
shared objective and involvement
throughout the organization level.
Management has to be persuaded by
well prepared working paper, plans,
budgets and citing precedent references.
The Managerial Resolve may be
confirmed and evidenced in black and
white at first by obtaining consent of
persons in command, like, Vice
Chancellor, Managing Director, Board
Chairman, by consent on email,
memorandum, note summary, or as the
organizational culture requires. Later the
formal consensus at board level may be
obtained by Board Resolution, Note
Summary, or as the case may be.
Rules of Business
Next is to draft the rules of business of
Endowment Fund, this may be also be
referred as, (TOR)Terms of Reference or

Deed. In drafting TOR, following aspects are to be
provided for;
o Create Identity by Naming of Fund, Scope & Prime
Objective
o Initial Promoters /Trustees & Rules of eligibility
o Initial Assets
o Detailed Rules of beneficiaries eligibility and
expense criteria
o Rules for Investment Management
o Accounts & Audit, Provisions
o Review Meetings
o Signatures & Registration
Legal Form
Trust deed, as drafted above, has to be registered with
Registrar of Trusts and Societies, because unless it gets
form of legal person, it cannot,
o open bank account,
o apply for tax exemptions,
o issue receipts and other correspondence
o enter into contract, and so on.
Tax Exemption
The trust hence legalized can apply for Income Tax
Exemption. There are 2 types of exemptions to be
claimed,
o Tax exemption to trust itself on its income, like
withholding tax on interest/profit on its
investments (Ref Section 159 ,Income Tax
Ordinance 2001 )
o Tax credit to donors on their donations endowed to
Focus Section
this fund (Para (61)/Part I/ IInd Schedule)
Avoiding Tax legally is not un-ethical, specially, in this
case, when amount saved is used for deprived sects of
society.
Fund Raising
Fund Raising is most difficult and important task and all
efforts above are of no use when sufficient funds are not
collected to operate the trust. It is uphill task to
convince profit oriented organizations to spend on
charity.
There should be, multiple as well as coordinated,
strategies, viz,
o Induction of Fund Raising(Marketing) Officers,
o P re p a re w e b s i t e i n f o r m i n g , o b j e c t i v e s ,
m a n a g e m e n t c re d e n t i a l s , p e r f o r m a n c e ,
beneficiaries feedback, transparency in all
processes, and different payments procedures, like,
online collection account, contact numbers,
o Contact corporate sector and invoke their
Corporate Social Responsibility,
o Start industry specialist courses like Textile
Engineering, to be sponsored by industry,
o Announce special awards/ scholarships in name of
large donors/corporations for their publicity,
o Motivate Alumni (old students fraternities) to
support the underprivileged talent following their
foot steps and donate personally or through their
organizations,
o Arrange Fund Raising activities and functions and
convene donors, philanthropists for awards
distribution ceremonies etc..
Investment Management
Investment of funds is another key task. Its
management should have 3 prime objectives;
o Determine Maximum Risk Tolerance Limits.
Management Accountant, May-June, 2014 | 33
Focus Section

reviewed in light of above points and then

circulated to all sections to control their
expenditures within approved limits

Operations and Accounts

o Earn sufficient profit to maintain economic
value(purchasing power) against inflation and meet
the costs of objectives of the fund as well, e.g if
Original Endowment is Rs.100, inflation is 6%,
interest is 12%, then out Rs.12 earned, Rs.6 will be
retained to maintain purchasing power and Rs.6 will
be available for spending.
o Liquidity needs for expenses.
An Investment Committee comprising of
professionally skilled persons may be set up.
Investment Policy should be formulated keeping in view
above mentioned objectives of investment
management. This can be achieved by;
Financial Aid Function
A Financial Aid Committee may be set up to approve
inclusion and exclusion of eligible scholars and review
their performance. Its rules of business and selection
criteria may also be drafted and approved by trustees.
Deserving Students meeting the criteria may be,
searched on defined criteria like, grades, family income,
or asked to apply for scholarships on convenient forms
by properly targeted communication, like, web site,
newspaper, college bulletin, notice boards, etc.
Performance of beneficiary scholars may be monitored
by monitoring their grades.
Accounting Function
Record of transactions should be made in properly
classified set of accounts to review performance.
Actual Vs Budget Variance Report should be drafted to
keep Financial control.

o defining controls and procedures of approving

investment transactions,
o define permissible investment asset classes, in
ranges of maximum and minimum in
proportionate (%age of total portfolio) terms,
keeping in view the risk tolerance and target
profit, define criteria for risk and past
performance analysis, etc.
Investment Committee should draft their rules of
business also, to manage investments. It may
include aspects like, composition of committee,
eligibility of members, comprehensive investment
policy, performance presentation, review meetings, etc. Periodic Review
Expense Budgeting Periodic review by Investment Committee of
Investment Performance vis-à-vis Profitability, Risk
Endowment Funds objectives in words should be Control, must be regularly ensured.
transformed into numbers by drafting an Expense
Operational Committee should also review their subject
Budget. In preparing budgets following should be kept in
on regular basis.
mind;
The comprehensive and consolidated review of
o Before projecting revenues, Investment Committee
performance by presentation of, accounts, non-
should consider that all profits cannot be utilized, a
accounting data and qualitative information, to Board of
portion of profits is to be retained for maintaining
Trustees, should be periodically made.
economic value of fund
After the review and feedback MBO cycle (management
o Objectives of fund should be kept in mind while
by objective) of Planning, Execution and Review would
allocating funds to expenditure heads, i.e education
start again.
sectors and type of scholars to be supported
(Author is Treasury Manager at NUST University, Islamabad, can be
o Subsidiary Budgets should sought from relevant contacted at jamshaidmohsin@gmail.com)
sections and then consolidated, it should be

34 | Management Accountant, May-June, 2014


Nursery of
Talent Reservoir
Introduction
Nations can survive without natural
resources like minerals, gold mines,
coals etc but scarcity of talented human
capital is the main reason of backward
nation. Sometimes the argument is
raised about the talent that it is god
gifted and it cannot be developed; if it is
true then only single nation has always
been the superpower of the whole
world. Therefore; talent can be built and
the nations that have decided to
progress and become the developed
Syed Irshad Ali, ACMA countries of the world they make the
system where those fertile brains are
produced that drive the nation.
ICMA Pakistan has
Business organizations can be treated
contributed a lot as talent reservoirs but the main
especially for the nursery of the talent creation is the
education institutes. Business
financial sector of the
organizations might act as a trader that
country by providing
it can just decorate the product from
finance experts; outside. For example the shirt can be
wrapped in an attractive packing but its
however the room of main ingredient cannot be improved
improvement always because if the cloth of the shirt is
substandard then ultimately it will
exists.
affect the goodwill of organization.
Hence; talent can be manufactured in
education institutes not in business
Management Accountant, May-June, 2014 | 35
Focus Section
organizations, however business
organizations can retain the talent and
manage it for the betterment of their
prospect. Therefore; the main reservoirs
for talent is education institute not
organizations.
ICMA Pakistan as a Talent
Reservoir
As explained earlier; an education
institute can play it more positive role in
building talent and storing it for the
economy of Pakistan. Most of the intake
of the institute does not comprise of the
position holders or first division
students; those students generally join
the institute, who have been failed to
take admission in medical, engineering,
or other professional colleges or
institutes due to their grades in inter/A
levels or finance constraint. But an
education institute should act as a steel
factory that transformed raw material
into finished product.
ICMA Pakistan has contributed a lot
especially for the financial sector of the
country by providing finance experts;
however the room of improvement
always exists. It is suggested that the
institute should converge its more
efforts in the following areas:
A. Syllabus Designing:
Syllabus is the only tool that makes a
highway by traveling on which any
institute can reach its destination. Like
in other fields the syllabus designers of
the institute have always inspired by
foreign qualification syllabi (CIMA-UK or
ICAI) and used copy-paste technology
for developing the syllabus. As syllabus
sets a path of the institute so its
importance cannot be overemphasized;
working professionals from different
Focus Section
fields must be hired on pay for
designing the syllabus. It should
cover the requirements of local
economy as well as international
needs.
B. Examination
Procedure:
In Pakistan; many qualifications like
ACCA, CIMA, CIA, CFA, etc are
available at doorstep; the standard
of these qualifications has not been
affected even if they are acquired
locally because of their
examination system.
The only controlling tool for an education institute is its
examination department. There has been a tremendous
improvement in the examination papers but as a
professional body the students must be asked about the
current local economy issues and practical scenarios in the
examination instead of reproducing bookish questions. For
this purpose; full-time paper setters should be hired who
are professionals and researchers so that they maintain
the quality of papers consistently.
C. Coaching:
Although most of the accounting education bodies do not
offer coaching classes but our institute does. Act as only
examination body can be enough to recognize itself as a
quality education institute but coaching and training can be
a plus point for maintaining the standard of education and
grooming of students that they can serve in a better way in
any organization. The institute can get comparative
advantage over its competitors by providing project based
practical problems in costing, management, accounting,
and finance. Collaborating with different organizations, the
institute can train its students; for this purpose our
members can play a vital role.
D. Article ship & Training:
By developing practicing management accounting firms
and making compulsory article ship at the middle of the
qualification; the students can not prepared to understand
and perform the practical aspects of management
accounting.
The first step is to make an atmosphere where practicing
firms are likely to open; this can only be possible when the
institute fights for statutory requirements within our
scope so that practicing firms can stand on their feet.
Business Organizations as Talent
Reservoir
The main assets of any organization are its employees. As
mentioned earlier the nursery of building talent is education
institute but organizations can polish, groom, and also build
talent to some extent of their employees by adopting the
following strategies:
36 | Management Accountant, May-June, 2014
A. Selection &
Recruitment:
Garbage-In-Garbage-Out (GIGO) a
well known phrase; the first most
important step in an organization is
to hire the best possible personnel
that must have capabilities of
adapting themselves in
understanding and improving the
existing system of an
organization. The selection
procedure should be so transparent
and systematic that only
competent and talented persons
who can fulfill the needs of the organizations; are
appointed.
B. Remuneration & Job Satisfaction:
Employees are the main resource of any organization so
the proper utilization of their abilities and knowledge can
only be obtained when they are satisfied with their jobs.
Competitive salary package and providing congenial
atmosphere in the organization may help the organization
to motivate and groom the talent of employees.
C. Training & Development:
Due to continuous and fast changes occur in all areas of
business including management system, costing, taxation,
etc; no one can be aware without proper training.
Organizations should prepare their employees to cope up
with these day-to-day developments in technology.
Organizations should allocate a reasonable amount on
training and development budget of employees because
system improvement can only be possible if the employees
are trained and literate.
D. Performance Appraisal:
Studying without exams is same as increment without
appraisal. Organizations should set the yardsticks (goals)
against which the performance of each employee is
assessed.
Conclusion
Although I suggest that the first source of making talent
reservoir is education institutes (my focus is on ICMA
Pakistan) but organizations can play a vital role in further
polishing the talent. Organizations should make the system
in such a way that their employees get motivated and do
not feel the wastage of their talent. Grooming is not the
one-way traffic that an employee himself gets it but it is a
two-way track where an organization invests on those
talented people who can serve in different areas. Therefore;
both education institutes and organizations can make
talent reservoirs where employees can be prepared for the
challenges faced during their practical lives; that will result
in the progress of the country as well.

Possibility of Succession
Planning in Public Sector-
A Sneak Peek into Culture
"Do you have any succession planning for your
organization? Yes, for every manager I have two
replacements. My HRM directorate never leave a
single seat vacant"
From this statement, it is clear that the succession
planning have been miss-understood as replacement
planning. It's closely related but the two processes are
different in their objectives. Replacement planning is the
process to keep the posts/positions filled by the new
employee by hiring or by promoting from the same
department of from other directorate.
However, "Succession planning is a means of identifying
critical management positions, starting at the levels of
project manager and supervisor and extending up to the
highest position in the organization ("Guaranteeing
Management, future through Succession Planning
"Carter, 1986). Although it is often confused with
replacement planning, succession planning goes beyond
replacement planning because its focus is broader than
one position, department or division (Effective
succession planning , Roth well,2005 )"
Like every planning cycle, Succession planning also
consists of following steps and was identified by many
"Gurus "which are ………….
a) Defining the strategy and mission of the
organization which required be monitoring and
reviewing after some time to cater for ever changing
environment in the world. Because mission one
decided can be modified with the emerging needs of
world or society.
b) Identify internal/external human resources to be
trained for future leaders/key position holders of the
organization. Identification of resources may include
the personal and performance assessment etc.
Moreover a selected employee or externally
selected resource must have commitment to
his/her goals.
c) Training of human resources, now this is
something which may be look into with much care.
Skill Gap analysis must be conducted to review the
existing pool and desired one .Every proposed
training for employees must be aligned with
organizational goals, mission and strategy,
specifically according to the employee individual
Focus Section
By Ayesha Mirza, ACMA
needs and based on the futuristic role of employee
in the organization.
d) Mentoring of the employees: leaders , project
managers, high performing employees needs
continuous mentoring by the existing leaders .It is
just like growing a tree, if seed is good , land is fertile,
environment is supporting, it can grow with speed
and can give fruits .However proper trimming and
cutting can make it even more attractive . Similarly
after selection and training, on job mentoring can
make your efficient employee a leader.
e) Follow-up by top management can make this
process of succession planning a workable process
and can bring sustainability to the organization's
progress.
The whole process of succession planning is linked with
futuristic approach and preparation for change well
ahead in time.
"I do not have time for strategic planning and
thinking about improvisation of systems in my
organization, because I am overburdened and
overloaded by routine work. Actually I am very
keen and enthusiastic about my job /assignment.
When I was in 17 grades, I used to review every file
with so much care and enthusiasm that I went
through every detail in the file. And I really like my
job even today, now.I am in 19 grade and I still
review the same files with equal responsibility and
interest.”
This is the story of almost every public servant
who works hard in wrong direction.
Succession planning is much more important in public
sector than in private sector. Because public sector
organizations are responsible for improvement in
society, economy and can lead the whole nation
towards the road of success. Day by day organizations
and think tanks have understood the importance of
human resource capital and its management. But this
idea is relatively very new and even absent in the public
sector in Pakistan. To me, the succession planning is
successful in Army, Police, bureaucracy. All these public
servants are being selected after a rigorous and detailed
selection process and being trained right after selection
Management Accountant, May-June, 2014 | 37
Focus Section

"Its simplify game of patients and called for Low Pay Packages: main motivational factor for
and length of service. I have training and anyone to remain on job is to get enough salary which
to just wait for some years mentoring after a make any one free of worries of everyday life. But low
to promoted to the seat of specific time span salary package causes demotivation and decrease the
my boss and if I waited a and whole culture , dedication towards your profession. Lack of motivation
little longer I will be on the strategies are being causes lack of interest resulting into low performers.
boss's boss's seat " transferred from Turnover ratio of employees in their early career is very
one level to another high. In South Korea, Government conduct surveys to
Career planning of very smoothly . identify the difference in salaries of Government
a public servant
However, in public employees and private employees which make public
sector there are sector as desirable for career oriented people as private
certain factors which can be addressed and which need sector.
to be drastically changed to make things happen in public Weak Generals, Strong Lieutenant Model: an
positively. Some of the factors which are very apparent approach that weak generals will not be a threat to
and I am sure every reader from public sector can easily competitors but lieutenant must be strong to manage
relate themselves with these factors which can make the things .Weak Generals will get the instructions and
succession planning difficult in public sector will implement without any question. This model results
Political Influence in Public Sector: At important in absence of a thought process which cannot build
seats or organizations which can affect the economy strategies and cannot foresee things .This is the most
and masses, political interference is the major factor favourite model in public sectors.
which can hinders the successful Above stated factors are the few of
implementation of succession planning. "I joined public service
those which can be easily eliminated and
Though one school of thought is in favour because I want to spend a can easily help top management to find
of this aspect arguing that political balanced life by spending out hidden talents from inside the public
Governments have agendas which can equal time between the sector and can also help in retention of
be implemented better through a person home and my profession “ newly hired talents .
who share same school of thought. But A motivation to join the Although succession planning usually
unfortunately, in our economy this public sector needs to be long term goal, it is never too
positive aspect of hiring, transfers is
late to include it as part of the transition
being exploited very badly.
process that is currently occurring, if only to ensure that
Lack of Strategic Planning: All over the world, every mistakes of past are not repeated. It is in the dire need of
political Government come with some policies, think time that in public sector we must have some strategic
tanks assess the needs of people and public sector have leaders who can change the system and can bring
to work on this. A good example of Government planning success and growth in economy. Developing the skills of
is the Retirement planning of Baby Boomers in USA. those earmarked for promotion should take place at
Government is planning for their and introducing regular intervals on an assessment and multidisciplinary
different reforms in their policies to accommodate them. basis be this via on-site experience, task rotation,
However, in our scenarios, we lack a foresight, a vision individual projects or other assignments. Some
which can lead our generations and which can help us to organisations even go as far as creating specific posts in
optimal utilization of resources. order to give
c andidates the "although I am getting
Rusticity of System: In public sector employees not peanuts from this job but its
only lack motivational factor but also system is a big experience they
secured .I think I must have a
hindrances in best utilization of any best mind. Our require. It is also
side business to make my life
system did not support high performers in Government i m p o r t a n t t h a t
good .For my business I need
sector. A career path in public sector is bound with the every succession
my resources , energy and
time an employee has to complete on a specific post and p l a n m a k e s
allowances for proper planning to move
seniority is the reason of promotion.
innovative people ahead in that field .so not use
Moreover job rotation is very difficult and even absent in brain here , safe it for my
w h o d e f y
public sector. It has been observed that a person entered business "
convention in the
in public sector retired in same department. For example
quest to enhance Financial planning of public
a person joined in payment section, he will retire from
the value of public servant
payment section on some higher scale. His abilities has
service. Excluding
never been assessed or utilized. According to my
such people within
judgement 60% public servants are underutilized .It is
the organisation, simply because they do not conform to
said that as long as habits and routines dictates the
organisation tradition, may mean that a valuable
pattern of living, new dimension cannot be found.
potential leader will have been lost to the public service

38 | Management Accountant, May-June, 2014


Building Talent Reservoir–
Role of ICMA Pakistan
By Syeda Sana Batool
Qualified CMA
T alent Reservoir
development is a
very vast area of Talent
Management. This
article will focus on the
Role of ICMA Pakistan,
the most prominent
professional institute
of Pakistan in the field
of Management
Accounting, as a primary source of the development of
Talent Reservoir for the corporate sector of the economy.
Before we look at the specific role played it would be better
to discuss the three important terms related to Talent
Management: Talent, Talent Reservoir, and Talent
Management and also discuss the need for building Talent
Reservoir.
Talent is the ability or skill either natural or
acquired through learning. However, Talent
adds value to the individual performance only
if accompanied by broad vision, dedication,
and hard work in right direction.
Ta l e n t m a n a g e m e n t e n t a i l s t h e
anticipation of human capital need for the
organisation and the plan of action
regarding the way to meet those needs.
The organisations, that understand the
strategic importance of the fact that
company's innovation and performance rely
upon the talent reservoir, place importance on the
talent management in order to make sure that talented and
superior workforce or employees are recruited, retained,
developed and rewarded. Effective and efficient Talent
Management proves to be the back bone for the success of
economy. Thus, Talent Management comprises three main
pillars: Talent Acquisition, Talent Development and Talent
Retention. ICMA Pakistan is the primary source available to
the corporate sector for the very first stage of Talent
Management i.e. Talent Acquisition.
Talent reservoir is basically related to storage of data of
talented employees of the organization. The goal of Talent
Reservoir is to build a reservoir (data base) of high-talent
people capable of supporting current and future business
requirements. It is a talent management process that deals
with the various aspects of the assessment process to
identify competencies required.
Focus Section
This integrates all components of talent management:
o selection including both external and internal,
o competency and performance evaluation,
o coaching and practical development, and
o Succession planning.
Need for Building Talent Reservoir
Having discussed the basic terminologies related to
Building Talent Reservoir, now it would be better to talk
about the need for building talent reservoir. We are living in
an era of professionalism. The world around us is changing
and evolving continuously. One of the biggest risks many
organisations are facing is to have the right talent enabling
them to compete in the future.
The business world today needs the competent
professionals in order to help organisations to achieve
sustainable growth and profitability. In order to
gain and maintain sustainable competitive
advantage, organisations tend to emphasize
on optimum resource utilization, value-
addition, innovation, continuous
improvement, internal controls, customer
satisfaction and other such factors. The
corporate sector is facing challenges to
remain competent and transparent while
dealing with the emerging new business
scenarios. Moreover, many business today
has a large majority of its key executives that
will probably retire in the next 5-10 years. While this
may not have been an issues 10 or 15 years ago, but now
for success and even survival of business organisations has
to match their needs with that of pool available.
Management Accountants are the professionals having
comprehensive knowledge and skills in the areas of
accounting, finance, management, leadership, laws and
ethics with the ability to make decisions for the growth and
sustainability of the organisations. Hence, these
professionals have become indispensable for the corporate
sector because they are capable enough to help the
organisations to respond to the challenging world of
business. Realizing the ever increasing need for industry-
institution collaboration, ICMA Pakistan and corporate
sector are committed to make their ties even stronger with
each other for utilizing each other expertise for mutual
benefit, growth and development.
Management Accountant, May-June, 2014 | 39
Focus Section
Role of ICMA Pakistan in Building Talent
Reservoir
Since inception of the ICMA Pakistan in 1951, the Institute
has maintained the trend of developing Business leaders
through imparting quality education and training in financial
and non-financial areas to bring value addition in the
economy. Hence, ICMA Pakistan is the main source of
talent reservoir for the corporate sector of Pakistan.
Realizing the challenges of profession, the Institute is
committed to not only maintaining high standards in the
areas of education, examination, memberships, trainings,
Continuous Professional Development (CPD), research,
publications, management consultancy, quality assurance,
international affiliation and corporate relations but also
keeping itself up-to-the mark with the international
standards.
Talent Management System of ICMA
Pakistan
Faculty and Teachings
The Institute has more than 250 qualified and experienced
faculty members. In order to ensure that best faculty is
hired, Institute conducts the comprehensive screening of
the candidates aspiring to teach. In order to ensure that
coaching is as per prescribed curriculum, the
faculty is required to submit a proper
course plan including total number of
lectures with the description of
topics. This plan is then used to
compare with the actual
performance and ensure that
performance variance does not
exceed the acceptable limit. The
devotion and hard work of the faculty
members are recognized and rewarded in the form
of Best Faculty Awards in each session.
Infrastructure and facilities
The institute maintains contemporary facilities in the form
of class rooms, computer labs, libraries and study area, and
Auditorium in order to provide congenial academic
environment to the students.
Class rooms
All classrooms are fully equipped with modern methods of
learning i.e. laptop, multimedia, microphone, etc. for
ensuring optimum learning is carried out. Moreover, all
classrooms are fully air conditioned to make sure that
students get the comfortable environment for their
studies.
Computer Labs
All campuses have computer labs fully equipped with all
requisite software included in the curriculum and those
required for corporate trainings and CPD programs to
ensure e-learning and its application.
Libraries and study area
The facility of libraries is provided at each campus with
latest books on core and related subjects, journals and
magazines of national and international repute. The libraries
40 | Management Accountant, May-June, 2014
have vast self-study area assisting students to study with
full dedication and focus. In addition to the self-study areas
at libraries, exclusive halls are provided to students for
group discussions after class lectures.
Auditorium
All campuses have purpose built auditorium that
conveniently accommodate 150 to 300 participants at
once for the purpose of continuing professional
development programs, including trainings, seminars,
lectures and guest speeches.
Students' Co-curricular Activities
The institute is playing its role in developing the
interpersonal skills of the students for the enhancement of
intellectual, social and cognitive abilities. These activities
help the students to deal with the complex situation in an
effective and efficient manner.
Examination
The examination system is at par with the requirements of
International Education Standards (IES) prescribed by
International Federation of Accountants (IFAC) to assess
students' competencies with respect to knowledge and
skills acquired.
The assessment process is carefully conducted in order to
gain and sustain the confidence of all stakeholders
especially that of students in the system.
The Institute has a strong feedback
system by way of 'Examiners'
C o m m e n t s ' re c o g n i z i n g t h e
significance of strong feedback
system for helping the students to
know their shortcomings in the
examinations. In addition to this, faculty
members provide their comments
regarding examination papers for further
improvement in the quality of the examination from time to
time.
Proficiency Awards
The students' efforts are recognized by awarding medals
and merit certificates for their remarkable performances.
In addition to this, students with outstanding performance
are given opportunities to share their experience with new
students.
National Awards and Convocations
The Institute hold National Awards and Convocations for
qualified students to recognize their completion and confer
degrees.
Conclusion
ICMA Pakistan is an invaluable source of talent reservoir for
the corporate sector of Pakistan. This is evident from the
fact that presently numbers of members of ICMA have
exceeded 5000. About 80% of these members are serving
on senior management positions such as CEOs, CFOs,
COOs, CIAs, company secretaries, Financial Analysts,
Public Practitioners, Management Consultants, etc, and
hence making significant contributions towards business
growth and economic development of Pakistan.

Ten Tricks of Talented
Organizations
E
very organization has four types of
resources. These resources are
Human, Financial, Physical and
informational. These resources differ from
one organization to another in terms of
Quantity, Quality, size and amount. The
most valuable and universally acceptable
resource is human capital. Human Capital
is the driver of all other resources. Human
Capital can convert a small national
company into a multinational company in a
short period of time by using integrated
Muhammad Muzamil Farooq strategy approach to manage available
resources in an excellent manner and by
using its unique strengths to combat with
weaknesses. A critical question is "Why
some organizations are pasted with the
label 'TOP TEN COMPANIES' in the world in
spite of having same types of resources?"
A smooth reply is they just have "TOP
MINDS" in their firms. Organizations sets
TALENT goals, define its vision and mission to be at
STRATEGY its desirable place in the market. Human
Capital converts goals, mission and vision
into a reality. Human Capital is also known
as the multiplier of resources and is also
known for the massive destruction of
many firms. This topic will cover many
ways to identify "TOP MINDS" in
organizations that may be currently
Management Accountant, May-June, 2014 | 41
Focus Section
working just like a normal employ in your
firm.
Medical Science and Talent:
The brain is phenomenally plastic. We
construct overselves through behavior. It is
not who you are. It's what you are. Our
artistic ability, creativity, innovativeness,
sharpness, processing mathematical
equations, remembering faces, voices,
places all occurs in brain. Our brain is
divided in four lobes. These are Frontal,
Temporal, Parental and occipital. These
lobes are responsible for different tasks
and amazingly they work integrated and
thus called collectively "Brain "if we all have
same brain divisions than why some people
are known as more talented and God
gifted. The answer of this question is highly
influenced by environmental factors and
culture in which we live. A man in a village
who know good about benefits and use of
agriculture equipment will be called genius.
The same person shall not be admirable in a
city where all are aware about agriculture
equipment. However being intelligent or
not is also a matter of brain. What if the
person in a village is not interested in
agriculture equipment? A study was
conducted in 2003 by University of Virginia
Focus Section
for analyzing brain processing abilities.300 sets of twins
aged 7 year were included in study. They were from both
rich and poor families. An IQ test was conducted at the
same time and in the same environment.60% of the high
scorers was from families with affluent resources. The
score of children from impoverished families remains poor.
Neurologist found strong genes in children from rich
families and weak in children from poor families. Remember
both classes have genes. The difference is just one is fully
developed and other is not as much as it should be. Another
research suggests that Cortex "A thin layer on the surface
of brain" is responsible for most sophisticated
informational processing.
How to Identify Talent?
Recruitment management,
employee engagement, learning
management, talent management
and 360 degree feedback are some
suits of Human Capital
Management. One Suit that is
directly related with organizational
success or failure is talent
management. It does not matter
that how much financial and other
resources you have but it's the
matter of intense importance that
who and how they are managed.
Once HR department has selected the right person for the
right place the next is to groom all selected employees. One
way is to build a talent reservoir, "A new generation of HR
management". Talent reservoir is a group of talented
employees who work under one or two executives who
pass them from different work areas and train them by
assigning diversified assignments. The benefit and purpose
behind it, is to ensure availability of ready to promote
employees. Organization and managers need not to worry
much about their replacement. This new Human Resource
management process discards old Traditional Succession
Planning system in which only those employees who have
spend an inordinate amount of time in organization are only
considered for promotion.80% positions are fulfilled by this
way. Another drawback of this system is that the
promoted person remains unaware about latest tools and
techniques of running business. The first step in a Talent
Reservoir System is the identification of right candidate
who will be injected in the system. Because it is somewhat
expensive thus everyone cannot be a part of this system.
See below the list of some common features of talented
people who enjoy talent pools.
– Dare to ask
– Keen to learn
– Devotion with work
– Have a vision and mission
– Work efficiently
– Good technical, interpersonal and communication
skills
– Time Management
– Broader views
42 | Management Accountant, May-June, 2014
– Honest
– Innovative mind
A person having such abilities may be considered for
placement in talent reservoir. Talent Reservoir may be at
lower level of management as well as the middle or upper
level of management. Some organizations have their own
assessment centers which are responsible for gathering
and analyzing job performance of selected employees.
Employees work in the shape of teams and thus the fruitful
result of team work is also achieved by talent reservoir.
Talent and Top Ten Richest Firms:
The only living thing in the world with his own processing
ability to trigger organizational resources is Human Capital.
What do you think about top 10 richest companies in the
world? What's the trick they have?
They have innovative minds.
Someone within the organization
has identified and recognizes them.
They have had been trained in
talent reservoir. Such innovative
minds multiplied available
resources as many times as they
can and let others to call them as
"Richest Companies" in the world.
These great companies are not
now even comparable with others.
They earn their own. They sow their
own. They cultivate their own. See below the list of some
top richest and biggest companies in the world.
Exxon Mobil (Revenue 502.3 B$)
Royal Dutch Shell (Revenue 492 B$ )
Walmart (Revenue 464 B$ )
British Petroleum ( Revenue 410 B$ )
Vitol (Revenue 290.5 B$)
Chevron ( Revenue 270 B$ )
Toyota (Revenue 210 B$ )
The trick behind this success is listed below
— They have a solid vision and mission
— Have appropriate Resources
— Have right people at right place
— They provide full job satisfaction
— Love with inventions to skim market (First Mover
Advantage)
— Cost Conciseness
— Always ready to combat with deficiencies
— Compliance with all social and corporate laws
— Take only optimal decisions
— They continue to search talent
References:
1. www.Lumosity.Com
2. www.careerjunction.co.za/global-talent-reservoir-
administrator-researche...
3. www.ibanet.org/Article/Detail.aspx? ArticleUid=77bbca63-
9e75-4288.
4. Performance Management by Frank Scott
5. Strategic Human Resource Management by Paul Boselie
 Meritorious Article

New rules mean virtually every company will

need a code of ethics...
Ensuring Ethical Effectiveness
Stung by the high-profile accounting scandals that drove some the nation's leading companies into
bankruptcy court, Congress and other regulatory authorities have taken up their pens in an attempt
to legislate business behavior. The Sarbanes-Oxley Act, requires publicly traded companies to
disclose whether they have adopted a code of ethics for their senior financial officers, and if not, why.
They also must report promptly any amendments to or waivers from the code.
By Randy Myers
This is one of the Articles of Merit, judged as such under Professional Accountants in Business -
Articles of Merit Programme for distinguished contributions to Management Accounting,
established by the Professional Accountants in Business Committee (PAIB), (under its former name
of FMAC) of IFAC.

T
he New York Stock Exchange, Even for CPAs who don't toil as principal In Search of a Policy
meanwhile, proposed new financial officers, comptrollers or principal
In an informal
corporate governance standards accounting officers - job titles Sarbanes- poll of 291
executives,
which - if the SEC approves them - would Oxley specifically Targets - the new law 44% of
introduces a raft of issues. As interpreted Yes No
require companies traded on that respondents
56%
said their 44%
exchange to adopt corporate governance by the SEC in the proposed rule-making company
did not have
guidelines and a code of business conduct notice it issued, Sarbanes-Oxley does a formal
code of ethics
and ethics for all employees. CPAs can help more than suggest companies have a code in place.
employers or clients navigate these new of ethics for senior financial executives.
rules and create a code of ethics that Source: Christian & Timbers, New York City
Once SEC rules are finalized, section 404 of
complies with all of the requirements. the act will require publicly traded
Nuts and Bolts companies to file in their annual reports an

For companies that choose to adopt a set
of ethics guidelines in response to
Sarbanes-Oxley-and few will run the risk
of not doing so given the negative message
it would send to investors, regulators and
potential litigants - section 406 of the act
says the code should seek to ensure that
senior financial executives
o Conduct themselves honestly and
ethically, particularly in handling actual
or apparent conflicts of interest.
o Provide full, fair, accurate, timely and
understandable disclosure in the
periodic reports their employers file
with the SEC.
o Comply with all applicable
government laws, rules and
regulations.
Internal auditors who uncovered the company's
accounting fraud reported it to the company's then
CFO Scott Sullivan. The federal government now
alleges Sullivan instigated the fraud and attempted to
block the internal investigation. According to an in-
depth report The Wall Street Journal, WorldCom didn't
finally acknowledge, make public and address the fraud
until its vice president of internal audit, Cynthia
Cooper, took damaging evidence to the company's
audit committee.
“internal control report” that outlines what
steps management has taken to establish
and maintain adequate internal controls
and financial reporting procedures, as well
as management's conclusions about the
effectiveness of those controls and
procedures - a report CPAs and corporate

Management Accountant, May-June 2014 | 43

Meritorious Article

finance departments likely will have a hand in drafting. The

report must say the company's public accountant has
attested to, and reported on, management's evaluation of
the company's internal controls and financial reporting
procedures. The company must include a copy of the
auditor's attestation in its annual report.
What's not clear, says CPA Sherrie McAvoy, national
director of corporate compliance and ethics services for
Deloitte & Touche in Dallas, is whether an external auditor
would be required to formally audit a client's compliance
with its own code of ethics. While her initial suspicion is it
would not, she says it won't be clear until the SEC issues establishing compliance standards and procedures -
final regulations. An SEC spokesman notes that Sarbanes- otherwise known as a code of conduct or ethics.
Oxley gave the agency 180 days from the date of the law's
enactment, or roughly until the end of January 2003, to Today, says McAvoy, surveys her firm conducted show
issue final rules. approximately 95% of Fortune 1000 companies have a code
of conduct. Stuart C. Gilman, president of the nonprofit
CPA Richard Steinberg, head of the corporate governance Ethics Resource Center in Washington, D.C., says many
practice for PricewaterhouseCoopers in Florham Park, New private companies have such guidelines as well; he
Jersey, takes a similar view. “As they look at internal controls, estimates that altogether there are more than 3,000 ethics
the external auditors are going to focus on this (the code of officers working in the United States.
ethics),” he says. “Not that they're going to audit it, but
they'll consider it as they assess the company's control What's different now that Sarbanes-Oxley is on the books?
environment.” According to McAvoy, the new law puts more emphasis on
financial reporting, particularly its accuracy. This could
Incremental Change translate into more responsibility for CPAs. Section 301
also mandates that companies put in place a mechanism for
Those counting on ethics codes to change corporate
employees to raise concerns about financial reporting
behavior may be surprised to learn that most public
matters - confidentially and anonymously. The SEC's
companies - at least those in the Fortune 1000already have
proposed rules for implementing section 406 go on to say
them. When the U.S. Federal Sentencing Guidelines
the code of ethics should identify the person or persons to
became law in 1991, they listed seven elements of an
whom employees should deliver those anonymous reports.
effective corporate compliance program judges could take
into consideration when sentencing corporations for federal Establishing a process for rank-and-file employees to
offenses. Most large public companies quickly realized the confidentially report code violations is a critical component
value of incorporating these elements into their operations, of any ethics program, according to McAvoy. Most of the
if only as risk management tools. Among them was companies that already have established such procedures

EXECUTIVE SUMMARY
THE SARBANES OXLEY ACT NOW REQUIRES PUBLICLY traded companies to disclose whether they have adopted a
code of ethics for senior financial officers. In addition, the New York Stock Exchange is considering new rules that would
require listed companies to have a code of business conduct that applies to all employees.
UNDER THE ACT THE SEC REQUIRES COMPANIES to file an internal control report with their annual report outlining
management's responsibilities for establishing and maintaining adequate internal controls as well as its conclusions
about the effectiveness of those establish a process for rank-and-file employees to report code violations confidentially
to someone outside the ordinary corporate chain of command
THE BEST WAY TO DRAFT A CODE OF ETHICS all employees will follow is to bring together a multidisciplinary team from
all parts of the organization. Employees must then be trained in what the code means using real-life dilemmas they might
encounter on the job. Regular refresher courses are important because ethics training is perishable - people forget
controls. The company's auditor must attest to management's evaluation.
MANY COMPANIES ALREADY HAVE ETHICS CODES. With the emphasis in Sarbanes -Oxley on financial reporting,
CPAs may want to help employers and clients review these codes to make sure they comply with the new regulations.
Companies will need to
COMPANIES WITH AN EXISTING ETHICS CODE UNLIKELY will need a new one. Still, businesses may want to revisit
the code to make sure they have a full-blown compliance program in place. Even though the act focuses on the CFO, the
SEC expects the entire organization to comply with the law.

44 | Management Accountant, May-June 2014


assign a case number to each complaint or tip an employee
makes so he or she can track its progress. In addition, the
person to whom employees report alleged violations is
generally someone outside the ordinary chain of corporate
command - an ethics or compliance officer, for example, or
an ombudsman - who nonetheless has access to the
company's top executives and its board of directors. The
WorldCom case amply illustrated the perils of having
employees report complaints to a senior executive with
routine corporate responsibilities.
Internal auditors who uncovered the company's accounting
fraud reported it to the company's then CFO Scott Sullivan.
The federal government now alleges Sullivan instigated the
fraud and attempted to block the internal investigation.
According to an in-depth report The Wall Street Journal,
WorldCom didn't finally acknowledge, make public and
address the fraud until its vice president of internal audit,
Cynthia Cooper, took damaging evidence to the company's
audit committee.
Many CPAs will have a role in helping companies comply
with Sarbanes-Oxley. Certainly, those in corporate finance
departments can be expected to be involved in drafting or
reviewing those portions of their company's code dealing
with financial matters, says Nancy Wilgenbusch, president
of Marylhurst University in Portland, Oregon, and a member
of the AICPA ethics committee. The portions of the code
CPAs might handle would range from insider trading to
appropriate and accurate expense reporting, acting as good
stewards of company assets, avoiding conflicts of interest
and assuring accurate corporate communications with the
public. To the extent the code of ethics includes quantifiable
measures of accountability concerning items such as insider
trading or entertainment expense reporting, for example,
Wilgenbusch says CPAs are ideally suited, by virtue of their
training and professional expertise, to evaluate or test the
results.
External auditors would also appear to have a role in
assessing compliance with codes of ethics, if only in the
context of a code's being part of a company's internal
Meritorious Article
control process. Gilman encourages outside auditors to go a
step further: For each client, the auditor should sign a
statement noting that it understands and accepts the
client's code of ethics. “This allows the outside auditing firm
to comport with the company's internal environment,”
Gilman says. “It permits a level of independence and says,
'We're willing to obey and abide by the same set of
standards the organization holds itself to.'”
Doing it Right
A number of companies- including Raytheon and Texas
Instruments - have been widely recognized for the scope
and quality of their ethics programs. Raytheon makes ethics
training a requirement for every employee, all the way up to
the CEO. Texas Instruments' employee ethics handbook
dates to 1961 and the company has received three ethics
awards for its leadership in the field. Texas Instruments also
provides employees with a business-card-sized pamphlet
that serves as a “quick test” for workers faced with an
ethical dilemma.
o Is the action legal?
o Does it comply with our values?
o If you do it, will you feel bad?
o How will it look in the newspaper?
o If you know its wrong, don't do it.
o If you're not sure, ask.
o Keep asking until you get an answer.
While it's difficult to calculate a hard return on investment
for drafting and implementing a code, Bruce Pfau, national
practice leader for organization measurements at Watson
Wyatt Worldwide has tried. A survey his consulting
company conducted in 2000 found workers who believed
their company operated with honesty and integrity showed
higher levels of commitment to their employer in terms of
job satisfaction and company pride than those who judged
their employer to have low ethical values. Pfau also found
companies highly rated by their employees for honesty and
Management Accountant, May-June 2014 | 45
Meritorious Article
integrity produced, over the previous three years, a higher
return to shareholders (112%) than poorly rated companies
(76%).
Putting Together a Code
With virtually all companies needing a code of ethics so they
can avoid having to report they don't have one under
Sarbanes-Oxley, the task of developing one from scratch
need not be too involved. The Financial Executives Institute
has drafted a one-page model code of ethics for senior
financial executives it says conforms to the new law; it can
be found on the organization's Web site at www.fei.org.
Another code developed by Parson Consulting, a national
consulting company specializing in finance, accounting and
business systems is available at ww.parsonconsulting.
com/sarbanesmarket_position.asp.
But most experts say it would be far better to create a code
of ethics for the entire company, one that applies to all
employees and builds
on their input. Under
the proposed
changes to the NYSE
listing requirements,
such a policy would
be required of all
companies trading on
the Big Board.
The challenge
companies face -
whether creating an
entirely new code or
reassessing and
upgrading an existing
one to reflect
Sarbanes-Oxley - is
to draft a document
that isn't just
decoration on the
company bulletin
board but instead helps employees live up to the ethical
standards investors, legislators and regulators demand.
“We're terrified here of what we call the three Ps - the print,
post and pray syndrome,” says Gilman. “You print a code of
conduct, post it on the wall and pray people actually read it.”
According to Gilman and other ethics professionals, the
correct approach is to bring together a multidisciplinary
team from all parts of the organization - finance, sales,
human resources, operations, marketing, executive - to
draft a code, communicate its importance to employees
and then involve them in seminars to help understand how
the code applies to them and their colleagues. Finally, says
Minneapolis-based ethics trainer Nan DeMars, author of
You Want Me To Do What? (Fireside, 1998), senior
management must follow through and hold people
accountable for complying with the code.
One way to make a code of ethics come alive for employees,
46 | Management Accountant, May-June 2014
DeMars says, is for human resources to plan training
sessions that engage them in discussions about real- life or
theoretical ethical dilemmas they might expect to handle
on the job. The more specific the situations are to the
particular company, the more valuable they will be. DeMars
gives these examples of the types of questions she might
pose in a seminar: “You are the assistant to David Duncan,
lead auditor for Arthur Andersen. You know the firm is
about to be subpoenaed. He asks you to shred documents.
What would you do? Or, you are Sharon Watkin's assistant
at Enron and you type her memo to Ken Lay warning him of
the possibility Enron will implode if its current accounting
practices continue. Now that you know the company is in
trouble and your boss is aware of this, what do you do?”
“You've got to take the words as well as the legal
requirements and translate them into understandable
practices,” agrees John J. Castellani, president of The
Business Roundtable, an association of CEOs of leading
corporations.
“Ultimately, doing so
gives you a very
strong tool. When
employees violate
the policy, they are
dismissed.”
DeMars and others
agree ethics
programs don't
achieve much when
they are handed
down by senior
management with
little input from other
employees or when
senior managers
themselves fail to
abide by the code or
neglect to stress its
importance. Enron
had a rigorous code
of ethics, for example, yet it fell victim to unethical behavior
in part because its board of directors twice voted to
suspend the code to allow the company's former CFO,
Andrew Fastow, to launch business activities that created,
for him, a conflict of interest. Ethics professionals warn
against viewing educational programs as a once-and-done
procedure. “Ethics training is perishable,” Gilman says.
“People forget.” To deal with this problem, companies should
schedule regular refresher courses for all employees.
Finding Help
While companies must enlist the cooperation of their own
staff members to draft a code of ethics that will resonate
with them, there's plenty of outside help available, too.
Among the Big Four accounting firms, both Deloitte &
Touche and PricewaterhouseCoopers offer ethics
consulting services, says Gilman. So do some law firms and

a number of nonprofit organizations and academic centers.
Among the latter are Gilman's own Ethics Resource Center
as well as the Ethics Officers Association in Belmont,
Massachusetts; the Institute for Global Ethics in Camden,
Maine; and the Markkula Center for Applied Ethics at Santa
Clara University in California. (See the sidebar above for
information on how to contact these and other resources.)
Elsewhere, the nonprofit Practicing Law Institute in New
York City offers programs on ethics and corporate
compliance several times a year, says McAvoy, and has
published a series of books on the topic. All that said, Gilman
cautions companies against offloading too much
responsibility to outside consultants. “Ethics are one of
those things where you don't want someone doing an
assessment and charging you a lot of money to tell you
what you want to hear,” he explains. The best ethics code is
one drafted in-house.
Many companies that already have a code of ethics are
unlikely to need a new one to respond to Sarbanes-Oxley,
says attorney Tom Patton, a partner with Tighe Patton
Armstrong Teasdale PLLC in Washington, D.C. This is
especially true since the new law doesn't require a company
to publish its set of guidelines but merely to confirm it has
one. “The statute defines a code of ethics in very broad
terms, so you have to make sure your existing code meets
all of them; assuming it does, you probably don't need to
develop a new one,” he says.
Stephen Hill Jr., a partner with the Kansas City, Missouri, law
firm Blackwell Sanders Peper Martin LLP, concurs but adds
companies may still want to review their code point by point
to make sure it covers all of the provisions in the new law
and that they have a “full-blown compliance program in
place.” The proposed SEC regulations under Sarbanes-Oxley
make it clear the code should promote “compliance with
applicable government laws, rules and regulations.”
At many companies, such reviews are already under way. “A
number of companies are taking a hard look at their codes
and making sure they're current and sharing them with their
boards of directors,” says Deloitte & Touche's McAvoy.
“They're also taking a look at the financial reporting aspects
and making sure they are as robust as they can be.”
Meanwhile, the Ethics Officers Association reports that
about 100 companies have hired ethics officers through
October of 2002 alone.
Hill says his firm is telling clients their entire organization,
not just the CFO, must be prepared to deal with compliance
issues. “Sarbanes-Oxley covers the CFO, but in its October
16 statement, the SEC makes it clear it's going to expect
the entire organization to comply with the law,” Hill says. By
way of example, the proposed SEC regulations mandate
that a company's code of ethics apply not only to senior
financial executives but also to the “principal executive
officer,” even though that position was not specified in the
act.
According to the London-based Institute of Business Ethics
(IBE) (www.ibe.org.uk) a code of ethics should include a
Meritorious Article
preface, signed by the chairman or CEO, explaining what
values are important to top management in conducting the
business. It should then cover these key areas:
o The purpose of the business and its values.
o Employee relations including working conditions,
recruiting, training, discrimination policies and use of
company assets by employees.
o Customer relations guidelines.
o The importance of protecting the investment made by
shareholders or other investors.
o Relationships with suppliers.
o How the company relates to society as well as to the
wider business community.
o How the company will implement the code, including
training.
The IBE also advises any company drafting a code to find a
champion - hopefully the CEO - who is prepared to drive the
introduction of a business ethics policy. Without this
support, there is little chance the company will find the code
a useful tool. The board of directors should also endorse the
ethics policy.
Will it Work?
Whether any of this will prevent unethical behavior is
uncertain, although most experts say codes can make a
difference when companies develop and implement them
properly. “There's nothing we can do to prevent a crook from
stealing if he or she wants to,” says ethics committee
member Wilgenbusch. “If people are greedy, a code won't
prevent them from behaving unethically. But if the CEO gets
the company's top 20 people in a room and says, 'We're
going to adhere to both the spirit and letter of the law; we're
going to play by the rules in every sense of the word and
anybody who steps across that line of ethical behavior not
only will be discharged immediately but prosecuted to the
full extent of the law,' then you are going to avoid unethical
behavior.” That's a goal every accountant can endorse.
Resources
The following organizations can help accountants who are charged with
developing, implementing or monitoring a corporation's code of ethics.
1. Ethics Officers Association 30 Church Street, Suite 331 Belmont,
Massachusetts 02478 617-484-9400 http://www.eoa.org/
2. Ethics Resource Center 1747 Pennsylvania Avenue, NW, Suite 400
Washington, D.C. 20006 202-737-2258 http://www.ethics.org/
3. Institute for Global Ethics P.O. Box 563 Camden, Maine 04843 207-
236-6658 http://www.globalethics.com/
4. Markkula Center for Applied Ethics Santa Clara University 500 El
Camino Real Santa Clara, California 95053-0633 408-554-5319
www.scu.edu/ethics
5. Practicing Law Institute 810 Seventh Avenue New York, New York
10019-5818 800-260-4PLI or 212-824-5710 http://www.pli.edu/
Randy Myers is an award-winning business and financial
writer and a contributing editor at CFO, Corporate Board
Member and Plan Sponsor magazines.
Management Accountant, May-June 2014 | 47
Article Section
First Appellate Forum
Under Some Fiscal Laws
Qaisar Mufti, FCMA
Laws are not
susceptible to more
than one
interpretation, not
requiring resort to
external sources for
interpretation
proposes, not calling
to undergo the rigor
of interpretation.
48 | Management Accountant, May-June, 2014
The Issue
A Collector (Appeals), under the Customs
Act, and Commissioner (Appeals), in
terms of Excise, Sales Tax and Income Tax
laws, is the first appellant authority.
Sections: (i) 33(2) of the Federal Excise
Act, 2005,
(ii) 45-B(2) of the Sales Tax Act,
1990,
(iii).129(5) of the Income Tax
Ordinance, 2001,
(iv) 193-A(3) of the Customs
Act, 1969,
provide that a Collector or Commissioner
(Appeal), as the case be, shall decide the
appeal with him within the period
specified in respective sections of the
indicated fiscal laws e.g. 90 days.
Word “shall” has been used in all these
laws to bind a Collector / Commissioner
(Appeal) to act to that end. These are
declaratory provisions, which provide
jurisdiction tied to the time frame spelled
out in the laws. The cited officers turn
coram-non-judice after expiry of the time
made available to them for action under
the respective laws. After expiry of the
time allowed to decide an appeal, under
the laws, one may stay as Collector or
Commissioner (Appeal) but no longer
empowered to take action on an appeal
lying with him undecided beyond the time
specified. Words of the laws direct to only
one end.
Fiscal laws require kneeling down in
keeping with their words. There should be
no qualm. Language is plain and words of
the above laws provide a clear path to
attain its targets viz. denial to the
government when its functionaries do not
aim reaping it. To this end, there is no need
to employ or to import words from
outside. That is for everybody.
Conveniences of state functionaries or
nation's need to raise revenue, policies of
the government, the laws are not
supposed to address and they do not
address.
No ambiguity in the laws
Despite languages of the subject fiscal
laws being plain with no ambiguity, sans
need for an extrapolation by way of
interpretation and show of an opposite
meanings missing, some jurists, defying
principles of interpretation of fiscal laws,
have attempted to go beyond what plain
language of the laws through the naked
eye provides. This is done by way of
induction of the drill to 'discover' whether
the words of laws in the main sections or
by way of provisions appended to
respective sections of the laws are
mandatory or directory. Such attempt is
without caring that intentions of the
legislature are clearly enshrined in the
laws. These laws are not susceptible to
more than one interpretation, not
requiring resort to external sources for
interpretation proposes, not calling to
undergo the rigor of interpretation.
Based on Indian Supreme Court judgment
in Bengal Immunity Co. Ltd. vs. State of
Bihar (AIR 1955 SC661) M.N. Rao, Former
Chie Justice, High Court of Himachal
Pardesh, in his General Clauses Act, 10th
Ed. Page-20, observed: “The Court cannot
discard the cardinal rules of interpretation
in order to avoid hardship or
inconvenience.” He proceeds further on
the authority of Indian Supreme Court in
Polestar Electronic (Pvt.) Ltd. vs.
Additional Commissioner Sales Tax, 1 SCC
636 AIR 1978 and observes: “Statutory
enactments must ordinarily be construed
according to the plain natural meaning of

the language and that no words should be added, altered, or
modified unless it is plainly necessary to do so in order to
prevent a provision from being unintelligible, absurd,
unreasonable, unworkable or totally irreconcilable with the
rest of the statute.”
On the subject, the Appellate Tribunal Inland Revenue
(Pakistan), Karachi, in I.T.A. Nos. 661 and 786/KB of 2010
(Tax Years 2003 & 2004), decided on 28-03-2013, [(2013)
108 TAX 373 (Trib)], observed:
“In PLD 1965 Dacca 296, in the case of Muzaffar Ahmad
v. Anwar Ali, the Honourable CJ, Mr. Murshed, while
speaking for the Court, has observed:
“Cannons of construction and rules of interpretation are
directed to one and only one end, namely, towards
finding out the intention of the Legislature. When this is
clear, there is no room for praying in aid any extraneous
principle of interpretation or canons of construction.”
Restriction of time is to cater public interest,
to guard against prolonged litigations and an
infinitely hanging sword on heads of the
taxpayers.
In aforesaid order of the Tribunal we also find following
observations of the Honourable Supreme Court:
“The main purpose of interpretation is to ascertain the
mind of the Legislature from the words used by it, and in
doing so it is a well-accepted rule that we must read the
words in the context in which they are used, for, the
meaning of a word read out of its context may well be
totally different and in different context or in different
association of words may equally well have a sense
which has the effect of limiting or restricting its ordinary
or popular sense.”
To suggest that the officers under reference could proceed
with the cases after expiry of the period law authorizes
them to adjudicate would be rendering these laws absurd.
Because in the absence of provisions existing with reference
to restriction of time for adjudication, these officers would
enjoy time unbound powers to decide the appeals before
them.
Article Section
Cure of mischief
Let purpose of the time limit on action by a Collector /
Commissioner (Appeals) and these officers ceasing to have
powers of adjudication after the prescribed time be
examined with eye on rationale for and beneficiaries of
these laws.
Restriction of time on these officers is to cater public
interest, to guard against prolonged litigations and an
infinitely hanging sword on heads of the taxpayers which
germinates public apathy. The laws under discussion, being
facilitating provisions for assessees, their interpretation
would lie also keeping in view: whether they answer the call
to facilitate the subjects. For purposes of interpretation,
focussed is also the mischief against which the laws extend
a helping hand. The mischief being tax payer's misery and the
prolonged sense of uncertainty they have to live with when
their appeals remain in process, undecided.
On the subject of a curative law or law to
cure a 'mischief ', “N. S. Bindra's
Interpretation of Statutes” by M N Rao
Amita Dhanda (10th Edition - Pages #
825-826), points out:
“While the statements and objects
cannot be used as aids to construction,
they can be used for the limited
purpose of understanding the background and
antecedent sate of affairs leading up to the legislation, of
finding the object of the legislature in enacting the
statute where all other methods of interpretation fail,
and also in order to find out what was the mischief which
the legislation aimed at. Such statement can
legitimately be referred to for correct application of:
(i). what was the law before the Act was passed;
(ii). what was the mischief or defect for which the law
had not provided;
(iii). what remedy the legislature had appointed; and
(iv). the reason for the remedy.”
As pointed out hereinbefore, needed was a law to take off
the indefinitely hanging sword on the tax payers in a
scenario where such hanging was caused by the
Management Accountant, May-June, 2014 | 49
Article Section
governmental functionaries. And here are the remedial and
curative laws to this end being discussed. All the above
criteria narrated by Bindra, are on the basis of judgments of
Supreme Court of India and High Courts of different Indian
provinces.
Help in interpretation is by way of:
Being curious, speculative on fate or outcome
of the matter stretches to pronouncing a nikah
(a). section(s) or sub-section(s) of the law.
not mandatory because of related nikah nama
(b). provision appended or super imposed
on sections or sub-sections of the law. not getting into the proposition of children the
(c). court judgments.
couple may have after wedlock or schools the
(d). departmental deliveries viz. SROs,
couple's children would go to.
ruling etc.
(e). interpretations by professionals and academicians.
(c), (d) or (e) above are not relevant when words in (a) or (b)
above leave no ambiguity to give vent to the need for
interpretation.
For comprehension of the laws being discussed, (a) or (b) in
text of the laws are sufficient.
Provisions in the laws
In the Customs Act and the Income Tax Ordinance limitation
on the period for decision by the officer as such is through
independent sub-sections in the legislations. Sales Tax &
Federal Excise Acts have put time constraint on powers of a
Commissioner (Appeals) by virtue of provisions
superimposed on related sections of the laws.
On the efficacy of a 'provision' dilates Justice G.P. Singh in his
'Principle of Statutory Interpretation' (Tenth Edition-2006,
Page-199), as follows:
“A proviso will not be normally construed as reducing the
purview of enactment to a nullity, or to take away a right
clearly conferred by the enactment but it has been held
that if a proviso on its true construction “is directly
repugnant to the purview, the proviso shall stand and be
a repeal of the purview, as it speaks the last intention of
the makers.”
Provisions in a statute are light bearers on the way to act in
50 | Management Accountant, May-June, 2014
accordance with the law. In the matter of efficacy, these are
superimposed on the law section to which they are
appended. These are mandatory in disregard of the purview
to which they are annexed or imposed on.
In furtherance the above dissertation following citations
and arguments are offered:
(a). The High Court of Sindh in Constitution Petition Nos.
D-1901 to 1905, D-1931 to 1941, D-1971 to 1973, D-
1980 to 1981, D-2062 & 2063, D-2104 & 2136, D-
2146, 2147, 2168 & 2169, D-2244, 2268, 2278 & 2282
to 2285, D-2342, 2392, 2570, 2631, 2632, 2728,
2903 all of 2009, D-41/2010, D-167/2010 & D-
180/2010 decided by Justice Gulzar Ahmed & Justice
Irfan Sadat Khan the High Court of Sindh at Karachi on
16-07-2010, ruled:
“The consensus of the above cited cases, as assumed up in
PLD 1958 SC (Pak) 41, is as under:
1. A proviso is to be regarded as something which excepts
a particular case from a general principle. The effect of a
proviso is to except something out of the proceeding
portion of the enactment as to qualify something
enacted therein which but for the portion would be
within it.
2. The words of a proviso are to be construed strictly and
confined to the special case which its works enact, it
would be wrong to construe those words as being co-
extensive those used in the purview, particularly where
the effect might be of bringing about a repeal of the
purview.”
(b). In the case of M/s. East and West Steamship Co. vs.
Secretary to Government of Pakistan, Ministry of
Commerce, Karachi and others (PLD 1958 Supreme
Court (Pak.) 41), the Hon'able Supreme Court held as
under:
“The words of a proviso are to be construed strictly and
confined to the special case which its words enact; it
would be wrong to construe those words as being co-
extensive with those used in the purview, particularly
where the effect might be of bringing about a repeal of
the purview.”
Quoted from C.P. Nos. D-1901 to 1905, D-1931 to 1941, D-1971 to 1973, D-
1980 to 1981, D-2062 & 2063, D-2104 & 2136, D-2146, 2147, 2168 & 2169, D-
2244, 2268, 2278 & 2282 to 2285, D-2342, 2392, 2570, 2631, 2632, 2728,
2903 all of 2009, D-41/2010, D-167/2010 & D-180/2010 by the High Court of
Sindh at Karachi

The laws are declarations
The subject laws, having ado with time related availability of
adjudication powers to the relevant officers, do not address,
give order to a person or authority. They are declaratory.
Therefore, there can be no proposition to classify the same
into mandatory and directory laws. One attempting to
classify the subject laws as such, should in the first instance
put forth rationale he comes to have for igniting the
controversy, which the tax payers may consider malicious.
What ails digestion?
Likely, lured by proclivity to be on right of the state
functionaries, some quarters have carved proceeding with
the following step(s) to interpret the subject laws:
(a). not believing that the subject laws are declaratory, not
addressing or giving direction to anyone for doing an
act, not calling support or aid to carry or to put the
message through.
It follows from the above that when the laws are not in
the nature of an address to the
specified individuals, giving them The Presidential order is a tower of light. It is a
options, there can be no conception of
going this way or that way. There is a policy decision showing way for interpretation
command: 'kneel down', there is no and application of statutes. It is not restricted
option, no authority or mandate for
attempts to classify the order into: (i) to a particular enactment or specific section(s)
mandatory or (ii) directory provisions. of a statute. It is magna carta for all lawmen,
One has to be compliant. Rules of authorities and civil society, foundation stone
interpretation of fiscal statutes do not
allow to advance reason in the face of
for the civil society.
the law. Called for is obedience.
(b). postulate that relevant laws have the revenue officials
as addressees with the address having two shades:
mandatory and directory. They insist on their inference
as such despite there being no trace of an address like
situation.
These are like charging section of the fiscal stature. A
charging section also is a declaratory provision,
permitting no branching off.
(c). assuming that there is no 'time related waning' of a
Collector / Commissioner (Appeals)'s powers for
purpose of adjudicating cases and believing the cited
officers not having become functus officio, which they
turn into due to operation of the law in relation to cases
not decided within the time allowed.
(d). getting into the frivolous rather illogical, unlawful,
without foundation, issue of conjecturing the fiscal
laws being directory and claiming that such a law is
directory - because consequences of not doing their
duty on the part of the identified officers are not cited.
The argument given is that in the event of final outcome
of law not being stated, the fiscal laws can be declared
directory through the self fabricated swords of
interpretation.
Article Section
It tantamounts to implying that, upon discretion of the
revenue officers, charging section of a fiscal law can be
taken as a directory provision. Jo chahey, jaisa chahe
maney ya na maney. Tax dey ya na dey.
They are not conscious that this would do away with
the cardinal principle of strict construction of fiscal
laws, particularly the postulate of doing away with
conjectures, imagination, kite flying, guess work. This
appears skipped in tieing-up through terrain of
arguments they come-up with.
(e). being curious, speculative on fate or outcome of the
matter - whether it is mandatory, stretches to
pronouncing a nikah not mandatory because of related
nikah nama not getting into the proposition of childrens
the couple may have after wedlock or schools the
couple's children would go to.
On the same logic, because of being non-descriptive of
utilization of funds raised, a law would be unlawful or
charging section of a fiscal law would be branded
directory.
(f ). not keeping in view the principle that when different
interpretations can be made, one favourable to the
assessee has to be adopted.
The Supreme Court of India, in Mahadeolal Kanodia
vs. Administrator General W. B. (AIR 1960. SC 936.
3 SCR 578), quoted by Vepa Sarathi in
“Interpretation of Statutes”, Page-62, 4th Edition,
has ruled”
“The principles which have to be applied for
interpretation of statutory provisions of this nature
are well established. The first of them is ……… The
third rule is that if in any legislation, the general
object of which is to benefit a particular class of
persons, any provision is ambiguous so that it is
capable of two meanings, one of which would
preserve the benefit and another which would take it
away, the meaning which preserves it should be
adopted.”
(g). not trusting that the laws sought restraint by a
Commissioner / Collector (Appeal) with reference to
exercise of his power to adjudicate after expiry of the
periods specified.
(h). being oblivious that, according to words of the laws,
Management Accountant, May-June, 2014 | 51
Article Section
vires of or validity of a Commissioner or Collector
(Appeal)'s order passed after expiry of the time period
allowed under the cited laws, would be total nullity.
Justice M. N. Rao, in his “N. S Bindra's General Clauses
Act” (10th Edition - Page # 18), on the basis of M/s.
Management Shahdara (Delhi) Saharapur Light Rly Co.
Ltd. v. SS Rly workers' Union AIR 1969 SC 513, 518; Raj
Kumar v. State Board of Technical Education AIR 1991
P&H 1, states:
“A literal meaning should be given to the language used
by the legislature unless the language is ambiguous or
its literal sense gives rise to an anomaly or results in
something liable to defeat the purpose of the Act.”
(i). abstaining to pronounce that a Collector /
Commissioner (Appeals) is no more on the position he
had, before running out of his term or time allowed to
him (by the laws) and repudiation of the relevant
officers having turned coram non judice to the end of
deciding the appeals pending with them beyond the
period law had provided.
(j). not taking cognizance that in 'reward' of failure to act in
time, a Collector /
Commissioner could not be
bestowed unfettered powers
to act the way he deemed fit.
(k). forsaking raison d' etre for the
c l e a r, u n a m b i g u o u s
declaration of the legislature
that powers to proceed with
an appeal by the relevant
officers under cited sections of
the legislation is not in place
after expiry of the periods
specified.
(l). pronouncing that the word “shall” appearing in the four
laws cited above, with reference to passing an order-
in-appeal by a Collector / Commissioner within the
specified time, can quietly be christened to read “may”
or some other word, which gives the officer concerned
a leeway, enabling him to pass an order beyond time
spelled out in these laws.
In certain cases involving laws, other than fiscal laws,
the word “may' be used in place of “shall”, but not
quietly, impulsively. Such relegation i.e. reading “may” in
place of “shall”, taking away valuable right of the tax
payer, the cannons of interpretation of fiscal laws do
not appear to uphold, because these cannons call for
strict construction.
(m). failing to believe that the laws spelled in:
(i). 33(2) of the Federal Excise Act, 2005,
(ii). 45-B(2) of the Sales Tax Act, 1990,
(iii). 129(5) of the Income Tax Ordinance, 2001,
(iv). 193-A(3) of the Customs Act, 1969,
52 | Management Accountant, May-June, 2014
declare that a Collector / Commissioner (Appeal) is
not capacitated to pass an order-in-appeal after
expiry of the period allowed under these laws.
Such a thought terrain imagines that in the event of passing
of the period allowed for adjudication to the Collector /
Commissioner, there will be 'vacuum' which needs to be
filled. It further imagines that this vacuum should be filled by
the defaulting officer through re-acquiring his waned
powers, which were not with him on expiry of the period
available under the law for deciding the appeal. Goes on to
imagine that the Collector / Commissioner can re-acquire
the same, at his discretion, just as a legislature can in
relation to the powers to legislate, to have or not to have, to
be possessed with or dispossessed, at its pleasure.
Lost sight of is that even the thought of assumption of
legislative powers by the executive, as such, is frightening. It
is tarnishing the entire civic fibre the society has put in place
after thousands of years of social, cultural and law
development.
M. N. Rao, Former Chief Justice High Court of Himachal
Pradesh, in his “N. S Bindra's General Clauses Act” (10th
Edition) gives following narratives on the subject matter of
this write-up:
“The court while interpreting a
statute may point out any
hardship or anomaly likely to
result therefrom leaving it
ultimately to the legislature to
amend the law when deemed fit”.
(Page-18). “Words in a remedial
statute have to be construed to
reasonably admit the relief
contemplated thereunder”.
(Page-19). “It is not, however,
permissible to omit or delete words from the operative
part of an enactment merely on the ground that,
according to the view of the court, it is inconsistent with
the spirit underlying the enactment. Provisions have to
be construed harmoniously as to render no provision
redundant”. (Page-20). “A result following from a
statutory provision is never an evil. A Court has no power
to ignore that provision and contend that it considers a
distress resulting from its operation. In the possibility of
alternative constructions, that alternative has to be
chosen which would be consistent with the smooth
working of the system purported to be regulated by the
statute. When an alternative construction is not
possible, the court has to adopt the ordinary rules of
literal interpretation. When words used are not capable
of two constructions, it is not open to adopt any other
hypothetical construction on the supposed ground of its
consistency with the object of the Act. Where two
constructions are possible upon the language of a
statute, the court has to chose one which is consistence
with good sense and fairness by eschewing the other
which would make its operation unduly oppressive,

unjust or unreasonable. It is dangerous to interpret a
statute by using the meanings of certain expressions of a
different statute, because the two may differ entirely in
their purpose and context”. (Pages 20-21). “The court is
not competent to insist upon the presumption that the
legislature has made a mistake. It must proceed on the
footing that the legislature has intended what is has
said. The supposed spirit of an enactment can certainly
not be given effect to contradicting the plain language of
the section of the Act or the rules made thereunder”.
(Page-21). “A disabling provision has to be construed
strictly”. (Page-24). “In case of ambiguity in a disabling
provision, effect has to be given to that which favoures
the individual”. (Page-24).
All assertions given in the cited sentences are based on
judgments of the Indian Supreme Court and High Courts.
Details of which appears in the book cited.
The laws redundant if not declaratory
With reference to the restrictions on acting beyond the
specified period, to say that the laws are
directory not mandatory, is to suggest
that the subject laws are barren not
delivering anything. It is surmising
that despite the cited
restriction on his powers
subsisting, ultimate arbiter of
the appeal would be the
Commissioner / Collector.
Professing that it would be
upto the cited officers to pass
orders even after the specified
periods, is to attempt leading the
subject laws to nullity.
No day dreaming, guess, intendment,
conjecture or objectivity theorizing on outcome
considerations should enter the era of a fiscal statutes'
interpretation. Because fiscal laws seek compliance in
disregard of the consequences. Mandated is winking at the
consequences.
Interpretations should be harmonious. These should do
away redundancy. Legislatures should not be accused of
wasting words or not choosing proper words to express its
intentions. No deficiency of English it can be charged for.
Cases not endowed with order-in-appeal
The Supreme Court of Pakistan, in Assistant Collector
Customs and Others vs. M/s. Khyber Electric Lamps and 3
Other, Civil Appeals Nos. 1358 to 1361 of 1997 decided on
20th October, 2000 (2001 SCMR 838), ruled:
“It is well-settled proposition of law that a thing required
by law to be done in a certain manner must be done in the
same manner as prescribed by law or not at all.”
ustice M. N. Rao, Former Chief Justice High Court of
Article Section
Himachal Pradesh, in his “N. S Bindra's General Clauses Act”
(10th Edition - Pages # 16-17), on the basis of M/s. Union of
India v. Deoki Nandan Aggrawal AIR 1992 SC 96, 101,
observes:
“The Court cannot add words to a statute or read words
into it that are not there. Assuming there is a defect or
an omission in the words used by the legislature, the
court cannot go to its aid to correct or make-up the
deficiency. Courts shall decide what the law is and not
what it should be. The court, of course, adopts a
construction which will carry out the obvious intention
of the legislature but cannot legislate itself.”
The outcome is mandatory if law is invoked before a
Collector or Commissioner (Appeal), a public functionary,
detailed to 'create' liability within a prescribed time.
'Creation' in this context encompasses: establishing,
altering, confirming, modification, putting in place, changing,
setting aside, variation etc. in relation to a liability.
An order-in-original is sub-merged in an order-in-appeal
which treats the order-in-original on the above lines
and thus creation (of a liability) takes place.
Going by this argument, a zero liability
creation is also included in the
exercise for or results of that.
Thus the issue of the subject
law being non-creative of a
liability is totally non-starter.
When the act required to be
performed is not so
performed, what is in hand of
all the parties is a past and
closed transaction.
As to what would happen to subject
matter of the tax dispute or the
consequences of the Collector / Commissioner
(Appeal) being not able to deliver an order-in-appeal in time,
this scribe would venture to make following citation:
“……….. the law presumes a controversy to be a past and
closed transaction where no appeal by either party is
pending against the original order.” (The Lahore High
Court, Lahore, in M/s. Nishat (Chunian) Ltd. vs. Province
of Punjab etc., Writ Petition No. 177 of 2008 and C.M.
No. 2050 of 2012, decided on 17-05-2012 [(2013) 107
TAX 199 (H.C. Isl.)])
There is 'no appeal by either party pending' on the
divestiture of a Collector / Commissioner (Appeal) to
proceed with the appeal lying with him. The consequence is
failure to create a liability as aforesaid. If the appeal was filed
by the Department it will have to live with infirmity to
recover the tax. When appeal is filed by the tax payer, the
revenue will be stopped from proceeding against the tax
payer. This is what interpretation of the law by the
Government of Pakistan (law, Justice & Human Rights
Division) is, quoted hereinafter.
Management Accountant, May-June, 2014 | 53
Article Section
Tailpiece
In complaint No. 805/2003 before Federal Tax Ombudsman
(FTO), Pace International vs. CBR Sales Tax Department,
the department contended that time limit imposed to the
end of adjudication was merely directory, not mandatory.
The department appeal all out to give an interpretation to
cover the wrong done, to get a licence to continue acting as
such while words of the law needed no such interpretation.
The FTO, however, held that order of the sales tax
authorities was time barred and that delay on the part of
sales tax department was 'malad-ministration' which was
established. Order of the FTO was appealed
against before the President of Pakistan.
The President has been pleased to reject the
CBR's representation.
Apparently, in its representation, the
department had contended that the time
limit under section 36(3) of the Sales Tax
Act was not mandatory, sidelining the issue:
whether clear words of the law required
'calling in aid any extraneous principles of
interpretation or cannons of construction', if
one were to borrow the phraseology of
Chief Justice Murshed in Muzaffar Ahmed vs.
Anwar Ali (PLD 1965. Dacca 296).
Proposition appears to have been presented to the
President was: required was a verdict with reference to
choice of travel on one out of the two available directions,
directory or mandatory. The President rejected pleading of
the department that it could be directory, ruling 'prescribed
time is mandatory'. This favoured the tax payer the way it
would have benefited him in the event of a ruling that the
relevant law was 'declaratory', leaving no room for
interpretation.
In M/s. S. S. Oil Mills Ltd., Lahore vs. The Secretary, Revenue
Division, Islamabad (Complaint No. 958-L/2005), also, the
Federal Tax Ombudsman, Regional Office, Lahore, stated:
“The department contends that the time limit under
section 36(3) ibid was merely directory and not
mandatory. The contention does not seem to be valid.”
“The impugned order, being violative of the provisions of
the aforesaid section, is clearly hit by time limitation as
provided in law. Respondents' objection to FTO's
54 | Management Accountant, May-June, 2014
jurisdiction is misconceived as 'maladministration' is
clearly established. The complainant's AR has, therefore,
justifiably sought application of FTO's decision as
sustained by the Presidential order referred to above to
its case as the issue involved in the complaint has
already been settled by FTO's decision and Presidential
order referred to above. This complainant is, therefore,
allowed the same dispensation as given in FTO's decision
in complaint No. 805/03 as sustained by Presidential
order dated 07-05-2005. Accordingly, it is
recommended that the Revenue Division direct the
competent authority to:
(i). Cancel the O-I-O No. 1002/05 dated 11-06-2005
(dispatched on 30-06-2005).
(ii). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx’
- FTO Annual Report-2005 (Pages # 144-145
Entire decision hereinabove, with reference to complaints
No. 805/2003 and 958-L/2005 before the FTO, pertains to
and is relevant to cited provisions existing in the Federal
Excise, Sales Tax, Customs Acts & Income Tax Ordinance.
The President of Pakistan rejected representation of the
department against orders of the FTO with
regard to obsolescence of powers of the
revenue functionaries after the time period
in which they are empowered to inflict levy
on the tax payers.
On the issue of 'action beyond the
prescribed time', the Law, Justice & Human
Rights Division, Government of Pakistan,
letter No. 185/2004/FTO-Law dated 07-
05-2005 to the Secretary (TO-II), CBR,
Islamabad (PTCL 2005 CL. 841), conveying
rejection of the departmental plea by the
President in complaint No. 805/2003, Pace
International vs. CBR / Sales Tax
Department, read:
“The department contends that the time limit under section
36(3) ibid was merely directory and not mandatory. The
contention does not seem to be valid. Where inaction on the
part of a public functionary within the prescribed time is
likely to affect the rights of a citizen the prescription of time
is deemed directory but where a public functionary is
empowered to create liability against a citizen only within
the prescribed time it is mandatory. The FTO's decision
must be sustained.”
The Presidential order is a tower of light. It is a policy
decision showing way for interpretation and application of
statutes. It is not restricted to a particular enactment or
specific section(s) of a statute. It is magna carta for all laws,
lawmen, authorities and civil society, foundation stone for
the civil society.
About the Author: A former: Chairman of ICAP & ICMAP Joint
Committee, Vice President ICMAP & ICSP and Founder President PIPFA,
the writer practices as Corporate Counsel.

State Bank of Pakistan’s
Monetary Policy Decision
(Announced on 17th May 2014)
R ecent gains in confidence in the economy, backed by
improvement in key indicators, need to be nurtured to
ensure their sustainability. For instance, the average CPI inflation
has remained in single digits during FY14 and policy vigilance is
required for this trend to continue. Economic activity has
improved and further reforms, especially in the energy sector,
would help consolidate the momentum. Similarly, improvement
in productivity and competitiveness is a must to continue to
build foreign exchange reserves in the medium term while
meeting external obligations.
The year-on-year CPI inflation has remained volatile during FY14.
It increased sharply till November 2013 then declined for few
months before increasing again to 9.2 percent in April 2014. The
average CPI inflation for July-April, FY14 is 8.7 percent; higher
than the year's target of 8 percent. The main reason for this
volatility is unexpected movements in food prices and changes in
administered prices. The core inflation, however, has remained
quite stable at around 8 percent over the past 12 months.
Importantly, from the point of view of monetary policy,
it is the outlook of inflation that matters.
The SBP expects average CPI inflation to remain
around 8 percent during FY15, barring any
exogenous shock. Basic factors supporting this
assessment are: (i) moderate aggregate demand;
(ii) deceleration in broad money growth led by
contained government budgetary borrowings from
the banking system; (iii) expectations of low
inflationary pressures as indicated by SBP-IBA
consumer confidence survey; and (iv) stable outlook of
international commodity prices.
Indicators of current economic activity are looking better as well.
Provisional estimates of real GDP show a growth of 4.1 percent
for FY14. Encouragingly, this growth has been led by a 5.8 percent
increase in the industrial sector output. Examination of private
credit data also points in the direction of improved economic
activity. For instance, the flow of net credit to private sector was
almost two and a half times more during the first nine months of
current fiscal year compared to the corresponding period of last
year. Similarly, the monthly average gross credit disbursements,
arguably a better gauge of the nexus between credit and
production, during the same period are about Rs150 billion higher
this year.
These trends show that interest rate is only one factor in
affecting economic activity. It is the improvement in sentiments,
relatively better availability of energy, and reduction in
government borrowing from the banking system that has
encouraged the private sector. The continuation of these trends,
however, would require a sustained effort to ease impediments
to growth through implementation of necessary reforms. In
particular, reforms in the energy sector can go a long way in
increasing productivity, easing the fiscal burden, and reducing the
import bill.
Because of the gap between imports and exports, the trade
deficit remains at an elevated level of $12.2 billion during July-
March, FY14. Also, the Real Effective Exchange Rate (REER) has
appreciated by 8.0 percent in Q3-FY14 and its potential impact
on the trade balance needs to be monitored carefully going
forward. Nevertheless, mainly due to robust growth in worker's
Pakistan’s Economic Horizons
remittances, the external current account deficit, at $2.3 billion,
seems quite manageable at this point in time. This is because the
capital and financial account net flows have also improved to
$2.2 billion, considerably easing the pressure on the balance of
payments position. In fact, the SBP was able to meet the IMF's
adjusted Net International Reserve (NIR) target for end-March
2014 by a wide margin.
After including the better-than-projected inflows from the
issuance of Euro bonds of $2 billion and other inflows from
multilateral sources in April and early May 2014, the SBP's
foreign exchange reserves have increased to $8.0 billion by 9th
May 2014 from $5.4 billion at end-March 2014. This marked
improvement in reserves and the consequent stability in the
foreign exchange market is the main indicator of improved
sentiments in and about the economy. In turn, these sentiments
could help in attracting more financial inflows and thus lead to
further increases in reserves. The SBP also remains committed
to play its role in ensuring further accumulation of
reserves to achieve adequate levels in the medium
term.
Despite a shortfall in tax collection compared to
the budgeted target, the government has been
able to contain the fiscal deficit at 3.1 percent
during July-March, FY14. Consequently,
government borrowing for budgetary support
from the banking system has come down to Rs276
billion during 1st July - 2nd May, FY14 compared to
Rs1021 billion during the corresponding period of last
year. In particular, government borrowing from SBP shows
a net retirement of Rs287 billion as compared to an increase of
Rs393 billion last year. Moreover, the government was also able
to keep its borrowings from SBP below the IMF target for end-
March 2014. Based on a balanced assessment of these
considerations, the SBP's Board of Directors has decided to
maintain the policy rate at 10 percent.
Research & Publications
Editor/Publisher
Mrs. Ghazala Yunus
Email: ghazala.yunus@icmap.com.pk
Research & Publications Department
Mr. Shahid Anwar
Deputy Director Research & Publications
Email: shahid.anwar@icmap.com.pk
Correspondence Address
ICMA Pakistan Head Office,
ST-18/C,ICMAP Avenue, Block-6,
Gulshan-e-Iqbal, Karachi-75300.
Tel: 021-99243900
Fax: 021-99243342
Email: rp@icmap.com.pk
URL: www.icmap.com.pk
Management Accountant, May-June 2014 | 55