AB INT Nov 2019

AB Accounting and Business
November/December 2019
Accounting and Business November/December 2019

Damage limitation
What can SMEs do to combat
bribery and corruption? Ethics in
Safe space
Australia is leading the world on
the ether
protecting whistleblowers Embedding a responsible
approach to personal data
Man of steel
Interview: Michael Samonas,
CFO of metals group Sidma
INT_COV_dataethics.indd 1 14/10/2019 16:05

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INT_insidecover.indd 1 10/10/2019 10:15

Welcome
As ACCA’s focus on ‘the power of ethics’ continues, we look at whistleblowing reforms
in Australia and how small businesses can guard against corruption and bribery
As we continue ACCA’s ‘power of And, on page 56, we speak

ethics’ theme in this issue, we report with Rachel Botsman, a renowned
on ACCA research into increasing management thinker on trust in the
concerns among small companies digital age. We hear her views on how
about the business consequences organisations and their people can stay
of bribery and corruption, and how trustworthy, and what accountants can
accountants could play a major role in do to help.
helping them guard against the risks. Meanwhile in our main interview we
See page 36. meet Michael Samonas FCCA, CFO
We also look at how organisations of Greek metals group Sidma Steel
need to approach data protection Products, whose desire for a more
in a lawful, fair and transparent way, demanding finance role was more
using ethical principles and good than met when the Greek economy
governance. Since the EU’s General was hit by the catastrophic fallout from
Data Protection Regulation came into the 2008 financial crisis. With demand
force last year, the ethical use of data for Sidma’s products reduced by half,
has become a global policy topic Samonas stepped up to keep the
as organisations worldwide look to business afloat. Read more about his
embed a values-driven approach to story on page 12.
data processing. See our article on And finally, as the Rugby World Cup
page 38. comes to a conclusion this month in
On page 32, we have a report on new Japan, on page 42 we take a look at
legislation to protect whistleblowers in the numbers behind the tournament
Australia’s private-sector. The reforms, and how participation in the sport is
which came into force in July, include increasing across Asia. AB
some world-leading elements but

have yet to be extended to public Annabella Gabb, international editor
sector whistleblowers. annabella.gabb@accaglobal.com
Accounting and Business About ACCA Leadership

The leading monthly magazine for ACCA (the Association of Chartered President: Jenny Gu FCCA
finance professionals, available in seven Certified Accountants) is the global Deputy president: Mark Millar FCCA
Chief executive: Helen Brand OBE
different versions: China, Ireland, Malaysia, body for professional accountants. It
Singapore, UK, Africa and International. offers business-relevant, first-choice Member services
* Magazine contacts, page 66 qualifications to people of application, ACCA office details, page 66
ACCA Connect: +44 (141)582 2000
* Available in app and pdf ability and ambition who seek a
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* AB Direct: weekly news bulletin rewarding career in accountancy, finance
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accaglobal.com/members
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Our alliance with CA ANZ
and digital formats. ISSN No: 1460-406X 219,000 members and 527,000 students More about ACCA’s alliance with Chartered
More at accaglobal.com/ab in 179 countries. accaglobal.com Accountants ANZ: accaglobal.com/alliance
November/December 2019 Accounting and Business 3
INT_Welcome.indd 3 16/10/2019 11:56

30 32
Corporate
25 The view from
Haiyu Mao of NTT
DATA, Tokyo, plus
corporate news
26 CPD Balancing act
Delivering diversity in
the workplace requires
careful planning
28 Digital nomads
Crossborder remote
working raises tricky
tax questions
Insights
30 Perfectly formed
Doing business
in Belgium
News Practice Comment 32 Safe haven
Australia leads the
6 News in pictures 17 The view from 22 ACCA president
way in protecting
A different view of Jean Paul Debono, Jenny Gu sets out her whistleblowers
recent headlines managing partner at vision for inclusion
Debono & Associates, 35 News in infographics
8 News in brief 23 Vanessa Richards Tax levies on personal
plus practice news
Digest of developments Exploit your corporate income around the world
18 Blockchain revolution
across the globe clout to challenge
New distributed ledger 36 Damage limitation
bad behaviour Bribery and corruption
technology gains ground
Interview climb the SME agenda
20 Online expert 24 Alnoor Amlani
12 Michael Samonas Follow our crash Private sector must 38 Embedding data ethics
Group CFO at Sidma course to create a get behind African An ethical approach to
Steel Products winning website integration personal data processing
6 20 26 36
4 Accounting and Business November/December 2019
INT_CON_contents.indd 4 16/10/2019 15:27

42 46 56 58
40 Role up, role up 54 CPD The story so far

Management ACCA
Accountants can take on IFRS 17 could affect
multiple roles to ensure 46 CPD Look within insurers in several ways 60 International Assembly
they are future fit Ethical leadership means ‘Maximising impact and
listening to the heart People opportunities’ was this
42 Great result
year’s theme
Japan’s Rugby Technical 56 Under the trust bonnet
World Cup is a It’s time for a reboot, 62 News
49 CPD Checking impact ACCA Caribbean
financial success says Rachel Botsman
The IASB’s post- celebrates 20 years;
implementation reviews Luxembourg event
Careers Basics
52 Technical update looks at public sector
44 CPD Saying thank you The latest on audit, 58 Good foundations innovation
Positive comments can tax and reporting across How to build an ethical 64 Changing trends
have multiple benefits the region organisation ACCA’s Global
Economic Conditions
Survey results
12
65 Council
Highlights from the
latest meeting of the
governing body
66 The future is digital
‘The banks’ ACCA is relaunching its
approach to us member portal as part of
altered overnight its digital transformation
– the switch
for lending 64
was effectively
turned off’
66
INT_CON_contents.indd 5 16/10/2019 15:25

INT_Newsinpix.indd 6 16/10/2019 15:19

Saudi Arabia is opening
up its tourism industry to
help reduce its economic
dependence on the
oil and gas sector. A
visa regime covering
49 countries will allow
foreign tourists as well
as pilgrims and expats to
visit the desert kingdom.
South African artist

Simphiwe Ndzube’s
installation Journey to
Asazi was on show at
the Lyon Biennale. This
year’s art festival explores
the economic impact of
industrialisation in a city
where manufacturing has
now collapsed.
The Rugby World Cup

trophy went on display
at Tokyo Stadium in
Japan before the game
between New Zealand
and Namibia. The
organisers expect the
tournament to add more
than ¥216bn (US$2bn) to
the Japanese economy.
A 19th-century carpet
rescued from the Notre
Dame fire in April has
gone on display in Paris.
It is one of the cathedral’s
treasures. Controversial
plans to rebuild the
iconic structure are likely
to cost in excess of
€1bn (US$1.1bn).
INT_Newsinpix.indd 7 16/10/2019 15:19

News in brief
This edition’s stories and infographics from across the globe, as well as a look
at the latest developments and issues affecting the profession
Digital hike some corporate profits digitalisation of the economy, having the most breaches.
Proposals to increase from low-tax jurisdictions and to continue advancing Eleven financial services
the tax revenues paid by into countries where the toward a consensus-based firms and seven professional
digital companies have multinationals generate their solution to overhaul the services firms have been
been published by the revenues, and so spread the rules-based international tax fined for poor control of
OECD secretariat. These tax take more widely. The system by 2020.’ private data and other
focus on the objective that proposals are now going offences, analysis by Mazars
multinationals should pay tax out for consultation. OECD Starbucks blow found.
wherever they have significant secretary-general Angel Starbucks has won its case
consumer-facing activities Gurría said: ‘We’re making in the General Court of the Ghosn and SEC settle
and generate their profits. real progress to address the European Court of Justice Carlos Ghosn has settled
It would involve reallocating tax challenges arising from (ECJ) against the European charges from the US
Commission, which had Securities and Exchange
accused it of benefiting Commission, agreeing to
from illegal state aid. The pay a US$1m civil penalty
ECJ found the commission and accepting a 10-year
had not proven that bar on being an officer or
Starbucks gained a clear director of a listed company.
economic advantage from The charges alleged that
tax arrangements agreed Ghosn, in his former role
with the Netherlands. The as Nissan CEO, made false
commission responded financial disclosures, omitting
that the ruling provided US$140m in payments to be
clarification that while made to him in retirement.
member states have He settled without admitting
Kigali Convention Centre exclusive competence in or denying the charges,
will host the event in determining national tax as did Nissan and another
December.
policies, they must not former director, Greg Kelly.
make tax arrangements that Nissan has agreed to pay
Africa Members Convention 2019 represent illegal state aid. a US$15m civil penalty and
Preparations are in full swing for ACCA’s second Africa Members Kelly a US$100,000 penalty,
Convention, which takes place in the Kigali Convention Centre GDPR fines plus a five-year officer and
from 9-11 December. The Rwandan capital will play host to Financial and professional director bar.
some of Africa’s leading business figures and motivational services firms are paying the
speakers in what promises to be an inspiring and insight-rich highest cost for breaching OECD success
event. Members will have the opportunity to network and EU General Data Protection The OECD’s Tax Inspectors
discuss the future role and relevance of accounting on the Regulations rules, which Without Borders (TIWB)
continent against a background of shifting social expectations came into effect in May last project has been declared
and rapid digital transformation. For more information and year. So far, 68 firms in 20 a success, collecting an
to register, go to bit.ly/ACCA-afr-conv19. To watch a video countries have been fined, additional US$500m in
introduction to the event, go to bit.ly/ACCA-afr-conv19yt. with the Czech Republic, taxes from multinational
Germany and Hungary enterprises. The initiative –
INT_newsinbrief.indd 8 16/10/2019 15:24

run jointly with the United She was Romania’s chief US$1.9bn for the year ended third term. Annual revenues
Nations Development prosecutor until she was July, an increase of 5.4% were US$618m when Berson
Programme – strengthens dismissed last year – and over 2018. The growth was took over in 2012.
developing countries’ her EU appointment was assisted by the acquisition
auditing capacity, leading to opposed by the Romanian of Philadelphia-based PwC fined US$7.9m
greater tax compliance by government. Her new office TayganPoint Consulting PwC has paid US$7.9m
multinational organisations. will investigate crimes Group, which added scale to to settle charges from
‘Tax officials around the against the EU budget, the firm’s advisory practice. the US Securities and
globe are gaining the including fraud, corruption The firm was also helped Exchange Commission
knowledge they need to and crossborder VAT fraud. by its launch of a cloud- alleging improper conduct
identify when their big Civil liberties committee chair based system that increased in connection with 19
taxpayers are not paying the Juan Fernando López Aguilar collaboration between teams engagements. PwC was
correct amount, as well as said: ‘Ms Kövesi is the perfect and clients. Bradley Preber found by the SEC to
the confidence and skills to choice to become EU chief was named interim CEO have breached auditor
engage with them to ensure prosecutor. She has excellent near the end of the financial independence rules by
correct taxes are collected,’ professional competences. year. BDO in the US reported performing prohibited
said OECD secretary- Moreover, Romania does not revenue growth of 11.8% to non-audit services during an
general, Angel Gurría. currently hold any key posts US$1.64bn in the year ending audit engagement, including
in the EU.’ June and aims to overtake exercising decision-making
EU chief prosecutor Grant Thornton to become authority in the design
Laura Codruţa Kövesi Revenues up the fifth largest firm in the and implementation of
has been appointed the Grant Thornton US has US. BDO partners re-elected software relating to an
EU’s first chief prosecutor. announced revenues of Wayne Berson as CEO for a audit client’s financial

reporting, and engaging authorities after an internal PGIM Investments were from increased investment
in management functions. review found an issue with reorganised in 2006 for tax would compensate for lower
The SEC also charged PwC how it reported international purposes, but in doing so revenues from existing
partner Brandon Sprankle fund transfers. The Australian disadvantaged funds that corporate tax payers, adding
with causing the firm’s Transaction Reports and they were advising by costing that ‘a host of cyclical factors,
independence violations. Analysis Centre, a financial them tens of millions of including rural financial
Both respondents agreed to crime regulator, will decide dollars in interest income and stress, weak corporate
settle the charges without on the scope of the audit, but causing less favourable tax sentiment, and a slow flow of
admitting or denying PayPal will have to pay for it. treatment in some foreign credit in the financial sector,
the findings. jurisdictions. Prudential remain headwinds to near-
Prudential censured failed to advise the funds of term growth’. Tata, one of
PayPal faces audit The SEC has charged two this or reimburse them in a India’s largest corporations,
PayPal faces an external subsidiaries of Prudential timely way for their losses. responded that the size of
audit in Australia in response Financial with failing to AST and PGIM self-reported the tax cut was insufficient.
to concerns raised about disclose conflicts of interest the conduct to the SEC after
its reporting obligations and making misleading initially failing to disclose it Social exchange
under Australian anti-money disclosures to the boards during an examination. They The Securities and Exchange
laundering and counter- for 94 funds they advised. voluntarily reimbursed the Board of India is examining
terrorism financing laws. According to the SEC, funds over US$155m. how to launch a ‘social
PayPal said its Australian Prudential subsidiaries AST stock exchange’ for the
unit had reported itself to Investment Services and PE strips out jobs listing of social enterprises
Private equity buy-outs and other not-for-profit
typically lead to large job organisations to assist them
losses, according to analysis with fundraising. It has
by academics at Harvard established a working group,
University and others. following an announcement
Employment fell by 13% by finance minister Nirmala
over two years at public Sitharaman in the Budget.
listed companies acquired
by private equity firms, the Debt solution
study concluded. By contrast, Unincorporated US territory
Council member Melanie
Proffitt and Mike Suffield, private equity takeovers of Puerto Rico has put forward a
ACCA’s director of private companies generate plan to cut its US$129bn debt
professional insights, new jobs. Other impacts of to US$86bn. The plan was
accepted the award. private equity acquisition drawn up by a seven-member
included lower staff pay and federal oversight board and
ACCA scoops prizes higher productivity. submitted to a US federal
ACCA won two categories at the Digital Accountancy judge for approval. Puerto
Awards in London last month: Professional Body of the Year, India cuts taxes Rico has been unable to pay
focusing on activities including ACCA China’s 30th anniversary India is cutting its base its debts, leading to Congress
and ACCA’s quarterly themes (the power of technology, corporate tax rate from passing legislation in 2016 to
connections, ethics and future-ready talent); and Thought 30% to 22% as part of the enable it to seek bankruptcy
Leadership Initiative of the Year, for the report How accountants government’s continued protection. If the proposals
can bridge the global infrastructure gap by ACCA and CPA efforts to stimulate growth are approved they could be
Canada. Outgoing ACCA president Robert Stenhouse said: ‘I in the economy and attract copied by heavily indebted
am thrilled that ACCA has been recognised in this way. It’s a higher levels of foreign US states, including Illinois
culmination of hard work and collaboration across teams and direct investment. However, and New Jersey. Bondholders
geographies, focused on delivering value to our members.’ Moody’s warned that it was face a haircut on the nominal
unlikely that tax revenues value of their holdings.

Aid expulsions
Nigeria is evicting various aid Omissions on emissions
agencies, claiming that some Taxes on pollution are too low in the 44 countries responsible
aid is being diverted to Boko for 80% of emissions, according to a report by the OECD. Taxing
Haram and other Islamic Energy Use 2019 found that only Denmark, the Netherlands,
extremist groups. Charities Norway and Switzerland tax non-road energy above a low-end Average fuel excise tax
say they are avoiding the carbon price benchmark of €30/t CO2. Average explicit carbon tax
road transportation of cash
to avoid seizure by terrorists. Average effective tax rates for selected countries: non-road emissions
40
The claim by the Nigerian
government follows the 35
Low-end carbon price benchmark (€30/t CO2)
execution of one aid worker 30
and the kidnapping of
25
five colleagues.
20
Challenges ahead 15
Namibia has experienced a
10
period of exceptional growth,
yet public debt has increased 5
sharply and its reserves of 0
international currencies have Brazil US Chile Australia Germany Japan UK France Italy Netherlands
fallen below adequate levels,
Source: Taxing energy use 2019: Using taxes for climate action
the International Monetary
Fund (IMF) has warned.
It added that rapid credit step in Kenya’s transition escalating geopolitical Whistle blows
growth fuelled fast-rising to a low-carbon economy tensions as a result of US lawmakers hope
house prices and elevated and is intended to help its foreign policy stance, to further incentivise
private sector indebtedness. to build Kenya’s capital including its close alignment whistleblowers to come
Robust growth has masked markets. Issued by Acorn with US policy on Iran and forward. The Public Company
slowing productivity growth Holdings and certified as continued involvement in Accounting Oversight
and declining external green by the UK Climate the Yemen war. However, Board is propposing
competitiveness, hindering Bonds Initiative, it is the first Saudi Arabia’s sovereign debt that whistleblowers
the long-term growth Kenyan corporate bond rated remains one of Fitch’s most get up to 30% of the
prospects of the economy. by an international ratings highly rated. Meanwhile, fines collected from a
The economic outlook for agency. new laws will boost the credit disciplinary proceeding
Namibia is ‘challenging’, said quality of Saudi Arabian if the total exceeds
the IMF. Saudi downgrade infrastructure deals, according US$250,000. Employers
Growing military tensions to a report from Moody’s would be prohibited from
Kenya goes green between Saudi Arabia and credit ratings agency. retaliating against them.
Kenya has closed East Iran have led to the former Improved credit quality will If it becomes law, this
Africa’s first ever green being downgraded by Fitch benefit schools and hospitals would be in addition to the
bond, raising funds for 5,000 Ratings. This follows an attack as a result of legislation Securities and Exchange
university students to live on Saudi oil installations flowing from Saudi Arabia’s Commission’s ‘extremely
in environmentally friendly, claimed by Yemen’s Houthis, Vision 2030 plan. Investments successful’ whistleblower
affordable housing in Nairobi. but blamed by the US on in core infrastructure programme, under which 62
The Ksh4.3bn (US$41.5m) Iran. The value of Aramco’s will be exempted whistleblowers have been
bond – developed with issued bonds fell after the from existing Saudi awarded US$381m. AB
the assistance of the UK attacks. Fitch said Saudi laws, easing property

government – is an important Arabia is vulnerable to ownership restrictions. Paul Gosling, journalist

Meltdown master
As the economy imploded during Greece’s sovereign debt crisis, group CFO
Michael Samonas FCCA stepped up to keep Sidma Steel Products afloat financially
I
n Greece it is simply known as ‘the Crisis’ – the sudden ‘Everything changed,’ says Michael Samonas FCCA, group
and catastrophic fallout from the global financial crisis CFO of Sidma Steel Products, Greece’s major steel producer.
that began in the US in 2008 and ricocheted around the ‘The banks’ approach to us altered overnight – the switch for
world. Weakened by years of financial mismanagement, lending was effectively turned off. I’m glad we survived.’
Greece was undoubtedly the biggest sovereign casualty. For Having joined Sidma a few years previously, in 2004,
Greek companies, the impact was immediate and shocking. Samonas found the more challenging finance role he was in
search of. He had been CFO at internet portal business Vizzavi,
a joint venture between Vodafone and Vivendi Universal that
offered both companies’ customers news, entertainment and
internet services on the go through their TV, mobile phones
or online. ‘Vizzavi was a service company, and in that respect
it was a relatively easy position – there was no production line
to manage, no inventory, and it had a very wealthy UK parent,’
Samonas says. ‘I wanted to be exposed to something more
demanding in finance.’
He describes his move to Sidma as ‘the right company
at the right time’. The first, relatively quiet, four years were
spent leading Sidma’s issue of public shares for a listing on
the Athens stock exchange in 2005, overseeing the issue of
syndicated bond loans of more than €120m (US$131.4m), and
implementing an integrated business software system.
In 2004 Sidma expanded into Romania and Bulgaria
and completed the construction of steel service centres in
Bucharest, Sofia and Inofita (around 50km north of Athens)
in 2007. The company’s purpose-built headquarters in Inofita
were completed in 2009.
The crisis, though, changed everything, triggering a
full-scale meltdown in Greece after
years of heavy national borrowing.
In 2010 the country was frozen out
of bond markets when it announced
government debt amounted to nearly
‘Everything changed. €300bn (US$328.5bn). Three bailout
The banks’ approach loans were granted by the International
Monetary Fund and European Central
to us altered
Bank, totalling €289bn (US$316.4bn),
overnight – the on condition that the country
switch for lending implemented stringent austerity
was effectively measures. The Greek government
turned off’ accordingly took an axe to public
spending, slashed public sector salaries
and raised tax rates dramatically.
INT_INTER_Samonas_Sidma.indd 12 14/10/2019 16:30

Collapse in demand
Demand for Sidma’s steel fell sharply –
i CV Samonas came to accountancy relatively
late in his career. He studied physics at
to less than half of pre-crisis volumes. the University of Surrey in the UK, gaining
‘Everyone was looking to me for a solution,’ 2004 an MSc followed by a PhD in electronic
says Samonas. ‘We had to cut product lines, Appointed group CFO, engineering. Those qualifications, though,
change our credit terms. I had to restructure Sidma Steel Products. were difficult to translate into a career in
the company and lay off people. It required Qualified as ACCA his home country. ‘I needed to find a way
patience and persistence. But we’re still to commercialise my skills,’ he says. ‘It’s
here, so we did something right.’ 2001 difficult to find a job in physics in Greece.’
In fact, in some ways, Samonas says, the CFO, Vizzavi He initially favoured marketing,
crisis changed Sidma for the better. ‘People completing a postgraduate diploma.
say you should always learn lessons from 1999 ‘Accountancy came later, while I was working
negative events. Don’t waste a crisis, they Business planning expert, for Vodafone,’ he says. ‘I met an interim head
say. And in that respect, the crisis was good strategy and planning of finance in the group who had a degree in
for me and for the company. No one really department, Vodafone history and an ACCA Qualification. I decided
thought too much about liquidity before that if I wanted to carry on I needed a serious
but they really care about it now. The 1997 qualification in finance, so I looked at the
attitude within the company has changed.’ Presales engineer, Hellenic ACCA programme and really liked what I
The crisis turned the CFO into the Telecommunications saw. My qualification got me the interview at
business’s helmsman. ‘Before the crisis, Sidma, without doubt.’
the development director would set the His aptitude for mathematics, along with
company’s agenda. Now I do it. It’s a completely different a long-standing interest in valuation, helped. ‘Valuation is my
approach. The starting point is what you can have in terms of real love. I went into accountancy partly so I would be able
resources, given the credit terms.’ to better understand it.’ In his early career, pre-qualification,
During the crisis, he spent a lot of time educating the he specialised in models for business planning, valuations,
business in the importance of finance and controls in a mergers, projects and data analysis – he has a continuing
recession. ‘For example, our sales people found it difficult interest in financial forecasting, analysis and business
to get clients to pay quickly or even on time, and that was modelling, which stretches to sharing his enthusiasm and
viewed as just the way it was. But I showed them exactly how knowledge with others.
our liquidity was affected if customers paid sooner rather than He taught at the former Athens college of the California-
later. I’m the sales team’s best friend now – they ask my advice based University of La Verne (where he completed an MBA),
about selling to particular clients.’ and currently teaches financial modelling at the American
At the moment, he adds, the company has around 0.05% of College of Greece. ‘I love teaching,’ he says. ‘I teach at
bad debts: ‘That’s very low,’ he says. ‘I became wiser as a result universities but I also work with companies, particularly SMEs,
of the crisis. I focused on things we didn’t have to focus on too who want to understand their finances better.’
much before.’
Cashflow and liquidity are now the mantra. ‘I monitor Back on track
cashflow forecasts and liquidity very closely, every day, and I Ten years on from the crisis, Sidma is back on track, although
spend an hour or two every day on credit control issues. The the trading environment remains challenging. The company
crisis has made us very careful about credit control – amounts has achieved cost reductions of more than 30% since the
over a set limit need my personal authorisation or may be beginning of the crisis, and in 2018 liquidity stood at €9.2m
referred to the company’s credit committee.’ (US$10.1m), an increase from €8.3m in 2017. Turnover reached
Another trend he monitors closely is the volume of post-dated €136.7m (US$149.7m) in 2018, a rise of 10.7% on the previous
cheques collected – a particularly Greek phenomenon. Greeks year. The company, though, reported pre-tax losses of €3.9m
habitually write cheques dated at some point in the future, (US$4.3m), mainly due to a 20% fall in the gross profit margin
sometimes as much as six months ahead. The practice is legal, because of rising raw material costs that had to be absorbed
but many argue that it helped contribute to the sovereign debt by the company. Its annual report acknowledged that there are
crisis that engulfed Greece. The credit bank Tiresias estimated ‘still significant structural problems in the economy’.
that, in 2009 alone, cheques worth €3bn (US$3.3bn) bounced. The company’s finance function is now leaner and more

i Tips

*
‘My approach is to break down every problem into a
sequence and then start at the beginning.’

*
‘I always find time to read and to do some research. It’s
so important to know what’s happening in finance and
business, such as the latest tech developments.’
i Basics
1931
Sidma group founded in Thessaloniki, northern Greece, to
trade and process steel products
225
Number of employees
C136.7m (US$149.7m)
Turnover in 2018
of technology innovation in finance.
C4.2m (US$4.6m) ‘I love technology and I want us to be
EBITDA in 2018 at the forefront of change, particularly
‘I showed the sales when it comes to analytics,
30% team exactly how automation, cybersecurity and data
Cost savings since the crisis visualisation. I haven’t managed to do
our liquidity was
much so far because I haven’t been
affected if customers able to secure the budget, but maybe
focused. Most processing activities paid sooner rather after the M&A is done we will get
have been outsourced – to KPMG than later. I’m their there. We want to implement more
for operations outside Greece and best friend now’ radical digital systems. That needs
to a specialist outsourcing company dedicated resources but also the
at home. ‘We have kept only right mindset. I try to be a facilitator,
value-adding activity in the finance but it’s not easy.’
function,’ says Samonas. ‘We have a chief accountant, credit Today, Greece’s economy is 25% smaller than it was before
controllers, and financial planning and analysis teams.’ the crisis but the country is off the critical list. In March 2019 it
Cost control is not the only reason for the outsourcing sold 10-year bonds for the first time since the bailout.
decision, though. Samonas says the company struggled to Samonas feels that a corner has, at last, been turned.
find and keep finance talent in its subsidiaries in Bulgaria ‘Greece needs investment and a stable tax system, and
and Romania, where the unemployment rate is in low single the newly elected government is focusing on this, which is
figures. ‘Our subsidiaries have taken up a lot of my time, encouraging. If we can continue to raise GDP and create jobs,
particularly in Eastern Europe where we had a high turnover of the impact on the national psyche will be tremendous. If there
staff. There was always a lot of training to do,’ he says. ‘Now are new projects, new money, new jobs, people will spend.
it’s KPMG’s problem if someone leaves.’ People feel hopeful again. It’s the first time in 10 years that I’ve
His plans for the future include completing the final stages of felt optimistic about our future.’ AB
due diligence for a planned merger with a Greek competitor,

which should conclude this year, and then to take full advantage Liz Fisher, journalist

INT.indd 15 14/10/2019 16:48
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INT.indd 16 2 09/10/2019
10/10/2019 14:59
10:12
The view from
Jean Paul Debono ACCA, managing partner, Debono &
Associates, Malta, and fishing enthusiast
68%
of US and UK audit
clients rank a Big
When I was young, I always Personality, proper Four firm as
imagined myself running attitude, respect, their first-choice
a business while helping enthusiasm and dedication external auditor, but
people. Later, I realised are key characteristics for 58% do not name their
that the foundation of an accountant. It’s been said current auditor as their first choice.
a successful business is that ability may get you to Source: Source Global Research
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INT_YPRAC_introDebono.indd 17 16/10/2019 15:32

Join the chain train
Finance professionals will be big beneficiaries from blockchain technology’s ability
to streamline and de-risk audit and accounting processes, says Julius Eka Abia FCCA
With blockchain enabling the parties

to a transaction to conduct their Life, death and everything in between
business without the traditional Examples of where blockchain is having a transformational effect on society:
trusted intermediary (such as a bank
* Asset management: trade
* Supply chain: eg visibility, and
or payment processing network), it is processing and settlement tamper-proof sensors on trucks
vital that accountants embrace this new
* Insurance: eg claims processing
* Real estate: eg land title records
distributed ledger technology.
* Cross-border payments
* Healthcare: eg tracking drugs to
Accounting has always relied on a
* Unconventional money lenders/ prevent counterfeiting
centralised system, with internal controls hard money lending
* Passports
to ensure checks and balances. But
* Internet of things (IoT)
* Birth, marriage and death certificates
centralised systems have vulnerabilities.
Blockchain can transcend these.
* Smart appliances
* Personal identification
Its huge selling point is the

transparency it offers. Blockchain is
a shared database in which multiple
identical copies of the ledger are stored
in millions of computers dispersed
across any number of geographical
regions. A record is kept of each
transaction, and the transaction cannot
be falsified or modified. In addition,
the transaction can be easily tracked,
and the system keeps a record that is
verifiable. It is also immutable: once a
transaction has been initiated, it cannot
be tampered with.
Accounting pros and cons

From an accounting perspective,
this high degree of transparency
generates a complete, understandable
and unbiased picture of a company’s
financial position. This helps reduce
uncertainty in the capital markets.
Blockchain also brings positive
changes to the way financial records
are created, kept and updated.
For example, because records in a
blockchain are held by users who
are distributed across a network, no
single individual or business can claim
ownership of them. Verification of the
INT_YPRAC_blockhainAbia.indd 18 16/10/2019 16:52

records is carried out by all participants, blockchain, and the condition, location the data, and the accountability of each
as each maintains a permanent record and value of the assets. Those with party involved in the audit process.
of the validated transaction. All parties specialised skills have to continually Blockchain also gives access to real-
have access to the same copy of the determine the method of accounting time data, reducing costs and making
ledger, so accounts reconciliation for different types of financial asset, audit more effective and efficient. It
is eliminated, reducing the costs of such as derivatives, or cash-based reduces the dependency on manual
maintaining and reconciling ledgers. and equity-based instruments. And data extraction and analysis, which
Assets that have in the past typically because blockchain does not allow are typically labour-intensive and
been held in centralised standalone the modification of data, a significant time-consuming. The application of
systems are held permanently in the amount of it has to be held in the blockchain requires auditors to design
distributed ledger, removing the need system, so transactional-level staff with more automated processes that can
to spend on such systems and providing blockchain-specialised skills are needed operate across the digital network.
absolute certainty about the existence to analyse the data periodically. Some blockchain systems also offer
of the assets. such features as smart contracts,
However, there are some limitations. Auditing pros and cons which provide the auditor with access
Accountants need to have specific From an auditing perspective, the to contract-related documentation
valuation skills to assess the economic transparency offered by blockchain (agreements, purchase orders, invoices,
value of each transaction in the ensures a high degree of accuracy in and so on), enhancing the audit of long-
term contracts.
Blockchain is not, however, without
risk to the audit. For example, the
Accountants need auditor has to assess the risk of
specific skills to information in the blockchain being
inaccurate, either through error or fraud.
assess the value of
Specialised auditing skills are needed to
each transaction understand this and the protocols in the
in the blockchain, blockchain environment.
and the condition, The auditor also still has to design
location and value procedures to provide appropriate
audit evidence of all the financial
of the assets
statement assertions. For example,
blockchain may provide evidence about
accuracy and completeness of an asset
transaction, but the auditor may not be
able to determine whether ownership is
fraudulent. Nor can blockchain ensure
compliance with accounting principles
such as IFRS Standards and the
associated accounting judgments.
The risks of the use of blockchain
in accounting and auditing need to
be properly understood. But as the
profession adopts the technology, there
is no doubt that blockchain offers an
opportunity to streamline the reporting
and audit processes. AB
Julius Eka Abia FCCA is audit manager

– projects, at Wabtec Corporation, US.
INT_YPRAC_blockhainAbia.indd 19 16/10/2019 15:35

Winner websites
You need to treat your website as a proper sales tool and not as a duty if you want to
persuade businesses of your expertise as an adviser, says Amanda C Watts
Navigating clients and prospects your own point of view it needs to brand, wording and customer journey.
through your practice’s website can serve a purpose and be something You need to show you are an authority
be a real problem. Your web presence more than a box-ticking exercise. on your ideal clients’ pains, and give the
needs to be up to date and look To attract the right clients through visitor a way to take the next step.
bespoke, rather than using a template your web presence, you need to The problem is that accountants don’t
created by web designers. And from position yourself with an engaging always focus on what attracts clients but
INT_YPRAC_WebDesign.indd 20 16/10/2019 15:36

First, your website needs to focus on the downloading your brochure with your
client, not you or your firm’s technical fees and more information on how you
Most people don’t expertise. All too often practices talk work; and those ready to commit might
care how long about themselves and how great have downloaded the lead magnet and
they are and the excellence of their your brochure, and checked out your
you have been in
expertise. This is not a good way to blogs and testimonials, so you need to
business. What attract clients. Most people don’t care offer them a click to book a call.
they do care about how long you have been in business, You need all of these calls to action
is the uplift in or the passion you feel for your work. across your website to maximise the
profit that you What they do care about is the time you number of client enquiries you receive.
can save them or the uplift in profit that Finally, you need to show how you are
can bring them
you can bring them. After all, those are different from all the other accountancy
probably your business priorities too. firms. One way of doing this is to
Next, you should consider finding offer content that is of real value, that
a niche. There a various ways you can addresses clients’ pains. This doesn’t
do this, by marketing your services to mean regurgitating content from an
specific groups: accountancy newsfeed or the Budget
* Vertical niching. In this instance, you announcement; what you need to do is

to show some thought leadership. For
need to be more specific about who
you help rather than your service – example, a practice with entrepreneurial
your focus on startups or particular clients could write blogs or guidance
sectors, for example. about running a business, without
* Horizontal niching. This involves actually mentioning accounting at all.

helping all types of client to
overcome a specific pain/problem.
* Micro-niching. This combines In a nutshell

vertical and horizontal niching, Follow these guidelines to ensure your
involving a focus on a specific website is working for you:
problem (the service) and the type
* Focus on the client.
of client.
* Find your niche.
* Capture email addresses.

Lead magnets
* Have multiple calls to action.
Next you need to look at how to
* Share valuable content.
become a ‘lead magnet’ – that is,
offering the visitor value in return for
go with what they know best. The typical their email address, such as guidance or That way you can position yourself as
practitioner’s website gives information tips on particular challenges your niche someone who has holistic, relevant
on the firm’s location and declares that market is facing. knowledge and not just technical ability
they carry out a variety of accounting Don’t forget to include multiple calls or competence in compliance-related
services, including year-end accounts, to action in your web presence, such services. By giving away valuable
audits, management accounts, as ‘Sign up to my free [lead magnet]’, content you can build a relationship
expenses, invoices, etc. But if your ‘Click here to book a call’, or ‘Download with a prospect before they have even
website focuses on helping your ideal our brochure’. Each call to action can enquired about working with you.
potential client overcome their fears and support website visitors at whatever All this may require a bit of thinking,
frustrations and gets them engaged, stage they are in their buying journey. but it beats picking up the phone and
you have a website that really works. For example, those at the early stage cold-calling. AB
If so many practices are getting their of their buying cycle might want to
website wrong, what should they focus download your guidance/tips; those Amanda C Watts is a marketing coach
on to get it right? at the middle stage are likely to be and author of The Pioneering Practice.
INT_YPRAC_WebDesign.indd 21 16/10/2019 15:37

Pushing for more
Diversity and inclusion are vital to a healthy workplace and a successful profession, and
president Jenny Gu FCCA will make them her watchwords during her year in office
ACCA, and my mission is to champion

the ever growing diversity of our
organisation, especially in attracting
females to the profession.
Diversity is not just about including
differences of gender, ethnicity, sexual
orientation, socio-economic status,
age, physical abilities, and religious and
political beliefs in the workplace, but
also about embracing all the talents that
accountants bring to their work. I recall
my early days when accountants were
seen as auditors and nothing more.
Now we are trained for roles right across
commerce and public administration –
an important and welcome change.
This matters so much to me. I have
seen improvements in opportunities for
women but they don’t go far enough.
According to the most recent UN and
International Labour Organization
report, at the current pace of progress
it will take another 200 years to bring
gender equality to the workplace. I want
to speak about removing barriers to
equal pay and promoting equal chances
The world was a very different place million students and affiliates. for women, including at board-level,
when I was a girl growing up in I owe this great good fortune to and to make the point that diversity is
Shanghai. Perhaps the biggest contrast ACCA, and I am thankful for all it good for businesses. It brings creativity,
between then and now can be summed has done for me and for countless innovation and ideas.
up in a single word: opportunity. thousands like me. I qualified with Finally, I want to inspire women to
While I was at school, chances for ACCA in 1998, and joining our want more in their professional life,
girls were limited in all societies. It took wonderful association was perhaps the to aim higher. Ambition is all about
a great leap of imagination to look best decision I have ever made in my silencing the inner voice that tells
beyond the roles that were traditionally life. Now I am anxious to promote the women: ‘You aren’t ready, you can’t
left for females. interests of professional accountants all achieve, you won’t be able to get there.’
Yet today I find myself writing my first around the world. My aim is to ensure that in ACCA what
column as the new president of ACCA – My special passions – and I aim to everyone, especially women, hears is:
and I could not feel happier, prouder or make them the main themes of my ‘You are, you can, you will.’ AB
humbler at having the chance to serve presidency – are the values of diversity
219,000 colleagues across the world, as and inclusivity. I am honoured to serve Jenny Gu FCCA is chief operating
well as guarding the welfare of half a as the first Chinese woman president of officer of Richemont China.
INT_AP_COM_Pres.indd 22 01/10/2019 17:08

Of courage and clout
With failure to challenge bad behaviour tantamount to endorsing it, ethics is everyone’s
problem, but financial professionals have an inbuilt advantage, says Vanessa Richards
In 2013, the Australian Army was hit by the) arbiter of value creation. Financial
a scandal involving a network of men expertise can therefore be a powerful
who distributed explicit footage of lever for influencing decision-makers.
women filmed without their consent. I was once working with an
In response to the scandal, the then organisation where inappropriate
chief of the Australian Army, Lieutenant behaviour was a known problem.
General David Morrison, posted a Management was reluctant to address
powerful video warning that the army the issue for fear of upsetting the
would not tolerate such behaviour. He high-fliers in the team in question.
also challenged every member of the Concerned as much for moral as for
army to show moral courage and take a performance reasons, the head of
stand. ‘The standard you walk past is the finance incorporated forecasts of future
standard you accept,’ he declared. financial provision for sexual harassment
Accountants and finance professionals claims (including a not-so-rough and
will recognise this as a fundamental quite aggressive estimate of the
part of the profession’s ethos: your potential costs) in the management
job is to protect your organisation by reports. The corporate cost of allowing
providing frank and fearless advice. that sort of behaviour to continue
This could involve something as easy as suddenly became much clearer to
recommending the most appropriate management, and action was taken.
accounting treatment or as difficult as That is a particularly pointed example,
reporting a suspected internal fraud. but there are many other avenues
Regardless of the size of the challenge, of influence open to those who hold
though, you draw on your moral positions of trust in their organisation.
courage to do your job properly. Encouraging respectful behaviour in
Experienced finance professionals meetings, leading team discussions on
are used to the pressures that this issues of respect and trust, or having a
entails, and we tend to be confident in quiet word with another team leader,
demonstrating our moral courage within can all have a significant impact when
our own areas of expertise. But how do they come from someone whose role
we apply that same courage outside the is not explicitly focused on culture
accounting sphere – to bullying, say, or and behaviour.
other negative behaviour? How do we So if your answer to the question ‘Is
take a stand when we do not have the this a standard I am willing to accept?’ is
support of the power and confidence no, you should pluck up your courage.
conferred by our expertise?
Financial You may well have more power to
I’ve observed that those in expertise can be successfully challenge that standard
professional positions, and accountants a powerful lever than you think. AB
in particular, often have greater power for influencing

than they may think they do when it Vanessa Richard is a corporate
decision-makers
comes to influencing corporate culture. communications and governance
Finance is frequently seen as an (if not consultant in Australia.
INT_COM_VR.indd 23 16/10/2019 15:41

Champion idea
The private sector, in the guise of AfroChampions and others, is getting behind Africa’s
free trade initiative and promoting the benefits of integration, says Alnoor Amlani FCCA
While the UK concentrates on exiting multinational enterprises. Successful

Europe and the US engages in trade African entrepreneurs such as Aliko
wars with China, Africa is focusing on Dangote, founder and CEO of industrial
its longstanding integration agenda. conglomerate Dangote Group, and
In the last six months the media others like him, have emerged to provide
has been full of the opportunities the leadership and ideas, and many believe
signing of the African Continental Free this brings a much-needed balance to
Trade Agreement (AfCFTA) will unleash. the discussion around integration.
But for the average African, and for What these entrepreneurs have in
African businesses, the pace of change common is a successful track record in
is slow and the much-touted benefits value creation across the continent and
too far off to be tangible. a deep knowledge of how Africa works.
Navigating the wide variety of They also pay a significant amount of
languages, customs, political systems, local taxes in the countries they operate
races, not to mention currencies and in, giving them a say in these territories.
market systems, of such a vast and Finally, Africa’s entrepreneurs are
diverse collection of peoples across a making their voices heard. Backed by
massive, largely undeveloped, continent global financial muscle, entrepreneurial
is going to be the biggest challenge to credibility and the absence of
the ambitious integration plan. bureaucracy, they also have the ability to
That’s why I am heartened by moves make things happen.
such as the AfroChampions initiative, Another area where the private
which seeks to reshape the African sector could play a role is in informing
renaissance by driving integration and and educating Africans about the value
investment via the private sector. of cooperating with their neighbours.
On the infrastructure front, the The recent xenophobic attacks in parts
African Union has set out the vision of South Africa starkly demonstrated
and strategic framework for progress the steep hill that must be climbed
in the form of the Programme for if free trade and free movement of
Infrastructure Development in Africa. people is to be achieved across the
The AfroChampions have pledged to continent. In the absence of a pan-
mobilise the private sector, in Africa and Africa’s continental newspaper or TV station,
beyond, to accelerate the continent’s entrepreneurs are Africans turned to the BBC and other
economic integration by rapidly international media for information – it
making their voices
deploying the infrastructure projects would be good to see Africa’s private
that are critical to successful delivery of
heard. Backed by sector step up and provide our own
the AfCFTA. global financial pan-African channels to promote
The AfroChampions initiative cheers muscle, they have greater understanding between Africans
me because it represents efforts by the the ability to make of different nations. AB
indigenous private sector to advance

things happen
the continent’s structural transformation Alnoor Amlani FCCA is a director with
and economic integration via African the CFOO Centre in Nairobi, Kenya.
AFR_COM_AA.indd 24 16/10/2019 15:41

The view from
Haiyu Mao FCCA, assistant finance manager, NTT DATA,
Tokyo, and speaker of human, data and finance languages 58% of organisations
I was born in Changchun, to help each other. I also across the world have
a city in northeast China, interact with overseas group deployed some form
and studied international company treasurers, and of automation, such as
accounting at Jilin exchange ideas with CFOs robotics, machine
University. Later I obtained at our annual conference. learning or natural language processing.
a PhD in technology Source: Deloitte
management for innovation I really appreciate Japanese
from the University of Tokyo. culture and food. The
Japanese language has many honorifics Governance ratings core
After my PhD, I joined the finance and polite forms (‘keigo’ in Japanese), Governance risk has credit implications
department of NTT DATA. A major which are elements of language that for all rated debt issuers, says Moody’s
challenge in the data management show respect or empathy for others. Investors Service in its report, Corporate
industry is how to ensure the security This is very important in Japanese governance assessments for publicly
of individual and enterprise data. NTT culture, particularly in a business traded non-financial companies.
DATA is expanding its global business environment. Coming from China, it was ‘Governance failures can lead to severe
and needs people with international not an easy adjustment for me at first, reputational and financial risks, including
experience who speak English well. but I really appreciate it. increased debt financing costs or, at
the extreme, complete loss of access to
A good finance manager needs a My biggest achievement is to solve capital markets,’ said Brendan Sheehan,
strong educational background, good problems by speaking three very a vice president and senior analyst at
knowledge of accounting and statistics, different kinds of language. I interact Moody’s. Separately, another Moody’s
and good communication and with my colleagues by speaking study has found that companies with
interpersonal skills. The best finance Japanese, English and Chinese; I greater gender diversity on their boards
manager is one who can derive new communicate with data to make tend to have higher credit ratings.
insights for the CFO and create value forecasts by using programming
for the company. languages; and I understand financial VW bosses charged
transactions and positions because I VW’s chief executive, former chief
Key aspects of my current role have accounting knowledge. executive and chairman have been
include liquidity management, foreign charged with market manipulation over
exchange risk management, improving My career goal is to become the CFO the emissions ‘cheat device’ scandal.
global cash management, and of an NTT DATA group company or Herbert Diess, Martin Winterkorn and
presenting at the annual global CFO high-tech startup. The business would Dieter Poetsch have been indicted by a
conference. I also undertake short-term need to be a provider of cutting-edge German public prosecutor, who alleges
cash forecasting, meeting payment solutions such as blockchain. they were aware of the use of software
obligations, mitigating FX risks for our to falsify emission test results. The three
headquarters and executing group Reading, studying new languages, deny being aware of the significance of
finance loans for overseas companies. playing piano, watching movies, the problem, or the potential financial
playing VR games and travelling are impact on the company. A German
What I enjoy most about my job is the some of my hobbies. Because NTT court hearing a class action from
energetic and international working DATA offers flexible working and consumers against VW has called on the
environment. My colleagues are encourages employees to take holidays, company to settle the claims against it.
passionate people who are always ready I have plenty of time for my interests. AB
INT_YCORP_introHaiyu.indd 25 14/10/2019 16:25

Delivering diversity
While many organisations are actively seeking to recruit more widely, taking everyone’s
views into account requires careful planning, as Urszula Pajdzik ACCA explains
Diversity in the workplace has been of companies. BCG suggests the ‘know-how’ that is not easily captured
debated for many years. A lot has been importance of these two conditions or stored by any IT systems. In order
said and written about it, but from means companies will have to look to harvest that information, employees
experience everyone realises by now beyond formal initiatives and embrace need to feel safe to share their opinion
that diversity is not something that will ‘softer’ tactics if they want to reap and the management needs to engage
just happen because different people diversity’s innovation benefit. in dialogue with its workforce.
have been put together into one office. Unfortunately, no amount of time
Companies can only benefit from Weighing it up spent on leadership courses can
having a diverse workforce if there are An important aspect of cognitive challenge the biases that individuals
opportunities for everyone to express diversity is making sure that business have been holding for years.
and challenge different views, and in decisions are preceded by an extensive Appreciating cognitive diversity requires
doing so find new and better ways process of weighing up all available a change of mindset at a personal level,
of working. information. Businesses spend a lot and results from understanding that
In a study carried out with the on ERP systems capable of handling everyone has something to contribute
Technical University of Munich, the an ever growing amount of data. and nobody has all the facts. If diversity
Boston Consulting Group (BCG) found The problem remains, however, with is to be more than just a slogan,
CPD
that openness to cognitive diversity – obtaining and handling information then each employee needs to take
when employees can share opposing such as employees’ expertise and their responsibility for the efficient flow of
ideas and provide constructive criticism information in the business. Ultimately,
– is one of the most powerful factors however, it is up to the management to
in helping the business harness the set the tone and show that employees’
benefits of a diverse workforce. No amount of opinion matters.
BCG looked at five work environment time spent on Patty McCord, former chief talent
conditions that are necessary to officer at Netflix, is known for stressing
leadership courses
encourage diversity and, as a result, the importance of communication
innovation. The most important was
can challenge flowing freely between employees and
participative leadership behaviour, with the biases that the management. At Netflix, employees
68% of companies seeking this as a individuals have are encouraged to challenge the status
prerequisite. However, the next most been holding quo and the management is advised
common prerequisite was openness to listen carefully. Ensuring cognitive
for years
to cognitive diversity, cited by 62% diversity made a huge difference to the
company’s bottom line and confirmed
that businesses grow best when people
Inclusive management are free to think together about how to
Promoting cognitive diversity in the workplace is about ensuring that employees serve their customers better.
at all levels are not only free, but expected to provide constructive criticism to the Encouraging cognitive diversity is
management. Allowing information to flow freely within the business can boost important for accountants too. In the
morale and have positive result on the financial performance. past, the accounts department was
Gallup research on the US workplace found that only three in 10 US employees often seen as a separate function from
strongly agree that their opinions count at work, but companies could improve the rest of operations. Nowadays,
productivity by 12% if that ratio increased to six out of 10. accountants are increasingly expected
to act as business partners who support
INT_YCORP_cogdiversityCPD.indd 26 16/10/2019 15:44

CPD
their colleagues in making the right increased transparency reduces that risk. cognitive diversity. The organisation
commercial decisions. A diverse Promoting cognitive diversity is not might be doing well, but how much
workforce increases the expertise without its price, though. Managers better could it be if employees felt that
available at management’s disposal. who have never relied on their they were truly free to speak up? How
Accountants able to engage with subordinates to provide valuable much more value would be added if
employees at all levels can ensure that information will find it difficult to information flowing from the bottom up
no information has been overlooked or change their attitudes. Teams relying carried as much weight as that coming
intentionally withheld. In the cognitively on more informal arrangements, from the other direction? Creativity might
diverse environment, accountants where those who are better connected not be what accountants are known
should have confidence that decision- get ahead of the rest, are unlikely to for, but when it comes to promoting
making is based on facts and not appreciate more transparent ways of cognitive diversity we might want to
mere opinions. doing business. take the road less travelled; it can make
In the cognitively diverse workplace, all the difference. AB
Increased transparency each team needs to bear certain

Accountants rely heavily on the ‘adjustments costs’. When everyone’s Urszula Pajdzik ACCA is group
integrity of various teams across starting position is open to debate, then reporting accountant at Cpl.
the business. Freedom to speak up ultimately no team can push its own
increases transparency and reduces agenda unchallenged. Management More information
the risk of having whistle-blowers interested in promoting cognitive Get CPD units by answering
silenced. It is much more difficult to diversity needs to be realistic about questions on this article at
accaglobal.com/abcpd.
collude and coerce in an environment potential conflicts that might cause.
where employees are expected to From a finance perspective, it remains Read the report by BCG and
question how the business is managed. impossible to quantify the value of the Technical University of Munich at
bit.ly/bcg-diverse.
Fraud will always be a risk; however, lost business that results from lack of
INT_YCORP_cogdiversityCPD.indd 27 16/10/2019 15:44

Navigating nomad tax
With technology allowing an increasingly mobile population to work from seemingly
anywhere, what are the tax implications for these digital nomads and their employers?
Press reports have recently highlighted 12 months’ rule – see box), either in Richard Harryman, tax director at PwC.
the impact on local economies of the form of income tax or of corporate ‘This works well in a straightforward
digital nomads – entrepreneurs of tax if they set up to work within a situation where the individual is based
apparently no fixed abode who corporate structure. in the same country that they are
travel the world in search of a decent However, it really depends on where employed or engaged in. For a remote
flat white and a super-fast internet the individual has habitually lived, worker, like the one in this example who
connection. While no doubt adding whether the country concerned has a lives and works in Portugal, paying tax
to the vibrancy and diversity of tax treaty with the country where they where they live and work would arguably
many thriving business enclaves, are working, whether they are self- be the “fairest” option, given that most
they have also been criticised for employed or doing a series of short- societies would expect someone living
inadvertently pushing up the cost of term employments, and how long the in that country to make a contribution.’
living and forcing out the less mobile engagement continues.
local population. The tax and reporting issues can also Things to consider
These digital nomads are able to depend on where they are performing However, Harryman adds that remote
make a living by working anywhere in duties, and there are many social working situations of this type present
the world, carrying out their business security and labour law considerations a number of potential wrinkles of
online without geographic boundaries. that could come into play, again which companies and workers should
Portugal’s capital Lisbon is just one city depending on the country concerned. be aware: whether the individual
that in recent years has seen an influx of So if one were to ask what a Polish is regarded as employed or self-
this footloose tribe, and a subsequent self-employed person living in Portugal employed, where the individual should
increase in rents and café culture. working for a Swiss company running pay social security, whether income tax
a website in Hungary would pay in withholding is due, and whether the
Headache for planners tax, the answer is never going to be individual triggers corporate filings for
It’s not an ideal scenario, and constitutes straightforward. the company.
a headache for local planners and ‘The rule of thumb in this situation for As Harryman says: ‘For companies
politicians. However, these individuals income tax and social security would dealing with this type of worker, the
will be spending their euros, and be that an individual would pay tax and key to managing the engagement
perhaps to a lesser extent their social security where they work,’ says is good data on areas such as role,
cryptocurrencies, in the local economy, structure, employee location and travel;
and through local sales taxes they will an understanding of the compliance
be adding to the national coffers. rules and where there are mismatches;
But more broadly, how are these Many countries and a technology-enabled process that
workers taxed and how do governments have anti- supports compliance.’
ensure they are contributing their fair On the self-employed versus
avoidance tax rules
share? Indeed, are they contributing employed position, this often has a
anything at all, or are these global
that can deem a significant impact on the tax and social
citizens so mobile that they are able to person employed security position of the individual, as
avoid the tax system altogether? regardless of well as implications for the tax and
The short answer is no. They will the contractual legal obligations for the company
be required to pay tax somewhere engaging them. Many countries have
situation on paper
depending on residency rules (Portugal, anti-avoidance tax legislation similar to
for example, operates a ‘183 days in the UK’s IR35 rules that can deem an
INT_YCORP_DigiNomads.indd 28 16/10/2019 15:49

Why Portugal?
Portugal operates a ‘183 days in 12 months’ residency test,
so if the individual lives in the country for longer, they are
deemed to be resident. However, even if deemed to be a
Portuguese resident, then the country’s special ‘non-habitual
residence’ rules – designed to attract ‘high value’ industries
and individuals as well as pensioners – could give a tax holiday
for the first 10 years living in the country. This takes the form
of a flat 20% income tax rate (usually up to 48%) for workers in
‘high value-added’ scientific, artistic or technical professions,
including IT workers. But, as always, expert advice should be
sought before packing the laptop and surfboard.
individual to be employed regardless countries require that the employer individual is doing, corporate tax filings
of the contractual situation on paper. In operates tax withholding. With remote can be triggered by a remote working
a remote worker situation, there is the workers, the company may not have a arrangement.
added challenge of a potential mismatch corporate presence in the country in Andy Kelly, global expatriate tax
in the way different countries think the which the remote workers are based. services partner at BDO, says the golden
individual should be treated. In some countries this can lead to the rule for employers is not to agree to
For social security, if an individual company needing to register with the an overseas flexible work arrangement
lives and works in one country, where local tax authorities in order to operate until the tax implications have been fully
social security is due should be relatively tax withholding, or the individual considered. ‘Even where the individual
straightforward. However, this may not signing up to some form of direct is engaged via a personal service
marry up where the engaging company collection arrangement. company or a consultancy agreement,
is in a remote working situation. For there’s no guarantee that the relevant
the individual, where social security Employer obligations tax authorities will not consider that the
is paid can be important for benefits Most multinational companies have individual should be taxed and subject
entitlement. For the company engaging been aware for some time of the risks to social security as an employee with
the individual, there are cost and involved in an individual working in accompanying employer liabilities and
compliance requirements. one country on behalf of an engaging obligations,’ he says. AB
For individuals who are employees or company based in another. Depending

who are deemed to be employed, most on the precise nature of what that Philip Smith, journalist
INT_YCORP_DigiNomads.indd 29 16/10/2019 15:49

The T
here are good reasons why Belgium is
often described as the gateway to Europe.
Its geographical location means it is ideally
beating
situated to serve the European Union’s (EU’s)
market of more than 500 million consumers, who
live within a 500-mile radius of the country. In
heart
addition, Belgium’s capital, Brussels, is the de facto
capital of the EU and is home to some of its most
significant institutions, including the European
of Europe
Commission and the European Council. It also
hosts a seat of the European Parliament.
Belgium’s population is over 11.3 million
and the country is bordered by four other EU
Belgium has economic, countries: France, Germany, Luxembourg and
geographical and the Netherlands. As an economy, it is very open
to exporters and it is quick and easy to open a
political advantages
business there. Belgium is also culturally diverse,
that make it an which makes it an ideal market to launch new
attractive destination products in, and a large proportion of the
for investors population can converse fluently in three languages:
Dutch, French and English. The country has
excellent infrastructure – including airports, sea
ports, railways and roads – as well as a good
telecommunications network. Meanwhile,
many multinational companies
have offices in Brussels due to
the economic and political
significance of the city.
‘Brussels is the beating
heart of Europe,’ says
Thierry Legrain, an
accountant with business
services firm TMF Group.
‘It is an important financial
centre, it is home to the
EU headquarters, and it is
easily accessible from across
Europe. Many foreign
investors are attracted
to Belgium
because of its
multicultural
INT_UK_I_TMF.indd 30 01/10/2019 17:23

population and the fact that several languages can easily be
used in the workplace.’ Top tips for doing business in Belgium
1. Appoint an effective adviser who combines a good
Good for business understanding of your company with in-depth knowledge
A range of industries operate in Belgium. The country of the local market.
is particularly known for its skills in vehicle-making, 2. Don’t expect to conduct business over the course of long
pharmaceuticals, petrochemical production and the meals – Belgians like their meetings to be professional,
manufacture of medical equipment. Many fast-moving productive and, ideally, short.
consumer goods groups have operations there, while transport 3. Belgians prize punctuality, so aim to arrive five to 10
and logistics companies are attracted by the country’s location, minutes prior to any appointment.
which makes it an excellent base from a logistical point of 4. Understand that Belgium has cultural and linguistic
view. Belgium is also considered to be a knowledge centre. divisions due to its population, which is comprised of
Its universities and hospitals are renowned as research and people who represent three distinct cultural identities:
development (R&D) centres and innovation hubs. Dutch, French and German.
‘We have a strong reputation for R&D and innovation due 5. Belgium has a long history in trade so Belgians are
to the high quality of our education and research facilities, the often skilled negotiators. They are, however, flexible
availability of skilled workers and our tax incentives for R&D and will be willing to accept a compromise even if it’s not
ventures,’ explains Legrain. ‘The government has introduced the ideal solution.
R&D tax incentives, which aim to encourage companies to
invest in research and innovation. Among these incentives are
withholding tax exemptions for researchers’ salaries, as well as tax returns, they need to compile their financial statements
tax relief on investment in patents and R&D.’ in a predefined format and file them with the National Bank
In 2017, Belgium enacted a reform of its corporate tax rate, of Belgium on an annual basis. Depending on their activities,
which should increase the country’s attractiveness to foreign they might also need to file a withholding tax return, a social
investors. The standard corporate tax rate fell from 33.99% balance sheet that provides information about the workforce
to 29.58% in 2018 and is set to fall further to 25% from 2020. and VAT returns, or provide statistical reporting to the National
Small and medium-sized enterprises have seen their tax rate Bank of Belgium. If a branch of a company is incorporated in
reduced to 20.4% on the first €100,000 of net taxable income, Belgium, the financial statements of the parent company need
provided that a minimum salary is paid to a least one of the to be translated into one of the country’s official languages
company’s directors. This rate will go down further to 20% in and filed with the National Bank of Belgium.
2020. ‘It’s good for companies,’ notes Legrain. Belgium offers many exciting opportunities for companies
that want to tap the large and prosperous European market.
Issues to consider To get the most out of these opportunities, however, they will
While there are many advantages to doing business in probably need support from local experts who can help them
Belgium, the market presents some challenges that companies to get to know the market and navigate the country’s rules and
should bear in mind. Traffic congestion is a problem, especially cultural mores. These experts can also help companies on a
in Antwerp and Brussels. Furthermore, as Belgium is a federal practical level – for example, in setting up bank accounts and
state, a lot of political decision-making power rests with its providing insight into how business is conducted.
local communities and regions, which can make the country’s ‘When entering the Belgian market, it is important for
rules hard to navigate. At the same time, Belgium is a companies to have the guidance of a local business services
bureaucratic country that requires businesses to comply with a adviser,’ Legrain recommends. ‘On the one hand, the provider
lot of regulation. The legal system can also be a frustration for should understand the needs of international business. On
companies due to its slow decision-making processes. the other, it should have local expertise in order to guide
When operating in Belgium, there are a number of companies through the administrative maze.’ AB
important accounting and tax obligations that companies must

comply with. For example, as well as preparing their corporate Sally Percy, journalist
Content sponsored by TMF Group, which specialises in providing the administration services businesses need to set up and
expand within and beyond their home markets. Its expertise is in-house, on the ground, and in over 80 jurisdictions. tmf-group.
INT_UK_I_TMF.indd 31 01/10/2019 17:23

Listen to the whistle
Australia’s world-leading legislation makes organisations and directors legally liable for
failing to protect and support whistleblowers in the private sector – but not the public
I
n October 2017, Richard Boyle, an employee of the After an internal investigation dismissed his allegations,
Australian Tax Office (ATO), made a complaint under the the Adelaide-based public servant went public in April 2018.
Public Interest Disclosure Act. He felt uncomfortable He subsequently lost his job, and is now facing a total of 66
with what he considered to be the excessive debt collection criminal charges, carrying a maximum combined penalty of
tactics that ATO staff were expected to employ – specifically, 161 years in jail.
the seizure of funds from the bank accounts of taxpayers Boyle’s case was still ongoing when, in July 2019, new
without prior notice or consideration for their circumstances. whistleblower protection laws covering the corporate,
INT_I_Whistle_in_Aus.indd 32 11/10/2019 08:53

financial and tax sectors passed earlier in the year took One of these is that they hold a company liable for a failure
effect. The Treasury Laws Amendment (Enhancing to prevent detrimental acts – by having no support plans in
Whistleblower Protections) Act 2019 aims to encourage ethical place, or neglecting to implement them, for example. ‘This
whistleblowing and discourage white collar crime, while culture-changing step is crucial,’ Brown says. ‘Many companies
holding employers accountable for are good at getting their employees
protecting eligible whistleblowers. to reveal wrongdoing. Their
While welcoming the new laws problem is knowing how to actually
covering the private sector, Serena protect them when they do.’
Lillywhite, CEO of Transparency ‘Many companies The second ground-breaking
International Australia, says that are good at getting aspect is that the new rules
‘never before has the case for law their employees to for whistleblowing outside the
reform to properly protect the company set a benchmark.
reveal wrongdoing.
public sector whistleblower been ‘Whistleblowers are protected
so obvious’.
Their problem if they choose to go to certain
Lillywhite believes that punitive is knowing how prescribed bodies rather than
repercussions for whistleblowers are to protect them through internal company
bad for transparency overall. ‘It really when they do’ channels,’ Brown explains. ‘And if
is a stark reminder that the public’s they blow the whistle to a regulator
right to know is being compromised,’ and nothing happens within 90
she says. ‘[Prosecution] has a days, or if there are emergency
chilling effect on the reporting of all wrongdoing, and that’s circumstances, then it is now relatively simple for them to go
what public integrity depends on. What we’re finding is that public and still be protected.’
whistleblowers, instead of being celebrated and potentially However, Brown also believes that these reforms, protecting
recognised as heroes, are in fact treated as criminals.’ only whistleblowers in the private sector, do not go far
enough. ‘Unless we extend the protections applying to public
World-leading whistleblowing, we cannot expect the public to take the rest of
While no timeline has been released for a planned review our whistleblowing regimes seriously,’ he says.
of the legislation covering the public sector, she says that
Australia’s new whistleblower protection laws for the private
sector ‘are quite progressive and world-leading’. The range Dirty linen washed in private
of protections include allowing anonymity and potential For Clean as a whistle: a five-step guide to better
compensation (in certain circumstances) for whistleblowers whistleblowing policy and practice in business and
experiencing adverse outcomes as a result of taking their government, researchers at Griffith University in Queensland
concerns to the media. It also covers people close to those looked at whistleblowing policies in 699 Australian public
making the disclosure (‘your partner could in fact blow the and private sector organisations, and the experience of
whistle’, says Lillywhite), as well as a broader definition of what 17,778 employees in 46 of those entities. Some 28% of the
constitutes misconduct. individuals surveyed (5,055 people) had raised concerns about
Further, private companies are now required to implement wrongdoing, internally and/or outside their organisation.
a whistleblower protection and support plan (which must be The research revealed that bringing wrongdoing to light led
in place by January 2020), and make it public. This forms part to action or reform more than 60% of the time.
of what Lillywhite sees as the biggest change under the new Of the 5,055 staff who raised concerns:
law: the directors of a company can now be sued for failing to
protect and support whistleblowers. ‘That’s a world-leading
* 72% did so exclusively through internal channels, 26% did
so internally in the first instance but subsequently went to
attribute of Australia’s new whistleblowing law,’ she says. outside channels, and just 2% reported externally only (at
There are now also more avenues for whistleblowers to raise no point using internal channels).
their concerns, including with an auditor.
AJ Brown, a professor at Griffith University, Queensland,
* 19% went to a union, professional association or industry
body, and only 1% ever went to a journalist, media
and a board member of Transparency International, believes organisation or public website.
Australia’s reforms are ‘world-leading’ in two respects.

With the new law extending to tax whistleblowers, Michael
Croker, Australia tax leader at ACCA’s strategic alliance partner
CA ANZ (Chartered Accountants Australia and New Zealand),
says that accountants and auditors have been placed in an
unfamiliar position. ‘We are still coming to terms with how we,
as a profession that has always been very mindful of taxpayer
confidentiality, might have in our midst a person who blows
the whistle on a taxpayer,’ he points out.
Confidentiality override
While the ATO already receives anonymous tip-offs, Croker
says that what’s changed is that despite all the ethical and
legal requirements on tax practitioners to keep their clients’
affairs confidential, there is now an exception clause. ‘We
now have an override legislation which says that if someone
in a professional firm blows the whistle on a client, that
whistleblower needs to be protected. Their identity is kept
secret; they are not to be prejudiced,’ he says. ‘Professional
firms in the tax industry in Australia are now obliged to train
their staff in how to handle a whistleblower in their midst.’
CA ANZ is working with the ATO to come up with
procedures so that all members know what their duties are if
they ever do come across a whistleblower, Croker says.
However, he believes that the
legislation should go further and
establish an oversight authority. ‘A
whistleblower protection agency, if
we had one, could triage disclosures, ‘Professional firms
send the information to the correct in the tax industry
agencies, counsel whistleblowers in Australia are
– if, for example, the disclosure
now obliged to
appears improperly motivated – and
also provide a guiding framework for
train their staff in captures conduct that may be
companies, directors, managers and how to handle a regarded as unethical.’
supervisors around implementation whistleblower in Yet Stappers shares the view that
of the legislation. their midst’ further improvement is needed.
‘Whistleblower protection in ‘For example, the public sector is
the private sector is great, but currently left out of the scope of the
it shouldn’t come at a large legislation. In this regard, I find the
implementation cost.’ exceptions to whistleblower protection regarding national
CA ANZ is now focused on educating its members about security issues a shortcoming,’ he says. ‘Whistleblowers play
the new requirements during what Croker views as a period of a key role in exposing and preventing wrongdoing harmful to
transition for accountants in Australia. the public interest and the welfare of society. However, they
From a global perspective, Jan Tadeusz Stappers, legal face significant risks of retaliation, which should be minimised
counsel at WhistleB, a Stockholm-based whistleblowing expert by sound legislation. Ensuring whistleblower protection is in
and system provider, agrees that Australia’s new legislation the interest of society as a whole, as much in Australia as in any
is overall ‘a significant step forward’. He says: ‘There is great other country in the world.’ AB
improvement regarding the possibility to report anonymously

and the extended scope of protected disclosures, which Peta Tomlinson, journalist

The taxman’s cut
A survey of tax and other goverment levies on personal income across the G7 nations
and 23 other economies reveals wildly disparate levels of contribution to the state
More information
What’s the hit? Income tax around the world covers high and super-high as
UHY’s Income tax around the world report reveals the well as lower incomes – see bit.ly/UHY-global-income-tax.
average tax rate (including social security contributions
and other charges) on incomes of US$25,000 is 13% in Asia in emerging economies. The global average tax rate has
Pacific, 19.2% in Europe, 23% in North America, and 23.5% fallen from 20.7% to 19.2% since 2014, the report found.
Tax rates across the G7 nations on incomes of US$25,000 Germany

30.3%
Italy
Canada 21.5%
US
18.3%
UK 18.0%
14.7%
Japan
France 8.0%
5.0%
Highest tax rates on incomes of US$25,000 globally Lowest rates on incomes of US$25,000 globally
Uruguay Israel
48.0% 3.0%
Romania China
41.5% 5.1%
Zambia Pakistan
37.0% 7.0%
Mexico Australia
32.9% 9.0%
Poland Spain
29.5% 9.7%
GL_I_Graphics.indd 35 08/10/2019 13:51

Stop the rot
Recent research highlights an upsurge in concern among small companies about the
business consequences of bribery and corruption, and what they can do about it
B
ribery and corruption are challenges that affect
businesses of all sizes. Yet the most significant efforts The role of accountants
to address these problems tend to focus on public Do you think SMEs would welcome advice from their
bodies and big corporations, which are those most likely accountant on the policies they need to have in place to deal
to be involved in cases where large sums of money change with bribery and corruption?
hands. Historically, little research has focused on the risks
76%
posed to small and medium-sized enterprises (SMEs),
Yes
despite SMEs accounting for 99% of all formally registered
businesses in countries where accurate data is available.
Six years on from its 2013 global survey of the impact of
bribery and corruption on the SME sector, ACCA has carried
out another. The 2019 survey of ACCA members working 15% 9%
in SMEs or providing them with professional services was No Don’t know
conducted via a public weblink, and its findings have been
published in the report Combating bribery in the SME sector.
‘SMEs are incredibly important,’ explains Jason Piper, According to ACCA’s latest survey, nearly two-thirds (64%) of
ACCA’s policy lead for tax and business law, and the author of SMEs globally regard bribery and corruption as a concern.
the report. ‘In quite a lot of countries, the majority of working This is a significant increase on 2013, when the figure was
people work in SMEs. Multinationals wouldn’t exist if they just 43%. Survey respondents from sub-Saharan Africa, the
didn’t have SMEs in their supply chain, providing services, Americas, Asia and the Middle East were most likely to be
goods and small parts. They are fundamental to the economy worried about bribery and corruption. Concern was noticeably
in every part of the world. Anything acting as a drag on their lower in Europe, probably as a result of the legislation and
productivity is something we should investigate and deal with.’ enforcement mechanisms that exist in the region.
When asked why bribery and corruption are problematic,
respondents compared them to a disease or rot, which if
What would help? unchallenged, spreads through the business community,
How do you rate the following in helping SMEs to fight damaging individual enterprises and ultimately national
corruption (on a scale of 1 to 5, where 5 is most effective)? economies. Globally, 64% of SMEs believe that bribery
and corruption have a negative impact on the business
29% 19% 14% 15% 23% environment. The research found that SMEs are most likely to
High-profile prosecutions encounter bribery when dealing with public sector officials.
10% 22% 26% 21% 20% In 2019, more than two-thirds of respondents (67%)
Guidance from professional and trade associations thought that SMEs routinely consider the risk of bribery
9% 16% 19% 29% 27% when contemplating doing business in some countries. This
Whistleblowing rights for employees and businesses is in stark comparison with 2013, when only 38% thought
the same. Similarly, in 2019, 62% of respondents thought
17% 18% 22% 23% 21%
that SMEs consider the risk of bribery when thinking about
An ethical code for businesses to publicly sign up to
doing business in certain sectors – compared with 45%
36% 26% 18% 12% 9% six years before. Another significant finding was the jump
The appointment of an auditor in respondents who thought that over the past 10 years
1 (least effective) 2 3 4 5 (most effective) businesses had become more willing to misrepresent their
financial statements to cover up corrupt behaviour. In 2019,
GL_I_BriberySMEs.indd 36 04/10/2019 13:25

45% believed this was the case, compared with 31% in 2013.
‘There are some encouraging findings around growing
awareness, and SMEs are readier to recognise when they
might be at risk,’ Piper says. ‘But the statistics are still not as
high as they should be. Some organisations don’t think about
bribery when they’re doing business overseas. But if you’re
doing business in particular regions, you are almost certainly
going to encounter it, so you should be considering it.’
Cry for help

While awareness is growing, a majority of SMEs (59%) do not
believe sufficient guidance exists to help them identify and
deal with instances of bribery and corruption. The survey
report concludes that accountants could play a major role
in helping SMEs protect themselves against bribery and
corruption risk. Three-quarters of respondents (76%) thought
that SMEs would welcome advice from their accountants on
how to establish policies and practices to deal with possible
cases of bribery and corruption.
Survey participants were asked
about possible measures that could
help SMEs to combat bribery and are organisations with a fair bit of
corruption. Almost two-thirds (65%)
Respondents resource to throw at the problem
placed a high effectiveness rating on compared corruption and an internal hierarchy that
laws granting whistleblowing rights to a disease or rot facilitates the creation of a sensible
to employees and businesses where that, if unchallenged, escalation process. In a business
they encounter instances of bribery with four or five employees, it’s not
spreads through
and corruption. practicable. Even in businesses with
Meanwhile, there has been a shift
business, damaging 50 to 70 employees, say, if someone
in perception of the usefulness of enterprises blows the whistle, then everyone
prosecution as a deterrent. In 2013, and ultimately knows who that person is.’
creating an environment where it was economies
clear that illegal activity would not Where next?
be tolerated (ie by means of high- So what can SMEs take away from
profile prosecutions) was considered the latest ACCA research? The
the most effective anti-corruption measure (listed by 40% of report argues that SMEs should be proactive about addressing
respondents). In 2019, the figure has fallen to just 23%. and managing the risk posed by bribery and corruption, even
‘We are perhaps seeing a loss of faith in prosecution as a if the steps they take are different in scale from those adopted
deterrent,’ Piper says. ‘Maybe there have not been as many by large corporates or public bodies.
high-profile prosecutions as people may have hoped. But Piper advises policymakers to produce ‘clear, short and
even where there have been, there is still an atmosphere of simple guidance’ and to ‘cooperate and coordinate so
bribery and corruption, and SMEs are encountering the same that businesses know that they’re facing the same sort of
problems they have always encountered.’ environment wherever they are’. The bottom line, he says, is
Nevertheless, Piper points out that helplines and protection this: ‘Policymakers should recognise the challenges that small
for whistleblowers pose their own challenges in terms of businesses face, convey the strong message that bribery and
deterrence. ‘Most of the existing guidance around the corruption are not acceptable, and put effective reporting
helplines and processes that enable people to blow the mechanisms in place.’ AB
whistle if they see corrupt activity are built around public

sector organisations or large multinationals,’ he says. ‘These Sally Percy, journalist
GL_I_BriberySMEs.indd 37 04/10/2019 13:25

Data decency
Applying an ethical approach to personal data processing is as a matter of good
governance never mind regulatory compliance, says John Bowman
T
he processing of personal data ought to be lawful, As a rule of thumb, quite apart from any legislative
fair and transparent and should meet the reasonable requirements, data should be sourced and shared responsibly.
expectations of the individuals concerned. This If organisations are unaware of the provenance of data and
ethical principle is not only behind the European Union’s unsure whether data is properly protected when shared with
General Data Protection Regulation (GDPR), which became third parties, the risk of data breaches rises.
law last year, but is also a guide to robust ethical corporate
behaviour generally. Global reverberations
Organisations that come within GDPR’s jurisdiction need to In the wake of GDPR, the ethical use of data (or ‘digital ethics’
be able to demonstrate they have a lawful basis for processing as it is known) has become a global public policy topic. Tim
data – by obtaining the consent of the individual, fulfilling the Cook, CEO of US tech company Apple, gave a keynote
terms of a contract or meeting the legitimate interest of the speech at an international conference of data protection
organisation. They also need to be able to explain in clear regulators in Brussels last year on the topic, during which he
terms what the processing is about, including the logic behind said: ‘At every stage of the creative process, then and now, we
any automated decision-making. Where the processing engage in an open, honest and robust ethical debate about
activity presents a high risk to individuals or society, then a the products we make and the impact they will have. That’s
data protection impact assessment should be carried out and just a part of our culture. We don’t do it because we have to.
appropriate measures put in place to help mitigate the risk. We do it because we ought to.’
GL_I_DataEthics.indd 38 04/10/2019 13:30

Cook’s speech was widely reported at the time and pointed
to an aspect of ethical data use that has caught the attention GDPR: data protection gets serious
of regulators: just because you can process data, even in The European Union’s General Data Protection Regulation
creative and innovative ways, that does not mean that you (GDPR), which became law in May last year, was designed
should. Elizabeth Denham, the UK Information Commissioner, to address concerns that rapid developments in data-driven
referred to this point in a speech last year. ‘Fairness is where services and technology could infringe the rights, freedoms
we crash against the questions of should we do this, rather and interests of individuals. Such concerns arise, for example,
than can we do this. Fairness is a legal principle in the GDPR, where connected devices track the behaviour of individuals
and we cannot expect it to be silent against should-type without their permission, data is used for purposes other than
questions.’ She added, ‘Every time we make a ruling on the those for which it was originally collected, and automated data
fairness principle, we reduce the real estate available for processing makes decisions about individuals in a way that is
those who operate in the ethically questionable but legally not transparent or easily explainable.
acceptable realm.’ In response to these concerns, GDPR seeks to strengthen
If the way that data is processed is considered ethically the privacy rights of individuals – for example, through a ‘right
questionable, results in unfair outcomes for individuals, or to be forgotten’, and better rights of access to information
has an adverse effect on society, then it may infringe GDPR’s concerning them. GDPR also places stricter obligations on
fairness principle. And while notions of fairness can be difficult organisations and makes them responsible and accountable
to frame, guidance is emerging. The European Commission for the personal data they process. Despite the length and
issued a set of ethics guidelines for trustworthy artificial complexity of GDPR, the obligations it places on organisations
intelligence earlier this year. Key elements of the guidelines are generally straightforward.
include transparency (processing decisions should be This overhaul of data protection law is enforced by a tough
explainable), diversity and non-discrimination (unfair bias must enforcement regime where companies that violate the rules
be avoided), and accountability (design processes should be can be fined up to 4% of their annual worldwide turnover.
assessed and auditable).
The Council of Europe also
published guidelines on artificial which could include supplementary
intelligence and data protection
The approach to questions on outcomes for customers
this year. These advise the adoption data management and society. The data protection
of a values-based approach when should reflect officer (a mandatory appointment for
products and services are being the values of the public bodies and for certain types of
designed, and recommend that data processing activity) could offer
business, which
applications give users meaningful advice on ethical processing, as could
control over data processing.
could include a stakeholder group, which would
customer outcomes provide direction on the approach to
Where to start and the wellbeing be taken by the organisation.
So what steps can organisations of society Finally, some measures of success
across the world take to embed an should be in place to track the
ethical approach to data processing? outcomes of the approach taken.
Their activities should be reconciled For example, information could be
with wider issues of corporate responsibility, and the approach held on the number of complaints relating to the fair use of
taken should reflect the values of the business, which could data or whether the organisation has been subject to adverse
include customer outcomes and the wellbeing of society. regulatory or media attention related to its data use.
Many organisations publish statements on human rights, There is no one-size-fits-all approach to embedding data
environmental protection and ethical supply chains. Some may ethics, but the steps outlined here should help to address the
wish to consider whether ethical data use and supply chains ethical issues that the data-driven world continues to raise. AB
fall into the same category.

On a more practical level, those organisations operating John Bowman is a senior principal at IBM consultancy
under the requirements of GDPR should carry out a data Promontory Financial Group, working in the privacy and
protection impact assessment for high-risk data processing, data protection practice.
GL_I_DataEthics.indd 39 04/10/2019 13:30

Setting the pace
Finance professionals can play many roles within a single organisation, thus ensuring
their adaptability to whatever the future brings, IFAC finds in its latest report
H
aving a clear sense of what lies
ahead has never been more
important for professional
accountants in today’s complex and
uncertain business environment. But are these
professionals taking steps to ensure they have
the right mix of skills, experience and ability to anticipate
tomorrow’s unexpected demands? Are they future fit?
This is the question that is being posed
in boardrooms around the world. EY
has tackled this in a recent report,
Setting the pace or keeping up
– is your board future-fit? Here,
the firm sets out what it believes
are the actions that boardroom
executives need to take to build their
fitness levels so that they are not left
behind. ACCA has also put forward its own
findings from its ‘Generation Next’ research, which
investigated the drivers of change and the skills that
will be most needed in the future. Now the International
Federation of Accountants (IFAC) has joined the debate.
Its research report, Future-fit accountants, probes the
roles that CFOs and their finance functions will need to
adopt over the next decade in order to remain integral to
their organisations. It highlights seven identities that
professional accountants will need to assume – some
are familiar and lie at the core to what professional
accountants do, but others may be less familiar
to many. But it is these roles that will ensure
they set the pace rather than follow
the pack.
Co-pilot, navigator, protector

The first role is of co-pilot. Sitting alongside
the CEO, the CFO will be actively involved
in all significant business decisions and major
initiatives to drive change and growth in the
organisation. Ready to take over the controls at a
moment’s notice, the CFO will be required to inspire and
lead others outside their own immediate finance teams. As
Sanjay Rughani, CEO of Standard Chartered Bank in Tanzania
GL_I_IFAC_Future.indd 40 02/10/2019 15:29

and deputy president of IFAC, says: ‘As a co-pilot, the CFO experiences to effectively convey meaning, and provide
will have great chemistry with both the CEO and business understanding and foresight as well as hindsight.
heads. The CFO will not only contribute to strategy but will PVS Jagan Mohan Rao, a member of IFAC’s Professional
drive the strategy.’ Accountants in Business Committee, picks up the story: ‘This
The second role is one of navigator, someone who can kind of storytelling will enhance the knowledge of the directors
steer an organisation toward value creation and sustained and the board members, which will help them do better and
profitability by providing what IFAC describes as ‘decision- ultimately the company will do better.’
relevant and actionable insights’. The navigator will identify The fifth role that a future-fit accountant will need to
trends and uncertainties, opportunities and risks, trade-offs develop is that of digital and technology enabler. IFAC
and implications through scenarios, forecasting and the use of says such an enabler allows a ‘cognitive and data-driven
predictive analytics. business that utilises digitalisation, including automation,
‘I draw heavily on my accounting skills and understanding artificial intelligence and data, in ways that drive decisions
of the organisation’s business model to offer a breadth of and growth’. But it will require effective collaboration with
view and insight that others in the organisation find difficult to information and technology experts to enhance existing
assemble,’ explains Stuart Chaplin, Shell Trading & Supply’s systems and tools and seize new opportunities that can boost
vice president of risk management. productivity and deliver value.
‘Finance professionals are effectively ‘The fourth industrial revolution is
the spider in the web who can forcing rapid evolution of business
connect the organisation and steer models, and in order to remain
outcomes to a higher level in terms ‘Finance competitive, companies must
of value delivery.’ professionals are become digitally savvy,’ says Daniel
Third on IFAC’s future-fit list is the effectively the spider Monehin, a former vice president at
role of brand protector. This is not Mastercard. ‘I am able to combine
in the web who
necessarily seen as a crucial part of the skillset of being an accountant
the professional accountant’s job can connect the with the skill of partnership
description, but that will change in organisation and with customers.’
the future as they are called upon steer outcomes to a Being a process and control expert
to protect the organisation and its higher level’ is the sixth area. While digitalisation
reputation through the stewardship is disrupting existing processes, a
of tangible and intangible assets, future-fit accountant will be able
and financial and non-financial to reconfigure processes within
performance. As IFAC says in its report, professional and beyond finance to drive efficiency and add greater value
accountants will do so through effective governance and to customers. ‘If you have an outstanding process, every
control, taking into accountant key stakeholder expectations employee in that process is above average from a customer
and social licence to operate. perspective,’ says Larry White, executive director of the
‘Maintaining the reputation of an organisation is not just a Resource Consumption Accounting Institute.
marketing activity,’ says Khalilullah Shaikh, CFO at Pakistan Final, and arguably the most important aspect in today’s
International Airlines. ‘It requires strong governance processes environment, the future-fit professional accountant will be
and stewardship of a company’s financial and non-financial the trusted professional. As Wendy Yung, audit committee
data and assets, taking into account the expectations of all member of the Hospital Authority Hong Kong, says: ‘From
stakeholders, including the public.’ my experience, professionals build trust in three ways: they
maintain high professional ethics, they keep a balanced view,
Storyteller, tech enabler, trusted professional and they are forward-looking.’
Next is the role of storyteller. A future-fit accountant will be Not every professional accountant will need to take on
able to enlighten internal and external stakeholders about the each of these roles, nor are they mutually exclusive, but IFAC
organisation’s narrative, how it creates value, the opportunities believes that each one will ensure the accountant remains
and the challenges it faces. Such a role transcends any one relevant in the future. AB
position, but the professional accountant is well placed

to deliver a company’s narrative using data, insights and Philip Smith, journalist
GL_I_IFAC_Future.indd 41 02/10/2019 15:29

Nice try
The surprising financial success of the Rugby World Cup in Japan could be a ‘game-
changer’ and further the cause of promoting greater participation in the sport in Asia
T
he Rugby World Cup and youthful continent,’ says World
in Japan is on track to Scoreboard Rugby chairman Bill Beaumont. ‘I
break the revenue record
* 400,000 visitors are expected to have believe we can look forward to a very
exciting and prosperous future for
set by the 2015 tournament in travelled to the tournament.
England, according to the sport’s
* 1.8 million tickets available. the game in this region.’
governing body. Concerns over
* Ticket applications in the 2018 ballot Japan Rugby 2019 is expected
to deliver record revenues for a
the unfavourable time zone and phase topped 4.5 million.
whether that would undermine
* 200,000+ tickets went on general sale. world cup tournament. An EY study,
media sales in the lucrative French
* 31 matches were shown in Japan on The Economic Impact of Rugby
World Cup 2019, estimates that
and UK television markets have free-to-air television channels.
evaporated. Pre-tournament worries
* 20 teams took part in the tournament. the total output to the Japanese
about the commercial programme
* 72,327 – capacity of Japan’s biggest economy will be US$4bn. The
tournament is predicted to increase
and the perceived weakness of the stadium, International Stadium
host team limiting domestic interest Yokohama. GDP by US$2bn and boost tax
also soon subsided. revenues by US$200m. Travel and
Instead, the tournament’s impact accommodation could generate
on the region could be a ‘game-changer’, according to US$987m to the economy in direct expenditure. More than
governing body and tournament organiser World Rugby. US$373m has already been invested in infrastructure projects,
Japan’s bid beat those of Italy and South Africa – two countries while the tournament has employed 25,000 people.
with an established rugby infrastructure – to become the first Japan Rugby 2019 is also hoping for long-term benefits.
host outside of the traditional rugby-playing nations. ‘Rugby World Cup 2019 represents an unprecedented
One major factor in the decision to hold the tournament economic opportunity for the whole of Japan, with a wide
in Japan was the aim to encourage more participation in the range of opportunities across many sectors,’ says organising
game across Asia. A programme linked to Japan’s bid, called committee CEO Akira Shimazu. ‘Through investment in
‘Impact beyond’, confirms it has already hit an ambitious target infrastructure, supporting jobs or generating tourism revenue
of reaching 1.8 million new participants in the game across opportunities, this is a tournament that is on track to deliver
the region. More than one million participants interacted with a significant economic legacy for our nation.’ By comparison,
the programme in Japan itself, while Rugby World Cup 2015 in England
emerging rugby nations such as produced an overall economic
Pakistan (237,000), China (180,000) impact close to £2.3bn (US$2.83bn).
and India (106,000) made impressive
contributions. Both sexes of all ages Big business
were also introduced to the game The quadrennial tournament is the
in Bangladesh, Indonesia, Laos, ‘Rugby World Cup commercial and financial vehicle that
Malaysia, Nepal, the Philippines, Sri drives World Rugby’s investment in
2019 represents
Lanka and Vietnam. the global game, supplying more
‘The Rugby World Cup council
an unprecedented than 90% of World Rugby’s revenues
awarded the Rugby World Cup to economic from broadcast, sponsorship and
Japan because we believed that it opportunity for the other commercial income. World
could be a powerful game-changer whole of Japan’ Rugby invested £482m (US$593m)
for sporting and social change in between 2016 and 2019 at all levels
Asia, the world’s most populous of the game, following the 2015
GL_I_rugby.indd 42 08/10/2019 13:54

Future players? Enthusiastic young supporters warm up
to welcome the French national team at a ceremony in
Fujiyoshida City on 15 September.
tournament. This represents a 38% increase on the previous matches at the stadium. Abe said the US$2bn cost of the
four-year financial cycle. stadium was too high and requested a new design. As a result,
The governing body defers all revenues and direct the stadium will now be ready in time to host the Olympic
expenditures related to Rugby World Cup until the year of the Games in Japan next year.
tournament – as such, all revenues relating to the tournament While World Rugby admits that the loss of the venue has
will be reported in its next set of accounts. had a ‘significant impact on the overall ticketing capacity and
With the Japanese tournament being hosted across 12 tournament budget’, the overall commercial success of the
cities, the economic benefits have been shared around the tournament has come as a surprise to the organisers. Land
country. However, Singapore and Hong Kong – part of the Rover and Société Générale are among the tournament’s
original Japan bid – were not chosen among the final 12 sponsors and are believed to have paid 25% increases on 2015
tournament locations. Japan’s initial bid allocated some pool prices to renew their Worldwide Partners rights.
matches there in what it called a ‘tender for Asia’ to help World Rugby’s chief commercial officer Tom Hill confims:
globalise the sport, but the International Rugby Board (IRB), ‘Commercial revenues are up. Broadcast revenues are up.
insisted matches must be staged within the host nation. Ticket sales are better than 2015. Sponsorship revenues are
Preparations for the tournament were relatively smooth, up. We were thinking potentially it wouldn’t be as attractive
with one major exception. Japan’s stadia development plans for sponsors as 2015, given the time zone, but it’s been more
were surprisingly altered in 2015, after prime minister Shinzo positive in terms of growth than we’d ever anticipated.’ AB
Abe shocked World Rugby by scrapping plans for the national

stadium in Tokyo, ending the host nation’s ability to stage Alex Miller, journalist
GL_I_rugby.indd 43 08/10/2019 14:02

In praise of gratitude
Positive comments or behaviour can have beneficial effects on others, says Dr Rob
Yeung, leading to a greater sense of well-being and improved work satisfaction levels
Mounting evidence suggests that Saying thank you

gratitude is associated with multiple Watch Dr Rob Yeung talk about the
benefits in the workplace. However, it’s importance of expressing gratitude at
bit.ly/ACCA-RobYeung.
worth differentiating between various
aspects of gratitude.
Two people can have almost identical control group of salaried university
circumstances in life yet one can feel fundraisers phoned potential donors
more grateful. Trait gratitude is a as usual. A second experimental group
personality characteristic, reflecting received a short visit from the university’s
someone’s tendency towards being director of annual giving who simply
grateful for their experiences in life. More said to them: ‘I am very grateful for your
usefully, felt gratitude is an emotion, a hard work. We sincerely appreciate your
sense of wonder and thankfulness, often contributions to the university.’
brought about within an individual as the During the duration of the
result of positive comments or behaviour experiment, the control group of
from another person. Finally, expressed fundraisers on average made 41
CPD
gratitude comprises the set of comments outgoing phone calls. The experimental
or behaviour that a person may use to group of fundraisers who experienced
evoke felt gratitude within someone else. the in-person expressed gratitude made
A recent study led by Portland State on average 63 outgoing calls. Given
University’s Alicia Starkey monitored that all of the fundraisers were salaried
146 hospital workers over 12 weeks. and did not receive bonuses for their
Employees who were thanked more call activity, the researchers concluded
often at work reported feeling more that the expressed gratitude had been
satisfied with their work. They also substantially effective at boosting those
reported sleeping better at night and employees’ motivation. It is perhaps
fewer headaches. worth noting that it only took a mere 16
What is remarkable about the study words of thanks to increase massively
is that the researchers simply asked their performance.
their participants how often they were
thanked. It did not require expensive Don’t take it for granted
or elaborate shows of appreciation in A critic might argue that it should
order to generate more felt gratitude in be obvious that gratitude matters.
the participants. Simply hearing others However, employee opinion surveys
Employees who
say ‘thank you’ more often made a routinely show that more employees
were thanked difference to both their work satisfaction feel underappreciated rather than overly
more often at work and well-being. praised and recognised for their work.
reported feeling In a separate investigation, business Ideally, we might wish to believe that
more satisfied with researchers Adam Grant and Francesca it should be obvious that gratitude
Gino tested the effects of a one-off matters; however, the reality is that
their work
instance of expressed gratitude on most people either underestimate
employees’ performance. The first its importance or are so caught up
GL_CAR_YeungCPD.indd 44 08/10/2019 13:57

in their own work and problems that
they forget to express their gratitude Dr Rob’s talent clinic
towards others. Supporting this
interpretation, researchers Amit
Kumar and Nicholas Epley at
Q A colleague and I both applied
for a more senior position. I
got the job and now manage him.
Booth School of Business have We used to get along, but he has
gathered data showing that those lately become somewhat resistant
that express gratitude greatly and unhelpful. He is older than me and has been with
underestimate how happy the the company longer too, so perhaps he feels I’m not
recipients feel. qualified to manage him. How should I confront him?
Employees may also find it
useful to express gratitude towards
their managers. Studies have found that
A Be careful not to jump to conclusions. Your promotion
and the changes in his behaviour may be correlated
rather than causally linked. There might be other colleagues or problems causing
managers who feel insecure about their him grief at work. Equally, it could be issues within his personal life that are affecting
competence are more likely to engage his behaviour at work.
in aggressive behaviour towards Even if your promotion has bruised his ego, it may only be a contributing factor,
employees, such as putting employees rather than the sole explanation for the changes in his demeanour. The point is that
down and being excessively critical. you cannot know his circumstances until you have asked him – gently – how he is
In other words, thanking difficult feeling about his work, and life in general too.
managers or showing appreciation for But before speaking to him, collect your thoughts and make notes about specific
whatever you find genuinely positive examples in which you have found his behaviour challenging. Then find a less hectic
about their leadership may be a useful moment in his schedule to have a one-to-one discussion together. Tell him about
tactic for reducing their mistreatment of these instances that you have observed. Be sure to avoid implying that you know
CPD
you. Of course, this may be the last thing what is going on inside his head. He may not have intended to be deliberately
you want to do, but it may at least give resistant and unhelpful. He may not even have realised that you perceive him this
you a little more space in the short-term way. Simply ask him for his opinions on what you have observed.
to consider your longer-term options. Your goal is to discover whatever issues or problems he has been facing – whether
Also bear in mind that expressing they are external or related to you and your promotion. Only then can you decide on
gratitude may not be helpful in all the appropriate action to take together.
situations. For instance, according to
a new study led by researcher Jeremy Tips for the top
Yip, expressing gratitude during a Effective managers appreciate that employees may have suggestions that are worth
negotiation may create the impression taking on board. After all, employees often receive more direct feedback from
that you are forgiving by nature; this customers and tend to have greater insight into how corporate strategies are being
in turn may inadvertently encourage translated into action. However, such managers also understand that they cannot say
other parties to attempt to exploit yes to every idea. A new study led by Danielle King, a scholar at Rice University in
you. As a result, it may be more Texas, has important implications for how managers should phrase their refusals.
appropriate to reserve your expressions In two experiments, King exposed employees to either vague
of gratitude for collegial rather than refusals that were phrased sensitively or specific reasons that
competitive circumstances. AB were phrased insensitively. Employees were significantly
more likely to stop making further suggestions when
More information they were received specific explanations delivered
Dr Rob tweets @robyeung. insensitively than when they heard vague explanations
expressed sympathetically. In other words, to
If you have a question for the talent
encourage your employees to continue speaking up,
clinic, email abeditor@accaglobal.com.
be sure to focus more on how you turn down their
Get CPD units by answering
ideas (ie how sensitively you come across) than what
questions on this article at
accaglobal.com/abcpd. you say in particular (ie the specific reasons you provide).
GL_CAR_YeungCPD.indd 45 08/10/2019 13:57

Wisdom from the heart
In the second in a two-part series on leadership, Alison Young explains how stepping
out of your head and into your body can help give a clearer sense of what is right
A walk back through the management be made for the business while
texts of yesteryear reveals a fascination management is about ‘simply’
with what managers actually did delivering consistently and predictably
throughout the day. Today, a on predetermined plans, then
combination of technology and process having great leaders at the top of
redesign means there is very little that the organisation really matters. And
remains mysterious in this domain. particularly so when it comes to
Focus has instead shifted to ways in confronting ethical
which we can develop great leaders and legal dilemmas.
(as well as managers) who arguably, A whole industry of
hold in their hands more of the future competency models and
success of their organisation. personality assessments has
The difference between grown up to satisfy the thirst
leadership and management can to find ways to develop the most
be debated. But if we believe effective leaders. In the right hands,
that leadership is about such tools can play a powerful role in
CPD
the discretionary personal and organisational change.

decisions to They help guide and provide

46
GL_M_AlisonYoungCPD.indd 46 04/10/2019 13:43

feedback on how the leader goes about boardrooms. After all, it’s not what to speak up. In turn, this leads to a more
their role with their colleagues and in leaders traditionally have been trained open environment where mistakes can
the wider business culture. to do, and it flies in the face of strategic be properly rectified before they risk
When competencies are infused analyses, formal presentations and escalating into corporate scandal.
with an enterprise’s values, they can spreadsheets. For most leaders, tapping
provide a clear steer not just on the into feelings is unfamiliar, uncomfortable The feeling-believing loop
‘how’ but also on some of the ‘what’ of and takes practice. This practice is not about stopping
the leadership role. ‘Do the right thing’ So what is the practice? As with reacting or thinking. Rather, being
is the rule for aspirational leadership changing any habit, the first step is able to access feeling-believing simply
(and employee) behaviour in more than to have the desire to do something offers the leader wisdom beyond their
one organisation from Amsterdam to differently. After that, it’s as much about positional power and into the ways
Zhengzhou. But neither that nor any not doing as it is about doing. they connect with people and the
other such aspiration can ever hope to Leaders can easily fall into the communities they serve. The leader’s
capture the range of ethical dilemmas reacting-thinking loop in the face of thinking that then follows is based on a
that face most leaders. In fact, having unwelcome news. Imagine a leader broader foundation of input rather than
tight definitions of the organisation’s being given information that, for on a knee-jerk emotional reaction. To
required leadership behaviour has not example, suggests that safety or ‘not do’ in the moment takes courage:
proven to be an insurance policy against to pause, connect with and reflect
corporate scandal or malpractice. on what the leader is actually feeling
So if leadership competencies and aren’t typically welcome guests on the
behaviour cannot be relied on to put a Tight definitions of business agenda.
brake on unethical or illegal behaviour required leadership If listening is one side of the
for the individual leader, what can? leadership coin, then speaking the
behaviour have
CPD
leader’s truth is the other.
Listening to the body
not proven an Courageous conversations require the
Perhaps we need to strip away the insurance policy leader to stay engaged with how they’re
‘industrialisation’ of leadership and get against corporate feeling, to feel ok with any discomfort
back to basics to discover what sits at scandal or they may be experiencing, and to speak
the heart of leadership – literally the their truth – to peers, senior or junior
malpractice
heart. Courage comes from the French colleagues, or shareholders. And after
word for heart (coeur), which used to they’ve told their story, they need to
be considered the seat of all feelings. manage any reactions others may have.
Nowadays, neuro-cardiologists have quality standards have been breached. History tells us that authentic moments
the technology to measure and confirm Quite likely, their reacting-thinking of truth on the part of a scandal-hit
that the heart has a functional brain in loop pushes them to respond with a CEO do more to rally a share price than
its own right. Leaders who can tap into challenge back, a verbal justification or a any amount of half-hidden untruths or
the innate intelligence of the heart’s jump into analytical problem solving. justifications. Rather than relying on an
‘brain’ are able to draw on a richer Adding in a feeling-believing loop elaborate leadership construct to tell
wisdom. It is this head-heart connection offers the leader a broader sense of them what’s right, leaders merely need
that helps the leader focus on what’s what’s possible. Neuroscience suggests to look inside themselves: the answer
important and right in the face of moral that this loop helps the leader make was there all the time. AB
or ethical choices. use of, rather than run away from, how
But attempts to encourage leaders they feel about the unwelcome news, Alison Young is a director of
to step out of their head and into their and therefore face what’s important Leaders in Change.
body so that they can listen to what or a priority. This loop also opens up
is really being said by others, and not the relational connection between the More information
just hear what they want to hear, are leader and the person who delivered Get CPD units by answering
typically met with raised eyebrows and the news, thereby helping to break questions on this article at
uncompromising scepticism in most down hierarchy and encouraging others
GL_M_AlisonYoungCPD.indd 47 04/10/2019 13:44

Invest in
yourself
We’re the world’s most forward thinking

accountancy body because of you – our
219,000 members at the forefront of our
great profession. You’re investing in your
career by maintaining your membership.
And we’re dedicated to investing in
resources that support your ambitions for
the year ahead. Through your commitment
and our help, we can shape the future of
finance together. accaglobal.com/members
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12:04
Striving for PIR-fection
An exhaustive post-implementation review process means a financial reporting
standard is anything but done and dusted when it is issued, as Adam Deller explains
CPD
Making a significant change is a long the subject of a public consultation, IFRS 3, Business Combinations. With
and slow operation. Even the UK’s where the IASB invites comments on IFRS 8 and IFRS 13, the IASB decided
departure from the EU is a quicker an exposure draft of the standard. The not to make any changes. IFRS 8 got as
process than the issue of a new IFRS second phase considers the comments far as an exposure draft with proposed
Standard. Issuing a new standard is a and presents the findings. Just as the amendments, but the IASB decided
long and arduous affair, requiring many creation of a new standard can take a not to proceed with these. IFRS 13
stages of discussion and comment, and long time, so can the PIR. was an even simpler process, with the
involving a vast range of stakeholders. IASB concluding that the information
There is rarely full agreement when the Completed PIRs required by the standard has been
standard is issued, which means that To date, the IASB has completed three useful with no particularly unexpected
the process does not simply stop then. PIRs – on IFRS 8, Operating Segments, increases in costs from its application.
The standard-setter, the International IFRS 13, Fair Value Measurement, and The result of the PIR on IFRS 3 was
Accounting Standards Board (IASB), less simple, as is often the case for
conducts a post-implementation review group accounting issues. At the end
(PIR) of each new standard. This is a of the second PIR phase for IFRS 3,
mandatory step, and the objective is to several areas were identified that
assess whether the standard is working There is rarely warranted further research. This led
as intended. The PIR considers the full agreement to amendments in the definition of
impact of the standard on preparers, when a standard a business, and work is ongoing in
investors and auditors. It also looks relation to the accounting for goodwill
is issued, which
at any issues that may arise after and impairment – the subject of major
the publication of the standard, as
means that the discussion, with the debate taking
well as those that were important or process does not numerous twists and turns.
contentious during its development. simply stop then There is a belief that under IFRS 3
The first phase of a PIR identifies the impairment is recognised too late
matters to be examined, which are then and often not enough. This column
GL_T_DellerCPD.indd 49 04/10/2019 13:55

has followed the discussion around slender majority for that decision (eight Statements, and SIC-12, Consolidation –
proposed changes to the impairment of the IASB’s 14 members), the board Special Purpose Entities.
test, including how to deal with is very interested in what stakeholders IFRS 11 replaced IAS 31, Interests
the effect of shielding in the initial think, further reinforcing the importance in Joint Ventures. The major change
calculation of goodwill. The IASB’s of feedback during the PIR process. As was a requirement for joint ventures
current view is that it is not feasible to the IFRS 3 experience shows, a PIR can to be accounted for using the equity
make the impairment test significantly be a long and difficult process, but it method, removing the option of the
more effective at recognising is also a vital one in trying to produce proportionate consolidation method.
impairment losses of goodwill. The only robust standards that lead to better IFRS 12 is a disclosure standard that
currently proposed change is to amend financial reporting. includes revised disclosure requirements
the way that value in use is estimated, for interests in subsidiaries, joint
simplifying some of the requirements for Upcoming PIRs arrangements and associates,
the impairment test. The current research pipeline includes in addition to disclosures about
Instead of improving the impairment a PIR of IFRS 10, Consolidated unconsolidated structured entities.
test, the IASB is currently considering Financial Statements, IFRS 11, Joint
the removal of the mandatory annual Arrangements, and IFRS 12, Disclosure Subsequent alterations
goodwill impairment test. The present of Interests in Other Entities. These So far, there have been only limited
proposal is that companies would need three standards were issued together amendments to the three standards,
to perform quantitative tests only when in May 2011 and became effective for which is consistent with the approach
there is an indication that impairment annual periods beginning on or after prior to a PIR. The IASB changed
may have occurred. 1 January 2013. They were issued partly IFRS 10 to define an ‘investment entity’
Another discussion has been about as a response to the financial crisis of as one whose business purpose is to
whether more intangible assets should 2008, with one of the major aims being invest funds solely for returns from
CPD
be recognised separately from goodwill to ensure that enterprises were no capital appreciation and/or investment
to provide more useful information. longer able to hide the true underlying income. Once defined, the changes to
Based on the feedback to date, the position by excluding particularly risky IFRS 10 require an investment entity not
IASB has not found persuasive evidence companies from their balance sheets. to consolidate entities it controls but to
that this would be useful, so no changes IFRS 10 provides a single measure those investments at fair value
are proposed. consolidation model applicable to through profit or loss.
The question of the reintroduction of all entities based on the principle The amendment to IFRS 11 requires
the amortisation model continues. The of control, addressing divergence an acquirer of an interest in a joint
IASB’s preliminary view is that it should in practice in applying IAS 27, operation in which the activities
not be reintroduced – but with only a Consolidated and Separate Financial constitute a business to apply all of the

principles in business combinations also form part of the PIR. Currently line with the approach in the US. There
accounting in IFRS 3. no standard exists for businesses appears to be little appetite to return
under common control, and there is a to having the option of proportionate
Issues arising possibility that some guidance could be consolidation, so the major aspects of
IFRS 10 is the most likely of the three folded into one of these three standards this are likely to remain.
standards to attract attention. One of when the guidance is finalised.
the aims of IFRS 10 is to prevent entities The accounting for joint ventures Next stage
being able to avoid the consolidation under IFRS 11 is now very close to the In the final quarter of 2019, the IASB
of special purpose vehicles (SPVs) that treatment adopted by the US standard- is seeking input from its consultative
they simply don’t want to consolidate. groups and the IFRS Interpretations
There was potential uncertainty over Committee, with the PIR featuring in
the application from IAS 27 and SIC-12, meetings in October, November and
and IFRS 10 really looked to provide a December. It will also hold meetings
stronger, clearer definition of control. The aim was to with other stakeholders before bringing
The standard now also provides detailed ensure enterprises out a summary of these findings in the
guidance on assessing control in could not exclude first quarter of 2020.
addition to numerous examples of when With group accounts forming a
particularly
entities will qualify for consolidation. number of the research projects on the
This has improved the situation but
risky companies IASB’s agenda, it will be interesting to
there is the risk that some entities may from their see if some of those projects are folded
adopt a narrow, legalistic interpretation balance sheets into the PIR of these standards, or if they
of the standard and illustrative form separate pieces of work. Either
examples to the point that if the SPV way, it is likely that the spotlight will
CPD
is not identical to an example, they remain on group accounting well into
can avoid consolidation. It may well be setter, the Financial Accounting 2020, and possibly beyond. AB
that additional situations arise during Standards Board, meaning that there
the PIR that lead to further illustrative are unlikely to be significant revisions Adam Deller is a financial reporting
examples. It is unlikely that there will be to the standard, if any at all. While the specialist and lecturer.
significant revisions to the definition of removal of proportionate consolidation
control, but further guidance on specific was one of the more controversial More information
arrangements is a distinct possibility. aspects of the new standards, it is Get CPD units by answering
The current project relating to extremely unlikely there will be a questions on this article at
businesses under common control could return to it, especially as it is now in
More information
Get CPD units by answering
questions on this article at
accaglobal.com/abcpd

Technical update
A monthly update of the latest developments in financial reporting, taxation and
legislation from international regulators, the EU and elsewhere
International additional information to investors The US Governmental Accounting

about their hedging relationships which Standards Board has proposed new
Ibor replacement are directly affected by the uncertainties. reporting guidance to assist state and
The IASB has amended some The amendments come into effect from local government in the US in their
requirements for hedge accounting 1 January 2020, but companies may transition away from IBORs.
to support the phasing out of some choose to apply them earlier.
interest rate benchmarks, such as The European Financial Reporting Goodwill and impairment
interbank offered rates (Ibors). This Advisory Group (EFRAG) has issued The International Accounting Standards
follows changes to IFRS 9, IAS 39 and draft endorsement advice on the IASB Board (IASB) is carrying out a research
IFRS 7. The latest amendments provide reforms on Ibor reform, stating that its project on goodwill and impairment
relief from the potential effects of preliminary assessment is that the IASB following its Post-implementation
uncertainty caused by the Ibor reform, amendments satisfy the criteria for Review of IFRS 3 Business Combinations.
and require companies to provide endorsement for use in the EU. The Board is investigating how
companies can provide users of financial
statements with better information
about mergers and acquisitions at a
reasonable cost. This investigation
includes the challenging question of
how companies should account for
goodwill after the business combination.
EFRAG tackles crypto assets

The European Financial Reporting
Advisory Group (EFRAG) is seeking
input from experts on crypto assets,
including definitions and recognising
associated accounting problems, with
the aim of identifying and proposing
solutions. The focus includes issuance
via initial coin offerings, investing
activities, payment services, custodial
services and mining of crypto assets.
Climate-related disclosures Fair Tax Mark thinks global

The Sustainability Accounting Standards Board (SASB) and the Climate Disclosure The UK’s Fair Tax Mark is exploring the
Standards Board (CDSB) have released the Task Force on Climate-related Financial scope for becoming an international
Disclosures [TCFD] Good Practice Handbook. This complements the TCFD benchmark of ethical tax compliance.
Implementation Guide, published earlier this year and provides real-world examples More than 50 businesses have so far
of TCFD reporting to help companies better understand how they can more been certified in the UK, but its three
effectively communicate with investors about financially material climate-related risks accreditation standards (multinational
and opportunities. To download the full report, visit bit.ly/TCFD-Guide. business, UK-only trading and
microbusiness) have been developed
INT_T_update.indd 52 16/10/2019 15:53

for UK-incorporated parent companies Integrated Reporting, is published at arrangements for audit firms. New
only. A grant from global philanthropic bit.ly/EmergenceIR. standards will apply from March next
organisation Luminate will fund research year and will require listed companies
into the development of a new set of National obtaining auditor opinions on the
standards to certify businesses that have appropriateness of financial statements
their ultimate company situated outside Employee benefits in Canada to disclose clear reasons for any
the UK. In first exploring different Canada’s Accounting Standards qualified opinion issued.
international tax regimes globally, it is Board (AcSB) is seeking feedback on
examining how to dovetail with the likes its exposure draft, Employee Future FASAB amends omnibus
of the GRI tax reporting standard and Benefits – Use of a Funding Valuation, The US Federal Accounting Standards
the UN-supported PRI’s investor guide which proposes to modify the guidance Advisory Board (FASAB) has issued
on corporate tax disclosure. on using an actuarial valuation for omnibus standards amendments
funding purposes in the measurement (SFFAS 57). This eliminates the required
Integrated reporting advice of the defined benefit obligation. supplementary stewardship information
The Conference Board has published Feedback is invited by 16 December (RSSI) category by rescinding SFFAS 8,
advice for report preparers to assist 2019. To submit comments, visit bit.ly/ Supplementary Stewardship Reporting;
them in strengthening their integrated EmployeeFutureBenefits. it updates references to leases in SFFAS
reporting. It argues that financial 5, SFFAS 6 and SFFAS 49 and makes a
reporting has not kept pace with the Japan’s new audit standards minor change to SFFAS 6. SFFAS 57 is
increased value of intangible assets and Japan’s Financial Services Agency available at bit.ly/SFFAS57. AB
that integrated reporting can address has decided to revise audit standards
this. Its report, The Emergence of to increase the accountability Paul Gosling, journalist
INT_T_update.indd 53 16/10/2019 15:53

Mythbusting
The impact of IFRS 17 on insurers’ operations will be
anything but standard, says Alex Foreman-Peck FCCA
IFRS 17, Insurance contracts, issued finance system often record year of sale,
in May 2016, had the objective the grouping required might result in
of aligning accounting treatment extra data having to be captured up
across the industry to increase the front, and these administration systems
understandability and visibility of may require costly modification or even
insurance companies’ performance. re-implementation.
The International Accounting The standard dictates that contracts
Standards Board’s recent consultation should be grouped according to
proposing amendments to the standard risk type and how the organisation
in the light of stakeholder concerns has manages that risk when deciding what
meant that the implementation date is a portfolio. However, this grouping
is likely to be pushed back to January tends to occur already, as it is needed
2022, giving insurers more time to for reserving and reporting internally
prepare for the changes. downstream. Sufficient data capture
The extent of these changes, is typically already available in the
including those relating to internal underwriting/claims systems.
CPD
reporting, will vary from insurer to The second hypothesis was that
insurer depending on the risks they general insurers would not be impacted
underwrite and their existing operating due to the simplified premium allocation
model (the interaction of data, systems, approach. This has also proved to be
processes and people). false. Although the liability for remaining
When the standard was near coverage remains substantially the
finalisation, there was much speculation same as under current standard IFRS 4,
about its potential impact. Let’s explore the fundamentals of calculation for the
four of the hypotheses. liability for incurred claims often differs.
New inputs are required that are
True or false? themselves outputs of calculation –
The first hypothesis was that IFRS 17 specifically, the discount rate and the
would require fundamental changes to risk adjustment to expected cashflows.
data capture and analysis in upstream Where these or equivalents are already
systems. This has proved to be false. used, they are often different from those
All business functions produce an required by IFRS 17. Consequently, they
output. In the case of finance, this is will require new processes to determine
often in the form of numerical reports them and, potentially, system support
with interpretation. This requires a to do so. The discount rate may require
process of taking raw data and turning new yield curves to be sourced. The
it into information, to be interpreted illiquidity premium must be calculated
by skilled people. IFRS 17 states and applied at regular intervals.
that insurance contract data must The risk adjustment has many more
be segmented by portfolio, annual options for determination, and these
cohort and profitability. While the are likely to be different from existing
administration systems that feed the regulatory and statutory equivalents.
INT_UK_T_IFRS17CPD.indd 54 16/10/2019 16:12

The third hypothesis is that, as the above should be recorded at contract amalgamate data before posting to the
standard integrates accounting and inception and subsequently. These general ledger. These software tools
actuarial disciplines, processes within balances and movements must be often generate the double entry needed
finance will need to be re-engineered. converted to double-entry for posting for the general ledger. Again, storage
Again, false. Many finance functions to the new nominal accounts in the may be a problem.
are divided between the accountants general ledger. Surprisingly few finance or enterprise
who deal with the accounting for Organisations face a number of resource planning (ERP) systems have a
premium and outstanding claims, and choices of where and how the CSM subledger to provide a more integrated
the actuaries who calculate the liability calculation and tracking occurs. Usually solution than might be available on
for incurred claims for short-term the first port of call is the actuarial middleware. The existing IT strategy
business and/or the long-term liability liability tool, with modifications or and architecture may determine which
for business written on a periodic upgrades to calculate the building solution type is best.
basis. Typically, the function performs a blocks that result in the CSM. The path to IFRS 17 will be a long one.
‘light touch’ calculation at quarterly or Some providers are extending their The practical impact is more confined to
half-yearly intervals, with a full report at functionality in this area, and this can be the finance function than first thought
the year end.
With IFRS 17, the expected cashflows
become far more integrated, with those
flows realised each period in the income
and expenditure statement. Every
reporting period requires the unwinding
of a discount rate and amortisation
of the deferred profit earned for that
CPD
period. Most of these movements are The practical
formulaic and can be accommodated
impact is more
through automated, recurring, periodic
journal posting into the general ledger.
confined to the
The month-end process is therefore finance function
unlikely to change radically. than first thought
Reassessment and potential
remeasurement of the capitalised
cashflows on the balance sheet,
adjusting for actual versus expected
cashflows, can continue to be updated
quarterly or less frequently. So, while the attractive to insurers looking to upgrade and changes measurement rather than
nature of calculations may change, the this system anyway. Those not already the fundamentals of what accountants
activities and their sequence are unlikely on the cloud may have problems with and actuaries do. Any solution will be
to need to. storage capacity and may wish to use an IT-dependent.
The final hypothesis is that there will existing data warehouse for storage and While the destination has become
be fundamental change to systems retrieval. A data warehouse is just that more certain, the path there continues
downstream. This has proved true. though, and not a calculation engine of to provide surprises. AB
All insurers will require changes and the type needed by IFRS 17.
investment in their systems. This Rather than alter the actuarial tool Alex Foreman-Peck FCCA is a partner
begins at the calculation of cashflows too much, middleware packages may at AFP Advisory.
for contract groups, the determination be purchased to take in the cashflows
of risk adjustment to those cashflows and do the necessary calculations. More information
and consequential deferred profit, This option is more attractive to larger Get CPD units by answering
the contractual service margin (CSM). insurers, which may have many actuarial questions on this article at
Thereafter each component listed tools in operation and may wish to
INT_UK_T_IFRS17CPD.indd 55 16/10/2019 16:12

Matters of trust
Tech fixes won’t solve a trust crisis, transparency is not a silver bullet, and the corporate
management of trust as a brand is an outdated strategy, says expert Rachel Botsman
Can you explain the concept of you look at the relationship between in character, which is based essentially
distributed trust? the employee and the employer, and around empathy – a feeling that the
My first book, What’s Mine Is Yours, between the customer and the consumer organisation cares and understands
looked at how technology could make and the company, trust really lies in the where you’re coming from and respects
us engage in behaviours that might hands of people. your views and perspectives, even if
previously have been considered risky, they’re completely different to its own.
such as opening our homes and cars Can trust be built? Then there’s integrity, which is the
to strangers. I was also hearing this There’s a myth around trust, particularly hardest trait for all organisations to scale.
narrative that trust was being eroded in within professional services, that it can Often people think integrity can be
institutions – in politics, media and the be built. Trust is something given to you. faked, with things like CSR programmes
banks. This led to the idea that maybe You can’t say you’re going to build more or sustainability or charity, but integrity
it’s not that trust is eroding or declining, trust with me: I have to give you my trust, is about your motives, about asking
but that it’s changing form. Technology you have to earn it. There’s no brand, whether your intentions align with the
takes trust that flowed upwards and was campaign or product that can manifest best interest of the consumer or user.
very hierarchical, and distributes it to trust; you have to be trustworthy. So it
people in new ways, through networks, lies in culture and behaviours. Do millennials have a different
platforms and social media. attitude to trust?
How can an organisation be I think millennials are more sceptical
How does this relate to organisations? more trustworthy? in some ways. My parents’ generation
It’s a mistake to think of trust as a brand There are two sets of traits: capability were quite deferential to experts
that works like a pyramid, managed and character. Capability traits include and leaders, and even brands. With
by the marketing and communications competence (how you do something) millennials, it’s a whole different mindset:
teams, and very much in the hands of and responsiveness (your respect for there is a hearty scepticism.
leadership. That’s not true any more. If time). But the real gold dust of trust lies
How much do people trust chatbots?
Customer service bots have a long
Botsman brief way to go. Often people are going to
Why would you invite a stranger to stay in your home, or hop in a car with a man customer service with a problem – and
you’ve never met? These are the questions that led Rachel Botsman to write her bots can’t empathise with someone
best-selling 2010 book What’s Mine Is Yours, co-authored with Roo Rogers. who is frustrated or upset. I deal a lot
Her interest is not just in the economics but also in the trust issues surrounding with fintechs and it drives me mad when
shared economy businesses such as Airbnb and Uber. New digital technologies, they don’t have a customer service
Botsman argues, enable the rise of ‘collaborative consumption’, and usher in a new department. It’s your money and you
economy based on a changed perception of trust. really don’t want to talk to Susie Chatbot;
Since then, Botsman has explored those issues further, most notably in her 2017 you want a human being because you
book Who Can You Trust?, in which she discusses the concept of distributed trust need to believe in an instant that that
and the decentralisation of trust in individuals and institutions. person understands your problem.
She has been named one of the 50 most influential management thinkers in the
world, a Young Global Leader by the World Economic Forum, and one of Fast Is there anything organisations can do
Company’s Top 100 Most Creative People in Business. She teaches the MBA course to regain trust once they’ve lost it?
on trust in the digital age at Oxford University’s Saïd Business School. Most trust crises come down to integrity.
The companies claim it’s a capability
INT_IE_P_ Botsmaninterview.indd 56 16/10/2019 16:11

problem: ‘We’ll fix the system, put more
bots on it, or whatever the technology
fix is.’ But actually, it’s a culture problem:
it’s people saying they don’t believe the
company’s interests are aligned with
theirs. That is a really hard place for a
company to come back from.
Samsung is a good example. The
company went through a trust crisis
over problems with its Galaxy Note 7
smartphone. Samsung admitted it was
about the phone but also said what was
wrong with its systems and fixed them.
You’ve talked about transparency not

being the answer.
People talk about transparency as
a magical cure but it’s not. I think
transparency is a tool. Gender pay is a
good example. If we can get accurate,
accessible information on gender pay,
we can create some change around that.
But blanket transparency is not the way
to create more trust.
First of all, I don’t think any company
can promise true transparency, so all you
get is surface-level disclosure. I’m not
saying that more transparency in banking fear and lack of confidence around What can accountancy professionals do
is a bad thing: being clear around big systems – particularly financial to increase trust?
interest rates and terms and conditions institutions – is because of the lack of Trust does not lie with firms but with
and payment schedules is absolutely responsibility and accountability when individuals. Accountants understand
key. But this idea that more transparency things do go wrong. risk because risk can be measured; they
increases trust is not how it works. If I understand money because money can
really trusted the bank, I would believe Does regulation make companies seem be measured. But trust is not the same.
what they said about interest rates; I more trustworthy or less? You can measure the traits we talked
wouldn’t need to know. People approach regulation in this about, but a sort of trust barometer?
top-down, hierarchical, linear fashion. Well, you can’t measure a human belief.
Who should take responsibility for You can see it with the UK’s Financial Risk is made up of likelihood and
creating a framework of trust? Conduct Authority trying to get its head severity: how bad something’s going to
It depends on the context. The sales around cryptocurrencies. You can’t apply be and the likelihood of it happening.
centre should take responsibility for the regulation that exists for existing With any client, in any situation, I think it’s
certain things. If we’re talking about currencies; a completely different worth asking: ‘Am I trying to reduce the
diversity around hiring, that’s an HR issue. mindset is needed – not just for what likelihood of something bad happening?
If we’re talking about good governance, the regulation looks like, but how it is Am I trying to reduce the severity of the
that’s a legal issue. So it’s contextual. enforced. One of the mistakes we make possible consequence? Or am I trying to
When people talk about trust, they’re is around how to create regulation that increase the confidence of my client to
often talking about responsibility: who can be owned by the community. I don’t take this risk?’ AB
should be responsible when things think we’ve cracked this idea yet of self-
go wrong? And so much of the anger, policing and community moderation. Emma Woollacott, journalist
INT_IE_P_ Botsmaninterview.indd 57 16/10/2019 16:11

The right direction
In order to instil a strong moral compass in finance professionals, organisations
must develop and adhere to ethical practices that reflect global standards
Never before have companies – both

public and private – been under such
intense scrutiny. Stakeholders are
becoming increasingly attuned to the
conduct of businesses they invest in
or even associate with, and nowadays
there is no place to hide.
As pointed out by Mohd Salihin Bin
Othman FCCA, financial controller
at Perbadanan Insurans Deposit
Malaysia, a corporate vision or set of
values posted on an organisation’s
website has no relevance to the digital
generation who are influenced by news
on their social media feeds ‘which can
go viral in a split second’. ‘This will be
a reminder to any person that their
behaviour cannot be just superficial,
or only surface during formal events or
official statements; it has to be a genuine
act that can be observed all the time,’ ACCA, group financial controller at investigate further before deciding on
he says. Owndays Singapore, underscores the the next step.’
ACCA members like Salihin importance of their role, pointing out
agree that setting one’s moral and that the focus of most departments A question of culture
ethical compass true north is an is on bringing assets and liabilities to That next step, Sim says, depends on
imperative today for professional the company. the culture – not just of the workplace
accountants, the finance gatekeepers ‘While the accounts department but also of the department and one’s
of the business world. Cherie Sim may not bring in traditional assets, immediate superior. ‘The person
our position is to safeguard those reporting will have to feel safe and
assets and also to disburse funds,’ assured that nothing is going to
she says. ‘Accountants are usually the happen to them, and that the matter
ones who collate information from will be taken care of appropriately.
‘Bad things happen different departments and present it Conclusions on past incidents may help
to the stakeholders, so we may be well the individual determine if it is worth
not only because
positioned to see the full picture of a speaking up,’ she says, adding that
bad people do company and to spot anything that does sometimes the outcome may not be a
bad things, but not seem right.’ direct hit at the wrongdoer but a subtle
also because good So, what if something suspicious twist or change to the system to prevent
people stand by is observed? Sim’s first step would future incidents.
be to mull it over and consider other Devanesan Evanson FCCA, CEO of
doing nothing’
viewpoints. ‘There might be a few the Minority Shareholders Watch Group,
sides to the story,’ she says. ‘I would agrees that, while the importance of
INT_B_MoralCompass.indd 58 14/10/2019 16:02

acting ethically ‘is a given’, there can be and unethical practices. ‘Finance Companies can be proactive, she
challenges at the coalface – especially professionals must always remember continues. ‘For example, before the
in Asia. that bad things happen not only Competition Law came into full effect,
‘The Asian and particularly Malaysian because bad people do bad things but the organisation I worked for had
culture has not shed its feudalistic also because good people stand by already put together relevant training
mentality as much as our Western doing nothing,’ he says. materials and guidelines, which was
counterparts,’ he says. ‘We still tend Overall, Devanesan believes the Asian enforced by senior management in the
to revere our CEOs and immediate business mindset must move away from finance and legal teams.’
superiors and the board members.’ the ‘king can do no wrong’ mentality The future, says Salihin, also
‘Speaking up’ presents its own ‘and adopt some liberal practices and depends on the profession’s leaders.
challenges – for example, if an culture from our Western counterparts, ‘It requires them to lead current and
individual’s values are challenged by a like speaking up and being assertive’. future accountants to be respectful,
superior. ‘The finance professional may highlighting the importance of ethical
face a “favour” inducement – “do this Ethical beacons values and the necessity of individual
and you will be enriched financially or In Hong Kong, Kelly Chan FCCA, integrity,’ he says, adding that despite
through position”,’ Devanesan says. managing director at Peony ‘serious efforts’ to create a nation free of
Even worse is the ‘fear factor’, where Consulting Services, finds that, corruption (the latest being the National
the person being coerced is made to generally speaking, senior management Anti-Corruption Plan, implemented in
feel that their job and livelihood may teams adhere to a high standard of January 2019), ethical deficiency issues
be at risk. ‘This is where the tone at ethical practice. She believes that ‘still persist to this day’.
the top becomes so very important in qualified accountants who have To rebuild investor trust after
driving ethical and moral behaviour,’ relevant experience can be beacons any corruption scandal requires
he says. ‘Where the top is corrupt, the of moral and ethical behaviour. They a thorough review, Salihin says.
direct reports tend to be corrupt and are also well-placed to mentor junior He believes this is incumbent on
then their direct reports and so on, and accountants to ensure that ethical governments across the world.
soon the whole fabric of a company – or standards are maintained. He sums up why this matters:
even a country – becomes corrupt, at an ‘To a great extent, ethical practices ‘Ethical misconduct in any organisation
accelerating pace.’ rely very much on the corporate culture can have very serious consequences,
Devanesan is, however, encouraged as a whole and top-down influences costing time, money, business
that more companies are putting from senior management are essential reputation and even imprisonment
policies in place that protect anonymous to ensure sustainability of such for the perpetrators. Organisations
whistle-blowers who call out corrupt practices,’ Chan says. must seriously consider the
plus points of staying on top of
any unethical practices within the
How to build an ethical organisation corporate environment.’
Research has demonstrated that an ethics and compliance programme is a powerful These benefits include
tool for reducing pressure to compromise standards and observations of misconduct; increased productivity (that can be
increasing employee reporting of observations that occur; and decreasing retaliation translated into profits and wealth
against whistleblowers. According to the Ethics & Compliance Initiative (ECI), the creation), as well as avoidance of
hallmarks of an effective programme are: potential legal issues.
* freedom to question management without fear More than that, organisations that
* rewards for following ethics standards act with the utmost integrity and
* not rewarding questionable practices – even if they produce good results transparency, as reflected in their daily
* positive feedback for ethical conduct operations, will earn the respect of
* employee preparedness to address misconduct society and investors. And that’s the
* employees’ willingness to seek ethics advice. greatest benefit to which any company
could aspire.
A free online toolkit to help businesses to tailor an ethics and compliance AB
programme to their needs is available on the ECI’s website at ethics.org.

Peta Tomlinson, journalist
INT_B_MoralCompass.indd 59 14/10/2019 16:02

Sounding board
Members of International Assembly got together in London to inform the
direction of ACCA and provide vital perspective on key developments
In September, ACCA the CFA Institute, Charles

International Assembly, Larbi-Odam FCCA of
made up of 53 members Deloitte Ghana and Kevin
from 42 countries, gathered Fitzgerald FCCA of Xero);
at the Adelphi in London the power of digital (with
for two days of discussion, Eric Sum of Fusion Bank,
workshops and networking. Alastair Barlow FCCA of
The 23rd event of its accountancy practice Flinder
kind, which had the theme and TedTalker Georgina Terry
‘Maximising impact and FCCA); and the power of
opportunities’, invited ethics (with Russell Guthrie,
members to consider how CFO of IFAC, and Maggie
ACCA is shaping and leading McGhee, ACCA executive
the profession, building for director). Attendees also
the future, and taking ACCA learned about innovations to
boldly forward. the ACCA Qualification, the
There were sessions on development of digital CPD
the power of connections and an update on ACCA’s
(featuring Emily Dunbar of mentoring scheme. AB
Clockwise from top: Bright Amisi, South

Africa; Thomas Galea, Malta (centre) and
Emmanuel Kapizionis, Greece (right);
Oksana Losevskaia, Russia.
INT_UK_A_Assembly.indd 60 09/10/2019 15:33

Babajide Ibironke,
Nigeria; Emmanuel
Kapizionis; Gajendran
Vyapuri, Singapore.
Dato’ Amiruddin Abdul
Marlene McIntosh, Jamaica. Satar, Malaysia.
Omer Zaheer Meer, Pakistan.

Angel Qi Tian, China.
INT_UK_A_Assembly.indd 61 09/10/2019 15:33

Time to reflect
ACCA Caribbean celebrated its 20th anniversary in style at a glittering gala evening,
honouring successes and partnerships, including the region’s longest serving member
Close to 200 members,

students and guests came
together for a glittering
gala evening in Port
of Spain, the capital of
Trinidad and Tobago, in
September to celebrate
the 20th anniversary of
ACCA Caribbean.
The event was the
culmination of a number
of initiatives to mark this
important milestone. Among
the guests were Tim Stew,
British High Commissioner
to Trinidad and Tobago;
senior ACCA member
Justice Neil Mohammed;
Sixto Coy, president of
the Institute
of Chartered Members, students, guests and staff gathered
Accountants of to celebrate ACCA Caribbean’s successes over
two decades.
Jamaica; Khalil
Alli, president
of the Institute
of Chartered
Accountants of
ACCA’s
the Caribbean; roots in the
and ACCA Caribbean go
international back more than
assembly
half a century
representatives
from Barbados
and Guyana.
Over the years, ACCA of many of them. Awards
has developed close were presented to Joint
relationships with national Examination Scheme Bertram Hadaway, a member for 54 years, received a
accountancy bodies and partners, Approved commemorative plaque in honour of his achievement.
other key institutions across Learning Partners, Global
the Caribbean, and the gala Prize Winners and the first Special mention went Bertram Hadaway & Co, who
provided an opportunity to approved employer in the to 90-year-old Bertram has been an ACCA member
recognise the contribution Caribbean, Deloitte BVI. Hadaway, founder of for 54 years.
INT_A_News.indd 62 16/10/2019 16:18

Mark Millar, ACCA’s deputy president, with Lydia McCollin, The gala evening wasn’t just about reflection and
president of Joint Examination Scheme partner, the honouring achievements: guests also found time to let
Institute of Chartered Accountants of Barbados. their hair down and do the conga.
ACCA’s roots in the Alongside the national Accountants of the said: ‘We are immensely
Caribbean go back more bodies of the Bahamas, Caribbean in 1987. Over the proud of the role we have
than half a century, with Barbados, Belize, Guyana, past two decades, member played in realising the
the organisation playing Jamaica, St Lucia, and and student numbers have dreams and launching
a fundamental part in Trinidad and Tobago, grown by 55%. the careers of countless
developing the Caribbean ACCA helped to establish Shelly-Ann Mohammed, Caribbean students
accountancy profession. the Institute of Chartered head of ACCA Caribbean, and members.’ AB
A creative approach
An ACCA conference in Luxembourg looked at how innovative practices are
driving sustainability, accountability and the digital agenda in the public sector
ACCA held a conference public sector innovation. interconnected challenges, and citizen initiatives, and
on creating value and A second panel explored we need to move from not simply rely on top-down
driving sustainability, areas where governments incremental to more radical visions of the future,’ said
accountability and the digital are applying innovative innovation – resulting in Alex Metcalfe, head of public
agenda through public practices to improve full system changes that sector policy at ACCA. ‘For
sector innovation at the outcomes for citizens and fundamentally rework how this to happen, we need to
European Court of Auditors create value, while driving we deliver public services.’ create new collaborations and
in Luxembourg. sustainability, accountability The event saw the perhaps also think differently
In a lively panel and the digital agenda, launch of a new ACCA about leadership.’
discussion, an impressive including blockchain. report, Innovation in The debate also looked
line-up of experts busted Lazaros S Lazarou FCCA, a public finance, which at the participatory role
the assumption that member of the European makes the case for a more of employees in the
innovation and the public Court of Auditors, who radical approach. future public service and
sector are antithetical, and hosted the event, said: ‘Innovative ideas must highlighted the importance
discussed how to cultivate ‘To address today’s also come from frontline of collaboration. AB
INT_A_News.indd 63 16/10/2019 16:19

Taking the temperature
ACCA’s Global Economic Conditions Survey celebrates 10 years, proving its value in
demonstrating the profession’s ability to identify changing trends, says Michael Taylor
This year ACCA celebrates – for example, using the More information
10 years of its Global percentage of who is To download ACCA’s latest and previous GECS reports,
Economic Conditions Survey ‘more optimistic’ minus the go to bit.ly/ACCA-GECS.
(GECS), the biggest global percentage of who is ‘less
survey of professional optimistic’. In addition, is happening now as well as onwards, GECS identified
accountants. there are questions about what is likely to be happening the tightening of credit
Since 2011, the quarterly influences on respondents’ in the near future are very conditions in China, which has
survey has been conducted businesses, such as access useful to policymakers, been the main driver of the
jointly with the Institute of to finance, suppliers government and the media. recent slowdown in growth.
Management Accountants going out of business and GECS does this, generating Over its first 10 years,
(IMA), and attracts well over operating costs. valuable coincident and GECS has proved its worth
1,000 responses each quarter. One of the great values of leading indicators – to use by demonstrating the
There is especially good GECS is that it collects the economists’ jargon. The fall profession’s ability to identify
coverage of the US, the UK, views of finance professionals in global confidence last and anticipate changing
the Middle East and Asia (in who are experiencing year, for example, flagged economic trends. Over the
particular, China) – key drivers current economic conditions the current global slowdown. next 10 years there will no
of the global economy. first-hand and who will be At the country level, GECS doubt be many twists and
The survey asks ‘core’ among the first to see any pointed to both the resilience turns in the economic cycle
questions about business changes in trends. Official of the US economy last year and GECS will be there,
confidence, orders, economic data such as GDP and the weak investment tracking them. AB
employment and investment is published with a lag and performance in the UK as

intentions. For each, a then subject to revision. Brexit uncertainty took its Michael Taylor is ACCA’s
diffusion index is calculated Surveys that tell us what toll. Elsewhere, from 2016 chief economist.
INT_UK_A_GECS.indd 64 16/10/2019 16:14

Council update
ACCA’s governing body met at the Adelphi in London in September and was updated
on strategic performance and the activities of a number of committees
Council met on Thursday on strategic performance

* Council endorsed ratification of the June
19 September in London. to 31 July and key amendments to Council 2019 examination results.
The Council meeting strategic matters. regulations for 2020 to
* Council received
featured discussions and
* Council further enable the continued presentations
decisions on a number of discussed and implementation of the from the chairs of
important matters. approved the ongoing governance review. Governance Design
* The officers updated development of ACCA’s

* Council noted the 2019 and Remuneration
Council on their activities future strategy. AGM booklet and committees, focusing on
since June, including
* Council agreed preparations for the their terms of reference
attendance at events in appointments to the Council elections. and current work plans.
the Caribbean, Malaysia, Council Board, standing
* Council considered
* Council received a report
Singapore, South Africa, committees, International regulatory developments from the meeting of the
UK, Vietnam and Zambia. Assembly and public in the UK and Ireland. Audit Committee held in
* Council received a interest oversight boards

* Council noted a report August.
presentation from the for 2019-20, as well as from the Qualifications The next Council meeting is in
chief executive, focusing pension scheme trustees. Board, including the London on 21 November. AB
A
ACC 19
20
A GM
Your vote
matters
Voting for the ACCA Council elections is
open from 3 October – 14 November.
Cast your vote now
www.accaglobal.com/vote
INT_UK_A_Council.indd 65 09/10/2019 15:39

Digital future AB International Edition
Nov/Dec 2019
Volume 22 Issue 9
New features and functionality enhancements are being rolled International editor
out in the first wave of ACCA’s digital transformation Annabella Gabb
annabella.gabb@accaglobal.com
Editor-in-chief
joanna.malvern@accaglobal.com
Digital editor Jamie Ambler
Video manager Jon Gilmore
Sub-editors Lesley Bolton, Dean

Gurden, Peter Kernan, Jenny Mill,
Eleni Perry, Vivienne Riddoch,
Rhian Stephens, Matt Warner
Design manager Jackie Dollar
Senior designer Robert Mills
Designers Bob Cree,

Suhanna Khan
Advertising Daniel Farrell

daniel.farrell@educate-direct.com
+44 (0)20 7902 1221
Head of ACCA Media

Peter Williams
peter.williams@accaglobal.com
Director of brand and

corporate reputation
Chris Quick
Printing Walstead Southernprint
Pictures Getty
Accounting and Business is published
by ACCA. All views expressed are those
of the contributors.
The Council of ACCA and the

publishers do not guarantee the
accuracy of statements by contributors
or advertisers, or accept responsibility
for any statement that they may
express in this publication. The
publication of an advertisement does
not imply endorsement by ACCA of a
product or service.
Copyright ACCA 2019

ACCA has announced From then, myACCA – is one of ACCA’s core values Accounting and Business. No part of
this publication may be reproduced,
plans to relaunch the designed to work on any and, as for many global stored or distributed without the
express written permission of ACCA.
myACCA portal for platform and device – will businesses today, the digital
Accounting and Business is published
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Ltd, a subsidiary of ACCA.
part of its ambitious digital landing page, making it easy business model.
Accounting and Business (ISSN:
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published monthly except July/August
The four-year project – to they have outstanding tasks. in members’ and students’ and Nov/Dec combined issues by
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Street, London, WC2N 6AU, UK.
of the year. professional body. Innovation portal.accaglobal.com. AB
INT_A_Backpage.indd 66 14/10/2019 15:34

Unlock your
Discover the
power of ethics potential with an
Ethics is having a more powerful impact
on business and society than ever
MSc in Professional
before. And consumer and government
focus on ethics and sustainability is
Accountancy
sharper than ever before.
ACCA members are trusted because
their ethical training is unsurpassed.
That makes them essential to business
success, today and tomorrow.
Take advantage of our unique opportunity for ACCA members to

gain an MSc in Professional Accountancy from the world-leading
University of London.
Find out more and apply at accaglobal.com/msc

Find resources on the power of ethics at accaglobal.com/ethics
INT_insidecover.indd 1 10/10/2019 10:15

AB Accounting and Business
November/December 2019

Damage limitation
What can SMEs do to combat
bribery and corruption? Ethics in
Safe space
Australia is leading the world on
the ether
protecting whistleblowers Embedding a responsible
approach to personal data
Man of steel
Interview: Michael Samonas,
CFO of metals group Sidma
INT_COV_dataethics.indd 1 14/10/2019 16:05

AB INT Nov 2019

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Accounting and Business November/December 2019

INT_COV_dataethics.indd 1 14/10/2019 16:05

Take advantage of our unique opportunity for ACCA members to

Find out more and apply at accaglobal.com/msc

INT_insidecover.indd 1 10/10/2019 10:15

As we continue ACCA’s ‘power of And, on page 56, we speak

some world-leading elements but

Accounting and Business About ACCA Leadership

November/December 2019 Accounting and Business 3

INT_Welcome.indd 3 16/10/2019 11:56

4 Accounting and Business November/December 2019

INT_CON_contents.indd 4 16/10/2019 15:27

40 Role up, role up 54 CPD The story so far

November/December 2019 Accounting and Business 5

INT_CON_contents.indd 5 16/10/2019 15:25

INT_Newsinpix.indd 6 16/10/2019 15:19

South African artist

The Rugby World Cup

November/December 2019 Accounting and Business 7

INT_Newsinpix.indd 7 16/10/2019 15:19

8 Accounting and Business November/December 2019

INT_newsinbrief.indd 8 16/10/2019 15:24

November/December 2019 Accounting and Business 9

INT_newsinbrief.indd 9 16/10/2019 15:25

10 Accounting and Business November/December 2019

INT_newsinbrief.indd 10 16/10/2019 16:51

the assistance of the UK attacks. Fitch said Saudi laws, easing property

November/December 2019 Accounting and Business 11

INT_newsinbrief.indd 11 16/10/2019 15:25

12 Accounting and Business November/December 2019

INT_INTER_Samonas_Sidma.indd 12 14/10/2019 16:30

November/December 2019 Accounting and Business 13

INT_INTER_Samonas_Sidma.indd 13 14/10/2019 16:30

due diligence for a planned merger with a Greek competitor,

14 Accounting and Business November/December 2019

INT_INTER_Samonas_Sidma.indd 14 16/10/2019 14:47

Simplify your life

November/December 2019 Accounting and Business 17

INT_YPRAC_introDebono.indd 17 16/10/2019 15:32

With blockchain enabling the parties

Its huge selling point is the

Accounting pros and cons

18 Accounting and Business November/December 2019

INT_YPRAC_blockhainAbia.indd 18 16/10/2019 16:52

Julius Eka Abia FCCA is audit manager

November/December 2019 Accounting and Business 19

INT_YPRAC_blockhainAbia.indd 19 16/10/2019 15:35

20 Accounting and Business November/December 2019

INT_YPRAC_WebDesign.indd 20 16/10/2019 15:36

* Vertical niching. In this instance, you announcement; what you need to do is

* Horizontal niching. This involves actually mentioning accounting at all.

* Micro-niching. This combines In a nutshell

* Capture email addresses.

November/December 2019 Accounting and Business 21

INT_YPRAC_WebDesign.indd 21 16/10/2019 15:37

ACCA, and my mission is to champion

22 Accounting and Business November/December 2019

INT_AP_COM_Pres.indd 22 01/10/2019 17:08

in particular, often have greater power for influencing

November/December 2019 Accounting and Business 23

INT_COM_VR.indd 23 16/10/2019 15:41

While the UK concentrates on exiting multinational enterprises. Successful